Exhibit 10.21
March 14, 2006
KSW, Inc.
37-16 23rd Street
Long Island City, New York 11101
Gentlemen:
We are pleased to advise you that Bank of America, N.A., successor
by
merger to Fleet National Bank (the "Bank") understands that KSW,
Inc., a
Delaware corporation (the "Borrower") may from time to time request
advances for
working capital purposes (the "Loans") under an unsecured line of
credit
established by the Bank in the amount of up to TWO MILLION AND
00/100 DOLLARS
($2,000,000.00) (the "Line") upon the following terms and
conditions:
1. Discretionary
Facility.
----------------------
(a) The Bank, in its sole discretion, shall consider requests
for
Loans hereunder from the Effective Date (as defined in Paragraph 11
below) until
the first to occur of (i) April 1, 2007 or (ii) the date upon which
this letter
is cancelled by the Bank as set forth below (the "Credit Period").
The Line
replaces the line in the identical amount made available under the
Bank's prior
letter of March 28, 2005. All Loans shall mature on the last day of
the Credit
Period. Any Loan hereunder shall be made in the Bank's sole and
absolute
discretion, but in any event shall be subject to the following: (v)
the Bank
shall have determined that money market conditions are favorable
for it to
acquire loan assets, (w) the Bank shall continue to be satisfied
with the
Borrower's business, financial condition and prospects and the
condition and
prospects of the industry in which the Borrower is engaged, (x) the
Bank shall
have received the Borrower's financial statements and other
information
requested in Paragraph 5 below and any other financial information
regarding the
Borrower which the Bank shall reasonably request from time to time,
(y) the
Borrower and/or any guarantor hereunder defaults under any
agreement with the
Bank and (z) the Borrower shall have maintained and be maintaining
a
satisfactory relationship with the Bank.
(b) In the event that the Bank agrees to lend pursuant to any
such
request by the Borrower, any such Loan shall be evidenced by the
promissory note
enclosed with this letter (the "Note") and be subject to the
conditions therein
contained and other documentation in form and substance
satisfactory to the
Bank.
(c) In order to expedite future requests for Loans, the Note must
be
executed by a duly authorized officer of the Borrower and returned
to the Bank.
The Bank may treat all signatures on this letter, the Note and the
Guaranty
(defined below) as genuine. The principal amount set forth in the
Note is
specified solely to expedite any Loans the Bank may choose to make
and is not a
credit line.
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KSW, Inc.
March 14, 2006
(d) All Loans made by the Bank hereunder shall at all times be
within
the sole and absolute discretion of the Bank. This letter does not
constitute
and should not be construed as constituting a commitment and in no
way obligates
the Bank to lend to the Borrower at any time or from time to time
hereafter. The
making of a Loan hereunder by the Bank to the Borrower at any time
or from time
to time shall not be deemed a waiver of the foregoing or a consent,
agreement or
commitment by the Bank to the making of any future Loan to the
Borrower. This
letter and the Bank's willingness to receive and consider requests
from the
Borrower for Loans hereunder are subject to cancellation by the
Bank in its sole
and absolute discretion at any time without prior notice to the
Borrower.
(e) Loans granted by the Bank will be in response to the
Borrower's
prior written notice to the Bank (duly executed by an authorized
officer of the
Borrower), 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 (if
applicable) the proposed uses by the Borrower for the proceeds of
any Loan then
being requested. Such notice shall be given at least one Business
Day prior to
any requested Prime Based Loan, as hereinafter defined, and at
least three
Business Days prior to any requested LIBOR Based Loan, as
hereinafter defined.
(f) Any Loans which the Bank, in its sole discretion, decides to
make
available, shall be upon such additional terms and conditions,
including,
without limitation, as to amount, use of proceeds, term and others,
which at the
time such Loan is made available, are acceptable to the Bank.
