<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
- --- of the Securities Exchange Act of 1934
For the quarterly period ended
JUNE 30, 1998
or
Transition Report Pursuant to Section 13 or 15(d)
- --- of the Securities Exchange Act of 1934
Commission File Number 0-13111
ANALYTICAL SURVEYS, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 84-0846389
(State of incorporation) (IRS Employer Identification No.)
941 NORTH MERIDIAN STREET
INDIANAPOLIS, INDIANA 46204
(Address of principal executive offices) (Zip Code)
(317) 634-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past (12) months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
ninety (90) days.
Yes X No
--- ---
The number of shares of common stock outstanding as of July 31, 1998 was
6,721,749.
<PAGE>
PART I ITEM 1.
ANALYTICAL SURVEYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998
------------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,559 $ 1,571
Accounts receivable, net of allowance for doubtful
accounts of $164 and $179 8,991 14,881
Revenue in excess of billings 21,613 37,608
Deferred income taxes 136 330
Prepaid expenses and other 545 911
Prepaid income taxes --- 1,470
------- -------
Total current assets 32,844 56,771
------- -------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost:
Equipment 7,983 12,109
Furniture and fixtures 1,151 1,411
Leasehold improvements 499 530
------- -------
9,633 14,050
Less accumulated depreciation and amortization (5,483) (6,708)
------- -------
4,150 7,342
Deferred income taxes 41 140
Goodwill, net of accumulated amortization
of $368 and $1,199 12,353 25,491
Other assets, net of accumulated
amortization of $130 and $511 758 374
------- -------
TOTAL ASSETS $50,146 $90,118
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998
------------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Lines of credit with banks (Note 2) $ 1,473 $ 67
Current portion of long-term debt 3,051 4,714
Billings in excess of revenue 789 1,376
Accounts payable and other accrued liabilities 3,693 6,986
Accrued payroll and related benefits 2,753 5,044
------- -------
Total current liabilities 11,759 18,187
Line of credit with bank (note 2) --- 7,300
Long-term debt, less current portion 14,145 22,502
Deferred compensation payable 411 295
------- -------
Total liabilities 26,315 48,284
------- -------
STOCKHOLDERS' EQUITY
Preferred stock; no par value. Authorized 2,500
shares; none issued or outstanding -- --
Common stock; no par value. Authorized 100,000 shares;
6,114 and 6,700 shares issued and outstanding
at September 30, 1997 and June 30, 1998, respectively 15,269 28,030
Retained earnings 8,562 13,804
------- -------
Total stockholders' equity 23,831 41,834
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $50,146 $ 90,118
------- -------
------- -------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months Nine Months
Ended Ended
June 30, June 30,
1997 1998 1997 1998
------ ------- ------- -------
<S> <C> <C> <C> <C>
SALES $8,484 $22,752 $24,643 $60,105
------ ------- ------- -------
COSTS AND EXPENSES
Salaries, wages and related benefits 3,983 10,553 11,524 28,958
Subcontractor costs 1,391 3,750 4,419 8,096
Other general and administrative 1,382 3,931 4,029 10,531
Depreciation and amortization 320 905 973 2,513
------ ------- ------- -------
7,076 19,139 20,945 50,098
------ ------- ------- -------
EARNINGS FROM OPERATIONS 1,408 3,613 3,698 10,007
------ ------- ------- -------
OTHER (INCOME) EXPENSE
Interest expense, net 123 541 382 1,425
Other (7) (84) (8) (115)
------ ------- ------- -------
116 457 374 1,310
------ ------- ------- -------
EARNINGS BEFORE INCOME TAXES 1,292 3,156 3,324 8,697
INCOME TAX EXPENSE 490 1,271 1,267 3,455
------ ------- ------- -------
NET EARNINGS $ 802 $ 1,885 $ 2,057 $ 5,242
------ ------- ------- -------
------ ------- ------- -------
EARNINGS PER COMMON SHARE
Basic $0.16 $0.30 $ 0.41 $0.84
------ ------- ------- -------
------ ------- ------- -------
Diluted $0.15 $0.28 $0.39 $0.78
------ ------- ------- -------
------ ------- ------- -------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 5,090 6,345 4,978 6,224
------ ------- ------- -------
------ ------- ------- -------
Diluted 5,409 6,819 5,260 6,720
------ ------- ------- -------
------ ------- ------- -------
</TABLE>
See accompanying notes to financial statements and common stock equivalent.
<PAGE>
ANALYTICAL SURVEYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine months Nine months
Ended Ended
June 30, June 30,
1997 1998
----------- -----------
<S> <C> <C>
CASH FLOWS PROVIDED (USED)
BY OPERATING ACTIVITIES $2,680 $ (5,994)
------ --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of equipment 157 21
Purchase of equipment and leasehold improvements (709) (2,668)
Payments for net assets acquired in business
combinations ----- (8,304)
------ --------
Net cash used in investing activities (552) (10,951)
------ --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under lines of credit with
banks (500) 5,347
Proceeds from issuance of long-term debt 214 11,501
Principal payments of long-term debt (948) (1,481)
Proceeds from issuance of common stock 486 1,590
------ --------
Net cash provided (used)
by financing activities (748) 16,957
------ --------
Net increase in cash 1,380 12
Cash at beginning of period 1,022 1,559
------ --------
Cash at end of period $2,402 $ 1,571
------ --------
------ --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 386 $ 1,278
------ --------
------ --------
Cash paid for income taxes $ 738 $ 2,197
------ --------
------ --------
Common stock issued for net assets acquired
in business combinations $ 0 $ 8,270
------ --------
------ --------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying interim condensed consolidated financial statements have
been prepared by management in accordance with the accounting policies described
in the Company's annual report for the year ended September 30, 1997. The
condensed consolidated financial statements include the accounts of the Company
and its subsidiaries. (See Note 3 regarding recent acquisitions). All
significant intercompany balances and transactions have been eliminated in
consolidation. The condensed consolidated financial statements have not been
audited by independent auditors. Certain information and note disclosures
normally included in consolidated financial statements prepared in accordance
with generally accepted accounting principles have been omitted. These
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1997.
The condensed consolidated financial statements reflect all adjustments
which are, in the opinion of management, necessary to present fairly the
financial position of Analytical Surveys, Inc., at June 30, 1998 and its results
of operations for the three and nine months ended June 30, 1998 and 1997, and
its cash flows for the nine months ended June 30, 1998 and 1997. All such
adjustments are of a normal recurring nature.
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"). SFAS 128 requires the restatement of all
prior-period earnings per share ("EPS") data. SFAS 128 replaces the
presentation of primary EPS, with a presentation of basic EPS and diluted EPS.
Under SFAS 128, basic EPS excludes dilution for common stock equivalents and is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
Company. The Company's diluted EPS for prior periods is the same as the primary
EPS previously reported while the Company's basic EPS will be greater than the
primary EPS previously reported.
2. NOTES PAYABLE TO BANK
On June 3, 1998, the Company replaced its existing lines of credit with a
three-year $11,000,000 secured line of credit and a $10,000,000 line of credit
for acquisitions (which is due in quarterly installments over a five-year
period), and the Company refinanced $16,000,000 of term debt. Borrowings under
the new credit facilities bear interest at either LIBOR plus 1.25% to 2.25% or
the prime rate.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
3. ACQUISITIONS
In June 1998, the Company, through its wholly owned subsidiary, Surveys
Holdings, Inc. acquired all of the issued and outstanding common stock of
Cartotech, Inc. for cash of $8,059,000 and 354,167 shares of restricted common
stock valued at $8,269,799 for total consideration of $16,328,799.
In May 1998, the Company acquired all of the issued and outstanding common
stock of Interra Technologies (India) Private Limited for cash of $437,701.
Interra had previously been an exclusive subcontractor to Analytical Surveys,
Inc.
<TABLE>
<S> <C>
Current assets $ 3,600,702
Equipment 1,950,146
Other assets, including Goodwill 13,806,988
Current liabilities (2,591,336)
Non current liabilities -----
-----------
$16,766,500
-----------
-----------
</TABLE>
4. STOCK OPTIONS
The following table summarizes stock option transactions under the
Company's four non-qualified stock option plans (in thousands except per
share amounts):
<TABLE>
<CAPTION>
Average
Shares under Option Price
option per share
------------ ------------
<S> <C> <C>
Outstanding at September 30, 1997 1,288 $ 9.23
Granted 728 39.19
Exercised (232) 6.88
Cancelled (1) 10.01
-----
Outstanding June 30, 1998 1,783 21.78
-----
-----
Options Exercisable at June 30, 1998: 730
-----
-----
Available for Grant at June 30, 1998 82
-----
-----
</TABLE>
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
PART I ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE
COMPANY SET FORTH BELOW SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1997. THIS QUARTERLY REPORT
ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISK AND
UNCERTAINTIES. THE STATEMENTS CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-Q
THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. WHEN
USED IN THIS QUARTERLY REPORT, OR IN THE DOCUMENTS INCORPORATED BY REFERENCE
INTO THIS QUARTERLY REPORT, THE WORDS "ANTICIPATE," "BELIEVE," "ESTIMATE,"
"INTEND" AND "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT
LIMITATION, STATEMENTS RELATING TO COMPETITION, FUTURE ACQUISITIONS, MANAGEMENT
OF GROWTH, INTERNATIONAL SALES, THE COMPANY'S STRATEGY, FUTURE SALES, FUTURE
EXPENSES AND FUTURE LIQUIDITY AND CAPITAL RESOURCES. ALL FORWARD-LOOKING
STATEMENTS IN THIS QUARTERLY REPORT ARE BASED UPON INFORMATION AVAILABLE TO THE
COMPANY ON THE DATE OF THIS QUARTERLY REPORT, AND THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THIS QUARTERLY REPORT.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 1997, AND OTHER FILINGS MADE WITH THE
SECURITIES AND EXCHANGE COMMISSION.
OVERVIEW
ASI, a leading provider of data conversion and digital mapping services to
users of customized geographic information systems, was founded in 1981 by its
current Chief Technical Officer, John A. Thorpe. From 1981 to 1990, the Company
experienced steady growth in revenues with periodic fluctuations in financial
results. After the hiring of the Company's current Chief Executive Officer and
Chief Financial Officer in 1990, the Company implemented a controlled growth
strategy, including improving and standardizing operating controls and
procedures, investing in infrastructure, upgrading the Company's proprietary
software and establishing capital sources.
In 1995, the Company embarked on a more aggressive growth strategy,
including consolidation of the fragmented GIS services industry. The Company
acquired substantially all of the assets of Wisconsin-based Intelligraphics,
Inc. ("Intelligraphics") in December 1995 for $3.5 million in cash and 345,000
shares of restricted Common Stock valued at $891,000. Intelligraphics, with over
200 employees, significantly expanded the Company's capacity to perform large
projects, added utility industry expertise, and established ASI's presence in
the midwestern United States. The acquisition contributed over 25 new customers
and $12.3 million in "backlog," which represents the amount of revenue that has
not been recognized on signed contracts.
In July 1996, the Company expanded its services to state and local
governments by acquiring substantially all of the assets of Westinghouse
Landmark GIS, Inc. ("ASI Landmark") for $2.0 million in cash. Based in North
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
Carolina, ASI Landmark's primary business is land base and cadastral mapping.
Prior to this acquisition, ASI had utilized subcontractors for certain of these
services. ASI Landmark also provided the Company with additional capacity for
photogrammetry, and a presence in the eastern and southeastern United States.
The acquisition contributed approximately 20 new customers, $9.1 million in
backlog and 105 employees to the Company.
The Company acquired MSE Corporation ("MSE") in July 1997 for $12.5 million
in cash and 925,000 shares of restricted Common Stock valued at $7.3 million.
The acquisition of Indiana-based MSE gave the Company greater capacity to serve
the utility market and further enhanced ASI's presence in the midwestern United
States. In addition, the acquisition of MSE contributed over 200 customers and
$43.0 million of backlog to the Company. Over 325 employees joined the ASI
workforce as a result of the MSE acquisition, including the Company's current
Chief Operations Officer and Chief Administrative Officer.
The Company acquired Texas-based Cartotech, Inc. ("Cartotech") in June 1998
for approximately $7.7 million in cash, net of cash acquired, and 354,167 shares
of restricted Common Stock valued at approximately $8.3 million, plus
acquisition costs of $359,000. The Cartotech acquisition extended ASI's presence
in the utility market, enhanced the Company's field inventory operations and
provided the Company with a strong presence in the southwestern United States.
The Cartotech acquisition contributed over 50 new customers and 270 employees to
the Company. One of Cartotech's customers, FirstEnergy Corp. (formerly known as
Ohio Edison), accounted for approximately 46.0% of Cartotech's revenues in
calendar 1997.
In conjunction with the above acquisitions, the Company has recorded
goodwill, which represents the excess of the purchase price over the fair value
of the net assets acquired in business combinations. As of June 30, 1998,
goodwill, net of accumulated amortization, was $25.5 million. The Company will
amortize the value of the intangible assets acquired in its recent business
acquisitions over a period of 15 years, representing the expected period of
benefit from the acquisitions. The Company believes this amortization period to
be appropriate based on the historical and forecasted operating results of the
acquired businesses.
The Company recognizes revenue using the percentage of completion method of
accounting on a cost-to-cost basis. For each contract, an estimate of total
production costs is determined. At each accounting period and for each of the
Company's contracts, the percentage of completion is based on production costs
incurred to date as a percentage of total estimated production costs. This
percentage is then multiplied by the contract's total value to calculate the
sales revenue to be recognized.
Production costs consist of internal costs, primarily salaries and wages,
and external costs, primarily subcontractor costs. Internal and external
production costs may vary considerably among projects and during the course of
completion of each project. As a result, the Company experiences yearly and
quarterly fluctuations in production costs, in salaries, wages and related
benefits and in subcontractor costs. These costs may vary as a percentage of
sales from period to period. Since 1995 the Company has relied less on
subcontractors and more on employees. The Company anticipates that, as a
percentage of sales, salaries, wages and related benefits will continue to
increase, with a corresponding decrease in subcontractor costs, due, in part, to
the Company's May 1998 purchase of Interra Technologies, an India-based company
that had been a provider of subcontractor services to the Company. The following
table illustrates the relationship of salaries, wages and related benefits and
subcontractor costs:
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
<TABLE>
Nine Months Ended
Year Ended September 30, June 30,
------------------------ -----------------
1995 1996 1997 1997 1998
<S> <C> <C> <C> <C> <C>
PERCENTAGE OF SALES:
Salaries, wages and related benefits 38.8% 46.3% 48.5% 46.8% 48.2%
Subcontractor costs . . . . . . . . . 23.9% 17.2% 14.5% 17.9% 13.5%
----- ----- ----- ----- -----
Total . . . . . . . . . . . . . . . . 62.7% 63.5% 63.0% 64.7% 61.7%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>
The Company recognizes losses on contracts in the period such loss is
determined. From the beginning of fiscal 1995 through the nine-month period
ending June 30, 1998, the Company has recognized aggregate losses on contracts
of approximately $913,000. Over the same period, the Company recognized sales of
$137.2 million. Sales and marketing expenses associated with obtaining contracts
are expensed as incurred.
Backlog increases when new contracts are signed and decreases as revenue is
recognized. As of June 30, 1998, backlog was $113.6 million. Recently, the
number of large projects awarded to the Company has increased. Contracts for
larger projects generally increase the Company's risk due to inflation as well
as changes in customer expectations and funding availability. The Company's
contracts are generally terminable on short notice, and while in the Company's
experience such termination is rare, there is no assurance that the Company will
receive all of the revenue anticipated under signed contracts.
The Company engages in significant research and development activities. The
majority of these activities occur as the Company develops software or designs a
product for a particular contract, so that the costs of such efforts are
included as an integral part of the Company's services. Such custom-designed
software can often be applied to projects for other customers. These amounts
expended by the Company are not included in research and development expenses,
although the Company retains ownership of such proprietary software or products.
The Company, through its Advanced Technology Division, also engages in research
and development activities independently of the Company's work on particular
customer projects. For fiscal 1997 and for the nine months ended June 30, 1998,
the Company expended $275,000 and $190,000, respectively, on such independent
research and development activities.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
consolidated statements of operations data expressed as a percentage of sales:
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30 June 30
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
PERCENTAGE OF SALES:
Sales. . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0% 100.0%
Costs and expenses
Salaries, wages and related benefits. . . . . . 46.9 46.4 46.8 48.2
Subcontractor costs . . . . . . . . . . . . . . 16.4 16.4 17.9 13.5
Other general and administrative. . . . . . . . 16.2 17.3 16.4 17.5
Depreciation and amortization . . . . . . . . . 3.8 4.0 3.9 4.2
----- ----- ----- -----
Earnings from operations . . . . . . . . . . . . . 16.7 15.9 15.0 16.6
Other expense, net . . . . . . . . . . . . . . . . 1.4 2.0 1.5 2.2
----- ----- ----- -----
Earnings before income taxes . . . . . . . . . . . 15.3 13.9 13.5 14.4
Income tax expense . . . . . . . . . . . . . . . . 5.8 5.6 5.1 5.7
----- ----- ----- -----
Net earnings . . . . . . . . . . . . . . . . . . . 9.5% 8.3% 8.4% 8.7%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
SALES. The Company's sales consist of revenue recognized for services
performed. Sales increased $14.3 million or 168.2% to $22.8 million for the
three months ended June 30, 1998 from $8.5 million for the three months ended
June 30, 1997. This increase was due to an increase in the number and size of
customer contracts with the Company (including MSE) as well as the impact of the
acquisition of MSE in July 1997. Prior to its acquisition by the Company, MSE's
sales for the three months ended June 30, 1997 were $6.9 million.
SALARIES, WAGES AND RELATED BENEFITS. Salaries, wages and related
benefits include employee compensation for production, marketing, selling,
administrative and executive employees. Salaries, wages and related benefits
increased 165.0% to $10.6 million for the three months ended June 30, 1998
from $4.0 million for the three months ended June 30, 1997. This increase was
primarily due to the addition of over 325 employees as a result of the MSE
acquisition in July 1997, as well as the hiring of additional employees to
support the Company's increased business. As a percentage of sales, salaries,
wages and related benefits decreased to 46.4% for the three months ended June
30, 1998 from 46.9% for the three months ended June 30, 1997. This decrease
was primarily attributable to normal fluctuations in the mix of contracts
worked. The Company anticipates that, as a percentage of sales, salaries,
wages and related benefits will increase, with a corresponding decrease in
subcontractor costs, due, in part, to the Company's May 1998 purchase of
Interra Technologies, an India-based company that had been a provider of
subcontractor services to the Company.
