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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
CEM CORPORATION
----------------
(Name of Issuer)
Common Stock, $.05 par value
------------------------------
(Title of Class of Securities)
125165 10 0
--------------
(CUSIP Number)
Michael J. Collins, 3100 Smith Farm Road, Matthews, NC 28105 (704) 821-7015
---------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
October 18, 1999
-------------------------------------------------------
(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 Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [X].
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SCHEDULE 13D
- --------------------- -----------------------------------
CUSIP NO. 125165 10 0 PAGE 2
- --------------------- -----------------------------------
- ------------ -------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MICHAEL J. COLLINS
- ------------ -------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- ------------ -------------------------------------------------------------------
3 SEC USE ONLY
- ------------ -------------------------------------------------------------------
4 SOURCE OF FUNDS
PF, BK
- ------------ -------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- ------------ -------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ------------ -------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER - 477,442
SHARES --------------- -------------------------------------
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER - 27,450
REPORTING --------------- -------------------------------------
PERSON WITH
9 SOLE DISPOSITIVE POWER - 477,442
--------------- -------------------------------------
10 SHARED DISPOSITIVE POWER - 27,450
- ------------ -------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
504,892
- ------------ -------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
- ------------ -------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.5%
- ------------ -------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- ------------ -------------------------------------------------------------------
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Item 1. Security and Issuer.
This Statement on Schedule 13D (this "Statement") is filed with respect
to the shares of Common Stock, $.05 par value per share (the "Common Stock"), of
CEM Corporation, a North Carolina corporation (the "Issuer"). The address of the
principal executive offices of the Issuer is 3100 Smith Farm Road, Matthews,
North Carolina 28105.
Item 2. Identity and Background.
This Statement is filed by Michael J. Collins (the "Reporting Person").
The Reporting Person has previously filed Statements on Schedule 13G with
respect to his beneficial ownership of Common Stock and is filing this Statement
pursuant to Rule 13d-1(e) under the Securities Exchange Act of 1934, as amended.
The Reporting Person is a director and the President and Chief Executive Officer
of the Issuer. His business address, and the address of the principal office of
the Issuer, is 3100 Smith Farm Road, Matthews, North Carolina 28105. The
principal business of the Issuer is the development, manufacture, sale and
service of microwave-based instrumentation for testing, analysis and process
control in analytical laboratory and industrial markets.
During the past five years, the Reporting Person has not been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
and has not been a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction that as a result of which subjects or subjected
him to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws. The Reporting Person is a
citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
All shares of Common Stock currently beneficially owned by the
Reporting Person were acquired with personal funds. Information set forth in
Item 4 of this Statement is incorporated herein by reference.
Item 4. Purpose of Transaction.
The Reporting Person acquired the bulk of his shares of Common Stock as
a founder of the Issuer in 1978. The Reporting Person believes that the Common
Stock represents an attractive long-term investment opportunity and believes
significant corporate savings can be achieved by elimination of reporting and
other obligations imposed on the Issuer as a public company. The Reporting
Persons is proposing to the Issuer an offer to acquire all of the outstanding
shares of Common Stock and options to purchase shares of Common Stock not owned
by the Reporting Person or members of his family in a negotiated merger
transaction at a cash price of $8.40 per share of Common Stock. The terms of
such proposal are set forth in a letter from the Reporting Person addressed to
the Chairman of the Board of Directors of the Issuer, a copy of which is
attached hereto as Exhibit 1 (the "Proposal"). The terms of the Proposal are
incorporated herein by reference.
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Page 4
The Proposal provides that such acquisition (the "Acquisition") would
be effected by means of a merger of the Issuer with a corporation formed by the
Reporting Person for that purpose ("Newco") or with a wholly owned subsidiary of
Newco. In either case the Issuer would be the surviving corporation.
As set forth in the Proposal, the details of the Reporting Persons'
proposal will be contained in a definitive merger agreement to be negotiated
with the Issuer. The Reporting Person anticipates that he will promptly deliver
to the Issuer a draft of such agreement. The proposed merger agreement will
contain what the Reporting Person regards as customary or expected conditions,
such as the obtaining of necessary regulatory approvals and third-party
consents, if any; absence of certain changes; and approval by the board of
directors and adoption by the Company's stockholders of the merger agreement
pursuant to the Issuer's articles of incorporation and North Carolina law.
On October 18, 1999, the Reporting Person accepted a term sheet (the
"Term Sheet") of Banc of America Commercial Finance Corporation to provide debt
financing of up to an aggregate of $18 million to fund the proposed merger
transaction. A copy of the Term Sheet is filed as Exhibit 2 to this Statement
and is incorporated herein by reference.
The Reporting Person may vary the terms of his proposal based on
negotiations with the Issuer or otherwise and may withdraw his proposal at any
time prior to its being accepted.
Item 5. Interest in Securities of the Issuer.
(a) The Reporting Person beneficially owns 504,892 shares of Common
Stock, which on the basis of 3,043,443 shares of Common Stock outstanding (as
reported in the Issuer's Annual Report on Form 10-K for the fiscal year ended
June 30, 1999) represents approximately 16.5% of the outstanding shares of
Common Stock. Of such 504,892 shares of Common Stock, 24,750 shares are
represented by options issued by the Issuer to the Reporting Person that are
exercisable or will become exercisable within 60 days of the date of this
Statement.
(b) The Reporting Person has sole power to vote and dispose of 477,442
shares of Common Stock beneficially owned by him. An aggregate of 27,450 shares
of Common Stock are held by the Reporting Person's spouse as custodian for the
benefit of their children. The Reporting Person may be deemed to share the power
to vote and the power to dispose of such 27,450 shares of Common Stock
(c) The Reporting Person has not acquired beneficial ownership of any
shares of Common Stock within the past 60 days.
(d) Not applicable.
(e) Not applicable.
<PAGE> 5
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Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
The information set forth in Item 4 of this Amendment is incorporated
herein by reference.
Item 7. Material to be Filed as Exhibits.
The Proposal is filed as Exhibit 1 to this Statement. The Term Sheet is
filed as Exhibit 2 to this Statement.
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment is true, complete and
correct.
Dated: October 19, 1999
/s/ Michael J. Collins
--------------------------
Michael J. Collins
<PAGE> 1
EXHIBIT 1
[letterhead of Michael J. Collins]
October 18, 1999
Mr. Ronald A. Norelli
Chairman of the Board of Directors
CEM Corporation
Dear Ron:
I am writing to propose an acquisition transaction that I believe will
provide an excellent value for our shareholders and is also in the best
interests of our employees and customers. As you know, I beneficially own
504,892 shares of the company's common stock (or 16.5% of the outstanding
shares). I am proposing to acquire the remaining shares of common stock in a
cash merger transaction at a price of $8.40 per share. In addition, all
outstanding stock options under the company's plans with an exercise price of
less than $8.40 would be exchanged for cash equal to the excess of $8.40 over
the exercise price.
The proposed price represents a significant premium of approximately
46% over today's closing price of $5.75. In addition, this price represents a
multiple of 6.5 times CEM's EBITDA for the 1999 fiscal year. This significantly
exceeds the premium and approximates the multiple paid last month in the
going-private acquisition of Instron Corporation, a instrument company in the
same industry with revenues of over six times that of CEM. This 46% premium also
significantly exceeds the 29% average premium paid in the 34 going-private
transactions that have occurred since October 1997.
The acquisition would be effected by means of a merger of the company
with a corporation to be formed by me for that purpose ("Newco") or with a
wholly owned subsidiary of Newco. In either case CEM would be the surviving
corporation. The details of the proposed merger will be contained in a draft
merger agreement that I will deliver to you promptly. The proposed merger
agreement will contain customary or expected conditions, such as obtaining
necessary regulatory approvals and third-party consents, if any; absence of
certain adverse changes; and approval by the board of directors and adoption by
the company's shareholders of the merger agreement pursuant to the company's
articles of incorporation and North Carolina law.
The proposed merger agreement will not contain a financing condition. I
have engaged Wachovia Securities, Inc. to assist me in obtaining financing.
Earlier today I accepted a term sheet from Banc of America Commercial Finance
Corporation to provide the necessary financing. A copy of the term sheet is
enclosed.
<PAGE> 2
Mr. Ronald A. Norelli
Chairman of the Board of Directors
CEM Corporation
October 18, 1999
Page 2
- -----------------------------------
I strongly believe my proposal is in the best interests of our public
shareholders. As you know, the trading volume in our stock is extremely low,
with trading volume over the past 12 months averaging approximately 4,200 shares
a day. The market is not providing adequate liquidity to our shareholders as
demonstrated by the reduction in volume and price since the company suspended
its buyback program. Moreover, a buyback program can provide only marginal
liquidity, and the company can purchase shares in the program only at the
prevailing market price, which may not be a fair price to our shareholders.
Because of our size and the lack of equity research coverage for our stock and
the analytical instruments industry in general (factors in large measure beyond
our control), it is and will continue to be difficult for the company to attract
new investor interest and for our shareholders to get a fair price when selling
their shares in the market.
I also believe that my proposal is in the best long-term interests of
the company, its employees, customers and suppliers. My proposal does not depend
on selling off any company assets, layoffs or termination of benefits or in any
way reducing the quality of our products or the pace of our product development.
As you know, the expense and pressures of being a public company are significant
for a company of our size. I believe elimination of those expenses and pressures
will be important factors in the company's success following the proposed
merger.
I recognize that the board need not pursue my proposal. I want to
emphasize that I am committed to the long-term development of the company
whether or not the board decides to pursue my proposal. I have devoted more than
21 years to CEM, and I intend to remain in my current role as President and
Chief Executive Officer as long as the board and the shareholders will allow me.
In addition, I have no interest in reducing my ownership in the company or
otherwise selling my shares.
As required by law, I will file a Schedule 13D with the Securities and
Exchange Commission to report my proposal made by this letter. A copy of this
letter will be attached as an exhibit.
I look forward to the board's consideration of my proposal.
Very truly yours,
/s/ Michael J. Collins
Michael J. Collins
<PAGE> 1
EXHIBIT 2
[letterhead of Banc of America Commercial Finance Corporation]
October 18, 1999
Mr. Michael J. Collins
c/o Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street
Charlotte, NC 28202
Dear Mike:
Banc of America Commercial Finance Corporation ("BACF") is pleased to present
its proposal to finance the proposed purchase of all of the outstanding shares
of CEM Corporation ("CEM") by Mr. Michael J. Collins, as described below (the
"Transaction"). BACF proposes to provide credit available in an amount totaling
up to $18.00 million in the form of a $3.00 million Revolving Credit Facility, a
$10.00 million Term Loan A, and a $5.00 million Term Loan B (collectively, the
"Financing"). The Financing is based on a maximum of $8.40 p/share being
tendered for the approximately 3 million shares outstanding of CEM. It is
anticipated that the uses will be as follows ($000):
Uses ($000)
-----------
Purchase Stock 25,565
Fees & Expenses 1,329
Refinance Existing Debt 1,239
Unused Revolver 3,000
------
Total 31,133
======
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Michael J. Collins
October 18, 1999
Page 2
REVOLVING CREDIT FACILITY
- -------------------------
Borrower: A newly formed company, whose sole purpose
is to merge into CEM ("Newco" or "Company").
Guarantor: A newly formed holding company, whose sole
purpose is to own the stock of Newco
("Holdings").
Revolver Amount: Up to $3,000,000.
Interest Rate: Floating at the 30 day LIBOR rate plus 375
basis points, payable monthly in arrears.
Revolver Term: Coterminous with Term Loan B.
Availability: Subject to an advance rate against eligible
accounts receivable of up to 85.0%, and an
advance rate against eligible inventory of
50%.
Collateral: A first lien on all of the Company's assets,
including cash, cash equivalents, inventory,
accounts receivable, property, plant and
equipment, intangibles, insurance policies,
contract rights and other agreements,
together with a pledge of the stock of the
Borrower and any subsidiaries, and a first
security interest in all of the purchaser's
rights under the Purchase Agreement and any
escrows established pursuant thereto.
