LOAN AND SECURITY AGREEMENT
This Agreement (as hereinafter defined) is made effective this
7th day of February, 2000 by and between Airport Systems International, Inc.
("ASI"), DCI, Inc. ("DCI") (collectively, jointly and severally, the
"Borrower") and Bank of America, N.A. ("LENDER").
PRELIMINARY STATEMENTS
(A) On January 3, 2000, ASI entered into an agreement to purchase
all of the stock of DCI (the "ACQUISITION").
(B) ASI and DCI each have existing notes, loans, indebtedness,
extensions of credit and credit facilities with Bank of America, all as more
particularly described on EXHIBIT E hereof ("EXISTING LOANS").
(C) In order to refinance and restate the Existing Loans, facilitate
the Acquisition, to provide working capital to Borrower, for real estate
purposes and to provide letters of credit to Borrower from time to time,
Borrower has requested (i) loans from Lender to Borrower on a revolving basis in
the amount of $8,000,000; (ii) term loans from Lender to Borrower in the amount
of $1,178,000; and (iii) an irrevocable direct-pay letter of credit facility in
the amount of $2,599,572.60.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed by and among the parties hereto as follows:
ARTICLE 1 - DEFINITIONS
Section 1.1 DEFINITIONS.
For the purposes of this Agreement:
"ACCOUNT DEBTOR" means a Person who is obligated on a Receivable.
"ACQUIRE", as applied to any Business Unit or Investment, means the
acquisition of such Business Unit or Investment by purchase, exchange, issuance
of stock or other securities, or by merger, reorganization or any other method.
"AFFILIATE" means, with respect to a Person, (a) any executive
officer, director, employee or managing agent of such Person, (b) any spouse,
parents, brothers, sisters, children and grandchildren of such Person, (c) any
association, partnership, trust, entity or enterprise in which such Person is a
director, executive officer or general partner, (d) any other Person that, (i)
directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such given Person, (ii) directly
or indirectly beneficially owns or holds 10% or more of any class of voting
stock or partnership or other equity interest of such
Person or any Subsidiary of such Person, or (iii) 10% or more of the voting
stock or partnership or other equity interest of which is directly or indirectly
beneficially owned or held by such Person or a Subsidiary of such Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities or partnership or other
interests, by contract or otherwise.
"AGREEMENT" means this Agreement, including the Exhibits and
Schedules hereto, and all amendments, modifications and supplements hereto and
thereto and restatements hereof and thereof.
"AGREEMENT DATE" means the date as of which this Agreement is dated.
"ASI RECEIVABLE" means a Receivable owed to ASI.
"ASSETS" means all assets of a Person determined in accordance with
GAAP and includable on a balance sheet of such Person prepared in accordance
with GAAP.
"AVAILABILITY" means, as of the date of determination, the aggregate
amount of Revolving Credit Loans available to be borrowed by the Borrower
hereunder in accordance with SECTION 2A.1 less the sum of the outstanding
principal balance of all Revolving Credit Loans hereunder as of such date.
"BENEFIT PLAN" means an employee benefit plan as defined in Section
3(3) of ERISA (other than a Multiemployer Plan) in respect of which a Person or
any Related Company is, or within the immediately preceding 6 years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
"BOND DOCUMENTS" means any and all documentation evidencing,
describing or relating to the Bonds.
"BOND LETTER OF CREDIT" means that certain Irrevocable Direct Pay
Letter of Credit issued by the Lender for the benefit of the Borrower (as
successor in interest to KHC of Lenexa, L.L.C.) in connection with DCI's
obligations under that certain Lease between the City of Lenexa, Kansas and
Borrower (as successor in interest to KHC of Lenexa, L.L.C.) dated as of
September 1, 1998 with reference to those certain City of Lenexa, Kansas
Variable Rate Demand Industrial Development Revenue Bonds (DCI, Inc. Project)
Series 1998 (the "BONDS").
"BORROWER" means Airport Systems International, Inc. and DCI, Inc.,
collectively, jointly and severally. All references herein to "Borrower" shall
be deemed to mean each of ASI and DCI individually, as applicable, and ASI and
DCI jointly; and all representations by "Borrower" herein shall be deemed to
mean each of ASI and DCI individually, as applicable, and ASI and DCI jointly.
"BORROWING BASE" means at any time, the sum of the Revolving Credit
Loan A Borrowing Base and the Revolving Credit Loan B Borrowing Base.
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"BORROWING BASE B CERTIFICATE" means a certificate in the form of
EXHIBIT B attached hereto.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which banks in Kansas City, Missouri are authorized to close.
"BUSINESS UNIT" means the assets constituting the business, or a
division or operating unit thereof, of any Person.
"CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures made and liabilities incurred for the acquisition of assets (other
than assets which constitute a Business Unit) which are not, in accordance with
GAAP, treated as expense items for such Person in the year made or incurred or
as a prepaid expense applicable to a future year or years.
"CAPITALIZED LEASE" means a lease that is required to be capitalized
for financial reporting purposes in accordance with GAAP.
"CAPITALIZED LEASE OBLIGATION" means Indebtedness represented by
obligations under a Capitalized Lease, and the amount of such Indebtedness shall
be the capitalized amount of such obligations determined in accordance with
GAAP.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"COLLATERAL" means and includes all of the Borrower's right, title
and interest in and to each of the following, wherever located and whether now
or hereafter existing or now owned or hereafter acquired or arising:
(a) all Receivables,
(b) all Inventory,
(c) all Equipment,
(d) all Contract Rights,
(e) all General Intangibles,
(f) all Deposit Accounts,
(g) all Real Estate
(h) all goods and other property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise to any
Receivable, including, but not limited to, all merchandise returned or
rejected by or repossessed from customers, or (ii) securing any
Receivable, including, without limitation, all rights as an unpaid vendor
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or lienor (including, without limitation, stoppage in transit, replevin
and reclamation) with respect to such goods and other properties,
(i) all mortgages, deeds to secure debt and deeds of trust on
real or personal property, guaranties, leases, security agreements and
other agreements and property which secure or relate to any Receivable or
other Collateral or are acquired for the purpose of securing and enforcing
any item thereof,
(j) all documents of title, policies and certificates of
insurance, securities, chattel paper and other documents and instruments
evidencing or pertaining to any and all items of Collateral,
(k) all files, correspondence, computer programs, tapes, disks
and related data processing software which contain information identifying
or pertaining to any of the Collateral or any Account Debtor or showing
the amounts thereof or payments thereon or otherwise necessary or helpful
in the realization thereon or the collection thereof,
(l) all cash deposited with the Lender or any Affiliate
thereof or which the Lender is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this Agreement or any of the
Security Documents, and
(m) any and all products and cash and non-cash proceeds of the
foregoing (including, but not limited to, any claims to any items referred
to in this definition and any claims against third parties for loss of,
damage to or destruction of any or all of the Collateral or for proceeds
payable under or unearned premiums with respect to policies of insurance)
in whatever form, including, but not limited to, cash, negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements and other documents.
(o) all of the stock of DCI owned by ASI, such stock
constituting 100% of the issued and outstanding stock of DCI.
"CONTRACT RIGHTS" means and includes, as to any Person, all of
such Person's then owned or existing and future acquired or arising rights
under contracts not yet earned by performance and not evidenced by an
instrument or chattel paper, to the extent that the same may lawfully be
assigned.
"CURRENT RATIO" means the ratio of Borrower's current Assets
to Borrower's current Liabilities measured at any given time.
"DCI RECEIVABLE" means a Receivable owed to DCI.
"DEFAULT" means any of the events specified in SECTION 11.1
that, with the passage of time or giving of notice or both, would
constitute an Event of Default.
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"DEFAULT MARGIN" means 3%.
"DEBT SERVICE COVERAGE RATIO" means on a rolling basis for the
immediately preceding four (4) quarters, the ratio of (i) Net Income
(excluding any after-tax gains or losses on the sale of assets (other than
the sale of Inventory in the ordinary course of business) and excluding
other after-tax extraordinary gains or losses), PLUS interest expense,
PLUS depreciation and amortization deducted in determining net income for
such period, OVER (ii) current principal maturities of long term debt
(including without limitation all Subordinated Debt) and Capitalized Lease
Obligations (including without limitation all payments by Borrower under
the Bond Documents) paid or scheduled to be paid during such period, PLUS
interest expense.
"DEPOSIT ACCOUNTS" means any demand, time, savings, passbook
or like account maintained with a bank, savings and loan association,
credit union or like organization, other than an account evidenced by a
certificate of deposit that is an instrument under the UCC.
"DISBURSEMENT ACCOUNT" means the account maintained by and in
the name of the Borrower with the Lender for the purpose of disbursing
Revolving Credit Loan proceeds and amounts credited thereto pursuant to
SECTIONS 2A.3(C)(I)(B) and 7.1(B)(II).
"DOLLAR" and "$" means freely transferable United States
dollars.
"ERISA" means the Employee Retirement Income Security Act of
1974, as in effect from time to time, and any successor statute.
"EBITDA" means, on a rolling basis for the immediately
preceding four (4) quarters, Net Income (or Net Loss) PLUS interest
expense, income tax expense, depreciation and amortization for such period
determined by GAAP.
"EFFECTIVE DATE" means the later of (a) the Agreement Date,
and (b) the first date on which all of the conditions set forth in SECTION
4.1 shall have been fulfilled or waived by the Lender.
"EFFECTIVE INTEREST RATE" means the rate of interest per annum
on the Loans in effect from time to time pursuant to the provisions of
SECTION 3.1(A), (B) and (C).
"ELIGIBLE EXPORT INVENTORY" means Inventory of ASI which would
otherwise be Eligible Inventory but is not Eligible Inventory only because
it is deemed Export Inventory by EXIMBANK or Lender for purposes of the
EXIMBANK Financing Documents.
"ELIGIBLE EXPORT RECEIVABLE" means any Receivable of ASI which
would otherwise be an Eligible Receivable but is not an Eligible
Receivable only because it is (i) deemed a Export Receivable by EXIMBANK
or Lender for purposes of the EXIMBANK
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Financing Documents and which Receivable (ii) may not meet the requirements
of SUBSECTION (F) of the definition of Eligible Receivable.
"ELIGIBLE INVENTORY" means items of Inventory of the Borrower
held for sale in the ordinary course of the business of the Borrower (but
not including packaging or shipping materials or maintenance supplies)
which are deemed by the Lender in the exercise of its sole but reasonable
discretion to be eligible for inclusion in the calculation of the
Borrowing Base as set forth herein. Unless otherwise approved in writing
by the Lender, no Inventory shall be deemed to be Eligible Inventory
unless it meets all of the following requirements: (a) such Inventory is
owned by the Borrower, is subject to the Security Interest, which is
perfected as to such Inventory, and is subject to no other Lien whatsoever
other than a Permitted Lien; (b) such Inventory consists of raw materials
or finished goods and does not consist of work-in-process, supplies or
consigned goods; (c) such Inventory is in good condition and meets all
standards applicable to such goods, their use or sale imposed by any
governmental agency, or department or division thereof, having regulatory
authority over such matters; (d) such Inventory is currently either usable
or saleable, at prices approximating at least the cost thereof, in the
normal course of the Borrower's business; (e) such Inventory is not
obsolete or returned or repossessed or used goods taken in trade; (f) such
Inventory is located at one of the locations listed in SCHEDULE 5.1(U);
(g) such Inventory is in the possession and control of the Borrower and
not any third party, or, if located in a warehouse or other facility
leased by the Borrower, the warehouseman or lessor has delivered to the
Lender a waiver and consent in form and substance satisfactory to the
Lender; (h) such Inventory is not Export Inventory; and (i) such Inventory
of ASI does not exceed twenty-five percent (25%) of all Inventory of ASI.
"ELIGIBLE RECEIVABLE" means the unpaid portion of a Receivable
payable in Dollars to the Borrower net of any returns, discounts, claims,
credits, charges or other allowances, offsets, deductions, counterclaims,
disputes or other defenses and reduced by the aggregate amount of all
reserves, limits and deductions provided for in this definition and
elsewhere in this Agreement which is deemed by the Lender in the exercise
of its sole but reasonable discretion to be eligible for inclusion in the
calculation of the Borrowing Base as set forth herein. Unless otherwise
approved in writing by the Lender, no Receivable shall be deemed an
Eligible Receivable unless it meets all of the following requirements: (a)
such Receivable is owned by the Borrower and represents a complete bona
fide transaction which requires no further act under any circumstances on
the part of the Borrower to make such Receivable payable by the Account
Debtor; (b) as to any DCI Receivable, such Receivable is not unpaid more
than 60 days past its due date or more than 90 days after the date of the
original invoice, and as to any ASI Receivable, such Receivable is not
unpaid more than 90 days after the date of the original invoice; (c) such
Receivable is not retainage; (d) such Receivable does not arise out of any
transaction with any Subsidiary or Affiliate of the Borrower; (e) such
Receivable does not arise out of any transaction with any creditor, lessor
or supplier of the Borrower, including deposits, except that such
Receivables described in this CLAUSE D which are otherwise Eligible
Receivables but for this CLAUSE D will be deemed Eligible Receivables to
the extent they exceed any accounts payable to such creditors, lessors or
suppliers of Borrower; (f) such Receivable is not owing by an Account
Debtor more than 25% of whose then-existing
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accounts owing to the Borrower do not meet the requirements set forth in
CLAUSE B above; (g) the Account Debtor with respect to such Receivable is
not located outside of the United States of America; (h) such Receivable is
not subject to the Assignment of Claims Act of 1940, as amended from time
to time, or any applicable law now or hereafter existing similar in effect
thereto, as determined in the sole discretion of the Lender, or to any
provision prohibiting its assignment or requiring notice of or consent to
such assignment; (i) the Borrower is not in breach of any express or
implied representation or warranty with respect to the goods the sale of
which gave rise to such Receivable; (j) the Account Debtor with respect to
such Receivable is not insolvent or the subject of any bankruptcy or
insolvency proceedings of any kind or of any other proceeding or action,
threatened or pending, which might, in the Lender's sole judgment, have a
Materially Adverse Effect on such Account Debtor; (k) the goods the sale of
which gave rise to such Receivable were shipped or delivered to the Account
Debtor on an absolute sale basis and not on a ▇▇▇▇ and hold sale basis, a
consignment sale basis, a guaranteed sale basis, a sale or return basis or
on the basis of any other similar understanding, and such goods have not
been returned or rejected; (l) as to any DCI Receivable, such Receivable is
not owing by an Account Debtor who or along with a group of affiliated
Account Debtors has then-existing accounts owing to DCI which exceed in
face amount 15% of DCI's total Eligible Receivables, except that otherwise
Eligible Receivables owing to DCI by ▇▇▇▇▇▇▇▇ Plastics Corporation shall be
Eligible Receivables provided that they do not exceed in face amount 35% of
DCI's total Eligible Receivables, and as to any ASI Receivable, such
Receivable is not owing by an Account Debtor who or along with a group of
affiliated Account Debtors has then-existing accounts owing to ASI which
exceed in face amount 40% of the ASI's total Eligible Receivables; (m) such
Receivable is evidenced by an invoice or other documentation in form
acceptable to the Lender containing only terms normally offered by the
Borrower, and dated no later than the date of shipment; (n) such Receivable
is a valid, legally enforceable obligation of the Account Debtor with
respect thereto and is not subject to any present, or contingent (and no
facts exist which are the reasonable basis for any future), offset,
deduction or counterclaim, dispute or other defense on the part of such
Account Debtor; (o) such Receivable is not evidenced by chattel paper or an
instrument of any kind, unless such chattel paper or instrument has been
delivered and endorsed and/or assigned to the Lender; (p) if such
Receivable arises from the performance of services, such services have been
fully performed; and (q) such Receivable is subject to the Security
Interest, which is perfected as to such Receivable, and is subject to no
other Lien whatsoever other than a Permitted Lien and the goods giving rise
to such Receivable were not, at the time of the sale thereof, subject to
any Lien other than a Permitted Lien.
"ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws now or hereafter in effect relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or
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industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water, ground water
or land) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, removal, transport or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes, and any and all regulations, notices or
demand letters issued, entered, promulgated or approved thereunder.
"EQUIPMENT" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising machinery,
apparatus, equipment, motor vehicles, tractors, trailers, rolling stock,
fittings, and other tangible personal property (other than Inventory) of
every kind and description used in such Person's business operations or
owned by such Person or in which such Person has an interest and all
parts, accessories and special tools and all increases and accessions
thereto and substitutions and replacements therefor.
"EVENT OF DEFAULT" means any of the events specified in
SECTION 11.1.
"EXIMBANK" means the Export-Import Bank of the United States.
"EXIMBANK FINANCING DOCUMENTS" means the Letter of Credit,
Loan and Security Agreement by and between Lender and Borrower dated
February 7, 2000 and attached hereto as EXHIBIT D together with each of
the Financing Documents referred to therein.
"EXPORT INVENTORY" means Inventory which is specifically
designated for sale to a non-U.S. Person and all Inventory deemed "Export
Inventory" pursuant to the EXIMBANK Financing Documents.
"EXPORT RECEIVABLES" has the meaning assigned to it in the
EXIMBANK Financing Documents.
"FINANCING STATEMENTS" means the Uniform Commercial Code
financing statements executed and delivered by the Borrower to the Lender,
naming the Lender as secured party and the Borrower as debtor, in
connection with this Agreement.
"FIXED CHARGES" means, for any period, (a) Interest Expense,
plus (b) payments of principal actually made with respect to Indebtedness,
including payments with respect to Capitalized Leases.
"FUNDED DEBT RATIO" means Indebtedness for Money Borrowed
(but specifically excluding Subordinated Debt) PLUS outstanding Letters of
Credit OVER EBITDA.
"GAAP" means generally accepted accounting principles
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of the Person referred to.
"GENERAL INTANGIBLES" means, as to any Person, all of such
Person's then owned or existing and future acquired or arising general
intangibles, choses in action and causes of action and all other
intangible personal property of such Person of every kind
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and nature (other than Receivables), including, without limitation,
Intellectual Property, corporate or other business records, inventions,
designs, blueprints, plans, specifications, trade secrets, goodwill,
computer software, customer lists, registrations, licenses, franchises,
tax refund claims, reversions or any rights thereto and any other amounts
payable to such Person from any Benefit Plan, Multiemployer Plan or other
employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds
thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key
employees on which such Person is beneficiary and any letter of credit,
guarantee, claims, security interest or other security held by or granted
to such Person to secure payment by an Account Debtor of any of the
Receivables.
"GOVERNMENTAL APPROVALS" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and filings with, and
reports to, all governmental bodies, whether federal, state, local,
foreign national or provincial, and all agencies thereof.
"GOVERNMENTAL AUTHORITY" means any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand
jury or arbitrator, in each case whether foreign or domestic.
"GUARANTY", "GUARANTEED" or to "GUARANTEE," as applied to
any obligation of another Person shall mean and include
(a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly
or indirectly, in any manner, of any part or all of such obligation of
such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise,
and whether or not constituting a guaranty, the practical effect of which
is to assure the payment or performance (or payment of damages in the
event of nonperformance) of any part or all of such obligation of such
other Person whether by (i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of property or the
purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or performance
(or payment of damages in the event of nonperformance) of or on account of
any part or all of such obligation or to assure the owner of such
obligation against loss, (iii) the supplying of funds to, or in any other
manner investing in, the obligor with respect to such obligation, (iv)
repayment of amounts drawn down by beneficiaries of letters of credit, or
(v) the supplying of funds to or investing in a Person on account of all
or any part of such Person's obligation under a guaranty of any obligation
or indemnifying or holding harmless, in any way, such Person against any
part or all of such obligation.
"INDEBTEDNESS" of any Person means, without duplication, (a)
Liabilities, (b) all obligations for Money Borrowed or for the deferred purchase
price of property or services or in
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respect of reimbursement obligations under letters of credit, (c) all
obligations represented by bonds, debentures, notes and accepted drafts that
represent extensions of credit, (d) Capitalized Lease Obligations, (e) all
obligations (including, during the noncancellable term of any lease in the
nature of a title retention agreement, all future payment obligations under such
lease discounted to their present value in accordance with GAAP) secured by any
Lien to which any property or asset owned or held by such Person is subject,
whether or not the obligation secured thereby shall have been assumed by such
Person, (f) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person, and (g) in the case of the Borrower (without
duplication) the Loans.
"INITIAL LOANS" means the Revolving Credit Loans, Term Loans made
and Letters of Credit issued to the Borrower on the Effective Date.
"INSTALLMENT PAYMENT DATE" means the fifteenth day of each month,
commencing on March 15, 2000.
"INTELLECTUAL PROPERTY" means, as to any Person, all of such
Person's then owned existing and future acquired or arising patents, patent
rights, copyrights, works which are the subject of copyrights, trademarks,
service marks, trade names, trade styles, patent, trademark and service ▇▇▇▇
applications, and all licenses and rights related to any of the foregoing and
all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations and continuations-in-part of any of the foregoing and
all rights to ▇▇▇ for past, present and future infringements of any of the
foregoing.
"INTEREST EXPENSE" means interest on Indebtedness during the period
for which computation is being made, excluding (a) the amortization of fees and
costs incurred with respect to the closing of loans which have been capitalized
as transaction costs, and (b) interest paid in kind.
"INTEREST PAYMENT DATE" means the fifteenth day of each calendar
month commencing on March 15, 2000 and continuing thereafter until the Secured
Obligations have been irrevocably paid in full.
"INTEREST RATE PROTECTION AGREEMENT" means (a) any and all rate swap
transactions, basis swaps, forward rate transactions, commodity swaps, commodity
options, forward commodity contracts, equity or equity index swaps or options,
bond or bond price or bond index swaps or options or forward bond or forward
bond price or forward bond index transactions, interest rate options, forward
foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, or any other similar transactions or any combination of any of
the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master
agreement, or (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by,
any form of master agreement published by the International Swaps and
Derivatives Associations, Inc., or any other master agreement (any such master
agreement,
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together with any related schedules, as amended, restated, extended,
supplemented or otherwise modified in writing from time to time, a "Master
Agreement"), including but not limited to any such obligations or liabilities
under any Master Agreement.
"INVENTORY" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a) goods
intended for sale or lease or for display or demonstration, (b) work in process,
(c) raw materials and other materials and supplies of every nature and
description used or which might be used in connection with the manufacture,
packing, shipping, advertising, selling, leasing or furnishing of goods or
otherwise used or consumed in the conduct of business, and (d) documents
evidencing and general intangibles relating to any of the foregoing.
