1
Exhibit (b)(1)
March 7, 2001
Xxxxx Xxxxxxxxx Xxxxxxxxxx
Executive Vice President
ACAS Acquisition (Weston), Inc.
Two Bethesda Metro Center, Suite 0000
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx Xxxxxxxxxx:
You have requested that we consider a financial arrangement with Xxx X.
Xxxxxx, Inc. (the "Borrower"), in connection with the purchase by ACAS
Acquisition (Weston), Inc. ("Parent") of 100% of the stock of the Borrower (the
"Acquisition") and the merger of the subsidiary (the "Subsidiary") of the Parent
into the Borrower (the "Merger") and to provide for Xxxxxxxx's ongoing working
capital needs after the Merger. The sum of the purchase price of the Stock in
connection with the Merger and certain transaction costs payable at closing is
approximately $58,725,840 plus the repayment of existing debt. In connection
therewith and subject to and upon the terms and conditions hereinafter set
forth, Bank of America, N.A. ("Bank") and Fleet Capital Corporation ("Lender")
are pleased to commit to providing (or amending the existing Bank of America,
N.A. facility to provide) the Borrower with a total credit facility (the "Credit
Facility") of up to $50,000,000 for which Bank of America, N.A. will act as
agent (the "Agent") for Fleet Capital Corporation and one or more other lenders
(together with Xxxxxx, the "Lenders"), as follows:
1. REVOLVING CREDIT LINE:
1.1 REVOLVING CREDIT FACILITY: A five-year revolving credit facility
(the "Revolving Credit Facility"), not exceeding $40,000,000 at
any one time outstanding, and providing for loans and advances
limited to the sum of: (i) 90% of eligible billed government
accounts receivable less than 91 days from date of original
invoice; plus (ii) 85% of eligible billed commercial accounts
receivable less than 91 days from date of original invoice; plus
(iii) 50% of eligible unbilled accounts receivable up to a maximum
of $10,000,000. Unbilled eligible accounts receivable advances
shall be limited to costs incurred as of the borrowing base date,
which will be billed within 30 days, and which are not used to
offset any reserve for Billings in Excess of Costs (as hereinafter
defined). Standards of eligibility and establishment of reserves
against loan availability will be established by Bank of America
and are subject to revision at Agent's discretion. The principal
amount of the loans made under the Revolving Credit Facility shall
be repaid on the sooner to occur of termination of the Revolving
Credit Facility (whether by Borrower or Agent and whether prior to
or after the occurrence of an event of default) or Borrower's or
Agent's receipt of any proceeds of any accounts or inventory, to
the extent of such proceeds.
1.2 Borrower may use the loan availability under the Revolving Credit
Facility to cause to be opened one or more Documentary Letters of
Credit and Standby Letters of Credit
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March 7, 2001
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("L/C's") for which Agent would establish a 100% reserve for all
Letters of Credit against loan availability under the Revolving
Credit Facility, provided, however, that the undrawn face amount
of all L/C's at any one time outstanding shall not exceed
$7,500,000 and the tenor of any such L/C shall not exceed one year
(180 days in the case of Documentary Letters of Credit).
1.3 RATE: Subject to adjustments made pursuant to Performance Pricing
options, all loans and advances under the Revolving Credit
Facility shall bear interest payable monthly, calculated on the
basis of a 360 day year for actual days elapsed, at a rate equal
to (i) one hundred basis points (1.00%) in excess of the Reference
Rate publicly announced from time to time by Bank, which interest
rate shall change as the Reference Rate changes; or at Borrower's
option, (ii) the Applicable LIBOR Margin (as defined below) plus
the 30, 60 or 90 day reserve adjusted LIBOR rate as quoted by
Bank, The LIBOR rate would be subject to standard LIBOR
conventions and mutually agreed upon restrictions as to total
outstanding amounts, initial amounts and incremental amounts.
REFERENCE RATE means the rate of interest publicly announced from
time to time by Bank, in Charlotte, NC, as its prime rate. It is a
rate set by Bank based upon various factors including Bank's costs
and desired return, general economic conditions, and other
factors, and is used as a reference point for pricing some loans.
