EXHIBIT
10.6
WELLS
FARGO
BUSINESS
LENDING CONFIRMATION LETTER
May 28,
2009
American
TonerServ Corp., William A Robotham, Daniel J Brinker, Thomas A.
Hakel, and Charles E Mache
420 Aviation
Blvd, Suite 103 Santa Rosa, CA 95403
RE: $835,000.00
Revolving Line of Credit
Wells Fargo
Bank, National Association ("Bank")
agrees to make available to American TonerServ Corp., William A
Robotham, Daniel J Brinker, Thomas A. Hakel, and Charles E
Mache ("Borrower") a Revolving Line of Credit (the "Credit").
The Credit shall bear interest and be repayable in accordance with
the terms and conditions of the Agreement. The Agreement consists
of (1) this Confirmation Letter (this "Letter"), (2) the Business
Lending Disclosure dated August 01, 2008 (the "Disclosure") and (3)
any Related Documents. All terms and conditions of the Disclosure
and Related Documents are incorporated herein by reference for all
purposes. All capitalized terms not defined in this Letter are
defined in the Disclosure.
Promise To
Pay. Borrower
promises to pay to Bank, or order, the principal amount of
$835,000.00, or so much as may be advanced and outstanding from
time to time, together with interest on the outstanding principal
balance. Borrower will pay Bank at Bank's address shown in this
letter or at such other place as Bank may designate in
writing.
Availability
Period. Subject to
applicable terms of the Agreement, advances under the line of
credit will be available until January 15, 2010 (the "Availability
Period"). During the Availability Period, Borrower may borrow,
repay, and borrow again from time to time under this revolving line
of credit up to the Credit Limit. If at any time, for any reason,
the principal balance at any time exceeds the Credit Limit,
Borrower shall repay the excess amount immediately.
Floating
Interest Rate. Interest shall
accrue on the unpaid outstanding principal balance of the Credit at
a floating rate equal to the Index plus 8.000% (the "Indexed
Rate"). The "Index" is the Prime Rate set by Bank from time to
time, which serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto.
Each change in the Index shall become effective on the date of each
change in the Prime Rate. The Indexed Rate will change as and when
the Index changes. Interest will be calculated as described in the
Interest Accrual Basis paragraph below. The Indexed Rate was
approximately 11.250% when this Letter was prepared.
Interest Rate
Floor. Notwithstanding
anything to the contrary, this Credit shall be subject to an
interest rate floor of 11.250% (the "Floor Rate"). This means
during the period of time when the normally applicable interest
rate is less than the Floor Rate, then the Floor Rate shall apply
in lieu of the normally applicable interest rate. However, if any
financial derivative is provided by Bank with respect to this
Credit, the following rules apply: (a) if a floating to fixed
interest rate swap (whether documented by an ISDA Master Agreement
or a Rate Management Agreement) is currently effective, the Floor
Rate shall not apply, unless the interest rate swap is documented
pursuant to an ISDA Master Agreement and contains an embedded
floor; and (b) if a rate cap is currently effective, the Floor Rate
shall apply.
1
Assumption.
The
Credit may be assumed during its term provided that the assuming
party (i) meets the Bank's standard underwriting criteria and (ii)
pays an assumption fee of 1% of the Credit's outstanding principal
balance in effect as of the date of the assumption
approval.
Interest
Accrual Basis. Interest shall
be computed on an actual/360 simple interest basis; that is, by
multiplying the applicable interest rate, times the outstanding
principal balance, times the actual number of days the principal is
outstanding and dividing by a year of 360 days.
Repayment.
Interest as it
accrues shall be due and payable monthly, commencing on July 15,
2009 and continuing on the same day of each month thereafter until
maturity. The Credit shall mature on January 15, 2010, at which
time all unpaid principal, accrued interest, and any other unpaid
amounts shall be due and payable in full. Unless otherwise agreed,
all sums received from Borrower may be applied to interest, fees,
principal, or any other amounts due to Bank in any order at Bank's
sole discretion.
Payment and
Rate Adjustments. If Bank fails
for any reason to timely or properly establish, charge or adjust
the interest rate or payment amount, Bank may retroactively correct
the interest rate and reamortize and adjust the payment amount at
any subsequent time as may be appropriate to restore the intended
amortization schedule. Borrower will promptly notify Bank of any
such oversight upon discovery of same. In no event shall Bank's
failure to properly reamortize or adjust payments result in a
forgiveness of any portion of the indebtedness.
Automatic Debit
of Payments. Borrower agrees
to maintain Wells Fargo Bank, National Association deposit account
number xxxxxxxxxxxxxxx from which Bank is authorized to debit loan
payments, fees and such other sums as may be payable under the
Agreement or Related Document as they become due with respect to
this Credit and any renewals and extensions of this Credit, and
shall keep such deposit account in good standing at all times. This
authorization shall remain in full force and effect until
discontinued by Bank, or written revocation from Borrower has been
received and processed by Bank at its office at BBSG Boise Loan
Ops, PO Box 8203, Boise, ID 83707. If this