"INVESTMENT" means, with respect to any Person: (a) the direct or
indirect purchase or acquisition of any beneficial interest in, any share of
capital stock of, evidence of Indebtedness of or other security issued by any
other Person, (b) any loan, advance or extension of credit to, or contribution
to the capital of, any other Person, excluding advances to employees in the
ordinary course of business for business expenses, (c) any Guaranty of the
obligations of any other Person, or (d) any commitment or option to take any of
the actions described in clauses (a), (b) or (c) above.
"LENDER" means Bank of America, N.A., a national banking
association, and its successors and assigns.
"LENDER'S OFFICE" means the office of the Lender specified in or
determined in accordance with the provisions of SECTION 12.1(C).
"LENEXA PROPERTY" means that certain real property located at ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ as more particularly described in
SCHEDULE 5.1(B)(B) hereof.
"LETTER OF CREDIT" means those letters of credit issued by Lender
pursuant to paragraph SECTION 2C.1.
"LETTER OF CREDIT OBLIGATIONS" means, as of any date of
determination, the sum of (i) the aggregate undrawn face amount of all Letters
of Credit except the Bond Letter of Credit; and (ii) the aggregate unreimbursed
amount of all drawn Letters of Credit not already converted to a Loan hereunder.
"LIABILITIES" means all liabilities of a Person determined in
accordance with GAAP and includable on a balance sheet of such Person prepared
in accordance with GAAP, including without limitation, Borrower's obligations
under the Bond Documents.
"LIABILITIES RATIO" means Liabilities PLUS outstanding Letters of
Credit LESS Subordinated Debt OVER Tangible Net Worth. For purposes of this
definition, the obligations of the Borrower under the Bond Documents will not be
"double counted" with the Bond Letter of Credit Obligation.
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"LIEN" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, lien, pledge, charge, lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person or upon the income or
profits therefrom, (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person, (c) any Indebtedness which is unpaid more than 30 days
after the same shall have become due and payable and which if unpaid would by
law (including, but not limited to, bankruptcy and insolvency laws) or otherwise
be given any priority whatsoever over general unsecured creditors of such
Person, and (d) the filing of, or any agreement to give, any financing statement
under the UCC or its equivalent in any jurisdiction.
"LOAN" means any Revolving Credit Loan or Term Loan, as well as all
such Loans collectively.
"LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the
Security Documents and each other instrument, agreement and document executed
and delivered by the Borrower in connection with this Agreement and each other
instrument, agreement or document referred to herein or contemplated hereby.
"MATERIALLY ADVERSE EFFECT" means any act, omission, event or
undertaking which would, singly or in the aggregate, have a materially adverse
effect upon (a) the business, assets, properties, liabilities, condition
(financial or otherwise), results of operations or business prospects of the
Borrower or any of its Subsidiaries, (b) the respective ability of the Borrower
or any of its Subsidiaries to perform any obligations under this Agreement or
any other Loan Document to which it is a party, or (c) the legality, validity,
binding effect, enforceability or admissibility into evidence of any Loan
Document or the ability of Lender to enforce any rights or remedies under or in
connection with any Loan Document; in any case, whether resulting from any
single act, omission, situation, status, event, or undertaking, together with
other such acts, omissions, situations, statuses, events, or undertakings.
"MAXIMUM CREDIT FACILITY" means Eleven Million, Seven Hundred
Seventy-Seven Thousand, Five Hundred Seventy-Two and 60/100 Dollars
($11,777,572.60).
"MONEY BORROWED" means, as applied to Indebtedness, (a) Indebtedness
for money borrowed, (b) Indebtedness, whether or not in any such case the same
was for money borrowed, (i) represented by notes payable and drafts accepted,
that represent extensions of credit, (ii) constituting obligations evidenced by
bonds, debentures, notes or similar instruments, or (iii) upon which interest
charges are customarily paid (other than trade Indebtedness) or that was issued
or assumed as full or partial payment for property, (c) Indebtedness that
constitutes a Capitalized Lease Obligation, and (d) Indebtedness that is such by
virtue of CLAUSE (F) of the definition thereof, but only to the extent that the
obligations Guaranteed are obligations that would constitute Indebtedness for
Money Borrowed.
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"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or a Related Company is
required to contribute or has contributed within the immediately preceding 6
years.
"NET INCOME" or "NET LOSS" means, as applied to any Person, the net
income (or net loss) of such Person for the period in question after giving
effect to deduction of or provision for all operating expenses, all taxes and
reserves (including reserves for deferred taxes and all other proper
deductions), all determined in accordance with GAAP.
"NET WORTH" of any Person means the total shareholders' equity
(including Subordinated Indebtedness, capital stock, additional paid-in capital
and retained earnings, after deducting treasury stock) which would appear as
such on a balance sheet of such Person prepared in accordance with GAAP.
"NOTE" means each of the Revolving Credit Notes and the Term Notes,
and "NOTES" means more than one of such notes.
"NOTICE OF BORROWING" has the meaning set forth in SECTION
2A.2(A)(III).
"OBLIGOR" means the Borrower, each party to the Security Documents
(other than the Lender), and each other party at any time primarily or
secondarily, directly or indirectly, liable on any of the Secured Obligations,
including without limitation the Guarantor.
"OLATHE PROPERTY" means that certain real property located at ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ as more particularly described in
SCHEDULE 5.1(B)(B) hereof.
"OPERATING LEASE" means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
"OVERLAND PARK PROPERTY" means that certain real property located at
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ as more particularly
described in SCHEDULE 5.1(B)(B) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency.
"PERMITTED INDEBTEDNESS FOR MONEY BORROWED" means (a) Permitted
Purchase Money Indebtedness, and (b) Subordinated Indebtedness.
"PERMITTED INVESTMENTS" means Investments of the Borrower in: (a)
negotiable certificates of deposit, time deposits and banker's acceptances
issued by the Lender or any Affiliate of the Lender or by any United States bank
or trust company having capital, surplus and undivided profits in excess of
$250,000,000, (b) any direct obligation of the United States of America or any
agency or instrumentality thereof which has a remaining maturity at the time of
purchase of not more than one year and repurchase agreements relating to the
same, (c) sales on credit in the ordinary course of business on terms customary
in the industry, and (d) notes,
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accepted in the ordinary course of business, evidencing overdue accounts
receivable arising in the ordinary course of business.
"PERMITTED LIENS" means: (a) Liens securing taxes, assessments and
other governmental charges or levies (excluding any Lien imposed pursuant to any
of the provisions of ERISA) or the claims of materialmen, mechanics, carriers,
warehousemen or landlords for labor, materials, supplies or rentals incurred in
the ordinary course of business, but (i) in all cases, only if payment shall not
at the time be required to be made in accordance with SECTION 8.4, and (ii) in
the case of warehousemen or landlords controlling locations where Inventory is
located, only if such liens have been waived or subordinated to the Security
Interest in a manner satisfactory to the Lender; (b) Liens consisting of
deposits or pledges made in the ordinary course of business in connection with,
or to secure payment of, obligations under workers' compensation, unemployment
insurance or similar legislation or under surety or performance bonds, in each
case arising in the ordinary course of business; (c) Liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of the Borrower's real estate, which in the
sole but reasonable judgment of the Lender do not materially detract from the
value of such real estate or impair the use thereof in the business of the
Borrower; (d) Purchase Money Liens securing Permitted Purchase Money
Indebtedness; (e) Liens of the Lender arising under this Agreement and the other
Loan Documents; (f) Liens arising out of or resulting from any judgment or
award, the time for the appeal or petition for rehearing of which shall not have
expired, or in respect of which the Borrower is fully protected by insurance
(subject to a reasonable deductible) or in respect of which the Borrower shall
at any time in good faith be prosecuting an appeal or proceeding for a review
and in respect of which a stay of execution pending such appeal or proceeding
for review shall have been secured, and as to which appropriate reserves have
been established on the books of the Borrower; (g) Liens specifically described
in and created by the Bond Documents; and (h) Liens with respect to the
Subordinated Indebtedness.
"PERMITTED PURCHASE MONEY INDEBTEDNESS" means Purchase Money
Indebtedness secured only by Purchase Money Liens and Capitalized Lease
Obligations, incurred by the Borrower after the Agreement Date, up to an
aggregate amount outstanding at any time equal to $50,000.
"PERSON" means an individual, corporation, partnership, association,
trust or unincorporated organization or a government or any agency or political
subdivision thereof.
"PRIME RATE" means during the period from the Effective Date through
the last day of the month in which the Effective Date falls, the per annum rate
of interest publicly announced by the Lender at its principal office as its
"prime rate" as in effect on the Effective Date, and thereafter during each
succeeding calendar month, means such "prime rate" as in effect on the last
Business Day of the immediately preceding calendar month. Any change in an
interest rate resulting from a change in the Prime Rate shall become effective
as of 12:01 a.m. on the first day of the month following the month in which such
change was announced. The Prime Rate is a reference used by the Lender in
determining interest rates on certain loans and is not intended to be the lowest
rate of interest charged on any extension of credit to any debtor.
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"PURCHASE MONEY INDEBTEDNESS" means Indebtedness created to finance
the payment of all or any part of the purchase price (not in excess of the fair
market value thereof) of any tangible asset (other than Inventory) and incurred
at the time of or within 10 days prior to or after the acquisition of such
tangible asset.
"PURCHASE MONEY LIEN" means any Lien securing Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
tangible asset (other than Inventory) the purchase price of which was financed
through the incurrence of the Purchase Money Indebtedness secured by such Lien.
"REAL PROPERTY" means all real property owned or leased by Borrower
including without limitation, the Lenexa Property, Olathe Property and Overland
Park Property.
"RECEIVABLES" means and includes, as to any Person, all of such
Person's then owned or existing and future acquired or arising (a) rights to the
payment of money or other forms of consideration of any kind (whether classified
under the UCC as accounts, contract rights, chattel paper, general intangibles
or otherwise) including, but not limited to, accounts receivable, letters of
credit and the right to receive payment thereunder, chattel paper, tax refunds,
insurance proceeds, Contract Rights, notes, drafts, instruments, documents,
acceptances and all other debts, obligations and liabilities in whatever form
from any Person and guaranties, security and Liens securing payment thereof, (b)
goods, whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (c) cash and non-cash proceeds of any of the
foregoing.
"RELATED COMPANY" means, as to any Person, any (a) corporation which
is a member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as such Person, (b) partnership or other trade or
business (whether or not incorporated) under common control (within the meaning
of Section 414(c) of the Code) with such Person, or (c) member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as
such Person or any corporation described in CLAUSE (A) above or any partnership,
trade or business described in clause (b) above.
"RESTRICTED DISTRIBUTION" by any Person means (a) its retirement,
redemption, purchase, or other acquisition for value of any capital stock or
other equity securities or partnership interests issued by such Person, (b) the
declaration or payment of any dividend or distribution on or with respect to any
such securities or partnership interests, (c) any loan or advance by such Person
to, or other investment by such Person in, the holder of any of such securities
or partnership interests, and (d) any other payment by such Person in respect of
such securities or partnership interests.
"RESTRICTED PAYMENT" means (a) any redemption, repurchase or
prepayment or other retirement, prior to the stated maturity thereof or prior to
the due date of any regularly scheduled installment or amortization payment with
respect thereto, of any Indebtedness of a Person (other than the Secured
Obligations and trade debt), and (b) the payment by any Person of
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the principal amount of or interest on any Indebtedness (other than trade debt)
owing to an Affiliate of such Person.
"REVOLVING CREDIT FACILITY" means the facility for the Revolving
Credit Loans in the principal sum of up to $8,000,000.
"REVOLVING CREDIT LOANS" means loans made to the Borrower pursuant
to SECTION 2A.1.
"REVOLVING CREDIT LOAN A" means Revolving Credit Loans made to
Borrower pursuant to the EXIMBANK Financing Documents.
"REVOLVING CREDIT LOAN B" means Revolving Credit Loans made to
Borrower pursuant to Section 2A.1(b).
"REVOLVING CREDIT LOAN A AVAILABILITY" means, as of the date of
determination, the amount of Revolving Credit Loans available to be borrowed by
the Borrower pursuant to the EXIMBANK Financing Documents.
"REVOLVING CREDIT LOAN B AVAILABILITY" means, as of the date of
determination, the amount of Revolving Credit Loans available to be borrowed by
the Borrower hereunder in accordance with SECTION 2A.1(B) LESS the sum of the
aggregate outstanding principal balance of all Revolving Credit Loan B hereunder
as of such date.
"REVOLVING CREDIT LOAN A BORROWING BASE" means the Borrowing Base
relating to Revolving Credit Loan A, all as further described in the EXIMBANK
Financing Documents.
"REVOLVING CREDIT LOAN B BORROWING BASE" means at any time an amount
equal to the sum of:
(a) Eighty Percent (80%) (or such lesser percentage as the
Lender may in its sole but reasonable discretion determine from time to
time) of the face value of Eligible Receivables due and owing at such time
(the "RECEIVABLE COMPONENT"), PLUS
(b) The least of (i) Fifty Percent (50%) (or such lesser
percentage as the Lender may in its sole but reasonable discretion
determine from time to time) of the lesser of cost or market value
(computed on a first-in-first-out basis) of Eligible Inventory at such
time; (ii) One Million, Three Hundred Thousand and No/100 Dollars
($1,300,000.00); and (iii) the Receivable Component, LESS
(c) Outstanding Letter of Credit Obligations for Letters of
Credit issued pursuant to SECTION 2C.1(A).
"REVOLVING CREDIT NOTES" means collectively Revolving Credit Note A
and Revolving Credit Note B.
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"REVOLVING CREDIT NOTE A" means the promissory note made by the
Borrower payable to the order of the Lender evidencing the obligation of the
Borrower to pay the aggregate unpaid principal amount of Revolving Credit Loan A
made to it by the Lender in connection with the EXIMBANK Financing Documents.
"REVOLVING CREDIT NOTE B" means the promissory note made by the
Borrower payable to the order of the Lender evidencing the obligation of the
Borrower to pay the aggregate unpaid principal amount of Revolving Credit Loan B
made to it by the Lender (and any promissory note or notes that may be issued
from time to time in substitution, renewal, extension, replacement or exchange
therefor, whether payable to the Lender or a different lender, whether issued in
connection with a Person becoming a lender after the Effective Date or
otherwise), substantially in the form of EXHIBIT A-2 hereto, with all blanks
properly completed.
"SCHEDULE OF EQUIPMENT" means a schedule delivered by the Borrower
to the Lender pursuant to the provisions of SECTION 7.14(C).
"SCHEDULE OF INVENTORY" means a schedule delivered by the Borrower
to the Lender pursuant to the provisions of SECTION 7.14(B).
"SCHEDULE OF RECEIVABLES" means a schedule delivered by the Borrower
to the Lender pursuant to the provisions of SECTION 7.14(A).
"SECURED OBLIGATIONS" means, in each case whether now in existence
or hereafter arising, (a) the principal of and interest and premium, if any, on
the Loans, and (b) all indebtedness, liabilities, obligations, overdrafts,
covenants and duties of the Borrower to the Lender or any Affiliate of the
Lender of every kind, nature and description, direct or indirect, absolute or
contingent, due or not due, contractual or tortious, liquidated or unliquidated,
and whether or not evidenced by any note and whether or not for the payment of
money under or in respect of this Agreement, any Note or any of the other Loan
Documents, including without limitation any Interest Rate Protection Agreements
or similar arrangements.
"SECURITY DOCUMENTS" means each of (a) the Financing Statements, and
(b) each other writing executed and delivered by any Person securing the Secured
Obligations or evidencing such security.
"SECURITY INTEREST" means the Liens of the Lender on and in the
Collateral effected hereby or by any of the Security Documents or pursuant to
the terms hereof or thereof.
"SUBORDINATED INDEBTEDNESS" means (a) Indebtedness evidenced by the
Subordinated Notes which is subordinated to the Secured Obligations as set forth
in the Subordination Agreements, and (b) any other Indebtedness for Money
Borrowed of the Borrower which is subordinated to the Secured Obligations on
terms and conditions acceptable to the Lender in its sole discretion.
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"SUBORDINATED NOTES" means those certain promissory notes in the
form of EXHIBIT C attached hereto, with respect to which the outstanding
principal balances as of the Effective Date are set forth on SCHEDULE 5.1(I)
attached hereto.
"SUBORDINATION AGREEMENTS" means the subordination agreements, in
form and substance acceptable to the Lender, pursuant to which the Indebtedness
evidenced by the Subordinated Notes is subordinated to the Secured Obligations.
"SUBSIDIARY" when used to determine the relationship of a Person to
another Person, means a Person of which an aggregate of 50% or more of the stock
of any class or classes or 50% or more of other ownership interests is owned of
record or beneficially by such other Person or by one or more Subsidiaries of
such other Person or by such other Person and one or more Subsidiaries of such
Person, (i) if the holders of such stock or other ownership interests (A) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (B) are entitled, as such holders, to
vote for the election of a majority of the directors (or individuals performing
similar functions) of such Person, whether or not the right so to vote exists by
reason of the happening of a contingency, or (ii) in the case of such other
ownership interests, if such ownership interests constitute a majority voting
interest.
"TANGIBLE NET WORTH" means, as applied to any Person, the Net Worth
of such Person at the time in question, after deducting therefrom the amount of
all intangible items reflected therein, including all unamortized debt discount
and expense, unamortized research and development expense, unamortized deferred
charges, goodwill, Intellectual Property, unamortized excess cost of investment
in Subsidiaries over equity at dates of acquisition, and all similar items which
should properly be treated as intangibles in accordance with GAAP PLUS
Subordinated Indebtedness.
"TERM LOAN A" means the loan made to the Borrower pursuant to
SECTION 2B.1(a).
"TERM LOAN B" means the loan made to the Borrower pursuant to
SECTION 2B.2(c).
"TERM LOANS" means collectively Term Loan A and Term Loan B.
"TERM NOTE A" means the Term Note made by the Borrower payable to
the order of the Lender evidencing the obligation of the Borrower to pay the
aggregate unpaid principal amount of the Term Loan A made to it by the Lender
(and any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor, whether
payable to the Lender or a different lender, whether issued in connection with a
Person becoming a lender after the Effective Date or otherwise), substantially
in the form of EXHIBIT A-3 hereto, with all blanks properly completed.
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"TERM NOTE B" means the Term Note made by the Borrower payable to
the order of the Lender evidencing the obligation of the Borrower to pay the
aggregate unpaid principal amount of the Term Loan B made to it by the Lender
(and any promissory note or notes that may be issued from time to time in
substitution, renewal, extension, replacement or exchange therefor, whether
payable to the Lender or a different lender, whether issued in connection with a
Person becoming a lender after the Effective Date or otherwise), substantially
in the form of EXHIBIT A-4 hereto, with all blanks properly completed.
"TERM NOTES" means collectively Term Note A and Term Note B.
"TERMINATION DATE" means the earlier of August 8, 2001 or such later
date to which the termination of the Revolving Credit Facility shall be extended
pursuant to SECTION 2A.5.
"TERMINATION EVENT" means, with respect to any Benefit Plan subject
to Title IV of ERISA, (a) a "Reportable Event" as defined in Section 4043(b)of
ERISA, but excluding any such event as to which the provision for 30 days'
notice to the PBGC is waived under applicable regulations, (b) the filing of a
notice of intent to terminate a Benefit Plan or the treatment of a Benefit Plan
amendment as a termination under Section 4041 of ERISA, or (c) the institution
of proceedings to terminate a Benefit Plan by the PBGC under Section 4042 of
ERISA or the appointment of a trustee to administer any Benefit Plan.
"UCC" means the Uniform Commercial Code as in effect from time to
time in the State of Kansas.
"UNFUNDED CAPITAL EXPENDITURES" means Capital Expenditures which are
paid for by a Person other than with the proceeds of Indebtedness for Money
Borrowed (other than the Loans) incurred to finance such Capital Expenditures
and other than those represented by Capitalized Lease Obligations.
"UNFUNDED VESTED ACCRUED BENEFITS" means, with respect to any
Benefit Plan subject to Title IV of ERISA at any time, the amount (if any) by
which (a) the present value of all vested nonforfeitable benefits under such
Benefit Plan exceeds (b) the fair market value of all Benefit Plan assets
allocable to such benefits, as determined using such reasonable actuarial
assumptions and methods as are specified in the Schedule B (Actuarial
Information) to the most recent Annual Report (Form 5500) filed with respect to
such Benefit Plan.
Section 1.2 OTHER REFERENTIAL PROVISIONS.
(a) All terms in this Agreement, the Exhibits and Schedules hereto
shall have the same defined meanings when used in any other Loan Documents,
unless the context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting
terms not specifically defined or specified herein shall have the meanings
generally attributed to such terms under GAAP including, without limitation,
applicable statements and interpretations issued by
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the Financial Accounting Standards Board and bulletins, opinions,
interpretations and statements issued by the American Institute of Certified
Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used in
the masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provisions of this Agreement.
(e) Titles of Articles and Sections in this Agreement are for
convenience only, do not constitute part of this Agreement and neither limit nor
amplify the provisions of this Agreement, and all references in this Agreement
to Articles, Sections, Subsections, paragraphs, clauses, subclauses, Schedules
or Exhibits shall refer to the corresponding Article, Section, Subsection,
paragraph, clause or subclause of, or Schedule or Exhibit attached to, this
Agreement, unless specific reference is made to the articles, sections or other
subdivisions or divisions of, or to schedules or exhibits to, another document
or instrument.
(f) Each definition of a document in this Agreement shall include
such document as amended, modified, supplemented or restated from time to time
in accordance with the terms of this Agreement.
(g) Except where specifically restricted, reference to a party to a
Loan Document includes that party and its successors and assigns permitted
hereunder or under such Loan Document.
(h) Unless otherwise specifically stated, whenever a time is
referred to in this Agreement or in any other Loan Document, such time shall be
the local time in Kansas City, Missouri.
(i) Whenever the phrase "to the knowledge of the Borrower" or words
of similar import relating to the knowledge of the Borrower are used herein,
such phrase shall mean and refer to (i) the actual knowledge of the President or
chief financial officer or (ii) the knowledge that such officers would have
obtained if they had engaged in good faith in the diligent performance of their
duties, including the making of such reasonable specific inquiries as may be
necessary of the appropriate persons in a good faith attempt to ascertain the
accuracy of the matter to which such phrase relates.
