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Exhibit 10.11
May 28, 1997
American Commercial Finance Corporation
000 Xxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxx, XX 00000
Gentlemen:
This letter sets forth certain agreements among you ("ACFC"), Industrial
Technologies, Inc. ("ITI") and Intec Europe, Ltd. ("INTEC" and collectively,
with ITI, the "BORROWERS"), Xxxxxx X. Xxxxxxx and Xxxxxx Xxxxxx (collectively,
the "FIDELITY GUARANTORS"), and Intec Corp. (the "CORPORATE GUARANTOR" and
collectively, with the Fidelity Guarantors, the "GUARANTORS"). The Borrowers and
Guarantors are sometimes referred to below as the "OBLIGORS".
The Borrowers and ACFC are parties to the Commercial Revolving Loan,
Demand Loan and Security Agreement dated November 1, 1996, as amended by letter
agreement in December, 1996 (collectively, the "LOAN AGREEMENT"), and the
"Financing Agreements", as defined in the Loan Agreement. Capitalized terms not
expressly defined herein shall have the definitions assigned to them in the Loan
Agreement.
The Borrower and the Corporate Guarantor acknowledge that each of them
is unconditionally indebted to ACFC, as borrower or guarantor, and the Fidelity
Guarantors acknowledge that each of them is obligated to ACFC as fidelity
guarantor, with respect to the debts listed on Exhibit A attached hereto (the
"INDEBTEDNESS") in the amounts set forth on Exhibit A attached hereto, plus
interest accrued and accruing thereon and costs and expenses of collection,
including, without limitation, attorneys' fees. Additionally, as of the date
hereof, the Obligors acknowledge that they have no defense, offset, recoupment
or counterclaim to their obligations with respect to the Indebtedness and
further that they have no other claim whatsoever against ACFC (whether arising
in contract, tort or otherwise) with respect to the Indebtedness or any other
matter whatsoever.
The Obligors have requested that ACFC: (i) extend to the Borrowers a new
term loan in the original principal amount of $500,000 (the "NEW TERM LOAN");
and (ii) modify certain other terms and conditions of the Loan Agreement
(collectively, the "ACCOMMODATIONS").
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ACFC has agreed to extend the Accommodations but only on the following
terms and conditions:
1. As an inducement to and in consideration of ACFC's agreements
contained herein, each of the Obligors represents, warrants and acknowledges to
ACFC that (a) all representations and warranties contained in the documents
executed in connection with the Indebtedness (the "LOAN DOCUMENTS") are true and
correct on and as of the date hereof and are incorporated herein by reference
and hereby remade; (b) the resolutions previously adopted by the Board of
Directors of the Borrowers and provided to ACFC have not in any way been
rescinded or modified and are now in full force and effect, except to the extent
that they have been modified or supplemented to authorize this Agreement and the
transactions described herein; (c) no Event of Default (as defined in the Loan
Documents) has occurred under any of the Loan Documents and no condition exists
which would constitute an Event of Default thereunder but for the giving of
notice or passage of time, or both; and (d) the consummation of the transactions
contemplated hereby is not prevented or limited by, nor does it conflict with or
result in a breach of the terms, conditions or provisions of, any evidence of
indebtedness, agreement or instrument of whatever nature to which any of the
Obligors is a party or by which any of them is bound, nor does such consummation
constitute a default under any of the foregoing, nor does such consummation
violate any federal, state or local law, regulation or order of any court or
agency which is binding upon any of the Obligors.
2. ACFC agrees to modify the Loan Agreement as follows:
(a) The first "WHEREAS" clause on page 1 of the Loan Agreement
is hereby deleted in its entirety and the following is substituted in lieu
thereof:
"WHEREAS, Borrower has requested Lender to extend to Borrower
(a) a revolving loan in the maximum aggregate principal amount
of up to $1,500,000 (the "REVOLVING LOAN") (b) a demand loan in
the original principal amount of $500,000 (the "DEMAND LOAN"),
and (c) a term loan in the original principal amount of $500,000
(the "TERM LOAN", and together with the Revolving Loan and the
Demand Loan, the "Loans")."
(b) The definitions of "Loan" and "Loans" on page 6 of the Loan
Agreement are hereby deleted in their entirety and the following is substituted
in lieu thereof:
"Loan" means a Revolving Loan, the Demand Loan or the Term Loan
and "Loans" means the Revolving Loans, the Demand Loan and the
Term Loan."
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(c) The definition of "Notes" on page 7 of the Loan Agreement is
hereby deleted in its entirety and the following in substituted in lieu thereof:
"Notes" means the Revolving Promissory Note, the Demand
Promissory Note and the Term Promissory Note."
(d) The following definitions are inserted at the end of Section
1.1 of the Loan Agreement:
"Term Loan" shall have the meaning assigned in Section 3.1
hereof.
"Term Promissory Note" shall have the meaning assigned in
Section 3.1 hereof."
