Exhibit 10.10
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LOAN AND SECURITY AGREEMENT
TKO FINANCE CORPORATION, an Illinois corporation
LOAN TO
ICON HOLDINGS CORP.
JUNE 20, 1997
TABLE OF CONTENTS
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DEFINITIONS AND TERMS...............................................................1
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LOAN - GENERAL TERMS................................................................8
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The Loan.........................................................................8
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Payment Terms....................................................................8
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Payment on Maturity..............................................................9
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Prepayment.......................................................................9
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Usury...........................................................................10
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COLLATERAL- GENERAL TERMS..........................................................10
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Grant of Security Interest......................................................10
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Disclosure of Security Interest.................................................12
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Inspection of Collateral; Audit of Records......................................12
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Maintain Perfection; Supplemental Documentation.................................13
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Perfected Security Interest; Location of Collateral.............................13
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Collateral in Lender's Control..................................................13
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Payment of Claims...............................................................14
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Special Collateral..............................................................14
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Sale of Collateral by Lender....................................................14
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COLLATERAL - ACCOUNTS..............................................................14
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Representations and Warranties Specifically Relating to Accounts................14
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Verification of Accounts........................................................15
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Notices to Account Debtors......................................................15
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Appointment of Lender As Attorney-In-Fact After Default.........................15
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TABLE OF CONTENTS
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(continued)
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OTHER COLLATERAL..............................................................................16
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Guaranties.................................................................................16
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Pledge of Stock............................................................................16
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Landlord's Waiver................................................Error! Bookmark not defined.
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Life Insurance.............................................................................16
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Security Agreements........................................................................17
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Notice of Other Collateral.................................................................17
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GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS.............................................17
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General Representations and Warranties.....................................................17
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Business Purpose; Margin Stock; Securities.................................................20
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Survival of Warranties and Representations.................................................21
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COVENANTS AND CONTINUING AGREEMENTS...........................................................21
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Financial Covenants........................................................................21
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Affirmative Covenants......................................................................21
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Negative Covenants.........................................................................25
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DEFAULT.......................................................................................27
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Events of Default..........................................................................27
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Remedies Cumulative........................................................................29
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Acceleration...............................................................................29
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Remedies...................................................................................30
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Assemble Collateral........................................................................30
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Injunctive Relief..........................................................................30
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Notice of Sale.............................................................................30
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ii
TABLE OF CONTENTS
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(continued)
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Postponement of Sale.....................................................31
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Waiver of Bond...........................................................31
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Consent Does Not Create Custom...........................................31
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Revenue Fund.............................................................31
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CONDITIONS PRECEDENT TO DISBURSEMENT........................................32
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Checklist Items..........................................................32
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Necessary Actions........................................................32
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Conditions Precedent.....................................................32
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GENERAL.....................................................................32
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Compliance with ERISA....................................................32
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Costs....................................................................38
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Modification.............................................................38
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Strict Compliance........................................................38
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Severability.............................................................39
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Successors and Assigns...................................................39
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Loan Agreement Controls..................................................39
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Termination..............................................................39
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Liability Prior to Termination...........................................39
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Waiver of Notice.........................................................40
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Indemnification..........................................................40
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Acceptance by Lender.....................................................40
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Release of Claims........................................................40
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Prior Agreements.........................................................40
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iii
TABLE OF CONTENTS
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(continued)
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Knowledge................................................................41
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Notice...................................................................41
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Section Titles, etc......................................................42
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Waiver by Borrower.......................................................42
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Governing Law............................................................42
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Appointment for Service of Process.......................................43
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Representation by Counsel................................................43
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Plural, Singular.........................................................43
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Waiver of Trial by Jury..................................................43
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iv
Schedule of Exhibits
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Exhibit "A" Wire Transfer Instructions
Exhibit "B" Make Whole Amount Calculation
Exhibit "C" Location of Collateral
Exhibit "D" Fictitious Names
Exhibit "E" Indebtedness
Exhibit "F" Schedule of Affiliates
Exhibit "G" Initial Collateral Report
Exhibit "H" ERISA Matters
Exhibit "I" Lessees
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated for
reference purposes only as of June 20, 1997 by and between TKO Finance
Corporation, an Illinois corporation ("Lender"), with its principal place of
business at ▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ICON
Holdings Corp., a Delaware corporation ("Borrower"), with its principal place of
business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
RECITALS:
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A. Borrower has requested that Lender make financial accommodations to
Borrower in the form of a term loan in the amount of $3,000,000.
B. Lender has agreed to provide such financial accommodations provided
that Borrower pledge to Lender all of its assets, including, but not limited to
shares in certain subsidiaries.
C. Lender and Borrower deem it to be in their best interest to set
forth their mutual covenants and agreements herein.
NOW THEREFORE, in consideration of any loan, advance, extension of credit
and/or other financial accommodation at any time made by Lender to or for the
benefit of Borrower, and of the promises set forth herein, the parties hereto
agree as follows:
1. DEFINITIONS AND TERMS
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1.1 Definitions. The following words, terms and/or phrases shall have the
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meanings set forth thereafter and such meanings shall be applicable to the
singular and plural form thereof, giving effect to the numerical difference.
(a) "Account Debtor": any Person who is and/or may become obligated to
Borrower under or on account of Accounts.
(b) "Accounts": the definition ascribed to this term in Section 3.1.
(c) "Affiliate": any Person (i) in which Borrower, one or more equity
interest holders owning five percent (5%) or more of the total equity interest
of Borrower, any Subsidiary, and/or any Parent, individually, jointly and/or
severally, now or at any time or times hereafter, has or have an equity or other
ownership interest equal to or in excess of five percent (5%) of the total
equity of or other ownership interest in such Person; and/or (ii) which directly
or indirectly through one or more intermediaries controls or is controlled
by, or is under common control with Borrower; provided that, Affiliate shall not
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include: (y) any partnership of which Borrower or any Subsidiary is a general
partner or, (z) ICON Receivables 1997-A L.L.C. For purposes of this definition,
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of Stock, by contract or otherwise.
(d) "Agreement": this Loan and Security Agreement, together with all
amendments, modifications, extensions, supplements and restatements hereto or
hereof.
(e) "and/or": one or the other or both, or any one or more or all, of the
things or Persons in connection with which the conjunction is used.
(f) "Assets": any and all real, personal and intangible property of
Borrower, including, without limitation Accounts, chattel paper, contract
rights, letters of credit, instruments and documents, Equipment, General
Intangibles, Inventory, Leases, Options, licenses, and Real Property, whether
now existing or hereafter acquired or arising.
(g) "Borrower": ICON Holdings Corp. and its permitted successors and
assigns.
(h) "Borrower's Liabilities": all obligations and liabilities of Borrower
or any other Loan Party to Lender (including, without limitation, all debts,
claims and indebtedness) whether primary, secondary, direct, contingent, fixed
or otherwise, heretofore, now and/or from time to time hereafter owing, due or
payable, however evidenced, created, incurred, acquired or owing and whether now
contemplated or hereafter arising, whether under this Agreement , any guaranty,
the other Loan Documents, or by oral or written agreement or operation of law or
otherwise. Borrower's Liabilities shall expressly include all obligations and
liabilities of any Guarantor under its respective guaranty or under any security
agreement entered into in favor of Lender.
(i) "Borrower's Obligations": all terms, conditions, warranties,
representations, agreements, undertakings, covenants and provisions (other than
Borrower's Liabilities) to be performed, discharged, kept, observed or complied
with by Borrower to or for the benefit of Lender, whether primary, secondary,
direct, contingent, fixed or otherwise, heretofore, now and/or from time to time
hereafter arising, evidenced, created, incurred, acquired or owing, whether not
contemplated or hereafter arising, whether under this Agreement, the other Loan
Documents, by any oral or written agreement, operation of law or otherwise.
Borrower's Obligations shall expressly include all obligations of any Guarantor
under its respective guaranty or under any security agreement entered into in
favor of Lender.
(j) "Business Day": any day, other than a Saturday, Sunday, a day that is
a legal holiday under the laws of the State of Illinois or any other day on
which lending
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institutions located in Chicago, Illinois are authorized or required by law or
other governmental action to close.
(k) "Charges": all national, federal, state, county, city, municipal
and/or other governmental (or any instrumentality, division, agency, body or
department thereof, including without limitation the Pension Benefit Guaranty
Corporation) taxes, levies, assessments, charges, liens, claims or encumbrances
upon and/or relating to the Collateral, Borrower's Liabilities, Borrower's
Obligations, Borrower's business, Borrower's ownership and/or use of any of its
assets, Borrower's income and/or gross receipts and/or Borrower's ownership
and/or use of any of its material assets.
(l) "Collateral": the definition ascribed to this term in Section 3.1.
(m) "Collateral Report": the definition ascribed to this term in Section
7.2(b)(iii).
(n) "Corporate Guarantors": collectively, ICON Capital Corp., a
Connecticut corporation, ICON Financial Corp., a Delaware corporation, ICON
Funding Corp., a Delaware corporation and ICON Securities Corp., a New York
corporation.
(o) "Costs": any and all costs and expenses (including, without
limitation, the reasonable fees and expenses of any counsel, accountants,
appraisers or other professionals) incurred by Lender at any time, in connection
with: (a) the preparation, negotiation and execution of this Agreement and all
other Loan Documents; (b) the preparation, negotiation and execution of any
amendment or modification of this Agreement or the other Loan Documents; (c) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender, Borrower or any other Person) in any way relating to the Collateral,
this Agreement, the other Loan Documents, the Secured Obligations, Borrower's
affairs or any Guarantor's affairs; (d) any attempt to enforce any rights of
Lender against Borrower or any other Person which may be obligated to Lender by
virtue of this Agreement or the other Loan Documents, including, without
limitation, the Account Debtors; (e) any inspection, verification or audit of
any of the Collateral in accordance with this Agreement; (f) any action to
preserve, protect, collect, sell, liquidate or otherwise dispose of the
Collateral; and (g) performing any of the obligations relating to or payment of
any Secured Obligation hereunder in accordance with the terms hereof.
(p) "Default Rate": interest at the rate of eighteen percent (18%) per
annum.
(q) "Environmental Laws": any Federal, state or local law, rule,
regulation, ordinance, order, code or statute applicable to Borrower, any
Guarantor or their respective property, in each case as amended (whether now
existing or hereafter enacted or promulgated), controlling, governing or
relating to the pollution or contamination of the air, water or land or
concerning hazardous, special or toxic materials, wastes or substances, or any
judicial or administrative interpretation of such laws, rules or regulations,
including, without limitation, the Water Pollution Control Act (33 U.S.C. (S)
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1251 et seq.), Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et
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seq.), Safe Drinking Water Act (42 U.S.C. (S) 3000(f) et seq.), Toxic Substances
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Control Act (15 U.S.C. (S) 2601 et seq.), Clean Air Act (42 U.S.C. (S) 7401 et
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seq.), and Comprehensive Environmental Response, Compensation and Liability Act
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(42 U.S.C. (S) 9601 et seq.).
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(r) "Equipment": the definition ascribed to this term in Section 3.1.
(s) "Equipment Leases": all leases or similar agreements pursuant to which
Borrower leases Equipment.
(t) "Event of Default": the definition ascribed to this term in Section
8.1.
(u) "Fee Agreements": shall mean any partnership agreement, management
agreement, consulting agreement, or other agreements pursuant to which Borrower
is to be paid fees, distributions, allocations, expense reimbursements,
consideration, salary or other compensation in consideration for providing
management, personnel or services, in any form whatsoever, to an Affiliate or to
any other Person. Services to be rendered under Fee Agreements may include, but
not be limited to marketing and leasing and releasing of equipment, monitoring
the use of collateral for financing transactions arranging for necessary
maintenance and repairs of equipment, collecting revenues, paying operating
expenses not paid directly by lessees, determining that equipment is used in
accordance with all operative contractual arrangements and providing clerical
and bookkeeping services.
(v) "Financials": those financial statements of Borrower, heretofore,
concurrently herewith or hereafter delivered by or on behalf of Borrower to
Lender, including but not limited to those financial statements and reports
delivered by Borrower to Lender pursuant to Section 7.2.(b)
(w) "GAAP": generally accepted accounting principles applied in the
preparation of the financial statements of a Person with such changes thereto
as: (i) shall be consistent with the then-effective principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors and
successors and (ii) shall be concurred in by the independent certified public
accountants of recognized standing acceptable to Lender reviewing such financial
statements of Borrower.
(x) "General Intangibles": the definition ascribed to this term in Section
3.1.
(y) "Guarantors": collectively, the Corporate Guarantors and the
Individual Guarantors.
(z) "Icon Subsidiaries": collectively, Corporate Guarantors, MGC/▇▇▇▇▇▇▇
Capital Corp., a Delaware corporation and ICON (UK).
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(aa) "ICON (UK)": ICON Capital (UK) Limited, a corporation organized under
the laws England and Wales.
(bb) "Individual Guarantors": Beaufort ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
(cc) "Indebtedness": with respect to any Person, at a particular time: (i)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise or any commitment by which such
Person assures a creditor against loss; (ii) obligations under leases which
shall have been or should be, in accordance with GAAP, recorded as capital
leases in respect of which obligations such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss; (iii) all obligations
and liabilities with respect to unfunded vested benefits under any "employee
benefit plan" or with respect to withdrawal liabilities incurred under ERISA by
Borrower or any ERISA Affiliate to a "multiemployer plan", as such terms are
defined under the Employee Retirement Income Security Act of 1974; and (iv) any
and all accounts payable, accruals and other items characterized as Indebtedness
in accordance with GAAP.
