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EXHIBIT 10.5
REVOLVING DOMESTIC LINE OF CREDIT AGREEMENT
AMENDED BY THE FIFTH EXTENTION AGREEMENT
FIFTH LOAN EXTENSION AGREEMENT - U.S. BANK
This Fifth Loan Extension Agreement (the "Fifth Amendment") is
entered into on March 10, 2000, between U.S. BANK NATIONAL ASSOCIATION ("U.S.
Bank") and DAW TECHNOLOGIES, INC. ("Daw").
RECITALS
A. On or about April 17, 1998, Daw and U.S. Bank entered into a
loan agreement. The loan agreement was modified and amended by the terms of a
modification and forbearance agreement dated September 10, 1998, a second
modification and forbearance agreement dated October 10, 1998, a loan extension
agreement dated November 18, 1998, a second loan extension agreement dated
February 26, 1999, a third loan extension agreement (which was set forth in a
letter from U.S. Bank to Daw) dated June 10, 1999, and a fourth loan extension
agreement dated on or about September 29, 1999. The above-described loan
agreement, as amended, is referred to herein as the "Loan Agreement."
B. Pursuant to the terms of the Loan Agreement, U.S. Bank
provides a revolving credit facility to Daw. Capitalized terms used in this
Fifth Amendment that are not defined herein shall have the meanings assigned to
those terms in the Loan Agreement.
X. Xxx is obligated to U.S. Bank pursuant to a promissory note
dated August 6, 1997, in the principal amount of $8,000,000 (which note, as
amended, is referred to herein as the "Note"). As of March 7, 2000, Daw owes
U.S. Bank the principal amount of $5,112,965.64, accrued interest of
$115,384.17, and late charges of $11,006.48 pursuant to the Note.
D. Interest continues to accrue on Daw's obligations to U.S. Bank
pursuant to the Note on and after March 7, 2000. In addition, Daw is obligated
to reimburse U.S. Bank (or pay directly if requested to do so by U.S. Bank) for
fees and costs incurred by U.S. Bank in connection with its banking relationship
with Daw, including reasonable attorney fees.
E. The debts and obligations of Daw to U.S. Bank pursuant to the
Loan Agreement and the Note are referred to below collectively as the
"Indebtedness."
F. The Indebtedness is secured by security interests and liens
in, among other things, all of Daw's existing and after-acquired accounts,
chattel paper, contract rights, equipment, fixtures, general intangibles, and
inventory (and the products and proceeds of all of those assets). The security
agreements executed by Daw that grant the security interests and liens described
in the preceding sentence are referred to below as the "Security Agreements."
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The personal property of Daw in which security interests and liens have been
granted in favor of U.S. Bank pursuant to the Security Agreements is referred to
below as the "Collateral."
G. The Loan Agreement, the Note, the Security Agreements, and the
other documents executed by Daw in favor of U.S. Bank are referred to herein as
the "Loan Documents."
H. The credit commitment extended by U.S. Bank to Daw pursuant to
the Loan Agreement has expired. Furthermore, the amount owed by Daw pursuant to
the Loan Agreement and the Note exceeds the Borrowing Base. As a result, Daw is
not entitled to any additional credit under the credit facility governed by the
Loan Agreement. Notwithstanding the foregoing, U.S. Bank in its discretion has
made certain advances to Daw following the expiration of the revolving credit
facility governed by the Loan Agreement.
X. Xxx has asked U.S. Bank to extend the maturity date of the
revolving credit facility provided by U.S. Bank to Daw and to continue to make
credit available to Daw thereunder. U.S. Bank is willing to do so, subject to
the terms and conditions set forth in this Fifth Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties agree as follows:
TERMS AND CONDITIONS
SECTION I
AVAILABILITY OF CREDIT
1.1 Acknowledgment of Amounts Owed. Daw hereby acknowledges and
agrees that the amounts of principal and interest specified in Recital C above
with respect to the Note are payable to U.S. Bank without offset, defense,
counterclaim, or claim of recoupment. In addition, Daw acknowledges its
obligation to pay U.S. Bank the amounts referred to in Recital D to this Fifth
Amendment.
1.2 Maximum Amount of Credit Available. From the effective date
of this Fifth Amendment through and including March 18, 2000, the maximum amount
of credit available to Daw pursuant to the revolving credit facility evidenced
by the Note shall be the lesser of (a) $5,500,000, or (b) the Borrowing Base (as
that term is defined in the Loan Agreement before the modifications and
amendments to the definition of that term effected by this Fifth Amendment) plus
$1,400,000. From March 19, 2000, through and including August 31, 2000, the
maximum amount of credit available to Daw pursuant to the revolving credit
facility evidenced by the Note shall be the lesser of (x) $5,000,000, or (y) the
Borrowing Base (as defined in the following paragraph of this Fifth Amendment).