(g) Additionally, no fact or circumstance of any kind
whatsoever,
including, without limitation, the fact that the Bank may discuss
or make Loans
available from time to time, the fact that the Borrower may depend
on Loans from
the Bank from time to time, or any act, practice, course of dealing
or procedure
which the Bank (or any person purporting to act on behalf of the
Bank) may take,
omit to take or establish or follow in connection with the Loans
made hereunder,
shall create or result in any obligation on the part of the Bank at
any time to
make any Loan available hereunder. Any modification to this letter
or the Note
shall be made in writing and shall be executed by the Borrower and
the Bank.
(h) This letter is solely for the information of the Borrower and
is
not to be shown to or relied upon by third parties. This letter
together with
the Note constitutes the entire understanding between the Bank and
the Borrower
with respect to the Loans hereunder.
2. Clean-up Requirement. Notwithstanding the foregoing, during
a
single clean up period elected by the Borrower comprised of any
thirty (30)
consecutive days during the Credit Period there shall be no
unsecured Loans
outstanding under the Line.
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KSW, Inc.
March 14, 2006
3. Interest and Fees. The Bank shall charge and shall be entitled
to
receive the following (which amounts, together with any other
amounts owing by
the Borrower to the Bank, may be charged to any demand deposit
account
maintained by the Borrower with the Bank): Loans shall bear
interest at a rate
per annum to be elected by the Borrower in accordance with the
notice provisions
in 1(d) above (at the Borrower's option subject to availability)
equal to the
following: (y) the Prime Rate, as defined in Schedule I attached
hereto plus one
(1.0%) percent (the "Prime Based Loans"), or (z) the LIBOR Rate, as
defined in
Schedule I attached hereto, plus two and one-half (2.50%) percent
per annum (the
"LIBOR Based Loan")
(a) LIBOR Based Loans shall be available for an interest period
of
one month (the "Interest Period"). In no event shall any LIBOR
Based Loan
Interest Period continue beyond the expiration of the Credit
Period. Loans shall
be in minimum amounts of $100,000.00 with respect to Prime Based
Loans and
$250,000.00 with respect to LIBOR Based Loans, or an integral
multiple of
$100,000 in excess thereof. The outstanding principal balance of
any Loan may be
converted from a Prime Based Loan to a LIBOR Based Loan, or from a
LIBOR Based
Loan to a Prime Based Loan, provided that LIBOR Based Loans may
only be
converted on the last day of the Interest Period applicable thereto
and the
required prior notice must be provided in connection with the
conversion of a
Prime Based Loan to a LIBOR Based Loan. Loans under the Line shall
be evidenced
by a note in an amount equal to the maximum aggregate amount of
Loans hereunder
(the "Note"). The Note shall contain standard provisions with
regard to LIBOR
Based Loans for illegality, inability to determine rate,
indemnification for
break funding, and increased cost or reduced return.
(b) 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.
(c) If the entire amount of any required principal and/or
interest
payment under the Loans is not paid in full within ten (10) days
after the same
is due, the Borrower shall pay to the Bank a late fee equal to five
(5%) percent
of the required payment. Upon default or after maturity or after
judgment has
been rendered, or if any Event of Default has occurred and is
continuing, the
Borrower's right to select pricing options shall cease and the
unpaid principal
of all Loans (excluding any defaulted payment of principal accruing
interest in
accordance with the preceding sentence) shall, at the option of the
Bank, bear
interest at a rate which is four (4) percentage points per annum
greater than
the otherwise applicable rate.
(d) Loans may be prepaid in whole or in part in a minimum amount
of
$250,000.00 for LIBOR Based Loans and $100,000.00 for Prime Based
Loans,
provided however, that any prepayment of any LIBOR Based Loan shall
be upon at
least three (3) Business days prior written notice to the Bank
(which notice
shall be irrevocable) and any such prepayment shall occur only on
the last day
of the Interest Period for such LIBOR Based Loan and is subject to
the LIBOR
Indemnification Provisions described on Schedule I attached
hereto.