SUBCONTRACTOR COSTS. Subcontractor costs include production costs
incurred through the use of third parties for production tasks such as data
conversion services to meet contract requirements, aerial photography and
ground and airborne survey services. Subcontractor costs increased 169.6% to
$3.8 million for the three months ended June 30, 1998 from $1.4 million for
the three months ended June 30, 1997. As a percentage of sales, however, sub
contractor costs remained constant at 16.4% for both the three months ended
June 30, 1998 and the three months ended June 30, 1997.
OTHER GENERAL AND ADMINISTRATIVE COSTS. Other general and
administrative costs include rent, maintenance, travel, supplies, utilities,
insurance and professional services. Such costs increased 184.4% to $3.9
million for the three months ended June 30, 1998 from $1.4 million for the
three months ended June 30, 1997, primarily due to greater supplies expense,
increased travel, and employee recruiting and relocation expenses related to
the integration of MSE. As a percentage of sales, other general and
administrative costs increased to 17.3% for the three months ended June 30,
1997 from 16.2% for the three months ended June 30, 1997.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization consists
primarily of amortization of goodwill incurred in connection with the Company's
acquisitions, as well as depreciation of certain of the Company's operating
assets. For the three months ended June 30, 1998, depreciation and amortization
increased 182.8% to $905,000 from $320,000 for the three months ended June 30,
1997. This increase was primarily attributable to the increased goodwill
recorded as a result of the MSE acquisition. As a percentage of sales,
depreciation and amortization increased slightly to 4.0% for the three months
ended June 30, 1998 from 3.8% for the three months ended June 30, 1997. The
Company expects amortization expense to increase substantially as a result of
the Cartotech acquisition.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
OTHER EXPENSE, NET. Other expense, net is comprised primarily of net
interest expense. Net interest expense increased 341.0% to $541,000 for the
three months ended June 30, 1998 from $123,000 for the three months ended June
30, 1997. This increase was primarily due to increased term debt incurred in
connection with the acquisition of MSE in July 1997 and increased utilization of
the Company's lines of credit for working capital.
INCOME TAX EXPENSE. Income tax expense was $1.3 million for the three
months ended June 30, 1998 compared to $490,000 for the three months ended June
30, 1997. The Company's effective income tax rate for the three months ended
June 30, 1998 was 40.3%, an increase from 37.9% for the three months ended June
30, 1997, due to the change in the mix of state tax rates as a result of the MSE
acquisition.
NET EARNINGS. Due to the factors discussed above, net earnings increased
135% to $1.9 million for the three months ended June 30, 1998 from $802,000 for
the three months ended June 30, 1997.
NINE MONTHS ENDED JUNE 30, 1998 AND 1997
SALES. Sales increased $35.5 million or 143.9% to $60.1 million for the
nine months ended June 30, 1998 from $24.6 million for the nine months ended
June 30, 1997. This increase was due to an increase in the number and size of
customer contracts with the Company (including MSE) as well as the impact of the
acquisition of MSE in July 1997. Prior to its acquisition by the Company, MSE's
sales for the nine months ended June 30, 1997 were $20.7 million.
SALARIES, WAGES AND RELATED BENEFITS. Salaries, wages and related benefits
increased 151.3% to $29.0 million for the nine months ended June 30, 1998 from
$11.5 million for the nine months ended June 30, 1997. This increase was
primarily due to the addition of over 325 employees as a result of the MSE
acquisition in July 1997, as well as the hiring of additional employees to
support the Company's increased business. As a percentage of sales, salaries,
wages and related benefits increased to 48.2% for the nine months ended June 30,
1998 from 46.8% for the nine months ended June 30, 1997. This increase, and the
corresponding decrease in subcontractor costs, was primarily attributable to the
Company's increased capability to perform more tasks internally as well as a
decrease in the number of projects which required subcontractor services.
SUBCONTRACTOR COSTS. Subcontractor costs increased 83.2% to $8.1 million
for the nine months ended June 30, 1998 from $4.4 million for the nine months
ended June 30, 1997, but decreased as a percentage of sales to 13.5% for the
nine months ended June 30, 1998 from 17.9% for the nine months ended June 30,
1997.
OTHER GENERAL AND ADMINISTRATIVE COSTS. Other general and administrative
costs increased 161.4% to $10.5 million for the nine months ended June 30, 1998
from $4.0 million for the nine months ended June 30, 1997, primarily due to
greater supplies expenses, increased travel, and employee recruiting and
relocation expenses related to the integration of MSE. As a percentage of sales,
other general and administrative costs increased to 17.5% for the nine months
ended June 30, 1997 from 16.4% for the nine months ended June 30, 1997.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
DEPRECIATION AND AMORTIZATION. For the nine months ended June 30, 1998,
depreciation and amortization increased 158.3% to $2.5 million from $973,000 for
the nine months ended June 30, 1997. This increase was primarily attributable to
the increased goodwill recorded as a result of the MSE acquisition. As a
percentage of sales, depreciation and amortization increased slightly to 4.2%
for the nine months ended June 30, 1998 from 3.9% for the nine months ended June
30, 1997.
OTHER EXPENSE, NET. Net interest expense increased 272.4% to $1.4 million
for the nine months ended June 30, 1998 from $382,000 for the nine months ended
June 30, 1997. This increase was primarily due to increased term debt incurred
in connection with the acquisition of MSE in July 1997 and increased utilization
of the Company's lines of credit for working capital.
INCOME TAX EXPENSE. Income tax expense was $3.5 million for the nine
months ended June 30, 1998 compared to $1.3 million for the nine months ended
June 30, 1997. The Company's effective income tax rate for the nine months ended
June 30, 1998 was 39.7%, an increase from 38.1% for the nine months ended June
30, 1997, due to the change in the mix of state tax rates as a result of the MSE
acquisition.
NET EARNINGS. Due to the factors discussed above, net earnings increased
154.8% to $5.2 million for the nine months ended June 30, 1998 from $2.1 million
for the nine months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's principal source of liquidity has consisted
of cash flow from operations supplemented by secured lines of credit. On June
3, 1998, the Company replaced its existing lines of credit with a three-year,
$11.0 million secured working capital line of credit and a $10.0 million line
of credit for acquisitions (which is due in quarterly installments over a
five-year period), and the Company refinanced $16.0 million of term debt.
Borrowings under the new credit facilities bear interest at a rate per annum
equal to, at the Company's option, (i) the agent bank's prime rate or (ii) an
adjusted London Interbank Offering Rate (LIBOR) plus a margin ranging from
1.25% to 2.25%. The agent bank's prime rate was 8.25% on June 3, 1998. The
Company borrowed approximately $8.9 million under the new acquisition line of
credit to fund the cash portion of the acquisition of Cartotech, related
transaction costs, retire existing Cartotech loans, and to provide working
capital. As of June 30, 1998, the Company's outstanding balances on its
working capital lines of credit were $7.4 million.
On June 26, 1998, the Company filed a registration statement with the
United States Securities and Exchange Commission for an offering of 2,250,000
shares of common stock, 1,750,000 of which will be sold by the Company and the
remaining 500,000 shares of which will be sold by existing shareholders. The
underwriters may exercise over allotment rights and increase the total offering
to 2,587,500 shares, of which 2,012,500 shares would be issued by the Company
and 575,000 shares would be sold by existing shareholders. If the offering is
successfully completed, the Company expects to use a portion of the net proceeds
of the offering to repay substantially all of the outstanding term debt and line
of credit loans.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
The Company's cash flow is significantly affected by three contract-related
accounts: accounts receivable; revenues in excess of billings; and billings in
excess of revenues. Under the percentage of completion method of accounting, an
"account receivable" is created when an amount becomes due from a customer,
which typically occurs when an event specified in the contract triggers a
billing. "Revenues in excess of billings" occur when the Company has performed
under a contract even though a billing event has not been triggered. "Billings
in excess of revenues" occur when the Company receives an advance or deposit
against work yet to be performed. These accounts, which represent a significant
investment by ASI in its business, affect the Company's cash flow as projects
are signed, performed, billed and collected.
Approximately $6.0 million in cash was used in operating activities for the
first nine months of fiscal 1998, compared to $2.7 million in cash generated for
the first nine months of fiscal 1997. The change in operating cash flows is
primarily attributable to normal fluctuations in the investment in
contract-related accounts. At June 30, 1998, the working capital in
contract-related accounts, excluding the newly acquired Cartotech balances, was
equivalent to 195 days sales outstanding, up from 189 days at March 31, 1998.
The Company believes that this level of investment is consistent with its normal
operating range of days sales outstanding.
For the nine months ended June 30, 1998, $11.0 million was used in
investing activities compared to $552,000 for the nine months ended June 30,
1997. Such investing activities principally consisted of payments for net assets
acquired in business combinations and purchases of equipment and leasehold
improvements.
For the nine months ended June 30, 1998, cash provided by financing
activities was $17.0 million compared to $748,000 in cash used for the nine
months ended June 30, 1997. Financing activities consisted primarily of net
borrowings and payments under lines of credit for working capital purposes and
net borrowings and payments of long-term debt used for business combinations and
the purchase of equipment and leasehold improvements.
The Company believes that funds available under its lines of credit and
cash flow from operations are adequate to finance its operations for at least
the next 18 months.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"). SFAS 128 requires the restatement of all
prior-period earnings per share ("EPS") data. SFAS 128 replaces the presentation
of the primary EPS with a presentation of "basic EPS" and "diluted EPS." Under
SFAS 128, basic EPS excludes dilution for common stock equivalents and is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to
issue common stock are exercised or converted into common stock or result in the
issuance of common stock that then share in the earnings of the entity. Under
SFAS 128, the Company's diluted EPS is the same as the income per share reported
by the Company prior to the adoption of SFAS 128, while the Company's basic EPS
is greater than the income per share as previously reported.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income." This statement requires that changes
in comprehensive income be shown in a financial statement that is displayed with
the same prominence as other financial statements. The statement will be
effective for fiscal years beginning after December 15, 1997 (the Company's
fiscal year beginning October 1, 1998). Reclassification for earlier periods is
required for comparative purposes. The Company is currently evaluating the
impact this statement will have on its financial statements; however, because
the statement requires only additional disclosure, the Company does not expect
the statement to have a material impact on its financial position or results of
operations.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information."
This statement supersedes Statement of Financial Accounting Standards No. 14,
"Financial Reporting for Segments of a Business Enterprise." This statement
includes requirements to report selected segment information quarterly and
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenues. The
statement will be effective for fiscal years beginning after December 15, 1997
(the Company's fiscal year beginning October 1, 1998). Reclassification for
earlier periods is required, unless impracticable, for comparative purposes. The
Company is currently evaluating the impact this statement will have on its
financial statements; however, because the statement requires only additional
disclosure, the Company does not expect the statement to have a material impact
on its financial position or results of operations.
YEAR 2000 ISSUES
The "Year 2000" issue concerns the potential exposures related to the
automated generation of business and financial misinformation resulting from the
application of computer programs that have been written using two digits, rather
than four, to define the applicable year. The Company and the third parties with
which it does business rely on numerous computer programs in their daily
operations. The Company has assessed its internal exposure to this issue and is
in the process of upgrading or replacing systems where necessary. The Company
does not believe that the costs to upgrade or replace such systems will be
material, and such costs will be expensed as incurred. The Company's customers
specify database designs, including date fields, and the Company's delivery of
data conforms to such specifications. Accordingly, the Company has not formally
evaluated the Year 2000 issue as it relates to the computer systems used by its
customers and potential customers.
PART II OTHER INFORMATION
Item 2. Legal Proceedings
The Company is not a party to any material pending legal proceeding nor
is its property the subject of a pending legal proceeding. The Company is
involved in routine litigation from time to time, which is incidental to the
business and the outcome of which is not expected to have a material effect
on the Company.
Item 5. Other Information
Shareholder Proposals
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
Shareholder proposals intended to be considered at the 1999 Annual Meeting
of Shareholders must be received by the Secretary of the Company not later than
September 9, 1998. Such proposals may be included in the 1999 Proxy Statement
if they comply with certain rules and regulations promulgated by the Securities
and Exchange Commission.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Credit Agreement between the Company and
Bank One, Colorado dated June 3, 1998
10.2 Exhibit A-1 to Credit Agreement
Promissory Note - Revolving Loan
10.3 Exhibit A-2 to Credit Agreement
Promissory Note - Term Loan
10.4 Exhibit A-3 to Credit Agreement
Promissory Note - Acquisition Loan
10.5 Exhibit C to Credit Agreement
Guaranty
10.6 Exhibit D to Credit Agreement
Pledge and Security Agreement
10.7 Exhibit E to Credit Agreement
Security Agreement and Assignment
27. Financial Data Schedule
(b) Reports on Form 8-K
The following report on Form 8-K was filed during the three months ended
June 30, 1998:
June 28, 1998 - Item 2 Acquisition on disposition of assets reporting
the acquisitions of Cartotech, Inc.
<PAGE>
ANALYTICAL SURVEYS, INC.
QUARTERLY REPORT ON FORM 10-Q
JUNE 30, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANALYTICAL SURVEYS, INC.
(Registrant)
Date: August 4, 1998 /s/ Sidney V. Corder
---------------------------
Sidney V, Corder, Chairman
and Chief Executive Officer
Date: August 4, 1998 /s/ Scott C. Benger
---------------------------
Scott C. Benger, Secretary/
Treasurer (principal financial
officer and principal
accounting officer)
Date: August 4, 1998 /s/ Brian J. Yates
---------------------------
Brian J. Yates, Controller
<PAGE>
$37,000,000
CREDIT AGREEMENT
DATED AS OF JUNE 3, 1998
BY AND AMONG
ANALYTICAL SURVEYS, INC., AS BORROWER
AND
THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF
AND
BANK ONE, COLORADO, N.A., AS AGENT
ARRANGED BY
BANK ONE, COLORADO, N.A.
