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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __) *
FIRST KANSAS FINANCIAL CORPORATION
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(Name of Issuer)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
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(Title of Class of Securities)
320651102
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(CUSIP Number)
GILBERT H. DAVIS, ESQ.
SIMS MOSS KLINE & DAVIS LLP
400 NORTHPARK TOWN CENTER, SUITE 310
1000 ABERNATHY ROAD, N.E.
ATLANTA, GEORGIA 30328
(770) 481-7200
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(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
JUNE 29, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are sent.
Page 1
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13D
CUSIP No.320651102
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1 NAME OF REPORTING PERSON:
Bradford M. Johnson
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: PF, BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION: United States
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NUMBER OF 7 SOLE VOTING POWER: 144,200
SHARES ----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 144,200
REPORTING ----------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER: NONE
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 144,200
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 9.3%
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14 TYPE OF REPORTING PERSON: IN
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ITEM 1. SECURITY AND ISSUER.
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This Statement relates to shares of the Common Stock, par value $0.10
per share, of First Kansas Financial Corporation (the "Company"). The Company
has its principal executive offices at 600 Main Street, Osawatomie, Kansas
66064.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
This Statement is filed by Mr. Bradford M. Johnson ("Mr. Johnson"), an
individual whose business address is Post Office Box 8208, Shawnee Mission,
Kansas 66208-0208. Mr. Johnson's principal occupation is serving as a financial
consultant on banking-related matters. Mr. Johnson is a citizen of the United
States of America.
Mr. Johnson has not been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors), or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which he was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
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The funds used to acquire the shares of the Company stock described in
Item 5 below were taken from Mr. Johnson's personal funds, and borrowed through
existing borrowing arrangements with Mercantile Bank of Kansas. Such loans have
been obtained in the ordinary course of business pursuant to standard loan
agreements and are secured in part by securities, including shares of the
Company stock, owned by Mr. Johnson. A copy of the Revolving Loan Agreement
between Mr. Johnson and Mercantile Bank of Kansas is filed with this Schedule as
Exhibit 7.1, which exhibit is incorporated in response to this Item 3 by this
reference.
In the event Mr. Johnson determines to purchase additional shares of
the Company stock, it is currently contemplated that he will use personal funds
and/or funds borrowed through his existing borrowing arrangements. As of the
date of this Statement, no other arrangements with third parties have been made
with respect to financing the acquisition of additional shares.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
Mr. Johnson has acquired the shares of the Company stock indicated
herein for investment in the ordinary course of his businesses consistent with
the belief that the value of the Company stock exceeded that reflected in the
respective market prices of the Company stock on the dates of such purchases.
Mr. Johnson may elect to acquire additional shares of the Company stock or to
sell shares. Any such determination may be based on a number of factors,
including the continued attractiveness of investment in the Company shares at
then prevailing market prices, the number of shares that are available for
purchase, the price or prices thereof, general market conditions and other
similar factors.
While he reserves the right to develop plans or proposals in the
future regarding the following items, at the present time Mr. Johnson has no
plans or proposals which relate to or would result in any of the following:
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(1) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(2) Sale or transfer of a material amount of assets of the Company or
of any of its subsidiaries;
(3) Any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(4) Any material change in the present capitalization or dividend
policy of the Company;
(5) Any other material change in the Company's business or corporate
structure;
(6) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(7) Causing a class of securities of the Company to be delisted from a
national securities exchange or cease to be authorized to be quoted in an inter-
dealer quotation system of a registered national securities association;
(8) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(9) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
Under the rules and regulations of the Securities and Exchange
Commission, Mr. Johnson may be deemed to be the beneficial owner of a total of
144,200 shares of the Company stock, representing approximately 9.3% of the
issued and outstanding shares of the Company. Mr. Johnson currently has sole
power to direct the voting and disposition of all such shares.
The percentages of outstanding shares of the Company stock set out in
the preceding paragraph are computed based on a total of 1,553,938 outstanding
shares of Company stock as of July 1, 1998, as indicated by information supplied
by the Company as of that date.
During the past 60 days, Mr. Johnson has engaged in the following
transactions in shares of the Company stock:
NO. OF SHARES PRICE
DATE PURCHASED/(SOLD) PER SHARE
- -------------- ---------------- ---------
06/29/98 105,000 $12.37
06/30/98 4,000 $12.375
07/01/98 2,000 $12.25
07/06/98 14,900 $12.125
07/07/98 10,200 $12.375
07/08/98 8,100 $12.3125
Each of the above transactions was effected on the open market through the
Nasdaq National Market System.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
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TO SECURITIES OF THE ISSUER.
