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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 15, 1997
Date of Report
(Date of earliest event reported)
INDUSTRIAL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-10790 04-2596252
(Commission File Number) (IRS Employer Identification No.)
One Trefoil Drive
Trumbull, Connecticut 06611
(Address of Principal Executive Offices) (Zip Code)
(203) 268-8000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On May 28, 1997, Industrial Technologies, Inc. (the "Company") and Intec
Europe, Ltd., the Company's indirect wholly-owned subsidiary ("Intec Europe"),
entered into a letter agreement (the "Amendment Letter") modifying that certain
Commercial Revolving Loan, Demand Loan and Security Agreement (the "Loan
Agreement") with American Commercial Finance Corporation ("ACFC") dated as of
November 1, 1996. Pursuant to the Loan Agreement, prior to its modification by
the Amendment Letter, the Company and Intec Europe were permitted to borrow
against eligible accounts receivable and inventory of the Company and Intec
Europe amounts not to exceed $1,500,000. The Amendment Letter modifies the Loan
Agreement such that the total principal amount permitted to be outstanding may
not exceed $2,000,000. Pursuant to the Loan Agreement as amended by the
Amendment Letter, ACFC extended additional credit to the Company in the amount
of $500,000 (the "New Term Loan"). In connection with the Amendment Letter, the
Company and Intec Europe delivered to ACFC a term promissory note in the
principal amount of $500,000 (the "Term Note"). The Term Note bears interest at
6% per annum above the prime rate on a floating basis and is due and payable on
February 1, 2004. The Term Note is secured by a first priority security interest
in all of the Company's personal property. Simultaneous with the closing of the
New Term Loan, the Connecticut Development Authority purchased a 100%
participation interest in the New Term Loan.
On May 15, 1997, the Company announced that it has retained D.H. Blair
Investment Banking Corp., New York, to act as the Company's financial advisor
and investment banker.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired. Not applicable.
(b) Pro Forma Financial Information. Not Applicable.
(c) Exhibits. The following exhibits are filed herewith.
10.10 Term Promissory Note, dated May 28, 1997.
10.11 Letter from Industrial Technologies, Inc. and certain other
parties to American Commercial Finance Corporation, dated May
28, 1997.
10.12 Loan Participation Agreement by and between American
Commercial Finance Corporation and Connecticut Development
Authority, dated May 28, 1997.
10.13 Letter to Connecticut Development Authority from Industrial
Technologies, Inc. and subsidiaries, dated May 28, 1997.
10.14 Press Release dated May 15, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 15, 1997 INDUSTRIAL TECHNOLOGIES, INC.
(Registrant)
By: /s/ Joseph Schlig
---------------------------------------
Joseph Schlig
Vice President, Chief Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially Numbered
Description of Exhibits Page Number
----------------------- -----------
<S> <C>
10.10 Term Promissory Note, dated May 28, 1997.
10.11 Letter from Industrial Technologies, Inc. and certain
other parties to American Commercial Finance
Corporation, dated May 28, 1997.
10.12 Loan Participation Agreement by and between
American Commercial Finance Corporation and
Connecticut Development Authority,
dated May 28, 1997.
10.13 Letter to Connecticut Development Authority from
Industrial Technologies, Inc. and subsidiaries,
dated May 28, 1997.
10.14 Press Release dated May 15, 1997.
</TABLE>
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Exhibit 10.10
TERM PROMISSORY NOTE
$500,000 May 28, 1997
For value received, the undersigned, INDUSTRIAL TECHNOLOGIES, INC., a
Delaware corporation, and INTEC EUROPE, LTD., a Delaware corporation
(collectively, the "MAKER"), do hereby jointly and severally promise to pay to
AMERICAN COMMERCIAL FINANCE CORPORATION, or order ("LENDER"), at its office at
433 South Main Street, West Hartford, Connecticut 06110, or at such other place
as the holder hereof (including Lender, hereinafter referred to as "HOLDER") may
designate, the sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000), together with
interest on the unpaid principal balance of this Note, beginning as of the date
hereof, before or after maturity or judgment, at the rate of six percentage
points (6%) per annum above the Prime Rate on a floating basis (subject to the
default rate of interest set forth below), which rate shall be computed and
payable monthly in arrears on the basis of a Three Hundred Sixty (360) day year
and actual days elapsed, together with all taxes levied or assessed on this Note
or the debt evidenced hereby against the Holder, and together with all costs,
expenses and attorneys' and other professional fees incurred in any action to
collect this Note or to enforce or foreclose any mortgage, security agreement or
other agreement securing this Note or to protect or sustain the lien of said
mortgage, security agreement or other agreement or in any litigation or
controversy arising from or connected with said mortgage, security agreement or
other agreement or this Note. The term "PRIME RATE" as used herein shall mean
the Prime Rate as published from time to time in the "Money Rates" section of
The Wall Street Journal or any successor publication, or in the event that such
rate is no longer published in The Wall Street Journal, a comparable index or
reference selected by the Lender. The Prime Rate may not necessarily be the
lowest or most favorable rate. Any change in the interest rate because of a
change in the Prime Rate shall become effective, without notice or demand, on
the first day of each month immediately following the month in which any change
in the Prime Rate occurs so that the Prime Rate in effect on the last day of any
month shall be the Prime Rate for interest computation purposes for the next
succeeding month.
