SECOND AMENDMENT TO LETTER OF CREDIT,
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO LETTER OF CREDIT, LOAN AND SECURITY
AGREEMENT ("Second Amendment") is made effective as of December _____, 2000, by
and among Elecsys Corporation, f/k/a Airport Systems International, Inc.
("Elecsys"); Airport Systems International, Inc. ("New ASI") and DCI, Inc.
("DCI") (Elecsys, ASI and DCI collectively, jointly and severally, the
"Borrower"), and Bank of America, N.A. ("Lender").
PRELIMINARY STATEMENTS
(A) Effective February 7, 2000, Elecsys, (then known as Airport
Systems International, Inc.), DCI and Lender entered into a Letter of Credit,
Loan and Security Agreement and other Financing Documents (as therein defined)
(collectively as amended, the "Loan Agreement");
(B) The Loan Agreement provided, among other things, that Lender
would lend Elecsys and DCI $8,000,000 on a revolving basis, $1,178,000 on a term
loan basis, and $2,599,572.60 on direct pay letter of credit facility;
(C) Effective November 1, 2000, Elecsys, then known as Airport
Systems International, Inc., did the following (the "Restructuring"): (1)
changed its name to "Elecsys Corporation" (2) formed a new company called
Airport Systems International, Inc. as a wholly owned subsidiary of Elecsys (New
ASI) and (3) transferred all of Elecsys' assets and liabilities to Airport
Systems International, Inc.(except for the stock of DCI and the assets and
liabilities related to the ownership of the DCI stock);
(D) The Restructuring occurred without compliance with Sections 10.3
and 10.4 of the Loan Agreement. In addition, Elecsys is not in compliance with
certain financial covenants set forth in the Loan Agreement. Therefore Borrower
has requested that Lender modify the terms and conditions of the Loan Agreement
as provided herein.
(E) The Export-Import Bank of the United States ("EXIMBANK")
guaranteed a portion of the Borrowers Obligations under the Financing Documents.
NOW, THEREFORE, in consideration of the premises and upon
application of Borrower, it is agreed by and among Lender and Borrower as
follows:
AGREEMENT
1. Acknowledgment of Preliminary Statements. The preliminary
statements set forth above are accurate, represent the intent of the parties
hereto and are incorporated herein
by reference. Unless otherwise defined in this Second Amendment, capitalized
terms used herein will have the same meaning in this Second Amendment as set
forth in the Loan Agreement.
2. General Non-Waiver. Except as expressly provided herein, nothing
in this Second Amendment shall be construed as a waiver on the part of Lender as
to any rights, remedy or remedies it may enjoy under the Loan Agreement with
respect to any existing circumstances, facts or events constituting an Event of
Default under the Loan Agreement.
3. Acknowledgment of Existing Defaults. Borrower hereby acknowledges
that the Restructuring occurred without compliance with Sections 10.3 and 10.4
of the Loan Agreement, and therefore constitutes Events of Default under Section
11.1(c) of the Loan Agreement. Borrower further acknowledges that for the period
from October 31, 2000 through the effective date of this Second Amendment, it is
not in compliance with the Minimum Tangible Net Worth, Maximum Liabilities Ratio
and Minimum Debt Service Coverage Ratio called for under the Loan Agreement and
that each such instance of non-compliance constitutes an Event of Default under
the Loan Agreement. All Events of Default described in this paragraph shall be
hereinafter referred to as the "Existing Defaults."
4. Limited Waiver of Defaults. Upon Lender's execution of this
Second Amendment, Borrower's payment in full of all fees, costs and expenses
hereunder required to be paid by Borrower including without limitation the
Forbearance and Waiver Fee, and Borrower's satisfaction of all conditions
precedent described in section 9 of this Second Amendment to the satisfaction of
Lender in its sole discretion, Lender hereby waives the Existing Defaults and
its right to collect interest at the Default Rate, provided Borrower remains in
compliance with the terms of the Loan Agreement as modified by this Second
Amendment. Nothing contained in this Second Amendment shall constitute or be
construed as a waiver of any other Default or Event of Default except as
expressly provided in this Paragraph 4.