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Except as described in this Statement, the parties filing this
Statement are not parties to any contract, arrangement, understanding or
relationships with any other person with respect to shares of the Company stock,
including but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, divisions of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
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Filed as exhibits hereto are the following:
7.1 Revolving Loan Agreement.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: July 9, 1998 \s\ Bradford M. Johnson
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Bradford M. Johnson
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REVOLVING LOAN AGREEMENT
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THIS REVOLVING LOAN AGREEMENT (this "Agreement"), dated and effective as of
1/st/ day of June, 1998, by and between Mercantile Bank ("Bank"), a Kansas state
bank with its principal place of business at 4700 West 50/th/ Place, Roeland
Park, Kansas 66205 and BRADFORD M. JOHNSON D/B/A HERON HILL PARTNERS
("Borrower"), an INDIVIDUAL with its principal place of business at SHAWNEE
MISSION, KANSAS 66208-0208 has reference to the following facts and
circumstances:
A. Borrower has requested that Bank loan monies to Borrower and Bank, in the
event it accepts this Agreement in writing, will lend monies to Borrower
pursuant hereto.
NOW, THEREFORE, in considerations of any loan or advance or grant of credit
hereafter made by Bank to or for the benefit of Borrower and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. DEFINITIONS AND TERMS
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1.1 The following terms and/or phrases shall have the meanings set forth and
shall be applicable to the singular and plural form, giving effect to the
numerical difference; whenever the context so requires, the use of "it" in
reference to Borrower shall mean Borrower as identified at the beginning of
this Agreement:
(A) "Affiliate": any person that, directly or indirectly, through one or more
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intermediaries, controls the Borrower (a "Controlling Person") or any
Person (other than the Borrower or a subsidiary) which is controlled by
or is under common control with a Controlling Person. As used herein,
the term "control" means possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract
or otherwise.
(B) "Borrower's Liabilities": all obligations and liabilities of Borrower to
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Bank (including, but not limited to, all debts, claims and
indebtednesses) whether primary, secondary, direct, contingent, fixed or
otherwise, heretofore, now and/or from time to time hereafter owing, due
or payable, however evidenced, created, incurred, acquired or owing and
however arising, whether under this Agreement, the Note or any Other
Agreements, instruments and/or documents heretofore, now and/or from time
to time hereafter executed by, and/or on behalf of Borrower, and
delivered to Bank, or by operation of law or otherwise.
(C) "Borrower's Obligations": all terms, conditions, warranties,
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representations, agreements, undertakings, covenants and provisions
(other than Borrower's Liabilities) to be performed, discharged, kept,
observed or complied with by Borrower pursuant to this Agreement or under
any Other Agreements, instruments and/or documents heretofore, now and/or
from time to time hereafter executed by, and/or on behalf of, Borrower,
and delivered to Bank.
(D) "Business Day": any day other than a Saturday, Sunday or legal holiday
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observed by Bank.
(E) "Charges": all Federal, State, County, City and/or other governmental
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taxes, levies, assessments, charges, claims or encumbrances upon and/or
relating to Borrower's business, Borrower's ownership and/or use of any
of its assets and/or Borrower's income and/or gross receipts.
(F) "Credit": the definition ascribed to this term in Section 2.1.
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(G) "Environmental Law": the definition ascribed to this term in Section
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4.1(E).
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(H) "Event of Default": the definition ascribed to this term in Section 6.1.
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(I) "Financials": those financial statements of Borrower, if any,
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heretofore, concurrently herewith or hereafter delivered by or on behalf
of Borrower to Bank.
(J) "Guarantor": any Person which has guaranteed to Bank the payment,
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collection or performance of all or any portion of Borrower's Liabilities
and/or Borrower's Obligations and/or has granted to Bank a security
interest in, or lien or encumbrance upon, some or all of such Person's
real and/or personal property to secure the payment and/or performance of
all or any portion of Borrower's Liabilities and/or Borrower's
Obligations.
(K) "Indebtedness": all obligations and liabilities of Borrower to any
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Person other than Bank (including, but not limited to, all debts, claims
and indebtednesses) whether primary, secondary, direct, contingent, fixed
or otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable, however evidence, created, incurred, occurred or owing
and howsoever arising, whether under written or oral agreement, by
operation of law, or otherwise.
(L) "Loans": the definition ascribed to this term in Section 2.1.
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(M) "Note": the promissory note in the form attached hereto as Exhibit A to
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be executed and delivered by Borrower to Bank in evidence of the Credit
(as defined in Section 2.1).