(j) The terms accounts, chattel paper, documents, equipment,
instruments, general intangibles and inventory, as and when used (without being
capitalized) in this Agreement or the Security Documents, shall have the
meanings given those terms in the UCC.
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Section 1.3 EXHIBITS AND SCHEDULES. All Exhibits and Schedules
attached hereto are by reference made a part hereof.
ARTICLE 2 - REVOLVING CREDIT FACILITY
A. REVOLVING CREDIT FACILITY
Section 2A.1 REVOLVING CREDIT LOANS.
(a) REVOLVING CREDIT LOAN A. Terms and conditions of Revolving
Credit Loan A shall be governed by the EXIMBANK Financing Documents.
(b) REVOLVING CREDIT LOAN B. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, the Lender shall make Revolving Credit Loans to the
Borrower from time to time from the Effective Date to the Termination Date, as
requested by the Borrower in accordance with the terms of SECTION 2A.3, in an
aggregate principal amount outstanding not to exceed at any time the LEAST OF
(a) Three Million and No/100 Dollars ($3,000,000.00); (b) the Revolving Credit
Loan B Borrowing Base and (c) an amount which, when added to the
then-outstanding balance of Revolving Credit Loan A would exceed the Revolving
Credit Facility. It is expressly understood and agreed that the Lender may and
at present intends to use the lesser of the amounts referred to in the foregoing
SUBCLAUSES (A) and (B) as a maximum ceiling on Revolving Credit Loan B;
PROVIDED, HOWEVER, that it is agreed that should Revolving Credit Loan B exceed
the ceiling so determined or any other limitation set forth in this Agreement,
such Revolving Credit Loan B shall nevertheless constitute Secured Obligations
and, as such, shall be entitled to all benefits thereof and security therefor.
The principal amount of any Revolving Credit Loan B which is repaid may be
reborrowed by the Borrower in accordance with the terms of this SECTION 2A.1(b).
The Lender is hereby authorized to record each repayment of principal of
Revolving Credit Loan B in its books and records, such books and records
constituting PRIMA FACIE evidence of the accuracy of the information contained
therein. All Revolving Credit Loans made pursuant to this SECTION 2A.1(b) are
collectively referred to as "REVOLVING CREDIT LOAN B."
Section 2A.2 MANNER OF BORROWING REVOLVING CREDIT LOAN A.
Borrowings of Revolving Credit Loan A shall be made in accordance with the
provisions of the EXIMBANK Financing Documents.
Section 2A.3 MANNER OF BORROWING REVOLVING CREDIT LOAN B.
Borrowings of the Revolving Credit Loan B shall be made as follows:
(a) REQUESTS FOR BORROWING. A request for an advance on
Revolving Credit Loan B shall be made, or shall be deemed to be made, in
the following manner:
(i) the Borrower may request an advance on Revolving
Credit Loan B by notifying the Lender at Lender's Office as
designated herein, before 1:30 p.m. (Kansas City, Missouri local
time) on the proposed borrowing date, of
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its intention to borrow, specifying the effective date and amount of
such proposed Revolving Credit Loan;
(ii) whenever a check is presented to the Lender for
payment against the Disbursement Account in an amount greater than
the then available balance in such account, such presentation shall
be deemed to be a request for an advance on Revolving Credit Loan B
on the date of such notice in an amount equal to the excess of such
check over such available balance, and such request shall be
irrevocable;
(iii) unless payment is otherwise made by the Borrower,
the becoming due of any amount required to be paid under this
Agreement or any of the Notes as interest shall be deemed to be a
request for an advance on Revolving Credit Loan B on the due date in
the amount required to pay such interest, and such request shall be
irrevocable; and
(iv) unless payment is otherwise made by the Borrower,
the maturity of any Secured Obligation required to be paid shall be
deemed to be a request for an advance on Revolving Credit Loan B on
the due date in the amount required to pay such Secured Obligation,
and such request shall be irrevocable.
(b) NOTICE OF BORROWING. Any request for an advance on
Revolving Credit Loan B under SECTION 2A.3(a)(i) (a "NOTICE OF Borrowing")
shall be made by telephone or in writing (including telecopy) and, in the
case of any telephonic notice, shall be immediately followed by a written
confirmation thereof in a form acceptable to the Lender, PROVIDED that the
failure to provide written confirmation shall not invalidate any
telephonic notice and, if such written confirmation differs in any respect
from the action taken by the Lender, the records of the Lender shall
control absent manifest error.
(c) DISBURSEMENT OF LOANS. The Borrower hereby irrevocably
authorizes the Lender to disburse the proceeds of each borrowing
requested, or deemed to be requested, pursuant to this SECTION 2A.3 as
follows: (i) the proceeds of each borrowing requested under SECTION
2A.3(a)(i) or SECTION 2A.3(a)(ii) shall be disbursed by the Lender in
lawful money of the United States of America in immediately available
funds, (A) in the case of the initial borrowing, in accordance with the
terms of the written instructions from the Borrower to the Lender, and (B)
in the case of each subsequent borrowing, by credit to the Disbursement
Account or to such other account as may be agreed upon by the Borrower and
the Lender from time to time; and (ii) the proceeds of each borrowing
requested under SECTION 2A.3(a)(iii) OR SECTION 2A.3(a)(iv) shall be
disbursed by the Lender by way of direct payment of the relevant
principal, interest or other Secured Obligation, as the case may be.
Section 2A.4 REPAYMENT OF REVOLVING CREDIT LOANS.
The Revolving Credit Loans will be repaid as follows: (a) whether or
not any Default or Event of Default has occurred, the outstanding principal
amount of all the Revolving Credit Loans is due and payable, and shall be repaid
by the Borrower in full together with
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accrued and unpaid interest on the amount repaid to the date of repayment, on
the Termination Date; (b) if at any time the aggregate unpaid principal amount
of the Revolving Credit Loans then outstanding exceeds the lesser of (i) the
Revolving Credit Facility or (ii) the respective amounts permitted to be
advanced to Borrower pursuant to the Available Commitment (as defined in the
EXIMBANK Documents, with respect to Revolving Credit Loan A) and SECTION 2A.1(b)
hereof (with respect to Revolving Credit Loan B), the Borrower shall repay such
Revolving Credit Loans (or Revolving Credit Loan A or B, as the case may be) in
an amount sufficient to reduce the aggregate unpaid principal amount of such
Loans by an amount equal to such excess, together with accrued and unpaid
interest on the amount repaid to the date of repayment; and (c) the Borrower
hereby instructs the Lender to repay the Revolving Credit Loans outstanding on
any day in an amount equal to the amount received by the Lender on such day
pursuant to SECTION 7.1(b).
Section 2A.5 REVOLVING CREDIT NOTES.
The Revolving Credit Loans and the obligation of the Borrower to
repay such Loans shall also be evidenced by Revolving Credit Note A and
Revolving Credit Note B payable to the order of the Lender. Such Notes shall be
dated the Effective Date and be duly and validly executed and delivered by the
Borrower, and shall be in form substantially similar to EXHIBIT A-1 and EXHIBIT
A-2 respectively, attached hereto.
B. TERM LOAN FACILITY
Section 2B.1 TERM LOANS.
(a) TERM LOAN A. Upon the terms and subject to the conditions of,
and in reliance upon the representations and warranties made under this
Agreement, the Lender agrees to make the Term Loan A to the Borrower on the
Effective Date in the amount of Three Hundred Twenty-Eight Thousand and No/100
Dollars ($328,000.00). The Lender will fund Term Loan A in order to pay off in
full, the second lien on the Olathe Property held by the Small Business
Administration in the approximate amount of $163,000.00 ("SBA Loan"). Until such
time as the SBA Loan is paid in full, Borrower will continue to make all
required payments on the SBA Loan. Concurrently with the payment in full of the
SBA Loan, Borrower will execute and deliver to Lender, an amendment to Lender's
existing first mortgage on the Olathe Property to reflect the new principal
amount of Three Hundred Twenty-Eight Thousand and No/100 Dollars ($328,000.00),
and Term Note A will be deemed delivered as an amendment and restatement of the
promissory note underlying Lender's first mortgage on the Olathe Property.
(b) TERM LOAN B. Upon the terms and subject to the conditions of,
and in reliance upon the representations and warranties made under this
Agreement, the Lender agrees to make the Term Loan B to the Borrower on the
Effective Date in the amount of Eight Hundred Fifty Thousand and No/100 Dollars
($850,000.00).
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Section 2B.2 MANNER OF BORROWING AND DISBURSING TERM LOANS.
The Borrower shall give the Lender at least two Business Days' prior
written notice of the occurrence of the Effective Date. On the Effective Date,
upon satisfaction of the applicable conditions set forth in SECTIONS 4.1 and
4.2, the Lender will disburse the Term Loans in same day funds in accordance
with the terms of the written instructions from the Borrower to the Lender.
Section 2B.3 REPAYMENT OF TERM LOANS.
(a) REPAYMENT OF TERM LOAN A. The Term Loan A is due and payable and
shall be repaid in full by the Borrower in consecutive equal installments of
principal in the amount of $3,793.54 commencing April 15, 2000 on
successive Installment Payment Dates; provided that the final installment
payable on March 15, 2001 shall be in the amount of the then unpaid balance of
Term Loan A together with any unpaid interest thereon. Interest on Term Loan A
shall be paid monthly in accordance with Section 3.1 below.
(b) REPAYMENT OF TERM LOAN B. The Term Loan B is due and payable and
shall be repaid in full by the Borrower in consecutive equal installments of
principal in the amount of $27,128.78 commencing March 15, 2000 on
successive Installment Payment Dates; provided that the final installment
payable on February 15, 2003 shall be in the amount of the then unpaid balance
of Term Loan A together with any unpaid interest thereon. Interest on Term Loan
B shall be paid monthly in accordance with Section 3.1 below.
Section 2B.4 TERM NOTES.
The Term Loans and the obligation of the Borrower to repay such Term
Loans shall be evidenced by a Term Note payable to the order of the Lender for
each of Term Loan A and Term Loan B. Such Notes shall be dated the Effective
Date and be duly and validly executed and delivered by the Borrower, and shall
be in form substantially similar to EXHIBIT A-3 and EXHIBIT A-4 respectively,
attached hereto.
Section 2B.5 MANDATORY PREPAYMENT OF TERM LOANS.
Any and all amounts received by the Borrower as proceeds from the
sale of any Equipment to the extent such proceeds exceed (i) $5,000 in the case
of any single item of Equipment, or (ii) $10,000 in the aggregate for all such
Equipment sold during any twelve-month period, shall be paid, immediately upon
receipt by the Borrower, to the Lender, and shall be applied to the principal
installments of the Term Loans (in the sole discretion of Lender as to whether
such payment is applied to Term Loan A or Term Loan B, or a combination of both)
in the inverse order of their maturities. On the prepayment date, the Borrower
shall pay interest on the amount prepaid, accrued to the prepayment date. The
Borrower shall also be obligated to prepay either or both of the Term Loans (as
Lender may elect in its sole discretion) in full together with accrued and
unpaid interest thereon upon any acceleration of either or both of the Term
Loans, as applicable, pursuant to ARTICLE 11.
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C. LETTER OF CREDIT FACILITY
Section 2C.1 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, and the
Loan Documents, during the term of this Agreement, Lender will, absent the
existence of a Default or Event of Default, from time to time cause the issuance
of, upon Borrower's request, Letters of Credit; PROVIDED, that the Letters of
Credit will be in form and substance acceptable to Lender in its sole
discretion; and PROVIDED FURTHER, that no Letter of Credit will have an
expiration date (i) more than eighteen (18) months from the date of issuance or
(ii) beyond six (6) months after the Termination Date. Borrower's reimbursement
obligation in respect of the Letters of Credit will automatically reduce, dollar
for dollar, the Revolving Credit Loan B Borrowing Base. Any payment made by
Lender to any Person on account of any Letter of Credit will constitute a
Revolving Credit Loan hereunder, to be applied against Revolving Credit Loan B.
At no time will the aggregate sum of direct Revolving Credit Loans by Lender to
Borrower PLUS the outstanding Letter of Credit Obligations exceed the lesser of
the Revolving Credit Facility or the Borrowing Base.
(b) The Lender will cause to remain in place, the Bond Letter of
Credit, more particularly described as Letter of Credit No. 972771, dated
September 15, 1998 in favor of UMB Bank, as trustee in the amount of
$2,599,572.60. Any payment made by Lender to any Person on account of the Bond
Letter of Credit, including without limitation the monthly interest draws will
charged against ASI's operating account (Bank of America Account #332200008673)
(the "OPERATING ACCOUNT") to the extent of sufficient funds therein. Any payment
made by Lender to any Person on account of the Bond Letter of Credit will
constitute a Revolving Credit Loan hereunder, to be applied against Revolving
Credit Loan B. Except as otherwise provided herein, the Letter of Credit and
Reimbursement Agreement dated as of September 1, 1998 by and among Lender, KHC
of Lenexa, LLC and DCI, Inc. ("REIMBURSEMENT AGREEMENT") will remain in full
force and effect. Notwithstanding the above, the Borrower agrees to execute any
amendment to or modification of the Reimbursement Agreement reasonably required
by the Lender in order to conform the terms of the Reimbursement Agreement to
the terms of this Agreement.
ARTICLE 3 - GENERAL LOAN PROVISIONS
Section 3.1 INTEREST.
(a) (i) REVOLVING CREDIT LOANS. The Borrower will pay interest on
the unpaid principal amount of each Revolving Credit Loan for each day
from the day such Loan was made until such Loan is paid (whether at
maturity, by reason of acceleration or otherwise), at a rate per annum
equal to the Prime Rate PLUS one-half of one percent (0.5%), payable
monthly in arrears on each Interest Payment Date and on the Termination
Date.
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(ii) TERM LOANS. The Borrower will pay interest on each Term
Loan at a rate per annum equal to the Prime Rate PLUS one-half of
one-percent (0.5%) payable in arrears on each Interest Payment Date and
when such Term Loans are due (whether at maturity, by reason of
acceleration or otherwise).
(b) The Borrower shall pay interest on the unpaid principal amount
of each Secured Obligation other than a Loan for each day from the day such
Secured Obligation becomes due and payable until such Secured Obligation is paid
at the rate per annum applicable to Revolving Credit Loans, payable on demand.
(c) From and after the occurrence of an Event of Default, the unpaid
principal amount of each Secured Obligation shall bear interest until paid in
full (or, if earlier, until such Event of Default is cured or waived in writing
by the Lender) at a rate per annum equal to the Default Margin plus the rate
otherwise in effect under SECTION 3.1(a) or (b), payable on demand. The interest
rate provided for in this SECTION 3.1(c) shall to the extent permitted by
applicable law apply to and accrue on the amount of any judgment entered with
respect to any Secured Obligation and shall continue to accrue at such rate
during any proceeding described in SECTION 11.1(g) or (h).
(d) The interest rates provided for in SECTIONS 3.1(a), (b) and (c)
shall be computed on the basis of a year of 360 days and the actual number of
days elapsed.
(e) It is not intended by the Lender, and nothing contained in this
Agreement or any Note shall be deemed, to establish or require the payment of a
rate of interest in excess of the maximum rate permitted by applicable law (the
"MAXIMUM RATE"). If, in any month, the Effective Interest Rate, absent such
limitation, would have exceeded the Maximum Rate, then the Effective Interest
Rate for that month shall be the Maximum Rate, and if, in future months, the
Effective Interest Rate would otherwise be less than the Maximum Rate, then the
Effective Interest Rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amount of interest which would have
been paid if the same had not been limited by the Maximum Rate. In this
connection, in the event that, upon payment in full of the Secured Obligations,
the total amount of interest paid or accrued under the terms of this Agreement
is less than the total amount of interest which would have been paid or accrued
if the Effective Interest Rate had at all times been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay to the Lender an
amount equal to the difference between (i) the lesser of (A) the amount of
interest which would have been charged if the Maximum Rate had, at all times,
been in effect and (B) the amount of interest which would have accrued had the
Effective Interest Rate, at all times, been in effect, and (ii) the amount of
interest actually paid or accrued under this Agreement. In the event the Lender
receives, collects or applies as interest any sum in excess of the Maximum Rate,
such excess amount shall be applied to the reduction of the principal balance of
the applicable Secured Obligation, and, if no such principal is then
outstanding, such excess or part thereof remaining shall be paid to the
Borrower.
Section 3.2 FEES.
(a) UNUSED LINE FEE. In connection with and as consideration for the
Lender's commitment hereunder, subject to the terms hereof, to lend to the
Borrower under the
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Revolving Credit Facility, the Borrower shall pay a fee to the Lender, from the
Effective Date until the Termination Date, in an amount equal to one quarter of
one percent (.25%) per annum of the average daily unused portion of the
Revolving Credit Facility, payable quarterly in arrears on the first day of each
quarter and on the date of any permanent reduction in the Revolving Credit
Facility.
(b) COMMITMENT FEE. Borrower will pay Lender a commitment fee
of $45,000 at closing, which shall be deemed fully earned upon execution of
this Agreement by Borrower and Lender.
(c) EXIMBANK FEES. Borrower will pay certain fees as described
in the EXIMBANK Financing Documents.
(d) FIELD EXAM FEES. Borrower will pay all of the reasonable
examination fees, costs and expenses incurred by Lender in connection with
periodic field examinations of Borrower's business operation and financial
records and Collateral. Unless a Default or Event of Default has occurred,
Lender will conduct field examinations no more frequently than once every six
(6) months.
(e) LETTER OF CREDIT FEES.
(1) With respect to all Letters of Credit except the Bond
Letter of Credit, Borrower will pay to Lender, upon issuance of such Letter of
Credit, a Letter of Credit fee equal to the maximum face duration of the Letter
of Credit in years (provided, however, that the minimum deemed face duration of
any Letter of Credit shall be 1/12th of one year) MULTIPLIED BY one and
one-quarter percent (1.25%) of the maximum obligation of the Lender under the
Letter of Credit;
(2) With respect to the Bond Letter of Credit, Borrower will
pay to Lender, upon issuance of the Bond Letter of Credit and annually upon each
anniversary of the issuance of the Bond Letter of Credit (prorated in the event
the Bond Letter of Credit is to expire prior to the next such anniversary), a
Letter of Credit fee equal to one and one-quarter percent (1.25%) of the maximum
obligation of the Lender under the Bond Letter of Credit;
(f) GENERAL. All fees shall be fully earned by the Lender when due
and payable and, except as otherwise set forth herein, shall not be subject to
refund or rebate. All fees are for compensation for services and are not, and
shall not be deemed to be, interest or a charge for the use of money.
Section 3.3 INCREASED COSTS AND REDUCED RETURNS.
The Borrower agrees that if any law now or hereafter in effect and
whether or not presently applicable to the Lender or any guideline or directive
of any Governmental Authority (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) or the
interpretation or administration thereof by any Governmental Authority, shall
either (a)(i) impose, affect, modify or deem applicable any reserve, special
deposit, capital
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maintenance or similar requirement against any Loan, (ii) impose on the Lender
any other condition regarding any Loan, this Agreement, the Notes or the
facilities provided hereunder, or (iii) result in any requirement regarding
capital adequacy (including any risk-based capital guidelines) affecting the
Lender being imposed or modified or deemed applicable to the Lender, or (b)
subject the Lender to any taxes on the recording, registration, notarization or
other formalization of the Loans or the Notes, and the result of any event
referred to in CLAUSE (A) or (B) above shall be to increase the cost to the
Lender of making, funding or maintaining any Loan or to reduce the amount of any
sum receivable by the Lender or the Lender's rate of return on capital with
respect to any Loan to a level below that which the Lender could have achieved
but for such imposition, modification or deemed applicability (taking into
consideration the Lender's policies with respect to capital adequacy) by an
amount deemed by Lender (in the exercise of its discretion) to be material,
then, upon demand by the Lender, the Borrower shall immediately pay to the
Lender additional amounts which shall be sufficient to compensate the Lender for
such increased cost, tax or reduced rate of return. A certificate of the Lender
to the Borrower claiming compensation under this SECTION 3.3 shall be final,
conclusive and binding on all parties for all purposes in the absence of
manifest error. Such certificate shall set forth the nature of the occurrence
giving rise to such compensation, the additional amount or amounts to be paid to
it hereunder, and the method by which such amounts were determined. In
determining such amount, the Lender may use any reasonable averaging and
attribution methods.
Section 3.4 MANNER OF PAYMENT.
(a) Each payment (including prepayments) by the Borrower on account
of the principal of or interest on the Loans or of any fee or other amounts
payable to the Lender under this Agreement or any Note shall be made not later
than 1:30 p.m. on the date specified for payment under this Agreement (or if
such day is not a Business Day, the next succeeding Business Day) to the Lender
at the Lender's Office, in Dollars, in immediately available funds and shall be
made without any setoff, counterclaim or deduction whatsoever.
(b) The Borrower hereby irrevocably authorizes the Lender and each
Affiliate of the Lender to charge any account of the Borrower maintained with
the Lender or such Affiliate with such amounts as may be necessary from time to
time to pay any Secured Obligations which are not paid when due.
Section 3.5 TERMINATION OF AGREEMENT.
(a) On the Termination Date, the Borrower shall pay to the Lender,
in same day funds, an amount equal to the aggregate amount of all Loans
outstanding on such date, together with accrued interest thereon, all fees
payable pursuant to SECTION 3.2 accrued from the date last paid through the
effective date of termination, any amounts payable to the Lender pursuant to the
other provisions of this Agreement, including, without limitation, SECTIONS 3.3,
11.2, 12.12 and 12.13, any and all other Secured Obligations then outstanding
and provide the Lender with an indemnification agreement in form and substance
satisfactory to the Lender with respect to returned and dishonored items and
such other matters as the Lender shall require. Borrower may terminate this
Agreement at any time prior to the Termination Date by paying all of the
outstanding Loans in full together with all interest, fees, costs and other
expenses required hereunder and terminating all Letters of Credit, plus a
prepayment fee of (a) two percent (2%) of
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the Maximum Credit Facility if such termination occurs on or before the last day
of the eighteenth (18th) month after the Effective Date hereof; or (b) one
percent (1%) of the Maximum Credit Facility if the Termination Date has been
extended and such termination occurs before the new Termination Date but after
the eighteenth month after the Effective Date hereof ("PREPAYMENT FEE").
