EXHIBIT 7.2
IMPERIAL BANK
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One Arizona Center o 000 X. Xxx Xxxxx, Xxxxx 000 x Xxxxxxx, Xxxxxxx 00000 (602)
000-0000 o Fax (000) 000-0000 o (000) 000-0000
Xxxxx 0, 0000
Xx. Xxxxxx Xxxx
Manager
AZI, LLC
0000 Xxxx 0xx Xxxxxx
Xxxxx, XX 00000
Re: Financing Commitment
Dear Xxxxxx:
Imperial Bank is pleased to present a commitment (as described below) to finance
the change in control of Arizona Instrument Corporation ("AZIC"). In addition to
the requirements of the term sheet below, this commitment remains subject to:
(1) final documentation acceptable to all parties, and (2) the absence of any
material adverse change in the operations or financial results of AZIC.
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TERMS & CONDITIONS
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Borrower: NewCo to be formed (and operating subsidiaries, if any)
Lender: Imperial Bank
Facility 01:
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Facility Type: Revolving Line of Credit
Amount: Up to $750,000 so long as Facility 03 is not extinguished.
Upon extinguishment of Facility 03, Amount will be increased
to up to $1,250,000
Purpose: Working capital and acquisition financing of Arizona
Instrument Corporation
Advances: Up to 75% of eligible accounts receivable, 25% of eligible
finished goods inventory, and 15% of eligible components
inventory. Advance rates subject to initial collateral audit
to be performed by Lender
Collateral: (1) Blanket filing on all of Borrower's assets now owned or
hereafter acquired.
(2) Pledge of the NewCo stock
Guarantor: Xxxxxx X. Xxxx
Interest Rate: Prime + 1.50%
Availability Fee: 50 basis points of unused availability, payable quarterly in
arrears
Maturity: 364 days from the date of close
Repayment: Interest monthly, principal at maturity
Facility 02:
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Facility Type Amortizing Term Loan
Amount: $2,250,000.00
Purpose: Acquisition financing of Arizona Instrument Corporation
Collateral: Identical to Facility 01
Guarantor: Identical to Facility 01
Interest Rate: Prime + 2.50%
Origination Fee: 1.50% of the term loan amount ($33,750) payable at closing
Final Maturity: 60 months from the date of close
Repayment: 6 months interest only, followed by equal monthly principal
payments sufficient to fully amortize the principal within
78 months, plus interest. Unpaid balance due at maturity.
Facility 03:
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Facility Type: Short Term Bridge Loan
Amount: up to $3,000,000.00
Advance: 100% of Imperial Bank Certificate of Deposit collateral
Purpose: Bridge access to cash
Collateral: Imperial Bank Certificate of Deposit for amount of Credit
Facility 03
Guarantor: Identical to Facility 01
Interest Rage: Prime
Origination Fee: $2,500.00 payable at closing
Final Maturity: One week from date of close
Repayment Principal and interest due at Maturity
Financial Covenants:
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Senior Debt
Services Coverage: Defined at EBITDA less Taxes / Total senior debt service.
Minimum ratio of 1.3x. Measured quarterly on a rolling
four quarter basis.
Total Debt Service
Coverage: Defined as EBITDA less Taxes / Total debt service. Minimum
ratio of 1.1x. Measured quarterly on a rolling four
quarter basis.
Leverage ratio: Defined as Funded Senior Debt / EBITDA less Taxes. Maximum
ratio of 3.5x for 2000, 3.0x thereafter. Measured
quarterly.
Liquidity ratio: Either a current or quick ratio to be negotiated.
Reporting Requirements:
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1) Monthly, within 30 days of month end, company-prepared financial statements
for NewCo certified by the Borrower's financial officer
2) Quarterly within 30 days of quarter end, a covenant compliance certificate
certified by the Borrower's financial officer
3) Monthly, within 15 days of month end, accounts receivable and accounting
payable agings, and a borrowing base certificate certified by the
Borrower's financial officer
4) Annually, within 90 days of year end, an unqualified audited financial
statement for NewCo prepared by Certified Public Accountants acceptable to
the Lender
Additional Requirements:
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1) Draw at close to be a maximum of $750,000 on Facility A for the purpose of
the acquisition of Arizona instruments;
2) Minimum of $1,000,000.00 in new equity or subordinated debt, of which
$500,000 must be equity;
3) Bi-annual collateral audits;
4) Subordination agreement with subordinated debt provider acceptable to
Lender;
5) Excess cash flow recapture provision to be negotiated (includes 100% of
proceeds from sale of real estate notes or liquefaction of cash value
of life insurance.
6) No dividends or distributions without prior written approval of the
Lender;
7) Annual capital expenditures limitation of $4000,000;
8) Guarantor jurat relating to personal financial statements;
9) Facilities 01 and 02 to be cross-collateralized and cross-defaulted;
10) Primary depository relationship to be maintained at Imperial Bank;
11) The Borrower shall bear all costs of legal documentation as well as any
out-of-pocket expenses, including but not limited to the collateral
audit, associated with the closing of this transaction;
12) Xxxxxx X. Xxxx to have and maintain majority ownership and control of
new company;
13) Stock purchase and/or merger agreement satisfactory to Imperial; and,
14) All other customary and reasonable business and financial covenants.
Imperial Bank is pleased to provide the above commitment to AZIC. If you find
the terms and conditions acceptable, please indicate so by signing below and
returning a signed copy to the Imperial Bank along with a deposit payment of
$15,000. The deposit will be applied against the commitment fees. Should the
financing not be completed, one-half of the deposit will be returned by Imperial
Bank.
This commitment will expire without further notice by 5:00, March 20, 2000
unless accepted by you. If accepted by you, the commitment will expire if the
financing is not completed by July 31, 2000.
Sincerely,
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Vice President
Accepted this 17th day of March, 2000
AZI, LLC
By: /s/ Xxxxxx X. Xxxx Its: Manager
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