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KSW, Inc.
March 14, 2006
(e) An underwriting fee of $5,000.00 and all reasonable fees
and
disbursements of the Bank's counsel in connection with the
preparation of any
documentation, enforcement of the Bank's rights or otherwise in
connection with
the Line, are due upon presentment of an invoice therefor.
4. Guarantee. By execution of this Line Letter in the space
provided
below, KSW Mechanical Services, Inc. (the "Guarantor") hereby
consents to this
Line Letter and the borrowing of the Loans set forth herein, and
reaffirms its
continuing liability under its guarantee dated March 31, 2005, in
respect of the
Loans and all documents, instruments and agreements to which it is
a party,
executed pursuant thereto or in connection therewith, without
offset, defense or
counterclaim (any such offset, defense or counterclaim as may exist
being hereby
irrevocably waived by such guarantor).
5. Other Conditions. In addition to the foregoing, at all times
during the Credit Period and as long as any Loans remain
outstanding, the
Borrower shall:
(a) Furnish to the Bank:
(i) Within ninety (90) days of the close of its fiscal year,
the consolidated balance sheets and related consolidated income
statements of the Borrower as of the last day of and for such
fiscal year, each such statement to be prepared in accordance
with GAAP consistently applied, such statements to contain
schedules of completed contracts and contracts in process and
be
audited by a firm of independent certified public accountants
satisfactory to the Bank;
(ii) Within forty-five (45) days of the close of the first,
second and third quarters of the Borrower's fiscal year
throughout the Credit Period, the consolidated balance sheet
and
related consolidated income statement of the Borrower as of the
last day
of and for such quarterly periods, each such statement
to be prepared in accordance with GAAP, consistently applied,
such statements to contain schedules of completed contracts and
contracts in process, and reviewed by a firm of independent
certified public accountants satisfactory to the Bank;
(iii) at the same time that the financial statements are
provided in subparagraphs (i) and (ii) above, an aging of the
accounts receivable and an accounts payable report of the
Borrower, (in a format satisfactory to the Bank), each as of
the
last day of and for such period. The accounts receivable aging
shall
include retainage receivables and any allowance for
doubtful accounts;
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KSW, Inc.
March 14, 2006
(iv) At the same time as items (i), (ii) and (iii) above are
delivered, a schedule of all construction projects in which the
Borrower is then involved and contracts which have been
completed
during such period (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 semi-annual Work-in-Progress
Schedule
shall be certified by a duly authorized officer of the Borrower
as being true, correct and complete;
(v) Such other statements and reports as shall be reasonably
requested by the Bank.
(b) maintain insurance with responsible and reputable 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 Borrower operates and naming
the Bank as
additional insured and loss payee thereon as its interests may
appear.
6. Documentation. The Bank's obligation hereunder shall be subject
to
preparation and execution of formal documentation acceptable to the
Bank and its
counsel, which shall include without limitation provisions
reflecting the terms
hereof, together with such representations, warranties, events of
default
(including cross default provisions) and other covenants acceptable
to the Bank.
There shall be no extension of credit hereunder unless and until
there shall
have been executed documentation acceptable to the Bank, including
without
limitation, the Line Letter, the Note and the Guarantee. The Bank
shall also be
furnished upon the Bank's request with (i) the Borrower's Note,
(ii) certificate
of incorporation, bylaws and good standing certificate for the
Borrower and the
Guarantor, and (iii) such other items or documentation as requested
by the Bank
or its counsel to fully effectuate and document the Line and the
security
therefor.
7. Legal Opinion. The Borrower shall furnish the Bank upon
request
with an opinion of counsel, in form and substance acceptable to the
Bank and its
counsel, with respect to the Line, the Borrower and the Guarantor,
including any
litigation against the Borrower or the Guarantor.
