Exhibit 10.3
Execution Copy
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GUARANTY AGREEMENT
Dated as of September 1, 2006
AMONG
DCI, INC.,
a Kansas corporation,
ELECSYS CORPORATION,
a Kansas corporation,
AND
NTG, INC,
a Kansas corporation,
AS GUARANTORS
AND
UMB BANK, N.A.,
Kansas City, Missouri,
AS TRUSTEE
Industrial Revenue Bonds
(DCI, Inc. Project)
Series 2006A, B and C
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GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT made and entered into as of September 1, 2006
(the "Guaranty"), by and among DCI, INC., a Kansas corporation (the
"Corporation"), ELECSYS CORPORATION, a Kansas corporation (the "Elecsys") and
NTG, INC., a Kansas corporation (the "NTG") (the Corporation, the Elecsys and
the NTG are hereinafter collectively referred to as the "Guarantors" and
individually as a "Guarantor,") and UMB BANK, N.A., a national banking
association with its principal corporate trust office in Kansas City, Missouri,
as Trustee (the "Trustee"), under a Trust Indenture dated as of September 1,
2006 (the "Indenture"), between the City of Olathe, Kansas, as Issuer (the
"Issuer") and the Trustee, as authorized by Ordinance No. 06-95 of the Issuer
passed on August 15, 2006 (the "Ordinance");
WITNESSETH:
WHEREAS, the Issuer, a municipal corporation organized and existing
under the laws of the State of Kansas, intends to issue its: (a) Tax Exempt
Industrial Revenue Bonds (DCI, Inc. Project), Series 2006A, in the aggregate
principal amount of $3,680,000 (the "Series 2006A Bonds"); (b) Tax Exempt
Industrial Revenue Bonds (DCI, Inc. Project), Series 2006B, in the aggregate
principal amount of $400,000 (the "Series 2006B Bonds"); and (c) Taxable
Industrial Revenue Bonds (DCI, Inc. Project), Series 2006C, in the aggregate
principal amount of $100,000 (the "Series 2006C Bonds," and together with the
Series 2006A Bonds and the Series 2006B Bonds, the "Bonds"); and
WHEREAS, the Bonds are to be issued under and pursuant to the Ordinance
and the Indenture; and
WHEREAS, the proceeds derived from the issuance of the Bonds are to be
applied to finance the cost of acquiring, constructing and equipping a Project
(as defined in the Indenture) to be leased by the Issuer to DCI Holdings FAE,
LLC ("Holdings") pursuant to a Lease Agreement dated as of September 1, 2006
(the "Lease"); and
WHEREAS, the Lease requires that Holdings assign its interest in the
Lease to the Corporation prior to January 1, 2007;
WHEREAS, the Guarantors will benefit from the issuance of the Bonds and
the lease of the Project to Holdings; and
WHEREAS, the Guarantors desire that the Issuer issue the Bonds and
apply the proceeds as aforesaid and are willing to enter into this Guaranty in
order to enhance the marketability of the Bonds and thereby achieve interest
cost savings to Holdings and as an inducement to the purchase of the Bonds by
all who shall at any time become owners of the Bonds.
NOW, THEREFORE, in consideration of the foregoing, the Guarantors do
hereby, subject to the terms hereof, covenant and agree with the Trustee as
follows:
ARTICLE I
REPRESENTATIONS OF GUARANTORS
Section 1.1. Corporation hereby represents and warrants that:
(a) The Corporation is a corporation duly organized and existing under
the laws of the State of Kansas, is not in violation of any provision of its
organizational documents, has not received notice and has no reasonable grounds
to believe that it is in violation of any of the laws of Kansas, has power to
enter into this Guaranty, has duly authorized the execution and delivery of this
Guaranty by proper action, and neither this Guaranty nor the agreements herein
contained contravene or constitute a default under any agreement, instrument or
indenture or any provision of its organizational documents or any other
requirement of law; and
(b) So long as the Bonds remain Outstanding (as defined in the
Indenture) and except as otherwise provided in Article IX of the Lease, the
Corporation will maintain its corporate existence, will continue to be a
corporation in good standing under the laws of the State of Kansas, will not
dissolve or otherwise dispose of all or substantially all of its assets.