(dd) "Inventory": the definition ascribed to this term in Section 3.1.
(ee) "Leases": the definition ascribed to this term in Section 3.1.
(ff) "Leaseholds": all estates and interests in land and improvements
created by any Lease.
(gg) "Lender": TKO Finance Corporation and its successors and assigns.
(hh) "Loan": any and all loans, advances, extensions of credit and/or other
financial accommodations of any kind or nature made by Lender at any time to,
for the benefit or at the request of Borrower pursuant to this Agreement and/or
any of the other Loan Documents.
(ii) "Loan Documents": this Agreement and the Other Agreements.
(jj) "Loan Party": Borrower, the ICON Subsidiaries, the Individual
Guarantors, or any one or more of the forgoing.
(kk) "Make Whole Amount": the definition ascribed to this term in Section
2.5.
(ll) "Maturity Date": July 1, 2000 or such earlier date as all Secured
Obligations shall be due and payable by acceleration or otherwise.
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(mm) "Note": that certain Term Note dated even date herewith, made by
Borrower payable to the order of Lender in the original principal amount of
$3,000,000, as said Note may hereinafter be replaced, modified, supplemented,
restated, or amended.
(nn) "Options": the definition ascribed to this term in Section 3.1.
(oo) "Other Agreements": the Note, the Pledge Agreements, together with all
agreements, instruments and documents evidencing or securing the Loan or the
transactions contemplated herein, including, without limitation, bond
agreements, loan agreements, security agreements, guaranties, mortgages, deeds
of trust, notes, applications and agreements for letters of credit, letters of
credit, advances of credit, bank acceptances, pledges, powers of attorney,
consents, assignments, collateral assignments, contracts, notices, leases,
financing statements and all other written matter heretofore, now and/or from
time to time hereafter executed by and/or on behalf of Borrower, any other Loan
Party or any other Person and delivered to Lender, or issued by Lender upon the
application and/or other request of, and on behalf of, Borrower.
(pp) "Parent": any Person, now or at any time or times hereafter, owning or
controlling (alone or with Borrower, any Subsidiary and/or any other Person) at
least a majority of the issued and outstanding Stock or other ownership interest
of Borrower or any Subsidiary (hereinafter defined). For purposes of this
definition, "control" shall have the same meaning ascribed to this term in
Section 1.1(c).
(qq) "Permitted Liens": (i) the liens created in favor of Lender, whether
pursuant to this Agreement, any of the Other Agreements or otherwise; (ii) liens
for Charges which are not yet due and payable or which are expressly permitted
pursuant to the terms hereof, or claims and unfunded liabilities under ERISA not
yet due and payable or which are being contested in good faith; (iii) liens
arising in connection with worker's compensation, unemployment insurance, old
age pensions and social security benefits which are not overdue or are being
contested in good faith by appropriate proceedings diligently pursued, provided
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that in the case of any such contest any proceedings commenced for the
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enforcement of such liens shall have been duly suspended and such provision for
the payment of such liens has been made on the books of Borrower as may be
required by GAAP; (iv) liens incurred in the ordinary course of business to
secure the performance of statutory obligations arising in connection with
progress payments or advance payments due under contracts with the United States
Government or any agency thereof entered into in the ordinary course of
business; and (v) additional liens expressly permitted from time to time in
writing by Lender.
(rr) "Person": any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether
national, federal, state, county, city,
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municipal or otherwise, including without limitation any instrumentality,
division, agency, body or department thereof).
(ss) "Pledge Agreement": those agreements entered into in accordance with
Section 5.2.
(tt) "Put Agreement": that certain Put And Call Agreement dated even date
herewith by and between Lender and Borrower.
(uu) "Real Property": any real property now owned or hereafter acquired by
Borrower, and all portions and parcels thereto, including the land and all
buildings and improvements thereon and all easements appurtenant thereto.
(vv) "Records": the definition ascribed to this term in Section 3.1.
(ww) "Secured Obligations": all Borrower's Liabilities, Borrower's
Obligations and Borrower's liabilities pursuant to the Put Agreement.
(xx) "Securities": shall have the meaning ascribed to that term in the
Securities Act of 1934.
(yy) "Securities Laws": all applicable Federal and state securities laws
and regulations promulgated pursuant thereto.
(zz) "Special Collateral": any Collateral which is evidenced by or consists
of any chattel paper, letters of credit, instrument, certificate or document,
including, without limitation, promissory notes, documents of title, securities
and warehouse receipts.
(aaa) "Stock": all shares, interests, participations or other equivalents
(however designated) of or in a corporation, whether voting or non-voting,
including, but not limited to, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents
convertible, in whole or in part, into any one or more or all of the foregoing.
(bbb) "Subsidiary": any Person at least a majority of whose issued and
outstanding Stock or other ownership interests now or at any time hereafter is
owned by any Loan Party.
(ccc) "Supplemental Documentation": any and all financing statements,
notices, disclosures, agreements, instruments, documents or other written
matter, which Lender may from time to time deem necessary to maintain or create
a valid and perfected security interest in the Collateral.
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(ddd) "Unmatured Default": any event or condition which, with the passage
of time or the giving of notice or both, would constitute an Event of Default
hereunder.
1.2 UCC. Except as otherwise defined in this Agreement or the other Loan
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Documents, all words, terms and/or phrases used herein and therein shall be
defined by the applicable definition therefor (if any) in the Uniform Commercial
Code as adopted by the State of Illinois.
1.3 GAAP. Except as otherwise defined in this Agreement or the other Loan
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Documents, all accounting terms used herein shall have the meaning ascribed to
that term in accordance with GAAP.
1.4 Borrower. Whenever the context so requires, the use of "it" in
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reference to Borrower shall mean Borrower as defined above.
2. LOAN - GENERAL TERMS
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2.1 The Loan. Subject to the terms and provisions hereof, Lender shall make
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available to Borrower a term loan in the original principal amount of $3,000,000
(the "Loan"). The Loan shall bear interest at the rate of eleven and one-half
percent (11.5%) per annum and shall be payable in thirty-six equal monthly
installments of $99,177.37, commencing on August 1, 1997 and on the first day of
each month thereafter through and including June 1, 2000. The unpaid principal
balance plus accrued but unpaid interest shall be due and payable July 1, 2000.
The Loan shall be further evidenced by the Note to be delivered concurrently
herewith, as amended, restated, modified, extended, supplemented, or replaced
from time to time hereafter, which Note is incorporated herein by reference as
if fully set forth herein.
2.2 Payment Terms. Each payment (including permitted prepayments) of
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principal, interest, or any other amounts of any kind with respect to the Note
shall be made by wire transfer of immediately available funds by Borrower to
Lender's account designated on Exhibit A (or at any other place which Lender may
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hereafter designate for such purpose in a notice duly given to Borrower
hereunder), no later than one-thirty p.m., Chicago time, on the date due
therefor. Funds received after that hour shall be deemed to have been received
by Lender on the next following Business Day. Whenever any payment to be made
under the Note shall be stated to be due on a date which is not a Business Day,
the due date therefor shall be extended to the next succeeding Business Day. At
Lender's election, Borrower shall direct its bank or other financial institution
to directly deposit the mandatory monthly installment payments by ACH to an
account designated by Lender.
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2.3 Payment on Maturity. On July 1, 2000, the Maturity Date, Borrower shall
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pay to Lender the entire principal balance of this Note then outstanding,
together with all accrued and unpaid interest, all penalties and late payment
fees hereunder.
2.4 Prepayment.
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(a) Prohibition of Partial Prepayments. The Loan may not be prepaid in
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part.
(b) Prohibition on Prepayment. The Loan may not be prepaid in whole
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prior to the expiration of the nineteenth month of the term hereof and receipt
by Borrower of the nineteenth payment due hereunder. Borrower expressly waives
the right to prepay the Loan except in strict accordance with the terms hereof.
If the maturity of the Loan is accelerated by reason of the occurrence of an
Event of Default hereunder or under any other Loan Document, including but not
limited to a default under the Note, then any subsequent tender of payment of
the Loan, including any redemption following acceleration under this Note or any
other Loan Document, or any tender by Guarantors, or any one or more of them, at
any time when Borrower is not insolvent or, if insolvent, was rendered insolvent
by a distribution with respect to its stock or other payments to Affiliates,
shall constitute an evasion of the restrictions on prepayment set forth herein
and shall be deemed to be a voluntary prepayment. Accordingly, to the extent
permitted by law, Lender may impose as a condition to accepting such tender that
Borrower pay to Lender an amount equal to the Make Whole Amount, as calculated
in accordance with Exhibit B (the "Make Whole Amount") multiplied by two (2) in
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addition to and not in lieu of any payment of principal, interest, fees,
penalties and charges. Any attempted prepayment prior to the nineteenth month of
the term hereof, shall be deemed to be a deposit of cash collateral with Lender
to secure the payment of the Note and the other Secured Obligations and shall be
held by Lender in a non-interest bearing account until prepayment is permitted
hereunder.
(c) Prepayment After Nineteenth Month. The Make Whole Amount is not
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applicable to any prepayment after the nineteenth month and receipt of the
nineteenth payment of principal and interest. After the nineteenth month during
the term hereof and receipt of the nineteen payment of principal and interest,
and provided no Event of Default or Unmatured Default has occurred and is
continuing, Borrower may prepay the Loan under the following terms and
conditions:
(i) The Loan may be prepaid in whole, upon not less than ten (10) days
prior written notice; provided that at the time of such payment, Borrower
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shall pay all accrued but unpaid interest, the then outstanding principal
balance, plus
(ii) At the time of any prepayment, and concurrently with notice
thereof, Borrower shall be deemed to have exercised its option to call any
Class B
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stock of Borrower then owned by Lender and Borrower shall be deemed to have
delivered to Lender a call notice in accordance with the terms of Section 4
the Put Agreement. In addition to and not in lieu of any amounts due and
owing pursuant to the terms of the Note, this Loan Agreement or any other
Loan Document, Borrower shall pay to Lender on the date of the prepayment
made pursuant to Section 2.4(c)(i), an amount equal to the price per share
payable by Borrower to Lender pursuant to Section 4 of the Put Agreement.
2.5 Usury. The provisions of this Section shall govern and control over any
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irreconcilably inconsistent provision contained in this Agreement or in any
other document evidencing or securing the Loan. Lender shall never be entitled
to receive, collect, or apply as interest hereon (for purposes of this Section,
the word "interest" shall be deemed to include any sums treated as interest
under applicable law governing matters of usury and unlawful interest), any
amount in excess of the Highest Lawful Rate (hereinafter defined) and, in the
event Lender ever receives, collects, or applies as interest any such excess,
such amount which would be excessive interest shall be deemed a partial
prepayment of principal and shall be treated hereunder as such; and, if the
principal of this Agreement is paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Highest Lawful Rate,
Borrower and Lender shall, to the maximum extent permitted under applicable law,
(i) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) spread the total amount of interest throughout the entire contemplated
term of this Agreement, provided that if this Agreement is paid and performed in
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full prior to the end of the full contemplated term hereof, and if the interest
received for the actual period of existence hereof exceeds the Highest Lawful
Rate, Lender shall refund to Borrower the amount of such excess and, in such
event, Lender shall not be subject to any penalties provided by any laws for
contracting for, charging or receiving interest in excess of the Highest Lawful
Rate. "Highest Lawful Rate" shall mean the maximum rate of interest which Lender
is allowed to contract for, charge, take, reserve or receive under applicable
law after taking into account, to the extent required by applicable law, any and
all relevant payments or charges hereunder.
3. COLLATERAL - GENERAL TERMS
--------------------------
3.1 Grant of Security Interest. To secure the prompt payment to Lender of
--------------------------
all Secured Obligations and the prompt, full and faithful performance by
Borrower of all Secured Obligations, Borrower hereby grants to Lender a security
interest in and to, and hereby mortgages, conveys, transfers, assigns and
pledges to Lender, all of Borrower's now existing and/or owned and hereafter
arising and/or acquired:
(a) accounts, accounts receivable, chattel paper, contract rights, letters
of credit, notes, instruments and documents, which shall include, without
limitation, any amounts
10
due under the Fee Agreements and amounts due or to become due in the future
("Accounts"), and all goods whose sale, lease or other disposition by Borrower
have given rise to Accounts and have been returned to or repossessed or stopped
in transit by Borrower.