5. [Intentionally omitted.]
6. Modifications to Loan Agreement. Lender and Borrower
hereby agree that the Loan Agreement is amended and modified as follows:
6.1 Section 1.1 is hereby amended by deleting the figure
"$8,000,000.00" following "(ii)" in the paragraph on page 3 which
begins with "Available Commitment" and substituting the figure
"$9,000,000.00."
6.2 Section 1.1 is hereby amended by deleting the phrase
"United States Six Million Dollars (U.S. $6,000,000)" in the
paragraph on page 5 which begins with "Commitment" and substituting
the phrase "United States Seven Million Dollars (U.S.$7,000,000)."
6.3 Section 3.5 is hereby amended by deleting the phrase "one
and one-quarter of one percent per annum (1.25%)" and substituting
the phrase "one and three-quarters of one percent per annum
(1.75%)."
6.4 The Promissory Note is hereby amended by deleting the
phrase "plus one-half of one percent per annum (0.5%)" appearing in
subparagraph (a) to the first full paragraph on the first page of
the Promissory Note and substituting the phrase "plus two percent
per annum (2%)."
6.5 Section 12.3(b) is deleted in its entirety and the
following is substituted therefor:
(b) EXIMBANK Facility Fee. The Borrower shall be obligated to
pay directly to the Bank the EXIMBANK Facility Fee in the
amount of U.S. $105,000.00 per annum, to be prorated for any
portion of a 12-month period during which the Commitment will
be outstanding, which is due and payable on the date of this
Agreement and on each anniversary of the date of this
Agreement.
6.6 Section 12.3(c) is deleted in its entirety and the
following is substituted therefor:
(c) Unused Line Fee. In connection with and as a consideration
for the Bank's Commitment, the Borrowers shall pay a fee to
the Bank in an amount equal to one-half of one percent (.5%)
per annum of the average daily unused portion of the
Commitment payable quarterly in arrears on the first day of
each quarter and on the date of any permanent reduction in the
Commitment.
6.7 Section 9.1 is deleted in its entirety and the
following is substituted therefor:
"Section 9.1 Financial Ratios.
(a) Minimum Tangible Net Worth. Permit the
Tangible Net Worth of the Borrower to be less
than:
(1) $5,600,000 at the end of the fiscal quarter
ending January 31, 2001,
(2) $6,100,000 at the end of each fiscal
quarter thereafter.
(b) Minimum Current Ratio. Permit the Current
Ratio at any time to be less than 1.45 to 1.0,
measured on a quarterly basis beginning January
31, 2001.
(c) [Intentionally omitted].
(d) Maximum Liabilities Ratio. Permit the
Liabilities Ratio of the Borrower to exceed:
(1) 2.75 to 1 at the end of the fiscal
quarters ending January 31, 2001 and April
30, 2001,
(5) 2.50 to 1 at the end of each fiscal
quarter thereafter.
(e) Minimum Debt Service Coverage Ratio. Permit
the Debt Service Coverage Ratio of the Borrower
to be less than:
(1) .75 to 1 at the end of the fiscal
quarter ending January 31, 2001
(2) 1.00 to 1 at the end of the fiscal
quarter ending April 30, 2001
(3) 1.20 to 1 at the end of each fiscal
quarter thereafter.
7. Further Security Documents. As a material part of the
consideration for Lender entering into this Second Amendment and in order to
induce Lender to modify the Loan Agreement and to extend credit to Borrower,
Elecsys and New ASI agree as follows:
7.1 New ASI hereby acknowledges, assumes and agrees to be bound by
all of the terms and conditions of the Loan Agreement as if an original
borrower thereunder, including without limitation, acknowledging Lender's
security interests in and to all of Elecsys' assets, which security
interests continue to be attached and perfected notwithstanding the
transfer of such assets to New ASI.