<PAGE>
TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS . . . . . . . . . . . . . . . . 1
SECTION 1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 ACCOUNTING TERMS AND DETERMINATIONS. . . . . . . . . . . . 20
ARTICLE II COMMITMENT; AMOUNTS AND TERMS OF
THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.1 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . 20
(a) REVOLVING LOANS COMMITMENT . . . . . . . . . . . . . 21
(b) TERM LOAN COMMITMENT . . . . . . . . . . . . . . . . 21
(c) ACQUISITION LOAN COMMITMENT . . . . . . . . . . . . 21
SECTION 2.2 ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.3 MAKING THE ADVANCES . . . . . . . . . . . . . . . . . . . 22
(a) REQUEST FOR ADVANCE . . . . . . . . . . . . . . . . 22
(b) REQUEST FOR ADVANCE IRREVOCABLE . . . . . . . . . . 22
(c) AVAILABILITY OF FUNDS, REVOLVING
LOANS AND ACQUISITION LOANS . . . . . . . . . . . . 23
(d) ADVANCES BY AGENT . . . . . . . . . . . . . . . . . 23
SECTION 2.4 COMMITMENT FEE . . . . . . . . . . . . . . . . . . . . . . 24
(a) COMMITMENT FEE RATE . . . . . . . . . . . . . . . . 24
(b) CALCULATION OF COMMITMENT FEE . . . . . . . . . . . 24
SECTION 2.5 REDUCTION OF THE REVOLVING LOANS AND
ACQUISITION LOANS COMMITMENT . . . . . . . . . . . . . . . 24
SECTION 2.6 REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) VOLUNTARY REPAYMENT . . . . . . . . . . . . . . . . 24
(b) INSTALLMENT PAYMENTS OF TERM LOAN . . . . . . . . . 25
(c) REPAYMENT OF ACQUISITION LOANS . . . . . . . . . . . 25
(d) MANDATORY REPAYMENT . . . . . . . . . . . . . . . . 26
(e) APPLICATION OF REPAYMENTS . . . . . . . . . . . . . 26
SECTION 2.7 DISTRIBUTION OF PAYMENTS BY THE AGENT . . . . . . . . . . 26
SECTION 2.8 PROMISSORY NOTES . . . . . . . . . . . . . . . . . . . . . 27
(a) THE REVOLVING NOTES . . . . . . . . . . . . . . . . 27
(b) TERM NOTES . . . . . . . . . . . . . . . . . . . . . 27
(c) ACQUISITION LOAN NOTE . . . . . . . . . . . . . . . 28
SECTION 2.9 PRO RATA TREATMENT . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.10 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) PRIME RATE LOANS . . . . . . . . . . . . . . . . . . 29
</TABLE>
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(b) LIBOR RATE LOANS . . . . . . . . . . . . . . . . . . 29
(c) DEFAULT RATE INTEREST . . . . . . . . . . . . . . . 29
SECTION 2.11 YIELD PROTECTION . . . . . . . . . . . . . . . . . . . . . 29
(a) INCREASED COSTS . . . . . . . . . . . . . . . . . . 30
(b) ADDITIONAL INTEREST. . . . . . . . . . . . . . . . . 30
(c) INCREASED CAPITAL. . . . . . . . . . . . . . . . . . 31
(d) BREAKAGE COSTS . . . . . . . . . . . . . . . . . . . 31
SECTION 2.12 CONVERSION OF LOANS; CHANGE OF
INTEREST PERIODS . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.13 ILLEGALITY, ETC. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 2.14 PAYMENTS AND COMPUTATIONS . . . . . . . . . . . . . . . . 33
ARTICLE III CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE . . . . . . . . . 34
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES . . . . . . . . . . . 37
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 38
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF
THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . 38
(a) CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . 38
(b) POWERS, ETC. . . . . . . . . . . . . . . . . . . . . 39
(c) AUTHORIZATION; NO CONFLICT . . . . . . . . . . . . . 39
(d) APPROVALS. . . . . . . . . . . . . . . . . . . . . . 40
(e) ENFORCEABILITY . . . . . . . . . . . . . . . . . . . 40
(f) FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . 40
(g) LITIGATION . . . . . . . . . . . . . . . . . . . . . 40
(h) FEDERAL RESERVE REGULATIONS. . . . . . . . . . . . . 41
(i) INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . 41
(j) ERISA. . . . . . . . . . . . . . . . . . . . . . . . 41
(k) COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . 42
(l) PAYMENT OF DEBTS AND TAXES . . . . . . . . . . . . . 42
(m) INDEBTEDNESS, GUARANTIES . . . . . . . . . . . . . . 43
(n) MATERIAL AGREEMENTS. . . . . . . . . . . . . . . . . 43
(o) PROPERTIES, INVENTORY AND EQUIPMENT. . . . . . . . . 43
(p) FINANCIAL CONDITION. . . . . . . . . . . . . . . . . 44
(q) INSURANCE. . . . . . . . . . . . . . . . . . . . . . 45
(r) FULL DISCLOSURE . . . . . . . . . . . . . . . . . . 45
(s) NO DEFAULT . . . . . . . . . . . . . . . . . . . . . 45
(t) STATUS OF LOANS AS SENIOR DEBT . . . . . . . . . . . 45
(u) SWAP OBLIGATIONS . . . . . . . . . . . . . . . . . . 45
ARTICLE V COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . . . . 46
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SECTION 5.1 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 46
(a) USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . 46
(b) REPORTING AND NOTICE REQUIREMENTS . . . . . . . . . . 46
(c) MAINTENANCE OF EXISTENCE, ETC.. . . . . . . . . . . . 49
(d) COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . 49
(e) INSURANCE . . . . . . . . . . . . . . . . . . . . . . 50
(f) MATERIAL AGREEMENTS . . . . . . . . . . . . . . . . . 50
(g) OBLIGATIONS AND TAXES . . . . . . . . . . . . . . . . 50
(h) MAINTAINING RECORDS; ACCESS TO
PROPERTIES AND INSPECTIONS. . . . . . . . . . . . . . 50
(i) ENVIRONMENTAL AND SAFETY MATTERS. . . . . . . . . . . 51
(j) DEPOSIT BALANCES. . . . . . . . . . . . . . . . . . . 52
(k) INTEREST RATE PROTECTION. . . . . . . . . . . . . . . 52
(l) SURVEYS . . . . . . . . . . . . . . . . . . . . . . . 52
(m) AUDIT OF ACCOUNTS RECEIVABLE AND
INVENTORY . . . . . . . . . . . . . . . . . . . . . . 52
(n) ADDITIONAL PLEDGES AND GUARANTORS . . . . . . . . . . 53
(p) LANDLORD'S WAIVER AND CONSENT . . . . . . . . . . . . 54
(q) FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . 54
SECTION 5.2 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 54
(a) FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . 54
(b) PROHIBITION OF FUNDAMENTAL CHANGES. . . . . . . . . . 55
(c) LIMITATION ON LIENS . . . . . . . . . . . . . . . . . 55
(d) DEBT. . . . . . . . . . . . . . . . . . . . . . . . . 55
(e) GUARANTEES. . . . . . . . . . . . . . . . . . . . . . 56
(f) INVESTMENTS, LOANS, ADVANCES, ETC.. . . . . . . . . . 56
(g) SALES OF ASSETS . . . . . . . . . . . . . . . . . . . 57
(h) TRANSACTIONS WITH AFFILIATES. . . . . . . . . . . . . 57
(i) MODIFICATION OF CERTAIN DOCUMENTS;
PERFORMANCE OF MATERIAL AGREEMENTS. . . . . . . . . . 57
(j) DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . 58
(k) ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . 58
(l) CHANGE OF ADDRESS; BUSINESS NAME(s) . . . . . . . . . 58
ARTICLE VI EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 6.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 59
(a) PAYMENTS UNDER THE AGREEMENT AND
THE NOTES . . . . . . . . . . . . . . . . . . . . . . 59
(b) REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 59
(c) OTHER LOAN INSTRUMENT OBLIGATIONS . . . . . . . . . . 59
(d) OTHER DEBT. . . . . . . . . . . . . . . . . . . . . . 59
(e) INSOLVENCY. . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
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(f) JUDGMENTS . . . . . . . . . . . . . . . . . . . . . 60
(g) TERMINATION OF CERTAIN LOAN
INSTRUMENTS . . . . . . . . . . . . . . . . . . . . 61
(h) COLLATERAL LIENS. . . . . . . . . . . . . . . . . . 61
SECTION 6.2 BANK'S RIGHTS UPON AN EVENT OF DEFAULT. . . . . . . . . . 61
ARTICLE VII THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 7.1 APPOINTMENT AND POWERS. . . . . . . . . . . . . . . . . . 61
SECTION 7.2 LIMITATION ON AGENT'S LIABILITY . . . . . . . . . . . . . 62
SECTION 7.3 DEFAULTS. . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 7.4 RIGHTS AS A BANK. . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.5 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 63
SECTION 7.6 NON-RELIANCE ON AGENT AND OTHER BANKS . . . . . . . . . . 64
SECTION 7.7 EXECUTION AND AMENDMENT OF LOAN
INSTRUMENTS ON BEHALF OF THE BANKS . . . . . . . . . . . . . . . . . . 64
SECTION 7.8 RESIGNATION OF THE AGENT. . . . . . . . . . . . . . . . . 65
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 8.1 AMENDMENTS; WAIVERS . . . . . . . . . . . . . . . . . . . 65
SECTION 8.2 NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.3 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.4 COSTS, EXPENSES AND TAXES . . . . . . . . . . . . . . . . 67
SECTION 8.5 RIGHT OF SET-OFF. . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.6 BINDING EFFECT. . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.7 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.8 CONSENT TO EXCLUSIVE JURISDICTION . . . . . . . . . . . . 69
SECTION 8.9 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. . . . . . . . . 69
SECTION 8.10 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 8.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 8.12 INCONSISTENT PROVISIONS . . . . . . . . . . . . . . . . . 70
SECTION 8.13 SHARING OF RECOVERIES . . . . . . . . . . . . . . . . . . 71
SECTION 8.14 ASSIGNMENTS AND PARTICIPATIONS. . . . . . . . . . . . . . 71
(a) ASSIGNMENTS . . . . . . . . . . . . . . . . . . . . 71
(b) PARTICIPATIONS. . . . . . . . . . . . . . . . . . . 73
SECTION 8.15 SURVIVAL OF REPRESENTATIONS AND
WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.18 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 8.19 ENTIRE AGREEMENT, COMMITMENT LETTER
SUPERSEDED . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 8.20 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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SCHEDULES
<TABLE>
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Schedule I Banks
Schedule 2.1 Banks; Address; Commitment
Percentages
Schedule 4.1(a) Borrower's and Guarantors' Capital
Structure and Shareholders
Schedule 4.1(b) Borrower's and Guarantors' Business
Names and Jurisdictions where
Qualified to do Business
Schedule 4.1(d) Approvals
Schedule 4.1(f) Financial Disclosures
Schedule 4.1(g) Litigation
Schedule 4.1(j) ERISA Disclosures
Schedule 4.1(m) Indebtedness; Guaranties
Schedule 4.1(n) Material Agreements
Schedule 4.1(o) Real Property; Inventory; Liens
Schedule 4.1(q) Insurance
</TABLE>
-v-
<PAGE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A-1 Form of Revolving Note
Exhibit A-2 Form of Term Note
Exhibit A-3 Form of Acquisition Loan Note
Exhibit B-1 Form of Request for Advance
Exhibit B-2 Form of Compliance Certificate
Exhibit B-3 Form of Interest Period/Conversion Notice
Exhibit C Form of Guaranty
Exhibit D Form of Pledge and Security Agreement
Exhibit E Form of Security Agreement and
Assignment
Exhibit F-1 Form of Deed of Trust
Exhibit F-2 Form of Collateral Assignment of Leases
and Rents
Exhibit F-3 Landlord's Waiver and Consent
Exhibit F-4 Consent to Assignment of Contracts
Exhibit F-5 Form of Assignment of Lease
Exhibit G-1 Form of Borrower's Omnibus
Certificate
Exhibit G-2 Form of Guarantor's Omnibus Certificate
Exhibit H-1 Form of Opinion of Counsel to Borrower
Exhibit H-2 Form of Opinion of Counsel to Guarantors
Exhibit H-3 Form of Opinion of Local Counsel
Exhibit I Form of Notice of Assignment
</TABLE>
-vi-
<PAGE>
CREDIT AGREEMENT
Dated as of June 3,1998
THIS CREDIT AGREEMENT (the "AGREEMENT") is made and entered into as
of June 3, 1998 by and between Analytical Surveys, Inc., a Colorado
corporation,(the "BORROWER") and the Banks listed on the attached SCHEDULE I,
as revised from time to time (collectively the "BANKS" and individually the
"BANK"); and BANK ONE, COLORADO, N.A.,in its capacity as agent for the Banks
hereunder(in such capacity, the "AGENT").
RECITALS
Pursuant and subject to the terms and conditions of this Agreement,
the Banks will make available to the Borrower (a) until June30, 2001, a
Senior Secured Revolving Line of Credit in the maximum amount of up to
$11,000,000, (b) until June 30, 2003, a Senior Secured Term Loan of
$16,000,000, and (c) until June 30, 1999 a Senior Secured Acquisition Draw
Facility in the maximum amount of $10,000,000. Payment by the Borrower of
the amounts due hereunder will be secured by liens on and security interests
in the real and personal property of the Borrower and guaranteed by the
Subsidiaries of the Borrower.
AGREEMENT
In consideration of the covenants contained herein the Parties
hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINITIONS.
As used in this Agreement, the terms identified in this SECTION 1.1
shall have the meanings specified below.
"ACCOUNT RECEIVABLE" means any account (as such term is defined in
the Uniform Commercial Code as adopted in the State of
-1-
<PAGE>
Colorado) or other right to payment for goods sold or services rendered of
the Borrower and its Subsidiaries.
"ACQUISITION LOANS" means the Advance of funds by the Banks to the
Borrower pursuant to the Acquisition Loan Commitment, which Loans will be
evidenced by the Acquisition Loan Notes.
"ACQUISITION LOANS COMMITMENT" means the commitment of each Bank to
Advance Acquisition Loans to the Borrower in the aggregate amount of
$10,000,000.00 as provided in SECTION 2.1(c) as the same may be adjusted or
terminated pursuant to SECTION 2.5 OR 6.2 or as otherwise provided in this
Agreement.
"ACQUISITION LOANS DRAW DATE" means June 30, 1999.
"ACQUISITION LOANS NOTE" means the promissory notes in the
aggregate principal amount of $10,000,000 evidencing the Acquisition Loan,
made by the Borrower and payable to the order of the Banks, substantially in
the form of EXHIBIT A-3 hereto, as the same may be supplemented, modified,
amended or restated from time to time in the manner provided herein.
"ACQUISITION LOAN RECORD" means a Record with respect to an
Acquisition Loan.
"ACQUISITION LOANS SCHEDULED MATURITY DATE" means June 30, 2004.
"ADVANCE" means an advance of funds by the Bank to the Borrower as
a Loan pursuant to a Request for Advance as provided in SECTION 2.2.
"AFFILIATE" means a Person that controls, is controlled by or is
under common control with another Person. For purposes hereof, "control"
means the practical power to direct the activities of a Person.
"AGENT" means Bank One, Colorado, N.A., as agent for and
representative (within the meaning of Section 9-105(m) of the Uniform
Commercial Code) of the Banks under the Loan Instruments, and any successor
Agent appointed pursuant to Section 7.8.
"AGREEMENT" means this Credit Agreement dated as of June 3, 1998
between the Borrower and the Banks, together with all schedules and exhibits
hereto, and all modifications, amendments, supplements, renewals and
extensions hereof in the manner provided herein.
-2-
<PAGE>
"APPLICABLE LAW" means,(a) all applicable common law and principles
of equity and (b) all applicable provisions of all (i) constitutions,
statutes, rules, regulations and orders of governmental bodies, (ii)
approvals of Government Authorities and (iii) orders, decisions, judgements
and decrees of all courts (whether at law or in equity or admiralty) and
arbitrators.
"APPLICABLE MARGIN" means such percentage for the Type of Loan as
set forth in the following table opposite the applicable ratio of Total Debt
to Trailing Four Quarter EBITDA determined as of the end of the Fiscal
Quarter immediately preceding such period:
<TABLE>
- -----------------------------------------------------------------------
Ratio of Total Less Than LIBOR Base Rate + Prime Rate +
Debt to Trailing
Four Quarter
EBITDA
Greater Than or
Equal to
- -----------------------------------------------------------------------
<S> <C> <C> <C>
3.50x -- 2.25% 0.500%
- -----------------------------------------------------------------------
3.00x 3.50x 2.00% 0.250%
- -----------------------------------------------------------------------
2.50x 3.00x 1.75% 0.000%
- -----------------------------------------------------------------------
2.00x 2.50x 1.50% 0.000%
- -----------------------------------------------------------------------
-- 2.00x 1.25% 0.000%
- -----------------------------------------------------------------------
</TABLE>
(i) The ratio of Total Debt to Trailing Four Quarter EBITDA
shall be computed by the Borrower and such ratio and the Applicable
Margin for each Type of Loan will be set forth in the Compliance
Certificate furnished under SECTION 5.1(b)(iv). The Applicable Margin
shall be subject to adjustment, if necessary, on the earlier of (a) five
(5) days after the delivery of the Compliance Certificate for the
applicable Fiscal Quarter and (b) fifty (50) days after the end of each
Fiscal Quarter of the Borrower ("MARGIN ADJUSTMENT DATE"). Any change
in the Applicable Margin shall apply to all Loans outstanding of any
Type as of the Margin Adjustment Date.
(ii) Notwithstanding the foregoing, the Applicable Margin will
be equal to the LIBOR Base Rate + 2.25% or Prime Rate +0.50%, as the
case may be, from the Effective Date to fifty (50) days after the Fiscal
Quarter ended June 30, 1998, at which point the Applicable Margin will
be as set forth in the Compliance Certificate accompanying the
-3-
<PAGE>
financial statements furnished under SECTION 5.1(b)(iv) for the Fiscal
Quarter ended June 30, 1998.
(iii) If the Borrower fails to furnish the Compliance
Certificate and the financial statements fifty (50) days after the end
of any Fiscal Quarter, the Applicable Margin shall be for the relevant
Fiscal Quarter equal to 2.25% for LIBOR Rate Loans or 0.50% for Prime
Rate Loans, as the case may be.
"ASSIGNMENT OF LEASE" means the assignment of lease pertaining to
the lessee's interest in leasehold estates held by the Borrower and its
Subsidiaries in the form of EXHIBIT F-5 hereto.
"AUTHORIZED SIGNATORY" means such Person or Persons as may be
designated from time to time in the most recent certificate delivered to the
Bank by the Borrower as being authorized to execute and deliver certificates
or other documents required or permitted to be executed and delivered to the
Bank by the Borrower or other Persons pursuant to this Agreement or any other
Loan Instrument, and in any case shall include the President, Treasurer and
the Chief Financial Officer of the Borrower.
"BANK" and "BANKS" means (a) the Agent and any Person listed on the
signature pages hereof following the Agent and (b) any Person that has been
assigned any or all of the rights or obligations of a Bank pursuant to
SECTION 8.14.
"BORROWER" means Analytical Surveys, Inc., a Colorado corporation.
"BORROWER'S ACCOUNT" means a demand deposit account maintained by
the Borrower with the Agent.
"BORROWER LOAN INSTRUMENTS" means, the Loan Instruments to which
the Borrower is a party.
"BORROWER'S OMNIBUS CERTIFICATE" means a certificate from the
Borrower substantially in the form of EXHIBIT G-1 hereto.
"BORROWER'S REAL PROPERTY" has the meaning given thereto in
SECTION 4.1(o).
"BUSINESS DAY" means a day of the year other than Saturday or
Sunday on which banks are not authorized to close in
-4-
<PAGE>
Denver, Colorado and, if the applicable Business Day relates to any LIBOR
Rate Loans, on which dealings are carried on in the London interbank market.
"CAPITAL EXPENDITURES" means amounts paid or indebtedness incurred
by the Borrower or any of its Subsidiaries in connection with the
acquisition, purchase or lease by such Borrower or any of its Subsidiaries of
capital assets that would be required to be capitalized (including the
applicable amount in respect of capitalized interest) and which amounts would
be shown as such capital expenditures on the consolidated statement of cash
flows of such Person in accordance with GAAP, PROVIDED, HOWEVER, Capital
Expenditures shall not include (i) amounts paid with insurance proceeds or
the proceeds of a condemnation award within twelve (12) months after receipt
by the Borrower or its Subsidiaries, as the case may be, in connection with
the purchase of capital assets to replace the capital assets destroyed in the
casualty loss giving rise to such insurance proceeds or taken in the
condemnation proceeding giving rise to such condemnation proceeds, as the
case may be, and (ii) capital assets acquired pursuant to a Qualified
Acquisition.
"CHANGE OF CONTROL" means the acquisition by any person or group
(other than Sidney V. Corder, Sol C. Miller and John A. Thorpe) of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of
1934, as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of 30%
or more of the outstanding shares of common stock of the Borrower; or, during
any period of twelve consecutive calender months, individuals who were
directors of the Borrower on the first day of such period shall cease to
constitute a majority of the board of directors of the Borrower.
"CMLTD" means, with respect to the Borrower or any Guarantor, all
principal amounts due and payable by the Borrower or such Guarantor during
the then-current month and during the following eleven months with respect to
Debt of such Person, other than accounts payable, accrued expenses and income
taxes payable.
"CODE" means the Internal Revenue Code of 1986, as amended, and as
the same may be supplemented, modified, amended or restated from time to
time, and the rules and regulations promulgated thereunder, or any
corresponding or succeeding provisions of applicable law.
-5-
<PAGE>
"COLLATERAL" shall mean all rights and interests of the Borrower
and of the Guarantors which are subject to the Collateral Documents.
"COLLATERAL DOCUMENTS" means the Deeds of Trust, the Security
Agreements, the Guaranties, the Landlord's Consent and Waiver and Consent,
the Assignments of Lease, the Collateral Assignments of Leases and Rents, and
the Pledge Agreement.
"COMMITMENT" means, with respect to each Bank, such Bank's
obligation to make Loans pursuant to the Revolving Loan Commitment, Term Loan
Commitment and Acquisition Loan Commitment.
"COMMITMENT FEE" has the meaning specified in SECTION 2.4 hereof.
"COMMITMENT FEE RATE" means the percentage set forth below in the
following table opposite the applicable ratio of Total Debt to Trailing Four
Quarter EBITDA determined as of the end of the Fiscal Quarter immediately
preceding such period:
<TABLE>
- ---------------------------------------------------------------
Ratio of Total Less Than Commitment Fee Rate
Debt to Trailing
Four Quarter
EBITDA Greater
Than
or Equal to
- ---------------------------------------------------------------
<S> <C> <C>
2.50x -- 0.250%
- ---------------------------------------------------------------
2.00x 2.50x 0.185%
- ---------------------------------------------------------------
-- 2.00x 0.150%
- ---------------------------------------------------------------
</TABLE>
The ratio of Total Debt to Trailing Four Quarter EBITDA shall be
computed by the Borrower and such ratio and the Commitment Fee Rate for the
Fiscal Quarter will be set forth in the Compliance Certificate furnished
under SECTION 5.1(b)(iv). The Commitment Fee Rate shall be subject to
adjustment, if necessary, on the earlier of (a) five (5) days after the
delivery of the Compliance Certificate for the applicable Fiscal Quarter and
(b) fifty (50) days after the end of each Fiscal Quarter of the Borrower.
