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EXHIBIT 99.1
[Letterhead of The CIT Group/Business Credit, Inc.]
November 18, 1999
XxXxxxx-Xxxxxxx, Inc.
0000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxxx
Ladies and Gentlemen:
We refer to the Post-Petition Loan and Security Agreement dated as of
July 15, 1999 (the "Credit Agreement") among XxXxxxx-Xxxxxxx, Inc., The CIT
Group/Business Credit, Inc. ("CITBC"), GMAC Commercial Credit LLC f/k/a BNY
Factoring LLC, each other lender referred to therein (collectively, the
"Lenders") and CITBC, as Lenders Agent ("Lenders Agent"), as amended by letter
dated August 16, 1999, as the same may be supplemented and amended from time to
time together with all documents and agreements executed in connection
therewith. Capitalized terms used herein and defined in the Credit Agreement
shall have the same meanings specified therein unless otherwise specifically
defined herein.
We hereby notify you, without giving effect to any other Defaults or
Events of Default that may exist under the Credit Agreement, that you have
defaulted in your obligations under the Credit Agreement in that:
(a) you have failed to cause within ninety (90) days
of the Filing Date (i) D.V. Associates to guarantee the Obligations of
Borrower under the Credit Agreement and grant a security interest in
its intellectual property as collateral for such guarantee, (ii) the
owners of the issued and outstanding common stock, partnership or
other equity interests in D.V. Associates to pledge to the Lenders
Agent all of the common stock or partnership or other equity interests
of or in D.V. Associates held by them, (iii) Xxxxxxx X. Xxxxxxx, Xx.
to execute and deliver a guaranty in favor of Xxxxxxx Agent in the
amount of $2,500,000 and (iv) Xxxx X. Xxxxx to execute and deliver a
guaranty in favor of Lenders Agent in the amount of $2,500,000;
(b) you have failed to furnish Lenders Agent the
Business Plan required by Section Two, Paragraph 2(i) of the Credit
Agreement;
(c) you have failed to furnish Lenders Agent with
monthly balance sheet, statement of operations and cash flow
statements for the six (6) months following the date of execution of
the Credit Agreement;
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(d) you have failed to furnish Lenders Agent and
each Lender within ninety (90) days after the end of the fiscal year
ended July 31, 1999, with an audited Balance Sheet, statements of
consolidated earnings, cash flow and reconciliation of surplus of the
Borrower, audited by independent financial public accountants
satisfactory to the Required Lenders;
(e) you have failed to furnish Lenders Agent and
each Lender within thirty (30) days after the end of the month ended
September 30, 1999, with interim financial statements, certified by an
authorized financial or accounting officer of the Borrower; and
(f) Xxxxxxx X. Xxxxxxx, Xx. and Xxxx X. Xxxxx have
each refused, following request by Xxxxxxx Agent, to provide to
Lenders Agent the additional collateral required by Section 5(d) of
their respective Reaffirmation and Modification of Pledge Agreements
dated as of July 15, 1999.
Therefore, we are hereby (a) placing you on notice that such
Defaults and/or Events of Default exist and are continuing and (b) requesting
that you inform us as to the actions you have taken, or intend to take, to
remedy such Defaults and/or Events of Default.
We hereby further advise you that we are charging you the
Default Rate of Interest on all Obligations under the Financing Agreement
commencing as of November 26, 1999. Additionally, we hereby notify you that all
future Revolving Loans, advances and other extensions of credit under the
Credit Agreement will be at our sole discretion and will in no way constitute a
waiver of any rights or remedies available to us by reason of the Defaults
and/or Events of Default or any other Default or Event of Default. Moreover,
notwithstanding the fact that at the present time we shall refrain from
terminating the Credit Agreement and/or accelerating the Borrower's Obligations
thereunder and/or exercising any or all of our other rights and remedies
against you, we reserve all of our rights and remedies against you and any
guarantors or pledgors, including without limitation the right to terminate the
Credit Agreement, demand payment of all of the Borrower's Obligations, commence
legal action to enforce collection thereof, and realize upon any and/or all
Collateral pledged to us under or in connection with the Credit Agreement.
Nothing contained herein shall be construed as a waiver, express or implied, of
any term, condition, covenant or agreement of the Credit Agreement or the other
Loan Documents or of any Default or Event of Default now or hereafter existing
thereunder (whether or not we have knowledge thereof), or to modify or impair
any rights to exercise at any time any right, remedy, power or privilege
available to the Lenders under the Credit Agreement and/or the Loan Documents,
any guaranties or applicable law.
Very truly yours,
THE CIT GROUP/BUSINESS
CREDIT, INC., AS LENDERS AGENT
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
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THE CIT GROUP/BUSINESS
CREDIT, INC., AS LENDER
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
GMAC COMMERCIAL CREDIT LLC
F/K/A BNY FACTORING LLC,
AS LENDER
By: /s/ Xxxxxxx Xxxxxxxx
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Name: Xxxxxxx Xxxxxxxx
Title: Vice President
cc: Xx. Xxxxxxx X. Xxxxxxx, Xx.
Mr. Xxxx Xxxxxxxx
Xx. Xxxx X. Xxxxx
Xxxxx Xxxxx, Esq.
Xxxxx X. Xxxxxxx, III, Esq.
X. Xxxxxxxxxxx Xxxxx, Esq.
Xxxxxx Xxxxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