The principal amount of this Note has been advanced pursuant to a
Commercial Revolving Loan, Demand Loan and Security Agreement (the "LSA")
between Maker and Lender dated November 1, 1996, as amended from time to time,
and is subject in all respects to the terms and conditions of said LSA. Interest
shall be due and payable on the first day of each and every month commencing on
June 1, 1997 and continuing until the obligations evidenced by this Note are
fully and finally paid, and principal shall be due and payable in twenty-six
(26) installments of $19,230.77 each, commencing on December 1, 1997 and
continuing on the first day of each and every March, June, September, and
December thereafter through and including February 1, 2004, on which date all
accrued and unpaid interest, principal
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and any other sums due hereunder shall be due and payable in full. Holder may,
in its sole discretion, charge any amounts due hereunder to Maker's revolving
loan account maintained with the Holder pursuant to the LSA.
In addition to the principal payments provided for above, Maker agrees
that, after the Demand Note (as defined in the LSA) has been paid in full, Maker
shall prepay the principal of this Note within 90 days after the end of each
fiscal year of each Maker (i.e. each fiscal year that ends after such payment in
full of the Demand Note) in an amount equal to the Prepayment Amount. For the
purposes hereof, the "Prepayment Amount" shall mean 20% of the sum of (a) such
Maker's net income after taxes for such year, calculated in accordance with
generally accepted accounting principles in a manner consistent with the
application thereof in the 1996 fiscal year, plus (b) any depreciation and
amortization that were expensed in calculating such net income, minus (c) any
principal amortization of long-term debt and the Demand Loan.
Maker agrees that (i) if any interest, principal or other amount is not
paid when due under this Note or the LSA or under any other obligation of Maker
to Holder; or (ii) if any Event of Default occurs under the LSA or if the LSA is
terminated; then, upon the happening of any such event, the entire indebtedness
with accrued interest thereon due under this Note shall, at the option of
Holder, accelerate and be immediately due and payable without notice. Failure to
exercise such option shall not constitute a waiver of the right to exercise the
same in the event of any subsequent default. Upon the occurrence of such an
event of default or demand for payment of any demand indebtedness owing by Maker
to Holder, the interest rate on this Note shall automatically increase without
notice to a floating per annum rate equal to four percentage points (4.0%) above
the rate otherwise in effect hereunder.
In the event of Maker's failure to pay any installment of interest,
and/or to pay any other sum due hereunder or under the LSA for more than ten
(10) days after the date it is due and payable, without in any way affecting
Holder's right to declare an event of default to have occurred and to exercise
its remedies as a consequence thereof, a late charge equal to five percent
(5.0%) of such late payment shall be assessed against Maker and shall be due and
payable immediately.
In addition to any other payments Maker is required to make hereunder,
if at any time within the Benefit Period there is an Out-of-State Relocation,
the Maker agrees to pay to Holder the penalty set forth in Section 2(2) of that
certain letter agreement from, among others, the Maker to the Connecticut
Development Authority dated of even date herewith (the "CDA LETTER AGREEMENT").
As used herein, the terms "Benefit Period" and "Out-of-State Relocation" shall
have the meanings set forth in the CDA Letter Agreement.
Notwithstanding any provisions of this Note, it is the understanding and
agreement of the Maker and Holder (and any guarantors of Maker's liabilities)
that
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the maximum rate of interest to be paid by Maker (or guarantors of Maker's
liabilities) to the Holder shall not exceed the highest or the maximum rate of
interest permissible to be charged by a commercial lender such as Lender to a
commercial borrower such as Maker under the laws of the State of Connecticut.
Any amount paid in excess of such rate shall be considered to have been payments
in reduction of principal.
Maker, and each and all guarantors of this Note hereby give the Holder a
lien and right of setoff for all Maker's liabilities upon and against all the
deposits, credits, collateral and property of Maker and guarantors, now or
hereafter in the possession or control of the Holder or in transit to it. Holder
may, upon the occurrence of an event of default hereunder, apply or set off the
same, or any part thereof, to any liability of the Maker even though unmatured.
Failure by the Holder to insist upon the strict performance by Maker of
any terms and provisions herein shall not be deemed to be a waiver of any terms
and provisions herein, and the Holder shall retain the right thereafter to
insist upon strict performance by the Maker of any and all terms and provisions
of this Note or any document securing the repayment of this Note.
MAKER AND EACH AND ALL GUARANTORS OF THIS NOTE HEREBY WAIVE TRIAL BY
JURY IN ANY COURT AND IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN
CONNECTION WITH OR IN ANY WAY RELATED TO THE FINANCING TRANSACTIONS OF WHICH
THIS NOTE IS A PART AND/OR THE ENFORCEMENT OF ANY OF HOLDER'S RIGHTS AND
REMEDIES, INCLUDING, WITHOUT LIMITATION, TORT CLAIMS. MAKER ACKNOWLEDGES THAT IT
MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS, AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. MAKER
FURTHER ACKNOWLEDGES THAT LENDER HAS NOT AGREED WITH OR REPRESENTED TO MAKER
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
MAKER AND EACH AND ALL GUARANTORS OF THIS NOTE ACKNOWLEDGE THAT THE LOAN
EVIDENCED BY THIS NOTE IS A COMMERCIAL TRANSACTION AND WAIVE THEIR RIGHTS TO
NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES, OR AS
OTHERWISE ALLOWED BY ANY STATE OR FEDERAL LAW WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH HOLDER MAY DESIRE TO USE, AND FURTHER WAIVES ITS RIGHTS TO REQUEST
THAT HOLDER POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT SAID MAKER AGAINST
DAMAGES THAT MAY BE CAUSED BY ANY PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY
HOLDER. Maker further waives diligence, demand, presentment for payment, notice
of nonpayment,
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protest and notice of protest, and notice of any renewals or extensions of this
Note, and all rights under any statute of limitations, and all guarantors agree
that the time for payment of this Note may be extended at Holder's sole
discretion, without impairing their liability thereon, and further consent to
the release of all or any part of the security for the payment hereof, at the
discretion of Holder, or the release of any party liable for this obligation
without affecting the liability of the other parties hereto. MAKER ACKNOWLEDGES
THAT IT MAKES THIS WAIVER KNOWINGLY, VOLUNTARILY, WITHOUT DURESS AND ONLY AFTER
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS. MAKER
FURTHER ACKNOWLEDGES THAT LENDER HAS NOT AGREED WITH OR REPRESENTED TO MAKER
THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
This Note shall be governed by and construed in accordance with the laws
of the State of Connecticut (but not its conflicts of law provisions).
References in this Note to the Maker in the singular shall include the the
plural and all obligations herein contained are and shall be joint and several.
INDUSTRIAL TECHNOLOGIES, INC.
By: /s/ G.W. Stewart
-------------------------
Its Chairman/CEO
INTEC EUROPE, LTD.
By: /s/ G.W. Stewart
-------------------------
Its Chairman/CEO
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Exhibit 10.11
May 28, 1997
American Commercial Finance Corporation
433 South Main Street
West Hartford, CT 06110
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"), Gerald W. Stewart and Joseph Schlig (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/ G.W. Stewart
---------------------------------
Its Chairman/CEO
INTEC EUROPE, LTD.
By: /s/ G.W. Stewart
---------------------------------
Its Chairman/CEO
INTEC CORP.
By: /s/ G.W. Stewart
---------------------------------
Its Chairman/CEO
/s/ Joseph Schlig
-------------------------------------
Joseph Schlig, individually as
Fidelity Guarantor
/s/ G.W. Stewart
-------------------------------------
Gerald W. Stewart, individually as
Fidelity Guarantor
Reviewed and Agreed to this 28th day of May, 1997:
AMERICAN COMMERCIAL
FINANCE CORPORATION
By: /s/ Richard Mount
--------------------------
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.
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Exhibit 10.12
LOAN PARTICIPATION AGREEMENT
THIS AGREEMENT, made this 28th day of May, 1997, by and between AMERICAN
COMMERCIAL FINANCE CORPORATION, having a place of business at 433 South Main
Street, West Hartford, Connecticut 06110 ("ACFC"), and CONNECTICUT DEVELOPMENT
AUTHORITY, having its principal place of business at 845 Brook Street, Rocky
Hill, Connecticut 06067 ("PARTICIPANT").