Bank may price loans at above or below the Reference Rate. Any
change in the Reference Rate shall take effect on the day
specified in the public announcement of such change.
1.4 L/C FEE: Two percent (2.00%) per annum (on the basis of a 360 day
year for actual days elapsed) would be payable monthly in arrears
on the average undrawn amounts of all letters of credit, in
addition to the amount of any costs or expenses incurred by Xxxxxx
(including the charges of the issuing bank) in connection with any
letter of credit opened, or caused to be opened. If any L/C,
whether or not due or payable, is for any reason outstanding on
the effective date of termination of the Revolving Credit
Facility, Borrower will be obligated to pay to Agent in cash an
amount equal to the sum of the undrawn amount of such L/C plus all
amounts which Bank, Agent or any Lender has theretofore paid with
respect to such L/C and for which such payor has not received
reimbursement.
1.5 EARLY TERMINATION FEE: In the event that the Revolving Credit
Facility is for any reason whatsoever terminated prior to its
scheduled expiration date, the Borrower shall pay to the Agent,
for the ratable benefit of the Lenders, an early termination fee.
If the effective date of the termination of the Credit Facilities
occur in the first year of the term, then the early termination
fee shall be 1.53% of the commitment amount; in the second and
third years, the early termination fee shall be .62% of the
commitment amount; and for all periods thereafter, there shall be
no early termination fee. Should termination occur after the first
anniversary due to the Borrower refinancing the credit facility
with the Bank or any of its affiliates pursuant to a credit
agreement in which the
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March 7, 2001
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Bank is the sole lender or agent, the early termination fee shall
be waived.
2. REAL ESTATE TERM LOAN:
2.1 AMOUNT AND AMORTIZATION: A five-year term loan (the "R/E Term
Loan") in principal amount equal to $10,000,000.
The Term Loan shall be repayable in fifty-nine (59) consecutive
monthly principal installments of $83,333.33 commencing thirty
(30) days after the closing ("Closing") of the financial
accommodations described herein with a final payment of the
outstanding balance due on the final maturity, expiration or
termination of the financial accommodations described herein.
Proceeds of the Xxxxxx Spring claim and of sales of fixed assets
(with a book value in excess of $250,000) or real estate assets
shall prepay the Term Loan, in inverse order of maturity.
2.2 RATE: Subject to adjustments made pursuant to Performance Pricing
options, all loans and advances under the R/E Term Loan shall bear
interest payable monthly, calculated on the basis of a 360 day
year for actual days elapsed, at a rate equal to (i) one hundred
basis points (1%) in excess of the Reference Rate; or at
Borrower's option, (ii) the Applicable LIBOR Margin plus the 30,
60 or 90 day reserve adjusted LIBOR rate as quoted by Bank. The
LIBOR option would be subject to standard LIBOR conventions and
mutually agreed upon restrictions as to total outstanding amounts,
initial amounts and incremental amounts
3. PERFORMANCE PRICING: The Facilities shall bear interest at a rate equal to
(1) LIBOR plus the Applicable LIBOR Margin or (2) the Reference
Rate plus one hundred basis point (1%). The Revolving Credit
Facility shall also be subject to an unused line fee (the "Unused
Fee") payable monthly in arrears on the unused portion of the
Revolving Credit Facility calculated on the basis of a 360 day
year for actual days elapsed. The Applicable LIBOR Margin and
Unused Fee, for any fiscal quarter following the closing, shall be
determined as of the last day of the immediately preceding fiscal
quarter based on the Performance Grid as follows:
-----------------------------------------------------------------------------------------
Applicable
Total Funded Debt/ LIBOR
EBITDA Ratio Unused Fee Margin
-----------------------------------------------------------------------------------------
less than or equal to 3.00 30b.p. 215b.p.
-----------------------------------------------------------------------------------------
>3.00 and less than or equal to 3.50 30b.p. 245b.p.
-----------------------------------------------------------------------------------------
>3.50 and less than or equal to 4.00 35b.p. 275b.p.