(N) "Other Agreements": all agreements, instruments and documents,
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including, but not limited to, loan agreements, security agreements,
guaranties, mortgages, deeds of trust, notes, pledges, applications and
agreements for letters of credit, letters of credit, advices of credit,
bankers acceptances, notices, financing statements and all other written
matter heretofore, now and/or from time to time hereafter executed by
and/or on behalf of Borrower and delivered to Bank, or issued by Bank
upon the application and/or other request of, and on behalf of, Borrower.
(O) "Person": any individual, sole proprietorship, partnership, joint
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venture, trust, unincorporated organization, association, corporation,
institution, entity, part or government (whether national, federal,
state, county, city, municipal or otherwise, including, but not limited
to, any instrumentality, division, agency, body or department thereof).
(P) "Termination Date": June 1, 1999, or such later date to which it may be
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extended pursuant to Section 7.12.
(Q) "Unmatured Event of Default": any event or condition which, with the
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lapse of time or giving notice to Borrower or both, would constitute an
Event of Default.
1.2 Except as otherwise defined in this Agreement, all accounting words, terms
and/or phrases used herein shall have the meanings customarily given them
in accordance with generally accepted accounting principles.
2. CREDIT: GENERAL TERMS
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2.1 Subject to the terms and conditions of this Agreement and the Other
Agreements and provided that an Event of Default or Unmatured Event of
Default, does not then exist, Bank agrees to make such loans or advances
(individually a "Loan" and collectively, the "Loans") to Borrower, as
Borrower may from time to time request, of up to, but not in excess of,
$3,000,000.00 at any time outstanding (the "Credit"). Loans made by Bank
may be repaid, and subject to the terms and conditions hereof, reborrowed
to, but not including the Termination Date, unless the Credit is otherwise
terminated as provided in this Agreement. In the event the outstanding
principal balance
2
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of the Loans exceeds the limitations set forth above, Borrower shall
immediately and without notice or demand, make the necessary payments to
eliminate such excess.
2.2 All loans made hereunder and other liabilities of Borrower arising
hereunder shall be paid by Borrower on the Termination Date, unless payable
sooner pursuant to the terms of this Agreement and/or the Note, but may, at
Borrower's election, be repaid in whole or in part any time prior to such
date without premium or penalty unless otherwise stated in the Note.
2.3 All fees, and all interest payable in respect of the Credit, shall be
computed on the basis of a year of 360 days, and charged for the actual
number of days elapsed. Whenever any payment to be made under this
Agreement, the Note or the Other Agreements shall be due on a non Business
Day, such payment shall be made on the next succeeding Business Day, and
such extension of time shall be included in the computation of interest due
upon the Credit.
2.4 If Bank shall determine any time after the date that the adoption of any
law, rule or regulation regarding capital adequacy, or any change therein
or in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank with any
request or directive regarding capital adequacy (whether or not having the
force of law) from any such authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on Bank's
capital as a consequence of its obligations hereunder to a level below that
which Bank could have achieve, but for such adoption, change or compliance
(taking into consideration Bank's policies with respect to capital
adequacy) by an amount deemed by Bank to be material, then Borrower shall
pay to Bank upon demand such amount or amounts. In addition to the amounts
payable under the provisions of this Agreement or the Other Agreements, as
will compensate Bank for such reduction. Determinations by Bank for
purposes of this Section of the additional amount or amounts required to
compensate Bank shall be conclusive in the absence of manifest error. In
determining such amount or amounts, Bank may use any reasonable averaging
and attribution methods.
3. CONDITIONS PRECEDENT TO DISBURSEMENT
------------------------------------
3.1 (A) The obligation of Bank to make the initial Loan to Borrower under the
Credit is subject to the condition precedent that Bank shall have
received each the following, duly executed and in form and substance
satisfactory to Bank:
(i) Duly executed copy of this Agreement;
(ii) Note, payable to the order of Bank and dated as of the date of
the initial Loan;
(iii) Guaranty duly executed by N/A;
(iv) Subordination and Stand-By Agreement duly executed by N/A;
(v) Secretary's Certificate, Partnership Certificate or affidavit
or sole proprietorship (said form being dictated by Borrower's
legal entity);
(vi) Security Agreement;
(vii) Pledge Agreement; and
(viii) Such other opinions, documents, certificates or approvals as
Bank reasonably may request.
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(B) The obligation of Bank to make the initial Loan and each subsequent Loan
is subject to satisfaction of the following conditions precedent:
(i) No change in the condition or operations, financial or otherwise, of
Borrower shall have occurred, which change, in the reasonable credit
judgment of Bank may have a material adverse effect on Borrower;
(ii) Before and after giving effect to such Loan, no Event of Default or
Unmatured Event of Default shall have occurred and be continuing
hereunder; and
(iii) Before and after giving effect to such Loan, all representations and
warranties of Borrower hereunder and/or under the Other Agreements
shall be true and correct as though made on the date of such Loan.