PREAMBLE
ACFC has entered into a Commercial Revolving Loan, Demand Loan and
Security Agreement dated November 1, 1996, as amended in December, 1996 (as
further amended or supplemented from time to time, the "LOAN AGREEMENT") with
INDUSTRIAL TECHNOLOGIES, INC., a Delaware corporation and INTEC EUROPE, LTD., a
Delaware corporation (collectively, the "BORROWER"). ACFC desires to sell, and
the Participant desires to purchase, a 100% interest in a term loan in the
original principal amount of $500,000 to be extended concurrently with the
execution of this Agreement by ACFC to Borrower pursuant to the Loan Agreement
(the "TERM LOAN"), on the terms and conditions set forth herein. Capitalized
terms used herein but not defined herein shall have the meanings ascribed to
them in the Loan Agreement.
WITNESSETH:
NOW, THEREFORE, ACFC and the Participant have agreed as follows:
1. Sale of Interest. Subject to the terms of this Agreement, ACFC hereby
sells, assigns and conveys to the Participant, and the Participant hereby
purchases from ACFC, a 100% interest in the Term Loan. The Participant's 100%
ownership interest in the Term Loan is hereinafter referred to as its
"Participation Share." The Participant shall have no interest in the revolving
loans or demand loan extended by ACFC to the Borrower pursuant to the Loan
Agreement in the maximum aggregate principal amounts of up to $1,500,000 and
$500,000 (the "REVOLVING LOAN" and "DEMAND LOAN", respectively) or in any
Commitment Fee, Minimum Interest Amount, or other fee charged pursuant to the
Loan Agreement, all of which amounts shall be retained by Lender for its own
account (except as otherwise provided in Section 3(a) hereof with respect to the
Termination Fee).
2. Funding. The Participant shall pay to ACFC the sum of $500,000 within
three (3) business days of the date hereof.
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3. Share and Priority of Payments.
(a) Prior to ACFC's demand for payment of any or all of the
Obligations, so long as no Defaulting Event has occurred, the
Participant shall (after the Participant has paid to ACFC the amount set
forth in Section 2 hereof in collected funds) be entitled to receive the
amount of all payments of principal, interest and late charges from
amounts actually received by ACFC from the Borrower and clearly
identified by the Borrower as being in respect of the Term Loan,
provided that ACFC shall have the right to retain from such payments any
amounts reasonably due and payable by the Participant to ACFC hereunder.
Prior to ACFC's demand for payment of any or all of the Obligations, so
long as no Defaulting Event has occurred, the Participant shall also be
entitled to receive its Participant's Termination Fee Share.
"Participant's Termination Fee Share" means a percentage of the amount
of the Termination Fee provided for in Section 13.1(b) of the Loan
Agreement (the "TERMINATION FEE") that is received by ACFC from the
Borrower and clearly identified by the Borrower as being in respect of
the Termination Fee, such percentage being that which the then
outstanding principal amount of the Term Loan bears to the aggregate
amount of the then Obligations of Borrower (the "TOTAL OBLIGATIONS").
(b) Any amounts received by ACFC from the Borrower prior to
ACFC's demand for payment of any or all of the Obligations and prior to
the occurrence of a Defaulting Event which are not clearly identified by
Borrower as being in respect of the Term Loan or in respect of any other
Obligations shall be retained by ACFC and applied to the Obligations
(other than the Term Loan) until such Obligations are fully and finally
paid in cash. The Participant acknowledges and agrees that while ACFC
may from time to time debit the Revolving Loan Account for principal and
interest charges on the Term Loan, any such debits shall be at ACFC's
sole discretion and shall not establish a pattern or custom binding upon
ACFC. Notwithstanding the foregoing, amounts paid by the Borrower will
not be applied to the Relocation Penalty, as defined in the promissory
note evidencing the Term Loan, until all of the Obligations (other than
the Term Loan) have been fully and finally paid in cash.
(c) After ACFC's demand for payment of any or all of the
Obligations or the occurrence of a Defaulting Event, the Participant
shall not be entitled to any payments in respect of the Participation
Share (including without limitation the Relocation Penalty as defined in
the promissory note evidencing the Term Loan) until all of the
Obligations (other than the Term Loan) are fully and finally paid in
cash.
(d) After ACFC's demand for payment of all or any of the
Obligations or the occurrence of a Defaulting Event, or upon any payment
or
<PAGE> 3
-3-
distribution of assets of Borrower or any Guarantors of any kind or
character (including without limitation, cash, property or securities)
resulting from (i) any dissolution, winding up, total or partial
liquidation, reorganization, sale, receivership, assignment for the
benefit of creditors, readjustment of indebtedness, composition or
extension of Borrower or any Guarantors (whether in bankruptcy or
similar proceeding), or (ii) any other disposition of all or any part of
Borrower, the Collateral, the Guarantors or of any asset of the
Guarantors, then, the Obligations (other than the Term Loan) shall first
be paid in full, or payment thereof provided for, before any payment is
made on account of the Participation Share.
