MASTER LOAN AND SECURITY
AGREEMENT
Dated as of June 29,
2009
ICON ION, LLC,
as Lender,
ARAM RENTALS CORPORATION,
as Borrower
ION GEOPHYSICAL CORPORATION,
as Guarantor
MASTER LOAN AND SECURITY
AGREEMENT
THIS MASTER
LOAN AND SECURITY AGREEMENT is made as of June 29, 2009 by
and among ARAM RENTALS CORPORATION (
“Borrower” ) with its principal office located
at 7236 — 10th Street NE, Calgary Alberta, T2E 8X3, ION
GEOPHYSICAL CORPORATION , a Delaware corporation (the “
Guarantor ”), with its principal office located at
2105 CityWest Blvd., Suite 400, Houston, Texas 77042, and
ICON ION, LLC , (the “ Lender ”) with its
principal office located at 100 Fifth Avenue, 4
th Floor, New York, New York 10011.
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A.
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Lender has agreed with Borrower
that, at Borrower’s request, Lender shall make the Loan
available to Borrower on the terms and subject to the conditions
set forth in this Agreement.
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B.
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Borrower and Lender desire that this
Agreement serve as a master agreement that sets forth the terms and
conditions governing the Loan that Lender may make to
Borrower.
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NOW,
THEREFORE , in
consideration of the representations, warranties and covenants set
forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
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1.1
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Defined Terms
. As used in this
Agreement, the following terms shall have the following meanings
(such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
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“Affiliate”
means, with respect to a
specified Person, another Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or
is under common control with the Person specified. “
Control ” means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise, and the terms
“ controlling ” and “ controlled
” have corresponding meanings.
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“Agreement”
means this Master Loan
and Security Agreement and all Schedules and Exhibits annexed
hereto and made a part hereof, as the same may be amended,
restated, supplemented, modified, renewed or replaced from time to
time.
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1
“Applicable Law”
means, at any time, with respect to
any Person, property, transaction or event, all applicable laws,
statutes, regulations, treaties, judgments and decrees and all
applicable official directives, rules, consents, approvals,
by-laws, permits, authorizations, guidelines, orders and policies
of any governmental or regulatory body or Persons having authority
over such Person, property, transaction or event.
“ARAM” means ARAM Systems Corporation, a Nova Scotia
unlimited company, and wholly-owned subsidiary of Guarantor; and
its successors and permitted assigns.
“Assignment”
means a collateral assignment in the
form of Exhibit B attached hereto pledging to Lender as
security for the Loan Borrower’s right, title and interest
in, but not the obligations of Borrower under, the Contracts
described in Schedule 1 thereto.
“BIA” means the Bankruptcy and Insolvency Act
(Canada) and the regulations thereunder as amended and in effect
from time to time, and any successor statutes.
“Blocked Account”
means each deposit account
established at the Blocked Account Bank into which all Contract
Receivables due under any Contract are to be deposited by the
applicable Obligor, Borrower or Guarantor for the benefit of Lender
over which Lender has a perfected security interest by way of a
Blocked Account Agreement with a Blocked Account Bank.
“Blocked Account
Agreement” means a blocked account control agreement
entered into by Borrower, Lender and a Blocked Account Bank in
respect of the Blocked Account in form and substance satisfactory
to Lender.
“Blocked Account
Bank” means one
or more commercial banks acceptable to Lender.
“Business Day”
means any day, other than a
Saturday, Sunday or Canadian holiday, on which Canadian chartered
banks are open for business in Calgary, Alberta, Canada.
“Canadian Insolvency
Proceeding” means, with respect to any Person, any voluntary
or involuntary insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution, reorganization, assignment for the
benefit of creditors, appointment of a custodian, receiver, trustee
or other officer with similar powers, or any other proceeding for
the liquidation, dissolution or other winding up of such Person,
whether under the BIA, the CCAA or the Winding-Up and
Restructuring Act (Canada), or any other bankruptcy or
insolvency laws, or any laws relating to relief of debtors,
readjustment of indebtedness or reorganization, composition or
extension of indebtedness.
“CCAA” means the Companies’ Creditors
Arrangement Act (Canada) and the regulations thereunder, as
amended and in effect from time to time, and any successor
statutes.
“Closing Date”
means June 29, 2009 or such
other date as Lender and Borrower may mutually agree
upon.
“Collateral”
has the meaning provided in
Section 3.1.
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“Consumer Goods”
has the meaning given to such term
in the PPSA.