It is the contemplation of Daw and U.S. Bank that in order for Daw to be in
compliance with the terms and conditions of the preceding sentence as of March
19, 2000, Daw either will have to have procured the Credit Insurance Policy (as
defined in paragraph 1.3 below) and be in a position to borrow against Eligible
Insured Foreign Accounts (as defined in paragraph 1.3 below), or shall use a
portion of an equity capital contribution recently obtained by means of a
private placement of securities of
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Daw to pay down the amount owed pursuant to the Note to the level of the
Borrowing Base. Daw hereby acknowledges and agrees that on or before March 19,
2000, Daw shall take one of the actions described in the preceding sentence to
insure that as of such date (and thereafter) the amount owed pursuant to the
Note does not exceed the lesser of the amounts described in the second sentence
of this paragraph. If at any time the amount outstanding pursuant to the Note
exceeds the maximum amount of credit available to Daw at the time in question,
Daw within three business days shall pay U.S. Bank an amount equal to such
excess (and Daw's failure to make such payment shall constitute an Event of
Default under Section 5.1(a) of this Fifth Amendment).
1.3 New Definition of the Borrowing Base. Following the date of
this Fifth Amendment, except as specified in the first sentence of paragraph 1.2
above, the term "Borrowing Base," as used herein and in the Loan Agreement shall
mean the sum of 75 percent of Eligible Domestic Accounts and 90 percent of
Eligible Insured Foreign Accounts. As used in this Fifth Amendment, the terms
"Eligible Domestic Accounts" and "Eligible Insured Foreign Accounts" have the
following meanings:
"Eligible Domestic Accounts" means all Eligible Accounts of Daw,
Intelligent Enclosures, Inc., Translite Systems, Inc., Daw
Technologies Contract Mfg. Services, Inc., Daw Technologies
Europe, Ltd., or Daw Construction Services, Inc. (which entities
other than Daw are referred to herein as the "Guarantors") with
respect to which (a) the Account Debtor is a resident of the
United States, or an entity incorporated or otherwise organized
under the laws of a state in the United States, (b) the account
arises out of goods sold or services performed by Daw or one of
the Guarantors in the United States, and (c) the goods sold or
services performed are delivered or provided to the Account
Debtor in the United States.
"Eligible Insured Foreign Accounts" means (a) Eligible Accounts
of Daw or the Guarantors with respect to which the Account Debtor
is not a resident of the United States or an entity incorporated
under the laws of a state in the United States, to the extent
that such accounts are covered by and insured under the Credit
Insurance Policy (as defined below). Notwithstanding anything in
this Fifth Amendment to the contrary, an account receivable that
initially was an Eligible Insured Foreign Account shall not cease
to be an Eligible Insured Foreign Account because it was not
timely paid by the Account Debtor, provided that (a) the Account
Debtor does not dispute its obligation to pay the account in
question and (b) Daw (or the Guarantor, as applicable) (i) has
timely complied with all provisions of the Credit Insurance
Policy regarding proof of loss (including any requirements
involving making demand for payment on the Account Debtor and
submitting proof of loss to the insurer), (ii) has complied with
the provisions of paragraph 1.11 of this Fifth Amendment (if such
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provisions are applicable to the account or accounts in
question), and (iii) has made a claim under the Credit Insurance
Policy with respect to the account in question before the
deadline under the Credit Insurance Policy for filing a claim of
loss with respect to the full amount of the account.
As used herein, the term "Credit Insurance Policy" means a policy
of insurance obtained by Daw, which must be in a form
satisfactory to U.S. Bank and issued by an insurer satisfactory
to U.S. Bank in its good faith discretion, insuring the payment
of accounts receivable of Daw or the Guarantors with respect to
which the Account Debtor is not a resident of the United States,
or an entity incorporated or otherwise organized under the laws
of a state in the United States. The Credit Insurance Policy
shall name U.S. Bank as an additional insured or additional loss
payee.
1.4 Amendment of Definition of Eligible Accounts. The definition
of the term "Eligible Accounts" in the Loan Agreement hereby is modified and
amended to add the following items to the list of matters that are not Eligible
Accounts:
(l) Accounts receivable from Western Star to the extent that
Western Star has provided operating financing to Daw or has made
any other loan or capital contribution to Daw that would give
Western Star a right of offset against Daw.
(m) Deposits paid by customers of Daw for goods or services
to be provided by Daw.
(n) Retainage.
(o) Prebillings.
(p) Progress xxxxxxxx in excess of the amount permitted by
the terms of the applicable contract.