-----------------------------------------------------------------------------------------
>4.00 and less than or equal to 4.50 40b.p. 305b.p.
-----------------------------------------------------------------------------------------
> 4.50 40b.p. 335b.p.
-----------------------------------------------------------------------------------------
At Closing, the Applicable LIBOR Margin and Unused Fee shall be the
highest rate set forth
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March 7, 2001
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above.
4. GUARANTORS: Guaranties shall be provided by Parent and all existing and
hereafter acquired subsidiaries on a senior secured basis.
5. FACILITY FEES: Fees associated with the Facility shall include:
i. A commitment fee as set forth in the letter agreement (the
"Fee Letter A") executed in connection herewith;
ii. A fee of $750 per day, per person plus out of pocket
expenses per field exam. Estimated requirement of four
Field Exams per year.
iii. An arrangement Xxx to Agent as set forth in the letter
agreement (the "Fee Letter B") executed in connection
herewith.
6. INTEREST RATE HEDGE: Borrower shall be required to purchase interest rate
protection on a minimum of 25% of the senior funded debt through a
hedging arrangement with the Bank or another institution
acceptable to Agent. The Agent will establish a reserve against
loan availability under the Revolving Credit Facility to address
any credit exposure to Bank associated with this product.
7. DEFAULT INTEREST: Upon and during the continuation of an event of default,
the applicable interest rate and letter of credit fees would be
increased by two percent (2.00%) per annum.
8. COLLATERAL: All loans, advances and other obligations, liabilities and
indebtedness of the Borrower to Agent and the Lenders (the
"Obligations") shall be secured by valid, perfected and
enforceable first priority liens and security interests in all
present and future assets of the Borrower (other than certain
assets subject to capital leases on the date hereof) including,
without limitation, all of the Borrower's accounts, contract
rights, instruments, documents, chattel paper, general
merchandise, owned real property, machinery and equipment, general
intangibles, inventory, patents, tradenames and all deposit
accounts and all proceeds of any of the foregoing, including,
without limitation, insurance proceeds and the stock of all
subsidiaries. The Borrower shall at all times maintain a "special
deposit account" with a bank that is acceptable to the Agent on
terms and conditions satisfactory to the Agent. The Borrower shall
on a daily basis deposit all cash receipts and other collections
into such "special deposit account", which shall be transferred
directly to the Agent on a daily basis and applied to repay
outstanding obligations under the Revolving Credit Facility.
9. COVENANTS AND OTHER PROVISIONS: The Agent's loan agreement shall contain the
following financial performance covenants that will be tested
quarterly (except Minimum Tangible Net Worth, which will be a
maintenance covenant). For the first three-quarters following
closing, each quarterly period shall be added to the last and
annualized in order to
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ACAS Acquisition (Weston), Inc.
March 7, 2001
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calculate covenants. At the end of the fourth quarter, all ratios
shall be tested quarterly for the prior four quarters.
9.1 Maximum ratio of Total Funded Debt to EBITDA of 5.0 to 1.0,
stepping down to 4.25 to 1.0 at December 31, 2001, to 3.75 to 1.0
at December 31, 2002 and to 3.5 to 1.0 at December 31, 2003;
9.2 Maximum ratio of Senior Funded Debt to EBITDA of 3.25 to 1.0,
stepping down to 3.0 to 1.0 at December 31, 2001 and to 2.5 to 1.0
at December 31, 2002;
9.3 Minimum Fixed Charge Coverage Ratio of 1.20. Defined as EBITDA
minus non-financed capital expenditures divided by cash interest
plus principal and lease amortization and cash taxes.
9.4 Minimum Tangible Net Worth of $3,500,000 with step-ups to account
for 50% of net income, 100% of any equity issuance and 100% for
the write-up of any assets.
9.5 Borrower shall provide a monthly compliance certificate stating
that all Accounts Payable relating to sub-contractors are not more
than 30 days past due for the period covered, and that amounts not
paid according to terms do not exceed, in the aggregate, $500,000,
except for amounts in good faith dispute. A reserve from
collateral availability shall be required for any amounts over 30
days past due related to unpaid sub-contractor payables with
possible Mechanics' Lien rights, except for amounts in good faith
dispute. Agent reserves the right to impose borrowing base
reserves for amounts in dispute.
9.6 The Agent's loan agreement shall also include such agreements,
representations, warranties and financial, affirmative and
negative covenants, defaults (including, without limitation,
cross-defaults) as the Agent may customarily use in transactions
of this type to evidence, secure and assure repayment and
performance of all of the Borrower's present and future,
obligations to the Agent and the Lenders.
10. NEGATIVE COVENANTS Shall include, but not be limited to, limitations on
additional indebtedness, restricted payments, investments, change
in control and management, assumption of liabilities, mergers and
acquisitions, dividends and distributions, sale or pledge of
assets and loans and advances to third parties. Cash capital
expenditures shall be limited to $3,500,000 per annum. In addition
to the $3,500,000 capital expenditure limitation for Fiscal Year
2001, the company shall be permitted to make additional capital
expenditures, during Fiscal Year 2001 only, for the purpose of
acquiring equipment to support three EPA START Contracts. These
expenditures in the aggregate shall not exceed $800,000.
11. REPORTING REQUIREMENTS
11.1 Monthly financial statements, in conformity with generally
accepted accounting principles applied on a consistent basis,
within 45 days of the end of each month;
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March 7, 2001
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11.2 Quarterly financial statements and 10Q if applicable within 45
days of the end of each fiscal quarter. Each quarterly statement
shall be accompanied by a compliance certificate, which certifies
continuing compliance with all representations, warranties and
covenants;
11.3 Annual financial statements and 10K if applicable within 120 days
of fiscal year end, prepared and certified by a CPA acceptable to
Agent. Each annual statement shall be accompanied by a compliance
certificate, which certifies continuing compliance with all
representations, warranties and covenants, and validation of the
Borrowing Base Certificate and all reserves calculated thereon;
11.4 Annual financial projections in form and substance satisfactory to
Agent, within 30 days of each fiscal year end;
11.5 Monthly project status reports in form and substance satisfactory
to Agent, within 30 days of month end;
11.6 Quarterly contract backlog reports in form and substance
satisfactory to Agent, within 45 days of fiscal quarter end;
11.7 Monthly borrowing base certificates as of the end of each
financial reporting period, dated within 5 days of such period,
accompanied by supporting accounts receivable aging, an accounts
payable aging and an unbilled receivables report acceptable to
Agent (more frequently, if requested by Agent);
11.8 Such other reports and information as requested by Agent.
12. CONDITIONS PRECEDENT: The obligation of the Lenders to fund and close the
Credit Facilities is conditioned upon compliance by the Borrower
with the following conditions:
12.1 No material adverse change shall have occurred, as determined by
Agent and Lenders in their sole discretion, in the business,
operations, profits or prospects of Borrower, Parent or Subsidiary
since the financial statements dated November 30, 2000, and Agent
and Lenders shall have received assurances reasonably satisfactory
to them (such as in the form of quarterly GAAP financial
statements) that Borrower shall have, as of the closing date, met
the financial performance projections dated November 7, 2000 as
supplemented by quarterly projections heretofore delivered to
Lender, adjusted to eliminate any post-closing savings.
12.2 At the time of Closing, Borrower shall have unused loan
availability of not less than $7,000,000 after giving effect to
all transactions to occur at the Closing and after deducting the
amount of accounts payable more than 30 days past due.
12.3 Receipt of a report being prepared by Xxxxxxxx, at the request of
Agent and Xxxxxxx, with respect to an investigation and audit of
the Real Property, the scope of which has
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ACAS Acquisition (Weston), Inc.
March 7, 2001
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been defined by the Agent, showing that the Property is
environmentally acceptable to the Agent and Lenders. All aspects
of the environmental report and the review thereof by an
independent environmental consultant acceptable to the Agent must
be satisfactory to the Agent in all respects.