“Contract”
means a written lease, installment
sale contract or other agreement evidencing payment obligations
relating to the leasing or financing of Equipment, in each case,
together with all schedules, riders, addenda or supplements
thereto, provided that each such Contract is consistent with
ARAM’s past practices.
“Contract
Receivables” means, with respect to a Contract, all amounts
due and payable or to become due and payable under such Contract,
together with all rights to receive such amounts under such
Contract.
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Contribution Agreement ” means the
Section 85 rollover agreement between ARAM, as vendor, and
Borrower, as purchaser, in respect of the transfer of the Equipment
and Contracts in the form attached as Exhibit A.
“
Credit Parties ” means Borrower and Guarantor
and “ Credit Party ” means either of
them.
“Default”
means any of the events described in
Section 7.1 regardless of whether any requirement in
connection with such event for the giving of notice, the lapse of
time, or both, has been satisfied or met.
“Equipment”
means: (i) any seismic
equipment contributed by ARAM to Borrower pursuant to a
Contribution Agreement on or prior to the Closing Date, and
(ii) any additional seismic equipment contributed to Borrower
including any additional seismic equipment that replaces the
seismic equipment identified in subsection (i) in the ordinary
course of the Borrower’s business, in each case, together
with all parts, spare parts, accessories, attachments, upgrades,
improvements, replacements, substitutions, additions, accessions,
alterations and repairs incorporated therein or affixed thereto,
and all proceeds thereof (including insurance proceeds); and
“related Equipment” shall, when used with
reference to any Contract, mean the Equipment subject to that
respective Contract. For greater certainty, any Hewlett Packard
leased equipment shall not be included in the definition of
“Equipment”.
“Event of Default”
means any of the events specified in
Section 7.1, provided that any requirement in connection with
such event for the giving of notice, the lapse of time or both, has
been satisfied or met.
“Fiscal Year”
means the fiscal year of Borrower,
which commences each January 1 and ends each
December 31.
“Foreign Located
Equipment” means all seismic equipment located in Germany
or Egypt, in each case, as listed in Schedule 1 attached
hereto on the Closing Date, that will automatically be included in
the definition of “Equipment” for all purposes of this
Agreement immediately upon its arrival into North
America.
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(i)
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in
respect of Borrower, generally accepted accounting principles as
approved by the Canadian Institute of Chartered Accountants that
are in effect from time to time, applied in a consistent manner
from period to period; and
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(ii)
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in
respect of Guarantor, generally accepted accounting principles that
are in effect in the United States from time to time, applied in a
consistent manner from period to period.
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“Guaranty”
means the guaranty from Guarantor in
favour of Lender in respect of the Indebtedness of Borrower in form
and substance satisfactory to Lender.
“HSBC” means HSBC BANK USA, N.A., in its capacity as
administrative agent under the HSBC Credit Agreement, together with
its successors and assigns.
“HSBC Credit
Agreement” means that certain Amended and Restated Credit
Agreement dated as of July 3, 2008, among Guarantor, as
domestic borrower, ION International S.À R.L., a Luxembourg
private limited company ( société a
responsabilité limitée ), as foreign borrower,
the guarantors from time to time party thereto, HSBC BANK USA,
N.A., as administrative agent, and the other financial institutions
party from time to time thereto, as lenders, as the same may be
amended, restated, supplemented or otherwise modified from time to
time.
“Hypothec”
means a moveable hypothec executed
by Borrower in favour of Lender in form and substance satisfactory
to Lender.
“Indebtedness”
means the aggregate principal amount
of the Loan made by Lender to Borrower hereunder, all accrued but
unpaid interest thereon, and all other amounts that Borrower may
from time to time be obligated to pay to Lender under this
Agreement and the other Loan Documents.
“Initial Draw Amount”
has the meaning set out in
Section 2.3(a).
“Interest Period”
means a period (i) in the case
of the first Interest Period, commencing on the Closing Date of the
initial Loan and ending on and including the first Payment Date and
(ii) for each successive Interest Period, commencing on each
Payment Date and ending on, and including, the next Payment Date,
provided if a Payment Date is not a Business Day, then the Interest
Period shall end on the first Business Day thereafter, provided in
no event will interest be charged twice for the same
day.
“Interest Rate”
means, with respect to the Loan, a
rate per annum equal to the following: (a) provided that no
Event of Default has occurred and is continuing, the interest rate
of fifteen percent (15%) per annum calculated monthly (the “
Fixed Interest Rate” ); and (b) upon the
occurrence and during the continuation of an Event of Default and
subject to Applicable Law, the sum of, with respect to the Loan,
(i) applicable Fixed Interest Rate plus (ii) an
additional 2.00% per annum.