(q) Earned but unbilled revenue.
(r) Claims by Daw for work beyond the scope of the original
contract for which no change order has been issued and approved
by the other party to the contract in question.
1.5 Loan Extension Fee. Prior to or contemporaneously with the
execution of this Fifth Amendment, Daw shall pay U.S. Bank a loan extension fee
of $30,000.
1.6 Applicable Interest Rate. On or after the date of this Fifth
Amendment, the interest rate charged on the principal amount outstanding
pursuant to the Note shall be U.S. Bank's Prime Rate (as defined below) plus 3
percent per annum (fully floating). As used in this Fifth Amendment, the term
"Prime Rate" means the rate of interest that U.S. Bank from time to
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time establishes as its prime rate or reference rate. The Prime Rate is not
necessarily the lowest rate of interest that U.S. Bank collects from any
borrower, or class of borrowers.
1.7 Amendment of the Note. Contemporaneously with the execution
of this Fifth Amendment, Daw shall execute and deliver to U.S. Bank a document
in form and content satisfactory to U.S. Bank amending the Note (the "Note
Amendment Agreement") to reflect the revised maturity date thereof and the new
interest rate thereon. Following the execution of this Fifth Amendment and the
Note Amendment Agreement by Daw, references in the Loan Agreement to the Note
shall mean the Note, as amended by the Note Amendment Agreement.
1.8 Information Regarding Credit Insurance Policy. Daw hereby
agrees that it promptly shall provide U.S. Bank with a copy of the Credit
Insurance Policy, all endorsements, riders, schedules, and exhibits to that
policy, all modifications or amendments of the Credit Insurance Policy, and all
notices received by Daw from the insurer under the Credit Insurance Policy. In
addition, Daw immediately shall notify U.S. Bank in writing of the receipt by
Daw of any communication from the insurer under the Credit Insurance Policy
informing Daw of the insurer's intention to terminate or cancel the Credit
Insurance Policy. Daw shall obtain the agreement (in writing) of the insurer
under the Credit Insurance Policy to give U.S. Bank at least 30 days' prior
written notice of the insurer's intended termination, cancellation, or material
modification of the Credit Insurance Policy. Daw hereby acknowledges and agrees
that if Daw fails to timely pay the policy premium with respect to the Credit
Insurance Xxxxxx, X.X. Bank may (but shall not be required to) pay such premium
and the amount paid by U.S. Bank shall become part of the Indebtedness.
1.9 Information Regarding Foreign Accounts. Daw hereby agrees
that it promptly shall deliver to the insurer under the Credit Insurance Policy
or to U.S. Bank all information requested by such insurer, or by U.S. Bank, as
the case may be, regarding Daw's (and the Guarantors') foreign accounts
receivable, or such other matters identified by the insurer or U.S. Bank in
relation to Daw's (or the Guarantors') foreign accounts or the insurance
thereof.
1.10 Assignment of Rights Under the Credit Insurance Policy. Daw
hereby assigns to U.S. Bank as security for the Indebtedness all of Daw's rights
under the Credit Insurance Policy (including, but not limited to, its right to
receive any payments thereunder). Prior to the inclusion of Eligible Insured
Foreign Accounts in the Borrowing Base, Daw shall deliver to U.S. Bank written
evidence satisfactory to U.S. Bank that the insurer under the Credit Insurance
Policy has been notified of the assignment effected by the preceding sentence of
this Agreement and acknowledges that assignment. The assignment described in the
two preceding sentences shall extend to rights (if any) of the Guarantors under
the Credit Insurance Policy and Daw shall cause the Guarantors to promptly take
reasonable steps to effect the assignment of their rights (if any) under the
Credit Insurance Policy to U.S. Bank.