(b) patents, copyrights and trademarks, and all applications for and
registrations of the foregoing, all contract rights (including rights to
distributions, dividends, payments or their consideration under any partnership
agreement, shareholder's agreement or limited liability company operating
agreement), franchise rights, trade names, art work, goodwill, beneficial
interests, rights to tax refunds, claims, warranties, guarantees, claims against
any supplier of any Inventory, including claims arising out of purchases of
defective goods or overpayments to or undershipments by suppliers, any claims
which Borrower may have against any vendor or lessor of Equipment or Inventory
and all other general intangibles of any kind or nature whatsoever (the "General
Intangibles");
(c) materials and inventories and finished goods, wherever located, whether
in transit, held by others for Borrower's account, covered by warehouse
receipts, purchase orders and contracts, or in the possession of any carriers,
forwarding agents, truckers, warehousemen, vendors, customers on a consignment
basis or other Persons, including, without limitation, all raw materials, work
in process, finished merchandise, supplies, goods, stores, incidentals, office
supplies and packaging materials ("Inventory");
(d) equipment, machinery, fixtures and appliances (including but not
limited to furniture, office equipment, motor vehicles, aircraft, boats and
vessels, trade fixtures, computer hardware and non-structural additions or
improvements located in or on, or attached to, and used or intended to be used
in connection with or the operation of any Leaseholds) and all other personal
property of every kind or nature, together with all extensions, additions,
improvements, substitutions and replacements to any of any of the foregoing
("Equipment");
(e) monies, reserves, deposits, certificates of deposit and deposit
accounts and interest or dividends thereon, securities, cash, cash equivalents
and other property now or at any time or times hereafter in the possession or
under the control of Lender or its bailee;
(f) books, records, computer records, computer software, ledger cards,
programs and other computer materials, customer and supplier lists, invoices,
orders and other property and general intangibles at any time evidencing or
relating to the Collateral ("Records");
(g) rights of Borrower under all leases, licenses, occupancy agreements,
concessions or other agreements entered into by Borrower as tenant or lessee or
licensee or concessionaire thereunder, whether written or oral, whether now
existing or entered
11
into at any time hereafter, whereby Borrower is granted the right, either
exclusively or in common with others, to use, possess, or occupy real estate
(the "Leases");
(h) options, rights of first refusal, grants, contracts, agreements, or
rights to purchase, lease, license, or otherwise acquire any interest in real
property, whether now existing or hereafter acquired ("Options");
(i) all accessions to any of the Collateral and all substitutions,
renewals, improvements and replacements of and additions thereto;
(j) all other property of Borrower, real and/or personal, in which Borrower
heretofore, now and/or from time to time hereafter has rights or has granted or
grants to Lender a security interest, assignment, lien, claim or other
encumbrance; and
(k) all products and proceeds of the foregoing (whether such proceeds are
in the form of cash, cash equivalents, proceeds of insurance policies,
condemnation proceeds, Accounts, General Intangibles, Inventory, Equipment,
Records or otherwise).
All of the foregoing is referred to herein individually and collectively as the
"Collateral". It is the intent of the parties that the Collateral shall include
all property of Borrower, real, personal or intangible, whether now existing or
hereafter acquired or arising, whether specifically enumerated herein or not,
and that the broadest possible interpretation should be given to the term
Collateral; provided that, Collateral shall not include any property of any
-------------
other Person (including any partnership of which Borrower is a general partner)
which may be in the possession or control of Borrower.
3.2 Disclosure of Security Interest. Borrower shall make appropriate
-------------------------------
entries upon its financial statements and Records disclosing Lender's security
interest in and assignment and pledge of the Collateral.
3.3 Inspection of Collateral; Audit of Records.
------------------------------------------
(a) Inspect Collateral. Lender (by any of its officers, accountants,
------------------
employees and/or agents) shall have the right, at any time or times, after not
less than two (2) Business Days prior notice during normal business hours
(unless an Unmatured Default or Event of Default then exists, in which event no
notice shall be required) to inspect the Collateral (and the premises upon which
it is located) and all related Records and to verify the amount and condition of
or any other matter relating to the Collateral. In addition to the foregoing
rights, Lender (by any of its officers, employees or agents) shall have the
right, at any time or times during Borrower's usual business hours, after at
least two (2) Business Days prior notice (unless an Event of Default or
Unmatured Default has occurred and is continuing in which event no prior notice
shall be required) to perform field inspections of Borrower's books and records,
at Borrower's sole cost and expense.
12
(b) Audit Records. In addition to the right to inspect set forth herein,
-------------
Lender (by any of its officers, accountants, employees and/or agents) shall have
the right to inspect the books and Records of Borrower. All reasonable costs,
fees and expenses incurred by Lender, or for which Lender becomes obligated, in
connection with such inspection, verification or audit shall constitute part of
Borrower's Liabilities, payable by Borrower to Lender on demand therefor and any
amount not paid on demand shall bear interest at the Default Rate. Borrower
hereby acknowledges that it is the intent of Lender to perform a field audit of
Borrower's books and Records, at Borrower's cost and expense, no less frequently
than quarterly.
3.4 Maintain Perfection; Supplemental Documentation. Borrower shall perform
-----------------------------------------------
all the acts requested by Lender which are reasonably necessary to maintain a
valid security interest in the Collateral, including but not limited to,
executing and/or delivering to Lender, at any time and from time to time
hereafter, any and all Supplemental Documentation that Lender may request, in
form and substance reasonably acceptable to Lender, to perfect and maintain
perfected Lender's security interest, lien and/or encumbrance in and/or
assignment and pledge of the Collateral and to consummate the transactions
contemplated in or by this Agreement and/or the Other Agreements. Borrower
agrees that Lender, to the extent permitted by applicable law, may execute, on
behalf and in the name of Borrower, any Supplemental Documentation covering all
or any of the Collateral and file the same in each and every appropriate
jurisdiction.
3.5 Perfected Security Interest; Location of Collateral. Borrower hereby
---------------------------------------------------
warrants and represents to and covenants with Lender that: (a) Lender's security
interest in the Collateral is now and at all times hereafter shall be perfected
and have a first priority; (b) the offices and/or locations where Borrower keeps
the Collateral and the Records are at the locations specified on Exhibit C
---------
hereto. Borrower has no other offices or locations and Borrower shall not remove
such Records and/or the Collateral therefrom and shall not keep any such Records
and/or the Collateral at any other office or location unless Borrower gives
Lender notice thereof at least thirty (30) days prior thereto and the same is
within the continental United States of America. Borrower, by written notice
delivered to Lender at least thirty (30) days prior thereto, shall advise Lender
of Borrower's opening or acquisition of any new office, place of business or
place where any of the Collateral is to be stored or kept, or its closing of any
then existing office, place of business or place where any of the Collateral is
to be stored or kept and any new office or place of business shall be within the
continental United States of America.
3.6 Collateral in Lender's Control. Lender, now or at any time hereafter,
------------------------------
in its sole and absolute discretion, may take control of, in any manner, and may
endorse Borrower's name to any of the items of payment or proceeds in its
possession or control and Lender shall apply the same to and on account of the
Secured Obligations in accordance with the terms hereof. Upon the occurrence of
an Event of Default and during the continuation thereof, Borrower, irrevocably,
hereby makes, constitutes and appoints
13
Lender (and all Persons designated by Lender for that purpose) as Borrower's
true and lawful agent and attorney-in-fact, with power, without notice to
Borrower, to take any such actions.
3.7 Payment of Claims. Upon the occurrence of an Event of Default and
-----------------
during the continuation thereof, Lender, in its sole and absolute discretion,
without waiving or releasing any of the Secured Obligations or any Event of
Default, may at any time or times thereafter, but shall be under no obligation
to, pay, acquire and/or accept an assignment of any security interest, lien,
encumbrance or claim asserted by any Person against the Collateral. All sums
paid by Lender in accordance with this Section 3.7 and all reasonable Costs
relating thereto incurred by Lender or for which Lender becomes obligated on
account thereof shall be part of the Secured Obligations payable by Borrower to
Lender on demand and any amount not paid on demand shall bear interest at the
Default Rate.
3.8 Special Collateral. Immediately upon Borrower's receipt of that portion
------------------
of the Collateral consisting of Special Collateral, Borrower shall ▇▇▇▇ the same
to show that such Special Collateral is subject to a security interest in favor
of Lender and shall deliver the original thereof to Lender, together with
appropriate endorsement and/or other specific evidence of assignment thereof to
Lender, in form and substance acceptable to Lender.
3.9 Sale of Collateral by Lender. Upon the occurrence of an Event of
----------------------------
Default and during the continuation thereof, regardless of the adequacy of any
Collateral, any deposits or other sums at any time credited by or payable or due
from Lender or any bailee of Lender to Borrower, or any monies, cash, cash
equivalents, certificates of deposit, securities, instruments, documents or
other assets of Borrower in the possession or control of Lender or its bailee
for any purpose may at any time be reduced to cash and applied by Lender to, or
setoff by Lender against, the Secured Obligations which are then currently due
hereunder.
4. COLLATERAL - ACCOUNTS
---------------------
4.1 Representations and Warranties Specifically Relating to Accounts.
----------------------------------------------------------------
Borrower warrants and represents to Lender on each date that it delivers to
Lender a Collateral Report that as of such date:
(a) the Accounts (including the Fee Agreements) listed therein are genuine,
are in all respects what they purport to be, are not reduced to a judgment, and,
if evidenced or secured by any instrument or item of chattel paper, are
evidenced by only one executed original instrument or item of chattel paper, and
such original has been endorsed and delivered to Lender;
14
(b) the Accounts (including the Fee Agreements) listed therein represent
bona fide transactions completed in accordance with the terms and provisions
hereof;
(c) there are no setoffs, counterclaims or disputes existing, or to the
best of Borrower's knowledge, asserted with respect to any Accounts (including
the Fee Agreements) listed thereon; and
(d) to the best of Borrower's knowledge, all Account Debtors of the
Accounts (including the Fee Agreements) listed thereon are solvent, had the
capacity to contract at the time any contract or other document was entered
into, and were duly authorized to enter into such contract by all required
partnership or corporate action.
4.2 Verification of Accounts. Upon the occurrence of an Event of Default
------------------------
and during the continuation thereof, Lender's nominee, together with any of
Lender's officers, employees or agents shall have the right, at any time or
times hereafter, in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Accounts by mail, telephone,
telegraph or otherwise. All Costs relating thereto reasonably incurred by Lender
(or for which Lender becomes obligated), including the costs of retaining
Lender's nominee, shall be part of the Secured Obligations, payable by Borrower
to Lender on demand and if not paid on demand, shall bear interest at the
Default Rate.
4.3 Notices to Account Debtors. Upon the occurrence of an Event of Default
--------------------------
and during the continuation thereof, Lender shall have the right, in its sole
and absolute discretion, without notice thereof to Borrower: (a) to notify any
or all Account Debtors that the Accounts and Special Collateral have been
assigned to Lender and that Lender has a security interest therein; (b) to
direct such Account Debtors to make all payments due from them to Borrower upon
the Accounts and Special Collateral directly to Lender; and (c) to enforce
payment of and collect, by legal proceedings or otherwise, the Accounts and
Special Collateral in the name of Lender and Borrower.
4.4 Appointment of Lender As Attorney-In-Fact After Default. Borrower,
-------------------------------------------------------
irrevocably, hereby designates, makes, constitutes and appoints Lender (and all
Persons designated by Lender) as Borrower's true and lawful agent and
attorney-in-fact from and after an Event of Default and during the continuation
thereof, with power, without notice to Borrower and at such time or times
hereafter as Lender, in its sole and absolute discretion, may determine, in
Borrower's or Lender's name: (a) to demand payment of the Accounts and Special
Collateral; (b) to enforce payment of the Accounts and Special Collateral by
legal proceedings or otherwise; (c) to exercise all of Borrower's rights and
remedies with respect to the collection of the Accounts and Special Collateral;
(d) to settle, adjust, compromise, extend or renew the Accounts and Special
Collateral; (e) to settle, adjust or compromise any legal proceedings brought to
collect the Accounts and Special Collateral; (f) to sell or assign the Accounts
and Special Collateral upon such terms, for such amounts and at such time or
times as Lender deems advisable; (g) to discharge and release the Accounts and
Special Collateral; (h) to prepare, file and sign Borrower's name
15
on any notice of lien, assignment or satisfaction of lien or similar document in
connection with the Accounts and Special Collateral; (i) to prepare, file and
sign Borrower's name on any proof of claim in Bankruptcy or similar document
against any Account Debtor; (j) to do all acts and things necessary, in Lender's
sole discretion, to fulfill Borrower's Obligations under this Agreement; and (k)
to prepare, file and sign Borrower's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the Accounts and
Special Collateral.
5. OTHER COLLATERAL
----------------
5.1 Guaranties. Concurrently herewith, Borrower shall cause each Guarantor
----------
to execute and deliver to Lender a guaranty of payment and performance of all
Secured Obligations; provided that the liability of the Individual Guarantors
-------------
shall be limited as provided in the guaranty evidencing their respective
obligations. In the event of the death of Beaufort ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or ▇▇▇▇ ▇. ▇▇▇▇▇, and the payment of insurance proceeds of the key-man life
insurance pledged pursuant to Section 5.4, the spouse of such man shall be
released from her respective guaranty.
5.2 Pledge of Stock. In addition to the Collateral pledged pursuant to the
---------------
terms of Section 4.1, Borrower shall, concurrently herewith, cause its
shareholders to enter into a Pledge Agreement pursuant to which such
shareholders will pledge to Lender 100% of the shares of Borrower to secure all
Secured Obligations. Concurrently herewith, Borrower shall execute Pledge
Agreements pursuant to which Borrower will pledge all of the stock of the ICON
Subsidiaries.