Notwithstanding the foregoing, the Commitment Fee Rate shall be 0.250% from
the Effective Date to fifty (50) days after the Fiscal Quarter ended June 30,
1998, at which point the Commitment Fee Rate shall be as set forth in the
Compliance Certificate accompanying the financial statements furnished under
SECTION 5.1(b)(iv) for the Fiscal Quarter ended June 30, 1998.
-6-
<PAGE>
"COMPLIANCE CERTIFICATE" means, a certificate substantially in the
form of EXHIBIT B-2.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion
of a Loan of one Type into a Loan of another Type pursuant to SECTION 2.12 or
2.13.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases, and (v) obligations under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or obligations of others of
the kinds referred to in clauses (i) through (iv) above.
"DEED OF TRUST" and "DEEDS OF TRUST" mean, respectively, any
mortgage, deed of trust or other collateral security document pertaining to
non-leasehold interests in real property executed by the Borrower or any
Guarantor from time to time in favor of the Agent (on behalf of the
Banks)supporting or securing any of the Obligations, including the Deeds of
Trust substantially in the form of EXHIBIT F-1 hereto from the Borrower and
certain of the Guarantors, as the same may be supplemented, modified, amended
or restated from time to time in the manner provided therein.
"DEFAULT" means any event or state of affairs that, with the giving
of notice or the passage of time (or both) would constitute an Event of
Default.
"DEFAULT RATE" means an interest rate per annum equal to three
percent (3%) above the Prime Rate in effect with respect to Loans at the time
of occurrence of any Event of Default.
"DISPOSITION" means any sale, assignment, transfer or other
disposition (including a ground lease or other long term obligation which
under GAAP is the equivalent of a sale of such asset)of any asset (whether
now owned or hereafter acquired) of any Person, other than inventory in the
ordinary course of business. Disposition shall not include sale and lease
back of capital equipment in an amount not in excess of, at any one time, an
aggregate principal amount of $3,000,000.
-7-
<PAGE>
"DOLLARS", "DOLLARS" and "$" means lawful money of the United
States of America.
"EBITDA" means, for any computation period, with respect to the
Borrower and all of its Subsidiaries on a consolidated basis or with respect
to a Person, an amount equal to Net Income for such period(determined in
accordance with GAAP) before deduction of interest expenses, taxes,
depreciation expenses and amortization for such period and excluding all
extraordinary items with respect to gains or losses arising out of the sale
or disposition of assets. This definition of EBITDA shall be used in the
calculation of the Applicable Margin, Commitment Fee Rate, Qualified
Acquisitions, covenants and for all other purposes under this Credit
Agreement.
"EFFECTIVE DATE" means June 3, 1998.
"EMPLOYEE BENEFIT PLAN" means an employee pension benefit plan as
defined in ERISA Section 3(2).
"ENVIRONMENTAL CLAIM" means: (a) any responsibility, liability or
unlawful act or omission under any Environmental Law (whether alleged or
otherwise); (b) any tortious act or omission or breach of contract pertaining
to any Environmental Substance (whether alleged or otherwise); or (c) any
other violation or claim under any Environmental Law or in respect of any
Hazardous Materials (whether alleged or otherwise).
"ENVIRONMENTAL AND SAFETY LAWS" means any and all federal, state,
local and foreign statutes, laws, regulations, ordinances, codes and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and common law
concerning public health or safety, worker health or safety or pollution or
protection of the environment, including without limitation those relating to
any emissions, discharges or releases of Hazardous Materials to ambient air,
surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, control, clean-up or handling of Hazardous Materials.
"EQUIPMENT" shall mean the equipment identified in SCHEDULE 4.1(o).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and as the same may be supplemented, modified, amended or
restated from time to time, and the rules
-8-
<PAGE>
and regulations promulgated thereunder, or any corresponding or succeeding
provisions of applicable law.
"ERISA AFFILIATE" and "ERISA AFFILIATES" shall mean,
respectively, any one or more of any trade, business, person or persons
that together with the Borrower would be deemed to be a single employer
within the meaning of Section 4001(a)(14) of ERISA.
"ERISA EFFECT" means any material and adverse effect on (a) any
Plan, (b) the assets and properties of any Plan or (c) any funding or other
liability of any one or more of the Borrower or any ERISA Affiliate in
respect of any Plan (individually or in the aggregate).
"ERISA EVENT" means any (a) "accumulated funding deficiency"
(whether or not waived), "prohibited transaction," "reportable event"
(other than any event for which the 30-day notice requirement has been
waived by regulation), "disqualification," "partial withdrawal,"
involuntary "partial termination" or "termination," "insolvency,"
"reorganization" or the imposition of any "penalty" or "withdrawal
liability" in respect of any Plan under (and as such words and phrases are
defined in" ERISA or the Code, as applicable), (b) any other violation of
ERISA, the Code or any other applicable law in respect of any Plan (whether
asserted or otherwise), (c) supplement or amendment to or modification or
restatement of any Plan that could have or has had an ERISA Effect, or
(d) imposition, increase or other adverse change in any funding obligation
or other liability of any one or more of the Borrower or any ERISA
Affiliate in respect of any Plan or to the Pension Benefit Guaranty
Corporation (individually or in the aggregate).
"EVENT OF DEFAULT" shall have the meaning assigned thereto in
SECTION 6.1 hereof.
"EXISTING LOAN AGREEMENT" means (a) the Business Loan Agreement,
dated as of June 30, 1997, between the Borrower, MSE Corporation, ASI
Landmark, Inc. and Bank One, Colorado, N.A. and the promissory notes
referred to therein, and (b) and the promissory notes of the Borrower in
favor of Bank One, Colorado, N.A. dated (i) February 26, 1998 in the
principal amount of $2,500,000, (ii) December 20, 1995 in the principal
amount of $1,850,000, (iii) June 21, 1996 in the principal amount of
$5,182,692.12 and (iv) February 6, 1997 in the principal amount of
$1,000,000.
-9-
<PAGE>
"FEDERAL FUNDS RATE" means, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York or, if such rate is
not so published for any day that is a Business Day, the average of
quotations for such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent.
"FEES" means the Commitment Fee.
"FISCAL QUARTER" means one of the three month accounting periods
comprising a Fiscal Year.
"FISCAL YEAR" means the twelve-month accounting period ending on
September 30 of each year.
"FIXED CHARGES" means, as of any date of determination, the
following, determined with respect to the immediately preceding four Fiscal
Quarters of the Borrower and the Guarantors for which financial statements
have been delivered pursuant to SECTION 5.1, the sum of (a) CMLTD,(b)
Interest Expense, (c) capital lease payments (d) federal and state income
tax expense and (e) dividends (other than dividends payable solely in
capital stock) for such period.
"GAAP" means generally accepted accounting principals applied in
the United States and practices which are recognized as such by the
American Institute of Certified Public Accountants or any successor
organization.
"GOVERNMENTAL AUTHORITIES" means any federal, state, county,
municipal, local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"GUARANTEE" and "GUARANTEES" mean a guarantee, endorsement,
contingent agreement to purchase or furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or
with respect to, any indebtedness (including Debt) or other obligations of
any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or other equity interests in any Person, or an
agreement to purchase, sell or lease (as lessee or lessor) real or personal
property or services primarily for the purpose of enabling a debtor to make
payment of its obligations or an agreement to assure a creditor against
loss, and including,
-10-
<PAGE>
without limitation, causing a bank to issue a letter of credit for the
benefit of another Person.
"GUARANTOR" and "GUARANTORS" means, respectively, any one or more
of MSE Corporation, an Indiana corporation, and ASI Landmark, Inc., a
Colorado corporation and any Person added as a Guarantor pursuant to
SECTION 5.1(n).
"GUARANTOR OMNIBUS CERTIFICATE" means a certificate to be
provided to the Bank by each of the Guarantors, each substantially in the
form of EXHIBIT G-2 hereto.
"Guarantor's Real Property" has the meaning given thereto in
SECTION 4.1(o).
"GUARANTY" and "GUARANTIES" means, the Guaranty from each of the
Guarantors to the Bank substantially in the form of EXHIBIT C hereto, as
the same may be supplemented, modified, amended or restated from time to
time in the manner provided therein.
"HAZARDOUS MATERIALS" means, collectively, any polychlorinated
biphenyls, petroleum or petroleum derived substance, friable asbestos, and
any toxic or otherwise hazardous waste, material or substance, including,
without limitation, all substances with respect to which liability or
standards of conduct may be imposed pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
from time to time, the Resource Conservation and Recovery Act of 1976, as
amended from time to time, or any other Environmental and Safety Law.
"INTEREST EXPENSE" means, with respect to the Borrower and its
Subsidiaries, for any period, the interest payable by the Borrower and its
Subsidiaries during such period as determined in accordance with GAAP.
"INTEREST PERIOD" means, for each LIBOR Rate Loan, the period
commencing on the date of the Advance thereof or the date of the Conversion
of any Prime Rate Loan into such a LIBOR Rate Loan and ending on the last
day of the period selected by the Borrower pursuant to the provisions below
and, thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be 1, 3 or 6 months as the
Borrower may, upon notice received by the Bank not later than 11:00 a.m.
(Denver, Colorado time) on the third
-11-
<PAGE>
Business Day prior to the first day of such Interest Period, select;
PROVIDED, HOWEVER, that:
(i) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last
day of such Interest Period shall be extended to occur on
the next succeeding Business Day, PROVIDED, that if such
extension would cause the last day of such Interest Period
to occur in the next following calendar month, the last day
of such Interest Period shall occur on the next preceding
Business Day; and
(ii) no Interest Period applicable to a Term Loan or
Acquisition Loan or portion thereof shall extend beyond any
date upon which is due any scheduled principal payment in
respect of the Term Loans and Acquisition Loans unless the
aggregate principal amount of Term Loans or Acquisition
Loans, respectively, represented by Prime Rate Loans or
LIBOR Rate Loans having Interest Periods that will expire on
or before such date, equals or exceeds the amount of such
principal payment; and
(iii) no Interest Period for any Term Loan shall extend
beyond June 30, 2003 and no Interest Period for any
Revolving Loan shall extend beyond June 30, 2001 and no
Interest Period for any Acquisition Loan shall extend beyond
June 30, 2004.
"INTEREST PERIOD/CONVERSION NOTICE" means a notice from the
Borrower to the Bank substantially in the form of EXHIBIT B-3 concerning
Conversions of Types of Advances, or concerning Interest Period elections.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate
protection agreement, future, option swap, cap or collar agreement or other
arrangement designed to fix interest rates or other wise hedge against
fluctuations in interest rates.
"INVENTORY" means all raw materials, work in process, finished
goods, merchandise, parts and supplies of every kind and description of the
Borrower, and of the Guarantors, and goods held for sale or lease or
furnished under contracts of service in which the Borrower or any Guarantor
now has or hereafter acquires any right, whether held by the Borrower or
others, and all documents of title, warehouse receipts, bills of lading, and
all
-12-
<PAGE>
other documents of every type covering all or any part of the foregoing.
Inventory includes inventory temporarily out of the Borrower's or any
Guarantor's custody or possession.
"LANDLORD WAIVER AND CONSENT" means the Landlord Waiver and
Consent pertaining to the lessor's interest in the leasehold estates held
by the Borrower or its Subsidiaries in the form of EXHIBIT F-3 hereto.
"LIBOR BASE RATE" means, for any Interest Period for any LIBOR
Rate Loan, the offered rate for U.S. Dollar deposits of not less than
$1,000,000.00 as of 11:00 A.M. City of London, England time two London
Business Days prior to the first date of each Interest Period as shown on
the display designated as "British Bankers Assoc. Interest Settlement
Rates" on the Telerate System ("TELERATE"), Page 3750 or Page 3740, or such
other page or pages as may replace such pages on Telerate for the purpose
of displaying such rate. PROVIDED, HOWEVER, that if such offered rate is
not available on Telerate then such offered rate shall be otherwise
independently determined by Agent from an alternate, substantially similar
independent source available to Agent or shall be calculated by Agent by a
substantially similar methodology as that thereto for used to determine
such offered rate in Telerate. "LONDON BUSINESS DAY" means any day other
than a Saturday, Sunday or a day on which banking institutions are
generally authorized or obligated by law or executive order to close in the
City of London, England.
"LIBOR RATE" means, for any LIBOR Rate Loan for any Interest
Period therefor, a rate per annum (expressed as a decimal, rounded upwards,
if necessary, to the nearest 1/100,000 of 1%) determined by the Agent to be
equal to the sum of (a) the LIBOR Base Rate for such Advance for such
Interest Period, plus (b) the Applicable Margin.
"LIBOR RATE LOAN" means a Loan which bears interest as provided
in SECTION 2.10(b).
"LIEN" means any mortgage, deed of trust, lien, chattel mortgage,
conditional sale contract, pledge, charge, security interest or encumbrance
of any kind whatsoever.
"LOAN" and "LOANS" means, respectively, all funds Advanced by the
Banks to the Borrower pursuant to Requests for Advance submitted by the
Borrower to the Agent and all other amounts paid or otherwise advanced
pursuant to any other Loan Instrument, which Loans will be evidenced by the
Notes.
-13-
<PAGE>
"LOAN INSTRUMENT" and "LOAN INSTRUMENTS" means, respectively, any
one or more of this Agreement, the Notes, the Requests for Advance, the
Guaranties, the Collateral Documents, and the various other deeds of trust,
mortgages, assignments, instruments and other documents creating or
evidencing the Banks' interest in any collateral securing or intended to
secure anyone's obligations under any of the foregoing, and all waivers,
consents, agreements, representations and warranties, reports, statements,
certificates, schedules and other documents executed by the requisite
Person(s) pursuant to or in connection with any of the foregoing and
accepted or delivered by the Agent (whether prior to, on or from time to
time after the Effective Date), as each may be supplemented, modified,
amended or restated from time to time in the manner provided therein.
"MATERIAL ADVERSE EFFECT" means any material and adverse effect,
whether individually or in the aggregate, upon (a) the assets, business,
operations, properties or condition, financial or otherwise, of the
Borrower and its wholly owned Subsidiaries, taken as a whole, (b) the
ability of the Borrower to make payment as and when due of all or any part
of the Obligations, or (c) the Collateral.
"MATERIAL AGREEMENTS" means all agreements of the Borrower or the
Guarantors which are Collateral Documents, and all other agreements and
contracts (written or oral, now existing or hereafter entered into) to
which the Borrower is a party, or by which the Borrower, or the Collateral
is bound, the nonperformance of which by the Borrower, the Guarantors or by
the Borrower's or a Guarantor's counter parties thereto would have a
Material Adverse Effect which Material Agreements in effect on the date
hereof are identified in SCHEDULE 4.1(n) hereto.
"MATURITY DATE" means, (a) with respect to the Revolving Loans,
the first to occur of (i) the Revolving Loans Scheduled Maturity Date and
(ii) the date on which the due date of the Loans has been accelerated and
payment demanded by the Agent by reason of an Event of Default pursuant to
ARTICLE VI; and (b) with respect to the Term Loans, the first to occur of
(ii) the Term Loans Scheduled Maturity Date and (i) the date on which the
due date of the Loans has been accelerated and payment demanded by the
Agent by reason of an Event of Default pursuant to ARTICLE VI; and (c) with
respect to the Acquisition Loans, the first to occur of (i) the Acquisition
Loans Scheduled Maturity Date and (ii) the date on which the due date of
the Loans has been accelerated and payment demanded by the Agent by reason
of an Event of Default pursuant to ARTICLE VI.
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<PAGE>
"MAXIMUM REVOLVING CREDIT AMOUNT" means $11,000,000.
"MULTIEMPLOYER PLAN" of any Person shall mean a multiemployer
plan defined as such in Section 3(37) of ERISA to which contributions have
been made by such Person or any ERISA Affiliate of such Person and which is
covered by Title IV of ERISA.
"NET INCOME" means, for any computation period, with respect to
the Borrower on a consolidated basis, cumulative net income earned during
such period as determined in accordance with GAAP.
"NET PROCEEDS" means the proceeds received by the Borrower in
cash from the sale, lease, assignment or other Disposition of any asset or
property (other than sales of assets in the ordinary course of business,
which, for purposes of this definition, shall not include any disposition
of assets in which the total consideration received or receivable is in
excess of $500,000), net of (a) reasonable and customary fees, costs,
commissions and expenses, including attorneys' fees, incurred in connection
with such sale, lease, assignment or other disposition and payable by or on
behalf of the seller or the transferor of the assets to which sale or
disposition relates, and (b) the amount of all foreign, Federal, state and
local taxes payable as a direct consequence of such sale, lease, assignment
or other disposition. For this purpose, all proceeds of insurance paid on
account of the loss of or damage to any such asset or property, or group of
assets or properties, and awards of compensation for any such asset or
property, or group of properties, taken by condemnation or eminent domain
shall be deemed to be Net Proceeds (PROVIDED that, in the case of proceeds
from insurance paid with respect to any loss or damage to any asset, such
proceeds, or any portion thereof, shall not constitute Net Proceeds if the
Agent has received notice from the Borrower of its intention to use such
proceeds or portion thereof at the time of such loss or damage, and such
proceeds or portion thereof are in fact so used within six months after the
occurrence of such loss or damage, to repair, restore or replace such
assets). With respect to the issuance or sale of equity securities, Net
Proceeds also means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' fees, discounts and
commissions and other expenses actually incurred in connection with such
sale or issuance. Net Proceeds do not include the proceeds from the
exercise of stock options issued pursuant to an employee stock option plan
described in the Borrower's proxy statements.
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<PAGE>
"NOTES" means, collectively, the Revolving Notes, the Term Notes
and the Acquisition Loans Notes.
"OBLIGATIONS" means the obligations of the Borrower to repay the
balance of the Loans outstanding hereunder, together with accrued and
unpaid interest thereon, fees payable hereunder, and all other amounts
payable or obligations to be performed by the Borrower hereunder or under
any other Loan Instrument or under any Permitted Swap Obligations for which
the counterparty is a Bank.