Section 1.2. Elecsys hereby represents and warrants that:
(a) Elecsys is a Kansas corporation duly organized and existing under
the laws of the State of Kansas, is not in violation of any provision of its
organizational documents, has not received notice and has no reasonable grounds
to believe that it is in violation of any of the laws of Kansas, has power to
enter into this Guaranty, has duly authorized the execution and delivery of this
Guaranty by proper action, and neither this Guaranty nor the agreements herein
contained contravene or constitute a default under any agreement, instrument or
indenture or any provision of its organizational documents or any other
requirement of law; and
(b) So long as the Bonds remain Outstanding (as defined in the
Indenture), Elecsys will maintain its corporate existence, will continue to be a
corporation in good standing under the laws of the State of Kansas, will not
dissolve or otherwise dispose of all or substantially all of its assets and will
not consolidate with or merge into another limited liability company or
corporation or permit one or more other limited liability companies or
corporations to consolidate with or merge into it, provided, that Elecsys may,
without violating the agreement contained in this subsection, consolidate with
or merge into another domestic limited liability company or corporation (that
is, a limited liability company or corporation organized and existing under the
laws of one of the states of the United States of America), or permit one or
more limited liability companies or corporations to consolidate with or merge
into it, or sell or otherwise transfer to another limited liability company or
corporation all or substantially all of its assets as an entirety and thereafter
dissolve, provided that the surviving, resulting or transferee limited liability
company or corporation, as the case may be, (i) shall be a limited liability
company or corporation organized and existing under the laws of one of the
states of the United States of America, as aforesaid, (ii) shall be qualified to
do business in the State of Kansas, (iii) shall assume in writing all of the
obligations of Elecsys under this Agreement, and (iv) shall have a net worth at
least equal to the net worth of Elecsys at the time of the consolidation, merger
or sale determined in accordance with generally accepted accounting principles
consistently applied.
Section 1.3. NTG hereby represents and warrants that:
(a) NTG is a corporation duly organized and existing under the laws of
the State of Kansas, is not in violation of any provision of its organizational
documents, has not received notice and has no reasonable grounds to believe that
it is in violation of any of the laws of Kansas, has power to enter into this
Guaranty, has duly authorized the execution and delivery of this Guaranty by
proper action, and neither this Guaranty nor the agreements herein contained
contravene or constitute a default under any agreement, instrument or indenture
or any provision of its organizational documents or any other requirement of
law; and
(b) So long as the Bonds remain Outstanding (as defined in the
Indenture), NTG will maintain its corporate existence, will continue to be a
corporation in good standing under the laws of the State of Kansas, will not
dissolve or otherwise dispose of all or substantially all of its assets and will
not consolidate with or merge into another limited liability company or
corporation or permit one or more other limited liability companies or
corporations to consolidate with or merge into it, provided, that NTG may,
without violating the agreement contained in this subsection, consolidate with
or merge into another domestic limited liability company or corporation (that
is, a limited liability company or corporation organized and existing under the
laws of one of the states of the United States of America), or permit one or
more limited liability companies or corporations to consolidate with or merge
into it, or sell or otherwise transfer to another limited liability company or
corporation all or substantially all of its assets as an entirety and thereafter
dissolve, provided that the surviving, resulting or transferee limited liability
company or corporation, as the case may be, (i) shall be a limited liability
company or corporation organized and existing under the laws of one of the
states of the United States of America, as aforesaid, (ii) shall be qualified to
do business in the State of Kansas, (iii) shall assume in writing all of the
obligations of NTG under this Agreement, and (iv) shall have a net worth at
least equal to the net worth of NTG at the time of the consolidation, merger or
sale determined in accordance with generally accepted accounting principles
consistently applied.
Section 1.4. Each Guarantor represents and warrants that the assumption
by Guarantors of their obligations hereunder will result in direct financial
benefits to all of the Guarantors.
ARTICLE II
THE GUARANTY
Section 2.1. The Guarantors, jointly and severally and each as
principal, hereby unconditionally guarantee to the Trustee for the benefit of
the owners from time to time of the Bonds:
(a) The full and prompt payment of the principal of and premium, if
any, on each of the Bonds when and as the same shall become due in accordance
with the terms and provisions of each such Bond and the Indenture, whether at
the stated maturity of such Bond, by acceleration, call for redemption or
otherwise;
(b) The full and prompt payment of the interest on each of the Bonds
when and as the same shall become due in accordance with the terms and
provisions of each such Bond and the Indenture;
(c) The full and prompt payment of all sums to be paid by Holdings and
the Corporation under the Lease; and
(d) The performance of all other obligations of Holdings and the
Corporation under the Lease.