5.3 Life Insurance. Concurrently herewith, Borrower shall deliver to Lender
--------------
the original policies and collateral assignments of life insurance policies in
the amount of $1,000,000 each, insuring the lives of Beaufort ▇.▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇. In the event of the payment of a death
benefit with respect to any such policy, the proceeds thereof shall be paid to
Lender and applied to the Secured Obligations, whether or not then due and
owing; provided that, in the event said proceeds are paid to Lender at any time
-------------
that the prepayment is prohibited hereunder, at Borrower's option, which option
shall be exercised by written notice to Lender, (i) said proceeds shall be held
as cash collateral by Lender in accordance with Section 2.5; provided that any
-------------
proceeds held by Lender shall be held in an interest-bearing account, interest
payable for the benefit of Borrower, or (ii) notwithstanding anything to the
contrary contained herein, Borrower shall be permitted to prepay the
indebtedness evidenced by the Note in an amount not to exceed insurance proceeds
actually received upon such death; provided that in addition to the principal
-------------
amount prepaid, Borrower shall pay to Lender a prepayment premium equal to the
Make Whole Amount if such prepayment is made prior to the nineteenth month
during the term hereof and receipt of the nineteenth payment of principal and
interest; provided however, that if the amount prepaid is equal to or greater
-------- -------
than the unpaid
16
principal balance of the Loan, the provisions of Section 2.4(c)(ii) shall be
deemed applicable thereto. In the event the proceeds of such insurance policy is
greater than the Secured Obligations, the excess shall be paid to Borrower or
the beneficiary of the policy, as their interests may appear.
5.4 Security Agreements. In addition to the Collateral pledged pursuant to
-------------------
the provisions of Section 3.1, Borrower shall cause each Corporate Guarantor to
grant to Lender a security interest in all of its property (real, personal and
intangible) as security for the Secured Obligations.
5.5 Notice of Other Collateral. Borrower hereby covenants and agrees to
--------------------------
deliver to Lender notice before entering into any contract or agreement to
acquire any real property, acquiring or entering into any Lease, or acquiring or
entering into any Option. Borrower hereby covenants and agrees to immediately
grant to Lender a first security interest, lien and mortgage, in form and
substance reasonably required by Lender, on any real property or Option
hereafter acquired, and Lease entered into after the date hereof.
6. GENERAL WARRANTIES, REPRESENTATIONS AND COVENANTS
-------------------------------------------------
6.1 General Representations and Warranties. Except as disclosed in writing
--------------------------------------
to Lender concurrently herewith, Borrower warrants and represents to and
covenants with Lender that:
(a) Borrower is and at all times hereafter shall be a corporation duly
organized and existing and in good standing under the laws of the State of
Delaware and qualified or licensed to do business and in good standing in all
states in which the laws thereof require Borrower to be so qualified and/or
licensed, including the State of New York;
(b) Borrower and each other Loan Party has the right, power and
capacity and is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and the Other Agreements to which it is a party;
(c) each of the fictitious names, if any, used by Borrower in the
United States during the five (5) year period preceding the date of this
Agreement is set forth on Exhibit D, attached hereto and none of such fictitious
---------
names are registered trademarks or tradenames with the U.S. Patent and Trademark
Office;
(d) the execution, delivery and/or performance by Borrower of this
Agreement and the Other Agreements shall not, by the lapse of time, the giving
of notice or otherwise, constitute a violation of any applicable law or a breach
of any provision contained in Borrower's Articles of Incorporation or By-Laws,
or contained in any agreement, instrument or document to which Borrower is now
or hereafter a party or by which it is or may become bound, or result in or
require the creation of any lien, security
17
interest, charge or other encumbrance upon or with respect to any now-owned or
hereafter arising or acquired properties of Borrower;
(e) this Agreement and the Other Agreements are and will be the legal,
valid and binding agreements of Borrower enforceable in accordance with their
terms, except as enforcement thereof may be subject to the effect of applicable
Bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, and to general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at law);
(f) Borrower has and at all times hereafter shall have good,
indefeasible and merchantable title to and ownership of the Collateral, free and
clear of all liens, claims, security interests and encumbrances, except the
Permitted Liens;
(g) Borrower owns no United States and foreign patents, trademarks,
tradenames, service marks, copyrights, and has made no applications therefor;
(h) Borrower possesses adequate assets, licenses, patents, copyrights,
trademarks and tradenames to continue to conduct its business as previously
conducted prior to the date hereof;
(i) Borrower is now, and at all times hereafter shall be, solvent and
generally paying its debts as they mature and Borrower now owns, and shall at
all times hereafter own, property which, at a fair valuation, is greater than
the sum of its debts;
(j) Borrower now has, and shall have at all times hereafter, capital
sufficient to carry on its business and transactions and all businesses and
transactions in which it is about to engage;
(k) there are no actions or proceedings which are pending or threatened
against Borrower, or to the best of Borrower's knowledge, any Loan Party which
might result in any material adverse change in its financial condition or
materially affect Borrower's or such other Person's assets or the Collateral or
Borrower's or such other Loan Party's ability to fully pay or perform the
Secured Obligations;
(l) Borrower is not a party to any contract or agreement or subject to
any charge, restriction, judgment, decree or order materially and adversely
affecting its business, property, assets, operations or condition, financial or
otherwise;
(m) Neither Borrower nor any ICON Subsidiary nor any Affiliate of
Borrower or any ICON Subsidiary is in violation of any applicable statute,
regulation or ordinance of the United States of America, of any state, city,
town, municipality, county or of any other jurisdiction, or of any agency
thereof, (including, but not limited to any Environmental Law or any Securities
Law) in any respect which might materially and
18
adversely affect its business, property, assets, operations or condition,
financial or otherwise;
(n) Borrower and each ICON Subsidiary has filed or caused to be filed all
tax returns which are required to be filed;
(o) Borrower and each ICON Subsidiary has paid all Charges shown to be due
and payable on said returns or on any assessments made against it or any of its
property, and all other Charges imposed on it or any of its properties by any
governmental authority;
(p) ICON (UK) is a wholly-owned subsidiary of Borrower, does not and at no
time during the term hereof shall have any assets with a value in excess of
$5,000, and has not heretofore and will not engage in any business activity.
(q) Except as disclosed in the Financials heretofore delivered by Borrower
to Lender and as set forth on Exhibit E, Borrower has no Indebtedness (except
---------
for Indebtedness arising in the ordinary course of its business since the dates
reflected in the Financials), has not guaranteed (other than as a result of the
endorsement of any instrument or items of payment for deposit or collection in
the ordinary course of business or as otherwise expressly permitted pursuant to
the terms hereof) the obligations of any Person, and there are no actions or
proceedings which are pending or, to the best of Borrower's knowledge,
threatened against Borrower which, in any of the foregoing cases, are reasonably
likely to result in any material adverse change in its financial condition or
materially adversely affect its assets or the Collateral or its ability to fully
perform and satisfy Borrower's Liabilities hereunder;
(r) Neither Borrower nor any ICON Subsidiary is in default with respect to
any indenture, loan agreement, mortgage, deed or other similar agreement
relating to the borrowing of monies to which it is a party, by which it is
bound;
(s) the most recent Financials fairly and accurately present the assets,
liabilities and financial conditions and results of operations of Borrower and
such other Persons, if any, described therein as of and for the periods ending
on such dates set forth therein and have been prepared in accordance with GAAP
and such principles have been applied on a basis consistently followed in all
material respects throughout the periods involved;
(t) there has been no material adverse change (as determined by Lender, in
Lender's sole discretion) in the assets, liabilities or financial condition of
Borrower since the date of the most recent Financials;
(u) the execution, delivery and performance by Borrower of this Agreement
and the Other Agreements will not, except to the extent caused by independent
19
actions of Lender, impose on or subject Lender to any liability, whether fixed
or contingent, in respect of any Environmental Law or Securities Law relating to
the operation of Borrower's business;
(v) Borrower is now, and at all times during the term or any renewal term
hereof Borrower shall be, in compliance with the Worker's Adjustment and
Retraining Notification Act;
(w) Borrower's execution and delivery of this Agreement and the Other
Agreements does not directly or indirectly violate or result in a violation of
any Securities Laws or Regulations U, G, T and X of the Board of Governors of
the Federal Reserve System (12 CFR 221, 207, 220 and 224, respectively), and
Borrower does not own or intend to purchase or carry any "margin security", as
defined in such Regulations;
(x) Attached hereto as Exhibit F is a true, accurate and complete schedule
---------
of all corporations, partnerships, joint venturers, trusts, limited liability
company, unincorporated organization, association or associate in which Borrower
has an equity interest.
(y) Lender's exercise of any of the rights or remedies described in Article
8 of this Agreement or in any of the Other Agreements shall not constitute a
breach of any provision contained in any agreement, instrument or document
concerning the assignment or license of, or the payment of royalties for, any
patents, patent rights, tradenames, trademarks, trade secrets, know-how,
copyrights or any other form of intellectual property now or at any time or
times hereafter protected as such by any applicable law; and
(z) attached hereto as Exhibit I is a true, accurate and complete list of
---------
the fifty largest lessees of equipment from Affiliates of Borrower (based upon
annual rental paid). No such lessee is in default under the terms of any lease
with any Affiliate of Borrower.
(aa) Borrower is not a party to any lease of real property, either as
lessor or lessee.
6.2 Business Purpose; Margin Stock; Securities. Borrower warrants and
------------------------------------------
represents to Lender that Borrower shall use the proceeds of the Loan solely to
pay existing Indebtedness and for general corporate purposes, consistently with
all applicable laws and statutes. Borrower's use of the proceeds of the Loan are
legal and proper uses (duly authorized by all requisite action of the board of
directors of Borrower), in accordance with applicable laws, rules and
regulations, as in effect from time to time. Borrower further warrants and
represents to Lender and covenants with Lender that Borrower is not in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the Board of Governors of
the Federal Reserve
20
System), and no proceeds of the Loan will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock. As of the date hereof, Borrower does not own the
Securities of any Person.
6.3 Survival of Warranties and Representations. Borrower covenants,
------------------------------------------
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement and the Other Agreements shall be true on
the date hereof, and shall survive the execution, delivery and acceptance hereof
and thereof by the parties thereto and the closing of the transactions described
herein and therein or related hereto or thereto.
7. COVENANTS AND CONTINUING AGREEMENTS.
-----------------------------------
7.1 Financial Covenants.
-------------------
(a) At all times during the term hereof, measured quarterly, Borrower
shall have minimum stockholder's equity of $1,500,000 as stated in Borrower's
balance sheet, and as determined in accordance with GAAP.
(b) At all times during the term hereof, measured quarterly, ICON
Capital Corp., a subsidiary of Borrower, shall have outstanding Accounts
(including the aggregate amount of Accounts due or to become due from Fee
Agreements) in an amount equal to three (3) times the then outstanding principal
balance of the Loan, discounted for the present value thereof at an interest
rate of 10% per annum.
7.2 Affirmative Covenants. Borrower warrants and represents to and
---------------------
covenants with Lender that Borrower shall, unless Lender otherwise consents
thereto in writing, do all of the following during the term hereof:
(a) Insurance. Borrower will at all times maintain or cause to be
---------
maintained on the Equipment, Inventory, any real property owned by Borrower any
ICON Subsidiary or any lessee thereof and Borrower's tangible other assets owned
by Borrower any ICON Subsidiary or any lessee thereof, insurance against such
risks ordinarily insured against by other owners or users of such properties in
similar businesses similarly situated and in any event the following:
(i) Property Insurance: insurance covering the Equipment, Inventory,
------------------
real property and Borrower's other tangible assets in the event of fire,
lightning, windstorm, vandalism, malicious mischief and all other risks
normally covered by "all risk" coverage policies in New York in an amount,
subject to commercially reasonable deductibles, equal to 100% of the
replacement value thereof;
21
(ii) Commercial General Liability Insurance: comprehensive general
--------------------------------------
public liability insurance (including coverage for elevators and
escalators, if any, contractual liability, explosion, underground
property, and broad form property damage endorsement, against claims for
bodily injury, death or property damage occurring or caused by events
occurring on, in or about any real estate leased by Borrower, and
adjoining streets and sidewalks), in such minimum combined single limit
amount as Lender shall reasonably require, subject to standard
deductibles;
(iii) Workers' Compensation Insurance: Worker's Compensation and
-------------------------------
employer's liability insurance covering Borrower's employees in such
amounts as is required by law;
(iv) Contents Insurance: Fire and Extended Coverage Insurance
------------------
(contents broad form) and Sprinkler Leakage Insurance on Borrower's
tangible personal property located on the premises of Borrower, and on all
improvements or betterments constructed by Borrower thereon, in amounts
sufficient, subject to standard deductibles, to fully insure such tangible
personal property;
(v) Business Interruption/Rent Loss Insurance. Business Interruption
-----------------------------------------
Insurance in such amount as Lender shall reasonably request but in no
event less than the estimated regularly scheduled principal and interest
payable hereunder during a twelve (12) month period and all Charges which
could become a lien upon the Assets.