4. REPRESENTATIONS AND WARRANTIES
------------------------------
4.1 To induce Bank to enter into this Agreement and to make Loans to Borrower,
Borrower makes the following representations and warranties to Bank, all of
which shall survive the execution of this Agreement and the making of the
initial Loan:
(A) Borrower is an individual duly organized and existing and in good
standing under the laws of the jurisdiction in which it was incorporated
and/or established, and has all requisite power and authority, corporate
and/or otherwise, to conduct its business and to own its properties.
Borrower is duly licensed and/or qualified to do business and in good
standing in all jurisdictions in which the laws thereof require Borrower
to be so licensed and/or qualified.
(B) The execution, delivery and performance by Borrower of this Agreement and
the Other Agreements, are within the powers of Borrower, corporate or
otherwise, have been duly authorized by all necessary action and do not
and will not: (i) require any consent or approval of the stockholders of
Borrower; (ii) violate any provision of any certificate or articles of
incorporation, by-laws, partnership agreement or other agreements of
Borrower or of any law, rule, regulation, order, will, judgment,
injunction, decree, determination or award binding upon or applicable to
Borrower; (iii) require the consent of approval of, or filing or
registration with, any governmental body, agency or authority; and/or
(iv) result in a breach of or constitute a default under, or result in
the imposition of any lien, charge or encumbrance upon any property of
Borrower. This Agreement and the Other Agreements constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws of general
application affecting the enforcement of creditor's right or by general
principles of equity.
(C) Borrower is not an "Investment company" or a company "controlled" by an
"Investment company" within the meaning of the Investment Company Act of
1940, as amended.
(D) All employee pension and benefit plans subject to the Employee Retirement
Income Security Act of 1974 ("ERISA") which are maintained for employees
of Borrower, are in compliance in all material respects with the
applicable provisions of ERISA.
(E) The operations of Borrower comply in all respects with the Comprehensive
Environmental Response, Compensation and Liability Act, any so-called
"Superfund" or "Superlien" law or any other federal, state or local laws,
rules, regulations, orders or decrees (collectively, "Environmental
Laws") relating to, or imposing liabilities or standards of conduct
concerning any hazardous substances, pollutants, contaminants, toxic or
dangerous waste, substance or material defined as such in any
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Environmental Law. There are no actions or proceedings which are pending,
or to the knowledge of Borrower threatened, against Borrower under any
Environmental Law.
(F) The Financials, copies of which have been furnished to Bank, are complete
and correct and fairly present the financial condition of Borrower as of
the dates referred to therein, and the results of their operations for
the periods then ended, all in accordance with generally accepted
accounting principles applied on a consistent basis. Since the date
thereof, there has been no material adverse change in the property,
financial condition or business operations of Borrower.
(G) Borrower has and at all times hereafter shall have good and marketable
title to all of its assets, real and personal, free and clear of all
liens, security interests, mortgages, claims and/or encumbrances except
those granted in favor of Bank, those existing as of the date of this
Agreement as reflected in the Financials and/or otherwise disclosed
therein and those referred to in Section 5.1(a) hereof.
(H) Except for trade payables arising in the ordinary course of its business
since the dates reflected in the Financials and/or as otherwise disclosed
therein, Borrower has no indebtedness.
(I) Borrower is not in default with respect to any indenture, loan agreement,
mortgage, deed of trust or similar agreement relating to the borrowing of
monies to which it is a party or by which it is bound.
(J) Borrower has and is in good standing with the respect to all governmental
permits, certificate, consents and franchise necessary to continue the
conduct of business conducted by it and to own or lease and operate its
properties as now owned or leased by it.
(K) Borrower is not a party to any agreement, Instrument or undertaking, or
subject to any other restriction (i) which materially or adversely
affects, or may in the future so affect, the property, financial
condition or business operations of Borrower, or (ii) under or pursuant
to which Borrower is or will be required to place (or under which any
other Person may place) a lien upon any of its properties to secure
payment and/or performance of any liability or obligation, either upon
demand or upon the happening of any condition or event, with or without
demand.
(L) There are no actions or proceedings which are pending or threatened
against Borrower, which (i) related to the execution, delivery or
performance of this Agreement and/or any of the Other Agreements, or (ii)
would cause any material adverse change in the property, financial
condition or business operations of Borrower.
(M) The proceeds of any Loan shall be used for proper business purposes and
consistently with all applicable laws and statutes. Borrower is not in
the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System), and no proceeds of any
Loan shall be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin
stock.