Purpose: For working capital.
Draws: Minimum draw of $100,000.
Revolver Amount
Drawn at Closing: Estimated to be zero at closing.
Letter of Credit
sub-facility Amount: $500,000
Letter of Credit Fees: 3.75% of the amount of the letters of credit
outstanding, payable quarterly in arrears.
In addition, the Borrower shall pay whatever
fees the issuing bank requires for the
standby or documentary L/C's.
Ranking: The Revolver shall rank pari passu with all
other portions of the Financing.
Facility Fee: 37.5 basis points of the average undrawn
amount of the Revolving Credit Facility,
payable quarterly.
Optional Prepayment: A prepayment penalty shall be payable on the
revolver equal to that under the Term Loans.
<PAGE> 3
Michael J. Collins
October 18, 1999
Page 3
TERM LOAN A
- -----------
Borrower: Same as Revolver
Guarantor: Same as Revolver
Amount: $10,000,000
Interest Rate: Floating at the 30 day LIBOR rate plus 450
basis points, payable monthly in arrears.
Term: 6 years.
Mandatory Repayment:
- Scheduled: To be paid in equal quarterly installments
based on the following annual schedule:
Yr1 750
Yr2 1,000
Yr3 1,500
Yr4 2,000
Yr5 2,250
Yr6 2,500
- Cash Sweep: 50% of Excess Cash Flow shall be paid
annually as additional principal payments,
applied in inverse order of maturity. Excess
Cash Flow shall mean EBITDA less capital
expenditures, less cash taxes, less
scheduled debt service.
- Asset Sales: 100% of net proceeds of asset sales shall be
applied to installments due in inverse order
of maturity.
- Equity Proceeds: 100% of net equity offering proceeds shall
be applied to installments due in inverse
order of maturity.
Collateral: Same as the Revolving Credit Facility.
Ranking: Ranks pari passu with Revolver & Term
Loan A.
TERM LOAN B
- -----------
Borrower: Same as Revolver & Term Loan A.
Guarantor: Same as Revolver & Term Loan A.
Amount: $5,000,000
Interest Rate: Floating at the 30 day LIBOR rate plus 600
basis points, payable monthly in arrears.
Term: 7 years.
Mandatory Repayment:
- Scheduled: Four equal quarterly payments beginning with
the earlier of the first quarter after
repayment in full of the Term Loan A or year
seven.
<PAGE> 4
Michael J. Collins
October 18, 1999
Page 4
- Cash Sweep: After repayment in full of Term Loan A, 50%
of Excess Cash Flow shall be paid annually
as additional principal payments, applied in
inverse order of maturity.
- Other: After repayment in full of Term Loan A, 100%
of net proceeds of asset sales, equity
offerings and insurance proceeds shall be
applied to in inverse order of maturity.
Optional Prepayment: After repayment in full of Term Loan A, with
the same prepayment premiums as Term Loan A.
Collateral: Same as the Revolving Credit Facility and
Term Loan A.
GENERAL TERMS AND CONDITIONS
- ----------------------------
The general terms and conditions set forth below shall apply to the Financing:
Financial Covenants
Financial covenants shall include but not be limited to:
(i) debt coverage ratios,
(ii) capital expenditure & research and development limitations,
and
(iii) minimum EBITDA levels.
Other Covenants
Other covenants shall include but not be limited to:
(i) financial reporting (including review of operating and capital
expenditure budgets),
(ii) restriction on additional indebtedness, stock issuance,
investments, management compensation or liens,
(iii) prohibition on disposition of material assets,
(iv) limitations on leasing,
(v) prohibitions of dividends and repurchase of common stock,
(vi) restriction on related party transactions,
(vii) change of control provisions (including equity holders,
management, and Board of Directors),
(viii) merger and consolidation provisions and
(ix) limitations on change in management contracts and replacement
of key members of management.
Events of Default/Remedies
The transaction documents shall contain events of default and remedies customary
for transactions of this type.
<PAGE> 5
Michael J. Collins
October 18, 1999
Page 5
MISCELLANEOUS
- -------------
Closing Date: To be mutually agreed upon.