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“Liabilities”
of any Person shall at any time mean
all items that, in accordance with GAAP, would be included on the
liability side of a balance sheet of that Person as of the date in
question and shall include the following items whether or not so
included in accordance with GAAP: (a) duties and obligations
(excluding unaccrued finance charges) of that Person, as obligor,
under leases, whether or not capitalized; (b) indebtedness
(including, without limitation, indebtedness arising under
conditional sale or other title retention agreements, but
excluding, however, prepaid interest thereon) secured by a Lien in
property owned or being purchased by that Person, whether or not
such indebtedness shall have been assumed by that Person; and
(c) all contingent obligations of that Person.
“Lien” means any lien, encumbrance or security interest
of any kind whatsoever, whether arising under a Security Instrument
or as a matter of law, judicial process or otherwise.
“Loan” means the loan that Lender makes to Borrower
under Article 2 of this Agreement.
“Loan Documents”
has the meaning set out in
Section 4.1(d) and shall also automatically include, without
limitation, the Blocked Account Agreement immediately upon being
executed and delivered by Borrower, Lender and the Blocked Account
Bank.
“Loan Limit”
means US$20,000,000; a portion of
which shall be available to Borrower under this Agreement and the
remaining amount (if any) shall be made available to US Borrower
under the US 2009 Loan Agreement.
“Material Adverse
Change” means
any change, event, violation, circumstance or effect that, when
considered individually or when aggregated with other changes,
events, violations, circumstances or effects, is or would
reasonably be expected to have a Material Adverse
Effect.
“Material Adverse
Effect” means a
material adverse effect on: (i) the business, property,
assets, liabilities, operations, condition (financial or otherwise)
or affairs of Borrower or Guarantor, taken as a whole;
(ii) the ability of Borrower or Guarantor to perform its
obligations under any of the Loan Documents; or (iii) the
ability of Lender to enforce its rights and remedies under any of
the Loan Documents.
“Maturity Date”
means July 31, 2014.
“Memorandum”
means the Memorandum of Association
and the Articles of Association of Borrower.
“Note(s)”
means the promissory note or notes
issued by Borrower in connection with each borrowing under the
Loan, in form and substance as set out in Exhibit D attached
hereto.
“Obligations”
means the Indebtedness, together
with any and all other duties, obligations, undertakings and
amounts required to be paid or performed by Borrower
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and/or
Guarantor under this Agreement and each Loan Document executed
pursuant hereto.
“Obligor”
means, with respect to a Contract,
each Person having a payment obligation under or with respect to
such Contract.
“Payment Date”
means the first (1
st ) day of each calendar month, or if such day is
not a Business Day, the next Business Day.
“Permitted
Jurisdictions” means, collectively, the United States and
Canada and each other jurisdiction to which the Lender has
consented in writing, such consent not to be unreasonably withheld,
delayed or conditioned; provided that Lender has taken those
steps reasonably required to obtain a valid, enforceable and
perfected first lien, charge and security interest in the Equipment
in each such jurisdiction.
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(i)
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inchoate liens for taxes,
assessments or other governmental charges or levies not at the time
delinquent or being contested in good faith by appropriate
proceedings;
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(ii)
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non-consensual statutory Liens
arising in the ordinary course of Borrower’s business to the
extent such Liens secure indebtedness that is not overdue;
and
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(iii)
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rights of Obligors under Contracts
in the related Equipment.
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“Person” means any natural person, corporation, limited
liability company, trust, joint venture, company, partnership,
firm, association, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other
capacity.
“Pledge Agreement”
means the non recourse securities
pledge agreement from ARAM in favour of Lender in respect of all
the outstanding equity securities of Borrower owned by ARAM in form
and substance satisfactory to Lender.
“PPSA” means the Personal Property Security Act
(Alberta) and all regulations and ministerial orders thereunder, as
from time to time in effect in the Province of Alberta; provided,
however, that if by reason of mandatory provisions of law, any and
all of the attachment, perfection or priority of the security
interest of Lender in and to the Collateral is governed by the
personal property security legislation as in effect in a
jurisdiction other than the Province of Alberta, the term
“PPSA” shall mean the personal property security
legislation as in effect in such other jurisdiction for purposes of
the provisions relating to such attachment, perfection or priority
and for purposes of definitions related to such
provisions.
“Proceeds”
has the meaning given to such term
in the PPSA.
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“Quarterly
Report” means a completed report
substantially in the form of Exhibit C hereto signed and
delivered by a senior officer of Borrower.