All policies of insurance on the Collateral or otherwise required hereunder
shall be in form and with companies reasonably satisfactory to Lender. Borrower
shall deliver to Lender the original (or certified copy) of each policy of
insurance and, upon the request of Lender, evidence of payment of all premiums
therefor that had become due and payable and shall deliver renewals of all such
policies to Lender at least ten (10) days prior to their expiration dates. Such
policies of insurance shall contain an endorsement, in form and substance
reasonably acceptable to Lender, showing all losses payable to Lender or, in
Lender's reasonable discretion, Borrower shall execute a separate assignment
thereof, in form and substance reasonably acceptable to Lender. Lender shall be
named as lender loss payee, mortgagee and secured party in all policies of
property insurance and as an additional insured in all policies of liability
insurance. Such endorsement shall provide that the insurance companies will give
Lender at least thirty (30) days' prior notice before any such policy shall be
materially modified or canceled and that no act or default of Borrower or any
other person (other than Lender) shall affect the right of Lender to recover
under such policy in case of loss or damage. Borrower hereby directs all
insurers under such policies to pay all proceeds payable thereunder directly to
Lender. During such times that an Event of Default has occurred and is
continuing, Borrower irrevocably makes, constitutes and appoints Lender (and all
officers, employees or agents designated by Lender) as Borrower's true and
lawful attorney and agent-in-fact for the purpose of making, settling and
adjusting claims under such policies, endorsing the name of Borrower in
22
writing or by stamp on any check, draft, instrument or other item of payment for
the proceeds of such policies and for making all determinations and decisions
with respect to such policies, in each such case. If Borrower shall fail to
obtain or to maintain any of the policies required by this Section 7.2 (a) or to
pay any premium relating thereto or to renew any such policies and to deliver
evidence of such renewal to Lender no later than ten (10) days prior to the
expiration of the existing policy, then Lender, without waiving or releasing any
obligation or default by Borrower hereunder and without notice to Borrower, may
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which Lender deems advisable. Borrower acknowledges that premiums paid by Lender
may be greater than those which Borrower may have been able to negotiate. All
sums so disbursed by Lender, including costs relating thereto, shall be payable
by Borrower to Lender on demand and shall be additional Borrower's Liabilities.
(b) Financial Reports. Borrower shall keep books of account and prepare
-----------------
financial statements and furnish to Lender the following (all of the foregoing
and following to be kept and prepared in accordance with generally accepted
accounting principles, in each case consistent with the Financials heretofore
delivered by Borrower to Lender, unless Borrower's independent certified public
accountants concur in any changes therein and such changes are disclosed in
writing to Lender):
(i) Annual. As soon as available, but no later than ninety (90) days
------
after the close of each fiscal year of Borrower, audited financial
statements of Borrower and ICON Capital Corp. (including a statement of
cash flow, a balance sheet and profit and loss statement with supporting
footnotes) as at the end of such year and for the year then ended all in
form and detail required by GAAP prepared by a firm of independent
certified public accountants selected by Borrower and reasonably acceptable
to Lender and containing the unqualified opinion of such independent
certified public accountants with respect to the financial statements and
accompanied by a statement by such accountant that, as of the date thereof,
there are no Events of Default or Unmatured Defaults under this Agreement
or any Other Agreement.
(ii) Quarterly Reports. As soon as available, but in no event less
-----------------
than forty-five (45) days after the end of each quarter, financial
statements of Borrower and ICON Capital Corp. (including a statement of
cash flow, a balance sheet and profit and loss statement with supporting
footnotes) as at the end of such year and for the year then ended all in
form and detail as reasonably required by Lender, prepared by the chief
financial officer of Borrower and containing the unqualified statement of
such officer that, as of the date thereof, there are no Events of Default
or Unmatured Defaults under this Agreement or any Other Agreement;
(iii) Collateral Reports. As soon as available, but in no event later
------------------
than the thirtieth day of each month, a report (the "Collateral Report"),
in form and detail
23
reasonably acceptable to Lender, setting forth: (i) any and all Fee
Agreements to which Borrower, any ICON Subsidiary, or any Affiliate of
Borrower or an ICON Subsidiary is a party pursuant to which Borrower, any
ICON Subsidiary or any Affiliate of Borrower or any ICON Subsidiary is to
receive fees, salary, or other compensation; (ii) the amount and timing of
the fees, salary or other compensation to be paid thereunder; and (iii)
whether any default or event of default has occurred by any party under the
terms of such Fee Agreement. Attached hereto as Exhibit G, is the initial
---------
Collateral Report, which Borrower hereby represents is true, accurate and
complete as of the date hereof.
(iv) Guarantor Financial Information. Borrower shall cause each
-------------------------------
Guarantor to deliver to lender those financial statements, Collateral
Reports, and other financial information required by the terms of the
Guaranties.
(v) Other Information. Such other data and information (financial
-----------------
and otherwise) as Lender, from time to time, may reasonably request bearing
upon or related to the Collateral, Borrower's financial condition and/or
result of operations.
(c) Records. Borrower shall keep accurate and complete Records relating to
-------
the Collateral and the operation of Borrower's business which Records shall be
made available to Lender upon notice to Borrower in accordance with Section 4.3
(unless an Event of Default or an Unmatured Default has occurred and is
continuing in which event no notice shall be required) for Lender's inspection,
copying, verification or otherwise.
(d) Pay Debts. Borrower shall pay or discharge or otherwise satisfy all
---------
Indebtedness at or before maturity or before the same becomes delinquent,
provided that Borrower shall not be required to pay any Indebtedness which is
-------------
unsecured while the same is being contested by it in good faith and by
appropriate proceedings so long as Borrower shall have set aside on its books
reserves in accordance with GAAP with respect thereto and title to any property
of Borrower is not jeopardized.
(e) Payment of Charges. Borrower shall pay promptly when due all of the
------------------
Charges, provided that notwithstanding the foregoing, Borrower may permit or
-------------
suffer the Charges to attach to Borrower's assets and may dispute, without prior
payment thereof, the Charges, on the conditions that: (i) Borrower, in good
faith, shall be contesting the same in an appropriate proceeding; (ii)
enforcement thereof against any assets of Borrower shall be stayed; and (iii)
appropriate reserves therefor shall have been established on the Records of
Borrower in accordance with GAAP. In the event Borrower, at any time or times
hereafter, shall fail to pay the Charges required herein, Borrower shall so
advise Lender thereof in writing; Lender may, without waiving or releasing any
Secured Obligation or any Event of Default hereunder, in its sole and absolute
discretion, at any time or times thereafter, make such payment, or any part
thereof, and take any other action with respect thereto which Lender deems
advisable. All sums so paid by Lender and any expenses, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, shall
24
be part of Borrower's Liabilities, payable by Borrower to Lender on demand and
any amount not paid on demand shall bear interest at the Default Rate.
(f) Corporate Existence. Borrower shall, and shall cause each ICON
-------------------
Subsidiary to, preserve and maintain its corporate existence, rights, privileges
and franchises in the jurisdiction of its incorporation or organization, and
qualify and remain qualified to do business in each other jurisdiction in which
such qualification is necessary in view of its business or operations.
(g) Equity Ownership.
----------------
(i) At all times during the term hereof, Borrower shall be the owner
of 100% of the issued and outstanding stock of the Corporate Guarantors and
ICON UK, subject to no liens and encumbrances, other than the Pledge
Agreement in favor of Lender.
(ii) At all times during the term hereof, Summit Asset Holding L.L.C.
and Warrenton Capital Partners L.L.C. shall each own 50% of the issued and
outstanding voting stock of Borrower, subject to no liens or encumbrances
other than the Pledge Agreement in favor of Lender. There shall be no class
of shares, other than the voting shares owned by Summit Asset Holding
L.L.C. and Warrenton Capital Partners L.L.C. and the Class B Stock, of
which Lender shall be the sole shareholder.
(iii) At all times during the term hereof, Borrower shall own not less
than 60% of the outstanding shares of MGC/▇▇▇▇▇▇▇ Capital Corporation,
subject to no liens or encumbrances other than the Pledge Agreement in
favor of Lender.
(h) Compliance with Laws. Borrower shall comply with, and shall cause each
--------------------
ICON Subsidiary to comply with, all laws, rules, regulations and governmental
orders (federal, state and local), including all Environmental Laws and all
Securities Laws, having applicability to it or to the business or businesses at
any time conducted by it, where the failure to so comply would have a material
adverse effect, either individually or in the aggregate, on the business,
condition (financial or otherwise) and assets, operations or prospects of
Borrower or the applicable ICON Subsidiary.
7.3 Negative Covenants. Borrower warrants and represents to and covenants
------------------
with Lender that Borrower shall not, without Lender's prior written consent
thereto, which consent Lender may or may not give in its sole discretion,
concurrently or hereafter to do any of the following:
(a) Sale of Collateral. Borrower shall not grant, assign, sell or
------------------
transfer any of Borrower's Assets or the Collateral to any Person. Borrower
shall not grant a security interest in, assign for collateral purposes or
permit, grant, or suffer a lien, claim or
25
encumbrance upon any of Borrower's Assets or the Collateral, except the
Permitted Liens; provided that, Borrower or any ICON Subsidiary may grant a
-------------
security interest in Accounts arising from Fee Agreements if: (i) Borrower or
the applicable ICON Subsidiary shall give Lender no less than thirty (30) days
prior written notice, and (ii) the creditor, Borrower and Lender shall enter
into a subordination agreement, in form and substance acceptable to Lender,
pursuant to which the holder of the Indebtedness secured by such lien shall
agree that (x) payments of such Indebtedness shall be subordinate to the Secured
Obligations, (y) any lien granted to secure such Indebtedness is expressly
subordinate to the liens in favor of Lender, and (z) upon the occurrence of an
Event of Default or Unmatured Default hereunder and during the continuation
thereof, no payments may be made or received on account of such Indebtedness.
(b) Attachment. Borrower shall not permit or suffer any levy, attachment or
----------
restraint to be made affecting any of its assets or the Collateral which such
levy, attachment or restraint has not been released within a reasonable period
of time.
(c) Receivers. Borrower shall not permit or suffer any receiver, trustee or
---------
assignee for the benefit of creditors, or any other custodian to be appointed to
take possession of all or any of Borrower's assets or any of the Collateral.
(d) Adverse Transactions. Borrower shall not enter into any transaction
--------------------
which materially adversely affects Borrower's ability to repay Borrower's
Liabilities or other Indebtedness, or materially adversely affects the
Collateral, or adversely affects Borrower's ability to perform the Secured
Obligations.
(e) Guaranty Debt. Borrower shall not guaranty or otherwise, in any way,
-------------
become liable with respect to the obligations or liabilities of any other
Person, including, without limitation, by agreement to (i) maintain net worth or
working capital, (ii) purchase the obligations or property of any such Person,
or to furnish funds to any such Person, directly or indirectly, through the
purchase of goods, supplies or services, in any such case with the intent to
provide such a guaranty or otherwise become so liable, or (iii) obtain upon its
credit the issuance of any letter or letters of credit for the obligations of
any such Person, provided that the foregoing limitations shall not apply to
-------------
endorsement of instruments or items of payment for deposit or collection in the
ordinary course of business.
(f) Change Capital Structure. Neither Borrower nor any Corporate Guarantor
------------------------
shall make any change in its capital structure or in any of its business
objectives, purposes and operations; neither Borrower nor any ICON Subsidiary
shall create or acquire any Subsidiary, without in each case causing such
Subsidiary to guaranty the Loan and grant a security interest to secure payment
thereof, on the same terms and conditions as the Corporate Guarantors.
26
(g) Borrower's Stock. Borrower shall not redeem, retire, purchase or
----------------
otherwise acquire, directly or indirectly, any of Borrower's stock or other
evidence of ownership interest or make any loans, advances and/or extensions of
credit to any Persons.
(h) Merger. Borrower shall not merge or consolidate with or acquire all
------
or substantially all of the assets or stock any Person, unless such merger
results in a Tangible Net Worth that is three times Borrower's Tangible Net
Worth on the date of the execution hereof. Borrower shall give Lender no less
than ten (10) Business Day's advance notice of any proposed merger,
consolidation or acquisition of all or substantially all of the assets or stock
of any Person.
8. DEFAULT
-------
8.1 Events of Default. The occurrence of any one of the following events
-----------------
shall constitute a default ("Event of Default") under this Agreement:
(a) if Borrower fails to pay Borrower's Liabilities, or any part thereof
on the due date thereof.
(b) Borrower breaches the covenants set forth in Sections 7.1, 7.2(a) or
(b), 7.3 and/or 7.4.
(c) Failure by Borrower to promptly perform any other obligation or
observe any other condition, covenant, term, agreement or provision required to
be performed or observed by Borrower under this Agreement within ten (10) days
after written notice thereof; provided that: (i) if such default, in the
-------------
reasonable discretion of Lender, creates a hazardous condition or materially,
adversely and immanently affects the value of the Collateral or the ability of
Borrower to perform its obligations hereunder, such default shall be cured
immediately, and (ii) subject to the provisions of subsection (i) above, to the
extent that such default is of such a character which reasonably requires more
than ten (10) days to cure, Borrower shall have such reasonable additional time
to cure the default, if Borrower has commenced to cure the same within said ten
(10) day period and is diligently and continuously pursuing such cure, which
default shall in all circumstances be corrected within thirty (30) days after
delivery of the above required written notice.
(d) if any representation or warranty on the part of Borrower contained
in this Agreement or the Other Agreements, or any document, instrument or
certificate delivered pursuant hereto or thereto shall have been incorrect in
any material respect when made or deemed made.