"PERMITTED LIEN" means:
(a) Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or which are being contested
in good faith and with due diligence and with respect to which
adequate reserves have been established;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary course
of business not yet delinquent or which are being contested in
good faith and with due diligence and with respect to which
adequate reserves have been established;
(c) Liens (other than Liens imposed by ERISA) consisting of
pledges or deposits under workers' compensation, unemployment
insurance and other social security legislation;
(d) easements, rights-of-way, zoning restrictions and other
similar encumbrances of record on real property incurred in the
ordinary course of business which, in the aggregate, are not
material in dollar amount, and which do not in any case interfere
with the ordinary conduct of the business of the Borrower or any
Guarantor;
(e) Liens existing on the date hereof and disclosed in
SCHEDULE 4.1(o) hereto;
(f) purchase money security interests securing payment by the
Borrower or any Guarantor of a portion of the purchase price of
any asset, PROVIDED THAT (i) any such Lien attaches to such
property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the
property so acquired in
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<PAGE>
such transaction, (iii) the principal amount of the debt secured
thereby does not exceed 100% of the cost of such property, and
(iv) the aggregate outstanding principal of such purchase money
security interest Liens shall not at any one time exceed $4,000,000;
(g) Liens, deposits or pledges to secure the non-delinquent
performance of bids, tenders, contracts (other than contracts for
the payment of money), leases (permitted under this Agreement),
public or statutory obligations, surety, stay, appeal, indemnity,
performance or other similar bonds, or other similar obligations
arising in the ordinary course of business; or
(h) Liens arising out of the lease of capital equipment in the
aggregate amount at any one time not exceed $4,000,000; or
(i) any attachment or judgment Lien either in existence less
than 30 calendar days after the entry thereof, or with respect to
which execution has been stayed, or with respect to which payment
in full above any deductible is covered by insurance.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of the Borrower or any Subsidiary existing or arising under Swap
Contracts with one or more creditworthy parties as the swap counterparty,
provided that such obligations are (or were) entered into by such Person in
the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments or assets held or reasonably
anticipated by such Person and not for the purpose of speculation. For the
purposes of this definition, the term "creditworthy party" means any Bank,
any Affiliate of any Bank or any third party having a credit rating from
Standard & Poor's and Moodys Investor's Services, Inc. not less than that of
the Bank with the lowest credit rating. All Swap Contracts with
counterparties who are not Banks will be unsecured.
"PERSON" means any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, limited
liability partnership, trust, unincorporated organization or government (or
any agency, instrumentality or political subdivision thereof).
"PLAN" of a Person shall mean an employee benefit or other plan
established or maintained by such Person or any ERISA
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<PAGE>
Affiliate of such Person and which is covered by Title IV of ERISA, other
than a Multiemployer Plan of such Person.
"PLEDGE AGREEMENT" means the Pledge and Security Agreement of the
Borrower pertaining to its interest in its Subsidiaries and its other
personal property substantially in the form of EXHIBIT D hereto, as the same
may be supplemented, modified, amended or restated from time to time in the
manner provided therein.
"PRIME RATE" means a fluctuating interest rate per annum as shall
be in effect from time to time as announced publicly by the Agent in Denver,
Colorado, from time to time, as the Agent's prime rate. Such rate will not
necessarily be the lowest interest rate charged by the Agent for loans to its
customers. The Prime Rate shall change on each day on which the Agent
announces a change in such Prime Rate.
"PRIME RATE LOAN" means an Advance which bears interest as provided
in SECTION 2.10(a).
"PRO RATA SHARE" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the fifth decimal) at such
time of such Bank's Commitment divided by the combined Commitments of all
Banks.
"QUALIFIED ACQUISITION" means any Person acquired by the Borrower
or a Subsidiary who fulfills all of the following requirements as of the date
of acquisition:
(a) Total annual revenues of the acquired Person shall not exceed 50%
of Borrower's pre-acquisition consolidated revenues for the twelve
months immediately preceding the date of acquisition;
(b) The total consideration paid for the acquired Person (excluding
assumed Debt and equity securities issued by the Borrower) shall not
exceed $8,500,000.00;
(c) The consolidated pro-forma balance sheet of the Borrower and the
acquired Person shall comply with all applicable financial covenants
set forth in SECTION 5.2 as of the date of the acquisition; and
(d) The acquired Person had positive EBITDA during the twelve months
immediately preceding the date of acquisition.
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<PAGE>
"REAL PROPERTY" has the meaning given thereto in SECTION 4.1(O).
"RECORD" means the grid attached to a Note, or the continuation of
such grid, or any other similar record, including computer records,
maintained by any Bank with respect to any Loan referred to in such Note.
"REGULATIONS D, T, U AND X" mean, respectively, Regulations D, T, U
and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be amended or supplemented from time to time.
"REGULATORY CHANGE" means, with respect to the Banks, any change
enacted or adopted after the date of this Agreement in United States federal
or state law or regulations or any foreign law or regulations (including,
without limitation, Regulation D) or the adoption or publication after the
date of this Agreement of any interpretations, directives or requests
(whether or not having the force of law) applying to a class of banks,
including the Banks, by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"REQUEST FOR ADVANCE" means a written request by the Borrower to
the Agent for an Advance of funds as a Loan hereunder, which written request
will be in the form of EXHIBIT B-1 hereto.
"REQUIRED BANKS" means, at any particular time, those Banks having
66 2/3% of the Loans or, if there are no Loans outstanding, at least 66 2/3%
of the Commitments.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), ordinance, treaty, code, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its assets to which the Person or any of
assets is subject.
"RESERVE REQUIREMENT" means, for any Interest Period for any LIBOR
Rate Loan, the average maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required
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<PAGE>
to be maintained by such member banks by reason of any Regulatory Change
against (i) any category of liabilities which includes deposits by reference
to which the LIBOR Base Rate is to be determined as provided in the
definition of "LIBOR Base Rate" in this SECTION 1.1, or (ii) any category of
extensions of credit or other assets which includes LIBOR Rate Loans.
"REVOLVING LOANS" means all Advances of funds by the Banks to the
Borrower pursuant to the Revolving Loans Commitment, which Loans will be
evidenced by the Revolving Note.
"REVOLVING LOANS COMMITMENT" means the commitment of the Banks to
Advance Revolving Loans to the Borrower from time to time in the aggregate
amount of $11,000,000.00 as provided in SECTION 2.1 as the same may be
adjusted or terminated pursuant to SECTIONS 2.5 AND 6.2 or as otherwise
provided in this Agreement.
"REVOLVING LOANS SCHEDULED MATURITY DATE" means June 30, 2001.
"REVOLVING NOTE" means the promissory notes in the aggregate
principal amount of $11,000,000, made by the Borrower and payable to the
order of the Banks, substantially in the form of EXHIBIT A-1 hereto, as the
same may be supplemented, modified, amended or restated from time to time in
the manner provided herein.
"REVOLVING NOTE RECORD" means a Record with respect to a Revolving
Note.
"SECURED PARTY" has the meaning ascribed to such term in the
Security Agreements, Pledge Agreements and the Deeds of Trust.
"SECURITY AGREEMENT" means a Security Agreement and Assignment from
the Borrower and the Guarantors substantially in the form of EXHIBIT E
hereto, as the same may be supplemented, modified, amended or restated from
time to time in the manner provided therein.
"SECURITY INTEREST" means the Liens created, or purported to be
created, by the Loan Instruments.
"SUBSIDIARY" or "SUBSIDIARIES" of a Person means, any corporation,
association, partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, membership
interests or other equity interest (in the case of Persons other than
corporations), is owned or
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<PAGE>
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refers to a
Subsidiary of the Borrower.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or
option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency option or
any other, similar transaction (including any option to enter into any of the
foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing any
or all of the foregoing.
"TERM LOAN" means the Advance of funds by the Banks to the Borrower
pursuant to the Term Loan Commitment, which Loans will be evidenced by the
Term Notes.
"TERM LOAN COMMITMENT" means the commitment of each Bank to Advance
the Term Loan to the Borrower in a single Advance, as provided in
SECTION 2.1(b).
"TERM NOTE" means the promissory notes in the aggregate principal
amount of $16,000,000 evidencing the Term Loan, made by the Borrower and
payable to the order of the Banks, substantially in the form of EXHIBIT A-2
hereto, as the same may be supplemented, modified, amended or restated from
time to time in the manner provided herein.
"TERM LOAN RECORD" means a Record with respect to a Term Loan.
"TERM LOAN SCHEDULED MATURITY DATE" means June 30, 2003.
"TOTAL DEBT" means, at any time, the Debt of the Borrower and its
Subsidiaries on a consolidated basis for the purposes of calculating the
financial covenants in SECTION 5.2(a), the Applicable Margin and the
Commitment Fee Rate at such time.
"TRAILING FOUR QUARTER EBITDA" means, with respect to the Borrower
and all of its Subsidiaries on a consolidated basis, the EBITDA for the
immediately preceding four Fiscal Quarters of the Borrower.
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"TYPE" means a type of Advance, being a Prime Rate Loan or a LIBOR
Rate Loan, as the case may be.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as in
effect from time to time in the State of Colorado.
SECTION 1.2 ACCOUNTING TERMS AND DETERMINATIONS. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, all calculations for purposes of determining compliance with the
terms of this Agreement shall be made, and all financial statements and
certificates and reports as to financial matters required to be delivered to
the Agent hereunder shall be prepared in accordance with GAAP applied for all
periods to the extent practicable on a basis consistent with that used in the
preparation of the financial statements identified in SECTION 4.1(f), so as
to fairly present the financial condition and results of operations of the
applicable Person.
ARTICLE II
COMMITMENT; AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.1 COMMITMENT. Each Bank severally agrees, on the terms and
subject to the conditions contained in this Agreement and the Loan
Instruments, to make Loans to the Borrower for the account of the Borrower in
accordance with the provisions of this SECTION 2.1.
(a) REVOLVING LOANS COMMITMENT. Pursuant to the Revolving Loans
Commitment, from the Effective Date until the Maturity Date, each
Bank severally agrees to Advance funds to the Borrower as
Revolving Loans, PROVIDED, HOWEVER, that at no time shall the
Banks be required to Advance Revolving Loans to the Borrower if,
after such Advance the sum of the principal amount of Revolving
Loans outstanding is in excess of the Maximum Revolving Credit
Amount; and PROVIDED FURTHER, that no Bank shall be required to
Advance Revolving Loans in an aggregate amount exceeding the
Bank's Revolving Loan Commitment as described on SCHEDULE 2.1.
Subject to the terms of this Agreement, the Borrower may borrow,
repay and reborrow funds Advanced to the Borrower as Revolving
Loans.
(b) TERM LOAN COMMITMENT. Pursuant to the Term Loan Commitment,
each Bank severally agrees to Advance, on the Effective Date, a
Term Loan to the Borrower, in a
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single Advance, in a principal amount not exceeding the Bank's Term
Loan Commitment as described on SCHEDULE 2.1.
(c) ACQUISITION LOAN COMMITMENT. Pursuant to the Acquisition
Loan Commitment, from the Effective Date to the Maturity Date,
each Bank severally agrees to Advance funds to the Borrower as
Acquisition Loans for the sole purpose of making Qualified
Acquisitions, PROVIDED, HOWEVER, that no Bank shall be required
to Advance Acquisition Loans in an aggregate amount exceeding the
Bank's Acquisition Loans Commitment as described on SCHEDULE 2.1,
PROVIDED, FURTHER, that at no time shall the Banks be required to
Advance Acquisition Loans to the Borrower if, after such Advance
the aggregate principal amount of Acquisition Loans Advanced
would exceed (A) the amount of the Acquisition Loans Commitment
MINUS (B) the aggregate principal amount of Acquisition Loans
Advanced to such time. The Borrower may not reborrow funds
Advanced as Acquisition Loans after such Advances, or any part
thereof, have been repaid.
SECTION 2.2 ADVANCES.
The Banks agree, on the terms and conditions set forth herein,
(a) to make Advances to the Borrower of Revolving Loans (as LIBOR Rate
Loans or as Prime Rate Loans) from time to time on any Business Day
from and after the Effective Date through the Maturity Date, (b) to
make Advances of to the Borrower of Acquisition Loans (as LIBOR Rate
Loans or as Prime Rate Loans) from time to time on any Business Day
from and after the Effective Date through the first to occur of the
Acquisition Loans Draw Date and the Maturity Date, and (c) to make an
Advance to the Borrower of the Term Loan (as a LIBOR Rate Loan or a
Prime Rate Loan) in a single Advance on the Effective Date. Each
LIBOR Rate Loan shall be in an amount not less than $500,000 or in
integral multiples of $250,000 in excess thereof, and each Prime Rate
Loan shall be in an amount not less than $100,000 or in integral
multiples of $10,000 in excess thereof, EXCEPT that an Advance of a
Prime Rate Loan may be in an amount equal to the entire unused
Revolving Loans Commitment. The total number of individual LIBOR Rate
Loan Advances outstanding at any time shall not exceed three (3) for
the Revolving Loans, two (2) for the Acquisition Loans and one (1) for
the Term Loan.
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SECTION 2.3 MAKING THE ADVANCES.
(a) REQUEST FOR ADVANCE. Each Revolving Loan, Acquisition Loan
and Term Loan Advance shall be made after delivery by the
Borrower to the Agent of a Request for Advance, duly executed by
an Authorized Signatory, delivered to the Agent (i) in the case
of a Prime Rate Loan, not later than 11:00 a.m.(Denver, Colorado
time) on the Business Day which is the date of the proposed
Advance and (ii) in the case of a LIBOR Rate Loan, not later than
11:00 a.m. (Denver, Colorado time) on the third Business Day
prior to the date of the proposed Advance. The Request for
Advance shall specify (A) the date and amount of the Advance,
(B) whether a Revolving Loan, Acquisition Loan or Term Loan is
requested, (C) the Type of Advance requested, (D) if a LIBOR Rate
Loan is requested, the initial Interest Period therefor, (E)and
if an Acquisition Loan is requested, such information regarding
the Qualified Acquisition as the Agent and Banks may request.
Promptly upon receipt of such Request for Advance, the Agent
shall notify the Banks thereof and of their Pro Rata Share of
such proposed Advance. Not later than 2:00 p.m. (Denver,
Colorado time) on the date of such Advance, subject to
fulfillment of the applicable conditions set forth in ARTICLE III,
the Agent will make such Advance available to the Borrower in same
day funds by depositing such funds in the Borrower's Account.
(b) REQUEST FOR ADVANCE IRREVOCABLE. Each Request for Advance
from the Borrower to the Agent shall be irrevocable and binding
on the Borrower. In the case of any request for a LIBOR Rate
Loan the Borrower shall indemnify the Banks against any loss,
cost or expense incurred by the Banks as a result of any failure
to fulfill on or before the date specified in such notice for
such Advance the applicable conditions set forth in ARTICLE III,
including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or reemployment of deposits or other
funds acquired by the Banks to fund the Advance when the Advance,
as a result of such failure, is not made on such date.
(c) AVAILABILITY OF FUNDS, REVOLVING LOANS AND ACQUISITION
LOANS. Not later than 2:00 p.m. (Denver, Colorado time) on the
proposed day of the Advance of any Revolving Loan or Acquisition
Loan, each of the Banks
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will make available to the Agent, at its address referred to in
SECTION 8.2, in immediately available funds, the amount of such
Bank's Pro Rata Share of the requested Revolving Loan or
Acquisition Loan. Upon receipt from each Bank of such amount and
upon receipt of the documents required by SECTIONS 3.1 AND 3.2 and
the satisfaction of the other conditions set forth therein, to the
extent applicable, the Agent will make available to the Borrower
the aggregate amount of such Revolving Loan or Acquisition Loan
made available to the Agent by the Banks. The failure or refusal
of any Bank to make available to the Agent at the aforesaid time
and place the amount of its Pro Rata Share of the requested
Revolving Loan or Acquisition Loan shall not relieve any other Bank
from its several obligation hereunder to make available to the
Agent the amount of such other Bank's Pro Rata Share of any
requested Revolving Loan or Acquisition Loan Advance.
(d) ADVANCES BY AGENT. The Agent may, unless notified to the
contrary by any Bank prior to an Advance, reasonably assume that
such Bank has made available to the Agent on such day the amount
of such Bank's Pro Rata Share of the Revolving Loan or
Acquisition Loan to be made on such day, and the Agent may (but
it shall not be required to), in reliance upon such assumption,
make available to the Borrower a corresponding amount. If any
Bank makes available to the Agent such amount on a date after
such day of Advance, such Bank shall pay to the Agent on demand
an amount equal to the product of (i) the Federal Funds Rate each
day included in such period, TIMES (ii) the amount of such Bank's
Pro Rata Share of such Revolving Loan or Acquisition Loan, TIMES
(iii) a fraction, the numerator of which is the number of days
that elapse from and including such day of Advance to the date on
which the amount of such Bank's Pro Rata Share of such Revolving
Loan or Acquisition Loan shall become immediately available to
the Agent, and the denominator of which is 360. A statement of
the Agent submitted to such Bank with respect to any amounts
owing under this paragraph shall be PRIMA FACIE evidence of the
amount due and owing to the Agent by such Bank.
SECTION 2.4 COMMITMENT FEE.
(a) COMMITMENT FEE RATE. The Borrower agrees to pay to the
Agent a Commitment Fee (the "COMMITMENT FEE") on
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the average daily unused portion of the sum of the Revolving Loans
Commitment and Acquisition Loans Commitment at the Commitment Fee
Rate, payable in arrears on the last day of each Fiscal Quarter of
the Borrower, and payable on the Maturity Date.
(b) CALCULATION OF COMMITMENT FEE. The Commitment Fee payable
with respect to the Revolving Loans and Acquisition Loans will be
calculated for the period from the Effective Date through the
date the Commitments have been terminated in accordance with this
Agreement, and shall be based upon (i) the amount by which the
daily average of the aggregate principal amount of Revolving
Loans and Acquisition Loans outstanding is less than (ii) the
aggregate Revolving Loans Commitment and Acquisition Loans
Commitment at such time.
SECTION 2.5 REDUCTION OF THE REVOLVING LOANS AND ACQUISITION LOANS
COMMITMENT. The Borrower shall have the right at any time, upon at least
three (3) Business Days' notice to the Agent, to terminate in whole or
reduce in part the unused portion of the Revolving Loans Commitment and the
Acquisition Loans Commitment, PROVIDED that each partial reduction of the
Revolving Loans Commitment and Acquisition Loans Commitment shall be in the
amount of not less than $1,000,000 or an integral multiple thereof. Any
such termination or reduction of the Revolving Loans Commitment and
Acquisition Loans Commitment shall be irrevocable and permanent. Promptly
after receiving such notice from the Borrower, the Agent will notify the
Banks of the substance thereof. The Revolving Loans Commitments and
Acquisition Loans Commitment of the Banks shall be reduced PRO RATA
pursuant to the notice or, as the case may be, terminated.
SECTION 2.6 REPAYMENT.
(a) VOLUNTARY REPAYMENT. The Borrower may repay the principal
amount of the Loans at any time, at its election, (i) in the case
of a Prime Rate Loan, on any Business Day, without prior notice,
and (ii) in the case of LIBOR Rate Loans, upon not less than
three (3) Business Days prior notice to the Agent, subject to
breakage costs provided for in SECTION 2.11. Any such voluntary
repayment of the Loans shall be in the principal amount of not
less than (y) $100,000 for Prime Rate Loans and in integral
multiples of $10,000 in excess thereof and (z) $1,000,000 for
LIBOR Rate Loans and in integral multiples of $250,000 in excess
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thereof. Any voluntary repayment of the Term Loan and the
Acquisition Loans shall be accompanied by payment of all accrued
but unpaid interest applicable to the principal amount of the
Term Loan and the Acquisition Loans so repaid.
(b) INSTALLMENT PAYMENTS OF TERM LOAN. The Borrower will repay
the Term Loan in quarterly installment payments of principal,
commencing on September 30, 1998 and on the last day of each
quarter thereafter, in accordance with the following:
<TABLE>
<CAPTION>
QUARTERLY
REPAYMENT PRINCIPAL
DATE PAYMENT AMOUNT
------------------ ---------------
<S> <C>
September 30, 1998 $650,000
December 31, 1998 $650,000
March 31, 1999 $650,000
June 30, 1999 $650,000
September 30, 1999 $725,000
December 31, 1999 $725,000
March 31, 2000 $725,000
June 30, 2000 $725,000
September 30, 2000 $800,000
December 31, 2000 $800,000
March 31, 2001 $800,000
June 30, 2001 $800,000
September 30, 2001 $875,000
December 31, 2001 $875,000
March 31, 2002 $875,000
June 30, 2002 $875,000
September 30, 2002 $950,000
December 31, 2002 $950,000
March 31, 2003 $950,000
June 30, 2003 $950,000
</TABLE>
(c) REPAYMENT OF ACQUISITION LOANS. The Acquisition Loans shall be
paid as follows:
(i) Interest only shall be payable quarterly in accordance
with SECTION 2.10 on the outstanding principal balance of
the Acquisition Loans from the Effective Date to the
Acquisition Loans Draw Date.
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(ii) After the Acquisition Loans Draw Date, twenty (20)
consecutive quarterly principal payments on the last
Business Day of each Fiscal Quarter in equal amounts, plus
interest payable in accordance with SECTION 2.10.
(d) MANDATORY REPAYMENT.
(i) The Borrower will repay the Loans in full on demand
upon the acceleration of the due date of any of the Loans by
the Agent pursuant to ARTICLE VI hereof.
(ii) The Borrower shall pay to the Agent Net Proceeds
within not more than five (5) Business Days after the
Borrower shall receive Net Proceeds from(x) Dispositions,
(y) any equity securities issuance or sale or (z) insurance
recoveries and condemnation and eminent domain awards.
Collateral shall be released from the liens of the
Collateral Documents upon any Disposition of such
Collateral, provided that (i) no Event of Default has
occurred and (ii) the Borrower shall have made the mandatory
repayment required under the terms of this SECTION 2.6.
(e) APPLICATION OF REPAYMENTS. All voluntary Loan repayments
received by the Agent from the Borrower will be applied to the
Revolving Loans, Acquisition Loans and Term Loans as the Borrower
shall instruct the Agent in writing concurrently with the
payment, and in the absence of such written instructions, will be
applied first to the Revolving Loans until they are repaid in
full, then to the Acquisition Loans until they are repaid in full
and finally to the Term Loan. All mandatory Loan repayments will
be applied first to reduce the Term Loan until the Term Loan is
paid in full, then to the repayment of the Acquisition Loans
until they are paid in full and finally to the repayment of the
Revolving Loans. All repayments of the Term Loan and Acquisition
Loans will be applied to the principal payments due with respect
to the such Loans in inverse order of maturity.
SECTION 2.7 DISTRIBUTION OF PAYMENTS BY THE AGENT.
The Agent shall promptly distribute to each Bank its Pro Rata Share of
each payment received by the Agent under the Loan
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Instruments for the account of the Banks by credit to an account of such Bank
at the Agent's Bank identified at SECTION 8.2 or by wire transfer to an
account of such Bank.
Unless the Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Banks under the Loan
Instruments that the Borrower will not make such payment in full, the Agent
may assume that the Borrower has made such payment in full to the Agent on
such date and the Agent in its sole discretion may, in reliance upon such
assumption, cause to be distributed to each Bank on such due date a
corresponding amount with respect to the amount then due such Bank. If and
to the extent the Borrower shall not have so made such payment in full to
the Agent and the Agent shall have so distributed to any Bank a
corresponding amount, such Bank shall, on demand, repay to the Agent the
amount so distributed together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank
repays such amount to the Agent at the Prime Rate.
SECTION 2.8 PROMISSORY NOTES.
(a) THE REVOLVING NOTES. The Revolving Loans shall be evidenced
by promissory notes of the Borrower in substantially the form of
EXHIBIT A-1 hereto (each a "REVOLVING NOTE"), dated as of the
Effective Date and completed with appropriate insertions. One
Revolving Note shall be payable to the order of each Bank in a
principal amount equal to such Bank's Revolving Loans Commitment
or, if different, the outstanding amount of all Revolving Loans
made (or held) by such Bank, plus interest accrued thereon, as
set forth below. The Borrower irrevocably authorizes each Bank
to make or cause to be made, at or about the time of an Advance
of any Revolving Loan or at the time of receipt of any payment of
principal on such Bank's Revolving Note, an appropriate notation
on such Revolving Note Record reflecting the making of such
Revolving Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Revolving Loans set forth
on such Bank's Revolving Note Record shall be PRIMA FACIE
evidence of the principal amount thereof owing and unpaid to such
Bank absent manifest error, but the failure to record, or any
error in so recording, any such amount shall not affect the
obligation of the Borrower hereunder or under any Revolving Note
to make payments of principal of or interest on any Revolving
Note when due.
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(b) TERM NOTES. The Term Loans shall be evidenced by promissory
notes of the Borrower in substantially the form of EXHIBIT A-2
hereto (each a "TERM NOTE"), dated the Effective Date and
completed with appropriate insertions. One Term Note shall be
payable to the order of each Bank in a principal amount equal to
such Bank's Term Loan Commitment and representing the obligation
of the Borrower to pay to such Bank such principal amount or, if
less, the outstanding amount of such Bank's Term Loan Commitment,
plus interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Bank to make or cause to be made a
notation on such Bank's Term Note Record reflecting the original
principal amount of such Bank's Term Loan Commitment and, at or
about the time of such Banks' receipt of any principal payment on
such Bank's Term Note, an appropriate notation on such Bank's
Term Note Record reflecting such payment. The aggregate unpaid
amount set forth on such Bank's Term Note Record shall be PRIMA
FACIE evidence of the principal amount thereof owing and unpaid
to such Bank absent manifest error, but the failure to record, or
any error in so recording, any such amount on such Bank's Term
Note Record shall not affect the obligation of the Borrower
hereunder or under any Term Note to make payments of principal of
and interest on any Term Note when due.
(c) ACQUISITION LOAN NOTE. The Acquisition Loans shall be
evidenced by promissory notes of the Borrower in substantially
the form of EXHIBIT A-3 hereto (each a "ACQUISITION LOAN NOTE"),
dated as of the Effective Date and completed with appropriate
insertions. One Acquisition Loan Note shall be payable to the
order of each Bank in a principal amount equal to such Bank's
Acquisition Loan Commitment or, if different, the outstanding
amount of all Acquisition Loans made (or held) by such Bank, plus
interest accrued thereon, as set forth below. The Borrower
irrevocably authorizes each Bank to make or cause to be made, at
or about the time of an Advance of any Acquisition Loan or at the
time of receipt of any payment of principal on such Bank's
Acquisition Loan Note, an appropriate notation on such
Acquisition Loan Note Record reflecting the making of such
Acquisition Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Acquisition Loans set
forth on such Bank's Acquisition Loan Record shall be PRIMA FACIE
evidence
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of the principal amount thereof owing and unpaid to such
Bank absent manifest error, but the failure to record, or any
error in so recording, any such amount on such Bank's Acquisition
Loan Note Record shall not affect the obligation of the Borrower
hereunder or under any Acquisition Loan Note to make payments of
principal and interest on any Acquisition Loan Note when due.
SECTION 2.9 PRO RATA TREATMENT. Except to the extent otherwise
provided herein, (a) Loans shall be made by the Banks pro rata in
accordance with their respective Commitments, (b) Loans of the Banks shall
be Converted and continued pro rata in accordance with their respective
amounts and Type and, in the case of LIBOR Rate Loans, having the Interest
Period being so Converted or continued, (c) each reduction in the Revolving
Loans Commitment, Acquisition Loan Commitment and the Term Loan Commitment
shall be made pro rata in accordance with the respective amounts thereof
and (d) each payment of the principal of or interest on the Loans shall be
made for the account of the Banks pro rata in accordance with their
respective amounts thereof then due and payable.
SECTION 2.10 INTEREST. The Borrower shall pay interest on the
unpaid principal amount of each Loan from the date of the Advance thereof
comprising such Loan until (but not including) the date such principal
amount has been repaid in full, at the following rates per annum:
(a) PRIME RATE LOANS. During such periods as such Loan is a
Prime Rate Loan, at a rate per annum equal at all times to the
Prime Rate PLUS Applicable Margin or the Default Rate, whichever
is applicable. Prime Rate interest PLUS the Applicable Margin
shall be payable quarterly in arrears, on the first day of each
Fiscal Quarter. Interest accruing at the Default Rate shall be
payable on demand.
(b) LIBOR RATE LOANS. During such periods as such Loan is a
LIBOR Rate Loan, at a rate per annum during the Interest Period
for such Loan equal to the LIBOR Rate or the Default Rate,
whichever is applicable. LIBOR Rate interest will be payable on
termination of the Interest Period applicable to the Loan, and,
if such Interest Period is longer than 3 months, then every 3
months. Interest accruing at the Default Rate shall be payable
on demand.
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(c) DEFAULT RATE INTEREST. Subject to the provisions of
SECTION 6.2, all outstanding Loans will bear interest at the
Default Rate during all periods when an Event of Default has
occurred and is continuing.
(d) INTEREST CALCULATIONS. Interest on the Loans shall be
computed on a 365/360 simple interest basis, by applying the
ratio of the applicable annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied
by the actual number of days the principal balance is
outstanding.
SECTION 2.11 YIELD PROTECTION. In order to protect the yield of the
Banks in connection with the Advances to be made hereunder, the Borrower
agrees as follows.
(a) INCREASED COSTS. If, due to either (i) the introduction of
or any change in or in the interpretation of any law or
regulation, or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority (whether or
not having the force of law), there shall be any increase in the
cost to the Banks of agreeing to make or making, funding or
maintaining LIBOR Rate Loans, then the Borrower shall from time
to time, upon demand by a Bank through the Agent, pay to such
Bank additional amounts sufficient to compensate the Bank for
such increased cost. A certificate as to the amount of such
increased cost, shall be submitted to the Borrower by the Agent.
Such certificate shall show in reasonable detail the Bank's
computations of its increased costs. Notwithstanding the
foregoing, there shall be no duplication of costs to the Borrower
as the result of the application of SECTION 2.11(b). Such
certificate of increased costs shall be conclusive and binding
for all purposes, absent manifest error.
(b) ADDITIONAL INTEREST. The Borrower shall pay to the Banks,
so long as the Banks shall be required under regulations of the
Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or
including Eurocurrency liabilities (as such term is defined in
Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time), additional interest on
the unpaid principal amount of each LIBOR Rate Loan, from the
date of the Advance thereof until the principal amount thereof is
paid in
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full, at an interest rate per annum equal at all times to
the remainder obtained by subtracting (i) the LIBOR Rate for the
Interest Period for such Loan from (ii) the rate obtained by
dividing such LIBOR Rate by a percentage equal to 100% minus the
reserve percentage applicable during such Interest Period (or if
more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Interest
Period during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the maximum Reserve Requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for the Banks with respect to liabilities or assets
consisting of or including Eurocurrency liabilities having a term
equal to such Interest Period, payable on each date on which
interest is payable on such Loan. Such additional interest shall
be determined by the Agent and a certificate as to the amount
shall be submitted to the Borrower. Such certificate shall show
in reasonable detail the Agent's computations. Such certificate
of additional interest shall be conclusive and binding for all
purposes, absent manifest error.
(c) INCREASED CAPITAL. If a Bank determines that compliance
with any law or regulation or any guideline or request from any
central bank or other Governmental Authority (whether or not
having the force of law) affects or would affect the amount of
capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and that the amount of such
capital is increased by or based upon the existence of the Bank's
commitment to lend hereunder and other commitments of this type,
then, upon demand by the Bank through the Agent, the Borrower
shall immediately pay to the Bank, from time to time as specified
by the Bank, additional amounts sufficient to compensate the Bank
or such corporation in the light of such circumstances, to the
extent that the Bank reasonably determines such increase in
capital to be allocable to the existence of the Bank's commitment
to lend hereunder. A certificate as to such amounts submitted to
the Borrower by the Agent or a Bank, shall be conclusive and
binding for all purposes, absent manifest error. Such
certificate shall show in
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reasonable detail the Agent's or the Bank's computations.
(d) BREAKAGE COSTS. If any payment of principal of any LIBOR
Rate Loan is made other than on the last day of the Interest
Period for such Loan as a result of acceleration of the maturity
of the Loans and the Notes pursuant to SECTION 6.2, or for any
other reason, the Borrower shall, upon demand by the Agent, hold
the Banks harmless and pay to the Banks, through the Agent, any
amounts required to compensate the Banks for additional losses,
costs or expenses which they may incur as a result of such
payment, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by the Banks to fund or maintain such
Advance provided, however, that such loss or expense shall not
include loss of Applicable Margin. Such payment shall be
calculated as though the Banks funded the principal amount
prepaid through the purchase of Dollar deposits in the London,
England interbank market having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the LIBOR
Rate less the Applicable Margin for such Interest Period, whether
in fact that is the case or not. The Agent's determination of
the amount of such payment shall be conclusive in the absence of
manifest error.
SECTION 2.12 CONVERSION OF LOANS; CHANGE OF INTEREST PERIODS. At
any time, with respect to Prime Rate Loans, and at any time not less than
three (3) Business Days prior to the end of the then current Interest
Period for any LIBOR Rate Loan, the Borrower may elect, by delivery to the
Bank of an Interest Period/Conversion Notice in the form of EXHIBIT B-3
duly executed by an Authorized Signatory, to Convert the Type of Advance
or, with respect to LIBOR Rate Loans, to select an Interest Period for such
Advance as permitted herein. If the Borrower fails to select the duration
of any Interest Period for any LIBOR Rate Loan in the foregoing manner,
such Advance will, unless paid in full on the last day of such Interest
Period, automatically, on the last day of the then existing Interest Period
therefor, Convert into a Prime Rate Loan.
SECTION 2.13 ILLEGALITY, ETC.
(a) Notwithstanding any other provision of this Agreement, if
the Agent or a Bank shall notify the
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Borrower that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any
central bank or other Governmental Authority asserts that it is
unlawful, for a Bank to perform its obligations hereunder to make
LIBOR Rate Loans or to fund LIBOR Rate Loans hereunder, (i) the
obligation of the Bank to make, or to Convert Loans into LIBOR Rate
Loans shall be suspended until the Bank shall notify the Borrower
that the circumstances causing such suspension no longer exist and
(ii) the Borrower shall prepay in full all LIBOR Rate Loans of the
Bank then outstanding, together with interest accrued thereon, either
on the last day of the Interest Period thereof if the Banks may
lawfully continue to maintain LIBOR Rate Loans to such day, or
immediately, if the Banks may not lawfully continue to maintain LIBOR
Rate Loan, unless the Borrower, within five (5) Business Days of
notice from the Bank, Converts all LIBOR Rate Loans of the Bank then
outstanding into Prime Rate Loans in accordance with SECTION 2.12.
(b) If, with respect to any LIBOR Rate Loan, a Bank notifies the
Borrower that the LIBOR Rate for any Interest Period for such
Advance will not adequately reflect the cost to the Bank, in the
Bank's reasonable judgement, of making, funding or maintaining
such LIBOR Rate Loan for such Interest Period, such LIBOR Rate
Loan will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Prime Rate Loan, and the
obligation of the Bank to make, or to Convert Advances into,
LIBOR Rate Loans shall be suspended until the Bank shall notify
the Borrower that the circumstances causing such suspension no
longer exist. Upon receipt of such notice, the Borrower may
revoke any Request for Advance or Interest Period/Conversion
Notice then submitted by it. If the Borrower does not revoke
such request or notice, the Bank shall make, Convert or continue
the Loan, as proposed by the Borrower, in the amount specified in
the applicable request or notice submitted by the Borrower, but
such Loan shall be made, Converted or continued as a Prime Rate
Loan instead of a LIBOR Rate Loan.
SECTION 2.14 PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment under any Loan Instrument
not later than 12:00 noon (Denver,
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Colorado time) on the day when due in Dollars to the Agent at its
address referred to in SECTION 8.2 in same day funds.
(b) The Borrower hereby authorizes the Agent, if and to the extent
payment is not made when due, subject to the expiration of applicable
grace periods, under any Loan Instrument, to charge from time to time
against the Borrower's Account or any or all other accounts of the
Borrower with the Agent any amount so due.
(c) All computations of interest and of Fees shall be made by the
Agent on the basis of a year of 360 days, in each case for the actual
number of days (including the first day but excluding the last day)
occurring in the period for which such interest or Commitment Fees
are payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent
manifest error, on the Borrower and the Banks.
(d) Whenever any payment under any Loan Instrument shall be stated
to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of
interest or the Commitment Fee, as the case may be; PROVIDED,
HOWEVER, if such extension would cause payment of interest on or
principal of LIBOR Rate Loans to be made in the next following
calendar month, such payment shall be made on the next preceding
Business Day.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation
of the Banks to make the initial Advance of the Loans is subject to the
satisfaction (or waiver by the Banks in their sole discretion) of the
following conditions precedent:
(a) that the Agent shall have received on or before the day of such
Advance the following, each dated as of the Effective Date, in form
and substance satisfactory to the Agent:
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(i) The Notes, duly executed by Authorized Signatories
on behalf of the Borrower.
(ii) The Guaranties, duly executed by the Guarantors.
(iii) A Deed of Trust from and duly executed by Authorized
Signatories on behalf of the Borrower pertaining to all of
Borrower's owned Real Property.
(iv) A Security Agreement from and duly executed by
Authorized Signatories on behalf of the Borrower, pertaining to
the Borrower's Equipment, Accounts Receivable, Inventory and
all other personal property of the Borrower.
(v) A Collateral Assignment of Leases in the form of
EXHIBIT F-2 duly executed by Authorized Signatories on behalf of
the Borrower pertaining to the portion of Borrower's owned Real
Property consisting of leasehold interests.
(vi) The Pledge Agreement, duly executed by the Borrower,
pertaining to Borrower's shares of stock in Guarantors together
with the original stock certificates subject thereto and stock
powers therefor, and pertaining to Borrower's Equipment and the
Borrower's Accounts Receivable and Inventory and all the other
personal property of the Borrower except the personal property
subject to other Collateral Documents.
(vii) A Deed of Trust from and duly executed by each
Guarantor pertaining to the Real Property owned by such
Guarantor.
(viii) A Security Agreement from and duly executed by each
Guarantor pertaining to such Guarantor's portion of Guarantors'
Equipment, such Guarantor's Accounts Receivable, such
Guarantor's Inventory and all other personal property of each
such Guarantor except the personal property subject to other
Collateral Documents.
(ix) Uniform Commercial Code Financing Statements and
assignments of patents, trademarks
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and copyrights pertaining to the Security Agreements, the
Pledge Agreement and the Collateral Assignments of Leases,
duly executed by the Borrower and the Guarantors, respectively,
as the Agent may request.
(x) Title insurance commitments in ALTA form pertaining to
Borrower's owned Real Property, in form and content and issued
by a title insurance company or companies reasonably acceptable
to the Agent, in an amount equal to the fair market value of
such Real Property insuring the Agent's first and prior Lien on
all such parcels established pursuant to the Deeds of Trust and
Collateral Assignments of Leases, together with a revolving
credit endorsement and such other endorsements and affirmative
coverages as the Agent may request, subject only to Permitted
Liens and other Liens and exceptions approved by the Banks in
their sole discretion, in all cases constituting the
unconditional commitment of such title insurance company or
companies to issue title insurance policies in favor of the
Agent on the terms of such title insurance commitments promptly
after the recording by such title insurance company or companies
of the Deeds of Trust and Collateral Assignments of Leases.
(xi) The results of Lien searches of the appropriate public
offices, including the United States Patent and Trademark Office
and Copyright Office, demonstrating to the Agent's satisfaction
that no Lien is of record with respect to the Borrower or any
Guarantor except (A) Liens which will be terminated or released
upon the repayment of the Borrower's obligations under the
Existing Loan Agreement and (B) Permitted Liens.
(xii) Certificates of insurance, in form and substance
satisfactory to the Agent from an independent insurance broker
dated as of the Effective Date, identifying insurers, types of
insurance, insurance limits, policy terms, and identifying the
Agent (on behalf of the Banks) as additional insured and loss
payee.
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(xiii) The Borrower's Omnibus Certificate, duly executed by
Authorized Signatories on behalf of the Borrower.
(xiv) A Guarantor's Omnibus Certificate, on behalf of each of
the Guarantors, duly executed by Authorized Signatories on
behalf of each of such Persons.
(xv) The favorable opinion of Sherman and Howard L.L.C.
legal counsel to the Borrower and the Guarantors, substantially
in the form of EXHIBIT H-1 AND H-2 hereto and local counsel
opinions, substantially in form of EXHIBIT H-3 and otherwise
satisfactory to the Banks and the Agent, with respect to matters
involving the laws of Indiana.
(xvi) The articles or certificate of incorporation of the
Borrower and each Guarantor as in effect as of the Effective
Date, certified by the Secretary of State of its state of
incorporation.
(xvii) A good standing certificate or certificate of status
for the Borrower and each Guarantor from the Secretary of State
of its state of incorporation and each state where the Borrower
or such Guarantor is qualified to do business as a foreign
corporation as of a recent date.
(xviii) A Compliance Certificate, effective as of April 30,
1998, duly executed by the Borrower and certified as true and
correct by the Borrower.
(xix) Phase I Environmental Assessments of all of Borrower's
owned Real Property and Guarantors' owned Real Property
(excluding such parcels as the Agent may approve in its sole
discretion), in form and content and prepared by consultants,
reasonably acceptable to the Agent, indicating the absence of
conditions which would warrant a Phase II Environmental
Assessment of such Real Property.
(xx) An Assignment of Lease duly executed by Authorized
Signatories on behalf of the Borrower in the form of EXHIBIT F-5
pertaining to each of the Borrower's leased business premises.
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(xxi) An Assignment of Lease duly executed by each Guarantor
in the form of EXHIBIT F-5 pertaining to each of the Guarantor's
leased business premises.
(xxii) Such other documents as the Agent and the Banks may
reasonably request to effect the purposes of this Agreement and
the other Loan Instruments.
(b) The Deeds of Trust identified in (a)(iii) and (a)(vii) shall
have been duly recorded and the Uniform Commercial Code Financing
Statements and assignments of patents, trademarks and copyrights
identified in (a)(ix) above shall have been duly filed.
(c) The Agent shall have received evidence satisfactory to it
that all amounts due from the Borrower to the lender under the
Existing Loan Agreement have been paid in full out of the
proceeds of the Loans on the Effective Date, or provision for
payment thereof in a manner acceptable to the Agent in its sole
discretion, shall have been made by the Borrower and approved by
the Agent, and the Agent shall have received executed termination
statements, in form satisfactory for filing, evidencing the
termination of the security interests in the Borrower's
properties which secured the Existing Loan Agreement.
(d) The Borrower shall have paid to the Agent the Fees and all
fees and expenses set forth in SECTION 8.4, including, without
limitation, all accrued and unpaid legal fees and disbursements
and the reasonable estimate of the Agent of the attorneys fees
and disbursements incurred by it through the closing (provided
that such estimate shall not thereafter preclude final settling
of accounts between the Agent and the Borrower with respect to
attorneys fees and disbursements incurred by the Agent
hereunder).
SECTION 3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of
the Banks to make each Advance (including the initial Advance) shall be
subject to the satisfaction (or written waiver by the Required Banks in their
sole discretion) of the following further conditions precedent that on the
date of such Advance:
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(a) the following statements shall be true:
(i) Except as provided in SECTION 3.2(a)(ii), the
representations and warranties contained in SECTION 4.1 of
this Agreement and in the Guaranties, are correct on and as
of the date of such Advance, before and after giving effect
to such Advance and to the application of the proceeds
therefrom, as the case may be, as though made on and as of
such date;
(ii) The information contained in the Schedules to this
Agreement is correct, except that the Borrower may amend such
Schedules at the time of a Request for Advance if such amendment
to the Schedule does not disclose an Event of Default or a
Material Adverse Effect;
(iii) No event has occurred and is continuing, or would
result from such Advance or from the application of the
proceeds therefrom, which constitutes a Default or an Event
of Default hereunder;
(iv) No change shall have occurred in the financial
condition or business of the Borrower or any Guarantor which
would constitute a Material Adverse Effect; and
(v) With respect to an Acquisition Loan, the proceeds of
such Acquisition Loan Advance will be used only for the
purpose of making a Qualified Acquisition.
(b) the Agent shall have received a Request for Advance and such
other approvals, opinions or documents as the Agent may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
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(a) CORPORATE EXISTENCE. The Borrower is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Colorado. Each of MSE Corporation and ASI
Landmark, Inc. is a corporation duly incorporated, validly
existing and in good standing under the laws of the States of
Indiana and Colorado, respectively. The capital structure and
shareholders of the Borrower and the Guarantors are set forth in
SCHEDULE 4.1(a).
(b) POWERS, ETC. The Borrower and each of the Guarantors
(a) has the power and authority to carry on its business as now
conducted and to own or hold under lease the assets and
properties it purports to own or hold under lease; (b) is duly
qualified, licensed or registered to transact its business and is
in good standing in every jurisdiction in which failure to be so
qualified, licensed or registered could have a Material Adverse
Effect; (c) has the power and authority to execute and deliver
this Agreement and each of the other Loan Instruments to which it
is or will be a party and to perform all of its obligations
hereunder and thereunder; and (d) conducts its business under the
names (and only the names) set forth in SCHEDULE 4.1(B) hereto;
and (e) is qualified to do business in each of the states listed
on SCHEDULE 4.1(b).
(c) AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by the Borrower of each Loan Instrument to which it
is or will be a party are within the Borrower's powers, have been
duly authorized by all necessary corporate action, and do not
contravene (i) the Borrower's Articles of Incorporation or
Bylaws, (ii) any law or judgement, order, writ, injunction,
decree or consent of any court binding on or affecting the
Borrower, (iii) any contract to which the Borrower is a party, or
by which the Borrower or its properties are bound; and (iv) do
not result in or require the creation of any lien, security
interest or other charge or encumbrance (other than pursuant
hereto) upon or with respect to any of its properties. The
execution, delivery and performance by each of the Guarantors of
each Loan Instrument to which such Person is or will be a party
are within the such Person's respective corporate powers or
limited liability company, as applicable, have been duly
authorized by all necessary corporate or limited liability
company, as applicable,
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action by such Person, and do not contravene (i) such Person's
articles of incorporation or by-laws, or (ii) any law or any
contractual restriction binding on or affecting such Person, and do
not result in or require the creation of any lien, security interest
or other charge or encumbrance (other than pursuant hereto) upon or
with respect to any of such Person's properties.
(d) APPROVALS. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Borrower or the Guarantors of any Loan
Instrument to which any such Person is or will be a party all of
which have been duly obtained and are in full force and effect,
except as indicated in SCHEDULE 4.1(d).
(e) ENFORCEABILITY. This Agreement is, and each other Loan
Instrument to which the Borrower will be a party when delivered
hereunder will be, the legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its
terms. Each Loan Instrument to which each Guarantor will be a
party when delivered hereunder will be the legal, valid and
binding obligation of each such Person, enforceable against such
Persons, respectively, in accordance with its terms.
(f) FINANCIAL STATEMENTS. The audited consolidated balance
sheets of the Borrower and the Guarantors and the related
consolidated statements of income and retained earnings of the
Borrower and the Guarantors as of September 30, 1997 for the
Fiscal Year then ended, and the unaudited balance sheets of the
Borrower and the Guarantors as at March 31, 1998, and the related
consolidated statements of income and retained earnings of the
Borrower and Guarantors for the Fiscal Quarter then ended, copies
of which have been furnished to the Banks, fairly present the
consolidated financial position of the Borrower and the
Guarantors as of such date and the consolidated results of the
operations of the Borrower and the Guarantors for the period
ended on such date, all in accordance with Regulation S-X
promulgated under the Securities Exchange Act of 1934, and since
September 30, 1997, there has been no material adverse change in
such condition or operations except as disclosed in
SCHEDULE 4.1(f) hereto.
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(g) LITIGATION. Except as set forth in SCHEDULE 4.1(g) hereto,
there is no pending, or to the Borrower's knowledge, threatened
action or proceeding affecting the Borrower or any of its
properties or business activities or any of the Guarantors or
their respective properties or business activities, before any
court, governmental agency or arbitrator, in which there is a
reasonable possibility of a Material Adverse Effect or which
purports to affect the legality, validity or enforceability of
this Agreement or any Loan Instrument to which the Borrower or
any Guarantor will be a party.
(h) FEDERAL RESERVE REGULATIONS. None of the Advances to be
provided to the Borrower hereunder will be used in violation of
Regulations T, U or X. The Borrower is not engaged in the
business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock
(within the meaning of Regulations T, U and X). No part of the
proceeds of any extension of credit hereunder, whether directly
or indirectly, and whether immediately, incidentally or
ultimately, will be used (i) to purchase or carry Margin Stock or
to extend credit to others for the purpose of purchasing or
carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails
a violation of, or which is inconsistent with, the provisions of
the Regulations of the Board of governors of the Federal Reserve
system, including Regulations T, U or X.
(i) INVESTMENT COMPANY ACT. The 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.
(j) ERISA.
(i) The Borrower and Guarantors neither maintain nor
contribute to any Employee Benefit Plan or Multiemployer
Plan other than those specified in SCHEDULE 4.1(j).
(ii) The Borrower and the Guarantors are in compliance in
all material respects with all applicable provisions of ERISA
and the Code with
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respect to all Employee Benefit Plans. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service
to be so qualified, and each trust related to such Plan has
been determined to be exempt from federal income tax under
Section 501(a) of the Code. The actuarial present value of
all accumulated benefit obligations under each Plan, as
disclosed in the most recent actuarial report with respect to
such Plan, do not exceed the fair market value of the assets
of such Plan. No material liability has been incurred by the
Borrower, any Guarantor or any of their ERISA Affiliates which
remains unsatisfied for any taxes, penalties or other amount
(other than contributions in the ordinary course) with respect
to any Employee Benefit Plan or any Multiemployer Plan, and to
the best knowledge of the Borrower no such material liability
is expected to be incurred.
(iii) The Borrower and the Guarantors have not
(a) engaged in a nonexempt prohibited transaction described
in Section 406 of ERISA or Section 4975 of the Code;
(b) incurred any liability to the Pension Benefit Guaranty
Corporation which remains outstanding other than the payment
of premiums and there are no premium payments which are due
and unpaid; (c) failed to make a required contribution or
payment to a Multiemployer Plan; or (d) failed to make a
required installment or other required payment under
Section 412 of the Code.
(iv) No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan or Multiemployer
Plan maintained or contributed to by the Borrower or any
Guarantor.
(v) No material proceeding, claim (other than routine
claims for benefits) lawsuit and/or investigation is
existing or, to the Borrower's knowledge, threatened
concerning or involving any Employee Benefit Plan or
Multiemployer Plan maintained or contributed to by the
Borrower or any Guarantor.
(k) COMPLIANCE WITH LAWS. The Borrower and the Guarantors are
in compliance with all applicable laws,
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ordinances, treaties, rules, regulations and orders of, and all
applicable restrictions imposed by, all Governmental Authorities in
respect of the conduct of their respective businesses and the
ownership of their respective properties, except such noncompliance
as would not, individually or in the aggregate, have a Material
Adverse Effect.
(l) PAYMENT OF DEBTS AND TAXES.
(i) The Borrower and each Guarantor: (a) has filed all
required federal, state and local tax returns with
appropriate taxing authorities respecting its operations,
assets and properties; and (b) has paid or caused to be paid
all taxes shown on those returns to the extent due, and has
paid all tax or other assessments imposed by Governmental
Authorities, except in either case taxes which are being
contested in good faith and for which adequate bonds or
other sureties as required by law have been posted by the
Borrower or Guarantor.
(ii) The Borrower and each Guarantor is current in its
payment of Debts (other than Debt in an aggregate amount not
to exceed $1,000,000.00) and performance of material
obligations under Material Agreements except those being
contested in good faith.
(m) INDEBTEDNESS, GUARANTIES.
(i) SCHEDULE 4.1(m), PART I contains a complete and
accurate list of all Debt of the Borrower and each of the
Guarantors, whether individual, joint, several or otherwise,
and whether fixed or contingent, including commitments,
lines of credit and other credit availabilities, identifying
with respect to each the respective parties, amounts and
maturities.
(ii) SCHEDULE 4.1(m), PART II contains a complete and
accurate list of all guarantees or other surety arrangements
or undertakings of the Borrower and each of the Guarantors
for obligations of any other Person (except for negotiable
instruments endorsed for collection or deposit in the
ordinary course of business),
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whether individual, joint, several or otherwise, identifying
with respect to each of the parties, amounts and maturities.
(n) MATERIAL AGREEMENTS. Except as set forth in
SCHEDULE 4.1(n), and except for the Loan Instruments, the
Borrower and the Guarantors are not a party to any Material
Agreements. The Borrower and each Guarantor is in compliance
with all Material Agreements and has not received any notices
from counter parties thereto asserting violations of any such
Material Agreements by the Borrower or any Guarantor or asserting
rights to terminate or modify any of such Material Agreements.
(o) PROPERTIES, INVENTORY AND EQUIPMENT. The Borrower owns or
leases the real property identified in PART I of SCHEDULE 4.1(o)
(the "BORROWER'S REAL PROPERTY") and owns the Equipment and
Inventory in the states identified in SCHEDULE 4.1(o). The
Guarantors own or lease the real property identified in PART II
of SCHEDULE 4.1(o) (the "GUARANTORS' REAL PROPERTY") and own the
Equipment and Inventory in the states identified in
SCHEDULE 4.1(o). The Borrower's Equipment and Inventory is
located in the states set forth in PART I of SCHEDULE 4.1(o).
The Guarantors' Equipment and Inventory is located in the states
listed in PART II of SCHEDULE 4.1(o). The Borrower has good,
marketable and insurable title to, or valid leasehold interests
in, all of Borrower's owned Real Property and good title to
Borrower's Equipment and the other assets of the Borrower, free
and clear of all Liens, other than the Liens identified in
PART III of SCHEDULE 4.1(o) and other Permitted Liens. The
Guarantors have good, marketable and insurable title to, or valid
leasehold interests in, all of Guarantors' Real Property and good
title to Guarantors' Equipment and the other assets of the
Guarantors, free and clear of all Liens, other than the Liens
identified in PART IV of SCHEDULE 4.1(o) and other Permitted
Liens.
(p) FINANCIAL CONDITION. Neither the Borrower nor any Guarantor
is entering into the arrangements contemplated by this Agreement
and the other Loan Instruments with actual intent to hinder,
delay or defraud either present or future creditors of the
Borrower or any Guarantor. On and as of the date of execution
hereof by the Borrower, and on and as of the date of each Advance
hereunder by the Banks, on a pro-forma basis
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after giving effect to the transactions contemplated by the Loan
Instruments and to all indebtedness (including Debt) incurred or
to be created in connection herewith:
(i) the present fair saleable value of the assets of the
Borrower and each Guarantor, respectively, (on a going
concern basis) will exceed the probable liability of the
Borrower and each Guarantor, respectively, on its
indebtedness (including Debt and contingent obligations);
(ii) the Borrower and each Guarantor, respectively, has
not incurred, nor does Borrower intend to or believe it will
incur, nor will Borrower permit any Guarantor to incur
indebtedness (including Debt and contingent obligations)
beyond its ability to pay such indebtedness as such
indebtedness matures (taking into account the timing and
amounts of cash to be received from any source, and of
amounts to be payable on or in respect of such
indebtedness); and the amount of cash available to the
Borrower and Guarantors after taking into account all other
anticipated uses of funds is anticipated to be sufficient to
pay all such amounts on or in respect of its respective
indebtedness (including Debt and contingent liabilities)
when such amounts are required to be paid; and
(iii) the Borrower and each Guarantor will have sufficient
capital with which to conduct its present and proposed
business, and the assets of the Borrower and each Guarantor,
respectively, do not constitute unreasonably small capital
with which to conduct its present or proposed business.
(q) INSURANCE. The Borrower and each of the Guarantors
currently maintains with financially sound and reputable insurers
insurance concerning its assets and business, with such
deductibles and retentions and having coverages against risks,
losses or damages as are customarily carried by reputable
companies in the same or similar businesses, such insurance being
in amounts no less than those amounts which are customary for
such companies under similar circumstances, which third-party
insurance coverages are identified in SCHEDULE 4.1(q).
