Exhibit 99.17(a)(1)
September 30, 1999
Mr. Tim O'Neil
Transfinancial Holdings, Inc.
8245 Nieman Road, Suite 100
Lenexa, KS 66214
Dear Tim:
LaSalle Bank, N.A. is pleased to provide a commitment for a total of $38.0
million ($10 million of this commitment to be provided by a participant) in
credit facilities to the new entity being formed to acquire Transfinancial
Holdings, Inc. and Crouse Cartage Company. The attached terms have been formally
approved and will be the basis for a formal loan agreement to document the
transaction. We look forward to working with you on this transaction and are
very interested in building a long-term relationship with Transfinancial
Holdings, Inc.
We hope this commitment meets with your approval. Please sign the attached term
sheet and return it to me to acknowledge your acceptance. This commitment will
expire on 10/15/99 if not accepted.
Sincerely,
/s/ Aimee W. Daniels
Aimee W. Daniels
Senior Vice President
Transfinancial Holdings, Inc.
$38.0 Million in Total Credit Facilities
Indicative Terms & Conditions
September 30, 1999
Borrower: 1 & 2) Crouse Cartage Company and
Specialized Transport, Inc.
Additionally, these facilities will be
guaranteed by Transfinancial Holdings.
3) A newly formed entity to be used for the
purpose of acquiring Transfinancial
Holdings, Inc. New entity and
Transfinancial Holdings will be named
borrowers on the proposed facilities.
Lenders: LaSalle Bank, N.A. and Bankers Trust
Credit Facilities: 1) $12,000,000 Line of Credit
2) $20,000,000 Term Loan
3) $6,000,000 Term Loan
LaSalle will hold $28 million of total
facilities. Bankers Trust will hold $10 million
of total facilities.
Purpose: 1) To acquire the outstanding shares of
Transfinancial Holdings, Inc., to
provide working capital, and to
refinance existing debt.
2 & 3) To acquire the outstanding shares
of Transfinancial Holdings, Inc. and
refinance existing debt.
Repayment: 1) Revolving, interest only payable
monthly or at the end of the applicable
LIBOR period (30, 60, 90 or 180 days).
2) Repayment will be based upon the
following schedule:
Year Amortization
---- ------------
One $325,000
Two $325,000
Three $5,050,000
Four $5,200,000
Five $9,100,000
Total $20,000,000
Repayment (cont): 3) Repayment will be based upon
the following schedule:
Year Amortization
---- ------------
One $2,925,000
Two $2,925,000
Three $150,000
Four $0
Five $0
Total $6,000,000
On facilities 2 & 3, interest payable
monthly or at the end of the applicable
LIBOR period (30, 60, 90 or 180 days).
Maturity: All facilities will mature five years
from funding.
Interest Rate: 1) Borrower's option of the
following pricing grid based upon a
ratio of Total Liabilities to Tangible
Net Worth at Crouse Cartage Company.
- --------------------------- -------------- ----------------- ----------------- ----------------- -------------------
<3.00 3.01 to 3.50 3.51 to 4.00 4.01 to 4.50 >4.50
------ ------------ ------------ ------------ ------
Prime, floating + 0.0% 0.0% 0.0% 0.0% 0.25%
LIBOR + 175 b.p. 200 b.p. 225 b.p. 250 b.p 275 b.p.
2) Borrower's option of the following
pricing grid based upon a ratio of
Total Liabilities to Tangible Net
Worth at Crouse Cartage Company.
- --------------------------- -------------- ----------------- ----------------- ----------------- -------------------
< 3.00 3.01 to 3.50 3.51 to 4.00 4.01 to 4.50 > 4.50
------ ------------ ------------ ------------ ------
Prime, floating + 0.0% 0.0% 0.0% 0.25% 0.50%
LIBOR + 200 b.p. 225 b.p. 250 b.p. 275 b.p 300 b.p.
- --------------------------- -------------- ----------------- ----------------- ----------------- -------------------
3) Prime + 0.50% floating or LIBOR + 300
basis points.
Fee: 1) Unused commitment fee of 25 basis
points, calculated quarterly
2 & 3) Commitment fee of $130,000 (50 basis
points)
Collateral: 1 & 2) Facilities 1 & 2 will be secured
by a blanket first priority perfected
lien on all tangible and intangible
assets of Crouse Cartage Company and
Specialized Transport, Inc. including
accounts receivable, inventory and
equipment. The line of credit (Facility
1) will be subject to a borrowing base,
with advances limited to 80% of eligible
accounts receivable. In the initial
period after closing (defined as the
first six months), payments from all
companies' customers shall be mailed to
the existing lockbox at Bankers Trust.
This account will be set-up as a
"blocked account" meaning that proceeds
will be remitted to LaSalle Bank NA and
applied to the loan balance. After the
initial period, payments from all
companies' customers shall be mailed
directly to a lockbox at LaSalle Bank.
The Bank shall, within two business days
after Bank receives checks from
companies' customers, apply such
collections to companies' liabilities to
the Bank. A field exam by LaSalle Bank
personnel will be performed prior to
close to determine eligibility.