(N) No Information, exhibit or report furnished by Borrower to Bank in
connection with the negotiation, execution or future performance of this
Agreement, contains any false or misleading Information or misstatement
of any facts.
5. COVENANTS
---------
5.1 So long as any of Borrower's Liabilities shall remain unpaid, Borrower
shall not do any of the following without the prior written consent of
Bank:
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(A) Create or permit to be created or allow to exist any mortgage, pledge,
encumbrance or other lien upon or security interest in any property or
assets now owned or hereafter acquired by Borrower, except (i) such as
exist and/or are granted to Bank hereunder or under any of the Other
Agreements; (ii) liens for Charges which are not yet due and payable;
(iii) mechanics', materialmen's, bankers', warehousemen's and similar
liens arising in the ordinary course of business and securing obligations
of Borrower that are not over due for a period of more than sixty (60)
days or are being contested in good faith by appropriate proceedings
diligently pursued; (iv) liens arising in connection with worker's
compensation, unemployment insurance, pensions and social security
benefits which are not over due or are being contested in good faith by
appropriate proceedings, diligently pursued; (v) liens arising for
purchase money acquisitions as permitted in section 5.1 (B) below; or
(vi) zoning restrictions, easements, licenses, restrictions on the use of
real property or minor irregularities in title thereto, which do not
materially detract from the value or impair the use of such real
property.
(B) Incur or permit to exist any Indebtedness except (i) Indebtedness under
the terms of this Agreement; (ii) Indebtedness hereafter incurred in
connection with liens permitted under Section 5.1(A) hereof; (iii)
Indebtedness for purchase money acquisitions not in excess of an
aggregate amount of $ N/A at any point in time; and (iv) other
Indebtedness approved in writing by Bank.
(C) Permit or suffer any levy, attachment or restraint to be made affecting
any of its assets or permit or suffer any receiver, trustee or assignee
for the benefit of creditors, or any other custodian to be appointed to
take possession of all or any of Borrower's assets.
(D) Acquire any other business or make any loan, advance or extension of
credit to, or investment in, any other Person, or create or participate
in the creation of any subsidiary or joint venture, except: (i)
investments in (a) Bank repurchase agreements, (b) savings accounts or
certificates of deposit in a financial institution of recognized
standing, (c) obligations issued or fully guaranteed by the United States
and (d) prime commercial paper maturing within ninety (90) days of the
date of acquisition by Borrower; (ii) loans and advances made to
employees and agents in the ordinary course of business, such as travel
and entertainment advances and similar items; and (iii) investments shown
on the Financials, provided that such investments shall not be increased.
(E) Liquidate or dissolve, or merge with or into or consolidate with or into
any other Person, or sell, lease, transfer or otherwise dispose of all or
any substantial part of its property, assets or business (other than
sales made in the ordinary course of business), amend, modify or
supplement Borrower's certificate or articles of Incorporation, bylaws,
partnership agreement or other document evidencing the existence of
Borrower as a legal entity.
(F) Discount or sell with recourse, or sell for less than the face amount
thereof, any of its notes or accounts receivable, whether now owned or
hereafter acquired.
(G) Guaranty or otherwise, in any way, become liable with respect to the
obligations or liabilities of any Person, other than in connection with
the endorsement of instruments or items for payment or deposit or
collection in the ordinary course of its business.
(H) Enter into any transaction, including, but not limited to, the purchase,
sale or exchange of property or the rendering of any services, with any
Affiliate, or enter into, assume or suffer to exist any employment,
consulting or other like contract with any Affiliate or any officer,
director or partner of any Affiliate, except a transaction or contract
which is in the ordinary course of business and is upon fair and
reasonable terms no less favorable than would be obtained in a comparable
arms-length transaction with a person not an Affiliate.
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5.2 So long as any of Borrower's Liabilities shall remain unpaid, Borrower
shall do all of the following, unless waived in writing by Bank:
(A) Maintain insurance in such amounts and against suck risks as are
customary by companies engaged in the same or similar businesses and
similarly situated.