1.11 Claim Procedure. Daw acknowledges that U.S. Bank's agreement
to make Advances available to Daw based upon Eligible Insured Foreign Accounts
is conditioned upon Daw obtaining credit insurance with respect to Eligible
Insured Foreign Accounts. Furthermore, Daw acknowledges that U.S. Bank is not
prepared to extend credit to Daw secured by Eligible Accounts other than
Eligible Domestic Accounts unless such other accounts are insured under the
Credit Insurance Policy and Daw (or a Guarantor, as applicable) takes all steps
required by that policy to recover payment from the insurer with respect to
Eligible Insured Foreign
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Accounts that are not paid by the Account Debtor. In that regard, Daw recognizes
that U.S. Bank expects Daw (or a Guarantor, as applicable) to strictly and
timely comply with all provisions of the Credit Insurance Policy related to
filing claims under the policy, providing proof of loss under the policy, and
notifying account debtors of their defaults as required by the Credit Insurance
Policy and Daw hereby agrees to timely comply (or cause the Guarantors to timely
comply) with all such provisions of the Credit Insurance Policy. Daw hereby
irrevocably appoints U.S. Bank as Daw's true and lawful attorney (such
appointment being coupled with an interest), with full power of substitution, in
the name of Daw, to take any and all steps or actions required by the Credit
Insurance Policy to timely and appropriately assert a claim under that policy,
subject to the conditions specified in this Agreement. Daw hereby agrees that if
Daw has not submitted (or caused the Guarantors to submit) a claim with respect
to a past-due Eligible Insured Foreign Account within 60 days of the deadline
for submitting a claim under the Credit Insurance Policy for full payment of the
account in question, Daw shall deliver to U.S. Bank a completed claim form with
respect to the account in question (which claim form shall be in form and
content satisfactory to the insurer under the Credit Insurance Policy and shall
be accompanied by any and all materials required by the insurer to establish
proof of loss). At the same time, Daw shall notify U.S. Bank in writing whether
Daw intends to make a claim (or cause the Guarantor in question to make a claim)
under the Credit Insurance Policy with respect to the account in question. If
Daw informs U.S. Bank that Daw does not intend to make a claim under the Credit
Insurance Policy with respect to an account (or cause the Guarantor in question
to make a claim), the account in question shall cease to be an Eligible Insured
Foreign Account and Daw within three business days shall pay U.S. Bank the
amount by which Daw's obligation under the Note exceeds the Borrowing Base
(exclusive of the account in question) (and Daw's failure to make such payment
shall constitute an Event of Default under paragraph 5.1(a) of this Fifth
Amendment). Furthermore, if Daw fails to timely provide the notice and the claim
form specified above, or if Daw has not taken (or caused the Guarantor in
question to take) any action that U.S. Bank reasonably believes is a condition
precedent under the Credit Insurance Policy to receive payment in full under
that policy of a claim with respect to an account included in the Borrowing
Base, and if Daw fails to provide the notice and claim form (or take action with
respect to a claim under the Credit Insurance Policy, as applicable) within
three business days of U.S. Bank giving Daw written notice of such failure or
inaction, then the account in question shall cease to be an Eligible Insured
Foreign Account and Daw shall have three business days to pay U.S. Bank an
amount equal to the amount by which the indebtedness under the Note exceeds the
Borrowing Base following the removal of that account from the Borrowing Base
(and Daw's failure to make such payment shall constitute an Event of Default
under paragraph 5.1(a) of this Fifth Amendment). If Daw fails to make the
payment required by either of the two preceding sentences following the removal
of an account from the Borrowing Base, U.S. Bank may use the power of attorney
granted in this paragraph to take any and all steps or actions U.S. Bank
reasonably believes are necessary to cause a claim to be made under the Credit
Insurance Policy for payment in full of the account in question (which actions
that may be taken by U.S. Bank include, but are not limited to, providing notice
of default to the Account Debtor, providing proof of loss to the insurer under
the Credit Insurance Policy, or asserting a claim for payment under the policy
with respect to the account in question). Notwithstanding the power of attorney
granted herein, U.S. Bank shall have no obligation to take any action on behalf
of Daw or any of the Guarantors under or with respect to the Credit Insurance
Policy.
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1.12 New Maturity Date of the Revolving Credit Facility. Subject
to the terms of this Fifth Amendment, U.S. Bank hereby agrees to continue to
make Advances available to Daw through August 31, 2000, in accordance with the
terms of the Loan Agreement (as modified hereby). In that regard, the maturity
date of the Note and revolving credit facility governed by the Loan Agreement
hereby are extended to August 31, 2000.
SECTION II
CONDITIONS PRECEDENT
2.1 Conditions Precedent. This Fifth Amendment, and U.S. Bank's
agreement to extend and modify the revolving credit facility U.S. Bank makes
available to Daw on the basis set forth in this Fifth Amendment, shall not be
effective until all of the following events occur:
(a) Execution of the Fifth Amendment. Daw executes this Fifth
Amendment and delivers it to U.S. Bank;
(b) Execution of the Note Amendment Agreement. Daw executes the
Note Amendment Agreement and delivers it to U.S. Bank;
(c) Payment of Attorney Fees. Daw pays U.S. Bank $1,250 for
attorney fees related to the negotiation and preparation of this Fifth
Amendment;
(d) Payment of Loan Fees. Daw pays U.S. Bank $30,000 with
respect to the loan fees owed pursuant to paragraph 1.5 of this Fifth
Amendment; and
(e) Execution of the Guaranty, the Guarantors' Security
Agreement, and the Guarantors' Financing Statements. The Guarantors
shall execute and deliver to U.S. Bank the Guaranty, the Guarantors'
Security Agreement, and the Guarantors' Financing Statements (as those
terms are defined in paragraph 3.2 of this Fifth Amendment).