Capital Contribution: On the Closing Date, Mr. Collins shall
contribute all of his common stock and
options (approximately 480,000 shares) into
the transaction, on terms acceptable to
BACF. In addition, cash of $9.1 million at
CEM will be used to fund part of the
Transaction.
Environmental: You shall arrange for an environmental
consulting firm acceptable to BACF to
conduct an environmental and occupational
safety and health review (the "Environmental
Review") of the Borrower's properties and
business practices. The scope of the
Environmental Review, the report prepared by
the consulting firm (the "Environmental
Report") and the consulting firm must be
satisfactory to BACF. BACF reserves the
right to have the Environmental Report
reviewed by its environmental consultants.
Environmental representations, warranties,
covenants, notices of default and
indemnities related to compliance with
environmental laws and regulations, and the
maintenance of the Borrower's properties
free of hazardous material and/or waste, as
are deemed appropriate by BACF and its
counsel in their sole discretion, will be
required.
Employment Contracts: BACF may require employment and non-compete
contracts between the Company and certain
members of senior management acceptable to
BACF.
Limited Recourse: Mr. Collins shall be liable for any harm,
loss, expense or damage (which may include
lost principal or interest and legal fees)
suffered or incurred by BACF as a result of
fraud, waste, misapplication of funds
(including, nonpayment of taxes or insurance
premiums resulting therefrom and failure to
account properly for any security deposit or
other deposit), and any direct or indirect
transfer of any collateral or the existence
of liens on the collateral in violation of
the Loan Documents (collectively, the
"Recourse Obligations"). In addition, the
Financing shall become recourse to Mr.
Collins in the event of the voluntary
bankruptcy of Holdings or the Company, or
any involuntary bankruptcy filed against
Holdings or the Company by any affiliate
(the "Bankruptcy Obligations"). Mr. Collins'
obligations for the Recourse Obligation and
the Bankruptcy
<PAGE> 6
Michael J. Collins
October 18, 1999
Page 6
Obligations shall be evidenced by a Limited
Guaranty and Indemnity Agreement in form and
substance satisfactory to BACF.
Key-Man Life Insurance: BACF may require key-man life insurance on
certain members of senior management in
amounts acceptable to BACF.
Transaction Expenses: All of BACF 's out-of-pocket
expenses (including expenses of legal
counsel and outside consultants) will be for
your account and will be paid by you,
regardless of whether the transactions
contemplated hereby are consummated.
Good Faith Deposit: A $50,000 good faith deposit (the "Deposit")
is due and payable upon acceptance of a
proposal letter. The Deposit will be
refunded, less any out-of-pocket expense
incurred, only in the event that BACF does
not approve this transaction and deliver a
commitment letter on substantially the terms
outlined herein. If CEM is purchased by
someone other than Mr. Collins prior to the
delivery of a commitment letter, the Deposit
shall be non-refundable. At closing, the
Deposit will be credited against the
Commitment Fees due as outlined in a
separate fee letter.
Interest Rate Protection: BACF may require that the Company obtain
interest rate protection with respect to its
floating rate obligations under the
Financing.
Broker: Mr. Collins agrees to indemnify and hold
BACF harmless from any claim for any
commission, fee or compensation from any
broker resulting from this transaction. BACF
represents that it has not retained any
broker or third party in connection with the
proposed transaction that it has not
arranged to compensate separately. No broker
or any other third party has any authority
to act or bind BACF
Assignment: BACF's interest in the Financing may be
assigned, sold, participated or otherwise
transferred, in whole or in part
Indemnity: Mr. Collins agrees to indemnify and hold
BACF harmless from any claim for damage,
loss or expense arising out of, or in
connection with, or any action contemplated
in connection herewith, if this transaction
is not consummated.
<PAGE> 7
Michael J. Collins
October 18, 1999
Page 7
Documentation: Negotiation of transaction agreements,
perfection of liens, and satisfaction of
other customary closing conditions
(including opinions) must be satisfactory in
form and substance to BACF and its counsel.
BACF's counsel shall prepare drafts of
transaction documents for the Financing.