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“Residual
Proceeds” means, as to a Contract, all
Contract Receivables and monetary value received by Borrower, net
of any out of pocket costs incurred in connection with obtaining
such Contract Receivables and monetary value, after all of the
obligations of the Obligor during the originally scheduled term of
the Contract (including the payment of all taxes and charges
relating to the Equipment) have been paid in full, including net
proceeds realized from the sale, re-lease or rental of the
Equipment or the renewal or extension of the Contract.
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“Scheduled
Repayment” has the meaning provided in
Section 2.8.
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“Second Draw
Amount” has the meaning provided in
Section 2.3(b).
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“Security
Deposits” means monies held by Borrower on
behalf of Obligors as collateral for obligations of such Obligors
under the Contracts.
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“Security
Instrument” means any security agreement, pledge
agreement, lease intended as security, conditional sale contract,
chattel mortgage, assignment, control agreement or other agreement,
or any amendment, restatement, supplement, renewal or replacement
thereof or thereto, or any financing statement or financing change
statement, in each case granting, evidencing or perfecting any
security interest in personal property.
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“Taxes”
shall have the meaning
provided in Section 6.1(f).
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“US 2009 Loan
Agreement” shall mean the Master Loan and
Security Agreement, dated June 30, 2009, as amended, among
ICON ION, LLC, as lender, US Borrower, as borrower, and ION
Geophysical Corporation, as guarantor and all Loan Documents (as
defined therein) pursuant thereto.
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“US
Borrower” means ARAM Seismic Rentals, Inc., a
corporation formed under the laws of the State of Texas; and its
successors and permitted assigns.
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“ US Borrower
Hypothec ” means a moveable hypothec executed by US
Borrower in favour of Lender substantially in the form of the
Hypothec.
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“US
Dollars” , “USD”
and “US$” means lawful money of the
United States of America.
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1.2
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Other Terms
. All accounting terms
not specifically defined herein shall be construed in accordance
with GAAP. All terms used in the PPSA, and not specifically defined
herein, are used herein as defined therein.
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1.3
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Interpretation
. As used in this
Agreement, the words “include”, “includes”
and “including” shall be deemed to be followed by the
phrase “without limitation,” the word “or”
is not exclusive, and the word “will” shall be
construed to have the same meaning and effect as the word
“shall”. Unless the context requires otherwise
(a) any definition of or reference to any agreement,
instrument or other document herein shall be construed
as
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referring to such agreement,
instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, restatements, supplements or
modifications set forth herein), (b) any reference herein to
any Person shall be construed to include such Person’s
successors and assigns (subject to any restrictions on assignments
set forth herein), (c) the words “herein”,
“hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, and
(d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless another
document is specifically referenced.
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1.4
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U.S. Currency
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Unless otherwise
specified herein, all amounts and values referred to in this
Agreement shall refer to lawful money of the United States.
Notwithstanding the foregoing, all payments made hereunder shall be
made in the currency in respect of which the obligation requiring
such payment arose.
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1.5
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Determination of Rates and Basis of
Calculation of Interest.
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(a)
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The
rates of interest and fees shall be determined by Lender whenever
such determination is required for any purpose of this Agreement in
accordance with the terms and conditions provided herein, and such
determination shall be prima facie evidence of such rate
absent manifest error.
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(b)
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All
interest payments to be made under this Agreement shall be paid
without allowance or deduction for deemed re-investment or
otherwise, both before and after maturity and before and after
default and/or judgment, if any, until payment of the amount on
which such interest is accruing, and interest will accrue on
overdue interest, if any.
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(c)
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In
calculating interest or fees payable under this Agreement for any
period, unless otherwise specifically stated, the first day of such
period shall be included and the last day of such period shall be
excluded.
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(d)
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Unless otherwise stated, wherever in
this Agreement reference is made to a rate of interest “per
annum” or a similar expression is used, such interest will be
calculated on the basis of a calendar year of 365 days or
366 days, as the case may be, and using the nominal rate
method of calculation, and will not be calculated using the
effective rate method of calculation or on any other basis that
gives effect to the principle of deemed re-investment of
interest.
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(e)
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For
the purposes of the Interest Act (Canada) and disclosure
under such act, whenever interest to be paid under this Agreement
is to be calculated on the basis of a year of 365 or 366 days
or any other period of time that is less than a calendar year, the
yearly rate of interest to which the rate determined pursuant to
such calculation is equivalent is the rate so determined multiplied
by the actual number of days in the calendar year in which the same
is to be ascertained and divided by 365 or 366 or such other period
of time, as the case may be.
