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Exhibit 10.11
TMCI ELECTRONICS, INC.
TOUCHE MANUFACTURING COMPANY, INC.
TOUCHE ELECTRONICS, INC.
ENTERPRISE INDUSTRIES, INC.
TRINITY ELECTRONICS, INC.
ENTERPRISE ACQUISITION CORPORATION
0000 XXXXXX XXXXX
XXX XXXX, XX 00000
March 26, 1998
Fleet Capital Corporation
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Re: First Amendment To Loan And Security Agreement
Gentlemen:
Reference is made to the Loan and Security Agreement dated as of
March 2, 1998 (as amended, the "Loan Agreement"), among Fleet Capital
Corporation, as Lender, and TMCI Electronics, Inc. ("TMCI"), Touche
Manufacturing Company, Inc., Touche Electronics, Inc., Enterprise Industries,
Inc., and Trinity Electronics, Inc. (collectively, the "Existing Borrowers"), as
Borrowers. All capitalized terms used herein that are not otherwise specifically
defined herein shall have the meanings given such terms in the Loan Agreement.
A subsidiary of TMCI, Enterprise Acquisition Corporation ("New
Try-Die") anticipates a merger with Try-Die, Inc. ("Old Try-Die, Inc.") in which
New Try-Die will be the surviving corporation, and New Try-Die anticipates
changing its name to Try-Die, Inc. (such merger and name-change, the "Try-Die
Acquisition"). The Existing Borrowers and New Try-Die have requested that the
Lender agree to make New Try-Die a Borrower under the Loan Agreement and extend
financing and other credit accommodations to New Try-Die.
The Borrowers have also requested that the Lender (i) permit the
Borrowers to elect that Revolving Credit Loans and Term Loans bear interest
based upon the LIBOR Rate, at the rates and on the terms described below; and
(ii) increase the maximum amount of Equipment Loans for the first year of term
of the Loan Agreement, at the rates and on the terms described below. The Lender
has agreed to such modifications to the Loan Agreement, subject to the following
terms and conditions:
1. Consent. Pursuant to Section 8.2.1. of the Loan Agreement, the Lender
consents to the transactions constituting the Try-Die Acquisition, provided that
the Try-Die Acquisition is consummated according to the terms of that certain
Merger Agreement and Plan of Reorganization of Enterprise Acquisition
Corporation, A Wholly-Owned Subsidiary of TMCI
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March 26, 1998
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Electronics, Inc. and Try-Die Incorporated (the "Merger Agreement"), in the form
and substance of the draft Merger Agreement delivered to Lender's counsel by
TMCI's counsel on March 23, 1998. Lender acknowledges the existence of the UCC
financing statement filed by General Electric Capital Corporation with respect
to AlliedSignal, Inc.
2. New Try-Die Designated as a Borrower. New Try-Die is, and hereby
shall be, a Borrower under the Loan Agreement, jointly and severally with the
other Borrowers with respect to all now existing and hereafter arising
Obligations and all references to Borrowers in the Loan Agreement shall mean all
Borrowers, including New Try-Die, jointly and severally. Subject to the terms of
the Loan Agreement, New Try-Die hereby agrees to be, and hereby is, jointly,
severally, unconditionally, and absolutely obligated and liable with the other
Borrowers to pay and perform all the Obligations under the Loan Agreement and
other Loan Documents.
3. Amendments.
a. LIBOR Rate Loans. Section 2.1.5 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following:
"2.1.5 LIBOR Rate Loans. Borrowers may elect, in accordance with
the terms of this Agreement, (a) with respect to Revolving Credit
Loans, or portions thereof, as provided herein, for such Loans to
bear interest based upon the LIBOR Rate, at a rate per annum
equal to two and three-quarters percent (2.75%) plus the LIBOR
Rate for the applicable LIBOR Interest Period, (b) with respect
to Term Loan-A and the Equipment Loans or portions thereof, as
provided herein, for such Loans to bear interest based upon the
LIBOR Rate, at a rate per annum equal to three percent (3.00%)
plus the LIBOR Rate for the applicable LIBOR Interest Period, and
(c) with respect to Term Loan-B or portions thereof, as provided
herein, for such Loans to bear interest based upon the LIBOR
Rate, at a rate per annum equal to four percent (4.00%) plus the
LIBOR Rate for the applicable LIBOR Interest Period. Following
the satisfaction of the conditions to the First Adjustment Date,
the foregoing margins above the LIBOR Rate will be reduced by
one-quarter percent (.25%) and, following the satisfaction of the
conditions to the Second Adjustment Date, the foregoing margins
above the LIBOR Rate will be reduced by an additional one-quarter
percent (.25%)."
b. Equipment Loans. The third and final sentence of Section 1.2.3
of the Loan Agreement is hereby stricken in its entirety and replaced with the
following
"The principal amount of Equipment Loans made hereunder shall not
exceed, in the aggregate, (a) during the period from March 2,
1998 to March 1, 1999, $2,000,000.00; and (b) from and after
March 2, 1999, $1,500,000.00 during
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any twelve consecutive months during the Original Term, and shall
not exceed in the aggregate $4,000,000.00 during the Original
Term."