8. Successors and Assigns. This Agreement shall be binding upon
and
inure to the benefit of the Borrower and the Bank and their
respective
successors and assigns, except that the Borrower may not assign or
transfer any
of its rights under this Agreement without the prior written
consent of the
Bank. The term "Bank" as used herein shall be deemed to include the
Bank and its
successors, endorsees and assigns.
5
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KSW, Inc.
March 14, 2006
9. 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 Borrower 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.
IN ANY ACTION, SUIT OR PROCEEDING, IN RESPECT OF OR ARISING OUT OF
THIS
AGREEMENT, THE NOTE, OR ANY OTHER DOCUMENTS RELATING TO THE LINE,
THE BORROWER
AND THE BANK MUTUALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY
LAW, TRIAL BY
JURY, COUNTERCLAIM AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE, OR
SPECIAL
DAMAGES.
10. Miscellaneous. The Bank reserves the right to sell
participations
in the Line to other lenders and the Borrower agrees that its
financial
statements and other information submitted to the Bank may be
distributed to
other potential participants. The Bank shall have the unrestricted
right at any
time and from time to time, and without the consent of or notice to
the
Borrower, to grant to one or more banks or other financial
institutions (each, a
"Participant") participating interests in the Bank's obligation to
lend
hereunder and or any or all of the loans held by the Bank
hereunder. In the
event of any such grant by the Bank of a participating interest to
a
Participant, whether or not upon notice to the Borrower, the Bank
shall remain
responsible for the performance of its obligations hereunder and
the Borrower
shall continue to deal solely and directly with the Bank in
connection with the
Bank's rights and obligations hereunder. The Bank may furnish any
information
concerning the Borrower in its possession from time to time to
prospective
Participants, provided that the Bank shall require any such
prospective
participant to agree in writing to maintain the confidentiality of
such
information. This letter shall not be assignable by operation of
law or
otherwise, without the prior written consent of the Bank. Time
shall be of the
essence regarding any time period stated herein. No waiver of any
of the terms
and provisions hereof shall be effective unless in writing, and no
waiver
furnished in writing shall be deemed a waiver of any future
condition. All
notices shall be in writing. The Borrower shall indemnify the Bank
and hold it
harmless against loss or damage suffered by it as a result of any
claim by any
person, firm or corporation for any brokerage or other commissions
alleged to be
due as a result of the transactions contemplated by this letter.
This letter
supersedes all prior agreements regarding a line of credit with the
Borrower.
The Bank may at any time pledge or assign all or any portion of its
rights under
the loan documents to any of the twelve (12) Federal Reserve Banks
organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.
No such
pledge shall release the Bank from its obligations under any of the
Line
documents.
6
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KSW, Inc.
March 14, 2006
11. Acceptance. If the foregoing is acceptable, please have the
enclosed copy of this letter signed by a duly authorized officer of
the Borrower
and the Guarantor in the space provided below and returned to the
Bank together
with the underwriting fee specified in Section 3(e) hereof on or
before March
31, 2006. This letter shall be of no force or effect and shall be
unenforceable
against the Bank: (i) unless fully signed and returned to the Bank
by such date;
and (ii) unless the documentation specified in Section 6 is signed
and returned
to the Bank by March 31, 2006 (the "Effective Date").
Very truly yours,
BANK OF AMERICA, N.A.
By: /s/ Russell K. Guter
-------------------------------
Russell K. Guter
Senior Vice-President
Accepted and Agreed this 14th day of March, 2006
Borrower:
KSW, INC.
By: /s/ Floyd Warkol
-------------------------------
Name:
Floyd Warkol
Title:
Chief Executive Officer
Guarantor:
KSW MECHANICAL SERVICES, INC.
By: /s/ Floyd Warkol
-------------------------------
Name:
Floyd Warkol
Title: Chief
Executive Officer
7
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KSW, Inc.
