[American International Consolidated Inc. Letterhead]
October 8, 1996
Xx. Xxx Xxxxxx
M.B.C.I.
00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
RE: Loan Agreement - April 24, 1996
Dear Xxx:
During the process of filing our Registration Statement with the S.E.C.,
and the review by our accountants Xxxx and Associates, it has been noted that we
need your consent relative to the following Negative Covenants - (Copy of
Section V of the Loan Agreement is enclosed).
(A) - For the fiscal year ended 4/30/96 we exceeded $120,000 aggregate
limit on capital expenditures by acquiring $148,264 in fixed assets. I believe
this limit would not be applicable until the fiscal year beginning May 1, 1996
since we executed the loan agreement on April 24, 1996. Your confirmation
concerning the effective date of this covenant is requested.
I. - M.B.C.I. hereby acknowledges that this covenant is effective for the
fiscal year beginning May 1, 1996 and consents to the capital expenditures
incurred for the fiscal year ended 4/30/96.
/s/ Xxx Xxxxxx, Vice President/CFO
--------------------------------------
(Acknowledgement)
(B) - During the current fiscal year we have acquired a "Metal Muncher" or
Hydraulic Gap-Bed Punch Press which costs $32,500. I have previously advised you
of this purchase and agreed to provide you the following explanation to justify
this acquisition:
This machine is utilized to punch bolt holes into plate steel. We presently are
fabricating a project which has approximately 18,000 holes. This project will
complete shipment in late November. Without this piece of equipment our options
are to hand-drill them at a cost of approximately $3.00 per hole or subcontract
them at a cost of $1.00 per hole. The anticipated payback due to this large
project is estimated to be 12 months. Excluding the large project indicated
above, we would normally recover our costs for this equipment in approximately
24 months.
I have arranged to lease/finance this equipment through Glesby/Marks
Leasing for 36 months at approximately $1,100 per month. A copy of the Lease
Agreement and the invoice for the equipment is enclosed for your verification.
Your consent concerning this single capital expenditure in excess of $25,000 is
requested.
II. - M.B.C.I. hereby acknowledges and consents to the "Metal Muncher"
acquired for a cost of $32,500 and lease financed by Glesby Marks as indicated
above.
Xx. Xxx Xxxxxx
October 8, 1996
Page 2
/s/ Xxx Xxxxxx, Vice President/CFO
-----------------------------------
(Acknowledgement)
(C) - In paragraph 5.1(C) it is provided that A.I.C.I. may incur (up to
$300,000 - exclusive of broker's commission) in pursuit of said public offering.
I have enclosed a schedule detailing all the costs incurred since inception,
amounts expensed and amounts capitalized. Please note I have included the costs
and proceeds from the "Bridge Loan" which was consummated in July. It is
anticipated that the Company will incur approximately $50,000 of additional
costs prior to the effective date of the Initial Public Offering. Please confirm
if we are in compliance with the limit specified in this covenant.
III. - M.B.C.I. hereby acknowledges the costs incurred to date pursuing the
Initial Public Offering of its stock and the anticipated future costs of
approximately $50,000. We confirm the Company is in compliance with this
covenant as a result of off-setting the proceeds of the $300,000 "Bridge Loan".
/s/ Xxx Xxxxxx, Vice President/CFO
-----------------------------------
(Acknowledgement)
(D) - The present status of the I.P.O. is that we plan to file our response
to the S.E.C. by October 15, 1996. We anticipate that we will clear all their
comments by October 31, 1996. We are presently awaiting NASDAQ's response to
various legal issues they have concerning the "Bridge Loan". We anticipate their
response this week and their final approval by October 31, 1996. We can "Go
Effective" as soon [sic] we receive the final approval from the S.E.C. and
N.A.S.D.A.Q.
As a result of these delays we request a reasonable extension of the
October 31, 1996 deadline specified in the Loan Documents Covenants.
IV. - M.B.C.I. hereby acknowledges and extends the Initial Public Offering
deadline to December 31, 1996.
/s/ Xxx Xxxxxx, Vice President/CFO
-----------------------------------
(Acknowledgement)
Your prompt response to the items addressed in this [sic] requested so Xxxx
and Associates can resolve the S.E.C.'s comments. Please feel free to contact
Xxxx Xxxxxx, Xxxx Xxxxxxx or me if you need any further information.
Sincerely,
/s/ Xxx Xxxxxxxx
Xxx Xxxxxxxx
VP - Finance
Xx. Xxx Xxxxxx
October 8, 1996
Page 3
Enclosures
cc: Xxxx Xxxxxx
Xxxx Xxxxxxx
JW/ch
STATE OF TEXAS
COUNTY OF XXXXXX
SWORN TO AND SUBSCRIBED by the said VP/CFO before and undersigned, a Notary
Public in and for the County and State aforesaid this 17th day of October ,
1996.
My Commission Expires
3-4-99 /s/ Xxxxx X. Xxxx
--------------------------- ------------------------
[Notary Stamp:
XXXXX X. XXXX
Xxxxxx Public, State of Texas
Commission Expires 3-4-99]