(e) The title of Article III of the Loan Agreement is hereby
amended to "Demand Loan and Term Loan"; the references to the "Demand Loan" in
Section 3.3 are amended in each case to "Demand Loan and Term Loan"; and the
following sentences are added to the end of Section 3.1:
"Subject to the terms and conditions contained in this
Agreement, and so long as no Defaulting Event has occurred and
so long as the Connecticut Development Authority has purchased a
100% participation interest therein on terms acceptable to
Lender in Lender's sole discretion, Lender agrees to make a term
loan (the "TERM LOAN") to Borrower in the original principal
amount of $500,000. In addition to this Agreement, the Term Loan
shall be evidenced by a Term Promissory Note payable to Lender
in the form of Exhibit C attached hereto (the "TERM PROMISSORY
NOTE").
(f) The following is added immediately following Section 13.1(c)
of the Loan Agreement:
"(d) TERM LOAN. The Term Loan shall be repaid as set forth in
the Term Promissory Note. The Borrower may not prepay the
principal balance of the Term Note."
3. Although consent is not required therefor by the Loan Agreement, the
Obligors nevertheless hereby consent to the sale by ACFC to the Connecticut
Development Authority (the "CDA") of a 100% participation interest in the Term
Loan (the "CDA PARTICIPATION"), and the Obligors hereby consent to the release
by ACFC to the CDA of any and all information (including without limitation,
financial information) pertaining to Obligors as ACFC, in its sole discretion,
may from time to time deem appropriate.
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4. Contemporaneously herewith, Borrower shall execute and deliver to
ACFC the Term Note, which shall evidence the New Term Loan.
5. Contemporaneously herewith, the Obligors shall execute and deliver
such documents as ACFC shall require and as CDA shall require in connection with
the CDA Participation.
6. The Guarantors acknowledge and consent to the Accommodations and
further acknowledge and affirm that their Guaranty Agreements dated as of
November 1, 1996 remain in full force and effect and continue to apply to the
Indebtedness, including without limitation, the Indebtedness evidenced by the
Term Note, subject in the case of the Fidelity Guarantors to the terms and
limitations of the Fidelity Guaranties.
7. The Borrowers acknowledge and agree that all indebtedness,
liabilities and obligations of the Borrowers to ACFC, including without
limitation the Indebtedness evidenced by the Term Note, shall continue to be
secured by a first lien on and security interest in all of the Borrower's
assets.
8. The Borrowers agree to pay the reasonable legal fees and expenses
incurred by ACFC in connection with this Agreement and the transactions
contemplated hereby. Nothing herein shall be construed to limit the Borrower's
obligations to pay fees, expenses and costs pursuant to the terms of the Loan
Documents. The Borrowers hereby authorize ACFC to, at ACFC's sole option, charge
such fees and expenses to the Loan.
9. This Agreement and the other Loan Documents constitute the entire
understanding and agreement among the parties hereto and supersede any prior or
contemporaneous oral understanding with respect to the subject matter hereof.
Except as expressly modified herein, the Loan Documents remain unmodified and in
full force and effect in accordance with their terms. To the extent there is a
conflict between this Agreement and the Loan Documents, the terms of this
Agreement shall prevail.
10. Notwithstanding anything herein or in the Loan Documents to the
contrary, ACFC acknowledges that the Corporate Guarantor has been unable to
obtain a certificate of good standing from the State of Delaware due to the need
to file certain tax returns, and that the Corporate Guarantor is making every
effort to obtain such good standing certificate, but that the Corporate
Guarantor will not be able to obtain such certificate by the anticipated closing
of the New Term Loan. Accordingly, ACFC hereby waives the requirement that the
Corporate Guarantor obtain such certificate in advance of the closing of the New
Term Loan, provided, however, that the Corporate Guarantor and the Borrowers
shall continue to diligently pursue such certificate and shall notify ACFC
immediately upon obtaining the same.
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If the foregoing is in accordance with your agreement, please indicate
the same by signing below.
Very truly yours,
INDUSTRIAL TECHNOLOGIES, INC.
By: /s/ X.X. Xxxxxxx
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Its Chairman/CEO
INTEC EUROPE, LTD.
By: /s/ X.X. Xxxxxxx
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Its Chairman/CEO
INTEC CORP.
By: /s/ X.X. Xxxxxxx
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Its Chairman/CEO
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx, individually as
Fidelity Guarantor
/s/ X.X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, individually as
Fidelity Guarantor
Reviewed and Agreed to this 28th day of May, 1997:
AMERICAN COMMERCIAL
FINANCE CORPORATION
By: /s/ Xxxxxxx Mount
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Its
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EXHIBIT A
(a) demand revolving loan (the "REVOLVING LOAN") extended by ACFC to
Borrowers in the original principal amount of $1,500,000 which is evidenced by,
among other things, the Loan Agreement and the Revolving Promissory Note dated
November 1, 1996 (the "REVOLVING PROMISSORY NOTE") the current principal balance
as of May 19, 1997 of which is $749,304.42; and
(b) a demand loan extended by ACFC to Borrowers in the original
principal amount of $500,000 which is evidenced by, among other things, the Loan
Agreement and a Demand Note dated November 1, 1996, the current principal
balance as of May 19, 1997 of which is $500,000.
(c) all interest accrued and accruing on the foregoing; all fees and
other charges arising in connection therewith, as set forth in the Loan
Agreement; and all fees, costs and expenses and other obligations that may arise
and are within the definition of Obligations.
