UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Arizona Instrument Corporation
------------------------------
(Name of Issuer)
$.01 par value common stock
---------------------------
(Title of Class of Securities)
040903205
----------
(CUSIP Number)
AZI LLC
1912 West 4th Street
Tempe, Arizona
(602) 281-1759
-------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 21, 2000
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
1
<PAGE>
SCHEDULE 13D
CUSIP No. 040903205
1) Names of Reporting Persons and I.R.S. Identification No. of Reporting
Entities:
AZI LLC, an Arizona Limited Liability Corporation, T.I.N. Applied For
-------------
Group Members:
George G. Hays
Chez & Schwartz Inc. Profit Sharing Plan dated 12/19/73
the beneficial owner of which is Harold D. Schwartz, and
Hays Family Revocable Lifetime AB Trust (Dated October 14, 1998),
the beneficial owners of which are Mr. and Mrs. George J. Hays.
2) Check the Appropriate Box if a Member of a Group*
(a) X
------------------------------------------------------------
(b)
------------------------------------------------------------
(3) SEC Use Only
(4) Source of Funds (See Instructions) BK
----------------------------------
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d) or 2(e) X
---
(6) Citizenship or Place of Organization Arizona
----------------
Number of shares beneficially owned by each reporting person with:
(7) Sole Voting Power
George G. Hays: 51,418;1 Harold D. Schwartz: 45,370
(8) Shared Voting Power 0
--------
(9) Sole Dispositive Power
George G. Hays: 51,418; Harold D. Schwartz: 45,370
- ----------------------
1 45,000 of the 51,418 shares beneficially owned by George Hays are vested
options to purchase shares at $4.60 per share.
2
<PAGE>
(10) Shared Dispositive Power 0
-----
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
George G. Hays: 51,418; Harold D. Schwartz: 45,370
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares .
-----
(13) Percent of Class Represented by Amount in Row (11)
George G. Hays: 3.7%, Harold D. Schwartz: 3.4%
(14) Type of Reporting Person 00
----------
3
<PAGE>
Item 1. Security and Issuer.
This statement relates to the $.01 par value common stock of Arizona
Instrument Corporation The address of the principal executive offices of Arizona
Instruments is 4114 East Wood Street, Phoenix, Arizona 85040.
Item 2. Identity and Background.
AZI LLC is a limited liability company organized under the laws of
Arizona. AZI LLC was formed for the sole purpose of acquiring Arizona
Instruments and continuing the business of Arizona Instrument Corporation. The
members of AZI LLC are George G. Hays; Chez & Schwartz Inc. Profit Sharing Plan
Dated 12/19/73, the beneficial owner of which is Harold D. Schwartz; and the
Hays Family Revocable Lifetime AB Trust (Dated October 14, 1998), the beneficial
owners of which are Mr. and Mrs. H. George Hays. The principal office and
principal place of business of AZI LLC is 1912 West 4th, Tempe, Arizona, 85281.
Neither AZI LLC nor any of its members have during the last five years
been convicted in a criminal proceeding or been subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandatory
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
To complete the merger of Arizona Instrument Corporation with and into
AZI LLC, AZI LLC and all of its members shall cancel all shares of Arizona
Instrument Corporation currently held by them and shall pay all other
shareholders of Arizona Instruments, Inc's. common stock $5.00 per share for
each share of outstanding stock.
In order to purchase the referenced shares, AZI LLC has secured
financing from Imperial Bank and from Arizona MultiBank Community Development
Corporation. On March 21, 2000, the Reporting Person accepted a commitment
letter from Imperial Bank to provide up to $6 million to fund the merger. A copy
of the Commitment Letter is filed as Exhibit 7.2 hereto and is incorporated by
reference herein. On March 21, 2000, the Reporting Person accepted a commitment
letter from Arizona MultiBank Community Development Corporation to provide
$500,000 to fund the merger. A copy of the Commitment Letter is filed as Exhibit
7.3 hereto and is incorporated by reference herein. The balance of the required
funds (approximately $500,000) will be provided from the personal funds of the
members of AZI LLC.
4
<PAGE>
Item 4. Purpose of Transaction.
On January 31, 2000, a Proposal was executed between the parties which
requires Arizona Instrument Corporation and a corporation to be formed (now AZI
LLC) to enter into an Acquisition Agreement whereby Arizona Instrument
Corporation, a Delaware corporation, would be merged with and into the new
corporation, AZI LLC, an Arizona limited liability company organized for the
purpose of effectuating the merger and continuing the business of Arizona
Instrument Corporation. A copy of this Proposal is attached as Exhibit 7.1. The
parties are currently negotiating the Merger Agreement.
The purpose of the merger is to engage in a going private transaction.
The Merger Agreement will provide that AZI LLC shall cancel all outstanding
shares of Arizona Instrument Corporation which are currently owned by AZI LLC or
its members, and shall purchase all remaining outstanding shares at $5.00 per
share, at which point Arizona Instrument Corporation will be merged with and
into AZI LLC, and AZI LLC will be the surviving entity. The identified
transaction is subject to Delaware dissenters' rights and/or rights of appraisal
and the merger is subject to the approval of the holders of 50 percent of the
outstanding shares of common stock.
The Board of Directors of Arizona Instrument Corporation has agreed to
recommend that the shareholders of Arizona Instrument Corporation approve the
merger.
Item 5. Interest in Securities of the Issuer.
George G. Hays is the beneficial owner of 51,418 shares, or 3.7% of the
total shares outstanding, of the common stock of Arizona Instrument Corporation
Beneficial ownership of 45,000 of such shares is through vested options to
purchase those shares at $4.60 per share. Harold D. Schwartz owns 45,370, or
3.4% of the total shares outstanding, of the common stock of Arizona Instrument
Corporation. George G. Hays and Harold D. Schwartz have sole voting power and
sole dispositive power with respect to the referenced shares.
Item 6. Contract, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
Arizona Instrument Corporation, and AZI LLC have executed a Proposal
and an Agreement and Plan of Merger as described in Item 4 and the Board of
Directors of Arizona Instrument Corporation, have agreed to recommend the
transaction to its shareholders.
Item 7. Material to be Filed as Exhibits.
7.1 Executed Proposal
7.2 Commitment Letter from Imperial Bank
7.3 Commitment Letter from Arizona Multibank Community Development
Corporation
5
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 27, 2000
AZI LLC
By: /s/ George G. Hays
-------------------------
George G. Hays, Manager
6
EXHIBIT 7.1
George G. Hays
6227 East Sunnyside Drive
Scottsdale, AZ 85254
March 24, 2000
Board of Directors
Arizona Instrument Corporation
1912 West 4th Street
Tempe, AZ 85281
Gentlemen:
The purpose of this letter is to propose a merger/business combination
transaction (the "Business Combination") between Arizona Instrument Corporation
("AZI") and a corporation ("NewCo") to be formed and owned by George G. Hays,
Harold D. Schwartz, and G. James Hays (the "Proposing Parties"). This letter
sets forth certain details of the proposed offer.
1. Consideration. In the Business Combination, all of the common stock of AZI
will be acquired by NewCo in exchange for $5.00 per share in cash, based on the
approximately 1,363,514 share of AZI common stock outstanding as of January 31,
2000.
2. Financing for the Transaction. The Proposing Parties have arranged to
complete the Business Combination with financing provided primarily by Imperial
Bank and the Proposing Parties which will be supplemented with financing from a
source of mezzanine funding (all financing sources together referred to as the
"Financing Parties"). As further described below, the Financing Parties'
commitment to provide the financing for the Business Combination is subject to
the satisfactory completion of their due diligence investigation.
3. Acquisition Agreement. AZI, NewCo, and the Proposing Parties agree to act in
good faith to negotiate and cause the execution of a definitive acquisition
agreement (the "Acquisition Agreement") at or before the end of the Due
Diligence Period (as defined herein). The Acquisition Agreement will contain
representations, warranties, covenants and conditions to be agreed upon by the
parties customary for transaction of the type contemplated in accordance with
this letter of intent. The Acquisition Agreement shall provide that the
Proposing Parties and NewCo shall be entitled to a termination fee not to exceed
the lesser of their out-of-pocket expenses or $100,000 in the event that (a) AZI
accepts a proposal that would, if consummated, result in a transaction more
favorable to AZI's stockholders from a financial point of view than the
transaction contemplated by the Acquisition Agreement, (b) AZI's Board of
Directors shall have withdrawn or adversely modified its recommendation of the
1
<PAGE>
Acquisition Agreement to the AZI stockholders, or (c) AZI's Board of Directors
shall have recommended to the AZI stockholders that they approve a proposal
other than the transaction contemplated by the Acquisition Agreement.