March 14, 2006
The Guarantor indicated below hereby consents to this Line Letter
and
the borrowing of the Loans set forth herein, and reaffirms its
continuing
liability under its guaranty dated March 31, 2005 (guaranteeing
payment, without
limitation, of the Loans) and all documents, instruments and
agreements to which
it is a party executed pursuant thereto or in connection therewith,
without
offset, defense or counterclaim (any such offset, defense or
counterclaim as may
exist being hereby irrevocably waived by such Guarantor).
KSW MECHANICAL, INC.
By: /s/ Floyd Warkol
-------------------------------
Name:
Floyd Warkol
Title: Chief
Executive Officer
8
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KSW, Inc.
March 14, 2006
SCHEDULE I: DEFINITIONS
-----------------------
1. Prime Rate: The term "Prime Rate" means the variable per
annum
rate of interest so designated from time to time by Fleet National
Bank as its
prime rate. The Prime Rate is a reference rate and does not
necessarily
represent the lowest or best rate being charged to any customer.
Changes in the
rate of interest resulting from changes in the Prime Rate shall
take place
immediately without notice or demand of any kind.
2. LIBOR Rate: The term "LIBOR" shall mean, as applicable to
any
LIBOR Based Loan, the rate per annum as determined on the basis of
the offered
rates for deposits in U.S. Dollars, for a period of time comparable
to such
LIBOR Based Loan which appears on the Telerate page 3750 as of
11:00 a.m. London
time on the day that is two London Banking Days preceding the first
day of such
LIBOR Based Loan; provided, however, if the rate described above
does not appear
on the Telerate System on any applicable interest determination
date, the LIBOR
rate shall be the rate (rounded upward, if necessary, to the
nearest one
hundred-thousandth of a percentage point), determined on the basis
of the
offered rates for deposits in U.S. dollars for a period of time
comparable to
such LIBOR Based Loan which are offered by four major banks in the
London
interbank market at approximately 11:00 a.m. London time, on the
day that is two
(2) London Banking Days preceding the first day of such LIBOR Based
Loan as
selected by Bank. The principal London office of each of the four
major London
banks will be requested to provide a quotation of its U.S. Dollar
deposit
offered rate. If at least two such quotations are provided, the
rate for that
date will be the arithmetic mean of the quotations. If fewer than
two quotations
are provided as requested, the rate for that date will be
determined on the
basis of the rates quoted for loans in U.S. dollars to leading
European banks
for a period of time comparable to such LIBOR Based Loan offered by
major banks
in New York City at approximately 11:00 a.m. New York City time, on
the day that
is two London Banking Days preceding the first day of such LIBOR
Based Loan. In
the event that Bank is unable to obtain any such quotation as
provided above, it
will be deemed that LIBOR pursuant to an LIBOR Based Loan cannot be
determined.
In the event that the Board of Governors of the Federal Reserve
System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank,
then for any
period during which such Reserve Percentage shall apply, LIBOR
shall be equal to
the amount determined above divided by an amount equal to 1 minus
the Reserve
Percentage. "Reserve Percentage" shall mean the maximum aggregate
reserve
requirement (including all basic, supplemental, marginal and other
reserves)
which is imposed on member banks of the Federal Reserve System
against
"Euro-currency Liabilities" as defined in Regulation D.
3. Banking Day: The term "Banking Day" shall mean, in respect of
any
city, any day on which commercial banks are open for business in
that city.
Schedule I/ Page -1-
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KSW, Inc.
