SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT TO 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, New 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 Loan and Security
Agreement and other Loan 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 7.8
and 10.7 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.
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 7.8 and 10.7 of the
Loan Agreement, and therefore constitutes Events of Default under Section
11.1(d) 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. Forbearance and Waiver Fee. In addition to those amounts due Lender
pursuant to Section 8 herein, Borrower shall pay to Lender the amount of Ten
Thousand and No/100 Dollars ($10,000.00) as a Forbearance and Waiver Fee. The
Forbearance and Waiver Fee shall be deemed earned as of the effective date
hereof, and shall be due and payable in full not later than the effective date
hereof. The payment of the Forbearance and Waiver Fee shall not reduce any of
the Borrower's obligations under the Loan Agreement.
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 in its entirety
the paragraph on page 16 beginning with "Revolving Credit Facilit"
and substituting the following:
"Revolving Credit Facility" means the facility for the
Revolving Credit Loans in the principal sum of up to
$9,000,000.00.
6.2 Section 3.1(a) is deleted in its entirety and the
following is substituted therefor:
"(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 Three
percent (3%), payable monthly in arrears on each
Interest Payment Date and on the Termination Date.
(ii) Term Loans. The Borrower will pay interest on each
Term Loan at a rate per annum equal to the Prime Rate
plus Three percent (3%) payable in arrears on each
Interest Payment Date and when such Term Loans are due
(whether at maturity, by reason of acceleration or
otherwise)."
6.3 Section 3.2(a) is deleted in its entirety and the
following is substituted therefor:
(a) Unused Line Fee. In connection with and as a consideration
for the Lender's commitment hereunder, subject to the terms
hereof, to lend to the Borrower under the 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-half of one percent (.5%) 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.
6.4 Section 10.1 is deleted in its entirety and the
following is substituted therefor:
"Section 10.1 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, the 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 its 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, New 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, New 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: