Exhbit 10.5
BUSINESS LOAN AGREEMENT (ASSET BASED)
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Principal Loan Date Maturity Loan No. [Call./Coll] Account Officer Initials
$3,000,000.00 08-30-2006 08-29-2007 ▇▇▇▇▇▇▇▇▇▇ 5300 309275 123
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item. Any item
above containing **** has been omitted due to text length limitations.
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Borrower: ELECSYS CORPORATION (TIN: ▇▇-▇▇▇▇▇▇▇): Lender: Bank Midwest, N.A.
DCI, INC. (TIN: ▇▇-▇▇▇▇▇▇▇); City Center Square Facility
and NTG, INC. (TIN: ▇▇-▇▇▇▇▇▇▇) ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
============================================================ =========================================================
THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated August 30, 2006, is made and
executed between ELECSYS CORPORATION: DCI, INC, and NTG, INC. ("Borrower") and
Bank Midwest, N.A. ("Lender") on the following terms and conditions. Borrower
has received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those
which may be described on any exhibit or schedule attached to this Agreement
("Loan") Borrower understands and agrees that (A) in granting, renewing, or
extending any Loan, Lender is relying upon Borrower's representations,
warranties, and agreements as set forth in this Agreement; (B) the granting,
renewing, or extending of any Loan by Lender at all times shall be subject to
Lender's sole judgment and discretion; and (C) all such Loans shall be and
remain subject to the terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of August 30, 2006, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
ADVANCE AUTHORITY. The following persons currently are authorized, except as
provided in this paragraph, to request advances and authorize payments under the
line of credit until Lender receives from Borrower, at Lender's address shown
above, written notice of revocation of their authority; ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President & CEO of ELECSYS CORPORATION; and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President &
CFO. FUNDS ARE TO BE DISBURSED AT BORROWER'S REQUEST AND LOAN OFFICER'S
APPROVAL. A MONTHLY BORROWING BASE CERTIFICATE IS REQUIRED.
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:
Conditions Precedent to Each Advance. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is
subject to the following conditions precedent, with all documents,
instruments, opinions, reports, and other items required under this
Agreement to be in form and substance satisfactory to Lender:
(1) Lender shall have received evidence that this Agreement
and all Related Documents have been duly authorized, executed,
and delivered by Borrower to Lender.
(2) Lender shall have received such opinions of counsel,
supplemental opinions and documents as Lender may request.
(3) The security interests in the Collateral shall have been
duly authorized, created, and perfected with first lien
priority and shall be in full force and effect.
(4) All guaranties required by Lender for the credit
facility(ies) shall have been executed by each Guarantor,
delivered to Lender, and be in full force and effect.
BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 2
(5) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books,
records, and operations, and Lender shall be satisfied as to
their condition.
(6) Borrower shall have paid to Lender all fees, costs, and
expenses specified in this Agreement and the Related Documents
as are then due and payable.
(7) There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under
this Agreement, and Borrower shall have delivered to Lender
the compliance certificate called for in the paragraph below
titled "Compliance Certificate."
Making Loan Advances. Advances under this credit facility, as well as
directions for payment from Borrower's accounts, may be requested
orally or in writing by authorized persons. Lender may, but need not,
require that all oral requests be confirmed in writing. Each Advance
shall be conclusively deemed to have been made at the request of and
for the benefit of Borrower (1) when credited to any deposit account of
Borrower maintained with Lender or (2) when advanced in accordance with
the instructions of any authorized person. Lender, at its option, may
set a cutoff time, after which all requests for Advances will be
treated as having been requested on the next succeeding Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal
amount of the outstanding Advances shall exceed the applicable
Borrowing Base, Borrower, immediately upon written or oral notice from
Lender, shall pay to Lender an amount equal to the difference between
the outstanding principal balance of the Advances and the Borrowing
Base. On the Expiration Date, Borrower shall pay to Lender in full the
aggregate unpaid principal amount of all Advances then outstanding and
all accrued unpaid interest, together with all other applicable fees,
costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account in
which Lender shall make entries for such Advance and such other debits
and credits as shall be appropriate in connection with the credit
facility. Lender shall provide Borrower with periodic statements of
Borrower's account, which statements shall be considered to be correct
and conclusively binding on Borrower unless Borrower notifies Lender to
the contrary within thirty (30) days after Borrower's receipt of any
such statement which Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loans, obligations and duties owed by Borrower to Lender, Borrower
(and others, if required) shall grant to Lender Security interests in such
property and assets as Lender may require. Lender's Security interests in the
Collateral shall be continuing liens and shall include the proceeds and products
of the Collateral, including without limitation the proceeds of any insurance.
With respect to the Collateral, Borrower agrees and represents and warrants to
Lender:
Perfection of Security Interests. Borrower agrees to execute all
documents perfecting Lender's Security Interest and to take whatever
actions are requested by Lender to perfect and continue Lender's
Security Interests in the Collateral. Upon request of Lender, Borrower
will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Borrower will note Lender's interest
upon any and all chattel paper and instruments if not delivered to
Lender for possession by Lender. Contemporaneous with the execution of
the Agreement, Borrower will execute one or more UCC financing
statements and any similar statements as may be required by applicable
law, and Lender will file such financing statements and all such
similar statements in the appropriate location or locations. Borrower
hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue
any Security interest. Lender may at any time, and without further
authorization from Borrower, file a carbon, photograph, facsimile, or
other reproduction of any financing statement for use as a financing
statement. Borrower will reimburse Lender for all expenses for the
perfection, termination, and the continuation of the perfection of
Lender's security interest in the Collateral. Borrower promptly will
notify Lender before any change in Borrower's name including any change
to the assumed business names of Borrower. Borrower also promptly will
notify Lender before any change in Borrower's Social Security Number or
Employer Identification Number. Borrower further agrees to notify
Lender in writing prior to
2
BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 3
any change in address or location of Borrower's principal governance
office or should Borrower merge or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter
shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Lender's representative
upon demand for inspection and copying at any reasonable time. With
respect to the Accounts, Borrower agrees to keep and maintain such
records as Lender may require, including without limitation information
concerning Eligible Accounts and Account balances and agings. Records
related to Accounts Receivable are or will be located at ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. With respect to the Inventory, Borrower
agrees to keep and maintain such records as Lender may require,
including without limitation information concerning Eligible Inventory
and records itemizing and describing the kind, type, quality, and
quantity of inventory. Borrower's Inventory costs and selling prices,
and the daily withdrawals and additions to Inventory. Records related
to Inventory are or will be located at ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The above is an accurate and complete list of all
locations at which Borrower keeps or maintains business records
concerning Borrower's collateral.
Collateral Schedules. Concurrently with the execution and delivery of
this Agreement, Borrower shall execute and deliver to Lender schedules
of Accounts and Inventory and schedules of Eligible Accounts and
Eligible Inventory in form and substance satisfactory to the Lender.
Thereafter supplemental schedules shall be delivered according to the
following schedule: With respect to Eligible Accounts, schedules shall
be delivered MONTHLY. With respect to Eligible Inventory, schedules
shall be delivered MONTHLY.
Representations and Warranties concerning Accounts. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (2) All Account Information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and
(3) Lender, its assigns, or agents shall have the right at any time and
at Borrower's expense to inspect, examine, and audit Borrower's records
and to confirm with Account Debtors the accuracy of such Accounts.
Representations and Warranties Concerning Inventory. With respect to
the Inventory, Borrower represents and warrants to Lender: (1) All
Inventory represented by Borrower to be Eligible inventory for purposes
of this Agreement conforms to the requirements of the definition of
Eligible Inventory; (2) All Inventory values listed on schedules
delivered to Lender will be true and correct, subject to immaterial
variance; (3) the value of the Inventory will be determined on a
consistent accounting basis; (4) Except as agreed to the contrary by
Lender in writing, all Eligible Inventory is now and at all times
hereafter will be in Borrower's physical possession and shall not be
held by others on consignment, sale on approval, or sale or return; (5)
Except as reflected in the Inventory schedules delivered to lender, all
Eligible Inventory is now and at all times hereafter will be of good
and merchantable quality, free from defects; (6) Eligible Inventory is
not now and will not at any time hereafter be stored with a bailee,
warehouseman or similar party without Lender's prior written consent,
and, in such event, Borrower will concurrently at the time of bailment
cause any such bailee, warehouseman, or similar party to issue and
deliver to Lender, in form acceptable to Lender, warehouse receipts in
Lender name evidencing the storage of Inventory; and (7) Lender, its
assigns, or agents shall have the right at any time and at Borrower's
expense to inspect and examine the Inventory and to check and test the
same as to quality, quantity, value, and condition.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) Security Agreements granting
to Lender security interests in the Collateral; (3) financing
statements and all other documents perfecting Lender's Security
Interests; (4) evidence of Insurance as required below; (5) together
with all such Related Documents as Lender may require for the Loan; all
in form and substance satisfactory to Lender's counsel.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 4
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender
or its counsel, may require.
Fees and Expenses Under This Agreement. Borrower shall have paid to
Lender all fees, costs, and expenses specified in this Agreement and
the Related Documents as are then due and payable.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any documents
or certificate delivered to Lender under this Agreement are true and
correct.
No Event of Default. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this
Agreement or under any Related Document.
MULTIPLE BORROWERS. This Agreement has been executed by multiple obligors who
are referred to in this Agreement individually, collectively and interchangeably
as "Borrower." Unless specifically stated to the contrary, the word "Borrower"
as used in this Agreement, including without limitation all representations,
warranties and covenants, shall include all Borrowers. Borrower understands and
agrees that, with or without notice to any one Borrower, Lender may (A) make one
or more additional secured or unsecured loans or otherwise extend additional
credit with respect to any other Borrower; (B) with respect to any other
Borrower alter, compromise, renew, extend, accelerate, or otherwise change one
or more times the time for payment or other terms of any indebtedness, including
increases and decreases of the rate of interest on the indebtedness; (C)
exchange, enforce, waive, subordinate, fail or decide not to perfect, and
release any security, with or without the substitution of new collateral; (D)
release, substitute, agree not to ▇▇▇, or deal with any one or more of
Borrower's or any other Borrower's sureties, endorsers, or other guarantors on
any terms or in any manner Lender may choose; (E) determine how, when and what
application of payments and credits shall be made on any indebtedness; (F) apply
such security and direct the order or manner of sale of any Collateral,
including without limitation, any non-judicial sale permitted by the terms of
the controlling security agreement or deed of trust; as Lender in its discretion
may determine; (G) sell, transfer, assign or grant participations in all or any
part of the Loan; (H) exercise or refrain from exercising any rights against
Borrower or others, or otherwise act or refrain from acting; (I) settle or
compromise any indebtedness; and (J) subordinate the payment of all or any part
of any of Borrower's indebtedness to Lender to the payment of any liabilities
which may be due Lender or others.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. ELECSYS CORPORATION is a corporation for profit which is,
and at all times shall be, duly organized, validly existing, and in
good standing under and by virtue of the laws of the State of Kansas.
ELECSYS CORPORATION is duly authorized to transact business in all
other states in which ELECSYS CORPORATION is doing business, having
obtained all necessary filings, governmental licenses and approvals for
each state in which ELECSYS CORPORATION is doing business.
Specifically, ELECSYS CORPORATION is, and at all times shall be, duly
qualified as a foreign corporation in all states in which the failure
to so qualify would have a material adverse effect on its business or
financial condition. ELECSYS CORPORATION has the full power and
authority to own its properties and to transact the business in which
it is presently engaged or presently proposes to engage. ELECSYS
CORPORATION maintains an office at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇. Unless ELECSYS CORPORATION has designated otherwise in writing,
the principal office is the office at which ELECSYS CORPORATION keeps
its books and records including its records concerning the Collateral.
ELECSYS CORPORATION will notify Lender prior to any change in the
location of ELECSYS CORPORATION's state or organization or any change
in ELECSYS CORPORATION's name. ELECSYS CORPORATION shall do all things
necessary to preserve and to keep in full force and effect its
existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and
4
BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 5
decrees of any governmental or quasi-governmental authority or court
applicable to ELECSYS CORPORATION and ELECSYS CORPORATION's business
activities.
DCI, INC. is a corporation for profit which is, and at all times shall
be, duly organized, validly existing, and in good standing under and by
virtue of the laws of the State of Kansas. DCI, INC. is duly authorized
to transact business in all other states in which DCI, INC. is doing
business, having obtained all necessary filings, governmental licenses
and approvals for each state in which DCI, INC. is doing business.
Specifically, DCI, INC. is, and at all times shall be, duly qualified
as a foreign corporation in all states in which the failure to so
qualify would have a material adverse affect on its business or
financial condition. DCI, INC. has the full power and authority to own
its properties and to transact the business in which it is presently
engaged or presently proposes to engage. DCI, INC. maintains an office
at ▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless DCI, INC. has
designated otherwise in writing, the principal office is the office at
which DCI, INC. keeps its books and records including its records
concerning the Collateral. DCI, INC. will notify Lender prior to any
change in the location of DCI, INC.'s state of organization or any
change in DCI, INC.'s name. DCI, INC. shall do all things necessary to
preserve and to keep in full force and effect its existence, rights and
privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental
authority or court applicable to DCI, INC. and DCI, INC.'s business
activities.