12.4 There shall exist (a) no action, suit, investigation, litigation,
or proceeding pending or threatened in any court or before any
arbitrator or governmental instrumentality, other than the
litigation listed on Schedule 5.8 to the Definitive Agreement and
Plan of Merger dated March 7, 2001 (the "Definitive Merger
Agreement") and the Summary of Current Significant Litigation
dated March 2000 delivered by the Borrower to the Agent, and (b)
no development in any of the pending matters disclosed in the
deliveries referred to in (a) immediately above, that in Lenders'
reasonable judgment (i) could reasonably be expected to have a
material adverse effect on the business, condition (financial or
otherwise), operations, performance, or properties of Borrower,
Parent or Subsidiary taken as a whole or which could impair
Borrower's ability to perform satisfactorily under the proposed
financing arrangement or (ii) could reasonably be expected to
materially and adversely affect the transaction. As of the date of
Closing the Borrower shall provide to the Agent a current Summary
of Current Significant Litigation in a form consistent with that
delivered prior hereto and referred to in (a) of this subsection.
12.5 The execution and delivery, in form, substance and/or amounts
acceptable to Agent and Lender, of Agent's customary agreements
(which shall provide for, among other things, Agent's standard
capital adequacy requirements and compensation and the rights of
the Agent, in its discretion, to determine eligibility of the
borrowing base collateral, to establish all necessary or
appropriate reserves including, without limitation, environmental
reserves, and to assess Agent's then standard fees for field
examination and the preparation of written reports thereof, for
amendments and waivers, Xxxxxxxx's indemnification of Agent and
Lenders, and consent to jurisdiction and venue as required by
Agent), documents, instruments, financing statements, mortgages,
pledges, guarantees, consents, evidences of corporate authority,
certificates, insurance certificates and loss payee endorsements,
opinions of counsel and such other writings and covenants
(financial and otherwise) to confirm and effectuate the lending
transaction as may be required by Agent and Xxxxxx and their
respective counsel.
12.6 The Borrower shall cooperate with Lenders in the syndication of
the Credit Facility and shall meet with prospective lenders as may
be reasonably requested by Agent.
12.7 Agent and Xxxxxxx shall be fully satisfied with the results of a
field examination performed prior to Closing of Xxxxxxxx's books,
records, financial condition and performance as well as the value
of the collateral and of Borrower's ability to provide accurate
reporting of unbilled accounts receivable.
12.8 Receipt by Agent of evidence of policies of insurance for the
Borrower, with terms of
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March 7, 2001
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coverage and endorsements as may be required by Agent, consistent
with the policies described on Schedule 5.23 of the disclosure
schedules to the Definitive Merger Agreement.
12.9 The Agent and Xxxxxxx will be furnished with the written opinion
of counsel of the Borrower (and of the Guarantors) reasonably
satisfactory in form and content to the Agent and Lenders.
12.10 Agent's receipt of an ALTA title policy by a title insurance
company satisfactory to Agent in an amount to be determined by
Agent that Agent's mortgage on the real property constitutes a
valid and perfected first lien in Agent's favor, without any
exceptions not acceptable to Agent and Lenders.
12.11 Agent and Xxxxxxx' full satisfaction that the terms and conditions
of all agreements relating to the Acquisition and Merger and all
transactions, agreements and documents relating thereto, are
consistent with the terms of the Definitive Merger Agreement.
12.12 Successful consummation of the Acquisition and Merger without any
amendments, modifications or waivers thereto which are not
acceptable to Agent and Lenders.
12.13 Evidence satisfactory to Agent and Lenders that the Borrower has
amended the 401K and "pay-for-performance" bonus plans to obtain
projected cash savings as set forth in projections provided to
Lenders by Parent.