7.2 To the extent not already granted, New ASI does hereby grant
Lender a security interest in and to all of its assets, including, without
limitation, all Receivables, Inventory, Equipment, Contract Rights,
General Intangibles, Deposit Accounts, Real Estate and other Collateral as
those terms are defined in the Loan Agreement to secure the payment and
performance of all of Borrower's Obligations under the Loan Agreement. New
ASI additionally agrees to execute a security agreement in such form as is
reasonably acceptable to Lender.
7.3 Elecsys shall and does hereby pledge as security for any or all
of Borrower's Obligations to Lender under the Loan Agreement all its right
title and interest in and to any and all shares of stock in New ASI.
Elecsys shall execute a
Stock Pledge Agreement further evidencing such pledge in such form as is
reasonably acceptable to Lender.
8. Modification Expenses. Borrower will pay to Lender promptly as
they come due, any and all costs and expenses incurred by Lender in connection
with the negotiation, preparation and documentation of this Second Amendment,
including without limitation, all recording fees, mortgage registration tax and
all reasonable attorneys' fees and costs.
9. Conditions Precedent. Lender shall be under no obligation
of any kind under this Second Amendment unless the following conditions
precedent have been satisfied as determined in the sole discretion of Lender:
9.1 Completion of a U.C.C. search at the expense of Borrower
demonstrating no intervening liens, claims or encumbrances that would
adversely impact upon Lender's security interests as set forth in this
Second Amendment and the Loan Agreement.
9.2 Full disclosure of all information and documents relating to the
name change, subsidiary formation and transfer set forth in the
preliminary statements above that may be reasonably requested by Lender.
9.3 Payment in full of the Forbearance and Waiver Fee in
immediately available funds.
9.4 Execution of a security agreement and stock pledge agreement
required by Section 7 of this Second Amendment.
9.5 Delivery of an reasoned opinion letter from Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxxx LLP to Lender in form and substance acceptable to Lender in
its sole discretion opining that the Restructuring was duly authorized
pursuant to the organizational documents of Elecsys and pursuant to Kansas
and Federal law with full corporate authority.
9.6 Delivery of an unqualified opinion letter from Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxxx LLP in form and substance acceptable to Lender in its sole
discretion opining as to the creation and perfection of security interests
in favor of Lender with respect to all assets of Borrower.
9.7 Execution and Delivery of a new Promissory Note reflecting the
change in the amount of Commitment set forth in paragraph 6.2 of this
Second Amendment.
9.8 Execution of any other documents, including financing
statements, amendments to existing financing statements, or other
documents reasonably requested by Lender in connection herewith.
10. Cross Default and Cross Collateralization. A default in the
payment or performance of Borrower's obligations under this Second Amendment
will constitute an Event of Default under the Loan Agreement and in such event
Lender will be entitled to exercise any and all remedies available thereunder.
Lender and Borrower further agree that the Security Documents securing the Loan
Agreement are hereby modified so that the Security Documents will continue to
secure the Loan Agreement as amended by this Second Amendment.
11. Ratification. The parties hereto ratify and reaffirm that all
terms, conditions and provisions of the Loan Agreement remain in full force and
effect except to the extent expressly modified by the terms of this Second
Amendment and the terms and conditions of this Second Amendment are hereby
incorporated in, and will hereafter be deemed a part of, the Loan Documents for
all purposes.
12. Releases. As a material part of the consideration for Lender
entering into this Second Amendment and in order to induce Lender to modify the
Loan Agreement and to extend credit to Borrower, Borrower hereby jointly and
severally releases and forever discharges Lender's directors, officers,
employees, agents, attorneys, affiliates, subsidiaries, successors and assigns
from any and all liabilities, obligations, actions, contracts, claims, causes of
action, damages, demands, costs and expenses whatsoever (collectively "Claims"),
of every kind and nature, however evidenced or created, whether known or
unknown, arising prior to or on the date of this Second Amendment including, but
not limited to, any Claims involving the extension of credit under or
administration of the Loan Agreement, the indebtedness incurred by the Borrower
or any other transactions evidenced by the Loan Agreement and/or this Second
Amendment.