(e) In the event that the Obligations (other than the Term Loan)
are fully and finally paid, ACFC shall assign to the Participant the
Term Loan and ACFC's lien and security interests in the Collateral,
without recourse and without any representations or warranties. Upon
such assignment, ACFC shall deliver to the Participant such of the
original Financing Agreements with respect to the Term Loan as ACFC may
have which the Participant reasonably deems necessary to enable the
Participant to receive Term Loan payments and collect the Term Loan, and
the participation interest of Participant under this Agreement shall
terminate.
4. Term Loan Collections and Remittances. All payments of principal,
interest and late charges received by ACFC from Borrower prior to ACFC's demand
for payment of all or any part of the Obligations or the occurrence of a
Defaulting Event which are clearly identified by Borrower as being in respect of
the Term Loan, as well as Participant's Termination Fee Share, shall be paid by
ACFC to the Participant within two (2) business days of ACFC's receipt of such
payment from the Borrower. Such payments by ACFC to the Participant will be made
by wire transfer, if requested by the Participant. In the event any Term Loan
payment or any part thereof is dishonored upon presentment for payment or is
rescinded or must be returned by ACFC for any reason after ACFC has remitted
payment to the Participant, the Participant agrees to reimburse ACFC for such
remittance immediately upon written demand by ACFC.
5. Servicing of Term Loan.
(a) ACFC shall endeavor to exercise the same care in
administering the Term Loan as it exercises with respect to similar
matters in which no participations are allotted by it, and it shall have
no further responsibility to the Participant. Without limiting the
generality of the foregoing, after the occurrence of a Defaulting Event,
ACFC shall have the right to proceed with such course of action as it
determines in its sole discretion, including commencing or refraining
from commencing collection proceedings or other legal action to enforce
the Obligations. In the event ACFC elects to commence legal proceedings
to enforce the Obligations, ACFC shall have the
<PAGE> 4
-4-
right to select legal counsel of its own choice. ACFC shall not be
liable, in the absence of bad faith, for any error of judgment or any
action taken by it, and in no event shall ACFC be liable for punitive or
consequential damages. Without limiting the foregoing, ACFC may rely
upon the advice of counsel concerning legal matters and upon any written
document believed to be genuine and to have been signed and sent by the
proper person or persons. ACFC shall give prompt written notice to the
Participant of any demand or default of the Obligations that is declared
by ACFC. Notwithstanding the foregoing provisions of this Section 5, in
the event that the Borrower fails to pay any amount under the Term Loan
(including, without limitation, the Relocation Penalty) as and when due,
ACFC shall, upon the written request of the Participant, demand payment
of the Obligations and commence such collection proceedings or other
legal action to enforce the Obligations as ACFC would undertake with
respect to similar matters in which no participations are allotted by
it, and it shall have no further responsibility to the Participant.
(b) ACFC may, in its sole discretion and without the consent of
the Participant, give or withhold waivers, consents and approvals, and
amend the Loan Agreement and the other Financing Agreements (as defined
in the Loan Agreement). ACFC agrees, however, that it will not amend any
provision of the Financing Agreements to change the principal amount of
the Term Loan, to reduce the interest, Relocation Penalty or late
charges on the Term Loan, to change the principal repayment schedule of
the Term Loan, or to release any Collateral without the written consent
of the Participant. ACFC shall, promptly after ACFC's receipt or giving
thereof, provide the Participant with copies of any amendments,
consents, or waivers with respect to the Financing Agreements.
(c) The Participant agrees that it will on demand reimburse
ACFC, to the extent of Participant's Expenses Participation Percentage
thereof, for any and all actual out-of-pocket costs, expenses and
disbursements which may be incurred or made by ACFC in connection with
any action which may be taken by ACFC to collect the amounts owing to
ACFC in connection with the Obligations, if ACFC is not reimbursed for
such amounts at such time by or on behalf of the Borrower. The
Participant shall not be obligated to reimburse ACFC for any of the
so-called "overhead", incidental and/or routine costs of administering
the Term Loan which do not entail out-of-pocket expenditures or
disbursements by ACFC. As used herein, "Expenses Participation
Percentage" means the proportion that the Participation Share then bears
to the total amount of the Obligations.
