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 (650) 233 3082.
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