COMMITMENT LETTER DATED MARCH 25, 2002
EX-10.23 7 w58568ex10-23.txt COMMITMENT LETTER DATED MARCH 25, 2002 EXHIBIT 10.23 Mr. Christopher J. Davis Safeguard Delaware Inc. Safeguard Scientifics Inc., Delaware 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 March 25, 2002 CONFIDENTIAL Dear Mr. Davis: Comerica Bank - California is pleased to provide this commitment letter to Safeguard Delaware Inc. and Safeguard Scientifics Inc., Delaware, to make available the following credit facility. This commitment supersedes any previous communications with or correspondence from the Bank and is subject to execution of a definitive written agreement and documentation for the transaction described in this letter. The terms of the financing are as follows: BORROWER: Safeguard Delaware Inc. and Safeguard Scientifics Inc., Delaware (the "Co- Borrowers") LENDER: COMERICA BANK - CALIFORNIA (the "Bank") FACILITY: A $25,000,000.00 Revolving Line of Credit TERMS: Monthly interest, principal due upon maturity MATURITY: 364 days from date of definitive loan documents INTEREST RATE: Prime+0% (currently Prime is 4.75%) FEES: 0.125% quarterly unused fee, payable quarterly in arrears, unless average quarterly deposit balance exceeds $5,000,000.00 DOCUMENTATION COSTS: All legal fees, closing costs and documentation fees to be paid by Borrowers, whether or not this transaction closes. GUARANTORS: Safeguard Scientifics Inc. COLLATERAL: Unsecured FINANCIAL COVENANTS: Borrower is to maintain all financial covenants on an ongoing basis (unless otherwise stated): 1) Minimum unrestricted cash must be 2x commitment amount. When the line is in use, Co-Borrower shall maintain in unrestricted deposit balances at the Bank, 2x their usage amount.
2) Co-Borrowers shall not have impairment charges against the Book Value of Private Partner Companies in excess of $50,000,000. Impact of FASB 142 should be excluded from this calculation. 3) Borrower and Guarantor to remain in compliance and in good standing with all Partnership, Operating, and Management Agreement OTHER COVENANTS: 1) Borrower will be subject to standard representations, warranties, and covenants for transactions of this type. 2) Bank will have no obligation to close and fund this loan if a Material Adverse Change in Borrower's business or financial condition has occurred. 3) Bank reserves the right, at Borrower's expense, to inspect Borrower's books and records by Bank's designated agent, with results satisfactory to Bank. 4) Borrower shall notify Bank in writing of any legal action commenced against it that may result in damages over $500,000.00. Borrower shall provide Bank with such notice immediately upon Borrower's receipt of notice of such legal action. REPORTING REQUIREMENTS: 1) 10Qs within 45 days of quarters ending Q1, Q2, and Q3 for Safeguard Scientifics Inc. 2) 10K within 90 days of FYE for Safeguard Scientifics Inc. 3) Accompanying 10Ks and 10Q: - Compliance Certificate - Company-prepared consolidating financial statements for Safeguard Scientifics. CONDITIONS OF CLOSING: The following shall be satisfied by Borrower prior to closing and shall be conditions precedent to Bank's obligation to fund the loan: 1) Borrower shall execute and deliver to Bank any and all Documents required by Bank within 90 days of the Credit Approval. 2) All reasonable out-of-pocket expenses including loan documentation expenses incurred, whether or not the transaction is closed by Bank in connection with its due diligence and closing of this transaction shall be reimbursed by the Borrower. EXPIRATION: Unless Borrower accepts this commitment letter on or before April 2, 2002 this commitment letter will expire and be of no further effect. This letter is provided solely for your information and is delivered to you with the understanding that neither it, nor its substance, shall be disclosed nor relied upon by any third person, except those who are in confidential relationship to you, or where the same is required by law.
If the terms set forth above are acceptable to you, please so indicate by signing and returning the original of this letter to us. Upon return of this letter, the Bank will prepare drafts of definitive loan documents for your review. It is intended that all legal rights and obligations of the Bank and Borrower would be set forth in signed definitive loan documents acceptable to Bank and its counsel, which will contain covenants in addition to the ones contained above. On behalf of the Bank, we are delighted to make this credit facility available to Safeguard Delaware Inc. and Safeguard Scientifics Inc., Delaware, and look forward to a long and mutually rewarding relationship. Please don't hesitate to call if you have any questions, I can be reached at ###-###-####. Sincerely, /s/ Judith Erwin Senior Vice President/Director of Venture Fund Services Comerica Bank - California Accepted and Agreed to: SAFEGUARD DELAWARE INC. AND SAFEGUARD SCIENTIFICS INC., DELAWARE By: /s/ Tonya L Zweier Title: Vice President Date: March 25, 2001