NTG, INC. is a corporation for profit which is, and at all times shall
be, duly organized, validly existing, and in good standing under and by
virtue of the laws of the State of Kansas. NTG, INC. is duly authorized
to transact business in all other states in which NTG, INC. is doing
business, having obtained all necessary filings, governmental licenses
and approvals for each state in which NTG, INC. is doing business.
Specifically, NTG, INC. is, and at all times shall be, duly qualified
as a foreign corporation in all states in which the failure to so
qualify would have a material adverse effect on its business or
financial condition. NTG, INC. has the full power and authority to own
its properties and to transact the business in which it is presently
engaged or presently proposes to engage. NTG, INC. maintains an office
at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless NTG, INC. has
designated otherwise in writing, the principal office is the office at
which NTG, INC. keeps its books and records including its records
concerning the Collateral. NTG, INC. will notify Lender prior to any
change in the location of NTG, INC.'s state of organization or any
change in NTG, INC.'s name. NTG, INC. shall do all things necessary to
preserve and to keep in full force and effect its existence, rights and
privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental
authority or court applicable to NTG, INC. and NTG, INC.'s business
activities.
Assumed Business Names. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete
list of all assumed business names under which Borrower does business:
None.
Authorization. Borrower's execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by
all necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a default under (1) any provision of (a)
Borrower's articles of incorporation or organization, or bylaws, or (b)
any agreement or other instrument binding upon Borrower or (2) any law,
governmental regulation, court decree, or order applicable to Borrower
or to Borrower's properties.
Financial Information. Each of Borrower's financial statements supplied to
Lender truly and completely disclosed Borrower's financial condition as of the
date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will constitute
legal, valid, and binding obligations of Borrower enforceable against Borrower
in accordance with their respective terms.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 6
Properties. Except as contemplated by this Agreement or as previously disclosed
in Borrower's financial statements or in writing to Lender and as accepted by
Lender, and except for property tax liens for taxes not presently due and
payable, Borrower owns and has good title to all of Borrower's properties free
and clear of all Security Interests, and has not executed any security documents
or financing statements relating to such properties. All of Borrower's
properties are titled in Borrower's legal name, and Borrower has not used or
filed a financing statement under any other name for at least the last five (5)
years.
Hazardous Substances. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (1) During the period of
Borrower's ownership of the Collateral, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of any
Hazardous Substance by any person on, under, about or from any of the
Collateral. (2) Borrower has no knowledge of, or reason to believe that there
has been (a) any breach or violation of any Environmental Laws; (b) any use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance on, under, about or from the Collateral by
any prior owners or occupants of any of the Collateral; or (c) any actual or
threatened litigation or claims of any kind by any person relating to such
matters. (3) Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the Collateral shall use, generate, manufacture,
store, treat, dispose of or release any Hazardous Substance on, under, about, or
from any of the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation all Environmental Laws. Borrower
authorizes Lender and its agents to enter upon the Collateral to make such
inspections and tests as Lender may deem appropriate to determine compliance of
the Collateral with this section of the Agreement. Any inspections or tests made
by Lender shall be at Borrower's expense and for Lender's purposes only and
shall not be construed to create any responsibility or liability on the part of
Lender to Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating the
Collateral for hazardous waste and Hazardous Substances. Borrower hereby: (1)
releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (2) agrees to indemnify and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the Collateral. The provisions of this section
of the Agreement, including the obligation to indemnify, shall survive the
payment of the indebtedness and the termination, expiration or satisfaction of
this Agreement and shall not be affected by Lender's acquisition of any interest
in any of the Collateral, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns and
reports that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower's Loan and
Note, that would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if any), and
all Related Documents are binding upon the signers thereof, as well as upon
their successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 7
Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all
material adverse changes in Borrower's financial condition, and (2) all existing
and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial condition
of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit Borrower's
books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Annual Statements. As soon as available, but in no event later than
ninety (90) days after the end of each fiscal year, Borrower's balance
sheet and income statement for the year ended, audited by a certified
public accountant satisfactory to Lender.
