EX-10.6
MODIFICATION AGREEMENT (THERMODYNETICS, INC.)
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THIS MODIFICATION AGREEMENT (THERMODYNETICS, INC.) (this "AGREEMENT"),
dated as of April 25, 2006, is by and among:
CITIZENS BANK OF MASSACHUSETTS, a Massachusetts state chartered bank
with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, as successor by merger
to USTrust (the "BANK");
THERMODYNETICS, INC., a Delaware corporation having a principal place
of business at 000 Xxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000 (the "BORROWER");
TURBOTEC PRODUCTS, INC., a Connecticut corporation having a principal
place of business at 000 Xxx Xxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx ("TURBOTEC"); and
VULCAN INDUSTRIES, INC., a Michigan corporation having a principal
place of business at of 0000 Xxxx Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000
("VULCAN" and collectively with Turbotec, the "GUARANTOR").
W I T N E S S E T H:
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WHEREAS, the Bank has entered into certain loan arrangements
(collectively, the "LOAN ARRANGEMENTS") with the Borrower, which Loan
Arrangements are evidenced by, among other things, each of the following
documents, instruments and agreements:
(a) Security Agreement (Inventory, Accounts, Equipment and other
Personal Property) (the "SECURITY AGREEMENT") dated September
4, 1992 between the Borrower and the Bank;
(b) Line of Credit Agreement for the Acquisition of Equipment (the
"1999 ELOC") dated June 25, 1999 between the Borrower and the
Bank, as amended by that certain Letter Agreement dated
September 29, 2000 and that certain Letter Agreement dated
November 28, 2000;
(c) Line of Credit Agreement for the Acquisition of Equipment (the
"2001 ELOC") dated November 1, 2001 between the Borrower and
the Bank, as amended by that certain Letter Agreement dated
January 23, 2002;
(d) Line of Credit Agreement for the Acquisition of Equipment (the
"2003 ELOC") dated January 14, 2003 between the Borrower and
the Bank, as amended by that certain letter agreement dated
December 15, 2003;
(e) Line of Credit Agreement for the Acquisition of Equipment (the
"2004 ELOC") dated October 20, 2004 between the Borrower and
the Bank;
(f) Secured Term Note (the "2002 NOTE") dated January 23, 2002
made by the Borrower payable to the Bank in the original
principal amount of $700,000.00;
(g) Secured Term Note (the "REAL ESTATE NOTE") dated January 23,
2002 made by the Borrower payable to the Bank in the original
principal amount of $2,025,000.00;
(h) Commercial Promissory Note (the "COMMERCIAL NOTE") dated
November 10, 2005 made by the Borrower and Turbotec payable to
the Bank in the original principal amount of $183,000.00;
(i) Open-End Mortgage (the "MORTGAGE") dated January 23, 2002
granted by the Borrower to the Bank and encumbering certain
property located on 000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx, as
amended by that certain Amendment to and Confirmation of Open
End Mortgage dated November 10, 2005; and
(j) Multi-Entity Guaranty (Unlimited) dated July 30, 2003 (as
amended from time to time and in effect, the "GUARANTY")
executed and delivered by each of the Borrower, Turbortec and
Vulcan, pursuant to which the Borrower, Turbortec and Vulcan
each unconditionally guaranteed the payment and performance of
each others' obligations to the Bank, as ratified by that
certain Ratification of Guaranty dated November 10, 2005.
Hereinafter, the foregoing documents, instruments and agreement
referred to in items (a) through (i) above, together with all other
documents, instruments and agreements which evidence the Loan
Arrangements, including without limitation, this Agreement, shall be
referred to collectively as the "LOAN DOCUMENTS" (Capitalized terms
used herein and not oterhwise defined herein shall have the meanings as
in the Loan Documents). Hereinafter the 1999 ELOC, the 2001 ELOC, the
2003 ELOC, and the 2004 ELOC shall be collectively referred to as the
"ELOC NOTES".