Conditions to
Commitment: If a commitment letter is issued it shall be
subject to the satisfaction, in BACF's
discretion, of certain conditions including
but not limited to:
(i) satisfactory review of the fiscal
year 1999 audited internal
financial statements of the Company
and the 2000 year-to-date internal
financial statements of the
Company;
(ii) satisfactory review of accounting,
financial, operational and MIS
systems and controls of the
Company; and employment contracts
with senior management;
(iii) satisfactory review of the scope of
the Environmental Review and
results of the Environmental
Report;
(iv) satisfactory review of the
historical financial performance of
the Company, as well as, internal
controls and procedures done by an
accounting firm acceptable to BACF;
(v) absence of material adverse change
in the financial condition,
operations or business prospects of
CEM or the Company;
(vi) satisfactory review of contingent
liabilities;
(vii) satisfactory review of projected
federal and state tax calculations,
and insurance policies;
(viii) satisfaction by BACF with all terms
of the Transaction, including,
without limitation, any tender
documents or merger agreement in
connection therewith; and
(ix) and satisfactory review of the
purchase agreements and equity
documents (including charter,
shareholder and other documents)
with terms and conditions
acceptable to BACF.
THIS IS NOT A COMMITMENT. THIS LETTER IS BEING SENT AT A TIME WHEN WE HAVE NOT
YET UNDERTAKEN A FULL BUSINESS, CREDIT AND LEGAL ANALYSIS OF THE COMPANY AND THE
PROPOSED TRANSACTION. AS A RESULT OF FURTHER INVESTIGATION AND ANALYSIS BY US
AND OUR LEGAL COUNSEL OR BY REASON OF INFORMATION OF WHICH WE ARE NOT NOW AWARE,
IMPEDIMENTS TO ISSUING A COMMITMENT LETTER OR CLOSING MAY BE DISCOVERED.
ACCORDINGLY, WE MAY REQUIRE THAT THE PROPOSED TRANSACTION BE RESTRUCTURED OR
OTHERWISE MODIFIED TO MAKE ALLOWANCE FOR SUCH IMPEDIMENTS. AS THE LENDER, WE ARE
THE SOLE JUDGE OF WHAT IS AN IMPEDIMENT AND WHETHER THE IMPEDIMENT IS SO
<PAGE> 8
Michael J. Collins
October 18, 1999
Page 8
SERIOUS AS TO IMPEDE OR PREVENT THE ISSUANCE OF A COMMITMENT LETTER OR THE
CLOSING OF THE PROPOSED TRANSACTION.
This Proposal Letter is being provided to you on the condition that neither it
nor its substance will be disclosed or distributed without the prior written
consent of BACF except to the Company, your and their agents, advisors, Mr.
Collins, and attorneys who have a need to know as a result of their being
specifically involved in the proposed transaction. This letter is not a
Commitment Letter.
This Proposal Letter
(i) shall set forth the entire understanding to date between the
parties and supersedes all prior agreements and
understandings, both written and oral, with respect to the
subject matter covered in this letter,
(ii) may not be amended, modified or supplemented in any respect
except as expressly set forth in writing signed by an
authorized representative of BACF, and
(iii) shall be governed by and construed in accordance with the
internal laws of the State of New York.
<PAGE> 9
Michael J. Collins
October 18, 1999
Page 9
If the terms of the Proposal Letter are acceptable to you, please sign below on
the enclosed copy of this letter. This Proposal Letter will become effective
upon your delivery to us of executed counterparts of this Proposal Letter and
the Fee Letter, and you agree upon acceptance of this Proposal Letter to pay the
fees set forth in the Proposal and Fee Letters (including the Deposit and
out-of-pocket expenses). This Proposal Letter expires if not accepted by 5:00
p.m. on October 20, 1999.
Very truly yours,
Banc of America Commercial Finance Corporation
By: /s/ Joseph P. Longosz
-------------------------------
Joseph P. Longosz
Senior Vice President
By: /s/ Karl F. Jaeger
-------------------------------
Karl F. Jaeger
Vice President
Agreed and accepted:
/s/ Michael J. Collins
- ----------------------------
Michael J. Collins
Dated: October 18, 1999
---------------