If all of the above-described conditions precedent are not satisfied by March
13, 2000, this Fifth Amendment shall not be effective and the parties' rights
and obligations shall continue to be governed by the Loan Documents.
SECTION III
COLLATERAL FOR THE INDEBTEDNESS
3.1 Continued Validity of the Security Agreements Previously
Executed by Daw. Daw hereby expressly reaffirms and acknowledges the validity of
the Security Agreements, the accuracy of the information contained in those
documents, and its grant of security interests and liens in favor of U.S. Bank
in the Collateral. Daw acknowledges and agrees that the Security Agreements, and
the security interests and liens created by those agreements, secure payment of
the Indebtedness. Furthermore, Daw acknowledges and agrees that the Security
Agreements, and the security interests and liens created thereby, shall continue
in full force and effect after the execution of this Fifth Amendment.
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3.2 The Guaranty, the Guarantors' Security Agreement, and the
Guarantors' Financing Statements. Prior to or contemporaneously with the
execution of this Fifth Amendment, the Guarantors shall execute and deliver to
U.S. Bank a guaranty (the "Guaranty") in form and content satisfactory to U.S.
Bank whereby the Guarantors guarantee payment of the Indebtedness and
performance of all of Daw's obligations under the Loan Documents. At the same
time, the Guarantors shall execute and deliver to U.S. Bank a security agreement
(the "Guarantors' Security Agreement") in form and content satisfactory to U.S.
Bank whereby the Guarantors grant a security interest in all of their personal
property to secure their obligations under the Guaranty and Daw's obligations
under the Loan Documents. In addition, the Guarantors shall execute financing
statements (the "Guarantors' Financing Statements") in form and content
satisfactory to U.S. Bank with respect to the assets described in the
Guarantors' Security Agreements. Following execution of the Guarantors' Security
Agreement, references herein and in the Loan Agreement to the Collateral shall
include the assets of the Guarantors described in the Guarantors' Security
Agreement.
3.3 Additional Financing Statements; Other Documents. Daw hereby
agrees that until the Indebtedness has been paid in full, Daw promptly shall
execute and deliver to U.S. Bank (and shall cause the Guarantors to execute and
deliver to U.S. Bank) all documents deemed necessary or desirable by U.S. Bank
to evidence, perfect, or continue U.S. Bank's security interests or liens in the
Collateral. Among other things, if requested to do so by U.S. Bank, Daw shall
cause each of the Guarantors to sign separate guaranties and security agreements
in favor of U.S. Bank in form and content substantially similar to the Guaranty
and the Guarantors' Security Agreements. The failure of any Guarantor to sign
and return any such document to U.S Bank within ten days of the date U.S. Bank
delivers the document to Daw shall constitute an Event of Default hereunder.
SECTION IV
MISCELLANEOUS PROVISIONS
4.1 Daw's Commitment to Locate a New Lender. The parties to this
Fifth Amendment desire to discontinue their banking relationship not later than
August 31, 2000 (when the Note matures). Daw hereby represents and warrants that
it will use its best reasonable efforts to locate a new lender and replace U.S.
Bank as soon as possible (and in any event not later than August 31, 2000). In
that regard, Daw hereby agrees that by May 31, 2000, Daw shall deliver to U.S.
Bank a written commitment from another lender that demonstrates to U.S. Bank's
reasonable satisfaction that Daw will be able to obtain a new loan or loans
sufficient to enable Daw to repay in full its obligations to U.S. Bank pursuant
to the Note by August 31, 2000. If Daw fails to comply with the provisions of
the preceding sentence, then as of June 1, 2000, the interest rate charged by
U.S. Bank on the principal amount outstanding under the Note shall increase to
the Prime Rate plus 5 percent per annum and Daw shall pay U.S. Bank a $10,000
fee (which U.S. Bank hereby is authorized to deduct from any account maintained
by Daw with U.S. Bank without notice to Daw).
4.2 No Agreement to Lend Additional Sums. Daw acknowledges and
agrees that, except as specified in the Loan Agreement (as modified and amended
by this Fifth Amendment), U.S. Bank has made no commitment to extend credit or
to lend funds to Daw and that U.S. Bank has no obligation to do so. Daw
acknowledges and agrees that this means, among
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other things, that U.S. Bank is not obligated to provide Daw a domestic line of
credit once contemplated by the parties hereto, or the foreign accounts
receivable credit facility guaranteed by the ExIm Bank previously discussed by
U.S. Bank and Daw.