Interim Statements. As soon as available, but in no event later than
thirty (30) days after the end of each fiscal quarter, Borrower's
balance sheet and profit and loss statement for the period ended,
prepared by Borrower in form satisfactory to Lender.
Additional Requirements. MONTHLY FINANCIAL STATEMENT, ACCOUNTS
RECEIVABLES AGING REPORT, ACCOUNTS PAYABLE AGING REPORT, INVENTORY
REPORT AND BORROWING BASE CERTIFICATE REQUIRED.
All financial reports required to be provided under this Agreement shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Borrower as being true and correct.
Additional Information. Furnish such additional information and statements, as
Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Minimum Income and Cash Flow Requirements.
Other Requirements. QUARTERLY LOAN COVENANTS.
MAXIMUM FUNDED DEBT TO EBITDA OF 4x BASED ON TRAILING TWELVE MONTHS
(TTM)
MAXIMUM DEBT TO TANGIBLE NET WORTH OF 2x.
MINIMUM TANGIBLE NET WORTH OF $4MM.
Except as provided above, all computations made to determine compliance
with the requirements contained in this paragraph shall be made in
accordance with generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages
and with insurance companies acceptable to Lender. Borrower, upon
request of Lender, will deliver to Lender from time to time the
policies or certificates of insurance in form satisfactory to Lender,
including stipulations that coverage will not be canceled or diminished
without at least ten (10) days prior written notice to Lender. Each
insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act,
omission or default of Borrower or any other person. In connection with
all policies covering assets in which Lender holds or is offered a
security interest for the Loans, Borrower will provide Lender with such
Lender's loss payable or other endorsements as Lender may require.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 8
Insurance Reports. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender
may reasonably request, including without limitation the following: (1)
the name of the insurer; (2) the risks insured; (3) the amount of the
policy; (4 ) the properties insured; (5) the then current property
values on the basis of which insurance has been obtained, and the
manner of determining those values; and (6) the expiration date of the
policy. In addition, upon request of Lender (however not more often
than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value
or replacement cost of any Collateral. The cost of such appraisal shall
be paid by Borrower.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any
of Borrower's Properties, income, or profits.
Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall notify Lender immediately in writing of any
default in connection with any agreement.
Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel provide written notice to Lender of
any changes in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.
Environmental Studies. Promptly conduct and complete, at Borrower's
expense, all such investigations, studies, samplings and testings as
may be requested by Lender or any governmental authority relative to
any substance, or any waste or by-product of any substance defined as
toxic or a hazardous substance under applicable federal, state, or
local law, rule, regulation, order or directive, as or affecting any
property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower's
properties, businesses and operations, and to the use or occupancy of
the Collateral, including without limitation, the Americans With
Disabilities Act, Borrower may contest in good faith any such law,
ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender's sole opinion,
Lender's interests in the Collateral are not jeopardized. Lender may
require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender's interest.
Inspection. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Borrower's
other properties and to examine or audit Borrower's books, accounts,
and records and to make copies and memoranda of Borrower's books,
accounts and records. If Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such
records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of
any records it may request, all at Borrower's expenses.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 9
Compliance Certificates. Unless waived in writing by Lender, provide
Lender within fifteen (15) days after the end of each Month End, with a
certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true and
correct as of the date of the certificate and further certifying that,
as of the date of the certificate no Event of Default exists under this
Agreement.
Environmental Compliance and Reports. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or
omission on Borrower's part or on the part of any third party, on
property owned and/or occupied by Borrower, any environmental activity
where damage may result to the environment, unless such environmental
activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with
any environmental activity whether or not there is damage to the
environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
assignments, financing statements, instruments, documents and other
agreements as Lender or its attorneys may reasonably request to
evidence and secure the Loans and to perfect all Security Interests.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (1) Except for trade debt incurred in the
normal course of business and indebtedness to Lender contemplated by
this Agreement, create, incur or assume indebtedness for borrowed
money, including capital leases, (2) sell, transfer, mortgage, assign,
pledge, lease, grant a security interest in, or encumber any of
Borrower's assets (except as allowed as Permitted Liens), or (3) sell
with recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, or
(3) pay any dividends on Borrower's stock (other than dividends payable
in its stock), provided, however that notwithstanding the foregoing,
but only so long as no Event of Default has occurred and is continuing
or would result from the payment of dividends, if Borrower is a
"Subchapter S Corporation" (as defined in the Internal Revenue Code of
1986, as amended), Borrower may pay cash dividends on its stock to its
shareholder from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of
9
BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 10
their ownership of shares of Borrower's stock, or purchase or retire
any of Borrower's outstanding shares or alter or amend Borrower's
capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance
money or assets to any other person, enterprise or entity, (2)
purchase, create or acquire any interest in any other enterprise or
entity, or (3) incur any obligation as surety or guarantor other than
in the ordinary course of business.
Agreements. Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of
Borrower's obligations under this Agreement or in connection herewith.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any ▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
Payment Default. Borrower fails to make any payment when due under the
Loan.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or
in any of the Related Documents or to comply with or to perform any
term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's or any Grantor's
property or Borrower's or any Grantor's ability to repay the Loan or
perform their respective obligations under this Agreement or any of the
Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the
benefit or creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
Defective Collateralization. The Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security
interest or lien) at any time and for any reason.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 11
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent or revokes or disputes the validity of or
liability under any Guaranty of the Indebtedness. In the event of a
death, Lender, at its option, may but shall not be required to, permit
the Guarantor's estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in
doing so, cure any Event of Default.
Change in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired.
Right to Cure. If any default, other than a default on indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been
given a notice of a similar default within the preceding twelve (12)
months, it may be cured if Borrower or Grantor, as the case may be,
after receiving written notice from Lender demanding cure of such
default: (1) cure the default within ten (10) days or (2) if the cure
requires more than ten (10) days, immediately initiate steps which
Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continue and complete all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity or
otherwise. Except as may be prohibited by applicable law all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
ADDITIONAL EVENTS OF DEFAULT. I agree to provide reasonable financial income
information including, but not limited to, signed financial statements, Federal
Tax Returns, and lease/rental documents to the Lender within 30 days of Lender's
written request. The financial statement shall consist of at least a balance
sheet, a listing of all contingent liabilities, and a statement of year-to-date
income as of the close of the last fiscal year. Failure on the part of the
borrower(s) to provide the requested information may be considered an event of
default under this note or agreement.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment
to this Agreement shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration
or amendment.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 12
Attorneys' Fees; Expenses. Borrower agrees to pay upon demand as of
Lender's costs and expenses, including Lender's attorneys' fees and
Lender's legal expenses incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce
this Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's attorneys' fees and
legal expenses whether or not there is a lawsuit, including attorneys'
fees and legal expenses for bankruptcy proceedings including efforts to
modify or vacate any automatic stay or injunction, and appraisals.
Borrower also shall pay all court costs and such additional fees as may
be directed by the court.
Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not be used to interpret or define
the provisions of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any
other matter relating to the Loan, and Borrower hereby waives any
rights to privacy Borrower may have with respect to such matters.
Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchases of
such participation interests. Borrower also agrees that the purchasers
of any such participation interests will be considered as the absolute
owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the
sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower further
agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses
that Borrower may have against Lender.
Governing Law. This Agreement will be governed by federal law
applicable to Lender and, to the extent not preempted by federal law,
the laws of the State of Missouri without regard to its conflicts of
law provisions. This Agreement has been accepted by Lender in the State
of Missouri.
Choice of Venue. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of ▇▇▇▇▇▇▇ County,
State of Kansas.
Joint and Several Liability. All obligations of Borrower under this
Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each Borrower
signing below is responsible for all obligations in this Agreement.
Where any one or more of the parties is a corporation, partnership,
limited liability company or similar entity, it is not necessary for
Lender to inquire into the powers of any of the officers, directors,
partners, members, or other agents acting or purporting to act on the
entity's behalf, and any obligations made or created in reliance upon
the professed exercise of such powers shall be guaranteed under this
Agreement.
No Waiver by Lender. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and
signed by Lender. No delay or omission on the part of Lender in
exercising any right shall operate as a waiver of such right or any
other right. A waiver by Lender of a provision of this Agreement shall
not prejudice or constitute a waiver of Lender's right otherwise to
demand strict compliance with that provision or any other provision of
this Agreement. No prior waiver by Lender nor any course of dealing
between Lender and Borrower, or between Lender and any Grantor shall
constitute a waiver of any of Lender's rights or of any of Borrower's
or any Grantor's obligations as to any future transactions. Whenever
the consent of Lender is required under this Agreement, the granting of
such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in
all cases such consent may be granted or withheld in the sole
discretion of Lender.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 13
Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepared, directed to the
addresses shown near the beginning of this Agreement. Any party may
change its address for notices under this Agreement by giving formal
written notice of the other parties, specifying that the purpose of the
notice is to change the party's address. For notice purposes, Borrower
agrees to keep Lender informed at all times of Borrower's current
address. Unless otherwise provided or required by law, if there is more
than one Borrower, any notice given by Lender to any Borrower is deemed
to be notice given to all Borrowers.