WHEREAS, the Borrower has informed the Bank that Turbotec Products,
Plc, a subsidiary of the Borrower, intends to conduct a public offering
(hereinafter, the "OFFERING") of its stock. In connection with the Offering, the
Borrower intends to sell a certain amount of the stock it owns in Turbotec
Products, Plc and has requested that, in connection therewith, the Bank amend
certain terms and conditions of the Loan Documents; and
WHEREAS, the Bank has agreed to do so, subject to the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in the Loan Documents and this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. ACKNOWLEDGMENT OF OBLIGATIONS. The Borrower hereby acknowledges and
agrees that, in accordance with the terms and conditions of the Loan
Documents, the Borrower is unconditionally liable to the Bank, as of
April 25, 2006, in the following aggregate amounts:
(a) ELOC Notes:
Principal: $461,326.18
(b) 2002 Note:
Principal $104,983.00
(c) Real Estate Note:
Principal $1,594,687.50
(d) Commercial Note:
Principal $172,105.00
(e) Letters of Credit (aggregate face amount): $0.00
(f) For all amounts now or hereafter due pursuant to the Guaranty.
(g) In addition, the Borrower is and shall remain liable to the
Bank for all accrued and unpaid interest as of April 25, 2006,
and all interest, reasonable fees, costs, expenses, and costs
of collection (including reasonable attorneys' fees and
expenses) heretofore or hereafter incurred in connection with
the Loan Documents, including, without limitation, all
reasonable attorney's fees and expenses incurred in connection
with the negotiation and preparation of this Agreement and all
documents, instruments, and agreements incidental hereto.
(h) Hereinafter all amounts due as set forth in this Section 1,
and all amounts payable under the Loan Documents, shall be
referred to collectively as the "OBLIGATIONS".
2. RATIFICATION OF LOAN DOCUMENTS; FURTHER ASSURANCES. The Borrower:
(a) Hereby ratifies, confirms, and reaffirms all the terms and
conditions of the Loan Documents. The Borrower further
acknowledges and agrees that except as specifically modified
by this Agreement, all terms and conditions of the Loan
Documents shall remain in full force and effect;
(b) Shall cooperate with the Bank and execute and deliver to the
Bank such further instruments and documents as the Bank shall
reasonably request from time to time to carry out to its
satisfaction the transactions contemplated by this Agreement
and the Loan Documents.
3. CONDITIONS PRECEDENT. This Agreement shall not become effective until
the following conditions have been satisfied (or waived in writing by
the Bank), all as determined by the Bank in its sole and exclusive
discretion:
(a) This Agreement, and all documents, instruments and agreements
required hereunder or related hereto shall have been executed
by the appropriate parties
and original counterpart signatures shall have been delivered
to the Bank (or its counsel).
(b) All actions on the part of the Borrower necessary for the
valid execution, delivery and performance of the terms of this
Agreement shall have been duly and effectively taken and
evidence thereof satisfactory to the Bank shall have been
provided to the Bank.
(c) The Borrower and the Turbotec shall have executed and
delivered to the Bank an Assignment and Assumption Agreement
with regard to the ELOC Notes and the 2002 Note in a form
attached hereto as EXHIBIT "A".
(d) The Borrower shall have executed and delivered to the Bank an
Pledge Agreement in connection with the pledge of $337,000.00
to support anticipated debt service shortfalls in a form
attached hereto as EXHIBIT "B".
(e) The Borrower shall have caused all obligations of Vulcan due
and owing, (excluding the indebtedness of Vulcan pursuant to
the Guaranty) to the Bank as referenced in a certain
Modification Agreement dated November 10, 2005 by and among
Vulcan, the Borrower and Turbotec to be paid in full.
(f) The Borrower shall have delivered to the Bank an executed copy
of the "Commercial Lease" between the Borrower and Turbotec
acceptable to the Bank and its counsel in connection with the
property located at 000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxx. In
connection therewith, the Borrower shall have executed and
delivered to the Bank a Landlord Waiver in a form attached
hereto as EXHIBIT "C".
4. PAYMENT IN REDUCTION OF OBLIGATIONS. The Borrower hereby covenants and
agrees that upon consummation of the Offering, the Borrower shall pay
to the Bank, in good and collected funds, a minimum of $625,000.00 to
be applied by the Bank in reduction of the Obligations in any manner
the Bank deems appropriate in its sole and exclusive discretion.
5. PAYDOWN OF COMMERCIAL NOTE. The Borrower hereby covenants and agrees
that upon consummation of the Offering, the Borrower shall pay to the
Bank, in good and collected funds, an amount to cause the obligations
under the Commercial Note to have a principal balance of not greater
than $37,000.00 (the "REMAINING OBLIGATIONS"). The Bank hereby agrees,
that the Remaining Obligations shall be paid in accordance with the
terms and conditions of the Commercial Note.