<PAGE> 5
-5-
6. Representations and Warranties.
(a) The Participant represents to ACFC that (i) it is entering into this
Participation Agreement and purchasing the Participation Share for its own
account; (ii) it has no present intention to, and agrees that it will not, sell,
assign, transfer or otherwise divide its interest in this Agreement or the
Participation Share; (iii) its entering into this Agreement and its purchasing
the Participation Share are in accordance with all laws, regulations and
statutes affecting or otherwise applicable to it; and (iv) it has previously
entered into similar participation agreements and made investments of the type
and kind and nature of this Agreement, is aware of and able to bear the economic
risks involved in its entering into this Agreement and purchasing the
Participation Share and does not foresee the occurrence of any event which would
alter said ability.
(b) The Participant acknowledges that (i) ACFC has furnished to the
Participant a copy of the Loan Agreement, the promissory note evidencing the
Term Loan and such other documents executed and/or delivered by the Borrower to
ACFC in connection therewith as Participant has requested, (ii) ACFC makes no
representation or warranty, and assumes no responsibility, with respect to the
due execution, sufficiency, legality, validity, enforceability or collectibility
of the Term Loan, the Financing Agreements or the Collateral (including, without
limitation, the enforceability of the Relocation Penalty), or the truth or
correctness of any representations, statements, or certifications made by the
Borrower or the Guarantors in connection with any of the foregoing, (iii) the
Participant's decision to purchase the Participation Share is based upon its own
independent analysis and evaluation of the Borrower and the Guarantors and their
respective financial positions, and (iv) the Participant has not relied on any
investigation or analysis conducted by ACFC or on any advice or communication by
ACFC. ACFC assumes no responsibility for the financial conditions of the
Borrower or the Guarantors or the performance of the Borrower's or the
Guarantors' obligations. ACFC agrees to furnish to the Participant copies of
such documents as ACFC shall receive in connection with the Term Loan as the
Participant may request. ACFC assumes no responsibility with respect to the
truth, correctness, authenticity, legality, validity or enforceability thereof.
(c) ACFC represents to the Participant that (i) ACFC is the sole legal
and beneficial owner of the Participation Share being issued to the Participant
hereunder; (ii) there exists no encumbrance on the Participation Share; and
(iii) SACFC has full power and authority to make the Term Loan and to issue to
the Participant the Participation Share.
7. Rights of Further Sale and Assignment. The Participant shall not sell
any interests in the Term Loan without ACFC's prior written consent. Except for
sales to affiliates of ACFC or as directed by regulatory authorities, ACFC will
not sell any interests in the Revolving Loan without Participant's prior written
consent.
<PAGE> 6
-6-
8. Term Loan is Not a Security. ACFC and the Participant acknowledge and
agree that this Agreement merely sets forth the terms and conditions under which
the Participant is acquiring an interest in the Term Loan. This Agreement is not
intended to represent and shall not be deemed to constitute a security pursuant
to the Securities Act of 1933, the Securities and Exchange Act of 1934, the
Investment Company Act of 1940 or other applicable federal or state law. This
Agreement and the participation of the Participant in the Term Loan is not
intended, and shall not be deemed, to create or constitute a loan by the
Participant to ACFC.
9. No Partnership or Joint Venture. ACFC and the Participant acknowledge
and agree that the relationship between them shall be solely that of contracting
parties with an agency relationship. Nothing contained in this Agreement shall
be deemed or construed to create a partnership, tenancy-in-common, joint tenancy
or joint venture by or between ACFC and the Participant. This Agreement shall
not confer upon either ACFC or the Participant any interest in, or subject
either to any liability for, the assets or liabilities of the other, except as
expressly stated herein.
10. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of Connecticut (but not its
conflict of laws provisions).
11. Notices. Any notice to be given under this Agreement shall be in
writing and mailed by certified mail, return receipt requested, or sent by
recognized overnight or same day delivery service, addressed as follows:
If to ACFC: American Commercial Finance Corporation
433 South Main Street
West Hartford, CT 06110
Attention: Richard E. Mount
President
If to the Participant: Connecticut Development Authority
845 Brook Street
Rocky Hill, CT 06067
Attention: Richard D. Graff
Vice President
or to such other address as either party may designate by notice given in
accordance with the terms of this paragraph.
12. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto, and cannot be modified in any respect except by an
agreement in writing.
<PAGE> 7
-7-
13. Headings. The headings contained in this Agreement are for the
convenience of reference only and are not to effect the construction of or be
taken into consideration in interpreting this Agreement.
14. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties
hereto.
IN WITNESS WHEREOF, each party has caused this instrument to be signed
in its corporate name by its duly authorized officer, on the day and year first
above written.
