Waiver Agreement between National City Bank, The Provident Bank, and Modern Technologies Corp. (May 2002)

Summary

National City Bank and The Provident Bank have agreed to temporarily waive certain defaults by Modern Technologies Corp. under a Credit Agreement dated December 28, 2001. The defaults relate to financial covenants and prohibited transactions identified in the company’s 2001 financial statements. The waiver applies only to these specific defaults and is effective through December 31, 2002. All other rights under the original Credit Agreement remain in effect.

EX-10.10 15 dex1010.txt EXHIBIT 10.10 Exhibit 10.10 [National City Logo] National City Bank Corporate Banking 6 North Main Street Dayton, OH ###-###-#### ###-###-#### Fax ###-###-#### Neal J. Hinker Senior Vice President May 2, 2002 Rajesh K. Soin Modern Technologies Corp. 33 W. First St. Dayton, OH 45402 Dear Raj: Modern Technologies Corp. ("Company") entered into a Credit Agreement, dated December 28, 2001, with National City Bank and The Provident Bank ("Banks"). This Credit Agreement required the Company to comply with certain covenants. Draft financial statements for the period ending December 31, 2001 have been received and financial covenants have been calculated and compared to requirements. The following defaults have occurred based upon our review of the draft financial statements: Section 3B.01 Tangible Net Worth Modern Technologies Corp. is required to maintain a Tangible Net Worth at December 31, 2001 of $2,750,000. The Company had a financial statement Net Worth of negative $120,592 at December 31, 2001. In order to calculate the financial covenant, the Goodwill of $1,558,491 is considered intangible and must be deducted. Tangible Net Worth after deducting Goodwill would be a negative $1,679,083, which is below the required minimum of $2,750,000. Section 3B.02 Adjusted Fixed Charge Coverage Modern Technologies Corp. was required to maintain a ratio of Net Income plus Interest Expense plus Taxes plus Depreciation/Amortization to Interest Expense plus Taxes plus Payment of Funded Debt plus Distributions +/- change in Advances to Affiliates of a minimum of 1.10 times for the period ending December 31, 2001. Based upon information in the draft financial statement, Modern Technologies Corp. achieved a .64 times coverage. Page 2 3D.01 Equity Transactions Modern Technologies Corp. was prohibited from transferring any equity interest of any Subsidiary. Based on information provided, the Company transferred ownership of BC Golf during the fiscal year, which was prohibited by the Credit Agreement. 3D.06 Dividends Modern Technologies Corp. made distributions to its shareholder, which have resulted in certain financial covenants not being met under this Agreement. Had these distributions not been made, the Company may have been in compliance with covenants of the Credit Agreement. National City Bank and The Provident Bank ("Banks") are agreeable to waiving the above defaults under the Credit Agreement dated December 28, 2001. Additionally, the Banks are agreeable to waiving these covenants only, through the period ending December 31, 2002. The Banks reserve all rights under the Credit Agreement except for those waived herein. Sincerely, /s/ Neal J. Hinker - ------------------ Neal J. Hinker Senior Vice President National City Bank as Agent