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(f)
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If
the payment of interest at the rate provided for in Subsection
(b) of the definition of “Interest Rate” is not
enforceable by reason of the Interest Act (Canada), then
payment of interest after an Event of Default on principal and
interest amounts shall be at the same rate of interest applicable
thereto prior to the occurrence of the Event of Default.
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(a)
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In
the event that any provision of this Agreement would oblige
Borrower to make any payment of interest or any other payment that
is construed by a court of competent jurisdiction to be interest in
an amount or calculated at a rate that would be prohibited by law
or would result in a receipt by Lender of interest at a criminal
rate (as such terms are construed under the Criminal Code
(Canada)), then notwithstanding such provision, such amount or rate
shall be deemed to have been adjusted nunc pro tunc to the
maximum amount or rate of interest, as the case may be, as would
not be so prohibited by law or so result in a receipt by the Lender
of interest at a criminal rate, such adjustment to be effected, to
the extent necessary, as follows:
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(i)
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firstly, by reducing the amount or
rate of interest otherwise required to be paid under Article 2
of this Agreement; and
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(ii)
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thereafter, by reducing any fees,
commissions, premiums and other amounts that would constitute
interest for the purposes of Section 347 of the Criminal
Code (Canada).
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(b)
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If,
notwithstanding the provisions of this Section 1.6 and after
giving effect to all adjustments contemplated thereby, the Lender
shall have received an amount in excess of the maximum permitted by
the Criminal Code (Canada), then such excess shall be
applied by the Lender to the reduction of the principal balance of
the Loan outstanding and not to the payment of interest or if such
excessive interest exceeds such principal balance, such excess
shall be refunded to Borrower.
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(c)
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Any
amount or rate of interest referred to in this Section 1.6
shall be determined in accordance with generally accepted actuarial
practices and principles at an effective annual rate of interest
over the term of this Agreement on the assumption that any charges,
fees or expenses that fall within the meaning of
“interest” (as defined in the Criminal Code
(Canada)) shall, if they relate to a specific period of time, be
prorated over that period of time and otherwise be prorated over
the terms of this Agreement and, in the event of dispute, a
certificate of a Fellow of the Canadian Institute of Actuaries
appointed by the Lender shall be conclusive for the purposes of
such determination.
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2.1
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The Loan . On the terms and subject to the
conditions set forth in this Agreement, Lender establishes and
agrees to make available to Borrower a committed non-revolving term
loan facility at the applicable Interest Rate.
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2.2
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Loan Limit
. The maximum
outstanding borrowings under the Loan shall not at any time exceed
the Loan Limit.
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2.3
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Advances; Non Revolving Feature of
Loan .
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(a)
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On
the Closing Date, Borrower may only draw under this Agreement by
way of a single borrowing in a maximum amount of
(i) US$12,500,000 less (ii) any borrowings made by
U.S. Borrower under the US 2009 Loan Agreement (the “
Initial Draw Amount ”).
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(b)
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On
July 17, 2009, Borrower may make a second and final draw under
this Agreement in a maximum amount of US$7,500,000 (the
“Second Draw Amount” ).
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(c)
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On
July 17, 2009, any undrawn commitment of Lender under this
Agreement shall be automatically cancelled. No amounts repaid or
prepaid by Borrower under this Agreement may be
reborrowed.
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2.4
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Purpose of Loan
. Borrower may use the
proceeds of the Loan for general corporate purposes, working
capital or to repay Liabilities.
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2.5
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Restrictions on
Borrowing . Borrower shall not request a
borrowing under the Loan if a Default or Event of Default exists at
such time or if the result thereof would create or cause a Default
or Event of Default.
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2.6
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Evidence of
Indebtedness . Lender shall maintain accounts and
records evidencing the Obligations of Borrower to Lender under this
Agreement. Lender’s accounts and records shall constitute
prima facie evidence of the Indebtedness of Borrower to
Lender under this Agreement in the absence of manifest
error.
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2.7
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Procedure of Requesting the
Loan .
Borrower hereby requests the Initial Draw Amount on the Closing
Date. In respect of the Second Draw Amount, Borrower shall execute
and deliver to Lender on or before July 17, 2009 the written
request in the form attached hereto as Exhibit F which shall
be irrevocable and binding on Borrower. Borrower shall indemnify
Lender against any loss or expense incurred by Lender as a result
of any failure by it to fulfill on or before the date specified for
such borrowing the applicable conditions set forth in
Sections 4.1 and 4.2, including, without limitation, any loss
or expense incurred by reason of the liquidation or re-employment
of deposits or other funds acquired by Lender to fund any loan to
be made by Lender as part of such borrowing if such loan, as a
result of such failure, is not made on such date.