AMERICAN COMMERCIAL FINANCE CORPORATION
By: /s/ Richard E. Mount
------------------------------------
Richard E. Mount
Its President
CONNECTICUT DEVELOPMENT AUTHORITY
By: /s/ Nancy A. Watt
------------------------------------
Nancy A. Watt
Its Loan Closing Administrator
<PAGE> 1
Exhibit 10.13
May 28, 1997
Connecticut Development Authority
845 Brook Street
Rocky Hill, Connecticut 06067
Re: 100% Participation in $500,000 Term Loan from American Commercial Finance
Corporation to Industrial Technologies, Inc. and Intec Europe, Ltd.
Gentlemen:
The undersigned, Industrial Technologies, Inc., a Delaware corporation,
and Intec Europe, Ltd., a Delaware corporation (collectively, the "Borrowers"),
and Intec Corp., a Delaware corporation (the "Guarantor"), hereby acknowledge
that the Connecticut Development Authority (the "Authority") has, on the date
hereof, purchased a one hundred percent (100%) participation (the
"Participation") in that certain term loan in the amount of $500,000.00 to be
made available by American Commercial Finance Corporation (the "Lender") to the
Borrowers on the date hereof (the "Term Loan") pursuant to the terms of a
certain Letter Agreement of even date herewith and the terms of that certain
Commercial Revolving Loan, Demand Loan and Security Agreement dated as of
November 1, 1996, and as amended from time to time thereafter, each by and among
the Borrowers, the Guarantor and the Lender (collectively, the "Loan and
Security Agreement").
To induce the Authority to purchase the Participation in the Term Loan
from the Lender, each of the undersigned hereby agrees as follows:
1. Until the Term Loan has been paid and satisfied in full:
(a) The Authority shall own an undivided one hundred percent (100%)
interest in the Term Loan.
(b) The Authority shall be the beneficiary of any and all liens and
security interests in the Collateral (as such term is defined in the Loan and
Security Agreement) granted by the Borrowers and the Guarantor to the Lender to
secure the Term Loan.
(c) The Authority shall be entitled to receive and review any and
all financial information and other documentation relating to the Borrowers and
the
<PAGE> 2
Connecticut Development Authority
May 28, 1997
PAGE 2
Guarantor now or hereafter in the possession of the Lender and all information
and documentation hereafter delivered to the Lender by any of the undersigned
in connection with the Term Loan and pursuant to the Loan and Security
Agreement.
(d) The Borrowers and the Guarantor shall promptly file when due
and furnish to the Authority copies of their respective State of Connecticut
Employee Quarterly Earnings Reports (Form UC-5A).
2. The Borrowers and the Guarantor acknowledge that the Participation
in the Term Loan has been purchased by the Authority and the
Guarantor from the Lender for the benefit of the Borrowers subject
to the terms of Section 32-5a of the Connecticut General Statutes,
as amended by Public Act 93-218 and Public Act 93-360. Section
32-5a:
(i) provides that a business organization receiving financial
assistance from the Authority shall not relocate outside the
State of Connecticut for (A) ten (10) years after receiving
such assistance from the Authority or (B) during the term
that any loan or loan guarantee constituting such financial
assistance is outstanding, whichever is longer (such period
being hereafter referred to as the "Benefit Period"), unless
the full amount of the assistance is repaid to the Authority
and a penalty equal to five percent (5%) of the total
assistance received is paid to the Authority; and
(ii) provides that if such business organization relocates within
the State of Connecticut during the Benefit Period, such
business organization shall offer employment at the new
location to its employees from the original location if such
employment is available.
Notwithstanding anything herein, in the Loan and Security Agreement or in
the other loan and collateral documents evidencing the Term Loan (the "Loan
Documents") to the contrary, if (i) at any time within the Benefit Period either
of the Borrowers relocates (as such term is defined in Section 32-5a of the
Connecticut General Statutes, and regulations related thereto, as the same may
be amended from time to time) outside of the State of Connecticut (an
"Out-of-State Relocation") or relocates within the State of Connecticut and does
not offer employment as provided above, then:
<PAGE> 3
Connecticut Development Authority
May 28, 1997
PAGE 3
(1) such event shall constitute an immediate event of default
under the Term Loan and the Loan Documents; and
(2) with respect to an Out-of-State Relocation, the Borrowers
hereby jointly and severally agree that they shall pay to the
Authority an amount equal to the full amount of the
Participation and a penalty equal to seven and one-half
percent (7.5%) of the original amount of Participation, such
penalty to be due and payable whether or not the Authority
has funded all or any portion of the Participation and
regardless of whether the Term Loan has been paid and
satisfied in full at such time; provided that the Authority's
right to receive payment of the full amount of the
Participation shall be subordinate.