Severability. If a court of competent jurisdiction finds any provision
of this Agreement to be illegal, invalid, or unenforceable as to any
person or circumstance, that finding shall not make the offending
provision illegal, invalid, or unenforceable as to any other person or
circumstance. If feasible, the offending provision shall be considered
modified so that it becomes legal, valid and enforceable. If the
offending provision cannot be so modified, it shall be considered
deleted from this Agreement. Unless otherwise required by law, the
illegality, invalidity, or unenforceability of any provision of this
Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of
any provisions of this Agreement makes it appropriate, including
without limitation any representation, warranty or covenant, the word
"Borrower" as used in this Agreement shall include all of Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing, however,
under no circumstances shall this Agreement be construed to require
Lender to make any Loan or other financial accommodation to any of
Borrower's subsidiaries or affiliates.
Successors and Assigns. All covenants and agreements by or on behalf of
Borrower contained in this Agreement or any Related Documents shall
bind Borrower's successors and assigns and shall inure to the benefit
of Lender and its successors and assigns. Borrower shall not, however,
have the right to assign Borrower's rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival of Representations and Warranties. Borrower understands and
agrees that in extending Loan Advances, Lender is relying on all
representations, warranties, and covenants made by Borrower in this
Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement or the Related Documents.
Borrower further agrees that regardless of any investigation made by
Lender, all such representations, warranties and covenants will survive
the extension of Loan Advances and delivery to Lender of the Related
Documents shall be continuing in nature, shall be deemed made and
redated by Borrower at the time each Loan Advance is made, and shall
remain in full force and effect until such time as Borrower's
indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever, is the last to
occur.
Time is of the Essence. Time is of the essence in the performance of
this Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural and the plural shall include the singular as the context may require.
Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code. Accounting words and
terms not otherwise defined in this Agreement shall have the meanings assigned
to them in accordance with generally accepted accounting principles as in effect
on the date of this Agreement.
Account. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 14
Advance. The word "Advance" means a disbursement of Loans funds made,
or to be made, to Borrower or on Borrower's behalf under the terms and
conditions of this Agreement.
Agreement. The word "Agreement" means this Business Loan Agreement
(Asset Based), as this Business Loan Agreement (Asset Based) may be
amended or modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement (Asset Based) from
time to time.
Borrower. The word "Borrower" means ELECSYS CORPORATION, DCI, INC; and
NTG, INC. and includes all co-signers and co-makers signing the Note
and all their successors and assigns.
Borrowing Base. The words "Borrowing Base" mean, as determined by
Lender from time to time, the lesser of (1) $3,000,000.00 or (2) the
sum of (a) 80.000% of the aggregate amount of Eligible Accounts, plus
(b) 50.000% of the aggregate amount of Eligible Inventory.
Business Day. The words "Business Day" mean a day on which commercial
banks are open in the State of Missouri.
Collateral. The word "Collateral" means all property and assets granted
as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lese or consignment intended
as a security device, or any other security or lien interest
whatsoever, whether created by law, contract or otherwise. The word
Collateral also includes without limitation all collateral described in
the collateral section of this Agreement.
Eligible Accounts. The words "Eligible Accounts" mean at any time, all
of Borrower's Accounts which contain selling terms and conditions
acceptable to Lender. The net amount of any Eligible Account against
which Borrower may borrow shall exclude all returns, discounts,
credits, and offsets of any nature. Unless otherwise agreed to by
Lender in writing, Eligible Accounts do not include
(1) Accounts with respect to which the Account Debtor is employee or
agent of Borrower.
(2) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with Borrower or its shareholders, officers, or
directors.
(3) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
(4) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(5) Accounts which are subject to dispute, counterclaim, or setoff.
(6) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered to the Account
Debtor.
(7) Accounts with respect to which Lender, in its sole discretion deems
the creditworthiness or financial condition of the Account Debtor to be
unsatisfactory.