(e) if the Collateral, or any portion thereof, is attached, seized,
subjected to a writ of distress, warrant, or are levied upon, or comes within
the possession of any receiver, trustee, custodian or assignee for the benefit
of creditors.
27
(f) if a petition under any section or chapter of the Bankruptcy Reform Act
of 1978, as amended, or any similar law or regulation shall be filed by Borrower
or any other Loan Party, or if Borrower or any other Loan Party shall make an
assignment for the benefit of its creditors or if any case or proceeding is
filed by Borrower for its dissolution or liquidation.
(g) if Borrower is enjoined, restrained or in any way prevented by court
order from conducting all or any material part of its business affairs or if a
petition under any section or chapter of the Bankruptcy Reform Act of 1978, as
amended, or any similar law or regulation is filed against Borrower or any other
Loan Party or if any case or proceeding is filed against Borrower for its
dissolution or liquidation and such injunction, restraint or petition is not
dismissed or stayed within thirty (30) days after the entry or filing thereof.
(h) if an application is made by any Person other than Borrower for the
appointment of a receiver, trustee, or custodian for the Collateral, or any
other material portion of Borrower's or any other Loan Party's assets and the
same is not dismissed or stayed within thirty (30) days after the application
therefor;
(i) if a notice of any Charge is filed of record with respect to all or any
of Borrower's or any other Loan Party's assets, or if any Charge becomes a lien
or encumbrance upon the Collateral or any other of Borrower's any other Loan
Party's assets, other than Permitted Liens, and the same is not released within
thirty (30) days after the same becomes a lien or encumbrance.
(j) the occurrence of an Event of Default under any of the Other
Agreements, which is not cured within the time period, if any, specified
therefor in such Other Agreement.
(k) if one or more judgments or decrees shall be entered against Borrower,
involving, individually, or in the aggregate, a liability of $50,000 or more and
all such judgments or decrees shall not have been vacated, discharged or stayed
pending appeal within thirty (30) days from the entry thereof.
(l) if this Agreement or any of the Other Agreements shall cease for any
reason to be in full force and effect (other than by reason of the satisfaction
of all of Borrower's Liabilities or voluntary release by Lender of any Other
Agreement) or Borrower or any other Person (other than Lender) shall disavow its
obligations thereunder, or shall contest the validity or enforceability of any
thereof.
(m) if Lender's lien or security interest in any Collateral shall for any
reason cease to be a legal, valid, perfected or enforceable first priority lien
on and security
28
interest in such Collateral (other than by reason of the payment in full of all
obligations secured thereby or voluntary release by Lender of such Collateral).
(n) if Borrower or any ERISA Affiliate (1) shall effect a complete or
partial withdrawal (as defined in ERISA Sections 4203 or 4205) from a
Multiemployer Plan, if such withdrawal could subject either Borrower or any
ERISA Affiliate to liability; (2) shall fail to pay when due an amount that is
payable by it to the PBGC or to an Employee Benefit Plan; (3) has instituted
against it by a fiduciary of any Multiemployer Plan an action to enforce ERISA
Section 515 and such proceedings shall not have been dismissed within thirty
(30) days thereafter; (4) has imposed against it any tax under Code Section
4980B(a); (5) has assessed against it by the Secretary of Labor a civil penalty
with respect to any Employee Benefit Plan under ERISA Section 502(c) or 502(l);
(6) shall apply for a waiver of the minimum funding standards of the Code; or
(7) shall permit any other event or condition to occur or exist with respect to
an Employee Benefit Plan that could subject either Borrower or any ERISA
Affiliate to liability.
(o) a default by Borrower or any other Loan Party shall occur under any
agreement, document or instrument (other than this Agreement or any of the other
Loan Documents) now or hereafter existing, to which Borrower or any other Loan
Party is a party and the effect of such default is reasonably likely to have a
material adverse effect on the financial conditions or business operations of
Borrower or such other Loan Party.
(p) if Borrower or any other Loan Party is in default in the payment of
any Indebtedness for borrowed money in an aggregate principal amount outstanding
in excess of $25,000 under any agreement (other than the Loan Documents), or is
in breach of any agreement evidencing such Indebtedness (other than any Loan
Document) and the effect of such default or breach, as the case may be, is to
enable the holder thereof then to accelerate the maturity of such Indebtedness,
unless the same is waived or otherwise ceases to exist.
(q) if Borrower or any ICON Subsidiary dissolves, liquidates, or fails
to maintain its corporate existence or amends its Articles of Incorporation or
By-Laws in any material respect.
(r) If any default occurs in the payment of Borrower's liabilities or
performance of Borrower's covenants under the terms of the Put Agreement
8.2 Remedies Cumulative. All of Lender's rights and remedies under this
-------------------
Agreement and the Other Agreements are cumulative and non-exclusive.
8.3 Acceleration. Upon an Event of Default, without notice by Lender to or
------------
demand by Lender to Borrower, Borrower's Liabilities shall be due and payable,
forthwith.
29
8.4 Remedies. Upon the occurrence of an Event of Default and the
--------
continuation thereof, Lender, in its sole and absolute discretion, may:
(a) exercise any one or more of the rights and remedies of a secured
party under the Uniform Commercial Code of the relevant state or states and any
other applicable law upon default by a debtor;
(b) enter, with or without process of law and without breach of the
peace, any premises where the Collateral is or may be located, and without
charge or liability to Lender therefor seize and remove the Collateral from said
premises and/or remain upon said premises and use the same for the purpose of
collecting, preparing and disposing of the Collateral;
(c) sell or otherwise dispose of the Collateral at public or private
sale for cash or credit, provided, however, that Borrower shall be credited with
-----------------------
the net proceeds of such sale only when such proceeds are actually received by
Lender;
(d) to the extent permitted by law, Borrower hereby waives all right
to the possession, income, and rents of any Real Property from and after the
occurrence of any Event of Default, and Lender is hereby expressly authorized
and empowered, at and following any such occurrence, to enter into and upon and
take possession of the real property and the Leaseholds or any part thereof, to
lease, sublease or assign the same, to collect and receive all rents and to
apply the same and to foreclose the lien of the mortgage hereby granted in
accordance with the laws of the state where the real property is located and
Lender shall have all rights and remedies to the fullest extent of the law;
and/or
(e) exercise any or all rights or remedies under any of the Other
Agreements.
8.5 Assemble Collateral. Upon the occurrence of an Event of Default and
-------------------
the continuation thereof, Borrower, immediately upon demand by Lender, shall
assemble the Collateral and make it available to Lender at a place or places to
be designated by Lender which are reasonably convenient to Lender and Borrower.
8.6 Injunctive Relief. Borrower recognizes that in the event Borrower
-----------------
fails to perform, observe or discharge any of the Secured Obligations, no remedy
of law will provide adequate relief to Lender, and agrees that Lender shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
8.7 Notice of Sale. Any notice required to be given by Lender of a sale,
--------------
lease, other disposition of the Collateral or any other intended action by
Lender, deposited in the United States mail, postage prepaid and duly addressed
to Borrower at its principal place
30
of business specified on Exhibit C not less than ten (10) days prior to such
proposed action, shall constitute commercially reasonable and fair notice to
Borrower thereof.
8.8 Postponement of Sale. Upon the occurrence of an Event of Default and
--------------------
the continuation thereof, Borrower agrees that Lender may, if Lender deems it
reasonable, postpone or adjourn any such sale of the Collateral from time to
time by an announcement at the time and place of sale or by announcement at the
time and place of such postponed or adjourned sale, without being required to
give a new notice of sale. Borrower agrees that Lender has no obligation to
preserve rights against prior parties to the Collateral. Further, Borrower
waives and releases any cause of action and claim against Lender as a result of
Lender's possession, collection or sale of the Collateral, any liability or
penalty for failure of Lender to comply with any requirement imposed on Lender
relating to notice of sale, holding of sale or reporting of sale of the
Collateral, and, to the extent permitted by law, any right of redemption from
such sale.
8.9 Waiver of Bond. In the event Lender seeks possession of the Collateral
--------------
through replevin or other court process, Borrower hereby irrevocably waives (a)
any bond, surety or security required as an incident to such possession, and (b)
any demand for possession of the Collateral prior to commencement of any suit or
action to recover possession thereof.
8.10 Consent Does Not Create Custom. No authorization given by Lender
------------------------------
pursuant to this Agreement or the Other Agreements to sell any specified portion
of the Collateral or any items thereof, and no waiver by Lender in connection
therewith shall establish a custom or constitute a waiver of the prohibition
contained in this Agreement against such sales, with respect to any portion of
the Collateral or any item thereof not covered by said authorization.
8.11 Revenue Fund. If an Event of Default of Unmatured Default has occurred
------------
and is continuing, upon direction from Lender, Borrower, and to the extent
appropriate Guarantor, shall establish a fund, herein referred to as the
"REVENUE FUND" with a bank (the "Bank") which is acceptable to Lender. Borrower,
and to the extent appropriate Guarantor, shall deposit into such fund all of
Borrower's revenues received from any of the Collateral, including any Fee
Agreements, during each succeeding month, beginning on the first day thereof,
and on each day thereafter. Borrower, and to the extent appropriate, Guarantor,
shall direct all Account Debtor's to remit payments to Borrower to the Revenue
Fund Account. Unless all of the Indebtedness has been accelerated pursuant to
the remedies set forth herein, monies in the Revenue Fund shall be paid first to
the Lender as payment on account of any and all outstanding Indebtedness then
due, and second to pay for ordinary and necessary expenses of the Borrower as
described in a request for disbursements delivered to the Bank.
31
9. CONDITIONS PRECEDENT TO DISBURSEMENT
------------------------------------
9.1 Checklist Items. The obligation of Lender to make the Loan to Borrower
---------------
is subject to the condition precedent that, in addition to satisfaction of the
conditions set forth in Sections 9.2 and 9.3, Lender shall have received, prior
to the disbursement of the proceeds of the Loan hereunder all documents,
instruments, agreements, notes, mortgages, collateral assignments, evidences of
Borrower's authority, and all other instruments as Lender may reasonably
request, including but not limited to all items on the Documentation Checklist,
delivered by Lender to Borrower prior to the date hereof.
9.2 Necessary Actions. The obligation of Lender to make the Loan to
-----------------
Borrower is subject to the further condition precedent that all proceedings
taken in connection with the transactions contemplated by this Agreement, and
all instruments, authorizations and other documents applicable thereto, shall be
reasonably satisfactory in form and substance to Lender and its counsel.
9.3 Conditions Precedent. In addition to the foregoing, prior to Lender
--------------------
making the Loan, all of the following shall have been satisfied in a manner
satisfactory to Lender:
(a) no change in the condition or operations, financial or otherwise,
of Borrower, or any other Loan Party, shall have occurred which change, in the
sole credit judgment of Lender, may have a material adverse effect on Borrower,
or any other Loan Party or on any of the Collateral;
(b) no litigation shall be outstanding or have been instituted or
threatened which Lender determines to be material against Borrower, any other
Loan Party or any of the Collateral;
(c) all of the representations and warranties of Borrower and all
other Loan Parties set forth in this Agreement and each of the Other Agreements
shall be true and correct on the date of disbursement;
(d) no Event of Default or Unmatured Default shall exist or be
continuing; and
(e) all Uniform Commercial Code financing statements shall have been
filed in the appropriate jurisdictions and Lender shall have received evidence,
in form and substance satisfactory to Lender thereof;
10. GENERAL
-------
10.1 Compliance with ERISA.
---------------------
32
(a) Representations and Warranties. Borrower hereby represents and
------------------------------
warrants that:
(i) Exhibit H hereto describes the Employee Benefit Plans to which
---------
Borrower or any of its ERISA Affiliates may have obligations;
(ii) each Employee Benefit Plan of Borrower or any of its ERISA
Affiliates is in compliance in all material respects with its terms and with the
applicable provisions of ERISA, the Code and all other statutes and regulations
applicable thereto and each such Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified, and each trust related to any such Employee
Benefit Plan has been determined to be exempt from federal income tax under
Section 501(a) of the Code;
(iii) neither Borrower nor any of its ERISA Affiliates maintains or
contributes to any Employee Benefit Plan with an actuarial present value of
projected benefit obligations that exceeds the fair market value of net assets
available for such benefits, calculated on the basis of the actuarial
assumptions specified in the most recent actuarial valuation for such Employee
Benefit Plan, and no such Employee Benefit Plan provides for subsidized early
retirement benefits that could materially adversely affect the funded status of
such Employee Benefit Plan or Employee Benefit Plans in the event of a reduction
in force or plant closing;
(iv) with respect to each Employee Benefit Plan that is a "defined
benefit plan", as defined in Section 3(35) of ERISA, the assets of each such
Employee Benefit Plan are equal to or greater than the accrued benefits of the
participants and beneficiaries thereunder, as determined pursuant to the
actuarial methods and assumptions utilized by the PBGC in the event of a plan
termination;
(v) neither Borrower nor any of its ERISA Affiliates sponsors,
maintains, participates in or contributes to any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA that provides benefits to employees
after termination of employment other than as required by Section 601 of ERISA
or applicable state law; as such, neither Borrower nor any of its ERISA
Affiliates are currently or will in the future be subject to the accounting
recognition and disclosure standards of Statement of Financial Accounting
Standards No. 106 (FASB 106);
(vi) neither Borrower nor any of its ERISA Affiliates has breached
in any material respect any of the responsibilities, obligations, or duties
imposed on them by ERISA or the regulations promulgated thereunder with respect
to any Employee Benefit Plan;
33
(vii) neither Borrower nor any ERISA Affiliate has (i) failed to
make a required contribution or payment to a Multiemployer Plan or (ii) made or
expects to make a complete or partial withdrawal under Sections 4203 or 4205 of
ERISA from a Multiemployer Plan;
(viii) at the date hereof, the aggregate potential withdrawal
liability payment, as determined in accordance with Title IV of ERISA, of
Borrower and any ERISA Affiliates with respect to all Employee Benefit Plans
that are Multiemployer Plans does not exceed $50,000 and, to the best of
Borrower's and its ERISA Affiliate's knowledge, no Multiemployer Plan is in
reorganization or insolvent within the meaning of Sections 4241 or 4245 of
ERISA.