(B) Maintain standard and modern system for accounting in accordance with
generally accepted principles of accounting consistently applied
throughout all accounting periods and consistent with those applied in
the preparation of the Financials, and furnish to Bank such information
respecting the business, assets and financial condition of Borrower as
Bank reasonably may request and, without request, furnish to Bank: (i)
within forty-five (45) days after the end of each of the first three (3)
quarters of each fiscal year of Borrower, consolidated and/or, if
applicable, consolidating balance sheet(s) and statement(s) of income and
surplus of Borrower and its consolidated subsidiaries as of the close of
such quarter and of the comparable quarter in the preceding fiscal year
in reasonable detail and accompanied by a certificate of the chief
financial officer of Borrower stating that such statements re true and
correct (subject to audit and normal year-end adjustment) and that, as of
the close of the last period covered in such financial statements, no
condition or event had occurred which constitutes an Event of Default or
Unmatured Event of Default hereunder (or if there was such a condition or
event, specifying the same): and (ii) as soon as available, an in any
event within ninety (90) days after the close of each fiscal year of
Borrower, a copy of the detailed long-form audit report for such year and
accompanying consolidated and/or, if applicable, consolidating financial
statements of Borrower and its consolidated subsidiaries, as prepared by
independent certified public accountants selected by Borrower and
satisfactory to Bank.
(C) Permit representatives of Bank to visit and inspect any of the properties
and examine any of the books and records of Borrower at any reasonable
time and as often as reasonably may be desired.
(D) Possess and maintain all necessary franchises, patents, trademarks, trad
names, copyrights and licenses to conduct its respective business(es).
6. DEFAULT
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6.1 The occurrence of any one of the following shall constitute a default
("Event of Default") by Borrower under this Agreement:
(A) If Borrower shall fail to pay any of Borrower's Liabilities, when due
and payable, or declared due and payable:
(B) If Borrower shall default in the performance or observance of any of
Borrower's Obligations (not constituting an Event of Default under any
other clause of this Section 6.1:
(C) If any representation, warranty, statement, report or certificate made or
delivered by Borrower, or any of its officers, employees or agents, to
Bank is not true and correct in any material respect when made or deemed
made:
(D) If Borrower, or any Guarantor shall (i) become insolvent, (ii) not be
paying their respective debts generally as such debts become due, (iii)
make an assignment for the benefit of creditors or cause or suffer any of
their respective assets to come within the possession of any receiver,
trustee or custodian, (iv) have a petition filed by or against any of
them under the Bankruptcy Reform Act of 1978, as amended, or any similar
law or regulation, (v) have any or their respective assets attached,
seized, or levied upon or (vi) otherwise become the subject of any
insolvency or creditor enforcement proceedings:
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(E) If Borrower shall default in the payment, when due, whether by
acceleration or otherwise, of any Indebtedness or Borrower, and such
default is declared and is not cured within the time, if any, specified
therefore in any agreement governing the same, or any event or condition
shall occur which results in the acceleration of the maturity of any
Indebtedness of Borrower or enables the holder thereof to accelerate the
maturity of any such Indebtedness;
(F) The death or incompetency of any individual Guarantor or the appointment
of a conservator for all or any portion of any such Guarantors assets:
(G) If one or more judgements or decrees shall be entered against Borrower
involving, individually, or in the aggregate, a liability of $10,000.00
or more and such judgments or decrees shall not have been vacated,
discharged or stayed pending appeal within sixty (60) days after the
entry thereof:
(H) If this Agreement or any of the Other Agreements, including, but not
limited to, the Note, at any time after their respective execution and
delivery, shall cease to be in full force and effect, shall be declared
null and void, shall be revoked or terminated or shall be subject to any
contest by any Person as to their validity and/or enforceability, for any
reason, or if Borrower shall for any reason deny any further liability to
the Bank hereunder and thereunder; or
(I) The occurrences of any default or Event of Default under any of the Other
Agreements which is not cured within the time, if any, specified in such
Other Agreements.
6.2 Upon the occurrence of any Event of Default or upon the occurrences, and
during the continuance of any of the events described in Section 6.1
notwithstanding Borrower's right to cure same), Bank shall have no further
obligation to, and may then forthwith cease making Loans to or for the
benefit of Borrower under this Agreement and the Other Agreements without
any notice to Borrower. Upon an Event f Default, without notice by Bank to
or demand by Bank of Borrower, Borrower's Liabilities shall be immediately
due and payable. Bank, in its sole discretion, upon an Event of Default may
exercise one or more of the rights and remedies accruing to Bank under this
Agreement or any of the Other Agreements and/or applicable law upon default
by a Borrower, including, but not limited to, the right to set off and/or
reduce to cash and apply to the payment of any of Borrower's Liabilities,
any monies, reserves, deposits, certificates of deposit, deposit accounts
and interest and dividends thereon, securities, cash and other property in
the possession of or under the control of Bank or any of Bank's Affiliates
(as defined in section 7.10).
7. MISCELLANEOUS
-------------
7.1 Borrower waives the right to direct the application of any and all payments
at any time or times hereafter received by Bank on account of Borrower's
Liabilities and Borrower agrees that Bank shall have the continuing
exclusive right to apply and reapply any and all such payments in such
manner as Bank may deem advisable, notwithstanding an entry by Bank upon
any of its books and records.