(b) Provided that no Default or Event of Default has occurred and is
continuing or would occur as a result, upon the written request of the Borrower,
Lender will permit Borrower to permanently reduce Term Loan A, Term Loan B
and/or Revolving Credit Loan B ("PERMANENT REDUCTIONS") on the following
conditions: (i) all Permanent Reductions shall be in increments of not less than
Two Hundred Thousand and No/100 Dollars ($200,000.00); (ii) Permanent Reductions
shall not occur more than once in any thirty (30) day period; (iii) Permanent
Reductions shall not occur more than four (4) times during the course of the
Loan; (iv) Lender shall be under no obligation to re-lend any amount permanently
reduced pursuant to a Permanent Reduction; (v) a Permanent Reduction may not be
made which would cause an overadvance against the Revolving Credit Loan B
Borrowing Base after giving effect to such Permanent Reduction; (vi) a Permanent
Reduction will be evidenced by an amendment to this Agreement, and will not be
effective until acknowledged by Lender to Borrower in writing; (vii) a Permanent
Reduction would be supported by an equity investment into ASI in an amount
greater than or equal to the Permanent Reduction; (viii) Borrower will pay the
Permanent Reduction Prepayment Fee (as hereinafter defined) to Lender; and (ix)
Borrower will pay the actual, reasonable costs of Lender, including without
limitation legal fees and costs, incurred in connection with a Permanent
Reduction. The "PERMANENT REDUCTION PREPAYMENT FEE" is equal to (a) one and
one-third percent (1.33%) of the amount of the Permanent Reduction if such
termination occurs on or before the last day of the eighteenth (18th) month
after the Effective Date hereof; or (b) two-thirds of one percent (.67%) of the
amount of the Permanent Reduction if the Termination Date has been extended and
such termination occurs before the new Termination Date but after the eighteenth
month after the Effective Date hereof.
Section 3.6 EXISTING LOANS.
Notwithstanding anything to the contrary herein, the Loans will be
used to refinance all of the Existing Loans. In addition to other Loans and
credit accommodations contained herein, this Agreement shall constitute a
restatement of all of the Existing Loans, and except as otherwise provided
herein, Lender shall have no obligation or commitment under the Existing Loans
to provide credit to Borrower. Notwithstanding the above, the Bond Letter of
Credit and the Reimbursement Agreement in connection therewith will remain in
place as provided herein, and the Lender's Mortgage on the Olathe Property and
the Promissory Note related thereto will remain in place as provided herein.
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ARTICLE 4 - CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Initial Loan.
Notwithstanding any other provision of this Agreement, the Lender's
obligation to make the Initial Loans is subject to the fulfillment of each of
the following conditions prior to or contemporaneously with the making of such
Loan:
(a) CLOSING DOCUMENTS. The Lender shall have received each of
the following documents, all of which shall be satisfactory in form and
substance to the Lender and its counsel:
(1) this Agreement, duly executed and delivered by the
Borrower;
(2) the Notes, dated the Effective Date and duly executed
and delivered by the Borrower;
(3) certified copies of the articles of incorporation and
by-laws of the Borrower as in effect on the Effective Date;
(4) certified copies of all corporate action, including
stockholder approval, if necessary, taken by the Borrower to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents and the borrowings under this Agreement;
(5) certificates of incumbency and specimen signatures with
respect to each of the officers of the Borrower who is authorized to
execute and deliver this Agreement or any other Loan Document on behalf of
the Borrower or any document, certificate or instrument to be delivered in
connection with this Agreement or the other Loan Documents and to request
borrowings under this Agreement;
(6) a certificate evidencing the good standing of the Borrower
in the jurisdiction of its incorporation and in each other jurisdiction in
which it is qualified as a foreign corporation to transact business;
(7) the Financing Statements duly executed and delivered by
the Borrower, and evidence satisfactory to the Lender that the Financing
Statements have been filed in each jurisdiction where such filing may be
necessary or appropriate to perfect the Security Interest;
(8) mortgages or leasehold mortgages, as the case may be, for
the Lenexa Property, Olathe Property and Overland Park Property in form
and substance acceptable to Lender in its discretion, duly executed by the
appropriate parties, and evidence satisfactory to Lender that such
mortgages have been recorded in each jurisdiction where such recording may
be necessary or appropriate to perfect the Security Interest therein;
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(9) Subordination Agreements, if any, duly executed and
delivered by the holders of any Subordinated Notes and the Borrower,
together with copies of any such Subordinated Notes bearing a legend
evidencing the subordination thereof to the Secured Obligations in form
satisfactory to Lender;
(10) landlords' and mortgagees' waiver and consent agreements,
if any, duly executed on behalf of each landlord of any leased real
property on which any Collateral is located;
(11) a Schedule of Inventory and a Schedule of Equipment,
each prepared as of December 31, 1999;
(12) a Schedule of Receivables prepared as of a date not
more than 3 days in advance of the Closing Date
(13) appraisals of all Real Estate and Equipment (to the
extent required by Lender), prepared by appraisers satisfactory to the
Lender, establishing values at levels satisfactory to the Lender to
support the Loans;
(14) commitments for title insurance for the Real Property in
form and substance satisfactory to the Lender showing Lender's first lien
position on the fee interest for the Olathe Property, first lien on the
leasehold interest for the Lenexa Property and second lien on the fee
interest for the Overland Park Property;
(15) environmental reports for the Real Estate
satisfactory to Lender in its sole discretion;
(16) surveys of the Real Estate certified to Lender
satisfactory to Lender in its sole discretion;
(17) certificates or binders of insurance relating to each of
the policies of insurance covering any of the Collateral together with
loss payable clauses which comply with the terms of SECTION 7.9(B);
(18) the Assignment and Assumption Agreement ("ASSIGNMENT
AGREEMENT") among KHC of Lenexa, L.L.C., DCI, UMB Bank, N.A., as
trustee, the City of Lenexa, Kansas and the Bank, effective as of the
date hereof, duly executed and delivered by the parties thereto;
(19) the closing documentation relating to the
Acquisition;
(20) a Borrowing Base Certificate prepared as of the Effective
Date duly executed and delivered by the chief financial officer of the
Borrower;
(21) a letter from the Borrower to the Lender requesting
the Initial Loans and specifying the method of disbursement;
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(22) copies of all the financial statements referred to in
Section 5.1(m) and meeting the requirements thereof;
(23) a certificate of the President of the Borrower stating
that, to the best of his knowledge and based on an examination sufficient
to enable him to make an informed statement, (a) all of the
representations and warranties made or deemed to be made under this
Agreement are true and correct in all material respects as of the
Effective Date, both with and without giving effect to the Loans to be
made at such time and the application of the proceeds thereof, and (b) no
Default or Event of Default exists;
(24) a signed opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP,
counsel for the Borrower as the Lender shall deem necessary or desirable,
opining as to such matters in connection with this Agreement as the Lender
or its counsel may reasonably request;
(25) a signed opinion of ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇, ▇.▇., Bond
Counsel, opining as to the tax-exempt status of the interest on the Bonds
as a result of the transactions contemplated by the Assignment Agreement
and as to such other matters as Lender may reasonably require;
(26) copies of each of the other Loan Documents duly executed
by the parties thereto with evidence satisfactory to the Lender and its
counsel of the due authorization, binding effect and enforceability of
each such Loan Document on each such party and such other documents and
instruments as the Lender may reasonably request;
(27) the loan documents for the EXIMBANK Financing Documents,
duly executed by the parties thereto satisfactory to Lender and EXIMBANK
in their discretion; and
(28) The stock pledge agreement in form satisfactory to
Lender, duly executed by ASI, pledging all of the stock of DCI to Lender;
(b) AVAILABILITY. The Lender shall be provided with evidence
satisfactory to it that, as of the Effective Date, after giving effect to the
Initial Loans, Revolving Credit Loan B Availability will not be less than Seven
Hundred Fifty Thousand and No/100 Dollars ($750,000.00).
(c) NO INJUNCTIONS, ETC. No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain or
prohibit or to obtain substantial damages in respect of or which is related to
or arises out of this Agreement or the consummation of the transactions
contemplated hereby or which, in the Lender's sole discretion, would make it
inadvisable to consummate the transactions contemplated by this Agreement.
(d) MATERIAL ADVERSE CHANGE. As of the Effective Date, there shall
not have occurred any change which, in the Lender's sole but reasonable
discretion, has had or would
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have a Materially Adverse Effect as compared to the condition of the Borrower
presented by the most recent unaudited financial statements of the Borrower
described in SECTION 5.1(M).
(e) SOLVENCY. The Lender shall have received evidence satisfactory
to it that, after giving effect to the Initial Loans (i) the Borrower has assets
(excluding goodwill and other intangible assets not capable of valuation) having
value, both at fair value and at present fair saleable value, greater than the
amount of its liabilities, and (ii) the Borrower's assets are sufficient in
value to provide the Borrower with sufficient working capital to enable it
profitably to operate its business and to meet its obligations as they become
due, and (iii) the Borrower has adequate capital to conduct the business in
which it is and proposes to be engaged.
(f) RELEASE OF SECURITY INTERESTS. The Lender shall have
received evidence satisfactory to it of the release and termination of all
Liens other than Permitted Liens.
(g) FINANCIAL RATIOS. All financial ratios described in this
Agreement are being met as of the Effective Date after giving effect to the
Initial Loans.
Section 4.2 ALL LOANS.
At the time of making of each Loan, including the Initial Loan:
(a) all of the representations and warranties made or deemed to be
made under this Agreement shall be true and correct in all material respects at
such time both with and without giving effect to the Loans to be made at such
time and the application of the proceeds thereof, except that representations
and warranties which, by their terms, are applicable only to the Effective Date
shall be required to be true and correct only as of the Effective Date,
(b) the corporate actions of the Borrower referred to in SECTION
4.1(a)(4) shall remain in full force and effect and the incumbency of officers
shall be as stated in the certificates of incumbency delivered pursuant to
SECTION 4.1(a)(5) or as subsequently modified and reflected in a certificate of
incumbency delivered to the Lender, and
(c) the Lender may, without waiving either condition, consider the
conditions specified in SECTIONS 4.2(a) and (b) fulfilled and a representation
by the Borrower to such effect made if no written notice to the contrary is
received by the Lender from the Borrower prior to the making of the Loans then
to be made.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 5.1 REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender as follows:
(a) ORGANIZATION; POWER; QUALIFICATION. The Borrower is a
corporation, duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted and is duly qualified and
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authorized to do business in each jurisdiction in which failure to be so
qualified and authorized would have a Materially Adverse Effect. The
jurisdictions in which the Borrower is qualified to do business as a foreign
corporation are listed on SCHEDULE 5.1(a).
(b) SUBSIDIARIES AND OWNERSHIP OF THE BORROWER. The Borrower has no
Subsidiaries, except those set forth on SCHEDULE 5.1(b)-1. The outstanding stock
of the Borrower has been duly and validly issued and is fully paid and
nonassessable by the Borrower and the number and owners of such shares of
capital stock of the Borrower are set forth on SCHEDULE 5.1(b)-2.
(c) AUTHORIZATION OF AGREEMENT, NOTES, MORTGAGES, LOAN DOCUMENTS AND
BORROWING. The Borrower has the right and power and has taken all necessary
action to authorize it to execute, deliver and perform this Agreement and each
of the other Loan Documents to which it is a party in accordance with their
respective terms and to borrow hereunder. This Agreement and each of the other
Loan Documents to which it is a party have been duly executed and delivered by
the duly authorized officers of the Borrower and each is, or when executed and
delivered in accordance with this Agreement will be, a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, except as
enforceability may be limited by laws relating to bankruptcy, insolvency and
other laws effecting creditors' rights generally and by general equitable
principles.
(d) COMPLIANCE OF AGREEMENT, NOTES, MORTGAGES, LOAN DOCUMENTS AND
BORROWING WITH LAWS, ETC. The execution, delivery and performance of this
Agreement and each of the other Loan Documents to which the Borrower is a party
in accordance with their respective terms and the borrowings hereunder do not
and will not, by the passage of time, the giving of notice or otherwise,
(i) require any Governmental Approval or violate any
applicable law relating to the Borrower or any of its Affiliates,
(ii) conflict with, result in a breach of or constitute a
default under (A) the articles or certificate of incorporation or by-laws
of the Borrower, (B) any indenture, material agreement or other material
instrument to which the Borrower is a party or by which any of its
property is bound or (C) any Governmental Approval relating to the
Borrower, or,
(iii) result in or require the creation or imposition of any
Lien upon or with respect to any property now owned or hereafter acquired
by the Borrower other than the Security Interest.
(e) BUSINESS. The Borrower is engaged principally in the
business described on SCHEDULE 5.1(e).
(f) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS. Except as set forth
in SCHEDULE 5.1(f), the Borrower (i) has all Governmental Approvals, including
permits relating to federal, state and local Environmental Laws, ordinances and
regulations required by any
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applicable law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the knowledge of the Borrower, threatened attack by direct
or collateral proceeding, and (ii) is in compliance with each Governmental
Approval applicable to it and in compliance with all other applicable laws
relating to it, including, without being limited to, all Environmental Laws and
all occupational health and safety laws applicable to the Borrower or its
properties, except for instances of noncompliance which would not, singly or in
the aggregate, cause a Default or Event of Default or have a Materially Adverse
Effect and in respect of which adequate reserves have been established on the
books of the Borrower.
(g) TITLES TO PROPERTIES. Except as set forth in SCHEDULE 5.1(g),
the Borrower has good and marketable title to or a valid leasehold interest in
all its real estate and valid and legal title to or a valid leasehold interest
in all personal property and assets used in or necessary to the conduct of the
Borrower's business, including, but not limited to, those reflected on the
balance sheet of the Borrower delivered pursuant to SECTION 5.1(m)(ii).
(h) LIENS. Except as set forth in SCHEDULE 5.1(h), none of the
properties and assets of the Borrower is subject to any Lien, except Permitted
Liens. Other than the Financing Statements, no financing statement under the
Uniform Commercial Code of any state which names the Borrower as debtor and
which has not been terminated has been filed in any state or other jurisdiction,
and the Borrower has not signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens listed in SCHEDULE 5.1(h) and Permitted
Liens.
(i) INDEBTEDNESS AND GUARANTIES. Set forth on SCHEDULE 5.1(i) is a
complete and correct listing of all of the Borrower's (i) Indebtedness for Money
Borrowed and (ii) Guaranties. The Borrower is not in default of any material
provision of any agreement evidencing or relating to such any such Indebtedness
or Guaranty. Excepting the Existing Loans described on EXHIBIT E, the Loans
contemplated herein and otherwise as provided on SCHEDULE 5.1(i), there are no
Existing Loans outstanding.
(j) LITIGATION. Except as set forth on SCHEDULE 5.1(j), there are no
actions, suits or proceedings pending (nor, to the knowledge of the Borrower,
are there any actions, suits or proceedings threatened, nor is there any basis
therefor) against or, to the knowledge of the Borrower, in any other way
relating adversely to or affecting the Borrower or any of its property in any
court or before any arbitrator of any kind or before or by any governmental
body.
(k) TAX RETURNS AND PAYMENTS. Except as set forth on SCHEDULE
5.1(k), all United States federal, state and local and foreign national,
provincial and local and all other tax returns of the Borrower required by
applicable law to be filed have been duly filed, and all United States federal,
state and local and foreign national, provincial and local and all other taxes,
assessments and other governmental charges or levies upon the Borrower and its
property, income, profits and assets which are due and payable have been paid,
except any such nonpayment which is at the time permitted under SECTION 8.4. The
charges, accruals and reserves on the books of the Borrower in respect of United
States federal, state and local taxes and foreign national, provincial and local
taxes for all fiscal years and portions thereof since the
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organization of the Borrower are in the judgment of the Borrower adequate, and
the Borrower knows of no reason to anticipate any additional assessments for any
of such years which, singly or in the aggregate, might have a Materially Adverse
Effect.
(l) BURDENSOME PROVISIONS. The Borrower is not a party to any
indenture, agreement, lease or other instrument, or subject to any charter or
corporate restriction, Governmental Approval or applicable law, compliance with
the terms of which might have a Materially Adverse Effect.
(m) FINANCIAL STATEMENTS. Borrower has furnished to the Lender a
copy of (i) its audited balance sheet as at April 30, 1999 (as to ASI) and its
unaudited balance sheet as at December 31, 1998 (as to DCI) and the related
statements of income, cash flow and retained earnings for the twelve-month
period then ended and (ii) its unaudited balance sheet as at December 31, 1999
(as to ASI) and November 30, 1999 (as to DCI), and the related statement of
income for the month period then ended. Such financial statements are complete
and correct and present fairly and in all material respects in accordance with
GAAP, the financial position of the Borrower as at the dates thereof and the
results of operations of the Borrower for the periods then ended. Except as
disclosed or reflected in such financial statements, the Borrower had no
material liabilities, contingent or otherwise, and there were no material
unrealized or anticipated losses of the Borrower.
(n) ADVERSE CHANGE. Since the date of the financial statements
described in CLAUSE (i) of SECTION 5.1(m), (i) no change in the business,
assets, liabilities, condition (financial or otherwise), results of operations
or business prospects of the Borrower has occurred that has had, or which
Borrower believes may have, a Materially Adverse Effect, and (ii) no event has
occurred or failed to occur which has had, or may have, a Materially Adverse
Effect.
(o) ERISA. Neither the Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on SCHEDULE 5.1(o). Each
Benefit Plan is in compliance with ERISA in all material respects, and neither
the Borrower nor any Related Company has received any notice asserting that a
Benefit Plan is not in compliance with ERISA. No material liability to the PBGC
or to a Multiemployer Plan has been, or is expected by the Borrower to be,
incurred by the Borrower or any Related Company.
(p) ABSENCE OF DEFAULTS. The Borrower is not in default under its
articles or certificate of incorporation or by-laws, and no event has occurred
which has not been remedied, cured or waived (i) that constitutes a Default or
an Event of Default or (ii) that constitutes or that, with the passage of time
or giving of notice, or both, would constitute a default or event of default by
the Borrower under any material agreement (other than this Agreement) or
judgment, decree or order to which the Borrower is a party or by which the
Borrower or any of its properties is bound or which would require the Borrower
to make any payment thereunder prior to the scheduled maturity date therefor.
(q) ACCURACY AND COMPLETENESS OF INFORMATION. All written
information, reports and other papers and data produced by or on behalf of the
Borrower and furnished to the Lender were, at the time the same were so
furnished, complete and correct in all material respects
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to the extent necessary to give the recipient a true and accurate knowledge of
the subject matter, no fact is known to the Borrower which has had, or may in
the future have (so far as the Borrower can foresee), a Materially Adverse
Effect which has not been set forth in the financial statements or disclosure
delivered prior to the Effective Date, in each case referred to in SECTION
5.1(m), or in such written information, reports or other papers or data or
otherwise disclosed in writing to the Lender prior to the Effective Date. No
document furnished or written statement made to the Lender by the Borrower in
connection with the negotiation, preparation or execution of this Agreement or
any of the Loan Documents contains or will contain any untrue statement of a
fact material to the creditworthiness of the Borrower or omits or will omit to
state a material fact necessary in order to make the statements contained
therein not misleading; provided, however, that no representation is made as to
the retrospective accuracy of any pro formas, projections or forecasts (except
that no information used as a basis for such pro formas, projections or
forecasts shall be knowingly or reasonably believed by the Borrower to be
inaccurate when used).
(r) SOLVENCY. In each case after giving effect to the Indebtedness
represented by the Loans outstanding and to be incurred and the transactions
contemplated by this Agreement, the Borrower is solvent, having assets of a fair
value which exceeds the amount required to pay its debts (including contingent,
subordinated, unmatured and unliquidated liabilities) as they become absolute
and matured, and the Borrower is able to and anticipates that it will be able to
meet its debts as they mature and has adequate capital to conduct the business
in which it is or proposes to be engaged.
(s) STATUS OF RECEIVABLES. Each Receivable reflected in the
computations included in any Borrowing Base Certificate meets the criteria
enumerated in the definition of Eligible Receivables (or Eligible Export
Receivables as the case may be), except as disclosed in such Borrowing Base
Certificate or as disclosed in a timely manner in a subsequent Borrowing Base
Certificate or otherwise in writing to the Lender.
(t) CHIEF EXECUTIVE OFFICE. The chief executive office of the
Borrower and the books and records relating to the Receivables are located at
the address or addresses set forth on SCHEDULE 5.1(t); except as set forth
SCHEDULE 5.1(t), the Borrower has not maintained its chief executive office or
the books and records relating to any Receivables at any other address at any
time during the five years immediately preceding the Agreement Date.
(u) STATUS OF INVENTORY. All Inventory included in any Borrowing
Base Certificate delivered to the Lender pursuant to Section 7.14(d) meets the
criteria enumerated in the definition of Eligible Inventory (or Eligible Export
Inventory as the case may be), except as disclosed in such Borrowing Base
Certificate or in a subsequent Borrowing Base Certificate or as otherwise
specifically disclosed in writing to the Lender. All Inventory is in good
condition, meets all standards imposed by any governmental agency or department
or division thereof having regulatory authority over such goods, their use or
sale, and is currently either usable or saleable in the normal course of the
Borrower's business, except to the extent reserved against in the financial
statements delivered pursuant to ARTICLE 9 or as disclosed on a Schedule of
Inventory delivered to the Lender pursuant to SECTION 7.14(b). Set forth on
SCHEDULE 5.1(u) is the (i) address (including street, city, county and state) of
each facility at which Inventory is
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located, (ii) the approximate quantity in Dollars of the Inventory customarily
located at each such facility, and (iii) if the facility is leased or is a third
party warehouse or processor location, the name of the landlord or such third
party warehouseman or processor. All Inventory is located on the premises set
forth on SCHEDULE 5.1(u) or is in transit to one of such locations, except as
otherwise disclosed in writing to the Lender; the Borrower has not located
Inventory at premises other than those set forth on SCHEDULE 5.1(U) at any time
during the four months immediately preceding the Agreement Date.
(v) EQUIPMENT. All Equipment is in good order and repair in all
material respects. Set forth on SCHEDULE 5.1(v) is the (i) address (including
street, city, county and state) of each facility at which Equipment (other than
motor vehicles) is located, (ii) the approximate value of Equipment located at
such facility; and (iii) if such facility is leased, the name of the landlord.
Except as set forth on SECTION 5.1(v), within the past four (4) months no
Equipment has been located at any other location.