(8) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or
debtor-in-relief acts; or who has had appointed a trustee, custodian,
or receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or
fails generally to pay its debts (including its payrolls) as such debts
become due.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 15
(9) Accounts which have not been paid in full with 90 DAYS from the
invoice date.
(10) ALL ACCOUNTS OF ANY ACCOUNT DEBTOR OR BORROWER IF ANY ACCOUNT OF
SUCH ACCOUNT DEBTOR HAS NOT BEEN PAID IN FULL WITHIN 90 DAYS OF ITS
INVOICE DATE.
Eligible Inventory. The words "Eligible Inventory" mean, at any time,
all of Borrower's Inventory as defined below, except:
(1) Inventory which is not owned by Borrower free and clear of all
security interests, liens, encumbrances, and claims of third parties.
(2) Inventory which Lender, in its sole discretion, deems to be
obsolete, unsalable, damaged, defective, or unfit for further
processing.
(3) Work in progress.
Environmental Laws. The words "Environmental Laws" mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9801, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986,
Pub. L. No. 98-499 ("▇▇▇▇"), the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and
Recovery Act 42 U.S.C. Section 6901, et seq., or other applicable state
or federal laws, rules, or regulations adopted pursuant thereto.
Event of Default. The words "Event of Default" mean any of the events
of default set forth in this Agreement in the default section of this
Agreement.
Expiration Date. The words "Expiration Date" mean the date of
termination of Lender's commitment to lend under this Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles.
Grantor. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the Loan,
including without limitation all Borrowers granting such a Security
Interest.
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of this Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.
Hazardous Substances. The words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used,
treated, stored, disposed of, generated, manufactured, transported or
otherwise handled. The words "Hazardous Substances" are used in their
very broadest sense and include without limitation any and all
hazardous or toxic substances, materials or waste as defined by or
listed under the Environmental Laws. The term "hazardous Substances"
also includes, without limitation, petroleum and petroleum by-products
or any fraction thereof and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced
by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the
Related Documents.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 16
Inventory. The word "Inventory" means all of Borrower's raw materials,
work in process, finished goods, merchandise, parts and supplies, of
every kind and description, and goods held for sale or lease or
furnished under contracts of service in which Borrower now has or
hereafter acquires any right, whether held by Borrower or others, and
all documents of title, warehouse receipts, bills of lading, and all
other documents of every type covering all or any part of the
foregoing. Inventory includes inventory temporarily out of Borrower's
custody or possession and all returns on Accounts.
Lender. The word "Lender" means Bank Midwest N.A., its successors and
assigns.
Loan. The word "Loan" means any and leans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule
attached to this Agreement from time to time.
Note. The word "Note" means the Note executed by ELECSYS CORPORATION,
DCI, INC.; and NTG, INC. in the principal amount of $3,000,000.00 dated
August 30, 2006, together with all renewals of, extensions of,
modifications of, refinancings of, consolidation of, and substitutions
for the note or credit agreement.
Permitted Liens. The words "Permitted Liens" mean (1) liens and
security interests securing indebtedness owed by Borrower to Lender;
(2) liens for taxes, assessments, or similar charges either not yet due
or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (4) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (5) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (6) those liens
and security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
Borrower's assets.
Primary Credit Facility. The words "Primary Credit Facility" mean the
credit facility described in the Line of Credit section of this
Agreement.
Related Documents. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Loan.
Security Agreement. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract,
or otherwise, evidencing, governing, representing or creating a
Security Interest.
Security Interest. The words "Security Interest" mean, without
limitation, any and all types of collateral security, present and
future, whether in the form of a lien, charge, encumbrance, mortgage,
deed of trust, security deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien or title
retention contract, lease or consignment intended as a security device,
or any other security or lien interest whatsoever whether created by
law, contract, or otherwise.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT
IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWERS) AND US
(LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 17
REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER
AGREE IN WRITING TO MODIFY IT.
WAIVE JURY. All parties to this Agreement hereby waive the right to any jury
trial in any action, proceeding, or counterclaim brought by any party against
any other party.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED AUGUST 30, 2006.
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BUSINESS LOAN AGREEMENT (ASSET BASED)
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 18
BORROWER:
ELECSYS CORPORATION
By:
-------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President & CEO of ELECSYS
CORPORATION
DCI, INC.
By:
-------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President of DCI, INC.
NTG, INC.
By:
-------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director/Treasurer of NTG, INC.
LENDER:
BANK MIDWEST, N.A.
By:
-------------------------------------------------------
Authorized Signer
18