4.3 Expenses of U.S. Bank. Daw shall reimburse U.S. Bank for all
expenses incurred by U.S. Bank, including, but not limited to, collateral
appraisals, collateral examination and inspection costs, and the reasonable fees
and expenses of legal counsel for U.S. Bank in connection with the analysis of
the existing banking relationship between Daw and U.S. Bank, the preparation,
negotiation, closing, administration, amendment, modification, and enforcement
of this Fifth Amendment, or the agreement evidenced hereby; the preservation,
protection, or disposition of the Collateral (or U.S. Bank's security interests
therein); or as required by applicable law, rules, policies, and regulations.
The amounts owed by Daw pursuant to the preceding sentence of this Fifth
Amendment are part of the Indebtedness and shall be paid by Daw within ten days
of the date U.S. Bank provides Daw with written notice requesting payment of
such costs and expenses, or on August 31, 2000, whichever occurs first.
4.4 Release of Claims. Daw hereby releases and forever discharges
U.S. Bank and U.S. Bank's agents, principals, successors, assigns, employees,
officers, directors, and attorneys, and each of them, of and from any and all
claims, demands, damages, suits, rights, defenses, offsets, or causes of action
of every kind and nature that Daw has or may have as of the date it executes
this Fifth Amendment, whether known or unknown, contingent or matured, foreseen
or unforeseen, asserted or unasserted, including, but not limited to, all claims
for compensatory, general, special, consequential, incidental, and punitive
damages, attorney fees, and equitable relief, other than U.S. Bank's obligations
under this Fifth Amendment and the Loan Agreement (as modified hereby) arising
on and after the date hereof.
4.5 Waiver of Existing Defaults. Daw hereby acknowledges and
agrees that it is in default with respect to various terms and conditions of the
Loan Agreement, including the provision specifying that the amount owed by Daw
pursuant to the Note shall not exceed the amount of the Borrowing Base and the
fact that the Note matured prior to the date of this Fifth Amendment and was not
repaid by Daw as agreed. Daw's existing defaults under the Loan Agreement are
referred to in this Fifth Amendment as the "Existing Defaults." At the time this
Fifth Amendment becomes effective, U.S. Bank shall waive the Existing Defaults.
4.6 Cash Collateral Account. Daw acknowledges the existence of
the Cash Collateral Account at U.S. Bank in connection with the parties' banking
relationship. Daw hereby represents and warrants that, except as specified in
the following sentence, until the Note is paid in full and U.S. Bank has no
further commitment to lend to Daw, Daw shall deposit (or cause to be deposited)
all proceeds of all of the Collateral into the Cash Collateral Account for
application to Daw's obligations pursuant to the Note. Notwithstanding the
foregoing, Daw and the Guarantors shall not be required to deposit proceeds of
their foreign accounts receivable into the Cash Collateral Account at any time
that Eligible Insured Foreign Accounts are not included in the Borrowing Base.
4.7 Financial Information. Daw will deliver to U.S. Bank the
statements, reports, and other information listed below:
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(a) Annual Audited Statement. As soon as available and in any
event by June 30, 2000, the consolidated balance sheet of Daw as of the
end of its 1999 fiscal year and the related statements of income and
retained earnings and statement of changes in financial position of Daw
for such year, accompanied by the audit report thereon by independent
certified public accountants selected by Daw and reasonably satisfactory
to U.S. Bank (which reports shall be prepared in accordance with
generally accepted accounting principles consistently applied and shall
not be qualified by reason of restricted or limited examination of any
material portion of Daw's records and shall contain no disclaimer of
opinion or adverse opinion except such as U.S. Bank in its sole
discretion determines to be immaterial;
(b) Monthly Financial Statement and Certificate. As soon as
available and in any event within 25 days after the end of each month,
the unaudited balance sheet and statement of income and retained
earnings of Daw as of the end of such month (and for the period from the
start of the fiscal year to the end of such month) accompanied by a
certificate of an authorized officer of Daw that such unaudited balance
sheet and statement of income and retained earnings present fairly the
financial position and the results of operations of Daw as of the end of
and for such month and that since the fiscal year-end report referred to
in clause (a) there has been no material adverse change in the financial
condition or operations of Daw as shown on the balance sheet as of said
date;
(c) Monthly Report Regarding Accounts Receivable. Within 25 days
after the end of each month, a report with respect to Daw's accounts
receivable (foreign and domestic) as of the last day of the preceding
month, which reports shall be in a form reasonably satisfactory to U.S.