(w) CORPORATE AND FICTITIOUS NAMES; TRADE NAMES. Except as otherwise
disclosed on SCHEDULE 5.1(w), during the one-year period preceding the Agreement
Date, the Borrower has not been known as or used any corporate or fictitious
name other than the corporate name of the Borrower on the Effective Date. All
trade names or styles under which the Borrower sells Inventory or Equipment or
creates Receivables, or to which instruments in payment of Receivables are made
payable, are listed on SCHEDULE 5.1(w).
(x) FEDERAL REGULATIONS. The Borrower is not engaged, principally or
as one of its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" (as each of the quoted
terms is defined or used in Regulations G and U of the Board of Governors of the
Federal Reserve System).
(y) INVESTMENT COMPANY ACT. The Borrower is not an "investment
company" or a company "controlled" by an "investment company" (as each of the
quoted terms is defined or used in the Investment Company Act of 1940, as
amended).
(z) EMPLOYEE RELATIONS. The Borrower is not, except as set forth on
SCHEDULE 5.1(z), party to any collective bargaining agreement nor has any labor
union been recognized as the representative of the Borrower's employees; the
Borrower knows of no pending, threatened or contemplated strikes, work stoppage
or other labor disputes involving its employees or those of its Subsidiaries.
(aa) INTELLECTUAL PROPERTY. The Borrower owns or possesses all
Intellectual Property required to conduct its business as now and presently
planned to be conducted without, to its knowledge, conflict with the rights of
others, and SCHEDULE 5.1(aa) lists all Intellectual Property owned by the
Borrower.
(bb) REAL PROPERTY. Except as otherwise disclosed on SCHEDULE
5.1(bb), the Borrower does not own, lease or otherwise operate or conduct
business at or on any real property.
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(cc) ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
5.1(c)(c), no environmental events or matters of any kind currently exist which
constitute a violation of an Environmental Law or which by discovery by any
Governmental Authority, notice or the passage of time would constitute a
violation of an Environmental Law is not waived or cured, and to the best of
Borrower's knowledge have ever existed on the Real Property, such environmental
matters to include without limitation, hazardous material spills or leaks,
existence of underground tanks, remediation or monitoring programs and/or
environmental investigations of any kind.
Section 5.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.
All representations and warranties set forth in this ARTICLE 5 and
all statements contained in any certificate, financial statement or other
instrument delivered by or on behalf of the Borrower pursuant to or in
connection with this Agreement or any of the Loan Documents (including, but not
limited to, any such representation, warranty or statement made in or in
connection with any amendment thereto) shall constitute representations and
warranties made under this Agreement. All representations and warranties made
under this Agreement shall be made or deemed to be made at and as of the
Agreement Date, at and as of the Effective Date and at and as of the date of
each Loan, except that representations and warranties which, by their terms are
applicable only to one such date shall be deemed to be made only at and as of
such date. All representations and warranties made or deemed to be made under
this Agreement shall survive and not be waived by the execution and delivery of
this Agreement, any investigation made by or on behalf of the Lender or any
borrowing hereunder.
ARTICLE 6 - SECURITY INTEREST
Section 6.1 SECURITY INTEREST.
(a) To secure the payment, observance and performance of the Secured
Obligations, the Borrower hereby mortgages, pledges and assigns all of the
Collateral to the Lender for itself and as agent for any Affiliate of the Lender
and grants to the Lender for itself and as agent for any Affiliate of the Lender
a continuing security interest in, and a continuing Lien upon, all of the
Collateral.
(b) As additional security for all of the Secured Obligations, the
Borrower grants to the Lender for itself and as agent for any Affiliate of the
Lender a security interest in, and assigns to the Lender for itself and as agent
for any Affiliate of the Lender all of the Borrower's right, title and interest
in and to, any deposits or other sums at any time credited by or due from the
Lender and each Affiliate of the Lender to the Borrower, with the same rights
therein as if the deposits or other sums were credited by or due from the
Lender.
(c) Notwithstanding the foregoing grant by the Borrower of a
security interest in all of the Collateral, it is understood and agreed by the
parties hereto that the Lender shall have as security for Revolving Credit Loan
B, any Letters of Credit issued pursuant to this Agreement and the Term Loans
(i) a second and subordinate lien on the Collateral which is comprised of Export
Receivables, Export Inventory and all proceeds thereof, including all monies on
deposit from time to time in the Restricted Account (each of the capitalized
terms in this SECTION 6.1(c)
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not otherwise defined herein shall have the meaning given to them in the
EXIMBANK Financing Documents), which are subject to a first priority lien in
favor of the Lender securing Revolving Credit Loan A, and (ii) a first priority
lien on all of the other Collateral. This agreement as to lien priority shall be
binding on the successors and assigns of the parties, including without
limitation, EXIMBANK.
Section 6.2 CONTINUED PRIORITY OF SECURITY INTEREST.
(a) The Security Interest granted by the Borrower shall at all times
be valid, perfected and enforceable against the Borrower and all third parties
in accordance with the terms of this Agreement, as security for the Secured
Obligations, and the Collateral shall not at any time be subject to any Liens
that are prior to, on a parity with or junior to the Security Interest, other
than Permitted Liens.
(b) The Borrower shall, at its sole cost and expense, take all
action that may be necessary or desirable, or that the Lender may request, so as
at all times to maintain the validity, perfection, enforceability and rank of
the Security Interest in the Collateral in conformity with the requirements of
SECTION 6.2(a) or to enable the Lender to exercise or enforce its rights
hereunder, including, but not limited to: (i) paying all taxes, assessments and
other claims lawfully levied or assessed on any of the Collateral, except to the
extent that such taxes, assessments and other claims constitute Permitted Liens,
(ii) diligently seeking to obtain, after the Agreement Date, landlords',
mortgagees' or mechanics' releases, subordinations or waivers, (iii) delivering
to the Lender, endorsed or accompanied by such instruments of assignment as the
Lender may specify, and stamping or marking in such manner as the Lender may
specify, any and all chattel paper, instruments, letters and advices of guaranty
and documents evidencing or forming a part of the Collateral, and (iv) executing
and delivering financing statements, pledges, mortgages, designations,
hypothecations, notices and assignments, in each case in form and substance
satisfactory to the Lender, relating to the creation, validity, perfection,
maintenance or continuation of the Security Interest under the UCC or other
applicable law.
(c) The Lender is hereby authorized to file one or more financing or
continuation statements or amendments thereto without the signature of or in the
name of the Borrower for any purpose described in SECTION 6.2(b). A carbon,
photographic or other reproduction of this Agreement or of any of the Security
Documents or of any financing statement filed in connection with this Agreement
is sufficient as a financing statement, to the extent permitted by applicable
law.
(d) The Borrower shall ▇▇▇▇ its books and records as may be
necessary or appropriate to evidence, protect and perfect the Security Interest
and shall cause its financial statements to reflect the Security Interest.
Section 6.3 RELEASE OF SECURITY INTERESTS.
So long as no Default or Event of Default has occurred, Lender will
permit a sale of, and release its Security Interest in the Overland Park
Property, provided that all net proceeds of such sale (after repayment of the
first mortgage thereon) are applied to repayment of the Secured Obligations in
the order determined by Lender in its sole discretion. So long as no
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Default or Event of Default has occurred, Lender will permit a sale of, and
release its Security Interest in the Olathe Property, provided that all net
proceeds of such sale are applied to repayment of the Secured Obligations in the
order determined by Lender in its sole discretion, but not inconsistent with the
Bond Documents.
ARTICLE 7 - COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner provided in SECTION 12.11:
Section 7.1 COLLECTION OF RECEIVABLES.
(a) At any time after a Default or Event of Default, ("BLOCKED
ACCOUNT EVENT"), upon written notice by Lender to Borrower, Borrower will cause
all moneys, checks, notes, drafts and other payments relating to or constituting
proceeds of Receivables, or of any other Collateral, to be forwarded to a Bank
of America Blocked Depository Account (the "BLOCKED ACCOUNT"), in accordance
with an account agreement relating thereto which Borrower agrees to execute, and
in particular the Borrower will (i) advise each Account Debtor to address all
remittances with respect to amounts payable on account of any Receivables to
such specified Blocked Account, and (ii) stamp all invoices relating to any such
amounts with a legend satisfactory to the Lender indicating that payment is to
be made to the Borrower via the Blocked Account. From and after the occurrence
of a Blocked Account Event, Lender may, in its sole discretion, elect to
continue the use of the Blocked Account notwithstanding that the Default or
Event of Default giving rise to the Blocked Account Event was cured or otherwise
waived.
(b) From and after such notice is given to Borrower that a Blocked
Account is required, the Borrower and the Lender shall cause all collected
balances in the Blocked Account to be applied daily (i) on account of the
Secured Obligations, as provided in SECTION 2.3(C), 11.2 and 11.3, such credits
to be entered on the first (1st) Business Day following receipt and to be
conditioned upon final payment in cash or solvent credits of the items giving
rise to them, and (ii) with respect to any balance remaining after such
application, so long as no Default or Event of Default has occurred and is
continuing, for transfer to the Disbursement Account or such other account of
the Borrower as the Borrower and the Lender may agree.
(c) Any moneys, checks, notes, drafts or other payments referred to
in CLAUSE (a) of this SECTION 7.1 which are received by or on behalf of the
Borrower will be held in trust for the Lender and will be delivered to the
Lender at the Lender's Office as promptly as possible in the exact form
received, together with any necessary endorsements.
(d) Unless and until any such notice of a requirement of a Blocked
Account is given by Lender, all Accounts Receivable may be collected directly by
the Borrower, provided that such funds are deposited into a Bank of America
commercial account.
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Section 7.2 VERIFICATION AND NOTIFICATION.
The Lender shall have the right (a) after notifying Borrower at any
time and from time to time, in the name of the Lender or in the name of the
Borrower, to verify the validity, amount or any other matter relating to any
Receivables by mail, telephone, telegraph or otherwise, and (b) after an Event
of Default, to notify the Account Debtors or obligors under any Receivables of
the assignment of such Receivables to the Lender and to direct such Account
Debtor or obligors to make payment of all amounts due or to become due
thereunder directly to the Lender and, upon such notification and at the expense
of the Borrower, to enforce collection of any such Receivables and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as the Borrower might have done.
Section 7.3 DISPUTES, RETURNS AND ADJUSTMENTS.
(a) In the event amounts due and owing under any Receivable in
excess of $50,000 are in dispute between the Account Debtor and the Borrower,
the Borrower shall provide the Lender with prompt written notice thereof.
(b) The Borrower shall notify the Lender promptly of all material
returns and credits in excess of $50,000 in respect of any Receivable, which
notice shall specify the Receivables affected.
(c) The Borrower may, in the ordinary course of business and prior
to a Default or an Event of Default, grant any extension of time for payment of
any Receivable or compromise, compound or settle the same for less than the full
amount thereof or release wholly or partly any Person liable for the payment
thereof or allow any credit or discount whatsoever thereon (an "ADJUSTMENT");
PROVIDED that (i) no Adjustment results in the reduction of more than $75,000 in
the amount payable with respect to any Receivable or of more than $200,000 with
respect to all Receivables in any fiscal year of the Borrower, and (ii) the
Lender is promptly notified of the amount of any Adjustment in excess of $10,000
for any Receivable, and the Receivable(s) affected thereby.
Section 7.4 INVOICES.
Upon the request of the Lender, the Borrower shall deliver to the
Lender, at the Borrower's expense, copies of customers' invoices or the
equivalent, original shipping and delivery receipts or other proof of delivery,
customers' statements, the original copy of all documents, including, without
limitation, repayment histories and present status reports, relating to
Receivables and such other documents and information relating to the Receivables
as the Lender shall specify.
Section 7.5 DELIVERY OF INSTRUMENTS.
In the event any Receivable in an amount in excess of $10,000 is, or
Receivables in excess of $50,000 in the aggregate are, at any time evidenced by
a promissory note or notes, trade acceptance or any other instrument for the
payment of money, the Borrower will
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immediately thereafter deliver such instruments to the Lender, appropriately
endorsed to the Lender.
Section 7.6 SALES OF INVENTORY.
All sales of Inventory will be made in compliance with all
requirements of applicable law.
Section 7.7 RETURNED GOODS.
The Security Interest in the Inventory shall, without further act,
attach to the cash and non-cash proceeds resulting from the sale or other
disposition thereof and to all Inventory which is returned to the Borrower by
customers or is otherwise recovered.
Section 7.8 OWNERSHIP AND DEFENSE OF TITLE.
(a) Except for Permitted Liens, the Borrower shall at all times be
the sole owner of each and every item of Collateral and shall not create any
Lien on, or sell, lease, exchange, assign, transfer, pledge, hypothecate, grant
a security interest or security title in or otherwise dispose of, any of the
Collateral or any interest therein, except for sales of Inventory in the
ordinary course of business, for cash or on open account or on terms of payment
ordinarily extended to its customers and except as otherwise expressly
contemplated herein. The inclusion of "proceeds" of the Collateral under the
Security Interest shall not be deemed a consent by the Lender to any other sale
or other disposition of any part or all of the Collateral. Notwithstanding the
above, Borrower may sell, transfer, convey or otherwise dispose of worn out or
obsolete equipment up to an aggregate market value of $10,000 during the term of
this Agreement, upon notice to Lender; provided that, any proceeds from such
sale, transfer, conveyance or disposition will be applied to the Secured
Obligations in the order determined by Lender in its sole but reasonable
discretion. Any other such dispositions shall be made only with the prior
written consent of the Lender, which consent shall not be unreasonably withheld,
provided that, Lender may, in its sole discretion, require the proceeds of such
disposition to be applied to the Secured Obligations in the order determined by
Lender or to the purchase of replacement Equipment in which the Lender will have
the first perfected security interest.
(b) The Borrower shall defend its title in and to the Collateral and
shall defend the Security Interest in the Collateral against the claims and
demands of all Persons.
(c) In addition to, and not in derogation of, the foregoing and the
requirements of any of the Security Documents, the Borrower shall (i) protect
and preserve all properties material to its business, including Intellectual
Property and maintain all tangible property in good and workable condition in
all material respects, with reasonable allowance for wear and tear, and (ii)
from time to time make or cause to be made all needed and appropriate repairs,
renewals, replacements and additions to such properties necessary for the
conduct of its business, so that the business carried on in connection therewith
may be properly and advantageously conducted at all times.
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Section 7.9 INSURANCE.
(a) The Borrower shall at all times maintain insurance on the
Inventory and Equipment against loss or damage by fire, theft, burglary,
pilferage, loss in transit and such other hazards as the Lender shall reasonably
specify, in amounts and under policies issued by insurers acceptable to the
Lender. All premiums on such insurance shall be paid by the Borrower and copies
of the policies delivered to the Lender. The Borrower will not use or permit the
Inventory or Equipment to be used in violation of any applicable law or in any
manner which might render inapplicable any insurance coverage.
(b) All insurance policies required under SECTION 7.9(a) shall name
the Lender as an additional named insured and shall contain "New York standard"
loss payable clauses in the form submitted to the Borrower by the Lender, or
otherwise in form and substance satisfactory to the Lender, naming the Lender as
loss payee as its interests may appear, and providing that (i) all proceeds
thereunder shall be payable to the Lender, (ii) no such insurance shall be
affected by any act or neglect of the insured or owner of the property described
in such policy, and (iii) such policy and loss payable clauses may not be
canceled, amended or terminated unless at least 30 days' prior written notice is
given to the Lender.
(c) Any proceeds of insurance referred to in this SECTION 7.9 which
are paid to the Lender which, in the aggregate with respect to any particular
incident, event or claim are:
(1) less than $250,000, shall be paid over to Borrower and
shall be, at the option of the Borrower in its sole discretion either (i)
applied to rebuild, restore or replace the damaged or destroyed property, or
(ii) applied to the payment or prepayment of the Secured Obligations, or a
combination thereof;
(2) between $250,000 and $1,000,000, shall be, subject to the
agreement of Borrower and Lender, either (i) applied to rebuild, restore or
replace the damaged or destroyed property, or (ii) applied to the payment or
prepayment of the Secured Obligations, or a combination thereof; provided ,
however, that if Borrower and Lender cannot agree as to the application of such
insurance proceeds, the parties will submit the matter to binding arbitration in
accordance with the procedures and rules governing binding arbitration as
provided by the American Arbitration Association; provided further, that the
scope of such arbitration shall be limited to the determination of the
application of proceeds to either (i) restore or replace the damaged or
destroyed property, or (ii) pay or prepay the Secured Obligations, or a
combination thereof;
(3) $1,000,000 or more, shall be, at the option of the Lender
in its sole discretion, either (i) applied to rebuild, restore or replace the
damaged or destroyed property, or (ii) applied to the payment or prepayment of
the Secured Obligations, or a combination thereof.
(d) The Borrower shall at all times maintain, in addition to the
insurance required by SECTION 7.9(a) or any of the Security Documents, insurance
with responsible insurance companies against such risks and in such amounts as
is customarily maintained by similar businesses or as may be required by
applicable law, including such public liability, products liability, third party
property damage and business interruption insurance as is
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consistent with reasonable business practices, and from time to time deliver to
the Lender upon its request a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby.
Section 7.10 LOCATION OF OFFICES AND COLLATERAL.
(a) The Borrower will not change the location of its chief executive
office or the place where it keeps its books and records relating to the
Collateral or change its name, identity or corporate structure without giving
the Lender 30 days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such
location, and all Equipment, other than motor vehicles, will at all times be
kept by the Borrower at one of the locations set forth in SCHEDULES 5.1(u) and
5.1(v), respectively, and shall not, without the prior written consent of the
Lender, be removed therefrom except, so long as no Event of Default shall have
occurred and be continuing, for sales of Inventory permitted under SECTION 7.6
and dispositions of Equipment permitted under SECTION 7.8(a).
(c) If any Inventory is in the possession or control of any of the
Borrower's agents or processors, the Borrower shall notify such agents or
processors of the Security Interest and, upon the occurrence of an Event of
Default, shall instruct them (and cause them to acknowledge such instruction) to
hold all such Inventory for the account of the Lender, subject to the
instructions of the Lender.
Section 7.11 RECORDS RELATING TO COLLATERAL.
(a) The Borrower will at all times (i) keep complete and accurate
records of Inventory on a basis consistent with past practices of the Borrower,
itemizing and describing the kind, type and quantity of Inventory and the
Borrower's cost therefor and a current price list for such Inventory, and (ii)
keep complete and accurate records of all other Collateral.
(b) The Borrower will take a physical listing of all Inventory,
wherever located, at least annually.
Section 7.12 INSPECTION.
The Lender (by any of its officers, employees or agents) shall have
the right, to the extent that the exercise of such right shall be within the
control of the Borrower, at any time or times to (a) visit the properties of the
Borrower, inspect the Collateral and the other assets of the Borrower and its
Subsidiaries and inspect and make extracts from the books and records of the
Borrower and its Subsidiaries, including, but not limited to, management letters
prepared by independent accountants, all during customary business hours at such
premises, (b) discuss the Borrower's business, assets, liabilities, financial
condition, results of operations and business prospects, insofar as the same are
reasonably related to the rights of the Lender hereunder or under any of the
Loan Documents, with the Borrower's and its Subsidiaries' (i) principal
officers, (ii) independent accountants and other professionals providing
services to the Borrower, and (iii) any other Person (except that any such
discussion with any third parties shall be
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conducted only in accordance with the Lender's standard operating procedures
relating to the maintenance of confidentiality of confidential information of
borrowers), and (c) verify the amount, quantity, value and condition of, or any
other matter relating to, any of the Collateral and in this connection to
review, audit and make extracts from all records and files related to any of the
Collateral. The Borrower will deliver to the Lender any instrument necessary to
authorize an independent accountant or other professional to have discussions of
the type outlined above with the Lender or for the Lender to obtain records from
any service bureau maintaining records on behalf of the Borrower.
Section 7.13 MAINTENANCE OF EQUIPMENT.
The Borrower shall maintain all physical property that constitutes
Equipment in good and workable condition in all material respects, with
reasonable allowance for wear and tear, and shall exercise proper custody over
all such property.
Section 7.14 INFORMATION AND REPORTS.
(a) SCHEDULE OF RECEIVABLES. The Borrower shall deliver to the
Lender (i) on or before the Effective Date, a Schedule of Receivables as of a
date not more than three Business Days prior to the Effective Date setting forth
a detailed aged trial balance of all of its then existing Receivables,
specifying the name of and the balance due from (and any rebate due to) each
Account Debtor obligated on a Receivable so listed, and (ii) no later than
twenty (20) days after the end of each accounting month of the Borrower, a
Schedule of Receivables as of the last Business Day of the Borrower's
immediately preceding accounting month setting forth (A) a detailed aged trial
balance of all the Borrower's then existing Receivables, specifying the name of
and the balance due from (and any rebate due to) each Account Debtor obligated
on a Receivable so listed and (B) a reconciliation to the Schedule of
Receivables delivered in respect of the next preceding accounting month.
(b) SCHEDULE OF INVENTORY. The Borrower shall deliver to the Lender
on or before the Effective Date, a Schedule of Inventory as of the last Business
Day of the immediately preceding accounting month of the Borrower, itemizing and
describing the kind, type, quantity and location of Inventory and the cost
thereof, and shall deliver to the Lender no later than twenty (20) days after
the end of each accounting month of the Borrower thereafter, a summary of
Borrower's Schedule of Inventory in form agreed upon by the Borrower and the
Lender; provided, however, that Lender may require a full Schedule of Inventory
with additional detail for any such monthly report in its sole but reasonable
discretion (including without limitation upon the Lender's request, an
itemization of the kind, type, quantity and location of Inventory and cost
thereof).
(c) SCHEDULE OF EQUIPMENT. The Borrower shall deliver to the Lender
on or before the Effective Date and thereafter on such subsequent dates as may
be requested by the Lender, a Schedule of Equipment, describing each item of
such Equipment and the location, cost and then current book value thereof.
(d) BORROWING BASE CERTIFICATE. The Borrower shall deliver to the
Lender not later than twenty (20) Business Days after the last day of each
accounting month of the Borrower
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a Borrowing Base Certificate prepared as of the close of business on the last
Business Day of such accounting month.
(e) NOTICE OF DIMINUTION OF VALUE. The Borrower shall give prompt
notice to the Lender of any matter or event which has resulted in, or may result
in, the actual or potential diminution in excess of $50,000 in the value of any
of its Collateral, except for any diminution in the value of any Receivables or
Inventory in the ordinary course of business which has been appropriately
reserved against, as reflected in the financial statements previously delivered
to the Lender pursuant to ARTICLE 9.