6. AMENDMENTS TO THE LOAN DOCUMENTS. From and after the date of this
Agreement, and satisfaction of all the conditions precedent to the
effectiveness of this Agreement as described herein, the Loan Documents
shall be amended as follows:
(a) The Real Estate Note shall be amended as follows:
(i) Paragraphs three (3) through six (6) are hereby
deleted in their entirety, and the following
paragraph shall be inserted in its place:
"IN THE EVENT OF PREPAYMENT OF THE BORROWER'S
OBLIGATIONS UNDER THIS SECURED TERM NOTE TO THE BANK,
EITHER AT THE BORROWER'S INITIATIVE OR UPON THE
EXERCISE BY THE BANK OF ITS RIGHTS IN THE EVENT OF
THE BORROWER'S DEFAULT, OTHER THEN FINANCING
FURNISHED BY THE BANK, THE BORROWER AGREES TO PAY A
PREPAYMENT FEE IN THE AMOUNT EQUAL TO ONE PERCENT
(1%) OF THE PRINCIPAL BALANCE WHICH IS SO PAID OR
PAYABLE PRIOR TO JANUARY 1, 2007."
(ii) Paragraph eight (8) is hereby deleted in its
entirety.
(b) Section 2.01 of the Security Agreement shall be amended to
read as follows:
"LIABILITIES SHALL MEAN ANY AND ALL LIABILITIES,
DEBTS, AND OBLIGATIONS OF THE BORROWER TO THE SECURED
PARTY, WHETHER OR NOT ANY OF SUCH ARE LIQUIDATED,
UNLIQUIDATED, PRIMARY, SECONDARY, SECURED, UNSECURED,
DIRECT, INDIRECT, ABSOLUTE, CONTINGENT, OR OF ANY
OTHER TYPE, NATURE, OR DESCRIPTION, OR BY REASON OF
ANY CAUSE OF ACTION WHICH THE SECURED PARTY MAY HOLD
AGAINST THE BORROWER, WHETHER NOW EXISTING OR
HEREAFTER ARISING, INCLUDING, WITHOUT LIMITATION, ALL
LIABILITIES AND OBLIGATIONS OF BORROWER TO SECURED
PARTY PURSUANT TO (I) THAT CERTAIN COMMERCIAL
PROMISSORY NOTE DATED NOVEMBER 10, 2005 MADE BY THE
BORROWER PAYABLE THAT CERTAIN TO THE SECURED PARTY IN
THE ORIGINAL PRINCIPAL AMOUNT OF $183,000.00; AND
(II) THAT CERTAIN SECURED TERM NOTE DATED JANUARY 23,
2002 MADE BY THE BORROWER PAYABLE TO THE SECURED
PARTY IN THE ORIGINAL PRINCIPAL AMOUNT OF
$2,025,000.00."
7. RELEASE OF MULTI-ENTITY GUARANTY (UNLIMITED). From and after the date
of this Agreement, and satisfaction of all the conditions precedent to
the effectiveness of this Agreement as described herein, the Borrower
and Turbotec are hereby released from all its liabilities and
obligations under the Guaranty. In connection therewith, Vulcan hereby
ratifies, confirms and reaffirms, all and singular, each of the terms
and conditions of the Guaranty and each of the warranties and
representations made in the Guaranty, and confirms and reaffirms the
indebtedness represented by the Guaranty, and that the Guaranty remains
in full force and effect. Furthermore, Vulcan hereby acknowledges,
confirms and agrees that, in addition to all other Obligations (as
defined in the Guaranty) guaranteed by the undersigned pursuant to the
Guaranty, the Guaranty expressly includes, without limitation, all
liabilities and obligations arising under the $183M Note, together with
any future modifications, amendments, substitutions or renewals
thereof.
8. AMENDMENTS TO COLLATERAL; SUPPLEMENTAL GRANT OF SECURITY INTEREST.
Notwithstanding any terms of the Security Agreement or any of the other
Loan Documents to the contrary, the Borrower hereby covenants and
agrees as follows:
(a) The security interests and liens granted by the Borrower
pursuant to the Security Agreement and any other of the Loan
Documents shall secure all of the Obligations, whether now
existing or hereafter incurred.
(b) The term "Uniform Commercial Code" shall be deemed to mean and
refer to the "Uniform Commercial Code as may be amended and in
effect from time to time".
(c) The collateral granted to the Bank by the Borrower pursuant to
Section 1 of the Security Agreement is intended to include all
assets of the Borrower. In order to secure the prompt payment
and performance of any and all Obligations (whether now owing
or hereafter incurred) of the Borrower to the Bank, the
Borrower hereby grants (and confirms and reaffirms all prior
grants) to the Bank, a continuing security interest in and to
all "Collateral" which term includes, without limitation, and
in addition to all collateral set forth in the Security
Agreement, the following categories of assets as defined in
the Uniform Commercial Code: goods (including inventory,
equipment and any accessions thereto), instruments (including
promissory notes), documents, accounts (including
health-care-insurance receivables, and license fees), chattel
paper (whether tangible or electronic), deposit accounts,
letter-of-credit rights (whether or not the letter of credit
is evidenced by a writing), commercial tort claims, securities
and all other investment property, general intangibles
(including payment intangibles and software), supporting
obligations and any and all proceeds of any thereof, wherever
located, whether now owned, or now due, in which the Borrower
has an interest or the power to transfer rights, or hereafter
acquired, arising, or to become due, or in which the Borrower
obtains an interest, or the power to transfer rights. The
Borrower acknowledges and agrees that the foregoing grant of a
security interest is in addition to, and is supplemental of,
all other security interests and liens previously granted to
the Bank by the Borrower.
(d) The Borrower hereby: ratifies, confirms and reaffirms the
effectiveness of any previously filed financing statements,
and authorizes the Bank (and any agent or representative of
the Bank) to prepare and file such financing statements (and,
if appropriate, amendments to existing financing statements)
as the Bank may deem necessary or appropriate to perfect or
protect its interests in the Collateral granted under the
terms of the Security Agreement, this Agreement, or any of the
other Loan Documents, including, without limitation, financing
statements which describe the Collateral with generic terms
such as "all assets" and/or "all personal property" (or words
of similar import) of the Borrower.
9. ADDITIONAL OPERATING ACCOUNT. Upon the consummation of the Offering,
and upon the Borrower's satisfaction of all the conditions precedent to
the effectiveness of this Agreement, as determined by the Bank in the
Bank's sole and exclusive discretion, the Borrower shall deposit
certain funds into an operating account (the "OPERATING ACCOUNT") to be
maintained by the Bank. The Operating Account shall secure all
Obligations of the Borrower to the Bank. Prior to the occurrence of an
Event of Default, the Borrower shall use the funds in the Operating
Account as it determines in its discretion. Upon the occurrence of an
Event of Default, the Bank may use any remaining funds in the Operating
Account to reduce the Obligations in manner determined in the Bank's
sole and exclusive discretion.
10. FEES AND EXPENSES.
(a) Upon execution of this Agreement, the Borrower shall pay to
the Bank an amount equal to any and all reasonable costs,
fees, or expenses (including attorneys' fees and expenses)
incurred by the Bank in connection with the Loan Documents,
whether directly or indirectly, including (but not limited to)
all reasonable legal fees and expenses incurred in connection
with the negotiation and the preparation of this Agreement.
From and after the execution of this Agreement, the Borrower
shall pay all of such costs, fees and expenses to the Bank on
demand.
(b) The Borrower hereby covenants and agrees that the Bank shall
be entitled (but not required) to debit or charge any
operating account of the Borrower to collect any fees, costs
or expenses to which the Bank may be entitled pursuant to this
Agreement or any of the other Loan Documents, all without
prior notice to the Borrower.
11. WAIVERS.
(a) JURY TRIAL. The Borrower makes the following waiver knowingly,
voluntarily, and intentionally, and understand that the Bank,
in entering into this Agreement, is relying thereon. THE
BORROWER, TO THE EXTENT OTHERWISE ENTITLED THERETO, HEREBY
IRREVOCABLY WAIVES ANY PRESENT OR FUTURE RIGHT OF THE BORROWER
TO A JURY IN ANY TRIAL OF ANY CASE OR CONTROVERSY IN WHICH THE
BANK IS OR BECOMES A PARTY (WHETHER SUCH CASE OR CONTROVERSY
IS INITIATED BY OR AGAINST THE BANK OR IN WHICH THE BANK IS
JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES
OUT OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE
BORROWER, OR ANY SUCH PERSON AND THE BANK.