12.14 Evidence satisfactory to Lenders of Xxxxxxxx's receipt of a cash
equity contribution of at least $3,500,000, and cash proceeds of
subordinated notes of at least $27,000,000 (the "Subordinated
Debt") upon terms and conditions consistent with the financing
term sheet from American Capital Strategies, Ltd., dated March 7,
2001 or otherwise acceptable to Agent and Lenders. To the extent
that, exclusive of Xxxxxx Springs, the Borrower reduces the level
of ineligible receivables or collects cash from sources other than
accounts included in the borrowing base ("Net Cash"), both
measured as of the January 26, 2001, the amount of Subordinated
Debt funded at Closing may be reduced by the lesser of $2,000,000
or the sum of the Net Cash, provided the R/E Term Loan balance is
reduced by $1,000,000 at Closing. Furthermore, to the extent that
the Borrower receives a cash equity contribution in excess of
$3,500,000, the Subordinated Debt may be reduced by the difference
between the cash equity contribution and $3,500,000. The cash
equity contribution will be netted against any loans to management
made by the Borrower in connection with an equity purchase. The
reduction to Subordinated Debt shall be limited to $2,000,000 in
aggregate.
12.15 Agent's receipt of a Subordination Agreement between American
Capital Strategies, Ltd., and the Agent and Lenders with terms and
conditions acceptable to Agent and Lenders, which shall include,
among other things, an acceptable standstill period, no
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restrictions on Lenders' ability to deal with collateral or amend
or modify loan documents, consent to Agent and Lenders providing
financing on a priming and/or superpriority basis in the event of
a Bankruptcy Case and subordination to such financing;
12.16 Except as hereinafter provided, Net Billings in Excess of Costs
shall be limited to $8,000,000 with all amounts exceeding such
limit to be reserved from collateral availability. "Net Billings
in Excess of Costs" shall be defined, as Xxxxxxxx in Excess of
Costs calculated by account debtor excluding invoices that have
been deemed by Agent ineligible for any reason. If the R/E Term
Loan is partially or totally repaid from the proceeds of the sale
of a portion of the real estate, an appraisal of the remaining
real estate shall be conducted by an appraiser acceptable to the
Lenders and
12.16.1 if the difference between 70% of the appraised value of
the real estate and the remaining principal balance of the
R/E Term Loan (the "R/E Equity") is greater than
$5,200,000, the cap on Net Billings in Excess of Costs
shall remain at $8,000,000; and
12.16.2 if the R/E Equity is less than $5,200,000, then the cap on
Net Billings in Excess of Costs shall be reduced by an
amount equal to 70% of the difference between $5,200,000
and the R/E Equity, but in no event will the cap on Net
Billings in Excess of Costs be less than $5,000,000.
Once the remaining real property has been sold, the cap on Net
Billings in Excess of Costs shall be reduced to $5,000,000.
12.17 Agent's full satisfaction that Xxxxxxxx has obtained any necessary
governmental consent or approvals and that Borrower is in
compliance with all applicable laws, rules and regulations in
connection with the Acquisition and the Merger.
12.18 Agent and Xxxxxxx' receipt of pro forma GAAP and fair salable
value opening balance sheets dated as of the closing date which
balance sheets shall reflect the consummation of the Acquisition
and the Merger and no material changes from the most recent pro
forma balance sheet previously delivered to Lenders and Lenders'
reasonable satisfaction that Borrower is adequately capitalized,
that the fair salable value of Borrower's assets will exceed its
liabilities at Closing, and that Borrower will have sufficient
working capital to pay its debts as they become due.
12.19 After a reasonable transition period following the Merger,
Borrower shall maintain Bank of America as its principal
depositary bank, including for maintenance of operating,
administrative, cash management, collection activity and other
deposit accounts for the conduct of its business.
12.20 The commitment of each of Bank of America, N.A. ("BAC") and Fleet
Capital Corporation (Fleet"), to make loans as a Lender as part of
the Credit Facility is limited to 50% of the total loans under the
Credit Facility and will not exceed $20,000,000 in
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maximum principal amount of loans under the Revolving Credit
Facility or $5,000,000 with respect to the R/E Term Loan, is
conditioned on BAC serving as Agent and both Fleet and BAC making
available to Borrower an equal commitment and an equal amount of
loans under the Credit Facility and is subject to all of the terms
and conditions of this letter.
12.21 No event shall have occurred and no condition shall exist which
constitutes a default or an event of default under the loan
documents.
12.22 Prior or at the closing, the Borrower shall have executed and
delivered to the Agent both Fee Letter A and Fee Letter B, or a
counterpart thereof.
12.23 Information Disclosure. As soon as available but at least ten (10)
days prior to closing, the Borrower shall deliver to the Agent or
its counsel:
i. A photocopy of the Articles of
Incorporation and Bylaws of the Borrower, together with all
amendments;
ii. A Certificate of Good Standing of the
Borrower from the state of its incorporation and each
jurisdiction in which it is qualified to do business;
iii. A photocopy of the Articles of
Incorporation and Bylaws, Articles of Organization and
Operating Agreement, or Certificate of Limited Partnership
and Limited Partnership Agreement, as applicable, of each
Guarantor, together with all amendments;
iv. A Certificate of Good Standing for each
Guarantor from its jurisdiction of formation and each
jurisdiction in which it is qualified to do business;
v. The resolutions of the Borrower and each
Guarantor, including the authorization of the execution,
delivery and performance of the Financing Documents and the
names and titles of the officer(s) or representative(s) of
the Borrower or Guarantor (as applicable) authorized to
sign the Financing Documents;
vi. A list showing the street address, city
or county and state of the Borrower's chief executive
office and of any other location where the Borrower
conducts or has a place of business;
viii. A list showing the street address, city
or county and state of each Guarantor's chief executive
office and of any other location where each Guarantor
conducts or has a place of business;
ix. A copy of the Borrower's property and
casualty
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insurance policies insuring buildings and improvements and
personal property on the Land in amounts consistent with
those set forth on Schedule 5.23 of the Definitive Merger
Agreement;
x. A copy of the Borrower's flood insurance
policy in an amount satisfactory to the Agent or the
maximum limit of coverage available, whichever is less, if
the real property on which Borrower's facility in West
Chester, Pennsylvania, is located (the "Land") is in a
special flood hazard area, or, if the Land is not located
in a special flood hazard area, a signed statement to that
effect from the insurance agent or broker of the Borrower;
xi. An environmental audit or report on the
Land received by the Borrower, or such other evidence as
the Borrower shall have received that the Land currently
complies with all environmental laws, ordinances, orders or
decrees of any state, federal, municipal or other
governmental body or agency applicable to the Land and no
hazardous substances or toxic wastes or materials have been
or are manufactured, stored or disposed of in, on or about
the Land;
xii. A current ALTA survey reasonably
satisfactory in all respects to the Agent on the Land,
prepared by a registered land surveyor or engineer
satisfactory to the Agent and certified to the Agent and
the Lenders, showing (1) the location on such Land of all
buildings, structures and other improvements and
established building setback lines, (2) the boundary lines
of such Land, (3) all access and other easements
appurtenant to such Land or necessary for the use of such
Land, (4) all roadways, driveways, easements, encroachments
and overhanging projections and similar encumbrances
affecting such Land, whether recorded or apparent from a
physical inspection of such Land, (5) any encroachments on
any adjoining property by the buildings or other structures
on such Land, and (6) such other items as may be reasonably
required by the Agent;
The summary of terms and conditions contained herein is not meant to be,
nor should it be construed as, an attempt to define all of the terms and
conditions of the transaction contemplated hereby, nor is it intended to reflect
specific document phrasing that will exist in the loan and security agreement.
It is intended only to outline the basic points of business understanding around
which binding legal documentation will be negotiated and/or structured. Further
negotiations will not be precluded by the issuance of this letter or by
acceptance by the Borrower.
All out-of-pocket fees and expenses incurred by Agent in connection with
the documentation of the Credit Facility and Agent review and due diligence,
such as reasonable legal (including the allocated costs of in-house counsel to
Agent), title insurance, field examination and any appraisal expenses incurred
after the date of this letter, together with an allocated charge of $750 per day
per field examiner, shall be paid by Borrower or Parent whether or not the
transaction herein contemplated is consummated.