(f) CERTIFICATION. Each of the schedules delivered to the Lender
pursuant to this SECTION 7.14 shall be certified by the Chief Financial Officer
of the Borrower to be true, correct and complete as of the date indicated
thereon.
(g) OTHER INFORMATION. The Lender may, in its reasonable discretion,
from time to time require the Borrower to deliver the schedules described in
SECTION 7.14(a), (b), (c) and (d) more or less often and on different schedules
than specified in such Section, and the Borrower will comply with such requests.
The Borrower shall also furnish to the Lender such other information with
respect to the Collateral as the Lender may from time to time reasonably
request.
Section 7.15 POWER OF ATTORNEY.
The Borrower hereby appoints the Lender as its attorney, with power
(a) to endorse the name of the Borrower on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into the
Lender's possession, and (b) to sign the name of the Borrower on any invoice or
▇▇▇▇ of lading relating to any Receivables, Inventory or other Collateral, on
any drafts against customers related to letters of credit, on schedules and
assignments of Receivables furnished to the Lender by the Borrower, on notices
of assignment, financing statements and other public records relating to the
perfection or priority of the Security Interest or verifications of account and
on notices to or from customers.
ARTICLE 8 - AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner provided for in SECTION 12.11, the Borrower
will:
Section 8.1 PRESERVATION OF CORPORATE EXISTENCE AND SIMILAR
MATTERS.
Preserve and maintain its corporate existence, rights, franchises,
licenses and privileges in the jurisdiction of its incorporation and qualify and
remain qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization except where the failure
to be qualified or authorized would not have a Materially Adverse Effect.
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Section 8.2 COMPLIANCE WITH APPLICABLE LAW.
Comply with all applicable laws relating to the Borrower except to
the extent a failure to so comply would have a Materially Adverse Effect.
Section 8.3 CONDUCT OF BUSINESS.
Engage only in businesses in substantially the same fields as the
businesses conducted on the Effective Date.
Section 8.4 PAYMENT OF TAXES AND CLAIMS.
Pay or discharge when due (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any properties belonging to it, and (b) all lawful claims of materialmen,
mechanics, carriers, warehousemen and landlords for labor, materials, supplies
and rentals which, if unpaid, might become a Lien on any properties of the
Borrower or such Subsidiary, except that this SECTION 8.4 shall not require the
payment or discharge of any such tax, assessment, charge, levy or claim which is
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established on the appropriate books.
Section 8.5 ACCOUNTING METHODS AND FINANCIAL RECORDS.
Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete), as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP.
Section 8.6 USE OF PROCEEDS.
(a) Use the proceeds of (i) the Initial Loans to pay the amounts and
for the purposes indicated in SCHEDULE 8.6 to the Persons indicated therein, and
(ii) all subsequent Revolving Credit Loans only for working capital and general
business purposes, and
(b) not use any part of such proceeds to purchase or carry, or to
reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulation G or U of the Board of Governors
of the Federal Reserve System) or for any other purpose which would involve a
violation of such Regulation G or U or Regulation T or X of such Board of
Governors or for any other purpose prohibited by law or by the terms and
conditions of this Agreement.
Section 8.7 HAZARDOUS WASTE AND SUBSTANCES; ENVIRONMENTAL
REQUIREMENTS.
(a) In addition to, and not in derogation of, the requirements of
SECTION 8.2 and of the Security Documents, comply with all laws, governmental
standards and regulations applicable to the Borrower or to any of its assets in
respect of occupational health and safety laws, rules and regulations and
Environmental Laws, promptly notify the Lender of its receipt of any notice of a
violation of any such law, rule, standard or regulation from or through any
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Governmental Authority and indemnify and hold the Lender harmless from all loss,
cost, damage, liability, claim and expense incurred by or imposed upon the
Lender on account of the Borrower's failure to perform its obligations under
this SECTION 8.7.
(b) Whenever the Borrower gives notice to the Lender pursuant to
this SECTION 8.7 with respect to a matter that reasonably could be expected to
result in liability to the Borrower in excess of $50,000 in the aggregate, the
Borrower shall, at the Lender's written request and the Borrower's expense, (i)
cause an independent environmental engineer acceptable to the Lender to conduct
such tests of the site as are necessary in the professional judgment of the
environmental engineer to determine the nature and extent of the environmental
impact to the site where the noncompliance or alleged noncompliance with
Environmental Laws has occurred and prepare and deliver to the Lender a report
setting forth the results of such tests, a proposed plan to bring the Borrower
into compliance with such Environmental Laws and an estimate of the costs
thereof, and (ii) provide to the Lender a supplemental report of such engineer
or other engineer acceptable to the Lender whenever the scope of the
noncompliance or the response thereto or the estimated costs thereof shall
materially change.
Section 8.8 ACCURACY OF INFORMATION.
All written information, reports, statements and other papers and
data furnished to the Lender, whether pursuant to ARTICLE 9 or any other
provision of this Agreement or any of the other Loan Documents, shall be, at the
time the same is so furnished, complete and correct in all material respects to
the extent necessary to give the Lender true and accurate knowledge of the
subject matter; provided, however, that with respect to the accuracy of pro
formas, projections or forecasts required hereunder, Borrower covenants only
that information used as a basis for such pro formas, projections or forecasts
shall be knowingly or reasonably believed by the Borrower to be true and correct
when used, and that such pro formas, projections and forecasts represent the
good faith belief of the Borrower when made.
Section 8.9 REVISIONS OR UPDATES TO SCHEDULES.
Should any of the information or disclosures provided on any of the
Schedules originally attached hereto become outdated or incorrect in any
material respect, the Borrower shall provide promptly to the Lender such
revisions or updates to such Schedule(s) as may be necessary or appropriate to
update or correct such Schedule(s); PROVIDED that no such revisions or updates
to any Schedule(s) shall be deemed to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedule(s) unless and until the Lender, in its sole discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).
ARTICLE 9 - INFORMATION
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner set forth in SECTION 12.11, the Borrower will
furnish to the Lender at the Lender's Office:
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Section 9.1 FINANCIAL STATEMENTS.
(a) AUDITED YEAR-END STATEMENTS. As soon as available, but in any
event within 90 days after the end of each fiscal year of the Borrower, copies
of the balance sheet of the Borrower as at the end of such fiscal year and the
related statements of income, shareholders' equity and cash flow for such fiscal
year, all on a consolidating basis, in each case setting forth in comparative
form the figures for the previous year of the Borrower and reported on, without
qualification, by Ernst & Young LLP or other independent certified public
accountants selected by the Borrower and acceptable to the Lender.
(b) MONTHLY FINANCIAL STATEMENTS. As soon as available, but in any
event within thirty (30) days after the end of each accounting month of the
Borrower, copies of the unaudited balance sheet of the Borrower as at the end of
such month and the related unaudited income statement for the Borrower for such
month and for the portion of the fiscal year of the Borrower through such month
all on a consolidating basis, certified by the chief financial officer of the
Borrower to the best of his knowledge as presenting fairly the financial
condition and results of operations of the Borrower as at the date thereof and
for the periods ended on such date, subject to normal year end adjustments.
(c) PROJECTED FINANCIAL STATEMENTS. In any case within thirty (30)
days after the end of the Borrower's fiscal year, and otherwise within thirty
(30) days after the written request of the Lender, forecasted financial
statements, prepared by the Borrower, consisting of balance sheets, cash flow
statements and income statements of the Borrower, reflecting projected
borrowings hereunder and setting forth the assumptions on which such forecasted
financial statements were prepared, covering the one-year period until the next
fiscal year end.
All such financial statements in CLAUSES (a) AND (b) above shall be
complete and correct in all material respects and shall be prepared in
accordance with GAAP applied consistently throughout the periods reflected
therein and shall be prepared on a consolidating basis. Projected financial
statements described CLAUSE (c) above and other projections, pro formas and
forecasts which have been or are to be delivered to the Lender hereunder, shall
reflect the good faith projections of the Borrower based on reasonable
assumptions of the Borrower.
Section 9.2 ACCOUNTANTS' CERTIFICATE.
Together with each delivery of financial statements required by
SECTION 9.1(A), a certificate of the accountants who performed the audit in
connection with such statements (a) stating that they have reviewed this
Agreement and that, in making the audit necessary to the issuance of a report on
such financial statements, they have obtained no knowledge of any Default or
Event of Default or, if such accountants have obtained knowledge of a Default or
Event of Default, specifying the nature and period of existence thereof, and (b)
setting forth the calculations necessary to establish whether or not the
Borrower was in compliance with the covenants contained in SECTIONS 10.1, 10.2,
and 10.5 as of the date of such statements.
The Borrower authorizes the Lender, after notice to Borrower, to
discuss the financial condition of the Borrower with the Borrower's independent
certified public accountants and agrees that such discussion or communication
shall be without liability to either the Lender
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or the Borrower's independent certified public accountants. The Borrower shall
deliver a letter addressed to such accountants authorizing them to comply with
the provisions of this SECTION 9.2. Notice by Lender to Borrower under this
SECTION 9.2 may be given by telephone.
Section 9.3 OFFICER'S CERTIFICATE.
Together with each delivery of financial statements required by
SECTION 9.1(a) and (b), a certificate of the Borrower's President or chief
financial officer, in a form satisfactory to Lender in its sole discretion, (a)
stating that, based on an examination sufficient to enable him to make an
informed statement, no Default or Event of Default exists or, if such is not the
case, specifying such Default or Event of Default and its nature, when it
occurred, whether it is continuing and the steps being taken by the Borrower
with respect to such Default or Event of Default, (b) setting forth the
calculations necessary to establish whether or not the Borrower was in
compliance with the covenants contained in SECTIONS 10.1, 10.2, and 10.5 as of
the date of such statements, and (c) containing other information reasonably
required by Lender to support Borrower's Borrowing Base calculations including,
but not limited to Accounts Receivable aging and Inventory listings.
Section 9.4 COPIES OF OTHER REPORTS.
(a) Promptly upon receipt thereof, copies of all reports, if any,
submitted to the Borrower or its Board of Directors by its independent public
accountants, including, without limitation, all management reports.
(b) From time to time and promptly upon each request, such
forecasts, data, certificates, reports, statements, opinions of counsel,
documents or further information regarding the business, assets, liabilities,
financial condition, results of operations or business prospects of the Borrower
as the Lender may reasonably request. The rights of the Lender under this
SECTION 9.4(b) are in addition to and not in derogation of its rights under any
other provision of this Agreement or any Loan Document.
(c) If requested by the Lender, statements in conformity with the
requirements of Federal Reserve Form G-1 or U-1 referred to in Regulations G and
U, respectively, of the Board of Governors of the Federal Reserve System.
Section 9.5 NOTICE OF LITIGATION AND OTHER MATTERS.
Prompt notice of:
(a) the commencement, to the extent the Borrower is aware of the
same, of all proceedings and investigations by or before any governmental or
nongovernmental body and all actions and proceedings in any court or before any
arbitrator against or in any other way relating adversely to, or adversely
affecting, the Borrower or any Affiliate of the Borrower or any of their
respective property, assets or businesses which would, singly or in the
aggregate, cause a Default or an Event of Default or have a Materially Adverse
Effect,
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(b) any amendment of the articles of incorporation or by-laws
of the Borrower,
(c) any change in the business, assets, liabilities, financial
condition, results of operations or business prospects of the Borrower or any
Affiliate of the Borrower which has had or would have any Materially Adverse
Effect and any change in the executive officers of the Borrower, and
(d) any (i) Default or Event of Default, or (ii) event that
constitutes or that, with the passage of time or giving of notice or both, would
constitute a default or event of default by the Borrower under any material
agreement (other than this Agreement) to which the Borrower is a party or by
which the Borrower or any of its property may be bound if the exercise of
remedies thereunder by the other party to such agreement would have, either
individually or in the aggregate, a Materially Adverse Effect.
Section 9.6 ERISA.
As soon as possible and in any event within 30 days after the
Borrower knows, or has reason to know, that:
(a) any Termination Event with respect to a Benefit Plan has
occurred or will occur,
(b) the aggregate present value of the Unfunded Vested Accrued
Benefits under all Plans has increased to an amount in excess of $0, or
(c) the Borrower is in "default" (as defined in Section 4219(c)(5)
of ERISA) with respect to payments to a Multiemployer Plan required by reason of
its complete or partial withdrawal (as described in Section 4203 or 4205 of
ERISA) from such Multiemployer Plan, a certificate of the President or the chief
financial officer of the Borrower setting forth the details of such of the
events described in CLAUSES (a) through (c) as applicable and the action which
is proposed to be taken with respect thereto and, simultaneously with the filing
thereof, copies of any notice or filing which may be required by the PBGC or
other agency of the United States government with respect to such of the events
described in CLAUSES (a) through (c) as applicable.
ARTICLE 10 - NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the
Secured Obligations have been indefeasibly paid in full, unless the Lender shall
otherwise consent in the manner set forth in SECTION 12.11, the Borrower will
not directly or indirectly:
Section 10.1 FINANCIAL RATIOS.
(a) MINIMUM TANGIBLE NET WORTH. Permit the Tangible Net Worth
of the Borrower at any time to be less than $7,250,000, measured on a
quarterly basis beginning April 30, 2000..
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(b) MINIMUM CURRENT RATIO. Permit the Current Ratio at any
time to be less than 1.5 to 1.0, measured on a quarterly basis beginning
April 30, 2000.
(c) MAXIMUM FUNDED DEBT RATIO. Permit the Funded Debt Ratio,
measured on a quarterly basis beginning April 30, 2000, to exceed (i) 4.15:1
from April 30, 2000 through January 30, 2001; and (ii) 3:1 from and after
January 31, 2001. In calculating the Funded Debt Ratio, EBITDA will be rolled up
as follows:
(1) For the April 30, 2000 measurement of the maximum Funded
Debt Ratio, EBITDA will be the sum of (x) $1,080,000 (which represents the
deemed EBITDA of DCI alone for three (3) fiscal quarters) PLUS (y) EBITDA for
ASI alone for the three (3) fiscal quarters immediately preceding the fiscal
quarter beginning February 1, 2000 PLUS (z) the calculated EBITDA for DCI's and
ASI's combined operations for the fiscal quarter beginning February 1, 2000.
(2) For the July 31, 2000 measurement of the maximum Funded
Debt Ratio, EBITDA will be the sum of (x) $720,000 (which represents the deemed
EBITDA of DCI alone for two (2) fiscal quarters) PLUS (y) EBITDA for ASI alone
for the two (2) fiscal quarters immediately preceding the fiscal quarter
beginning February 1, 2000 PLUS (z) the calculated EBITDA for DCI's and ASI's
combined operations for the two (2) fiscal quarters beginning February 1, 2000.
(3) For the October 31, 2000 measurement of the maximum Funded
Debt Ratio, EBITDA will be the sum of (x) $360,000 (which represents the deemed
EBITDA of DCI alone for one (1) fiscal quarter) PLUS (y) EBITDA for ASI alone
for the fiscal quarter immediately preceding the fiscal quarter beginning
February 1, 2000 PLUS (z) the calculated EBITDA for DCI's and ASI's combined
operations for the three (3) fiscal quarters beginning February 1, 2000.
(4) From and after the January 31, 2001 measurement of the
maximum Funded Debt Ratio, EBITDA will be the calculated EBITDA for DCI's and
ASI's combined operations.
(d) MAXIMUM LIABILITIES RATIO. Permit the Liabilities Ratio of
the Borrower at any time to exceed 1.95 to 1, measured on a quarterly basis
beginning April 30, 2000.
(e) MINIMUM DEBT SERVICE COVERAGE RATIO. Permit the Debt
Service Coverage Ratio of the Borrower at any time to be less than 1.25:1,
measured on a quarterly basis beginning April 30, 2000.
Section 10.2 INDEBTEDNESS.
Create, assume, or otherwise become or remain obligated in respect
of, or permit or suffer to exist or to be created, assumed or incurred or to be
outstanding any Indebtedness for Money Borrowed, except for Permitted
Indebtedness for Money Borrowed.
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Section 10.3 GUARANTIES.
Become or remain liable with respect to any Guaranty of any
obligation of any other Person except in connection with the Bond Documents.
Section 10.4 INVESTMENTS.
Acquire, after the Agreement Date, any Business Unit or Investment
or, after such date, permit any Investment to be outstanding, other than
Permitted Investments.
Section 10.5 CAPITAL EXPENDITURES.
Make or incur any Capital Expenditures, except that the Borrower may
make or incur Capital Expenditures in any fiscal year in an amount not to
exceed, in the aggregate, $300,000.
Section 10.6 RESTRICTED DISTRIBUTIONS AND PAYMENTS, ETC.
Declare or make any Restricted Distribution or Restricted Payment,
except that so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, the Borrower may make may make payments on
the Subordinated Indebtedness to the extent permitted by the Subordination
Agreements or the other subordination provisions applicable thereto.
Section 10.7 MERGER, CONSOLIDATION AND SALE OF ASSETS.
Merge or consolidate with any other Person or sell, lease or
transfer or otherwise dispose of all or a substantial portion of its assets to
any Person.
Section 10.8 TRANSACTIONS WITH AFFILIATES.
Effect any transaction with any Affiliate on a basis less favorable
to the Borrower than would be the case if such transaction had been effected
with a Person not an Affiliate.
Section 10.9 LIENS.
Create, assume or permit or suffer to exist or to be created or
assumed any Lien on any of the property or assets of the Borrower, real,
personal or mixed, tangible or intangible, except for Permitted Liens and Liens
described on SCHEDULE 5.1(H).
Section 10.10 OPERATING LEASES.
Enter into any lease other than a Capitalized Lease which would
cause the annual payment obligations of the Borrower under all leases (other
than leases of real property in effect on the Effective Date (and renewals and
substitutions therefor) and Capitalized Leases) to exceed $25,000 in the
aggregate excepting that certain Aircraft Lease Agreement dated July 11, 1997 by
and between ASI and Scope Leasing, wherein ASI makes lease payments of
approximately $42,000 per year.
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Section 10.11 BENEFIT PLANS.
Permit, or take any action which would result in, the aggregate
present value of the Unfunded Vested Accrued Benefits under all Benefit Plans of
the Borrower to exceed $0.
Section 10.12 SALES AND LEASEBACKS.
Enter into any arrangement with any Person providing for the leasing
from such Person of real or personal property which has been or is to be sold or
transferred, directly or indirectly, by the Borrower to such Person.
Section 10.13 AMENDMENTS OF OTHER AGREEMENTS.
Amend in any way the interest rate or principal amount or schedule
of payments of principal and interest with respect to any Indebtedness (other
than the Secured Obligations) other than to reduce the interest rate or extend
the schedule of payments with respect thereto.
Section 10.14 BOND PROCEED EXPENDITURES.
Expend any proceeds of the Bonds without the prior written approval
of Lender in its sole, but reasonable discretion.
ARTICLE 11 - DEFAULT
Section 11.1 EVENTS OF DEFAULT.
Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any governmental or nongovernmental body:
(a) DEFAULT IN PAYMENT OF LOANS. The Borrower shall default in any
payment of principal of, or interest on, any Loan or Note as due within five (5)
calendar days of the date when due (whether at maturity, by reason of
acceleration or otherwise).
(b) OTHER PAYMENT DEFAULT. The Borrower shall default in the
payment, as and when due, of principal of or interest on, any other Secured
Obligation, and such default shall continue for five days after written notice
thereof has been given to the Borrower by the Lender.
(c) MISREPRESENTATION. Any representation or warranty made or deemed
to be made by the Borrower under this Agreement or any other Loan Document or
any amendment hereto or thereto shall at any time prove to have been incorrect
or misleading in any material respect when made.
(d) DEFAULT IN PERFORMANCE. The Borrower shall default (i) in the
performance or observance of any term, covenant, condition or agreement
contained in ARTICLES 6, 7, 8, 9 or
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10; or (ii) in the performance or observance of any term, covenant, condition or
agreement contained in any other provision of this Agreement (other than as
specifically provided for otherwise in this SECTION 11.1) and such default shall
continue for a period of 30 days after written notice thereof has been given to
the Borrower by the Lender.
(e) INDEBTEDNESS CROSS-DEFAULT. (i) The Borrower shall fail to pay
when due and payable the principal of or interest on any Indebtedness (other
than the Loans or Notes) where the principal amount of such Indebtedness is in
excess of $25,000, or (ii) the maturity of any such Indebtedness shall have (A)
been accelerated in accordance with the provisions of any indenture, contract or
instrument providing for the creation of or concerning such Indebtedness, or (B)
been required to be prepaid prior to the stated maturity thereof, or (iii) any
event shall have occurred and be continuing which, with or without the passage
of time or the giving of notice, or both, would permit any holder or holders of
such Indebtedness, any trustee or agent acting on behalf of such holder or
holders or any other Person so to accelerate such maturity. Notwithstanding
SECTION 11.1(e)(i) above, Borrower's failure to pay regular trade payables
incurred in the ordinary course of business in an amount up to $50,000 shall not
constitute an Event of Default unless and until such trade payables remain
unpaid or otherwise unsatisfied for ninety (90) days of the date due, provided
that Borrower notifies Lender of any such trade payables not later than thirty
(30) days after the due date and thereafter updates the status of such trade
payables periodically to the reasonable satisfaction of Lender.
(f) OTHER CROSS-DEFAULTS. The Borrower shall default in the payment
when due or in the performance or observance of any material obligation or
condition of any agreement, contract or lease (other than the Security Documents
or any such agreement, contract or lease relating to Indebtedness), if the
exercise of remedies thereunder by the other party to such agreement could have
a Materially Adverse Effect.
(g) VOLUNTARY BANKRUPTCY PROCEEDING. Any Obligor shall (i) commence
a voluntary case under the federal bankruptcy laws (as now or hereafter in
effect), (ii) commence a proceeding seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding
up or composition for adjustment of debts, (iii) consent to or fail to contest
in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (iv) apply for or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of a substantial part of its property, domestic or
foreign, (v) admit in writing its inability to pay its debts as they become due,
(vi) make a general assignment for the benefit of creditors, or (vii) take any
corporate action for the purpose of authorizing any of the foregoing.
(h) INVOLUNTARY BANKRUPTCY PROCEEDING. A case or other proceeding
shall be commenced against any Obligor in any court of competent jurisdiction
seeking (i) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of debts, or (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of any
Obligor or of all or any substantial part of the assets, domestic or foreign, of
any Obligor, and such case or proceeding shall continue undismissed or unstayed
for a period of 60 consecutive calendar days,
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or an order granting the relief requested in such case or proceeding against any
Obligor (including, but not limited to, an order for relief under such federal
bankruptcy laws) shall be entered.