13. Renewal. To the extent that any payment or payments made to
Lender under this Second Amendment or the Loan Agreement are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, to either Borrower, whether directly or
indirectly as a debtor-in-possession, or to a receiver or any other party under
any bankruptcy law, or other state or federal law, then the portion of the
indebtedness of the Borrower intended to have been satisfied by such payment or
payments will be revived and will continue in full force and effect as if such
payment or payments had never been received by Lender.
14. Representations and Warranties. Elecsys, ASI and DCI
--------------------------------
jointly and severally represent and warrant to Lender as follows:
(A) All of the representations and warranties of Borrower in
the Loan Agreement are true and correct as of the date hereof, as modified
by this Second Amendment.
(B) Except as expressly described herein, no Event of Default
is in existence with respect to the Loan Agreement or Security Documents.
(C) No Event of Default has occurred or will occur as a result
of the execution, delivery, and performance of this Second Amendment.
(D) This Second Amendment has been duly authorized, executed
and delivered and is a legally valid, binding, joint and several
obligation of Elecsys, ASI and DCI and is enforceable against each of them
in accordance with its terms.
(E) The transfer to New ASI by Elecsys of assets and related
liabilities in the Restructuring did not create any tax liability to
Elecsys or New ASI, and (ii) the conduct of the navigational aids business
through New ASI will not have any material federal income tax consequences
different than if such business had continued to be conducted through
Elecsys.
15. Miscellaneous.
(A) Borrower hereby agrees and acknowledges that Lender may
endorse and deposit any check or other instrument tendered in connection
with a partial payment without thereby giving effect to or being bound by
any language purporting to make acceptance of such instrument an accord
and satisfaction of the Secured Obligations evidenced by this Second
Amendment or the Loan Agreement.
(B) In the event of a conflict between or among the terms,
covenants, conditions or provisions of this Second Amendment, Loan
Agreement or any other Loan Documents, Lender may elect to enforce from
time to time those provisions that would afford Lender the maximum
financial benefits and security for the Secured Obligations and/or provide
Lender the maximum assurance of payment of the Secured Obligations in
full.
(C) No inference in favor of, or against, any party will be
drawn from the fact that such party has drafted any portion of the Loan
Agreement.
(D) This Second Amendment may be executed in any number of
counterparts, each of which will be deemed to be an original but all of
which taken together will constitute one and the same agreement.
(E) This Second Amendment will be governed by and construed
under the laws of the State of Missouri.
(F) This Second Amendment will be binding upon and will inure
to the benefit of the parties hereto and to their respective successors
and assigns.
16. WAIVER OF JURY TRIAL. LENDER AND BORROWER WAIVE THE RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS SECOND AMENDMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY MADE BY
BORROWER AND BORROWER ACKNOWLEDGES THAT NEITHER LENDER NOR ANY PERSON ACTING ON
BEHALF OF LENDER HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. BORROWER FURTHER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS FIRST AMENDMENT AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND IT HAS
HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. BORROWER FURTHER
ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF
THIS WAIVER PROVISION.
IN WITNESS WHEREOF, Borrower and Lender have caused this First
Amendment to be executed by an officer duly authorized to so execute and bind
Borrower and Lender, respectively, effective as of the day and year first
written above.
"BORROWER"
ELECSYS CORPORATION, a Kansas
corporation
By:
Printed Name:
Its:
DCI, INC., a Kansas corporation
By:
Printed Name:
Its:
AIRPORT SYSTEMS INTERNATIONAL, INC., a
Kansas corporation
By:
Printed Name:
Its:
ACCEPTED effective the _____ day of December, 2000, at Lender's
place of business in the City of Kansas City State of Missouri.
"LENDER"
BANK OF AMERICA, N.A.,
a national banking association
By:
Printed Name:
Title:
