Exhibit 10.6
[LOGO OF BANK OF AMERICA]
Bank of America
Northeast Middle Market Banking
NY5-529-04-06
300 Broadhollow Rd.
Melville, NY 11747
March 8, 2007
KSW, Inc.
MR. FLOYD WARKOL, PRESIDENT
37-16 23rd Street
Long Island City, NY 11101
Dear: Warkol:
We are pleased to advise you that Bank of America, N. A. (the "Bank") holds
available for the use of KSW, Inc. (the "Company") a line of credit in the
amount of Two Million Dollars And 00/100 ($2,000,000) upon the following terms
and conditions:
1. Facilities. (a) The line of credit (the "Line") shall include
short-term loans (hereinafter referred to individually as a "Loan" or "Credit"
and collectively as "Loans" or "Credits).
(b) Credits shall be extended upon the Company's prior written
notice to the Bank (duly executed by an authorized officer of the Company) such
notice to be in a form satisfactory to the Bank which may be accomplished by
facsimile transmission. Each such notice shall be accompanied by detailed
information satisfactory in all respects to the Bank regarding the proposed uses
by the Company for the funds from the Loan then being requested.
2. Credit Period - Advances under the Line shall be available for
the period commencing with the date of the Company's acceptance of the terms
hereof and ending March 30, 2008 ("Credit Period"). All loans shall mature on
March 30, 2008.
3. Clean-up Requirement - Notwithstanding the foregoing, during a
single period comprised of any 30 consecutive days during the Credit Period
there shall be no Loans outstanding under the Line.
4. Interest - Loans shall bear interest at a fluctuating rate per
annum equal to one percent (1.00%) in excess of the Prime Rate (the rate of
interest established by the Bank from time to time as its "prime rate"), such
interest rate to change when and as the Prime Rate changes. As an alternative,
the Borrower may choose a rate per year equal to the LIBOR 1 Month, 2 Month, 3
Month, 6 Month Fixed Rate plus 2.50 percentage points. Interest shall be
computed on the basis of a 360-day year for actual days elapsed and shall be
payable monthly in arrears on the first day of each month. The Bank may charge
the above interest to any demand deposit account maintained by the Company with
the Bank.
5. Guarantee - All obligations of the Company owing to the Bank
shall be unconditionally guaranteed, by the following guarantor (collectively,
the "Guarantor") pursuant to the Bank's standard form of guarantee which has
previously been provided to the Bank: KSW Mechanical Services, Inc..
KSW, Inc. 2
6. Collateral - All obligations of the Company to the Bank shall be
secured by a first-priority perfected security interest in all present and
future personal property and fixtures of the Company as more fully described in
one or more security agreements executed by the Company in favor of the Bank.
7. Other Conditions - In addition to the foregoing, at all times
during the Credit Period and as long as any Credit remains outstanding, the
Company, and Guarantor, shall:
(a) Furnish to the Bank:
(i) within one hundred twenty (120) days of the
close of the company's fiscal year the consolidated and consolidating balance
sheet, statements of income and retained earnings and cash flows of the Company
and its subsidiaries as of the last day of and for such fiscal year, each such
statement to be prepared in accordance with generally accepted accounting
principals ("GAAP") consistently applied and certified by a firm of independent
certified public accountants satisfactory to the Bank;
(ii) within sixty (60) days of the close of each
calendar quarter of the Company's fiscal year throughout the Credit Period, the
consolidated and consolidating balance sheet, statements of income and retained
earnings and cash flows of the Company and its subsidiaries as of the last day
of and for such quarterly period, each such statement to be prepared in
accordance with GAAP, consistently, applied;
(iii) within sixty (60) days of the close of each
calendar quarter of the Company's fiscal year throughout the Credit Period, an
aging of the accounts payable and accounts receivable of the Company, (in a
format satisfactory to the Bank), each as of the last day of and for such
calendar quarter period. The accounts receivable aging shall include retainage
receivables and any allowance for doubtful accounts;
(iv) Within sixty (60) days of the close of each
calendar quarter of the Company's fiscal year throughout the Credit Period, a
schedule of all construction projects in which the Company is then involved
(each a "Work-in-Progress Schedule"), in form and substance satisfactory to the
Bank and including, without limitation: (A) an identification of each project by
name, and (B) the contract price for each such project (including any change
orders), the costs incurred to date, gross profit to date, contract billings to
date, costs and estimated earnings in excess of billings and billings in excess
of costs and estimated earnings, and costs to complete. The Work-in-Progress
schedule will include contract revenues earned and contract costs for the period
reported. Each such quarterly Work-in-Progress schedule shall be certified by a
duly authorized officer of the Company as being true, correct and complete;
(b) maintain bonds and insurance with responsible and reputable
bonding and insurance companies or associations in such amounts and covering
such risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Company
operates and naming the Bank as an additional insured and loss payee thereon as
its interest may appear on each insurance policy.
8. Events of Default - Upon the occurrence of any of the following
events:
(a) the usual credit factors not remaining favorable with
respect to the Company or Guarantor in the sole determination of the Bank or one
or more conditions existing or events occurring which have resulted or may
result in a material adverse change in the business, properties or financial
condition of the Company or Guarantor as determined in the sole discretion of
the Bank;
(b) the Company or Guarantor failing to perform any condition or
obligation described in this agreement or in any other agreement, document or
instrument executed and delivered pursuant to or in connection with this
agreement within the time periods specified;
KSW, Inc. 3
(c) the Company or Guarantor defaulting under any agreement,
document or instrument executed and delivered pursuant to or in connection with
this agreement (whether executed prior or subsequent to the date hereof) or in
connection with any obligation then outstanding with the Bank;
(d) the Company or Guarantor defaulting under any agreement,
document or instrument with any other person or entity; or
(e) any Guarantee ceasing to be in full force and effect;
then, in any such event (each an "Event of Default" and
collectively the "Events of Default"), any or all of the following actions may
be taken: The Bank may in its sole discretion and without presentment, demand,
protest or notice to the Company or any Guarantor, all of which are hereby
waived, (i) declare all sums outstanding under the Line and all indebtedness,
obligations and liabilities owing in connection therewith due and payable and
the same shall forthwith become due and payable without presentment, demand,
protest or notice, (ii) curtail or eliminate the Line and/or any or all of the
Credits, and (iii) take whatever other action it shall deem appropriate as
permitted by applicable law or by any agreement, document or instrument executed
and delivered pursuant to or in connection with the Line or Credits.
9. Documentation - There shall be no extension of credit hereunder
unless and until there shall have been executed documentation acceptable to the
Bank.
10. Governing Law - This letter agreement and each extension of
credit hereunder shall be governed by and construed in accordance with the laws
of the State of New York and the Company hereby submits to the jurisdiction of
the United States Federal courts and the courts of the State of New York located
in any county or city as selected by the Bank within the State of New York.
KSW, Inc. 4
11. Acceptance -If the foregoing is acceptable, please have the
enclosed copy of this letter signed by a duly authorized officer of the Company
and by the Guarantor in the spaces provided below and returned to the Bank on or
before March 30, 2007. This letter shall be of no force or effect and shall be
unenforceable against the Bank unless signed and returned to the Bank by such
date.
Very truly yours,
Bank of America, N. A.
/s/ Russell K. Guter
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Russell K. Guter,
Senior Vice President
ACCEPTED AND AGREED:
KSW, Inc.
By: /s/ Floyd Warkol
---------------------------
Floyd Warkol, President
KSW Mechanical Services, Inc.
By: /s/ Floyd Warkol
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Floyd Warkol, President