Exhibit 10.8
LETTER AGREEMENT
REGARDING SUBSIDIARY SUPPORT
March 1, 2004
MACC Private Equities Inc.
000 Xxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
RE: $400,000 Convertible Note and Security Agreement dated as of
March 1, 2004 between MACC Private Equities Inc. and Xxxxxxxx X.
Xxxxxxx
Ladies and Gentlemen:
This Letter Agreement is made by and between MACC Private Equities Inc. a
Delaware corporation (the "Company") and MorAmerica Capital Corporation, an Iowa
corporation and wholly-owned subsidiary (the "Subsidiary") of the Company.
Except as otherwise defined herein, capitalized terms used herein shall have the
meanings given them (including through incorporation by reference) in the
Convertible Note and Security Agreement dated as of March 1, 2004 (the "Note"),
by and between the Company and Xxxxxxxx X. Xxxxxxx ("Xxxxxxx").
The Company desires to enter into the Note in order to obtain a revolving
line of credit in the maximum amount of $400,000. The Subsidiary acknowledges
that it anticipates benefit from the Company's ability to borrow under Note.
Xxxxxxx has requested that, in consideration for the extension of credit by
Xxxxxxx under the Note, Company enter into this Letter Agreement with the
Subsidiary.
1. Subject to:
(a) the articles of incorporation and by-laws of the Subsidiary;
(b) any statute, law, regulation, ordinance, code, order, rule or other
governmental restriction applicable to the Subsidiary, including,
without limitation, (i) those applicable to Subsidiary as a small
business investment company licensed under the Small Business
Investment Act of 1958, and (ii) laws relating to the insolvency of
debtors; and
(c) the legal and fiduciary responsibilities of the board of directors of
the Subsidiary in respect of the declaration and payment of dividends
and distributions;
the Subsidiary hereby agrees with Company, at any time any amount is owing under
the Note, to make a payment to Company in the amount available from any or all
of the following sources, up to the then-outstanding amount of principal and
interest under the Note:
MACC Private Equities Inc.
March 1, 2004
Page 2
i. dividends legally available for distribution to Company from time
to time;
ii. payments to the Company from time to time under the tax sharing
agreement between the Company and the Subsidiary; and
iii. reimbursement payments to the Company from time to time for those
expenses incurred by the Company that are properly allocable to
the Subsidiary, provided, however, that at the time of payment
any such reimbursement payment shall not impair the capital of
MorAmerica Capital more than the lesser of (a) forty-five percent
(45%) or (b) the maximum impairment percentage permitted under
the capital impairment rules of the Small Business
Administration.
2. This Letter Agreement, and the obligations of the Subsidiary, shall
terminate upon the later to occur of (i) the conversion of all of the
outstanding principal of and interest on the Note into shares of the
Company's Common Stock pursuant to terms of the Note, or (ii) satisfaction
in full of all obligations of the Company to Xxxxxxx under the Note.
3. This Letter Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which shall constitute one
instrument.
4. Company and the Subsidiary hereby acknowledge that the agreements contained
herein are intended to benefit Xxxxxxx and agree that Xxxxxxx is a third
party beneficiary hereof. Other than as set forth in the immediately
preceding sentence, nothing herein contained shall confer any right upon
any person other than the parties hereto.
5. This Letter Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
6. The Subsidiary acknowledges and agrees that:
(a) The Company is a holding company the assets of which are comprised
substantially of capital stock of the Subsidiary.
(b) Company's business operations are carried out substantially through
the Subsidiary.
(c) The line of credit under the Note will be used by Company for
operating expenses that will be of benefit to the Subsidiary.
MACC Private Equities Inc.
March 1, 2004
Page 3
Sincerely,
SUBSIDIARY
MORAMERICA CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
By: /s/ Xxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
Acknowledged and agreed this 1st day of March, 2004.
MACC PRIVATE EQUITIES INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
cc: Xxxxxxxx X. Xxxxxxx