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2.8
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Scheduled Repayments
. Subject to the terms
of this Agreement, Borrower shall permanently repay the principal
amount of all borrowings outstanding under the Loan in the
following amounts and on the following dates (each a “
Scheduled Repayment ”):
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(a)
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for
the period from the Closing Date to and including June 30,
2009, Borrower shall make a payment of interest only on
July 1, 2009 based on the applicable Interest Rate and the
Initial Draw Amount;
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(b)
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for
the period from the July 1, 2009 to and including
July 31, 2009, Borrower shall make a payment of interest only
on August 1, 2009 based on the applicable Interest Rate and
the Initial Draw Amount;
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(c)
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for
the period from July 17, 2009 to and including July 31,
2009, Borrower shall make a payment of interest only on
August 1, 2009 based on the applicable Interest Rate and the
Second Draw Amount;
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(d)
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sixty (60) equal monthly
installments, payable monthly in arrears on the Payment Date, each
monthly installment in the amount as set out in the amortization
schedule annexed to each Note, with the first monthly payment due
on September 1, 2009; and
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(e)
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all
remaining outstanding principal of the Loan together with all
accrued interest, fees and other amounts then unpaid by Borrower
with respect to the Loan, on the Maturity Date.
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(a)
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Borrower may not voluntarily prepay
all or any outstanding borrowings under the Loan during the period
from the Closing Date until and including July 31,
2012.
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(b)
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During the period commencing
August 1, 2012 until and including January 31, 2014,
Borrower may make a prepayment of the outstanding principal balance
of the Loan plus all accrued and unpaid interest through such date
plus all fees that are then owing and due provided that:
(i) Borrower pays to Lender a prepayment fee equal to the
amount of 3% of the outstanding principal balance of the Loan at
such time, and (ii) Borrower provides thirty (30) days
prior written notice to Lender.
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(c)
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From and after February 1,
2014, Borrower may at any time, without payment of any penalty or
fee, upon thirty (30) days prior written notice to Lender,
make a prepayment of the outstanding principal balance of the Loan
plus all accrued and unpaid interest through such date plus all
fees that are then owing and due.
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(d)
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Borrower may make a prepayment
against the outstanding principal balance of the Loan as
contemplated and permitted by Section 6.2(g)(ii)(B)
provided that all terms and conditions of
Section 6.2(g) are complied with by Borrower and
Guarantor.
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11
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Upon indefeasible payment in full of
all amounts owing under or in connection with the Loan, and upon
Borrower’s written request, Lender shall release its security
interest in the Collateral securing the Loan.
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2.10
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Payments Generally
. Each payment under
this Agreement shall be made for value at or before 1:00 p.m. (New
York time) on the day such payment is due, provided that, if any
such day is not a Business Day, such payment shall be deemed for
all purposes of this Agreement to be due on the Business Day next
following such day (and any such extension shall be taken into
account for purposes of the computation of interest and fees
payable under this Agreement). All payments shall be made by
Borrower to Lender by way of wire to the following
account:
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Account Name:
ICON Leasing Fund Twelve, LLC
Account Number: 590411942
Bank Name: JP Morgan Chase
Bank Address: New York, NY
ABA: 021000021
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2.11
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Fees. The Borrower shall pay Lender a fee
of 0.50% of the sum of the Initial Draw Amount and the Second Draw
Amount on each of the 12 th , 24 th , 36 th and 48 th Payment Dates. Lender acknowledges
receipt from Borrower of an irrevocable and fully earned commitment
fee of $300,000.
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2.12
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Illegality
. If the introduction of
or any change in any Applicable Law or in the interpretation or
application thereof by any court or by any governmental authority
charged with the administration thereof, makes it unlawful or
prohibited for Lender to make, to fund or to maintain its
commitment or any portion thereof or to perform any of its
obligations under this Agreement, Lender may, by 30 days
written notice to Borrower (unless the provision of the Applicable
Law requires earlier prepayment in which case the notice period
shall be such shorter period as required to comply with the
Applicable Law), terminate its obligations under this Agreement (or
those that are unlawful or prohibited as the case may be) and in
such event, the Borrower shall (to the extent required) prepay such
borrowings under the Loan forthwith (or at the end of such period
as Lender in its discretion agrees), without notice or penalty
(other than breakage costs), together with all accrued but unpaid
interest and fees as may be applicable to the date of
payment.