(ix) neither Borrower nor any ERISA Affiliate has failed to make a
required installment or any other required payment under Section 412 of the Code
on or before the due date for such installment or other payment;
(x) neither Borrower nor any ERISA Affiliate is required to
provide security to an Employee Benefit Plan under Section 401(a)(29) of the
Code due to an Employee Benefit Plan amendment that results in an increase in
current liability for the plan year;
(xi) no liability to the PBGC has been, or is expected by Borrower
or any ERISA Affiliate to be, incurred by Borrower or any ERISA Affiliate, other
than the payment of premiums, and there are no premium payments that have become
due and which are unpaid;
(xii) no events have occurred in connection with any Employee
Benefit Plan that might constitute grounds for the termination of any such
Employee Benefit Plan by the PBGC or for the appointment by any United States
District Court of a trustee to administer any such Employee Benefit Plan;
(xiii) no Reportable Event has, in the case of any Employee Benefit
Plan maintained by Borrower or an ERISA Affiliate other than a Multiemployer
Plan, occurred and is continuing, or to the best of Borrower's knowledge, has
occurred and is continuing in the case of any such Employee Benefit Plan that is
a Multiemployer Plan;
(xiv) no Employee Benefit Plan maintained by Borrower or an ERISA
Affiliate had an Accumulated Funding Deficiency, whether or not waived, as of
the last day of the most recent fiscal year of such Employee Benefit Plan or, in
the case of any Multiemployer Plan, as of the most recent fiscal year of such
Multiemployer Plan for which the annual reports of such Multiemployer Plan's
actuaries and auditors have been received; and
34
(xv) neither Borrower nor any ERISA Affiliate has engaged in a
Prohibited Transaction prior to the date hereof, and the execution, delivery,
and carrying out of this Agreement will not involve any non-exempt Prohibited
Transactions (within the meaning of Part 4 of Subtitle B of Title I of ERISA) or
any transaction in connection with which a tax could be imposed pursuant to
Section 4975 of the Code.
(b) ERISA Reports. Borrower shall:
-------------
(i) as soon as possible, and in any event within fifteen (15)
Business Days, after Borrower or an ERISA Affiliate knows or has reason to know
that, regarding any Employee Benefit Plan with respect to Borrower or an ERISA
Affiliate, a Prohibited Transaction or a Reportable Event has occurred (whether
or not the requirement for notice, if applicable, of such Reportable Event has
been waived by the PBGC), deliver to Lender a certificate of a responsible
officer of Borrower setting forth the details of such Prohibited Transaction or
Reportable Event, the action that Borrower proposes to take with respect
thereto, and, when known, any action taken or threatened by the Internal Revenue
Service, Department of Labor, or PBGC;
(ii) upon request of Lender made from time to time, deliver to
Lender a copy of the most recent actuarial report, funding waiver request, and
annual report filed with respect to any Employee Benefit Plan maintained by
Borrower or an ERISA Affiliate;
(iii) upon request of Lender made from time to time, deliver to
Lender a copy of any Employee Benefit Plan sponsored, contributed to,
participated in or maintained by Borrower or any ERISA Affiliate; and
(iv) as soon as possible, and in any event within ten (10) Business
Days, after it knows or has reason to know that any of the following have
occurred with respect to any Employee Benefit Plan maintained, or contributed
to, by Borrower or an ERISA Affiliate, deliver to Lender a certificate of a
responsible officer of Borrower setting forth the details of the events
described in (a) through (l) and the action that Borrower or any ERISA Affiliate
proposes to take with respect thereto, together with a copy of any notice or
filing from the PBGC or other agency of the United States government with
respect to such of the events described in (a) through (l): (a) any Employee
Benefit Plan has been terminated if such termination could subject Borrower or
any ERISA Affiliate to material liability; (b) the Plan Sponsor intends to
terminate any Employee Benefit Plan; (c) the PBGC has instituted or will
institute proceedings under Section 4042 of ERISA to terminate any such Employee
Benefit Plan or to appoint a trustee to administer such Employee Benefit Plan,
or Borrower or any ERISA Affiliate receives a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such Multiemployer
Plan;
35
(d) Borrower or any ERISA Affiliate withdraws from any Employee Benefit
Plan, or notice of any withdrawal liability is received by Borrower or any
ERISA Affiliate; (e) any Employee Benefit Plan has received an unfavorable
determination letter from the Internal Revenue Service regarding the
qualification of the Employee Benefit Plan under Section 401(a) of the
Code; (f) Borrower or any ERISA Affiliate fails to make a required
installment or any other required payment under Section 412 of the Code on
or before the due date for such installment or payment or has applied for a
waiver of the minimum funding standard under Section 412 of the Code; (g)
the imposition of any tax under Code Section 4980B(a) or the assessment by
the Secretary of Labor of a civil penalty under Sections 502(c) or 502(l)
of ERISA; (h) there is a partial or complete withdrawal (as described in
ERISA Section 4203 or 4205) by Borrower or any ERISA Affiliate from a
Multiemployer Plan; (i) Borrower or any ERISA Affiliate is in "DEFAULT" as
defined in ERISA Section 4219(c)(5)) with respect to payments to a
Multiemployer Plan required by reason of its complete or partial withdrawal
from such Employee Benefit Plan; (j) a Multiemployer Plan is in
"REORGANIZATION" or is "INSOLVENT" (as described in Title IV of ERISA) or
such Multiemployer Plan intends to terminate or has terminated under
Section 4041A of ERISA; (k) the institution of a proceeding by a fiduciary
of a Multiemployer Plan against Borrower or any ERISA Affiliate to enforce
Section 515 of ERISA; or (1) Borrower or any ERISA Affiliate has materially
increased benefits under any existing Employee Benefit Plan or commenced
material contributions to an Employee Benefit Plan which is either not
fully insured or is a defined benefit plan to which Borrower or any ERISA
Affiliate was not previously contributing. For purposes of this Section,
Borrower shall be deemed to have knowledge of all facts known by the Plan
Administrator of any Employee Benefit Plan of which Borrower or any ERISA
Affiliate is the Plan Sponsor.
(c) Compliance with ERISA. Borrower and its ERISA Affiliates will
---------------------
not (i) establish, maintain, or operate any Employee Benefit Plan that is not in
compliance in all material respects with the provisions of ERISA, the Code, and
all other applicable laws, and the regulations and interpretations thereunder;
(ii) allow to exist any Accumulated Funding Deficiency with respect to any
Employee Benefit Plan, whether or not waived; (iii) terminate any Employee
Benefit Plan or withdraw or effect a partial or complete withdrawal (as
described in ERISA Sections 4203 or 4205) from any Multiemployer Plan, if such
termination or withdrawal could subject Borrower or any ERISA Affiliate to
material liability; (iv) fail to make any required installment or any other
payment required under Section 412 of the Code on or before the due date for
such installment or other payment; (v) amend any Employee Benefit Plan so as to
result in an increase in current liability for the plan year such that Borrower
or any ERISA Affiliate is required to provide security to such Employee Benefit
Plan under Section 401(a)(29) of the Code; (vi) fail to make any contribution or
payment to any Multiemployer Plan which Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer Plan; (vii)
enter into any Prohibited Transaction for which a class exemption is not
available or a
36
private exemption previously has not been obtained from the Department of Labor;
(viii) permit the occurrence of any Reportable Event, or any other event or
condition, which could subject either Borrower or any ERISA Affiliate to
liability; or (ix) allow or permit to exist any other event or condition known
or that reasonably should be known to Borrower which event or condition relates
to an Employee Benefit Plan and could subject either Borrower or any ERISA
Affiliate to material liability.
(d) Definitions. For purposes of this Section 10.1, the following
-----------
definitions shall apply:
(i) "ACCUMULATED FUNDING DEFICIENCY" shall have the meaning
assigned to that term in Section 302 of ERISA.
(ii) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(iii) "EMPLOYEE BENEFIT PLAN" shall mean an employee benefit plan
within the meaning of Section 3(3) of ERISA that is maintained, sponsored,
participated in or contributed to by Borrower or any ERISA Affiliate.
(iv) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, or any successor thereto.
(v) "ERISA AFFILIATE" shall mean any corporation, trade or Business
that is, along with Borrower, a member of a controlled group of trades or
businesses, or a member of any group of organizations, within the meaning
of Sections 414(b), (c), (m) or (o) of the Code, and any regulations
thereunder.
(vi) "MULTIEMPLOYER PLAN" shall mean any plan described in Sections
3(37) or 4001(a)(3) of ERISA to which contributions are or have been made
by Borrower or any ERISA Affiliate.
(vii) "PBGC" shall mean the Pension Benefit Guaranty Corporation or
any governmental body succeeding to its functions.
(viii) "PLAN ADMINISTRATOR" shall have the meaning assigned to it in
Section 3(16)(A) of ERISA.
(ix) "PLAN SPONSOR" shall have the meaning assigned to it in Section
3(16)(B) of ERISA.
(x) "PROHIBITED TRANSACTION" shall mean a transaction that is
prohibited under Code Section 4975 or ERISA Section 406 and not exempt
under Code Section 4975 or ERISA Section 408.
37
(xi) "REPORTABLE EVENT" shall mean (a) an event described in
Sections 4043(c), 4068(a), or 4063(a) of ERISA or in the regulations
thereunder, (b) receipt of a notice of withdrawal liability with respect to
a Multiemployer Plan pursuant to Section 4202 of ERISA, (c) an event
requiring Borrower or any ERISA Affiliate to provide security for an
Employee Benefit Plan under Code Section 401(a)(29), (d) any failure to
make payments required by Code Section 412(m), (e) the withdrawal of
Borrower or any ERISA Affiliate from an Employee Benefit Plan in which it
is a "SUBSTANTIAL EMPLOYER" as defined in Section 4001(a)(2) of ERISA, (f)
the institution of proceedings to terminate an Employee Benefit Plan by the
PBGC, or (g) the filing of a notice to terminate an Employee Benefit Plan
or the treatment of an amendment of an Employee Benefit Plan as a
termination under Section 4041 of ERISA.
10.2 Costs. Borrower hereby agrees that it shall reimburse Lender on
-----
demand, as part of the Secured Obligations, for any and all Costs, and any
amount not paid on demand shall bear interest at the Default Rate; provided
--------
that, (i) the Costs to be reimbursed by Borrower with respect to attorney's fees
----
incurred in the negotiation, preparation and execution of this Agreement and the
other Loan Documents shall not exceed $20,000 plus out-of-pocket costs and
expenses, and (ii) unless an Event of Default or an Unmatured Default has
occurred and is continuing, or Borrower and Lender materially amend the terms
hereof, the maximum costs to be reimbursed by Borrower during the term hereof
shall be $5,000 per year.
10.3 Modification. This Agreement and the Other Agreements may not be
------------
modified, altered or amended except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer this Agreement or
the Other Agreements or any portion thereof, including, without limitation,
Borrower's rights, titles, interests, remedies, powers and/or duties thereunder.
Borrower hereby consents to Lender's sale, assignment, transfer or other
disposition, at any time and from time to time hereafter, of this Agreement or
the Other Agreements, or of any participation therein of portion thereof,
including, without limitation, Lender's rights, titles, interests, remedies,
powers and/or duties.
10.4 Strict Compliance. Lender's failure at any time or times hereafter to
-----------------
require strict performance by Borrower of any provision of this Agreement shall
not waive, affect or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Lender of an
Event of Default by Borrower under this Agreement or the Other Agreements shall
not suspend, waive or affect any other Event of Default by Borrower under this
Agreement or the Other Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of Borrower
contained in this Agreement or the Other Agreements and no Event of Default by
Borrower under this Agreement or the Other Agreements shall be deemed to have
been suspended
38
or waived by Lender unless such suspension or waiver is by an instrument in
writing signed by an officer of Lender and directed to Borrower specifying such
suspension or waiver.