Bank;
(d) Monthly Report Regarding Work in Progress. Within 25 days of
the end of each month, a report with respect to Daw's work in progress
as of the end of the preceding month, which reports shall be in a form
reasonably satisfactory to U.S. Bank;
(e) Monthly Borrowing Certificate. Within 25 days after the end
of each month, a written report identifying Daw's Eligible Domestic
Accounts and Eligible Insured Foreign Accounts as of the end of the
prior month, all reconciled to Daw's balance sheet as of the end of the
month in question;
(f) Monthly Report Regarding Accounts Payable. Within 25 days
after the end of each month, a report with respect to Daw's accounts
payable as of the end of the preceding month, which reports shall
provide reasonable detail regarding the aging of such accounts payable
and shall otherwise be in a form reasonably satisfactory to U.S. Bank;
(g) Monthly Report Regarding Refinancing Efforts. Within 25 days
after the end of each month, a written report in a form reasonably
satisfactory to U.S. Bank identifying in reasonable detail the status as
of the end of the preceding month of Daw's efforts to locate a new
lender or lenders to replace U.S. Bank;
(h) Shareholder Reports. As soon as available (and within 45 days
of the end of each calendar quarter for Form 10Q's and within 180 days
of the end of each fiscal
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year for Form 10K's), all reports sent by Daw to its shareholders and
all quarterly and annual reports filed by Daw with the Securities and
Exchange Commission and each other governmental authority having
jurisdiction over Daw;
(i) Tax Returns. As soon as available (and not more than 30 days
after filing), Daw's federal income tax returns for 1998 and 1999; and
(j) Other Information. All other statements, reports, and other
information as U.S. Bank reasonably may request concerning the financial
condition and business affairs of Daw.
If Daw does not timely provide U.S. Bank the information required pursuant to
any or all of subparagraphs 4.7(a), 4.7(h), or 4.7(i), Daw shall pay U.S. Bank a
late reporting fee of $1,000 per each report not timely provided to U.S. Bank.
If Daw does not provide each of the reports specified in subparagraphs 4.7(b)
through 4.7(g) each month, Daw shall pay U.S. Bank a late reporting fee of
$1,000 for each month in which all of the reports are not timely delivered to
U.S. Bank. Daw hereby authorizes U.S. Bank to deduct such fees from any account
maintained by Daw with U.S. Bank without notice to Daw.
4.8 Capital Expenditures. Daw shall not make capital expenditures
(including expenditures with respect to capital leases) that in the aggregate
exceed the sum of $250,000 during the period from March 1, 2000, through August
31, 2000 (provided, however, that amounts paid by Daw in respect of its real
property lease obligations shall not be included in the foregoing limitation).
SECTION V
DEFAULT AND REMEDIES
5.1 Events of Default. The occurrence of any of the following
events ("Event(s) of Default") shall constitute a default by Daw under this
Fifth Amendment and the Loan Documents:
(a) Failure to Pay. Daw fails to pay any amount owed to U.S. Bank
pursuant to the Note when such amount is due and such failure shall
continue for three business days following written notice from U.S.
Bank;
(b) Failure to Pay Attorney Fees and Costs. Daw fails to pay U.S.
Bank's attorney fees, costs, and expenses as required by paragraph 4.3
of this Fifth Amendment and such failure shall continue for three
business days following written notice from U.S. Bank;
(c) Failure to Comply with Other Obligations. Daw fails to comply
with any other covenant, agreement, term, or condition imposed upon Daw
by this Fifth Amendment, the Loan Documents, or any other agreement
between Daw and U.S. Bank (or among Daw, U.S. Bank, and any third party
or parties), including, but not limited to, Daw's obligation under the
third sentence of paragraph 4.1 to deliver a lending
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commitment letter to U.S. Bank by May 31, 2000, and does not remedy or
cure such failure within ten days following written notice from U.S.
Bank of such failure;
(d) Diminution in the Value of the Collateral. A material
diminution in the value of all or any material portion of the
Collateral;
(e) Incorrect or Misleading Statement. Any material statement,
representation, or warranty made by Daw in this Fifth Amendment, or in
any oral or written statement furnished to U.S. Bank, whether prior to,
contemporaneously with, or subsequent to the delivery of this Fifth
Amendment, proves to have been incorrect or misleading in any material
respect when made; or
(f) Receivership/Bankruptcy. A receiver or trustee is appointed
for Daw, or for any substantial part of its assets, or any bankruptcy
case is instituted by or with respect to Daw.
5.2 Acceleration. At the option of U.S. Bank, upon the occurrence
of any Event of Default, the Indebtedness immediately shall be due and payable
and U.S. Bank shall have no obligation to extend any further credit to Daw.
5.3 Remedies. Following the occurrence of an Event of Default,
U.S. Bank immediately and without notice to Daw may exercise any or all of its
rights and remedies under the Loan Documents and applicable law, all of which
rights and remedies are cumulative.
SECTION VI
GENERAL TERMS
6.1 Assignment. U.S. Bank reserves the right to transfer or
assign, without notice to or consent by Daw, any or all of the powers, rights,
title, and interests held by U.S. Bank under this Fifth Amendment, the Loan
Documents, or any other agreements between the parties to this Fifth Amendment
(or among those parties and any third party or parties). Those agreements may
not be assigned by Daw by operation of law, or otherwise, without U.S. Bank's
prior, written consent, and any such attempted assignment shall be void and
entirely without effect.
6.2 Captions. Any captions for the sections of this Fifth
Amendment are for convenience only and do not control or affect the meaning or
construction of any of the provisions of this Fifth Amendment.
6.3 Severability. If any term, condition, or provision of this
Fifth Amendment, or any other document or instrument referred to in this Fifth
Amendment, is held invalid for any reason, such offending term, condition, or
provision shall be stricken therefrom, and the remainder of this Fifth Amendment
shall not be affected thereby.
6.4 Status of Loan Documents; Amendments. The Loan Documents may
be amended or modified only by a written agreement signed by an authorized
representative of Daw
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and an authorized representative of U.S. Bank that by its terms expressly
supersedes, modifies, amends, or alters those documents.
6.5 Continued Effectiveness of the Loan Documents. The Loan
Documents remain in full force and effect and are binding and enforceable in
accordance with their terms (as modified hereby and by the Note Amendment
Agreement). Following the execution of this agreement, references in the Loan
Agreement to the "Agreement" mean the Loan Agreement, as amended hereby.
6.6 Negotiated Agreement. This Fifth Amendment is a negotiated
agreement. In the event of any ambiguity in this Fifth Amendment, such ambiguity
shall not be subject to a rule of contract interpretation that would cause the
ambiguity to be construed against either of the parties to this Fifth Amendment.
6.7 Voluntary and Entire Agreement. The only consideration for
the execution of this Fifth Amendment is the consideration expressly recited
herein. This Fifth Amendment and the other agreements and instruments referred
to in this Fifth Amendment set forth and constitute the entire agreement among
the parties hereto with respect to the subject matter of this Fifth Amendment.
No oral promise or agreement of any kind or nature, other than those that have
been reduced to writing and set forth herein, has been made among U.S. Bank and
Daw. Daw acknowledges that it has been, or has had the opportunity to be,
represented by legal counsel in connection with the negotiation and execution of
this Fifth Amendment and the other agreements and instruments referred to in
this Fifth Amendment. Daw fully understands the meaning and intent of this Fifth
Amendment and voluntarily executed this Fifth Amendment and the other agreements
and instruments referred to in this Fifth Amendment.
6.8 Construction and Conflict with Other Agreements. In the event
of any conflict between the terms of this Fifth Amendment and the terms of any
other agreements or instruments referred to in this Fifth Amendment, the terms
of this Fifth Amendment shall control.
6.9 Waivers. No waiver of any provision of this Fifth Amendment,
the Loan Documents, or any other agreement between the parties hereto, nor
consent to any failure by Daw to comply with such provisions, shall be effective
unless the same shall be in writing and signed by U.S. Bank, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
6.10 Applicable Law. Notwithstanding anything in the Loan
Documents to the contrary, the Loan Documents, this Fifth Amendment, and any
other instruments or agreements required or contemplated hereunder shall be
governed by, and construed under, the laws of the state of Oregon without regard
to principles of conflicts of law.
6.11 Venue. Daw submits to the jurisdiction of any state or
federal court sitting in Portland, Oregon, in relation to any controversy or
dispute between the parties under the Loan Documents and hereby waives any claim
that such forum is not convenient, or that another forum is more convenient.
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6.12 STATUTORY NOTICES. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES, AND COMMITMENTS MADE BY U.S. BANK CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS THAT ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED
SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION,
AND BE SIGNED BY U.S. BANK TO BE ENFORCEABLE. BY UTAH STATUTE (UCA 25-5-4) THE
FOLLOWING DISCLOSURE IS REQUIRED: THIS FIFTH AMENDMENT IS A FINAL EXPRESSION OF
THE AGREEMENT BETWEEN U.S. BANK AND DAW AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY ALLEGED ORAL AGREEMENT. DAW
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ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS FIFTH AMENDMENT.
U.S. BANK NATIONAL ASSOCIATION DAW TECHNOLOGIES, INC.
By By
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Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxx
Vice President President
By
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Xxxxxxx X. Xxxxxxxx
Executive Vice President and
Chief Financial Officer
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