12
Xxxxx Xxxxxxxxx Xxxxxxxxxx
ACAS Acquisition (Weston), Inc.
March 7, 2001
Page 12 of 14
Borrower and Parent, are jointly and severally obligated to make continuing
deposits to reimburse out of pocket costs upon the request of Agent. In the
event that Borrower declines for any reason to borrow from Lender, or the
transaction is not consummated for any other reason whatsoever, Agent shall be
entitled to retain the full amount of all deposits and the Commitment Fee as
compensation for administrative costs incurred and damages sustained. Borrower's
obligation for costs and expenses shall survive termination of this letter.
This letter is solely for the benefit of Xxxxxxxx and may not be relied
on by any other party without the prior written consent of Agent. Agent and
Xxxxxx give the Borrower permission to summarize the contents of this letter in
disclosure documents required by the securities laws in connection with the
Merger.
By acceptance of this letter, Xxxxxx agrees to indemnify and hold Agent
and each of the Lenders, each of its or their respective affiliates and each of
its or their respective directors, officers, employees, agents, attorneys and
consultants, harmless from and against any and all losses, claims, damages,
liabilities and expenses (including fees and disbursements of counsel) that may
be incurred by or asserted against any such indemnities in connection with or
arising out of any documentation, investigation, litigation, proceeding or other
matters related to the financing transactions herein described, this commitment
letter or the credit facilities discussed herein, whether or not any such
indemnities are a party to such documentation, investigation, litigation,
proceeding or other matters and whether or not such financing transaction is
consummated or any future documentation executed; provided, however, that no
person shall have the right to be so indemnified hereunder for matters arising
solely from its own willful misconduct or gross negligence. Neither Agent nor
any Lender and its or their affiliates shall be responsible or liable to the
Borrower, Parent or any other person for any special, indirect, punitive,
exemplary or consequential damages, which may be alleged. The obligation
contained in this paragraph will survive the closing of the Credit Facility
and/or any termination of this letter.
BORROWER AND THE PARENT HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS LETTER, ANY
TRANSACTION RELATING HERETO, OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE. This letter may only be amended, modified or revised in writing
executed by the parties hereto.
This letter supersedes and replaces all previous communications between
the parties, written or oral. This commitment letter shall expire on March 19,
2001 unless an executed copy of this letter is returned to Agent along with a
good faith deposit of $200,000 no later than 5 p.m. New York City time on or
before such date.
This letter agreement shall be governed by and construed in accordance
with the law of the state of New York. This commitment, unless previously
terminated as above provided, shall expire at 5 p.m. New York time on July 31,
2001 unless extended in writing by Xxxxxx in its sole discretion.
13
Xxxxx Xxxxxxxxx Xxxxxxxxxx
ACAS Acquisition (Weston), Inc.
March 7, 2001
Page 13 of 14
14
Xxxxx Xxxxxxxxx Xxxxxxxxxx
ACAS Acquisition (Weston), Inc.
March 7, 2001
Page 14 of 14
If the foregoing is acceptable, please sign the enclosed copy of this
letter and return it to Bank of America, N.A. with the required deposit. We look
forward to working with you in the weeks ahead.
Very truly yours,
BANK OF AMERICA, N.A. COMMITMENT
-----------
$25,000,000
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxxxx Xxxxxxx
---------------------------------------
Title: Senior Vice President
--------------------------------------
AGREED AND ACCEPTED:
-------------------
ACAS ACQUISITION (WESTON), INC. FLEET CAPITAL CORPORATION COMMITMENT
-----------
$25,000,000
By: /s/ Xxxxx Xxxxxxxxx Xxxxxxxxxx By: /s/ Xxxxxxx Xxxxxxxxxx
------------------------------- -----------------------------------------
Name: Xxxxx Xxxxxxxxx Xxxxxxxxxx Name: Xxxxxxx Xxxxxxxxxx
----------------------------- ---------------------------------------
Title: Executive Vice President Title: Senior Vice President
---------------------------- --------------------------------------
Date: Date:
----------------------------- ---------------------------------------