All payments by the Guarantors shall be paid in lawful money of the United
States of America. Each and every default in the payment of the principal of,
premium, if any, or interest on any Bond, and each and every other default
hereunder, shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder as each cause of action arises.
Section 2.2. The joint and several obligations of the Guarantors under
this Guaranty shall be absolute and unconditional and shall remain in full force
and effect until released and discharged as herein provided, and such
obligations shall not be affected, modified or impaired upon the happening from
time to time of any event, including without limitation any of the following,
whether or not with notice to, or the consent of, the Guarantors:
(a) The compromise, settlement, release or termination of any or all of
the obligations, covenants or agreements of Issuer under the Indenture or
Holdings or the Corporation under the Lease;
(b) The failure to give notice to any one or more of the Guarantors of
the occurrence of an event of default under the terms and provisions of this
Guaranty, the Indenture or the Lease;
(c) The assignment or mortgaging or the purported assignment or
mortgaging of all or any part of the interest of the Issuer, Holdings or the
Corporation in the Project or any failure of title with respect to the Issuer's,
Holdings' or the Corporation's interests in the Project;
(d) The waiver of the payment, performance or observance by Issuer,
Holdings or the Corporation or any one or more of the Guarantors of any of the
obligations, covenants or agreements of any of them contained in the Indenture,
the Lease or this Guaranty;
(e) The extension of the time for payment of any principal of, premium,
if any, or interest on any Bond or under this Guaranty or of the time for
performance of any other obligations, covenants or agreements under or arising
out of the Indenture, the Lease or this Guaranty or the extension or the renewal
thereof;
(f) The modification or amendment (whether material or otherwise) of
any obligation, covenant or agreement set forth in the Indenture or the Lease,
provided that the obligations of the Guarantors are not thereby increased or
expanded without their prior written consent;
(g) The taking or the omission of any of the actions referred to in
the Indenture or the Lease or any actions under this Guaranty;
(h) Any failure, omission, delay or lack on the part of Issuer or the
Trustee to enforce, assert or exercise any right, power or remedy conferred on
the Issuer or the Trustee in this Guaranty, the Lease or the Indenture, or any
other act or acts on the part of the Issuer, the Trustee or any of the owners
from time to time of the Bonds;
(i) The voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets, marshalling of assets
and liabilities, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment of, or other similar proceedings affecting Issuer, Holdings,
Corporation or any one or more of the Guarantors or any of the assets of any of
them, or any contest of the validity of the Indenture, the Lease or this
Guaranty or the interest of the Trustee in the rentals under the Lease in any
such proceeding;
(j) To the extent permitted by law, the release or discharge of any one
or more of the Guarantors from the performance or observance of any obligation,
covenant or agreement contained in this Guaranty by operation of law;
(k) The default or failure of Issuer or any one or more of the
Guarantors to perform fully any of their respective obligations set forth in the
Indenture, the Lease or this Guaranty;
(l) Any invalidity or irregularity in any statutory or other
proceedings relating to the performance or existence of Issuer, to the issuance
of the Bonds or the execution or delivery of the Indenture or the Lease;
(m) Any impossibility or illegality of performance on the part of
Issuer or Corporation of any of their respective obligations under or in
connection with the Bonds, the Indenture or the Lease; or
(n) Any other circumstances, occurrence or condition, whether similar
or dissimilar to any of the foregoing, that might be raised in avoidance of or
in defense against any action to enforce the obligations of the Guarantors under
the provisions hereof.
Section 2.3. The rights of the Trustee to enforce the obligations of
the Guarantors under this Guaranty by any proceedings, whether by action at law,
suit in equity or otherwise, shall not be impaired by any right, counterclaim or
defense of any character whatsoever, including without limitation any right,
claim or defense of rescission, recoupment, reduction, limitation, set-off,
counterclaim, waiver, frustration, surrender, alteration or compromise. This
Guaranty and the joint and several obligations of the Guarantors hereunder are
separate and independent of Holding's or the Corporation's obligations under the
Lease and the Indenture, and it is specifically understood and agreed by the
Guarantors that any payment now or hereafter made by or on behalf of Holdings or
the Corporation under or pursuant to the Lease or the Indenture shall not,
except to the extent paid to the owners of the Bonds directly by the Issuer,
Holdings, the Corporation or by the Trustee, affect, impair or diminish, in any
manner whatsoever, the joint and several obligations of the Guarantors
hereunder. In the event that Holdings, the Corporation or any successor lessee
or assignee under the Lease should fail to perform any such agreement on its
part, the Guarantors may institute such action as they deem necessary to compel
performance so long as such action does not abrogate the Guarantors' obligations
herein.
ARTICLE III
REMEDIES ON DEFAULT
Section 3.1. In the event of a default in the payment of principal of
or premium, if any, on any Bond of a series of Bonds when and as the same shall
become due, whether at the stated maturity thereof, by acceleration, call for
redemption or otherwise, or in the event of a default in the payment of any
interest on any Bond of a series of Bonds when and as the same shall become due,
the Trustee may, and if requested so to do by the owners of not less than 25% in
aggregate principal amount of the Bonds of such series then outstanding and upon
provision being made for its fees and expenses and
indemnification as hereinafter provided, shall be obligated to proceed
hereunder, and the Trustee, in its sole discretion, shall have the right to
proceed first and directly against any one or more of the Guarantors under this
Guaranty to the extent of their respective obligations hereunder without
proceeding against or exhausting any other remedies which it may have and
without resorting to any other security held by Issuer or the Trustee. Before
taking any action hereunder, the Trustee may require a satisfactory indemnity
bond be furnished for the reimbursement of all expenses it may incur and to
protect it against all liability except that which is adjudicated to have
resulted from its negligence or willful default, by reason of any action so
taken.
Section 3.2. Each Guarantor hereby expressly waives notice from the
Trustee or the owners from time to time of any of the Bonds of their acceptance
and reliance on this Guaranty. The Guarantors agree to pay all costs, expenses
and fees, including all reasonable attorneys' fees, which may be incurred by the
Trustee in enforcing or attempting to enforce this Guaranty following any
default hereunder, whether the same be enforced by suit or otherwise.
Section 3.3. No remedy herein conferred upon or reserved to the Trustee
is intended to be exclusive of any other available remedy or remedies, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Guaranty or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon any
default, omission or failure of performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Trustee to exercise any remedy reserved to it
in this Guaranty, it shall not be necessary to give any notice, other than such
notice as may by herein expressly required. In the event any provision contained
in this Guaranty should be breached by a Guarantor and thereafter duly waived by
the Trustee, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. No waiver, amendment,
release or modification of this Guaranty shall be established by conduct, custom
or course of dealing, but solely by an instrument in writing duly executed by
the Trustee.
ARTICLE IV
GENERAL COVENANTS AND AGREEMENTS
Section 4.1. This Guaranty is entered into by the Guarantors for the
benefit of the Trustee and the owners from time to time of the Bonds and any
successor trustee under the Indenture, all of whom shall be entitled to enforce
performance and observance of this Guaranty to the same extent as if they were
parties signatory hereto.
Section 4.2. The Guarantors shall be discharged of their obligations
hereunder only upon (1) the payment of the principal of, premium, if any, and
interest on the Bonds to the Trustee, or provision for payment thereof having
been made with the Trustee as provided in the Indenture, and (2) upon
satisfaction of all obligations of the lessee under the Lease.
Section 4.3. The joint and several obligations of the Guarantors
hereunder shall arise absolutely and unconditionally when the Bonds shall have
been issued, sold and delivered by Issuer and the proceeds thereof paid to the
Trustee.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1. The agreements contained herein on the part of the
Guarantors shall inure to and be binding upon their respective heirs,
successors, assigns and legal representatives including without limitation any
successor or assign in any transaction expressly permitted by this Guaranty.
Section 5.2. This Guaranty constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the Guarantors and the Trustee with respect to the subject matter hereof
and may be executed simultaneously in several counterparts, each of which shall
be deemed an original, and all of which together shall constitute one and the
same instrument.
Section 5.3. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or Sections in this Guaranty shall not affect the
validity or enforceability of the remaining portions of this Guaranty, or any
part thereof.
Section 5.4. This Guaranty shall be governed by and construed and
interpreted in accordance with the laws of the State of Kansas.
[Remainder of page intentionally blank.]
IN WITNESS WHEREOF, the Guarantors have executed this Guaranty as of
the date first above written.
DCI, INC.,
a Kansas corporation
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
ELECSYS CORPORATION,
a Kansas corporation
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
NTG, INC.,
a Kansas corporation
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Director and Treasurer
S-1
ACCEPTED:
UMB BANK, N.A.,
as Trustee
By:
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Name:
Title:
S-2