COMMITMENT LETTER FROM WELLS FARGO BANK WEST, N.A.
DATED OCTOBER 20, 2000
EXHIBIT (B)-1
October 20, 2000
Alan Bergold, President
HIA, Inc.
4275 Forest Street
Denver, CO 80216
Dear Mr. Bergold:
Subject: Tender Offer on the HIA, Inc. ("HIA") Public Stock for a
Maximum of 3,000,000 Shares
This letter is to confirm to you that Wells Fargo Bank West, N.A. has
approved the credit facilities shown on the attached Term Sheet dated
October 20, 2000. The Bank hereby commits to make the loans to HIA's
wholly-owned subsidiary CPS Distributors, Inc. ("CPS"), and CPS's
wholly-owned subsidiaries, Water Systems, Inc. and Western Pipe Supply
Co., Inc. subject to the following conditions: (i) no Event of Default
or event that with the passage of time or both would constitute an
Event of Default; and (ii) loan documentation acceptable to our legal
counsel.
If the closing does not take place on or before December 31, 2000, this
commitment shall expire and be of no further force and effect
whatsoever.
Sincerely,
/s/ Randall Schmidt
Randall Schmidt
Vice President
Commercial Banking
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Enclosures
CPS DISTRIBUTORS, INC., WATER SYSTEMS, INC.
AND WESTERN PIPE SUPPLY CO., INC.
TERM SHEET
OCTOBER 20, 2000
CO-BORROWERS: CPS Distributors, Inc., Water Systems,
Inc.
and Western Pipe Supply Co., Inc.
CREDIT FACILITY A: Renew $5,000,000 (an increase of $500,000)
Revolving Line of Credit for general
corporate. Up to $350,000 of proceeds of
revolving advances may be used by the
Borrower to fund a portion of the tender
offer described under Credit Facility B.
Availability shall be controlled by a
borrowing base equal to 80% of eligible
accounts receivable plus 65% of eligible
dated receivables (cap of $1,000,000) plus
50% of eligible inventory (cap of
$3,000,000), less 105% of the Deustch
Financial Services Corporation payable
less
the loan balance of Term Loans B and C.
CREDIT FACILITY B: $500,000 Term Loan to finance the purchase
of treasury stock (the "Tender Offer").
Tender Offer to shareholders of HIA, Inc.
shall not exceed $750,000 (3,000,000
shares
@ $0.25/share). Total cost of the Tender
Offer including fees shall not exceed
$850,000.
CREDIT FACILITY C: Existing $733,333 Term Loan. Proceeds
were used to finance the acquisition of
Western Pipe and Supply, Inc. in May 1999.
MATURITY DATE:
Facility A: December 31, 2002
Facility B: December 31, 2005
Facility C: May 31, 2004
INTEREST RATE:
Facility A: Bank Prime Rate (floating); interest
payable monthly
Facility B: On the day of the first advance, the
interest rate shall be fixed at the Bank's
Prime Rate minus 1/8%; interest shall be
payable monthly beginning 1/31/01.
Facility C: 8.125%; interest payable monthly
AMORTIZATION:
Facility B: Monthly principal payments of $8,333.33
beginning 1/31/01.
Facility C: Monthly principal payments of $11,905
beginning 8/31/99 and a balloon due at
maturity.
ORIGINATION FEE: $2,500
PREPAYMENT FEES:
Facility B and C: _ of 1% of the face amount in year 1; r
of 1% of the face amount in year 2 and
of
1% of the face amount in year 3.
CLOSING EXPENSES: The Borrower shall be responsible for all
costs and expenses reasonable incurred by
the Bank in connection with the making and
disbursement of the Loans, including but
not limited to recording and filing fees,
lien searches and legal fees and expenses.
COLLATERAL: Loans shall be secured by a first security
interest in all inventory, accounts,
inventory and unencumbered equipment and
general intangibles of Borrower.
GUARANTORS: Loans shall be guaranteed by HIA, Inc.
FINANCIAL
COVENANTS:
<TABLE>
11/30/00- 12/31/01 and
11/30/01 Thereafter
--------- -----------
<S> <C> <C>
Minimum Tangible
Capital Funds:
December through July 2,000,000 2,500,000
August through November 2,600,000 3,100,000
Maximum Senior Debt to
Tangible Capital Funds 3.50:1 3.50:1
Minimum Current Ratio 1.25:1 1.25:1
Minimum Debt Service
Coverage 1.30:1 1.30:1
</TABLE>
FINANCIAL
REPORTING: No change from current agreement.
OTHER: The Bank's documents shall include
warranties, covenants and conditions as
are
customarily contained in documents
relating
to loans similar to this request.
COMMITMENT
AND FUNDING
SUBJECT TO: Satisfactory loan documentation