4. Contingencies. This offer is subject to (a) the satisfactory completion of a
due diligence investigation by the Financing Parties during the due diligence
period (the "Due Diligence Period") of thirty days that shall commence on the
date. AZI accepts this letter of intent, (b) the negotiation and execution of
the Acquisition Agreement, (c) the receipt by the Board of Directors of a
fairness opinion that the transaction is fair to AZI's stockholders from a
financial point of view, and (d) obtaining all third-party consents required to
complete the Business Combination including approval by the stockholders and the
disinterested members of the Board of Directors (the "Disinterested Directors")
of AZI in accordance with the AZI Certificate of Incorporation and Bylaws.
5. Benefits of the Business Combination. The Business Combination will provide
benefits to the stockholders associated with AZI including the following:
a. The Business Combination values the AZI common stock at $5.00 per
share, which represents a significant (43%) premium to the last bid
price of the AZI common stock of $3.50 on January 27, 2000.
b. The Business Combination will provide valuable liquidity for AZI
stockholders.
c. The present business of AZI would not be disrupted because NewCo
plans to continue such business in the same location and in
substantially the same manner for the foreseeable future.
d. There would be a greater likelihood that AZI's officers and other
employees would continue in their present terms for the foreseeable
future.
e. The customers and vendors of AZI will benefit from the Business
Combination because the relationship they have with AZI will not be
disrupted based on the foregoing plans to continue AZI's business in
substantially the same manner and retain AZI's personnel.
6. Communications. Without the prior consent of the parties hereto, between the
date hereof and the execution date of the Acquisition Agreement, neither AZI,
NewCo or the Proposing Parties nor any of the officers, directors, employees,
affiliates, stockholders or agents of any of them, shall make any statement or
public announcement or any release to trade publications or through the press or
otherwise, or make any statement to any competitor, customer or any other third
party, with respect to the transaction contemplated hereby; provided, however,
that nothing contained herein shall prevent (a) a party from communicating with
those employees who will be involved in facilitating the closing of the
2
<PAGE>
transaction contemplated hereby, (b) a party from disclosing this transaction to
its lenders or advisors and as required by law, or (c) responding to or
negotiating with other possible acquiring parties.
7. No Solicitation. AZI agrees that the Disinterested Directors and it shall
not, prior to the execution date of the Acquisition Agreement, directly or
indirectly, initiate, encourage or solicit the making, submission or
announcement of any Acquisition Proposal. As used herein, the term "Acquisition
Proposal" means and includes any offer, indication of interest or proposal
(other than by NewCo or the Proposing Parties) (a) to acquire thirty percent or
more of AZI's assets or (b) relating to a transaction which would upon the
consummation thereof result in any person beneficially owning thirty percent or
more of the capital stock of AZI, in either case whether by merger,
consolidation, share exchange, reorganization or other business combination,
purchase of assets, tender or exchange offer or otherwise.
8. Expenses. Each party will be responsible for all of its respective expenses
incurred in connection with this transaction. AZI shall be responsible for all
of the expenses incurred to file with Securities and Exchange Commission the
proxy statement and Schedule 13E-3 required to be filed on behalf of all of the
parties in connection with the Business Combination. If AZI violates paragraph 7
hereof, it shall reimburse to NewCo and the Proposing Parties all of the
expenses not exceeding $100,000 they have incurred in connection with this
transaction from the date hereof through the end of the Due Diligence Period.
9. Termination. Except for paragraphs 6 and 8 hereof, this letter of intent will
automatically terminate and be of no further force and effect upon the earliest
of (a) execution of a definitive Acquisition Agreement, (b) mutual agreement of
all of the parties to terminate this letter of intent, and (c) the end of the
Due Diligence Period. Notwithstanding anything in the previous sentence, the
termination of this letter agreement shall not affect any rights a party has
with respect to the breach of this letter of intent by another party prior to
such termination.
This letter of intent is intended to be, and shall be construed only as a letter
of intent and except for paragraphs 6, 8 and 9 shall not impose any binding
obligations on any person. Except as provided in the immediately preceding
sentence, it is understood that the rights and obligations of the parties remain
to be defined in a definitive Acquisition Agreement into which this letter of
intent shall be merged.
If you are in agreement with the terms set forth above and desire to proceed
with the Business Combination on that basis, please sign this letter of intent
in the space provided below and return it to the undersigned. The offer in this
letter of intent will expire at 5:00 p.m., Arizona time, on February 10, 2000,
unless this letter of intent is signed by AZI on the appropriate line below and
returned to the undersigned such that it is received prior to such time.
3
<PAGE>
Sincerely, Accepted and Agreed as of
January 31, 2000
Arizona Instrument Corporation
/s/ George G. Hays
- --------------------
By /s/ S. Thomas Emerson
------------------------------
George G. Hays on behalf of myself, Director
the other Proposing Parties and NewCo Chairman, The Special Committee
4
EXHIBIT 7.2
IMPERIAL BANK
- ------------------------------------------------------------------------------
One Arizona Center o 400 E. Van Buren, Suite 900 o Phoeniz, Arizona 85004 (602)
417-1100 o Fax (602) 261-7881 o (800) 525-4913
March 2, 2000
Mr. George Hays
Manager
AZI, LLC
1912 West 4th Street
Tempe, AZ 85281
Re: Financing Commitment
Dear George:
Imperial Bank is pleased to present a commitment (as described below) to finance
the change in control of Arizona Instrument Corporation ("AZIC"). In addition to
the requirements of the term sheet below, this commitment remains subject to:
(1) final documentation acceptable to all parties, and (2) the absence of any
material adverse change in the operations or financial results of AZIC.
- --------------------------------------------------------------------------------
TERMS & CONDITIONS
- --------------------------------------------------------------------------------
Borrower: NewCo to be formed (and operating subsidiaries, if any)
Lender: Imperial Bank
Facility 01:
------------
Facility Type: Revolving Line of Credit
Amount: Up to $750,000 so long as Facility 03 is not extinguished.
Upon extinguishment of Facility 03, Amount will be increased
to up to $1,250,000
Purpose: Working capital and acquisition financing of Arizona
Instrument Corporation
<PAGE>
Advances: Up to 75% of eligible accounts receivable, 25% of eligible
finished goods inventory, and 15% of eligible components
inventory. Advance rates subject to initial collateral audit
to be performed by Lender
Collateral: (1) Blanket filing on all of Borrower's assets now owned or
hereafter acquired.
(2) Pledge of the NewCo stock
Guarantor: George G. Hays
Interest Rate: Prime + 1.50%
Availability Fee: 50 basis points of unused availability, payable quarterly in
arrears
Maturity: 364 days from the date of close
Repayment: Interest monthly, principal at maturity
Facility 02:
------------
Facility Type Amortizing Term Loan
Amount: $2,250,000.00
Purpose: Acquisition financing of Arizona Instrument Corporation
Collateral: Identical to Facility 01
Guarantor: Identical to Facility 01
Interest Rate: Prime + 2.50%
Origination Fee: 1.50% of the term loan amount ($33,750) payable at closing
Final Maturity: 60 months from the date of close
Repayment: 6 months interest only, followed by equal monthly principal
payments sufficient to fully amortize the principal within
78 months, plus interest. Unpaid balance due at maturity.
Facility 03:
------------
Facility Type: Short Term Bridge Loan
Amount: up to $3,000,000.00
Advance: 100% of Imperial Bank Certificate of Deposit collateral
Purpose: Bridge access to cash
<PAGE>
Collateral: Imperial Bank Certificate of Deposit for amount of Credit
Facility 03
Guarantor: Identical to Facility 01
Interest Rage: Prime
Origination Fee: $2,500.00 payable at closing
Final Maturity: One week from date of close
Repayment Principal and interest due at Maturity
Financial Covenants:
- --------------------
Senior Debt
Services Coverage: Defined at EBITDA less Taxes / Total senior debt service.
Minimum ratio of 1.3x. Measured quarterly on a rolling
four quarter basis.
Total Debt Service
Coverage: Defined as EBITDA less Taxes / Total debt service. Minimum
ratio of 1.1x. Measured quarterly on a rolling four
quarter basis.
Leverage ratio: Defined as Funded Senior Debt / EBITDA less Taxes. Maximum
ratio of 3.5x for 2000, 3.0x thereafter. Measured
quarterly.
Liquidity ratio: Either a current or quick ratio to be negotiated.
Reporting Requirements:
- -----------------------
1) Monthly, within 30 days of month end, company-prepared financial statements
for NewCo certified by the Borrower's financial officer
2) Quarterly within 30 days of quarter end, a covenant compliance certificate
certified by the Borrower's financial officer
3) Monthly, within 15 days of month end, accounts receivable and accounting
payable agings, and a borrowing base certificate certified by the
Borrower's financial officer
4) Annually, within 90 days of year end, an unqualified audited financial
statement for NewCo prepared by Certified Public Accountants acceptable to
the Lender
Additional Requirements:
- ------------------------
1) Draw at close to be a maximum of $750,000 on Facility A for the purpose of
the acquisition of Arizona instruments;
2) Minimum of $1,000,000.00 in new equity or subordinated debt, of which
$500,000 must be equity;
3) Bi-annual collateral audits;
<PAGE>
4) Subordination agreement with subordinated debt provider acceptable to
Lender;
5) Excess cash flow recapture provision to be negotiated (includes 100% of
proceeds from sale of real estate notes or liquefaction of cash value
of life insurance.
6) No dividends or distributions without prior written approval of the
Lender;
7) Annual capital expenditures limitation of $4000,000;
8) Guarantor jurat relating to personal financial statements;
9) Facilities 01 and 02 to be cross-collateralized and cross-defaulted;
10) Primary depository relationship to be maintained at Imperial Bank;
11) The Borrower shall bear all costs of legal documentation as well as any
out-of-pocket expenses, including but not limited to the collateral
audit, associated with the closing of this transaction;
12) George G. Hays to have and maintain majority ownership and control of
new company;
13) Stock purchase and/or merger agreement satisfactory to Imperial; and,
14) All other customary and reasonable business and financial covenants.
Imperial Bank is pleased to provide the above commitment to AZIC. If you find
the terms and conditions acceptable, please indicate so by signing below and
returning a signed copy to the Imperial Bank along with a deposit payment of
$15,000. The deposit will be applied against the commitment fees. Should the
financing not be completed, one-half of the deposit will be returned by Imperial
Bank.
This commitment will expire without further notice by 5:00, March 20, 2000
unless accepted by you. If accepted by you, the commitment will expire if the
financing is not completed by July 31, 2000.
Sincerely,
/s/ Edmund Ozorio
- -------------------
Edmund Ozorio
Vice President
Accepted this 17th day of March, 2000
AZI, LLC
By: /s/ George G. Hays Its: Manager
------------------------- -------
EXHIBIT 7.3
ARIZONA MULTIBANK
Community Development Corporation
Andrew W. Gordon Phone (602) 594-4444
President Facsimile (602) 594-4433
[email protected]
March 21, 2000
Mr. George G. Hays
AZI LLC
6227 E. Sunnyside Drive
Scottsdale, Arizona 85254
Re: Terms and Conditions of Acquisition Loan
Dear Mr. Hays:
This commitment letter follows up on our conversations over the past few weeks
and summarizes what we discussed regarding certain proposed terms and conditions
for a $500,000 loan ("Loan") from Arizona MultiBank Community Development
Corporation ("MultiBank") to AZI LLC ("Borrower") for its proposed acquisition
of Arizona Instrument Corporation. The Loan, as presented herein, was approved
by MultiBank's Investment Committee on February 28, 2000.
Borrower: AZI LLC, an Arizona Limited Liability Company and operating
subsidiaries, if any.
Amount: $500,000.
Use of Funds: Annual interest rate floating, at Prime plus 4.25%
(currently 13%), with an additional Yield Enhancement in
the amount of an accrued 2% on the principal balance,
paid annually when Borrower shows positive net income
before taxes.
Term: Seven months interest-only, followed by equal monthly
principal payments (approximately $6,410.26), plus interest
on the principal balance, sufficient to amortize the Loan
over 78 months. Unpaid balance due on Maturity.
Maturity: 61 months from the date of close.
Collateral: General asset lien on all current and after acquired assets
of Borrower, second only to Imperial Bank.
Personal Guaranty: George G. Hays and Jeanine C. Hays, husband and wife.
Bank of Americao 101 North First Avenueo 18th Flooro Phoenix, Arizona 85003
<PAGE>
Life Insurance: Key person life insurance on George G. Hays in the
amount of $500,000, naming MultiBank as the first
beneficiary, to satisfy Borrower's obligations
to MultiBank. Life insurance company must acknowledge
MultiBank's assignment and security interest in the
policy.
Prepayment: No penalty for full or partial prepayments of
principal.
Fees and Expenses: Non-refundable Application Fee of $250 (received
2/25/00), Commitment Fee of 1.0% ($5,000) and
Documentation Fee of $350; Closing Fee of 2%
($10,000) payable at closing; and all out-of-pocket
costs, fees and expenses associated with the Loan,
including but not limited to legal expenses.
Other Provisions: o George G. Hays shall maintain no less than fifty
one percent (51%) ownership interest in Borrower.
o MultiBank may sell, assign or otherwise transfer
the Loan.
o At time of closing, total funding for the
acquisition transaction from all other sources is
substantially in the currently-contemplated form
and substance, including, but not limited to: 1)
senior indebtedness provided by an institutional
lender ("Senior Lender") in an amount not to
exceed $6.5 million, reduced to $3.5 million
within one week from date of closing and 2)
$500,000 of new equity.
o Intercreditor Agreement between MultiBank and
Senior Lender with commercially reasonable
terms for this type of transaction, including,
but not limited to: 1) best efforts for notice
of event of default by Senior Lender to
MultiBank, 2) senior indebtedness not to exceed
$500,000 over the outstanding balance of the
original facilities in place at closing; senior
indebtedness cap to be increased one dollar for
each dollar of subordinated debt repayment, 3)
interest-rate spread over Prime Rate on the
original senior facilities capped at the rate
at time of closing and, upon default, the rate
shall not exceed the stated default interest
rate, 4) standstill provision not to exceed 180
days, 5) Senior Lender's prior consent to sell,
assign or otherwise transfer the Loan.
o Reporting requirements similar to those required
by Senior Lender.
o No distributions to members of Borrower without
written consent of MultiBank, except for tax
liability purposes.
o Total debt service coverage, leverage and
liquidity ratios.
o Capital expenditure limit of $400,000.
o Compensation to George G. Hays not to exceed
$200,000 per annum.
o All other customary and reasonable business
and financial terms, conditions and covenants.
To reserve MultiBank's Loan commitment, through June 30, 2000, please sign this
letter where indicated below and return it to MultiBank no later than 5:00 p.m.,
Friday, March 24, 2000. Please include with the letter the Commitment Fee
($5,000) and, if you wish for MultiBank to begin drafting the loan documents,
also include the Documentation Fee of $350.
Bank of America o 101 North First Avenue o 18th Floor o Phoenix, Arizona 85003
<PAGE>
Arizona MultiBank is very pleased to offer AZI LLC the proposed Loan and we
appreciate the opportunity to assist you in acquiring Arizona Instrument
Corporation. The proposed Loan is subject to commercially reasonable and
customary documentation for a transaction of this type and current information
that demonstrates no material adverse change in the condition of Arizona
Instrument Corporation, or the Borrower, or the Guarantor. Upon execution of the
loan documents, the loan documents shall control notwithstanding any
inconsistency with this commitment letter.
Sincerely,
/s/ Andrew W. Gordon
- ---------------------
Andrew W. Gordon
Accepted and Agreed,
/s/ George G. Hays March 23, 2000
- -------------------------------------------- --------------
George G. Hays Date
AZI LLC
Bank of America o 101 North First Avenue o 18th Floor o Phoenix, Arizona 85003