(i) LOAN DOCUMENTS. Any event of default or Event of Default under
any other Loan Document shall occur or any Obligor shall default in the
performance or observance of any material term, covenant, condition or agreement
contained in, or the payment of any other sum covenanted to be paid by any
Obligor under, any such Loan Document; or any provision of this Agreement, or of
any other Loan Document after delivery thereof hereunder, shall for any reason
cease to be valid and binding, other than a nonmaterial provision rendered
unenforceable by operation of law, or any Obligor or other party thereto (other
than the Lender) shall so state in writing; or this Agreement or any other Loan
Document, after delivery thereof hereunder, shall for any reason (other than any
action taken independently by the Lender and except to the extent permitted by
the terms thereof) cease to create a valid, perfected and, except as otherwise
expressly permitted herein, first priority Lien on, or security interest in, any
of the Collateral purported to be covered thereby.
(j) JUDGMENT. A judgment or order for the payment of money which
exceeds $50,000 in amount shall be entered against any Obligor by any court and
such judgment or order shall continue undischarged or unstayed for 30 days.
(k) ATTACHMENT. A warrant or writ of attachment or execution or
similar process which exceeds $50,000 in value shall be issued against any
property of any Obligor and such warrant or process shall continue undischarged
or unstayed for 30 days.
(l) ERISA. (i) Any Termination Event with respect to a Benefit Plan
shall occur that, after taking into account the excess, if any, of (A) the fair
market value of the assets of any other Benefit Plan with respect to which a
Termination Event occurs on the same day (but only to the extent that such
excess is the property of the Borrower) over (B) the present value on such day
of all vested nonforfeitable benefits under such other Benefit Plan, results in
an Unfunded Vested Accrued Benefit in excess of $0, (ii) any Benefit Plan shall
incur an "accumulated funding deficiency" (as defined in Section 412 of the Code
or Section 302 of ERISA) for which a waiver has not been obtained in accordance
with the applicable provisions of the Code and ERISA, or (iii) the Borrower is
in "default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan resulting from the Borrower's complete or
partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such
Multiemployer Plan.
(m) QUALIFIED AUDITS. The independent certified public accountants
retained by the Borrower shall refuse to deliver an opinion in accordance with
Section 9.1(a) with respect to the annual financial statements of the Borrower.
(n) CHANGE OF CONTROL. ASI shall cease to own, beneficially and of
record, 100% of the outstanding capital stock of DCI or such ownership shall
cease to vest in ASI, voting control of DCI.
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(o) MATERIAL ADVERSE CHANGE. There occurs any act, omission, event,
undertaking or circumstance or series of acts, omissions, events, undertakings
or circumstances which have, or in the sole but reasonable judgment of the
Lender would have, either individually or in the aggregate, a Materially Adverse
Effect.
Section 11.2 REMEDIES.
(a) AUTOMATIC ACCELERATION AND TERMINATION OF FACILITIES. Upon the
occurrence of an Event of Default specified in SECTION 11.1(g) or (h), (i) the
principal of and the interest on the Loans and the Notes at the time
outstanding, and all other amounts owed to the Lender under this Agreement or
any of the Loan Documents and all other Secured Obligations, shall thereupon
become due and payable without presentment, demand, protest or other notice of
any kind, all of which are expressly waived, anything in this Agreement or any
of the Loan Documents to the contrary notwithstanding, and (ii) the Revolving
Credit Facility and the commitment of the Lender to make advances thereunder or
under this Agreement shall immediately terminate.
(b) OTHER REMEDIES. If any Event of Default (other than as
specified in SECTION 11.1(g) or (h)) shall have occurred and be continuing,
the Lender, in its sole and absolute discretion, may do any of the following:
(i) declare the principal of and interest on the Loans and the
Notes at the time outstanding, and all other amounts owed to the Lender
under this Agreement or any of the Loan Documents and all other Secured
Obligations, to be forthwith due and payable, whereupon the same shall
immediately become due and payable without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in
this Agreement or the Loan Documents to the contrary notwithstanding;
(ii) terminate the Revolving Credit Facility and any
commitment of the Lender to make advances hereunder;
(c) FURTHER REMEDIES. If any Event of Default shall have
occurred and be continuing, the Lender, in its sole and absolute discretion,
may do any of the following:
(i) notify, or request the Borrower to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or more
of the Receivables to make payment to the Lender or any agent or designee
of the Lender, at such address as may be specified by the Lender, and, if,
notwithstanding the giving of any notice, any Account Debtor or other such
obligor shall make payments to the Borrower, the Borrower shall hold all
such payments it receives in trust for the Lender, without commingling the
same with other funds or property of, or held by, the Borrower and shall
deliver the same to the Lender or any such agent or designee immediately
upon receipt by the Borrower in the identical form received, together with
any necessary endorsements;
(ii) settle or adjust disputes and claims directly with
Account Debtors and other obligors on Receivables for amounts and on terms
which the Lender considers
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advisable and in all such cases only the net amounts received by the
Lender in payment of such amounts, after deductions of costs and
attorneys' fees, shall constitute Collateral, and the Borrower shall have
no further right to make any such settlements or adjustments or to accept
any returns of merchandise;
(iii) enter upon any premises on which Inventory or Equipment
may be located and, without resistance or interference by the Borrower,
take physical possession of any or all thereof and maintain such
possession on such premises or move the same or any part thereof to such
other place or places as the Lender shall choose, without being liable to
the Borrower on account of any loss, damage or depreciation that may occur
as a result thereof, so long as the Lender shall act reasonably and in
good faith;
(iv) require the Borrower to and the Borrower shall, without
charge to the Lender, assemble the Inventory and Equipment and maintain or
deliver it into the possession of the Lender or any agent or
representative of the Lender at such place or places as the Lender may
designate;
(v) at the expense of the Borrower, cause any of the Inventory
and Equipment to be placed in a public or field warehouse, and the Lender
shall not be liable to the Borrower on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the Lender
shall act reasonably and in good faith;
(vi) without notice, demand or other process, and without
payment of any rent or any other charge, enter any of the Borrower's
premises and, without breach of the peace, until the Lender completes the
enforcement of its rights in the Collateral, take possession of such
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of the Borrower's equipment, for the
purpose of (A) completing any work in process, preparing any Inventory for
disposition and disposing thereof, and (B) collecting any Receivable, and
the Lender is hereby granted a license or sublicense and all other rights
as may be necessary, appropriate or desirable to use the Intellectual
Property in connection with the foregoing, and the rights of the Borrower
under all licenses and franchise agreements shall inure to the Lender's
benefit (provided, however, that any use of any federally registered
trademarks as to any goods shall be subject to the control as to the
quality of such goods of the owner of such trademarks and the goodwill of
the business symbolized thereby);
(vii) exercise any and all of its rights under any and all
of the Security Documents;
(viii) apply any cash Collateral to the payment of the Secured
Obligations in any order in which the Lender may elect or use such cash in
connection with the exercise of any of its other rights hereunder or under
any of the Security Documents;
(ix) establish or cause to be established one or more
lockboxes or other arrangement for the deposit of proceeds of Receivables,
and, in such case, the Borrower
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shall cause to be forwarded to the Lender at the Lender's Office, on a
daily basis, copies of all checks and other items of payment and deposit
slips related thereto deposited in such lockboxes, together with
collection reports in form and substance satisfactory to the Lender; and
(x) exercise all of the rights and remedies of a secured party
under the UCC (whether or not the UCC is applicable) and under any other
applicable law, including, without limitation, the right, without notice
except as specified below and with or without taking the possession
thereof, to sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any location chosen by the Lender, for cash,
on credit or for future delivery and at such price or prices and upon such
other terms as the Lender may deem commercially reasonable. The Borrower
agrees that, to the extent notice of sale shall be required by law, at
least 10 days' notice (or such longer period as required by law) to the
Borrower of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notice, but
notice given in any other reasonable manner or at any other reasonable
time shall also constitute reasonable notification. The Lender shall not
be obligated to make any sale of Collateral regardless of notice of sale
having been given. The Lender may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
Section 11.3 Application of Proceeds.
All proceeds from each sale of, or other realization upon, all or
any part of the Collateral following an Event of Default shall be applied or
paid over as follows:
(a) FIRST: to the payment of all costs and expenses incurred
in connection with such sale or other realization, including reasonable
attorneys' fees,
(b) SECOND: to the payment of the Secured Obligations (with
the Borrower remaining liable for any deficiency) in any order which the
Lender may elect, and
(c) THIRD: the balance (if any) of such proceeds shall be paid
to the Borrower or, subject to any duty imposed by law or otherwise, to
whomsoever is entitled thereto.
THE BORROWER SHALL REMAIN LIABLE AND WILL PAY, ON DEMAND, ANY DEFICIENCY
REMAINING IN RESPECT OF THE SECURED OBLIGATIONS, TOGETHER WITH INTEREST THEREON
AT A RATE PER ANNUM EQUAL TO THE HIGHEST RATE THEN PAYABLE HEREUNDER ON SUCH
SECURED OBLIGATIONS, WHICH INTEREST SHALL CONSTITUTE PART OF THE SECURED
OBLIGATIONS.
Section 11.4 Power of Attorney.
In addition to the authorizations granted to the Lender under
SECTION 7.15 or under any other provision of this Agreement or any of the Loan
Documents, upon and after an Event of Default, the Borrower hereby irrevocably
designates, makes, constitutes and appoints the Lender (and all Persons
designated by the Lender from time to time) as the Borrower's true
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and lawful attorney and agent in fact, and the Lender or any agent of the Lender
may, without notice to the Borrower, and at such time or times as the Lender or
any such agent in its sole discretion may determine, in the name of the Borrower
or the Lender,
(a) demand payment of the Receivables, enforce payment thereof by
legal proceedings or otherwise, settle, adjust, compromise, extend or renew any
or all of the Receivables or any legal proceedings brought to collect the
Receivables, discharge and release the Receivables or any of them and exercise
all of the Borrower's rights and remedies with respect to the collection of
Receivables,
(b) prepare, file and sign the name of the Borrower on any proof of
claim in bankruptcy or any similar document against any Account Debtor or any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with any of the Collateral,
(c) endorse the name of the Borrower upon any chattel paper,
document, instrument, notice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document
or agreement relating to the Receivables, the Inventory or any other Collateral,
(d) use the stationery of the Borrower, open the Borrower's mail,
notify the post office authorities to change the address for delivery of the
Borrower's mail to an address designated by the Lender and sign the name of the
Borrower to verifications of the Receivables and on any notice to the Account
Debtors,
(e) use the information recorded on or contained in any data
processing equipment and computer hardware and software relating to the
Receivables, Inventory or other Collateral to which the Borrower or any
Subsidiary of the Borrower has access.
Section 11.5 MISCELLANEOUS PROVISIONS CONCERNING REMEDIES.
(a) RIGHTS CUMULATIVE. The rights and remedies of the Lender under
this Agreement, the Note and each of the Loan Documents shall be cumulative and
not exclusive of any rights or remedies which it or they would otherwise have.
In exercising such rights and remedies, the Lender may be selective and no
failure or delay by the Lender in exercising any right shall operate as a waiver
of such right nor shall any single or partial exercise of any power or right
preclude its other or further exercise or the exercise of any other power or
right.
(b) WAIVER OF MARSHALING. The Borrower hereby waives any right
to require any marshaling of assets and any similar right.
(c) LIMITATION OF LIABILITY. Nothing contained in this ARTICLE 11 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Lender or any agent or designee of the Lender to
make any demand or to make any inquiry as to the nature or sufficiency of any
payment received by it or to present or file any claim or notice or take any
action with respect to any Receivable or any other Collateral or the moneys due
or to become due thereunder or in connection therewith or to take any steps
necessary to preserve any rights against prior parties, and neither the Lender
nor any of its agents or designees shall have any liability to the Borrower for
actions taken pursuant to this Article 11, any other provision of
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this Agreement or any of the Loan Documents, so long as the Lender or such agent
or designee shall act reasonably and in good faith.
(d) APPOINTMENT OF RECEIVER. In any action under this ARTICLE 11,
the Lender shall be entitled to the appointment of a receiver, without notice of
any kind whatsoever, to take possession of all or any portion of the Collateral
and to exercise such power as the court shall confer upon such receiver.
Section 11.6 TRADEMARK LICENSE.
The Borrower hereby grants to the Lender the nonexclusive right and
license to use any trademarks, tradenames and servicemarks then used by the
Borrower, for the purposes set forth in SECTION 11.2(c)(vi) and for the purpose
of enabling the Lender to realize on the Collateral and to permit any purchaser
of any portion of the Collateral through a foreclosure sale or any other
exercise of the Lender's rights and remedies under the Loan Documents to use,
sell or otherwise dispose of the Collateral bearing any such trademark. Such
right and license is granted free of charge, without the requirement that any
monetary payment whatsoever be made to the Borrower or any other Person by the
Lender. The Borrower hereby represents, warrants, covenants and agrees that it
presently has, and shall continue to have, the right, without the approval or
consent of others, to grant the license set forth in this SECTION 11.6.
Section 11.7 FORBEARANCE/MODIFICATION FEES. If Borrower requests,
and Lender agrees, in Lender's sole and absolute discretion, to enter into a
forbearance or modification agreement in connection with any Default, Event of
Default or potential default, in addition to legal and other fees, costs and
expenses incurred in connection with Lender's protection of its Collateral, due
diligence and documentation, Borrower will pay a forbearance or modification fee
determined by Lender, but in no event less than $10,000.
ARTICLE 12 - MISCELLANEOUS
Section 12.1 NOTICES.
(a) METHOD OF COMMUNICATION. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone subsequently
confirmed in writing. Notices in writing shall be delivered personally or sent
by overnight courier service, by certified or registered mail, postage pre-paid,
or by facsimile transmission and shall be deemed received, in the case of
personal delivery, when delivered, in the case of overnight courier service, on
the next Business Day after delivery to such service, in the case of mailing, on
the third day after mailing (or, if such day is a day on which deliveries of
mail are not made, on the next succeeding day on which deliveries of mail are
made) and, in the case of facsimile transmission, upon transmittal, provided
that any facsimile notice from Borrower to Lender will be concurrently made with
another form of acceptable notice hereunder.
(b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it
at the following addresses, or any other address of which all the other parties
are notified in writing.
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If to either Borrower: Airport Systems International, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to the Lender: Bank of America, N.A.
1200 One Kansas City Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
with copy to: ▇▇▇▇▇ ▇▇▇▇ LLP
3500 One Kansas City Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) LENDER'S OFFICE. The Lender hereby designates its office located
at 1200 One Kansas City Place, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or
any subsequent office which shall have been specified for such purpose by
written notice to the Borrower, as the office to which payments due are to be
made and at which Loans will be disbursed.
Section 12.2 EXPENSES.
The Borrower agrees to pay or reimburse on demand all costs and
expenses incurred by the Lender, including, without limitation, the reasonable
fees and disbursements of counsel, in connection with (a) the negotiation,
preparation, execution, delivery, administration, enforcement and termination of
this Agreement and each of the other Loan Documents, whenever the same shall be
executed and delivered, including, without limitation, (i) the out-of-pocket
costs and expenses incurred in connection with the administration and
interpretation of this Agreement and the other Loan Documents, (ii) the costs
and expenses of appraisals of the Collateral, (iii) the costs and expenses of
lien searches, and (iv) taxes, fees and other charges of filing the Financing
Statements and continuations and the costs and expenses of taking other actions
to perfect, protect, and continue the Security Interest; (b) the preparation,
execution and delivery of any waiver, amendment, supplement or consent by the
Lender relating to this Agreement or any of the Loan Documents; (c) sums paid or
obligations incurred in connection with the payment of any amount or taking any
action required of the Borrower under the Loan
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Documents that the Borrower fails to pay or take; (d) if an Event of Default
exists, costs of inspections and verifications of the Collateral, including,
without limitation, standard per diem fees charged by the Lender for travel,
lodging, and meals for inspections of the Collateral and the Borrower's
operations and books and records by the Lender's agents; (e) costs and expenses
of forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining each Disbursement Account, Agency Account and
Lockbox; (f) costs and expenses of preserving and protecting the Collateral; (g)
after the occurrence of a Default, consulting with and obtaining opinions and
appraisals from one or more Persons, including personal property appraisers,
accountants and lawyers, concerning the value of any Collateral for the Secured
Obligations or related to the nature, scope or value of any right or remedy of
the Lender hereunder or under any of the Loan Documents, including any review of
factual matters in connection therewith, which expenses shall include the fees
and disbursements of such Persons; and (h) costs and expenses paid or incurred
to obtain payment of the Secured Obligations, enforce the Security Interest,
sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to prosecute or defend any claim in any way
arising out of, related to or connected with, this Agreement or any of the Loan
Documents, which expenses shall include the reasonable fees and disbursements of
counsel and of experts and other consultants retained by the Lender.
The foregoing shall not be construed to limit any other provisions
of the Loan Documents regarding costs and expenses to be paid by the Borrower.
The Borrower hereby authorizes the Lender to debit the Borrower's loan accounts
(by increasing the principal amount of the Revolving Credit Loan) in the amount
of any such costs and expenses owed by the Borrower when due.
Section 12.3 STAMP AND OTHER TAXES.
The Borrower will pay any and all stamp, registration, recordation
and similar taxes, fees or charges and shall indemnify the Lender against any
and all liabilities with respect to or resulting from any delay in the payment
or omission to pay any such taxes, fees or charges, which may be payable or
determined to be payable in connection with the execution, delivery, performance
or enforcement of this Agreement and any of the Loan Documents or the perfection
of any rights or security interest thereunder.
Section 12.4 SETOFF.
In addition to any rights now or hereafter granted under applicable
law, and not by way of limitation of any such rights, upon and after the
occurrence of any Default or Event of Default, the Lender and any participant
with the Lender in the Loans are hereby authorized by the Borrower at any time
or from time to time, without notice to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and to
apply any and all deposits (general or special, time or demand, including, but
not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other indebtedness at any time held or owing by
the Lender or any participant to or for the credit or the account of the
Borrower against and on account of the Secured Obligations irrespective or
whether or not (a) the Lender shall have made any demand under this Agreement or
any of the Loan Documents, or (b) the Lender shall have declared any or all of
the Secured Obligations to
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be due and payable as permitted by SECTION 11.2 and although such Secured
Obligations shall be contingent or unmatured.
Section 12.5 LITIGATION.
EACH OF THE LENDER AND THE BORROWER HEREBY KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR
NATURE IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST THE
BORROWER OR THE LENDER ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR ANY
ASSIGNMENT THEREOF OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN
THE BORROWER AND THE LENDER OF ANY KIND OR NATURE. THE BORROWER AND THE LENDER
HEREBY AGREE THAT THE FEDERAL COURT OF THE WESTERN DISTRICT OF MISSOURI OR, AT
THE OPTION OF THE LENDER, ANY COURT IN WHICH THE LENDER SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER
IN CONTROVERSY AND WHICH SITS IN A JURISDICTION IN WHICH THE BORROWER TRANSACTS
BUSINESS SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS
OR DISPUTES BETWEEN THE BORROWER AND THE LENDER, PERTAINING DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING
THEREFROM. THE BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS, HEREBY
WAIVING PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS
ISSUED THEREIN AND AGREEING THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE
BORROWER AT THE ADDRESS SET FORTH IN SECTION 12.1(B), WHICH SERVICE SHALL BE
DEEMED MADE UPON RECEIPT THEREOF. THE NON-EXCLUSIVE CHOICE OF FORUM SET FORTH IN
THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO
ENFORCE THE SAME IN ANY APPROPRIATE JURISDICTION. NOTWITHSTANDING ING TO THE
CONTRARY CONTAINED HEREIN, EXCEPTING THE LIMITED PROVISIONS OF SECTION 7.9(C)
HEREOF, NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS LENDER'S
CONSENT TO SUBMIT ANY DISPUTES, DISAGREEMENTS OR OTHER ISSUES OF ANY KIND
WHATSOEVER UNDER THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS TO ARBITRATION,
MEDIATION OR ANY OTHER FORM OF ALTERNATIVE DISPUTE RESOLUTION.
Section 12.6 WAIVER OF RIGHTS.
THE BORROWER HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY WAIVES
ALL RIGHTS WHICH THE BORROWER HAS UNDER APPLICABLE LAW TO NOTICE AND TO A
JUDICIAL HEARING PRIOR TO THE ISSUANCE OF A WRIT OF POSSESSION ENTITLING THE
LENDER, ITS SUCCESSORS AND ASSIGNS TO POSSESSION OF THE COLLATERAL UPON DEFAULT
OR EVENT OF DEFAULT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND
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WITHOUT LIMITING ANY OTHER RIGHT WHICH THE LENDER MAY HAVE, THE BORROWER
CONSENTS THAT, IF THE LENDER FILES A PETITION FOR AN IMMEDIATE WRIT OF
POSSESSION UNDER APPLICABLE LAW AND THIS WAIVER OR A COPY HEREOF IS ALLEGED IN
SUCH PETITION AND ATTACHED THERETO, THE COURT BEFORE WHICH SUCH PETITION IS
FILED MAY DISPENSE WITH ALL RIGHTS AND PROCEDURES HEREIN WAIVED AND MAY ISSUE
FORTHWITH AN IMMEDIATE WRIT OF POSSESSION IN ACCORDANCE WITH APPLICABLE LAW,
WITHOUT THE NECESSITY OF AN ACCOMPANYING BOND AS OTHERWISE MAY BE REQUIRED BY
APPLICABLE LAW. THE BORROWER HEREBY ACKNOWLEDGES THAT IT HAS READ AND FULLY
UNDERSTANDS THE TERMS OF THIS WAIVER AND THE EFFECT HEREOF.
Section 12.7 REVERSAL OF PAYMENTS.
To the extent the Borrower makes a payment or payments to the Lender
or the Lender receives any payment or proceeds of the Collateral for the
Borrower's benefit, which payment(s) or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, the
Lender shall have the continuing and exclusive right to apply, reverse and
re-apply any and all payments to any portion of the Secured Obligations, and, to
the extent of such payment or proceeds received, the Secured Obligations or part
thereof intended to be satisfied shall be revived and continued in full force
and effect, as if such payment or proceeds had not been received by the Lender.
Section 12.8 INJUNCTIVE RELIEF.
The Borrower recognizes that, in the event the Borrower fails to
perform, observe or discharge any of its obligations or liabilities under this
Agreement, any remedy of law may prove to be inadequate relief to the Lender;
therefore, the Borrower agrees that the Lender, at the Lender's option, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
Section 12.9 ACCOUNTING MATTERS.
All financial and accounting calculations, measurements and
computations made for any purpose relating to this Agreement, including, without
limitation, all computations utilized by the Borrower to determine whether it is
in compliance with any covenant contained herein, shall, unless there is an
express written direction or consent by the Lender to the contrary, be performed
in accordance with GAAP.
Section 12.10 ASSIGNMENT; PARTICIPATION.
All the provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its rights
under this Agreement. The Lender may assign to one or more Persons, or sell
participations to one or more Persons in, all or a portion of its rights and
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obligations hereunder and under the Note and, in connection with any such
assignment or sale of a participation, may assign its rights and obligations
under the Security Documents. The Lender may, in connection with any assignment
or proposed assignment or sale or proposed sale of a participation, disclose to
the assignee or proposed assignee or participant or proposed participant any
information relating to the Borrower furnished to the Lender by or on behalf of
the Borrower, provided that such assignee, proposed assignee, participant or
proposed participant agrees to keep such information confidential.
Section 12.11 AMENDMENTS.
Any term, covenant, agreement or condition of this Agreement or any
of the other Loan Documents may be amended or waived and any departure therefrom
may be consented to if, but only if, such amendment, waiver or consent is in
writing signed by the Lender and, in the case of an amendment, by the Borrower.
Unless otherwise specified in such waiver or consent, a waiver or consent given
hereunder shall be effective only in the specific instance and for the specific
purpose for which given.
Section 12.12 PERFORMANCE OF BORROWER'S DUTIES.
The Borrower's obligations under this Agreement and each of the Loan
Documents shall be performed by the Borrower at its sole cost and expense. If
the Borrower shall fail to do any act or thing which it has covenanted to do
under this Agreement or any of the Loan Documents, the Lender may (but shall not
be obligated to) do the same or cause it to be done either in the name of the
Lender or in the name and on behalf of the Borrower, and the Borrower hereby
irrevocably authorizes the Lender so to act.
Section 12.13 INDEMNIFICATION.
The Borrower agrees to reimburse the Lender for all reasonable costs
and expenses, including counsel fees and disbursements, incurred and to
indemnify and hold the Lender harmless from and against all losses suffered by
the Lender, other than losses resulting from the Lender's gross negligence or
willful misconduct, in connection with (a) the exercise by the Lender of any
right or remedy granted to it under this Agreement or any of the Loan Documents,
(b) any claim, and the prosecution or defense thereof, arising out of or in any
way connected with this Agreement or any of the Loan Documents, except in the
case of a dispute between the Borrower and the Lender in which the Borrower
prevails in a final unappealed or unappealable judgment, and (c) the collection
or enforcement of the Secured Obligations or any of them.
Section 12.14 ALL POWERS COUPLED WITH INTEREST.
All powers of attorney and other authorizations granted to the
Lender and any Persons designated by the Lender pursuant to any provisions of
this Agreement or any of the Loan Documents shall be deemed coupled with an
interest and shall be irrevocable so long as any of the Secured Obligations
remain unpaid or unsatisfied or the Revolving Credit Facility has not been
terminated.
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Section 12.15 SURVIVAL.
Notwithstanding any termination of this Agreement, (a) until all
Secured Obligations have been paid in full and the Revolving Credit Facility
terminated, the Lender shall retain its Security Interest and shall retain all
rights under this Agreement and each of the Security Documents with respect to
the Collateral as fully as though this Agreement had not been terminated, and
(b) the indemnities to which the Lender is entitled under the provisions of this
Article 12 and any other provision of this Agreement and the Loan Documents
shall continue in full force and effect and shall protect the Lender against
events arising after such termination as well as before.
Section 12.16 SEVERABILITY OF PROVISIONS.
Any provision of this Agreement or any other Loan Document which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remainder of such provision or the remaining provisions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
Section 12.17 GOVERNING LAW.
This Agreement, the Note and all other Loan Documents shall be
construed in accordance with and governed by the law of the State of Missouri
except as expressly provided therein.
Section 12.18 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and shall be binding upon all
parties, their successors and assigns, and all of which taken together shall
constitute one and the same agreement.
Section 12.19 REPRODUCTION OF DOCUMENTS.
This Agreement, each of the Loan Documents and all documents
relating thereto, including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by the
Lender, and (c) financial statements, certificates and other information
previously or hereafter furnished to the Lender, may be reproduced by the Lender
by any photographic, photostatic, microcard, microfilm, miniature photographic
or other similar process, and the Lender may destroy any original document so
reproduced. Each party hereto stipulates that, to the extent permitted by
applicable laws any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original shall be in existence and whether or not such reproduction was made by
such Lender in the regular course of business), and any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.
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Section 12.20 FUNDS TRANSFER SERVICES.
(a) The Borrower acknowledges that the Lender has made available to
it a description of security procedures regarding funds transfers executed by
the Lender or an affiliate bank at the request of such Borrower (the "Security
Procedures"). The Borrower and the Lender agree that the Security Procedures are
commercially reasonable. The Borrower further acknowledges that the full scope
of the Security Procedures which the Lender or such affiliate bank offers and
strongly recommends for funds transfers is available only if the Borrower
communicates directly with the Lender or such affiliate bank as applicable in
accordance with said procedures. If the Borrower attempts to communicate by any
other method or otherwise not in accordance with the Security Procedures, the
Lender or such affiliate bank, as applicable, shall not be required to execute
such instructions, but if the Lender or such affiliate bank, as applicable, does
so, the Borrower will be deemed to have refused the Security Procedures that the
Lender or such affiliate bank, as applicable, offers and strongly recommends,
and the Borrower will be bound by any funds transfer, whether or not authorized,
which is issued in the Borrower's name and accepted by the Lender or such
affiliate bank, as applicable, in good faith. The Lender or such affiliate bank,
as applicable, may modify the Security Procedures at such time or times and in
such manner as the Lender or such affiliate bank, as applicable, in its sole
discretion, deems appropriate to meet prevailing standards of good banking
practice. By continuing to use the Lender's or such affiliate bank's, as
applicable, wire transfer services after receipt of any modification of the
Security Procedures, the Borrower agrees that the Security Procedures, as
modified, are likewise commercially reasonable. The Borrower further agrees to
establish and maintain procedures to safeguard the Security Procedures and any
information related thereto.
(b) The Lender or such affiliate bank, as applicable, will generally
use the Fedwire funds transfer system for domestic funds transfers, and the
funds transfer system operated by the Society for Worldwide International
Financial Telecommunication (SWIFT) for international funds transfers.
International funds transfers may also be initiated through the Clearing House
InterBank Payment System (CHIPs) or international cable. However, the Lender or
such affiliate bank, as applicable, may use any means and routes that the Lender
or such affiliate bank, as applicable, in its sole discretion, may consider
suitable for the transmission of funds. Each payment order, or cancellation
thereof, carried out through a funds transfer system or a clearing house will be
governed by all applicable funds transfer system rules and clearing house rules
and clearing arrangements, whether or not the Lender or such affiliate bank, as
applicable, is a member of the system, clearing house or arrangement and the
Borrower acknowledges that the Lender's or such affiliate bank's, as applicable,
right to reverse, adjust, stop payment or delay posting of an executed payment
order is subject to the laws, regulations, rules, circulars and arrangements
described herein.
Section 12.21 CONSENT TO ADVERTISING AND PUBLICITY.
The Borrower agrees that the Lender may issue and disseminate to the
public information describing the credit accommodation entered into pursuant to
this Agreement, including the name and address of the Borrower and the amount
and a general description of the credit facilities provided hereunder.
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Section 12.22 FINAL AGREEMENT.
This Agreement and the other Loan Documents are intended by the
parties hereto as the final, complete and exclusive expression of the agreement
among them with respect to the subject matter hereof and thereof. This Agreement
and the other Loan Documents supersede any and all prior oral or written
agreements between the parties hereto relating to the subject matter hereof and
thereof.
Section 12.23 MO. REV. STAT. SECTION 432.045 NOTICE.
The following notice is given to comply with Mo. Rev. Stat.
Section 432.045:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT THE BORROWER AND THE LENDER FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY THE BORROWER AND
THE LENDER COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES HERETO,
EXCEPT AS THE PARTIES HERETO MAY LATER AGREE IN WRITING TO MODIFY IT.
Section 12.24 K.S.A. 16-117 AND ▇▇-▇▇▇ ▇▇▇▇▇▇.
The following notice is given to comply with K.S.A. 16-117 and
16-118:
THIS IS THE FINAL EXPRESSION OF THE LOAN AND SECURITY AGREEMENT
BETWEEN BORROWER AND LENDER. THIS LOAN AND SECURITY AGREEMENT CANNOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR ORAL CREDIT AGREEMENT OR OF A
CONTEMPORANEOUS ORAL CREDIT AGREEMENT BETWEEN BORROWER AND LENDER. THE FOLLOWING
SPACE (WHICH THE PARTIES HERETO AGREE IS SUFFICIENT SPACE) IS PROVIDED FOR THE
PLACEMENT OF NONSTANDARD TERMS, IF ANY (IF THERE ARE NO NONSTANDARD TERMS TO BE
ADDED, STATE "NONE"):
__________________________NONE__________________________________
________________________________________________________________
________________________________________________________________
BY SIGNING BELOW, BORROWER AND LENDER HEREBY AFFIRM THAT THERE IS NO
UNWRITTEN ORAL CREDIT AGREEMENT BETWEEN THEMSELVES WITH RESPECT TO THE SUBJECT
MATTER OF THIS WRITTEN CREDIT AGREEMENT.
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Section 12.25. YEAR 2000.
The Company has (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business operations (including those
affected by suppliers, vendors and customers) that could be adversely affected
by the "Year 2000 Problem" (that is, the risk that computer applications used by
the Company or any of its Subsidiaries (or suppliers, vendors and customers) may
be unable to recognize and perform properly dated-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, the Company believes that all computer applications (including
those of its suppliers, vendors and customers) that are material to its or any
of its Subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 compliant"), except to
the extent that a failure to do so could not reasonably be expected to have a
Materially Adverse Effect.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in Kansas City, Missouri by their duly authorized officers in
several counterparts all as of the day and year first written above.
BORROWER:
AIRPORT SYSTEMS INTERNATIONAL,
INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
DCI, INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
LENDER:
BANK OF AMERICA, N.A.
By:_____________________________
Name:___________________________
Title:__________________________
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EXHIBIT "A-1"
REVOLVING CREDIT NOTE B
$3,000,000 Date: February 7, 2000
FOR VALUE RECEIVED, on February 7, 2000 the undersigned promises to
pay to the order of BANK OF AMERICA, N.A., (hereinafter, together with any
holder hereof, called "HOLDER") at Kansas City, Missouri (or at such other place
as the Holder may designate in writing to the undersigned) the principal amount
of Three Million and No/100 Dollars ($3,000,000.00) or so much thereof as has
been advanced hereunder.
The undersigned shall pay interest as provided in that certain Loan
and Security Agreement between the undersigned and Holder dated February 7,
2000 (the "LOAN AGREEMENT"). Unless otherwise defined herein, defined terms
shall have the same meaning as in the Loan Agreement.
It is contemplated that the principal sum evidenced by this Note may
be reduced from time to time and that additional advances may be made from time
to time, as provided in the Loan Agreement; provided, however, that the
outstanding principal amount evidenced by this Note shall not exceed the maximum
amount provided in the Loan Agreement.
This Note is subject to the terms and conditions of, and entitled to
the benefit of the Collateral described in, the Loan Agreement. Capitalized
terms not defined herein shall have the meanings given in the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder, under the Loan Agreement, the Security Documents or
at law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy.
Principal and interest on this Note shall be payable and paid in
lawful money of the United States of America.
The undersigned and all endorsers waive presentment, notice of
dishonor and protest.
Time is of the essence of this Note and, in case this Note is
collected by law or through an attorney at law, or under advice therefrom, the
undersigned agrees to pay all costs of collection, including reasonable
attorneys' fees if collected by or through an attorney.
The provisions of this Note shall be construed and interpreted and
all rights and obligations of the parties hereunder determined in accordance
with the laws of the State of Missouri.
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THIS REVOLVING CREDIT NOTE "B" EVIDENCES, IN PART, THE SAME
INDEBTEDNESS AS EVIDENCED BY DOCUMENTATION RELATING TO THE "EXISTING LOANS" (AS
SUCH TERM IS DEFINED IN THE LOAN AGREEMENT). THIS REVOVING CREDIT NOTE "B" IS
SECURED BY ALL OF THE SAME COLLATERAL AS THE EXISTING LOANS PURSUANT TO THE
TERMS OF THE LOAN AGREEMENT AND RELATED LOAN DOCUMENTS. ALL FUTURE ADVANCES MADE
TO THE MAKER WILL ALSO BE SECURED BY THE LOAN DOCUMENTS. THIS REVOLVING NOTE "B"
IS, IN PART, A RESTATEMENT OF THE EXISTING LOANS AND THE DOCUMENTS RELATING
THERETO, AND ITS EXECUTION AND DELIVERY DOES NOT EVIDENCE A CANCELLATION OF THE
INDEBTEDNESS EVIDENCED BY THE PRIOR DOCUMENTS.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed, sealed and delivered in Kansas City, Missouri, in its corporate name,
by and through its respective duly authorized officers, as of the day and year
first above written.
BORROWER:
AIRPORT SYSTEMS INTERNATIONAL,
INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
DCI, INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
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EXHIBIT "A-2"
TERM NOTE A
$328,000 Date: February 7, 2000
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
BANK OF AMERICA, N.A. (together with any holder hereof, called "HOLDER") with
offices located in Kansas City, Missouri, the principal sum of Three Hundred
Twenty-Eight Thousand and No/100 Dollars ($328,000.00) at the offices of Holder
at Kansas City, Missouri, or at any other place designated by Holder, in lawful
money of the United States, together with interest, said principal sum being
payable in equal monthly installments of $3,793.54 each, the first such
installment being due on the 15th day of March, 2000, and succeeding
installments being due on the same date of each successive month thereafter, and
a final installment of all unpaid principal due on the earlier of (i) the 15th
day of February, 2001, or (ii) concurrently upon the sale of the Olathe Property
(as defined in the Loan Agreement, as defined below). Interest on the unpaid
principal balance shall be due with each installment of principal at the rate
provided in the Loan and Security Agreement between the undersigned and Bank of
America, N.A. of even date (the "LOAN AGREEMENT"). Unless otherwise defined
herein, defined terms shall have the same meaning as in the Loan Agreement.
This Note is subject to the terms and conditions of, and entitled to
the benefits of the Collateral described in, the Loan Agreement. Capitalized
terms not defined herein shall have the meanings given in the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder, under the Loan Agreement, the Security Documents or
at law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy.
Principal and interest on this Note shall be payable and paid in
lawful money of the United States of America.
The undersigned and all endorsers waive presentment, notice of
dishonor and protest.
Time is of the essence of this Note and, in case this Note is
collected by law or through an attorney at law, or under advice therefrom, the
undersigned agrees to pay all costs of collection, including reasonable
attorneys' fees if collected by or through an attorney.
The provisions of this Note shall be construed and interpreted and
all rights and obligations of the parties hereunder determined in accordance
with the laws of the State of Missouri.
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THIS TERM NOTE "A" EVIDENCES, IN PART, THE SAME INDEBTEDNESS AS
EVIDENCED BY DOCUMENTATION RELATING TO THE "EXISTING LOANS" (AS SUCH TERM IS
DEFINED IN THE LOAN AGREEMENT). THIS TERM NOTE "A" IS SECURED BY ALL OF THE SAME
COLLATERAL AS THE EXISTING LOANS PURSUANT TO THE TERMS OF THE LOAN AGREEMENT AND
RELATED LOAN DOCUMENTS. ALL FUTURE ADVANCES MADE TO THE MAKER WILL ALSO BE
SECURED BY THE LOAN DOCUMENTS. THIS TERM NOTE "A" IS, IN PART, A RESTATEMENT OF
THE EXISTING LOANS AND THE DOCUMENTS RELATING THERETO, AND ITS EXECUTION AND
DELIVERY DOES NOT EVIDENCE A CANCELLATION OF THE INDEBTEDNESS EVIDENCED BY THE
PRIOR DOCUMENTS.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed, sealed and delivered in Kansas City, Missouri, in its corporate name,
by and through its respective duly authorized officers, as of the day and year
first above written.
BORROWER:
AIRPORT SYSTEMS INTERNATIONAL,
INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
DCI, INC., A KANSAS CORPORATION
Attest:
By:_____________________________
By: Name:___________________________
-------------------------- Title:__________________________
Name:
Title:
-▇▇-
▇▇▇▇▇▇▇ "▇-▇"
▇▇▇▇ NOTE B
$850,000 Date: February 7, 2000
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
BANK OF AMERICA, N.A. (together with any holder hereof, called "HOLDER") with
offices located in Kansas City, Missouri, the principal sum of Eight Hundred
Fifty Thousand and No/100 Dollars ($850,000.00) at the offices of Holder at
Kansas City, Missouri, or at any other place designated by Holder, in lawful
money of the United States, together with interest, said principal sum being
payable in equal monthly installments of $27,128.78 each, the first such
installment being due on the 15th day of March, 2000, and succeeding
installments being due on the same date of each successive month thereafter, and
a final installment of all unpaid principal due on the 15th day of February,
2003, and said interest on the unpaid principal balance shall be due with each
installment of principal at the rate provided in the Loan and Security Agreement
between the undersigned and Bank of America, N.A. of even date (the "LOAN
AGREEMENT"). Unless otherwise defined herein, defined terms shall have the same
meaning as in the Loan Agreement.
This Note is subject to the terms and conditions of, and entitled to
the benefits of the Collateral described in, the Loan Agreement. Capitalized
terms not defined herein shall have the meanings given in the Loan Agreement.
No delay or failure on the part of the Holder in the exercise of any
right or remedy hereunder, under the Loan Agreement, the Security Documents or
at law or in equity, shall operate as a waiver thereof, and no single or partial
exercise by the Holder of any right or remedy hereunder, under the Loan
Agreement, the Security Documents, or at law or in equity shall preclude or
estop another or further exercise thereof or the exercise of any other right or
remedy.
Principal and interest on this Note shall be payable and paid in
lawful money of the United States of America.
The undersigned and all endorsers waive presentment, notice of
dishonor and protest.
Time is of the essence of this Note and, in case this Note is
collected by law or through an attorney at law, or under advice therefrom, the
undersigned agrees to pay all costs of collection, including reasonable
attorneys' fees if collected by or through an attorney.
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The provisions of this Note shall be construed and interpreted and
all rights and obligations of the parties hereunder determined in accordance
with the laws of the State of Missouri.
THIS TERM NOTE "B" EVIDENCES, IN PART, THE SAME INDEBTEDNESS AS
EVIDENCED BY DOCUMENTATION RELATING TO THE "EXISTING LOANS" (AS SUCH TERM IS
DEFINED IN THE LOAN AGREEMENT). THIS TERM NOTE "B" IS SECURED BY ALL OF THE SAME
COLLATERAL AS THE EXISTING LOANS PURSUANT TO THE TERMS OF THE LOAN AGREEMENT AND
RELATED LOAN DOCUMENTS. ALL FUTURE ADVANCES MADE TO THE MAKER WILL ALSO BE
SECURED BY THE LOAN DOCUMENTS. THIS TERM NOTE "B" IS, IN PART, A RESTATEMENT OF
THE EXISTING LOANS AND THE DOCUMENTS RELATING THERETO, AND ITS EXECUTION AND
DELIVERY DOES NOT EVIDENCE A CANCELLATION OF THE INDEBTEDNESS EVIDENCED BY THE
PRIOR DOCUMENTS.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed, sealed and delivered in Kansas City, Missouri, in its corporate name,
by and through its respective duly authorized officers, as of the day and year
first above written.
BORROWER:
AIRPORT SYSTEMS INTERNATIONAL,
INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
DCI, INC., A KANSAS CORPORATION
Attest: By:_____________________________
Name:___________________________
By: Title:__________________________
--------------------------
Name:
Title:
-78-
EXHIBIT C
COPIES OF SUBORDINATED NOTES
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EXHIBIT D
EXIMBANK FINANCING DOCUMENTS
-80-
EXHIBIT E
[Existing Loans]
-81-
LOAN AND SECURITY AGREEMENT
Dated as of February 7, 2000
Between
AIRPORT SYSTEMS INTERNATIONAL, INC.
AND
DCI, INC.
(the Borrower)
and
BANK OF AMERICA, N.A.
(the Lender)
TABLE OF CONTENTS
EXHIBITS AND SCHEDULES
EXHIBIT A-1 FORM OF REVOLVING CREDIT NOTE B
EXHIBIT A-2 FORM OF TERM NOTE A
EXHIBIT A-3 FORM OF TERM NOTE B
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C COPIES OF SUBORDINATED NOTES
EXHIBIT D EXIMBANK FINANCING DOCUMENTS
EXHIBIT E EXISTING LOANS
SCHEDULE 5.1(a) Jurisdictions in Which Borrower is Qualified as a
Foreign Corporation
SCHEDULE 5.1(b) Borrower's Capital Stock
SCHEDULE 5.1(e) Borrower's Business
SCHEDULE 5.1(f) Exceptions to Governmental Approvals
SCHEDULE 5.1(g) Non Lien Title Exceptions and Defects and Property
Disposed of Out of Ordinary Course of Business
SCHEDULE 5.1(h) Liens
SCHEDULE 5.1(i) Indebtedness for Money Borrowed and Guaranties
SCHEDULE 5.1(j) Litigation
SCHEDULE 5.1(k) Tax Returns and Payments
SCHEDULE 5.1(o) ERISA
SCHEDULE 5.1(t) Location of Chief Executive Office
SCHEDULE 5.1(u) Locations of Inventory
SCHEDULE 5.1(v) Locations of Equipment
SCHEDULE 5.1(w) Corporate and Fictitious Names
SCHEDULE 5.1(z) Employee Relations
SCHEDULE 5.1(aa) Intellectual Property
SCHEDULE 5.1(bb) Real Property
SCHEDULE 5.1(cc) Environmental Matters
SCHEDULE 8.6 Use of Proceeds