7.2 This Agreement and the Other Agreements may not be modified, altered or
amended except by an agreement in writing signed by Borrower and Bank.
Borrower may not sell, assign or transfer this Agreement or the Other
Agreements or any portion thereof, including, but not limited to,
Borrower's rights, titles, interests, remedies, powers and/or duties
thereunder. Borrower consents to Bank's grant of participations in or sale,
assignment, transfer or other disposition, at any time or from time to time
hereafter, of this Agreement or the Other Agreements, or any portion
thereof, including, but not limited to, Bank's rights, titles, interests,
remedies, powers and/or duties.
7.3 Bank's failure at any time or time hereafter to require strict performance
by Borrower or failure to enforce Bank's rights, under any provision of
this Agreement or the Other Agreements shall not waive, affect or diminish
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<PAGE>
any right of Bank thereafter to demand strict compliance and performance
therewith or to enforce Bank's rights. Any suspension or waiver by Bank of
an Event of Default shall not suspend, waive or affect any other Event of
Default, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of Borrower contained in this
Agreement and the Other Agreements, and no Event of Default by Borrower
under this Agreement and the Other Agreements, shall be deemed to have been
suspended or waived by Bank unless such suspension or waiver is by an
instrument in writing signed by an officer of Bank and directed to Borrower
specifying such suspension or waiver.
7.4 If any provision of this Agreement or the Other Agreements or the
application thereof is held invalid or unenforceable, the remainder of this
Agreement and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this
Agreement and the Other Agreements shall be severable in any such instance.
7.5 This Agreement and the Other Agreements shall be binding upon and inure to
the benefit of the successors and assigns of Borrower and Bank. this
provision, however, shall not be deemed to modify Section 7.2 hereof.
7.6 Except as otherwise specifically provided in this Agreement, Borrower
waives any and all notice or demand which Borrower might be entitled to
receive with respect to this Agreement by virtue of any applicable statute
or law, and waives presentment, demand and protest and notice of
presentment, protest, default, dishonor, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Bank on which Borrower may in any way be
liable and hereby ratifies and confirms whatever Bank may do in this
regard.
7.7 Upon demand by Bank, Borrower shall reimburse Bank for all costs, fees and
expenses incurred by Bank or for which Bank becomes obligated, in
connection with the negotiation, preparation and conclusion of this
Agreement and the Other Agreements, including, but not limited to, all
fees, costs and expenses of attorneys retained by Bank (including, but not
limited to, attorneys who are employees of bank and/or any of its
Affiliates).
7.8 This Agreement and the Other Agreements are submitted by Borrower to Bank
(for Bank's acceptance or rejection thereof) at Bank's principal place of
business as an offer by Borrower to borrow monies from Bank and shall not
be binding upon Bank or become effective until and unless accepted by Bank,
in writing, at said place of business. If so accepted by Bank, this
Agreement and the Other Agreements shall be deemed to have been made at
said place of business. This Agreement and the Other Agreements shall be
governed and controlled by the internal laws of the State of Kansas as to
interpretation, enforcement, validity, construction, effect and in all
other respects, without reference to principles of choice of law.
7.9 Jurisdiction. TO INDUCE BANK TO ACCEPT THIS AGREEMENT AND ALL OTHER
------------
AGREEMENTS RELATED HERETO, BORROWER HEREBY IRREVOCABLY AGREES THAT, SUBJECT
TO BANK'S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY
WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT
OR ANY AGREEMENT RELATED HERETO OR ANY COLLATERAL HELD BY BANK IN
CONNECTION HEREWITH OR THEREWITH SHALL BE LITIGATED ONLY IN COURTS HAVING
SITUS WITHIN THE STATE OF KANSAS OR THE STATE OR MISSOURI. BORROWER HERE BY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL
COURT LOCATED WITHIN EITHER OF SAID JURISDICTIONS. BORROWER HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT IN ACCORDANCE WITH THIS SECTION. BORROWER AND A BANK IRREVOCABLY
WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH
BORROWER AND BANK ARE PARTIES.
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7.10 To the extent permitted by applicable law, if at any time or times
hereafter Bank employs counsel (including, but not limited to, attorneys
who are employees of Bank and/or any of its affiliates) (A) for advice or
other representation with respect to this Agreement, the Note or the Other
Agreements or the administration of the Credit, (B) to represent Bank in
any litigation, contest, dispute, suit or proceeding or to commence,
defend or intervene or take any other action in or with respect to any
such matter, or (C) to enforce any rights of Bank against Borrower and/or
any Guarantor, the reasonable costs, fees and expenses incurred by Bank in
any manner or way with respect to the foregoing, shall be part of
Borrower's Liabilities, payable by Borrower to Bank on demand. For
purposes of this Agreement "affiliate" of the Bank shall include, but not
be limited to, Mercantile Bancorporation Inc. ("MBI") and any banking or
non-banking subsidiary of MBI, whether owned, controlled by, controlling
or under common control with MBI directly or indirectly through any
subsidiary.
7.11 To the extent that Bank receives any payment on account of Borrower's
Liabilities, and any such payment(s) or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside,
subordinated and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act, sate or federal law, common law or
equitable cause, then, to the extent of such payment(s) received,
Borrower's Liabilities, or part thereof intended to be satisfied shall be
revived and continue in full force and effect as if such payment(s) had
not been received by Bank and applied on account of Borrower's
Liabilities.
7.12 This Agreement shall terminate on the maturity of the Note, including, but
not limited to, any and all renewals and extensions thereof, if any,
unless the Credit is otherwise terminated pursuant to the terms of this
Agreement. The extension or renewal of any Note evidencing credit
hereunder shall automatically extend the Termination Date of this
Agreement to the maturity date of such extended or renewed Note unless the
Credit is otherwise terminated pursuant to the term hereof. Borrower may
terminate the Credit at any time upon written notice to Bank and payment
in full of the outstanding principal balance of, and accrued and unpaid
interest on, the Loans and all other of Borrower's Liabilities under this
Agreement. Notwithstanding anything stated herein to the contrary all of
Bank's rights and remedies, the liens and security interest of Bank in the
Collateral and all of borrower's Liabilities shall survive termination of
the Credit extended to Borrower hereunder until all of the Borrower's
Liabilities have been paid in full. The termination or cancellation of the
Credit shall not affect or impair the liabilities and obligations of
Borrower and/or any Guarantor or any one or more of them to Bank or Bank's
rights with respect to any Loans and advances made and other Borrower's
Liabilities incurred prior to such termination or with respect to the
Collateral.
7.13 All notices, requests and other communications to any party hereunder
shall be in writing (including, but not limited to , bank wire, telex or
similar writing) and shall be given to such party at its address or telex
number set forth on the signature pages hereof or such other address or
telex number as such party may hereafter specify. Each such notice,
request or other communication shall be effective (i) if given by telex,
when such telex is transmitted to the telex number specified in this
Section and the appropriate answer back is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mail with
first class postage prepaid, addressed as aforesaid or (iii) if given by
any other means, when delivered at the address specified in this Section.
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NOTICE. THIS AGREEMENT IS THE FINAL EXPRESSION OF THE CREDIT AGREEMENT
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BETWEEN BORROWER AND BANK, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY PRIOR
OR CONTEMPORANEOUS ORAL CREDIT AGREEMENT BETWEEN BORROWER AND BANK. IF THERE
ARE ANY ADDITIONAL TERMS, THEY ARE REDUCED TO WRITING AS
FOLLOWS:
- --------------------------------------------------------------------------------
NONE
- --------------------------------------------------------------------------------
- -----------------------------------
I/WE AFFIRM THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN BORROWER AND BANK.
BORROWER: BANK:
___________________________________
BRADFORD M. JOHNSON D/B/A MERCANTILE BANK
- -------------------------------------
HERON HILL PARTNERS
- -------------------
X \s\ Bradford M. Johnson By: \s\ James A. Thomas
- ------------------------------------- ----------------------------------------
JAMES A. THOMAS, VICE PRESIDENT
THIS SECTION IS ALSO MADE PART OF THIS AGREEMENT IN COMPLIANCE WITH MO. REV.
STAT. (S)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 YOU, THE BORROWER, AND US, THE
BANK, FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING
SUCH MATTERS ARE CONTAINED IN HIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
IN WITNESS WHERE OF, this Agreement has been duly executed as of the day and
year specified at the beginning hereof.
BORROWER
- ------------------------------
BRADFORD M. JOHNSON D/B/A
- ------------------------------
HERON HILL PARTNERS
- ------------------------------
X \s\ Bradford M. Johnson
- ------------------------------
MAILING ADDRESS
- ------------------------------
- ------------------------------
SHAWNEE MISSION, KS 66208-0208
- ------------------------------
- ------------------------------
- ------------------------------
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<PAGE>
Accepted this 1/st/ day of JUNE, 1998.
BANK:
MERCANTILE BANK
By: \s\ James A. Thomas
---------------------------------------
Title: JAMES A. THOMAS, VICE PRESIDENT
------------------------------------
Address:
P.O. Box 419147
KANSAS CITY, MO 64141-6147
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