4. Reserve. Pursuant to Section 1.1.1. of the Loan Agreement, Borrowers
acknowledge and agree that Lender has established a reserve in the amount
necessary, in the determination of the Lender, to repay in full the SBA Payoff
Amount (as defined below). This reserve will be maintained by Lender and paid
directly to the Existing Creditor (as defined below) in accordance with the
Payoff Letter (as defined below).
5. Ineligible Collateral. Borrowers agree that, until such time as the
conditions precedent set forth in paragraph 7 below have been satisfied: (i) the
assets of New Try-Die shall be excluded from the definitions of Eligible
Accounts, Eligible Equipment, and Eligible Inventory; and (ii) Borrowers shall
not request that Lender make and Lender shall not, except in its sole
discretion, make Revolving Credit Loans or Term Loans or Equipment Loans to New
Try-Die. Borrowers agree that, until such time as the UCC financing statement
filed by General Electric Capital Corporation with respect to AlliedSignal, Inc.
is removed, all accounts covered by such financing statement shall not be
Eligible Accounts.
6. Conditions Precedent. The Borrowers acknowledge and agree that the
foregoing consent and amendments will not become effective, unless and until all
of the following documents have been fully executed and delivered in form and
substance satisfactory to Lender in all respects and in Lender's sole
discretion:
a. this Letter Agreement;
b. the Endorsement(s) in the forms attached as Exhibit A hereto;
c. UCC-11 or other such results from search firms acceptable to
Lender for all locations where assets of Old Try-Die or New Try-Die may be
located;
d. amendments to the schedules and exhibits to the Loan Documents
to reflect the transactions contemplated hereby;
e. executed and delivered copies of all merger, employment,
consulting and other agreements entered into by any Borrower or any Subsidiary
of a Borrower in connection with the Try-Die Acquisition;
f. a payoff letter (the "Payoff Letter") from El Dorado
Bank/Liberty National Bank (the "Existing Creditor") confirming that it holds
the security interests evidenced by the UCC-1 financing statement numbered
9520060339 filed in favor of Liberty National Bank, SBA Loan Group, on or about
July 13, 1995, and specifying the existing indebtedness of Old Try-Die owing to
the Existing Creditor and that, upon receipt of payment of such amount (such
amount,
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including all interest or late charges accruing on or before the date of such
payment, the "SBA Payoff Amount") on or before the date set forth therein, the
Existing Creditor will release any and all liens it holds in the assets of Old
Try-Die;
g. certificates of officers and exhibits thereto in the form
required to be delivered to Lender by the Borrowers in connection with the Loan
Agreement;
h. such litigation, tax lien, and other searches as Lender may
request; and
i. all such other documents and instruments, including without
limitation, corporate legal existence and good standing certificates, certified
resolutions of the directors of the Borrowers, as the Lender may request.
7. Conditions Subsequent. The Borrowers acknowledge and agree that each
of the following documents will be fully executed and delivered to the Lender,
in form and substance satisfactory to Lender in all respects and in Lender's
sole discretion, on or before April 10, 1998:
a. landlord consent and waiver agreements with respect to all
locations of New-Try Die, in the form previously executed on behalf of Lender by
the landlords of the Existing Borrowers;
b. UCC-1 financing statements of New Try-Die, for all locations
in which UCC-1 financing statements are presently filed on behalf of Lender by
the Existing Borrowers and for all locations of New Try-Die and Old Try-Die,
copies of filing receipts or acknowledgments issued to evidence all filings or
recordations necessary to perfect the Liens of Lender in the Collateral,
including, without limitation, with respect to Collateral furnished by New
Try-Die, and UCC-3 amendments reflecting the change in name anticipated by New
Try-Die, in a form acceptable to Lender to ensure that such Liens constitute
first priority valid and perfected Liens; and
c. certificates of casualty insurance policies evidencing
coverage of the assets owned by New Try-Die together with loss payable
endorsements on Lender's standard form of loss payee endorsement naming Lender
as loss payee.
8. Confirmation of Representations and Warranties. The Borrowers
represent and warrant that (a) the representations and warranties made in the
Loan Documents are true, correct and complete on the date hereof; (b) they are
in compliance with all the covenants and agreements contained in the Loan
Documents; and (c) no Default or Event of Default exists or has occurred and is
continuing under the Loan Documents. The Borrowers acknowledge and agree that
they are unconditionally liable for the full, prompt and complete performance
and payment of all Obligations arising under the Loan Documents or otherwise,
without defenses, counterclaims or setoffs of any kind or nature. The Lender, by
entering into this Amendment, does not waive any rights and remedies it may have
under the Loan Documents or otherwise, including, without
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limitation, arising or resulting from any Default or Event of Default, and all
of such rights and remedies are hereby expressly reserved.
9. Authority. Each Borrower represents and warrants that it is a
corporation duly organized and in good standing under the laws of its state or
other jurisdiction of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on the financial
condition, results of operation or businesses of Borrower or the rights of
Lender hereunder or under any of the other Financing Documents. Each Borrower
represents and warrants that the execution, delivery and performance of this
Amendment is within the corporate powers of each Borrower, has been duly
authorized and are not in contravention of law or the terms of the certificates
of incorporation, by-laws, or other organizational documentation of such
Borrower, or any indenture, agreement or undertaking to which such Borrower is a
party or by which such Borrower or its property are bound. Each Borrower
represents and warrants that this Amendment constitutes the legal, valid and
binding obligation of each Borrower enforceable in accordance with its terms.
10. Miscellaneous. This Amendment shall be deemed to be a Loan Document
under the Loan Agreement. The Borrowers agree to pay all reasonable attorneys'
fees incurred by Lender in connection with the negotiation and preparation of
this Amendment and the instruments and documents prepared in connection
herewith. This Amendment supersedes all prior correspondence and discussions
relating to the subject matter hereof. This Amendment shall be governed and
construed under the laws of the State of Connecticut and is subject to all the
rights and waivers, including the waiver of jury trial, set forth in the Loan
Agreement. Except as explicitly set forth herein, the Borrowers confirm that the
Loan Agreement and other Loan Documents have not been amended or modified and,
as amended hereby, continue in full force and effect.
11. PREJUDGMENT REMEDY WAIVER; COMMERCIAL TRANSACTION.
EACH BORROWER HEREBY WAIVES RIGHTS AS IT MAY HAVE TO NOTICE AND/OR
HEARING UNDER ANY APPLICABLE FEDERAL OR STATE LAWS INCLUDING, WITHOUT
LIMITATION, CONNECTICUT GENERAL STATUTES SECTION 52-278A, ET SEQ. AS AMENDED,
PERTAINING TO THE EXERCISE BY LENDER OF SUCH RIGHTS AS THE LENDER MAY HAVE,
INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO SEEK PREJUDGEMENT REMEDIES AND/OR
DEPRIVE BORROWERS OF OR AFFECT THE USE OF OR POSSESSION OR ENJOYMENT OF ANY
BORROWER'S PROPERTY PRIOR TO THE RENDITION OF A FINAL JUDGMENT AGAINST ANY
BORROWER. EACH BORROWER FURTHER WAIVES ANY RIGHT IT MAY HAVE TO REQUIRE LENDER
TO PROVIDE A BOND OR OTHER SECURITY AS A PRECONDITION TO OR IN CONNECTION WITH
ANY
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PREJUDGMENT REMEDY SOUGHT BY AGENT AND LENDER, AND WAIVE ANY OBJECTION TO THE
ISSUANCE OF SUCH PREJUDGMENT REMEDY BASED ON ANY OFFSETS, CLAIMS, DEFENSES OR
COUNTERCLAIMS TO ANY ACTION BROUGHT BY ANY LENDER. EACH BORROWER HEREBY
REPRESENTS, COVENANTS AND AGREES THAT THE PROCEEDS OF THE LOANS EVIDENCED BY
THIS AGREEMENT SHALL BE USED FOR GENERAL COMMERCIAL PURPOSES AND THAT SUCH LOANS
CONSTITUTE A "COMMERCIAL TRANSACTION" AS DEFINED BY THE STATUTES OF THE STATE OF
CONNECTICUT.
Executed as an instrument under seal as of the date first written above.
WITNESS: TMCI ELECTRONICS, INC.
TOUCHE MANUFACTURING
COMPANY, INC.
TOUCHE ELECTRONICS, INC.
ENTERPRISE INDUSTRIES, INC.
TRINITY ELECTRONICS, INC.
ENTERPRISE ACQUISITION
CORPORATION
______________________________ By:_______________________________________
Name:_____________________________
Title:____________________________
Accepted and Agreed:
FLEET CAPITAL CORPORATION
By:______________________
Name:________________
Title:_______________
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EXHIBIT A
See attached three endorsements.
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ENDORSEMENT TO $4,700,000.00 SECURED PROMISSORY NOTE-A
FOR VALUE RECEIVED, the undersigned hereby endorses and joins as a
Borrower, jointly and severally, in the attached $4,700,000.00 Secured
Promissory Note-A dated March 2, 1998.
ENTERPRISE ACQUISITION CORPORATION
By: _____________________________
Name:
Title:
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ENDORSEMENT TO $2,000,000.00 SECURED PROMISSORY NOTE-B
FOR VALUE RECEIVED, the undersigned hereby endorses and joins as a
Borrower, jointly and severally, in the attached $2,000,000.00 Secured
Promissory Note-B dated March 2, 1998.
ENTERPRISE ACQUISITION CORPORATION
By: _____________________________
Name:
Title:
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ENDORSEMENT TO $4,000,000.00 SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned hereby endorses and joins as a
Borrower, jointly and severally, in the attached $4,000,000.00 Secured
Promissory Note dated March 2, 1998.
ENTERPRISE ACQUISITION CORPORATION
By: _____________________________
Name:
Title:
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