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3.1
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Grant of Security
. As general and
continuing collateral security for the due payment and performance
of the Obligations, Borrower charges, pledges and assigns to
Lender, and grants to Lender a lien and security interest in, all
present and after acquired personal property and undertaking of
Borrower including, without limitation, the following:
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12
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(b)
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all
Contracts and Contract Receivables;
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(c)
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all
cheques, money orders, wire transfers, notes, drafts and other
orders for payment of money or other remittances payable to
Borrower and the depository accounts in the name of Borrower,
including all Blocked Accounts, and including all sums now or
hereafter on deposit in or payable to and any interest accrued or
payable on the credit balances therein;
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(d)
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any
guarantees, supporting obligations or other collateral securing
payment of the Contracts; and
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(e)
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all
Proceeds of any of the foregoing;
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but
specifically excludes Consumer Goods (collectively, the “
Collateral ”).
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3.2
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Limitations on Grant of
Security . If the grant of any security
interest in any Contract under Section 3.1 would result in the
termination or breach of the governing agreement relating to such
Contract, then the applicable Contract will not be subject to any
security interest under Section 3.1 but will be held in trust
by Borrower for the benefit of Lender. In addition, the security
interests created by this Agreement do not extend to the last day
of the term of any lease, rental contract or other agreement now
held or hereafter acquired by Borrower. Such last day will be held
by Borrower in trust for Lender and, on the exercise by Lender of
any of its rights under this Agreement following an Event of
Default, will be assigned by Borrower as directed by
Lender.
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3.3
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Attachment
. Borrower confirms that
value has been given by Lender to Borrower, that Borrower has
rights in the Collateral (other than after-acquired property) and
that Borrower and Lender have not agreed to postpone the time for
attachment of the security interests created by this Agreement to
any of the Collateral. The security interests created by this
Agreement are intended to attach: (i) to existing Collateral
when Borrower signs this Agreement; and (ii) to Collateral
subsequently acquired by Borrower immediately upon Borrower
acquiring any rights in such Collateral. The security interests
created by this Agreement will have effect and be deemed to be
effective whether or not the Obligations or any part thereof are
owing or in existence before or after or upon the date of this
Agreement.
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3.4
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Additional Security
. The security interests
created by this Agreement are in addition and without prejudice to
any other security interests now or later held by Lender. No
security interests held by Lender will be exclusive of or dependent
upon or merge in any other security interests, and Lender may
exercise its rights under such security interests separately or in
combination.
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3.5
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Cooperation of Lender While in
Possession of Collateral . To the extent Lender has perfected
its security interest in Collateral by possession of such
Collateral, Lender agrees to permit Borrower reasonable access to
such Collateral (including making or allowing the Borrower to make
copies of any Contracts that are in the possession of the
Lender).
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13
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4.1
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Conditions Precedent to the Loan
— Initial Borrowing . The obligation of Lender to make
available the initial borrowing under this Agreement is subject to
the terms and conditions of this Agreement and is conditional upon
satisfactory evidence being given to Lender and its counsel as to
compliance with the following conditions:
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(a)
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Representations and
Warranties. Each of the representations and
warranties contained in this Agreement shall be true and correct as
if made by the Borrower and the Guarantor contemporaneously with
the initial borrowings under the Loan.
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(b)
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Resolutions and
Certificates . Lender shall have received, duly
executed and in form and substance satisfactory to it:
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(i)
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a
copy of the constating documents and by-laws of each Credit Party
and ARAM and a copy of the resolutions of the board of directors of
each Credit Party and ARAM authorizing the execution, delivery and
performance of the Loan Documents, certified in each case by a
senior officer of the applicable Credit Party and ARAM;
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(ii)
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a
certificate of incumbency for each Credit Party and ARAM showing
the names, offices and specimen signatures of the officers who will
execute the Loan Documents; and
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(iii)
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a
certificate of status for each Credit Party and ARAM or its
equivalent from its jurisdiction of organization.
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(c)
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Legal Opinions
. Lender shall have
received a favourable legal opinion from counsel to each Credit
Party and ARAM in connection with the due authorization, execution,
delivery and enforceability of the Loan Documents and related
matters, which opinions shall be satisfactory to Lender and its
counsel, acting reasonably.
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(d)
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Delivery of Agreements
. The Credit Parties
shall have executed and unconditionally delivered, or caused to be
executed and delivered, the following documents to Lender
(collectively, the “ Loan Documents
”):
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(i)
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this Agreement;
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(ii)
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the
Assignment;
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(iii)
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the
Hypothec;
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(iv)
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the
Pledge Agreement together with (a) original share certificates
evidencing the equity securities owned by ARAM in the Borrower, and
(b) duly executed share transfer power in respect thereof
undated in blank;
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(v)
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the
Guaranty;
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(vi)
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the
Note in connection with the Initial Draw Amount; and
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(vii)
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an
assignment of insurance executed by Borrower (but not the
applicable insurer(s)) in favour of Lender (it being acknowledged
by Lender that Borrower shall undertake to use its best efforts to
obtain an acknowledgement from each applicable insurer within a
reasonable period of time following the Closing Date, but that
failure of Borrower to delivery any such acknowledgement shall not
constitute an Event of Default under this Agreement).