3. The joint and several obligations of the undersigned to the
Authority hereunder shall survive the repayment of the Term Loan.
INDUSTRIAL TECHNOLOGIES, INC.
By: /s/ G.W. Stewart
-----------------------------------------
Gerald W. Stewart
Its President and Chief Executive Officer
By: /s/ Joseph Schlig
-----------------------------------------
Joseph Schlig
Its Vice President and Chief Financial
Officer
INTEC EUROPE, LTD.
By: /s/ G.W. Stewart
-----------------------------------------
Gerald W. Stewart
Its President and Chief Executive Officer
By: /s/ Joseph Schlig
-----------------------------------------
Joseph Schlig
<PAGE> 4
Connecticut Development Authority
May 28, 1997
PAGE 4
Its Vice President and Chief Financial
Officer
INTEC CORP.
By: /s/ G.W. Stewart
-----------------------------------------
Gerald W. Stewart
Its President and Chief Executive Officer
By: /s/ Joseph Schlig
-----------------------------------------
Joseph Schlig
Its Vice President and Chief Financial
Officer
ACKNOWLEDGMENT OF AUTHORITY
The Authority acknowledges that the Guarantor has been unable to obtain a
certificate of good standing from the State of Delaware, and that the Guarantor
is making every effort to obtain such good standing certificate, but that the
Guarantor will not be able to obtain such certificate before the anticipated
funding of the Term Loan on the date hereof. Accordingly, the Authority hereby
waives the requirement that the Guarantor obtain such certificate of good
standing in advance of funding the Term Loan; provided, however, that the
Guarantor and the Borrowers shall continue to diligently pursue obtaining such
certificate and shall provide a copy of same to the Authority upon obtaining
same.
CONNECTICUT DEVELOPMENT
AUTHORITY
By: /s/ Nancy A. Watt
-----------------------------------------
Nancy A. Watt
Its Loan Closing Administrator
Duly Authorized
<PAGE> 1
Exhibit 10.14
INTEC
INDUSTRIAL TECHNOLOGIES, INC.
PRESS RELEASE
For Release: IMMEDIATELY
Contact: Gerald W. Stewart 203-268-8000
Eric H. Twerdahl 203-268-8000
INDUSTRIAL TECHNOLOGIES INC. RETAINS
D.H. BLAIR INVESTMENT BANKING CORP. AS FINANCIAL ADVISOR
TRUMBULL, CONNECTICUT, MAY 15, 1997 .... INDUSTRIAL TECHNOLOGIES INC. (NASDAQ:
INTI) (BSE: ITI) announced today that it has retained D. H. Blair Investment
Banking Corp., New York, to act as the Company's financial advisor and
investment banker.
Industrial Technologies, Inc. will continue its focus upon acquisition and
strategic alliances as part of the Company's overall growth and expansion
strategy. In its near-term plan, the Company will align with other web-surface
inspection and measurement technology companies to augment its global market
coverage and broaden its product offerings.
D. H. Blair Investment Banking Corp. is a leading Wall Street investment banking
firm well-known for its activities assisting technology-oriented companies with
IPO's and private placements. Blair will assist Industrial Technologies with
merger and acquisition advisory, analysis, and implementation.
Dr. Gerald W. Stewart, Industrial Technologies' Chairman and CEO, adds: "We are
very pleased to welcome D. H. Blair to our team to complement our efforts in
fulfilling our long-term strategy for growth and international expansion in
web-inspection systems and instruments as well as in our industrial computer
sectors."
INDUSTRIAL TECHNOLOGIES, INC., designs, assembles and markets automatic surface
inspection systems, electro-optical sensors and industrial computers. The
Company's INTEC Inspection Division sells a family of automated inspection
systems used in web processing industries for detecting surface flaws in various
commercial products such as paper, plastics, photographic materials, metals and
glass. Inspection systems utilize laser, CCD line scan camera or video image
analysis technology. The Company's AMDEX Industrial Computer Division assembles
and markets a broad range of industrial PC's and embeddable systems for multiple
applications.
<PAGE> 2
All statements regarding anticipation and expectations contained herein are
forward-looking statements that involve a number of uncertainties and risks,
including but not limited to, business conditions and growth in the industries
into which the Company sells its products and the general economy, demand and
acceptance of existing products, the timely development and acceptance of new
products, the impact of competitive products and pricing, manufacturing
efficiencies, the achievement of sales and budget projections and any other
factors discussed in the Company's filings with the Securities and Exchange
Commission.
One Trefoil Drive, Trefoil Park, Trumbull, CT 06611
Tel: 203-268-8000 Fax: 203-268-2538