(b) WAIVER OF CLAIMS. The Borrower hereby acknowledges and agrees
that it does not have any offsets, defenses, claims, or
counterclaims against the Bank, or any of its affiliates, or
their respective officers, directors, employees, affiliates,
attorneys, representatives, predecessors, successors, or
assigns with respect to the Loan Documents, the Obligations,
or otherwise, and that if the Borrower now had, or ever did
have, any such offsets, defenses, claims, or counterclaims
against the Bank, or any of its affiliates, or their
respective officers, directors, employees, affiliates,
attorneys, representatives, predecessors, successors, or
assigns, whether known or unknown, at law or in equity, from
the beginning of the world through this date and through the
time of execution of this Agreement, all of them are hereby
expressly WAIVED, and the Borrower hereby RELEASES the Bank,
its affiliates, and their respective officers, directors,
employees, affiliates, attorneys, representatives,
predecessors, successors, and assigns from any liability
therefore.
12. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Bank as follows:
(a) The Loan Documents, as amended hereby, constitute legal, valid
and binding obligations of the Borrower, enforceable in
accordance with their respective terms.
(b) No approval or consent of, or filing with, any governmental
agency or authority is required to make valid and legally
binding the execution, delivery or performance by the Borrower
of this Agreement or the Loan Documents as amended hereby.
(c) The representations and warranties contained in the Loan
Documents are true and correct at and as of the date made and
as of the date hereof, except to the extent of changes
resulting from transactions specifically contemplated or
specifically permitted by the Loan Documents, changes which
have been disclosed in writing to the Bank prior to the date
hereof and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially
adverse, and to the extent that such representations and
warranties relate expressly to an earlier date.
(d) After giving effect to this Agreement, the Borrower will have
performed and complied in all material respects with all terms
and conditions of the Loan Documents required to be performed
or complied with by them prior to or at the time hereof.
13. NOTICES. Any communication between the Bank and Borrower shall be
forwarded via certified mail, return receipt requested, or via
recognized overnight courier, addressed as follows:
If to the Bank: Citizens Bank of Massachusetts
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx, Vice President
With a copy via telecopier to:
Xxxxxx X. Xxxx, Esquire
Xxxxxx & Xxxxxxxxxx LLP
Xxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
If to the Borrower: Thermodynetics, Inc.
000 Xxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, President
With a copy via telecopier to:
Xxxxxxx X. Xxxxxx, Esquire
Xxxxxxx X. Xxxxxx, P.C.
Attorney at Law
000 Xxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
14. GENERAL.
(a) This Agreement shall be binding upon the Borrower and its
respective successors and assigns and shall inure to the
benefit of the Bank and its successors and assigns.
(b) Any determination that any provision of this Agreement or any
application thereof is invalid, illegal, or unenforceable in
any respect in any instance shall not affect the validity,
legality, or enforceability of such provision in any other
instance, or the validity, legality, or enforceability of any
other provision of this Agreement.
(c) This Agreement, together with the agreements, instruments and
other documents executed in connection herewith, incorporates
all discussions and negotiations among the Borrower and the
Bank, either express or implied, concerning the matters
included herein and in such other instruments, any custom,
usage, or course of dealings to the contrary notwithstanding.
No such discussions, negotiations, custom, usage, or course of
dealings shall limit, modify, or otherwise affect the
provisions hereof.
(d) It is declared and agreed by each of the parties hereto that
the Loan Documents, as amended hereby, shall continue in full
force and effect. The Borrower shall continue to comply with
all of the terms and conditions of the Loan Documents, as
modified hereby.
(e) All rights and obligations hereunder, including matters of
construction, validity, and performance, shall be governed by
and construed in accordance with the law of the Commonwealth
of Massachusetts and are intended to take effect as sealed
instruments.
(f) The captions of this Agreement are for convenience purposes
only, and shall not be used in construing the intent of the
parties hereto.
(g) In the event of any inconsistency between the provisions of
this Agreement and the other Loan Documents (or any other
documents, instruments and agreements which may evidence or
relate to the Loan Arrangements), the provisions of this
Agreement shall govern and control.
(h) This Agreement may be executed in several counterparts and by
each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which
together shall constitute one instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date and year
first above written.
"BORROWER"
THERMODYNETICS, INC.
By:_______________________________
Name:
Title:
"BANK"
CITIZENS BANK OF MASSACHUSETTS
By: ________________________________
Name: Xxxxx Xxxxxx
Title: Vice President
ACKNOWLEDGED AND AGREED:
TURBOTEC PRODUCTS, INC.
By: _______________________________
Name:
Title:
VULCAN INDUSTRIES, INC.
By:_______________________________
Name:
Title:
Signature Page to Modification Agreement
Exhibit A
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Exhibit B
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Exhibit C