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(e)
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No Default or Event of
Default . No
Default or Event of Default has occurred and is continuing under
this Agreement or any other Loan Document.
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(f)
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Registration . Satisfactory evidence that Lender
has a valid and perfected first priority (subject to Permitted
Liens) security interest in the Collateral in all jurisdictions
deemed necessary or advisable by the Lender and its
counsel.
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(g)
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Insurance . Lender shall have received a
satisfactory certificate of insurance issued by Borrower’s
insurance broker (the insurance policies issued by a reputable
underwriter satisfactory to Lender) in respect of all policies
maintained by the Borrower naming Lender as a first loss payee and
additional insured.
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(h)
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Lender Fees . All fees and expenses payable
pursuant to the terms and conditions of the letter dated
May 21 from the Lenders to the Borrower otherwise due and
payable by the Borrower to the Lender shall have been paid or shall
contemporaneously be paid to the Lender including, but not limited
to, the Commitment Fee.
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(i)
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Legal Fees . The legal fees and disbursements
of Lender’s counsel that have been invoiced at least two
Business Days prior to the Closing Date shall have been
paid.
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(j)
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HSBC Release . A satisfactory release from HSBC
in respect of any security interest, lien, claim or encumbrance in
respect of the Collateral.
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(k)
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Liens against Equipment
. There shall be no
liens, encumbrances or other security interests charging any of the
Equipment, other than security interests in favour of Lender or
other Liens not otherwise prohibited under
Section 6.2(b).
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(l)
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Material Adverse Change
. A Material Adverse
Change shall not have occurred.
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(m)
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Contribution Agreement
. Lender has received a
copy of the executed Contribution Agreements and Lender is
satisfied with terms and conditions of transfer of the Equipment
and contracts to Borrower pursuant to such Contribution
Agreements.
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15
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(n)
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Financing Statements
. Lender shall have
received PPSA verification statements satisfactory to Lender and
its legal counsel evidencing the registration of financing
statements against each Obligor, as debtor, in favour of Borrower,
as secured party, in all jurisdictions required by Lender and it
legal counsel.
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4.2
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Conditions Precedent to the Loan
— Subsequent Borrowings . The obligation of Lender to make
available the additional drawing contemplated in
Section 2.3(b) of this Agreement after the initial drawing and
Closing Date is conditional upon satisfactory evidence being given
to Lender as to compliance with the following
conditions:
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(a)
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Representations and
Warranties. Each of the representations and
warranties contained in this Agreement shall be true and correct as
if made by Borrower and Guarantor contemporaneously with any
subsequent borrowing under the Loan.
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(b)
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No Default or Event of
Default . No
Default or Event of Default has occurred and is continuing under
this Agreement or any other Loan Document.
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(c)
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Notice of Borrowing
. Lender shall have
received a notice of borrowing as contemplated in Section 2.7
of this Agreement.
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(d)
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Liens against Equipment
. There shall be no
liens, encumbrances or other security interests charging any of the
Equipment, other than security interests in favour of
Lender.
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(e)
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Notice of Liens.
Lender shall not have
received written notice of any lien, trust, charge, encumbrance or
other security interest affecting the Equipment charged by
Lender’s Loan Documents or an execution.
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(f)
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Material Adverse Change
. A Material Adverse
Change shall not have occurred since the Closing Date.
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(g)
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Bankruptcy Remoteness
. Borrower shall be a
“special purpose bankruptcy remote” entity as such term
is generally recognized to mean in the United States that is
satisfactory to Lender and its legal counsel. The Memorandum shall
have been amended such that Borrower is a “special purpose
bankruptcy remote” entity to the satisfaction of Lender and
its legal counsel. A certified copy of each Special Resolution
passed amending the Memorandum as provided herein shall have been
filed at the Nova Scotia Registry of Joint Stock Companies and a
Registry certified copy of each such Special Resolution shall have
been delivered to Lender. All “special purpose bankruptcy
remote” provisions of the Certificate of Formation of US
Borrower, a corporation formed or to be formed under the Texas
Business Organizations Code, shall be contained in the Memorandum
unless Lender waives any such requirement or any such provision is
contrary to the laws of the Province of Nova or the laws of Canada
applicable therein.
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