March 14, 2006
4. LIBOR Indemnification Provisions: Borrower may prepay a
LIBOR
Based Loan only upon at least three (3) Banking Days prior written
notice to
Bank (which notice shall be irrevocable), and any such prepayment
shall occur
only on the last day of the Interest Period for such LIBOR Based
Loan. Borrower
shall pay to Bank, upon request of Bank, such amount or amounts as
shall be
sufficient (in the reasonable opinion of Bank) to compensate it for
any loss,
cost, or expense incurred as a result of: (i) any payment of a
LIBOR Based Loan
on a date other than the last day of the Interest Period for such
Loan; (ii) any
failure by Borrower to borrow a LIBOR Based Loan on the date
specified by
Borrower's written notice; (iii) any failure by Borrower to pay a
LIBOR Based
Loan on the date for payment specified in Borrower's written
notice. Without
limiting the foregoing, Borrower shall pay to Bank a "yield
maintenance fee", if
any, in an amount computed as follows: The current rate for United
States
Treasury securities (bills on a discounted basis shall be converted
to a bond
equivalent) with a maturity date closest to the term chosen
pursuant to the
LIBOR Rate Election as to which the prepayment is made, shall be
subtracted from
the LIBOR in effect at the time of prepayment. If the result is
zero or a
negative number, there shall be no yield maintenance fee. If the
result is a
positive number, then the resulting percentage shall be multiplied
by the amount
of the principal balance being prepaid. The resulting amount shall
be divided by
360 and multiplied by the number of days remaining in the term
chosen pursuant
to the LIBOR Rate Election as to which the prepayment is made. Said
amount shall
be reduced to present value calculated by using the above
referenced United
States Treasury securities rate and the number of days remaining in
the term
chosen pursuant to the LIBOR Rate Election as to which prepayment
is made. The
resulting amount shall be the yield maintenance fee due to Bank
upon the
prepayment of a LIBOR Based Loan. Each reference in this paragraph
to "LIBOR
Rate Election" shall mean the election by Borrower of the LIBOR
Rate. If by
reason of an Event of Default, Bank elects to declare the Note to
be immediately
due and payable, then any yield maintenance fee with respect to a
LIBOR Based
Loan shall become due and payable in the same manner as though
Borrower had
exercised such right of prepayment. In the event that the Bank
shall be entitled
to compensation pursuant to this provision, it shall promptly
notify the
Borrower of the event by reason of which it has become so entitled.
The Borrower
shall pay the Bank the amount shown as due on any such notification
within
fifteen (15) days after receipt thereof.
Schedule I/ Page -2-
<PAGE>
LINE OF CREDIT NOTE
Date:
March 14, 2006
Office Address: 300
Broad Hollow Road
$2,000,000.00
Melville, NY 11747
ON
DEMAND for value received, the undersigned promises to pay to the
order
of Bank of America, N.A., a national banking association,
(hereinafter called
the Bank) at its Office in the place first above stated, or such
other address
as the holder hereof may designate, in immediately available funds,
the sum of
TWO MILLION AND 00/100 ($2,000,000.00) DOLLARS, or, the aggregate
unpaid
principal amount of all loans made by the Bank to the undersigned
hereunder,
whichever is less. The undersigned also promises to pay interest at
said office
in like money on the unpaid principal amount hereof from time to
time
outstanding prior to maturity at an annual rate equal to the
rate(s) specified
in paragraph 1 of the attached Rider. Interest shall be payable on
the 1st day
of each month commencing on May 1, 2006 and on the maturity hereof.
Interest
shall be calculated on the basis of a 360 day year and actual days
elapsed,
provided that any interest so calculated hereunder shall in no
event be in
excess of the maximum permitted under applicable law. Upon and
following demand
and/or after maturity, whether after stated maturity, acceleration
or otherwise,
and/or after judgment has been rendered on this note, this note,
and, to the
extent not specifically provided elsewhere to the contrary and to
the extent
permitted by applicable law, any interest, fee or other amount due
in connection
with the Liabilities (as hereinafter defined), shall bear interest
at a per
annum rate determined daily and payable on demand which shall be 4%
in excess of
the rate hereinbefore provided, but in no event in excess of the
maximum rate of
interest permitted under applicable law. All payments made in
connection with
this note and the documents, instruments and agreements executed
pursuant hereto
or in connection herewith (collectively the "Loan Documents") shall
be in lawful
money of the United States of America in immediately available
funds, without
counterclaim or setoff and free and clear of,