The term loan will be secured by a
blanket lien on the assets of Crouse
Cartage Company and Specialized
Transport, Inc. Advances on the term
loan will be limited to 80% of the
orderly liquidation value of equipment
that has been appraised by Taylor &
Martin. Other fixed assets will be
appraised if necessary to provide full
collateral support for the loans.
Mortgages on real estate will be taken
as an abundance of caution. Mortgages
will be filed for all properties of
significant value as determined by the
Bank in its sole discretion.
3) Facility 3 will be secured by a blanket
first priority perfected lien on all
tangible and intangible assets of
Transfinancial Holdings, Inc. and its
subsidiaries, (excluding Universal
Premium Acceptance Corporation but
including all others and those acquired
thereafter), including accounts
receivable, inventory and equipment.
Collateral will also include a pledge of
stock of Transfinancial Holdings, Inc.
and all material subsidiaries including
Universal Premium Acceptance
Corporation. Advances on the term loan
will be limited to 40% of valuation of
UPAC. Valuation of UPAC will be
determined based on review of fairness
opinion value or by outside appraisal
engaged by LaSalle Bank NA.
All facilities will be cross-defaulted
and cross-collateralized.
Reporting Requirements: The Borrower shall furnish
the following information:
1) Annual audited consolidated and
consolidating financial statements
within 90 days of fiscal year end.
2) Monthly financial statements within
30 days of month-end.
3) Quarterly covenant compliance
certificate within 30 days of
quarter-end.
4) Annual budget within 90 days of
fiscal year end,
5) Frequency of borrowing base
certificate and aging of accounts
receivable to be determined.
6) Other information deemed necessary
by the Lender.
Covenants: The loan documents would contain
covenants customary for credit
facilities of this type including, but
not limited to, the following (to be
determined on a rolling four quarter
basis):
1) Minimum Debt Service Coverage
(defined as Net Cash flow/debt
service + interest on capital
leases) of 1.10x through 12/31/00
increasing to 1.20 thereafter. Net
Cash flow is defined as earnings
before interest, taxes, depreciation
and amortization less taxes,
dividends paid for taxes and capital
expenditures not funded by
additional indebtedness.
2) Maximum Total Liabilities to
Tangible Net Worth at Crouse Cartage
of 6.0x.
3) Minimum Tangible Net Worth of $1.5
million at Transfinancial Holdings
and $7.0 million at Crouse Cartage
Company increasing annually by 50%
of net income. Intangibles shall
include goodwill, prepaid expenses
excluding licenses, deferred taxes
and deferred charges.
4) In the event of the sale of
Universal Premium Acceptance
Corporation, required reduction in
debt to be negotiated.
Other Conditions: Commitment is subject to
satisfactory completion of due
diligence, which includes but is not
limited to, a satisfactory field exam,
satisfactory review of valuation of
UPAC, and confirmation of transaction
accounting based on review by LaSalle's
counsel to avoid fraudulent conveyance
and minority shareholder rights issues
as well as review of tender offer.
The Commitment is also subject to
satisfactory review of UPAC financing
contract to ensure no negative impact on
proposed financing.
Other Covenants may include, but not be
limited to: limitations on additional
indebtedness, capital expenditures,
change in ownership, change in primary
nature of business, liens, dividends,
management fees, distributions and
redemption's, investments and asset
sales. All covenants will be acceptable
to the Bank in its sole discretion.
Representations & Warranties:
Customary for credit agreements of this
nature including, but not limited to,
corporate existence, corporate and
governmental authorization, financial
information, no material adverse change,
compliance with laws, no material
litigation, payment of taxes, full
disclosure, and no liens or indebtedness
except as acceptable to Lender.
Events of Default: Customary in credit agreements of this
nature including, failure to pay any
interest, principal or fees when due,
failure to meet any covenant or
agreement, inaccurate or false
representation or warranties,
cross default, insolvency, bankruptcy,
ERISA, judgment defaults and change of
control.
Expenses: Borrower would pay all reasonable costs
and expenses associated with the
preparation, due diligence,
administration, and enforcement of all
documents executed in connection with
these credit facilities including, but
not limited to, all legal fees, filing
fees, field audit, equipment appraisal,
market valuations and closing costs.
Upon acceptance of this commitment and
prior to additional due diligence by
LaSalle Bank, Borrower agrees to make a
good faith deposit of $20,000, or pay
all due diligence costs incurred by
LaSalle Bank, including but not limited
to legal fees, field exam fees, and
appraisal fees should the purchasing
group be unsuccessful in their attempts
to purchase the company.
Conditions Precedent: Those conditions precedent
customarily found in credit agreements
for transactions of this nature,
including without limitations:
documentation in form and substance
acceptable to Bank and Its counsel, no
material adverse change, no event of
default, payment of fees, satisfactory
completion of due diligence, accuracy of
representations and warranties.
If the terms of this commitment meet with your approval, please sign below and
return an original copy to LaSalle Bank, NA.
Accepted by:
Name: /s/ Timothy P. O'Neil
Title: President
Date: 9/30/99