10.5 Severability. If any provision (in whole or in part) of this Agreement
------------
or the other Loan Documents or the application thereof to any person or
circumstance is held invalid or unenforceable, then such provision shall be
deemed modified, restricted, or reformulated to the extent and in the manner
necessary to render the same valid and enforceable, or shall be deemed excised
from this Agreement or the other Loan Document, as the case may require, and
this Agreement and such other Loan Document shall be construed and enforced to
the maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein or therein, as the case
may be. The parties further agree to seek a lawful substitute for any provision
found to be unlawful. If such modification, restriction or reformulation is not
reasonably possible, the remainder of this Agreement and the other Loan
Documents and the application of such provision to other persons or
circumstances will not be affected thereby and the provisions of this Agreement
and the other Loan Documents shall be severable in any such instance.
10.6 Successors and Assigns. This Agreement and the Other Agreements shall
----------------------
be binding upon and inure to the benefit of the successors and assigns of
Borrower and Lender; provided that this Agreement and no interest or right
-------------
hereunder may be assigned by Borrower without the prior written consent of
Lender, which consent may be withheld in Lender's sole and exclusive discretion.
10.7 Loan Agreement Controls. The provisions of the Other Agreements are
-----------------------
incorporated in this Agreement by this reference thereto. Except as otherwise
provided in this Agreement and except as otherwise provided in the Other
Agreements by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Other Agreements, the provision
contained in this Agreement shall govern and control.
10.8 Termination. Except for the obligations set forth in Section 10.9
-----------
hereof and as may be expressly provided in any Other Agreement, this Agreement
and all of the covenants, agreements and obligations of Borrower set forth
herein and in the Other Agreements and the liens and security interests granted
Lender pursuant hereto and the Other Agreements shall automatically terminate
when all accrued but unpaid Secured Obligations hereunder have been paid in
full.
10.9 Liability Prior to Termination. Except to the extent provided to the
------------------------------
contrary in this Agreement and in the Other Agreements, no termination or
cancellation (regardless of cause or procedure) of this Agreement or the Other
Agreements shall in any way affect or impair the powers, obligations, duties,
rights and liabilities of Borrower or Lender in any way or respect relating to
any transaction or event occurring prior to such termination or
39
cancellation with respect to Collateral and/or any of the undertakings,
agreements, covenants, warranties and representations of Borrower or Lender
contained in this Agreement or the Other Agreements.
10.10 Waiver of Notice. Except as otherwise specifically provided in this
----------------
Agreement, Borrower waives any and all notice or demand which Borrower might be
entitled to receive with respect to this Agreement or the Other Agreements by
virtue of any applicable statute or law, and waives presentment, demand and
protest and notice of presentment, protest, default, dishonor, non-payment,
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel
paper and guaranties at any time held by Lender on which Borrower may in any way
be liable and hereby ratifies and confirms whatever Lender may do in this
regard.
10.11 Indemnification. Borrower shall indemnify, defend, and hold Lender
---------------
harmless from and against any and all losses, costs, liabilities, damages, and
expenses (including legal and other expenses incident thereto) of every kind,
nature and description, that result from or arise out of: (a) the breach of any
representation or warranty of Borrower set forth in this Agreement or in any
certificate, schedule, or other instrument by Borrower pursuant hereto; (b) the
breach of any of the covenants of Borrower contained in or arising out of this
Agreement or the transactions contemplated hereby; or (c) any third party claims
relating to the conduct of the Borrower's business.
10.12 Acceptance by Lender. This Agreement and the other Loan Documents are
--------------------
submitted by Borrower to Lender (for Lender's acceptance or rejection thereof)
at Lender's principal place of business as an offer by Borrower to borrow monies
from Lender now and from time to time hereafter and shall not be binding upon
Lender or become effective until and unless accepted by Lender, in writing, at
said place of business. If so accepted by Lender, this Agreement and the other
Loan Documents shall be deemed to have been made at said place of business.
10.13 Release of Claims. Borrower releases Lender from any and all causes
-----------------
of action or claims which Borrower may now or hereafter have for any asserted
loss or damage to Borrower claimed to be caused by or arising from: (a) any
failure of Lender to protect, enforce or collect in whole or in part any of the
Collateral; (b) Lender's notification to any Account Debtor of Lender's security
interests in the Accounts and Special Collateral; (c) Lender's directing any
Account Debtor to pay any sums owing to Borrower directly to Lender; and (d) any
other act or omission to act on the part of Lender, its officers, agents or
employees, except for willful misconduct.
10.14 Prior Agreements. Except as otherwise provided herein, this Agreement
----------------
and the Other Agreements supersede in their entirety any other agreement or
understanding
40
between Lender and Borrower with respect to loans and advances made by Lender
and all commitments of Lender in connection therewith.
10.15 Knowledge. As used herein the phrase "TO THE BEST OF BORROWER'S
---------
KNOWLEDGE" or words of such import shall mean all knowledge, including actual
knowledge and knowledge of matters which any reasonable person in such position
knew or should have known after due inquiry, of the respective officers,
directors and managers of Borrower.
10.16 Notice. Any and all notices given in connection with this Agreement
------
shall be deemed adequately given only if in writing and addressed to the party
for whom such notices are intended at the address set forth below. All notices
shall be sent by personal delivery, Federal Express or other overnight messenger
service, first class registered or certified mail, postage prepaid, return
receipt requested or by other means at least as fast and reliable as first class
mail. A written notice shall be deemed to have been given to the recipient party
on the earlier of (a) the date it shall be delivered to the address required by
this Agreement; (b) the date delivery shall have been refused at the address
required by this Agreement; or (c) with respect to notices sent by mail, the
date as of which the postal service shall have indicated such notice to be
undeliverable at the address required by this Agreement. Any and all notices
referred to in this Agreement, or which either party desires to give to the
other, shall be addressed as follows:
(a) If to Lender, at: TKO Finance Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. Ozark, President
with a copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
(b) If to the Borrower, at: ICON Holdings Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Beaufort ▇.▇. ▇▇▇▇▇▇, President
with a copy to: ▇▇▇▇ ▇▇▇, Esq.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
41
The above addresses may be changed by notice of such change, mailed as
provided herein, to the last address designated.
10.17 Section Titles, etc. The Section titles and table of contents, if
--------------------
any, contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto. All references herein to Section, paragraphs, clauses and other
subdivisions refer to the corresponding Sections, paragraphs, clauses and other
subdivisions of this Agreement; and the words "herein", "hereof", "hereby",
"hereto", "hereunder", and words of similar import refer to this Agreement as a
whole and not to any particular Section, paragraph, clause or subdivision
hereof. All Exhibits which are referred to herein or attached hereto are hereby
incorporated by reference.
10.18 Waiver by Borrower. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS
------------------
AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES (a) PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY
BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS
REGARD; (b) ALL RIGHTS TO NOTICE AND A HEARING PRIOR TO LENDER'S TAKING
POSSESSION OR CONTROL OF, OR TO LENDER'S REPLEVY, ATTACHMENT OR LEVY UPON THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; AND (c) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT, EXTENSION AND EXEMPTION LAWS.
10.19 Governing Law. THIS AGREEMENT HAS BEEN DELIVERED FOR ACCEPTANCE BY
-------------
LENDER IN CHICAGO, ILLINOIS AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE
STATE OF ILLINOIS. BORROWER HEREBY (a) IRREVOCABLY SUBMITS, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED IN CHICAGO, ILLINOIS, OVER ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY MATTER ARISING FROM OR RELATED TO THIS AGREEMENT; (b) IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT BORROWER MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF ANY SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT; (c) AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY LAW; AND (d) TO THE EXTENT PERMITTED BY
42
APPLICABLE LAW, AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING AGAINST
LENDER OR ANY OF LENDER'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR PROPERTY,
CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT
OTHER THAN ONE LOCATED IN ▇▇▇▇ COUNTY, ILLINOIS. NOTHING IN THIS SECTION SHALL
AFFECT OR IMPAIR LENDER'S RIGHT TO SERVE LEGAL PROCESS IN ANY MANNER PERMITTED
BY LAW OR LENDER'S RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR
BORROWER'S PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
10.20 Appointment for Service of Process. Borrower hereby irrevocably
----------------------------------
appoints and designates Corporation Service Company, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ as its true and lawful attorney-in-fact and duly
authorized agent for service of legal process and agrees that service of such
process upon such agent and attorney-in-fact shall constitute personal service
of such process upon Borrower.
10.21 Representation by Counsel. Borrower hereby represents that it has
--------------------------
been represented by competent counsel of its choice in the negotiation and
execution of this Agreement and the Other Agreements; that it has read and fully
understood the terms hereof; Borrower and its counsel have been afforded an
opportunity to review, negotiate and modify the terms of this Agreement, and
that it intends to be bound hereby. In accordance with the foregoing, the
general rule of construction to the effect that any ambiguities in a contract
are to be resolved against the party drafting the contract shall not be employed
in the construction and interpretation of this Agreement.
10.22 Plural, Singular. The singular shall be deemed to include the plural
----------------
and the plural to include the singular.
10.23 Waiver of Trial by Jury. TO THE EXTENT PERMITTED BY LAW, BORROWER AND
-----------------------
LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER AGREEMENTS OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF EITHER PARTY IN CONNECTION HEREWITH WHETHER SOUNDING IN CONTRACT, TORT, FRAUD
OR OTHERWISE. BORROWER HEREBY EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN AND THAT BORROWER IS VOLUNTARILY
WAIVING ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE BETWEEN
THE PARTIES HERETO.
43
BORROWER AND LENDER EACH HEREBY EXPRESSLY ACKNOWLEDGES THAT IT IS
WAIVING ITS RIGHT TO TRIAL BY JURY.
----------------------------
INITIALS
----------------------------
INITIALS
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
BORROWER:
--------
ICON HOLDINGS CORP., a Delaware corporation
By:
--------------------------------
Beaufort ▇.▇. ▇▇▇▇▇▇, President
LENDER:
------
TKO FINANCE CORPORATION
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. Ozark, President
Exhibit A
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Wire Transfer Instructions
--------------------------
First Chicago National Bank
Chicago, IL
ABA #071 000013
For the Account of TKO Finance Corporation
Account No. 119 289 86
Attn: ▇▇▇▇ ▇▇▇▇▇
Exhibit B
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Make Whole Amount
-----------------
For purposes hereof, the "Make Whole Amount" shall mean, as of any
prepayment date, to the extent that the Reinvestment Yield, as hereinafter
defined, on such date is lower than the interest rate payable on or in respect
of the Note, the excess of: (a) the present value of the principal and interest
payments to be foregone by any prepayment on the Note, determined by discounting
(semi-annually on the basis of a 360-day year composed of twelve (12) thirty
(30) day months) such payments at a rate that is equal to the Reinvestment
Yield; over (b) the aggregate principal amount of the Note then to be paid or
prepaid.
To the extent that the Reinvestment Yield on any prepayment date is
equal to or higher than the interest rate payable on or in respect of the Note,
the Make Whole Amount is zero.
For purposes hereof, "Reinvestment Yield" shall mean the yield as set
forth on page "USD" of the Bloomberg Financial Markets Service at 10:00 a.m.
(Chicago time) on the prepayment date for actively traded U.S. Treasury
securities having a maturity equal to the weighted average life to maturity of
the Note then being prepaid rounded to the nearest month, or if such yields
shall not be reported as of such time or the yields as of such time are not
ascertainable in accordance with the preceding clause, then the arithmetic mean
of the yields published in the statistical release designed H-15 (519) of the
Board of Governors of the Federal Reserve System under the caption "U.S.
Government Securities--Treasury Constant Maturities" (the "Statistical Release")
for the maturity corresponding to the remaining weighted average life to
maturity of the Note then being prepaid or paid as of the date of such
prepayment or payment rounded to the nearest month. If no maturity exactly
corresponding to such rounded weighted average life to maturity shall appear
therein, yields for the two most closely corresponding published maturities (one
of which occurs prior and the other subsequent to the weighted average life to
maturity) shall be calculated pursuant to the foregoing sentence and the
Reinvestment Yield shall be interpolated from such yields on a straight-line
basis (rounding, in each of such relevant periods, to the nearest month).
Exhibit C
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Location of Collateral
----------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Exhibit D
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Fictitious Names
----------------
NONE
Exhibit E
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Indebtedness
------------
. Promissory Note dated August 20, 1996 by Borrower in the original
principal amount of $1,133,000 in favor of Summit Asset Holding L.L.C.
. Promissory Note dated August 20, 1996 by Borrower in the original
principal amount of $233,000 in favor of Warrenton Capital Partners L.L.C.
. Promissory Note dated August 20, 1996 by Borrower in the original
principal amount of $1,200,000 in favor of Warrenton Capital Partners
L.L.C.
. Demand Note dated August 20, 1996 by Borrower in the original
principal amount of $1,100,000 in favor of ICON Capital Corp.
49
Exhibit F
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Affiliates
----------
ICON Capital Corp., a Connecticut corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ICON Capital (UK) Limited, a corporation organized
under the laws of the United Kingdom
c/o The Summit Group PLC,
▇▇▇ ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ICON Financial Corp., a Delaware corporation
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
ICON Funding Corp., a Delaware corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ICON Securities Corp., a New York corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
MGC/▇▇▇▇▇▇▇ Capital Corporation, a Delaware corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Exhibit G
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
INITIAL COLLATERAL REPORT
-------------------------
Exhibit
-------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
ERISA Matters
-------------
NONE
Exhibit I
---------
Attached to and Forming a
Part of Loan and Security Agreement
ICON Holdings Corp.
Lessees
-------