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(r) FULL DISCLOSURE. No representation or warranty contained in
this Agreement or in any other Loan Instrument to which the
Borrower is a party, or in any other document furnished from time
to time by the Borrower to the Bank pursuant to this Agreement,
contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements herein
or therein not misleading in any material respect as of the date
made or deemed to be made. Except as may be set forth herein or
in any of the Schedules hereto or in the certificates and
information furnished pursuant to SECTION 5.1(b), there is no
fact known to the Borrower which has had, or is reasonably
expected to have, a Material Adverse Effect.
(s) NO DEFAULT. No Default or Event of Default has occurred and
is continuing.
(t) STATUS OF LOANS AS SENIOR DEBT. All Debt of the Borrower to
the Banks and the Agent in respect of the Loans constitutes
"Senior Debt" or "Senior Indebtedness" (or the analogous term
used therein) under the terms of any instrument evidencing or
pursuant to which there is issued indebtedness which purports to
be Debt of the Borrower.
(u) SWAP OBLIGATIONS. Neither the Borrower nor any of its
Subsidiaries has incurred any outstanding obligations under any
Swap Contracts, other than Permitted Swap Obligations. The
Borrower has undertaken its own independent assessment of its
consolidated assets, liabilities and commitments and has
considered appropriate means of mitigating and managing risks
associated with such matters and has not relied on any swap
counterparty or any Affiliate of any swap counterparty in
determining whether on not to enter into any Swap Contract.
(v) FRANCHISES, PATENTS, COPYRIGHTS, ETC. The Borrower and the
Subsidiaries possess all franchises, patents, copyrights,
trademarks, trade names, licenses and permits, and rights in
respect of the foregoing, adequate for the conduct of their
business as now conducted without known conflict with any rights
of others.
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ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.1 AFFIRMATIVE COVENANTS. So long as any of the Notes
shall remain unpaid, or the Banks shall have any Commitment hereunder, or
any obligation of the Borrower or any Guarantor hereunder or under any Loan
Instrument has not been fully performed, the Borrower will, unless the
Required Banks shall otherwise consent in writing:
(a) USE OF PROCEEDS. Subject to compliance by the Borrower with
all of the terms and conditions hereof, use the Advances
exclusively to pay amounts due under the Existing Loan Agreement,
to make Qualified Acquisitions and for any corporate purpose of
the Borrower or any Guarantor.
(b) REPORTING AND NOTICE REQUIREMENTS. Provide to the Agent:
(i) as soon as available, and in any event within 90 days
after the end of each Fiscal Year of the Borrower, audited
consolidated statements of income, retained earnings and
cash flows for the Borrower and its Subsidiaries for such
Fiscal Year and the related audited consolidated balance
sheets of the Borrower and its Subsidiaries as of the end of
such Fiscal Year, setting forth in comparative form the
corresponding consolidated figures for such Fiscal Year and
the prior Fiscal Year, each accompanied by a report of the
Borrower's independent public accountants (who shall be a
nationally recognized firm or otherwise satisfactory to the
Agent), which reports shall state that such consolidated
financial statements fairly present the consolidated
financial position and results of operations of the Borrower
and its Subsidiaries in accordance with GAAP without
material qualification;
(ii) simultaneously with the delivery of the annual
financial statements referred to in SECTION 5.1(b)(i) above,
a report of the independent auditors who audited such
statements stating that, in connection with their audit of
such statements (and without conducting any procedures other
than those customarily conducted
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in a year-end audit), such auditors have obtained no knowledge
of any condition or event which constitutes a Default or Event
of Default hereunder, or if such auditors have obtained
knowledge of any such condition or event, specifying in such
report each such condition or event of which they have
knowledge and the nature and status thereof; PROVIDED,
HOWEVER, that such auditors shall not be liable to the Banks
by reason of any failure to obtain knowledge of any condition
or event which constitutes a Default or Event of Default that
would not be disclosed in the course of their audit
examination;
(iii) as soon as available, and in any event within
90 days after the end of each Fiscal Year of the Borrower,
(a) a consolidated annual budget, broken down quarterly, for
the Borrower and the Guarantors for the following Fiscal
Year, and (b) an operating plan for the Borrower and the
Guarantors for the then current Fiscal Year and the four
following Fiscal Years, all in a form and at a level of
detail reasonably acceptable to the Agent;
(iv) within 45 days after the conclusion of each Fiscal
Quarter of the Borrower, a Compliance Certificate signed by
the chief executive officer or chief financial officer of
the Borrower,(a) to the effect that no Default or Event of
Default is in existence, (b) setting forth in reasonable
detail the computations necessary to demonstrate compliance
by the Borrower with the financial covenants set forth in
SECTION 5.2(a), (c) the computations in reasonable detail of
the ratio of Total Debt to Trailing Four Quarter EBITDA
ratio referred to in the definitions of Applicable Margin
and Commitment Fee Rate and (d)(if applicable)
reconciliations to reflect any relevant changes in GAAP
since the Effective Date;
(v) as soon as available, and in any event within 45 days
after the end of each Fiscal Quarter, (a) a Form 10-K or 10-Q,
as applicable, filed by the Borrower with the Securities
and Exchange Commission; and (b) a backlog summary report in
form and substance reasonably satisfactory to the Agent;
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(vi) within 45 days after the end of each Fiscal
Quarter a listing and aging of all Accounts Receivable of
the Borrower and the Guarantors (with all of the foregoing
to be in form and at a level of detail reasonably acceptable
to the Agent);
(vii) at least 30 days prior to the acquisition date of
a proposed Qualified Acquisition, notice identifying the
Person to be acquired and such information concerning the
Person as the Agent may request in order to prepare the
Collateral Documents referred to in SECTION 5.1(n);
(viii) within 20 days after the date of acquisition of a
Qualified Acquisition, (a) a Compliance Certificate, as of
the last day of the month immediately preceding the date of
acquisition of the Qualified Acquisition, for the Borrower
and the acquired Person on a pro-forma basis and (b) a
certificate, in form and level of detail reasonably
acceptable to the Agent, establishing compliance with the
definition of Qualified Acquisition, all signed by the chief
executive officer or chief financial officer of the
Borrower;
(ix) promptly upon the request of the Agent, copies of
all "management letters" received by the Borrower from the
Borrower's independent accountants;
(x) as soon as possible, and in any event within 5 days
after the Borrower knows or has reason to know thereof,
notice of any ERISA Event, describing the same in reasonable
detail;
(xi) promptly upon the occurrence thereof, notice of
any Default or Event of Default describing the same in
reasonable detail, together with a report concerning the
steps which the Borrower is taking or will take to remedy
such Default or Event of Default;
(xii) promptly on the occurrence thereof, notice of any
Material Adverse Effect describing the same in reasonable
detail, together with a
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report concerning the steps which the Borrower is taking or
will take to eliminate such Material Adverse Effect;
(xiii) promptly after receipt of written request from the
Agent or the Required Banks, such other information
concerning the Borrower or any of the Guarantors, and
concerning their respective businesses, operations, assets
or financial condition (including accounts payable listings
and agings, fixed asset schedules and information concerning
leases) as the Agent or Required Banks may reasonably
request; provided that so long as no Event of Default has
occurred, such request for information shall be limited to
one request per month; and
(xiv) promptly upon the occurrence thereof, notice of
all changes in the articles of incorporation or bylaws of
the Borrower or any of the Guarantors, or the employment
status with the Borrower or Guarantors of Sidney V. Corder
or Scott C. Benger;
(xv) promptly after the furnishing thereof to the
shareholders of the Borrower copies of all financial
statements, reports and proxy statements so furnished; and
(xvi) promptly upon the filing thereof, copies of all
registration statements and annual, quarterly, monthly or
other regular reports which the Borrower or any of its
Subsidiaries files with the Securities and Exchange
Commission.
(c) MAINTENANCE OF EXISTENCE, ETC. Except as provided in
SECTION 5.2(b), maintain its corporate existence and cause each
Guarantor to maintain its corporate existence, and maintain and
cause each Guarantor to maintain their respective material
rights, privileges and franchises.
(d) COMPLIANCE WITH LAWS. Comply and cause each Guarantor to
comply in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over each such
Person or their respective business, except where the failure to
comply would not have a Material Adverse Effect.
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(e) INSURANCE.
(i) Maintain the third-party insurance identified in
SCHEDULE 4.1(q), PROVIDED, HOWEVER, that in no event shall
such insurance be for an amount less than the replacement
cost of the assets so insured.
(ii) Without limiting the obligations of the Borrower
under this SECTION 5.1(e), in the event the Borrower fails
to maintain the insurance required by the foregoing
provisions of this SECTION 5.1(e), then the Banks may, but
shall have no obligation to, procure insurance covering the
interests of the Banks, in such amounts and against such
risks as the Banks shall deem appropriate, and the Borrower
will reimburse the Banks in respect of any premiums paid by
the Banks as provided in SECTION 8.4.
(f) MATERIAL AGREEMENTS. Perform, and cause all Guarantors to
perform, all of each such Person's obligations under the Material
Agreements in substantial compliance with all terms and
conditions thereof.
(g) OBLIGATIONS AND TAXES. Pay and cause all Guarantors to pay
each such Person's Debt in excess of $1,000,000 and other
obligations in accordance with their terms and pay and discharge
promptly all Federal and State and local taxes, and all
governmental assessments and charges or levies imposed upon any
such Person or upon such Person's income or profits or in respect
of its assets or business, or in any event before the same shall
become delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise which, if unpaid,
might give rise to a Lien upon such properties or any part
thereof; PROVIDED, HOWEVER, that such payment and discharge shall
not be required so long as the validity or amount thereof shall
be contested in good faith by appropriate proceedings and the
Borrower or such Guarantor, as applicable, shall have set aside
on its books adequate reserves in accordance with GAAP with
respect thereto.
(h) MAINTAINING RECORDS; ACCESS TO PROPERTIES AND INSPECTIONS.
Maintain, and cause all Guarantors to
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maintain, all financial records in accordance with GAAP and permit,
and cause all Guarantors to permit, after two weeks notice unless
an Event of Default has occurred, any Bank employees or other
representatives designated by the Agent or the Required Banks to
visit and inspect the properties of the Borrower or of any
Guarantor, and to inspect their respective financial and business
records and make extracts therefrom and copies thereof, all at
reasonable times and in a manner so as not to unreasonably disrupt
the operations of the Borrower or of such Guarantors and as often
as reasonably requested, and permit, and cause such Guarantors to
permit, any such employees or representatives to discuss the
affairs, finances and condition of the Borrower and Guarantors with
the officers and other representatives thereof, including the
Borrower's independent accountants if a representative of the
Borrower is present and if the Agent has notified the Borrower not
less than 24 hours prior to such meeting of the issues that will be
discussed.
(i) ENVIRONMENTAL AND SAFETY MATTERS.
(i) Comply and cause all Guarantors to comply with all
Environmental and Safety Laws applicable to the Borrower and
the Guarantors, respectively, in all material respects.
(ii) Keep its properties and facilities and cause all
Guarantors to keep their facilities and properties free from
any Liens arising under any applicable Environmental and
Safety Laws.
(iii) If the Banks at any time have reason to believe
that any property or facility owned or operated by the
Borrower or any Guarantor has been or may be operated in
violation of any Environmental or Safety Laws applicable
thereto or contaminated with any Hazardous Materials in
excess of levels allowed by Environmental or Safety Laws or
subject to any government-imposed obligation to conduct any
environmental investigation or clean-up, any of which in the
good faith judgement of the Banks may impair in any material
respect the ability of the Borrower or any Guarantor to
satisfy any obligations of the Borrower hereunder or under
any Loan Instrument,
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the Borrower shall, upon the written request of the Banks, at
the Borrower's sole cost and expense, conduct such
investigation or study, through retention of a consulting firm
reasonably satisfactory to the Banks, as is necessary in the
good faith judgment of the Banks to demonstrate that no such
impairment could reasonably be expected to have a Material
Adverse Effect.
(j) DEPOSIT BALANCES. Maintain, and cause the Guarantors to
maintain, their respective primary operating, payroll and
investment deposit account balances with the Agent or its
Affiliates, except for accounts maintained in locations where the
Agent and its Affiliates have no bank.
(k) INTEREST RATE PROTECTION. If after the Effective Date an
issuance or sale of the equity securities of the Borrower
resulting in Net Proceeds to the Borrower of $20,000,000 or more
has not occurred by September 30, 1998, enter into as of
September 30, 1998 and maintain during the time that any Loan is
outstanding, interest rate protection, subject to an Interest
Rate Protection Agreement in form and substance satisfactory to
the Agent, in an amount to be negotiated by the Borrower and the
Agent.
(l) SURVEYS. At its expense provide to the Agent, on or before
May 31, 1998, a current ALTA/ACSM survey of the real property
described in the Deeds of Trust prepared by a surveyor acceptable
to the Agent showing the legal description of the land, the
location of all improvements thereon, the location of any
recorded easements or other restrictions affecting the land, the
flood plain status of the land and a description and the date of
the map or maps reviewed.
(m) AUDIT OF ACCOUNTS RECEIVABLE AND INVENTORY.
(i) No more often than annually, so long as there is
no Event of Default, permit, and cause the Guarantors to
permit, the Agent or representatives of the Agent to conduct
during regular business hours a field examination and
inspection of the Collateral, and to audit and copy all of
the Borrower's and the Guarantors' financial books, records,
journals and other records and data relating to the
Collateral to the
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extent that the Agent deems necessary in regard to the Banks'
rights under the Loan Instruments.
(ii) Promptly pay or reimburse the Agent for the
actual cost of all field examinations and audits including
all out of pocket expenses for travel, food and lodging.
(n) ADDITIONAL PLEDGES AND GUARANTORS. Within ten (10) Business
Days after any Person becomes a Subsidiary of the Borrower,
(i) The Borrower shall grant to the Agent on behalf of
the Banks, a pledge of 100% of the shares of capital and
voting stock of such Person owned by the Borrower and the
Guarantors pursuant to a Pledge Agreement and execute and
deliver to the Agent such Pledge Agreement, original stock
certificates subject thereto and stock powers therefor.
(ii) Such Person shall execute and deliver to the
Agent a Guaranty, Deed of Trust, Pledge Agreement, Security
Agreement, Collateral Assignment of Leases, Assignment of
Lease, Landlord's Waiver and Consent, and Uniform Commercial
Code Financing Statements pertaining to all of such Person's
real and personal property, both tangible and intangible,
all in form and substance satisfactory to the Agent.
(iii) Borrower, at its expense, shall provide to Agent
(A) title insurance as provided under SECTION 3.1(a)( )
with respect to such Person's owned real property, (b) a
current ALTA/ACSM survey as provided under SECTION 5.1 ( )
with respect to such Person's owned real property,(C)Phase I
Environmental Assessments with respect to such Person's
owned real property as provided under SECTION 3.1(a) ( ),
(D) certificates of insurance, in form and substance
satisfactory to the Agent, from an independent insurance
broker identifying insurers, types of insurance, insurance
limits, policy terms, and identifying the Agent (on behalf
of the Banks) as additional insured and loss payee with
respect to such Person's property, and (E) such other
documents as the Agent and the Bank's may request
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with respect to such Person's property to effect the purposes of
this Agreement and the other Loan Instruments.
(iv)Borrower shall pay all reasonable legal fees,
disbursements and expenses incurred by the Agent in
connection with the preparation, execution, delivery,
recording and filing of the Loan Instruments described in
this SECTION 5.2(n).
(o) YEAR 2000 COMPATIBILITY. Take all action necessary to
ensure that the computer based systems of the Borrower and
its Subsidiaries are able to operate and effectively process
data including dates on or after January 1, 2000, except
that such action shall not be required to the extent that
failure to take such action would not have a Material
Adverse Effect. At the request of the Agent, the Borrower
shall provide assurance reasonably acceptable to the Agent
of the year 2000 compatibility of the Borrower and its
Subsidiaries.
(p) LANDLORD'S WAIVER AND CONSENT. Promptly, but in no event
more than 30 days after the Effective Date, use commercially
reasonable efforts to provide a Landlord's Waiver and
Consent, in form and substance satisfactory to the Agent,
for each of the Borrower's or Guarantor's leased business
premises, executed by the landlord for such premises.
(q) FURTHER ASSURANCES. Execute and deliver such further
documents and do such other acts and things as the Banks may
reasonably request in order to effect fully the purposes of
this Agreement and each of the other Loan Instruments and to
provide for payment of the Loans and all other amounts due
hereunder within the scope of this Agreement.
SECTION 5.2 NEGATIVE COVENANTS. So long as any of the Notes shall
remain unpaid, or the Banks shall have any Commitment hereunder, or any
obligation of the Borrower or any Guarantor hereunder or under any Loan
Instrument has not been fully performed, the Borrower will not, unless the
Required Banks shall otherwise consent in writing:
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(a) FINANCIAL COVENANTS.
(i) MAXIMUM TOTAL DEBT TO EBITDA RATIO. Permit, as of the
end of any Fiscal Quarter, for Borrower and all Subsidiaries on a
consolidated basis a ratio of (y) Total Debt to (z) Trailing
Four Quarter EBITDA to be greater than
<TABLE>
TIME PERIOD MAXIMUM RATIO
<S> <C>
From the Effective
Date to September
29, 1998 3.00:1.00
September 30, 1998
to September 29,
1999 2.50:1.00
September 30, 1999
and thereafter 2.00:1.00
</TABLE>
(ii) MINIMUM FIXED CHARGE COVERAGE RATIO. Fail to
maintain a ratio of Trailing Four Quarter EBITDA to Fixed Charges
of less than 1.3:1.0.
(iii) MINIMUM NET INCOME. Fail to earn Net Income for two (2)
consecutive Fiscal Quarters.
(iv) MAXIMUM ANNUAL CAPITAL EXPENDITURES. During any
Fiscal Year, make Capital Expenditures for the Borrower and all
Subsidiaries on a consolidated basis in excess of $4,000,000.
(v) MINIMUM EBITDA. Fail to maintain for the Borrower and
all Subsidiaries on a consolidated basis a minimum Trailing Four
Quarter EBITDA of $10,000,000.
(b) PROHIBITION OF FUNDAMENTAL CHANGES. Effect, or permit to be
effected with respect to any Guarantor, any transaction of
merger, consolidation, recapitalization, reorganization,
liquidation or dissolution except any Subsidiary may merge,
consolidate or reorganize with, or liquidate and transfer its
assets to,(i) the Borrower, provided that the Borrower is the
continuing
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or surviving corporation or (ii) any Subsidiary provided that if
any transaction shall be between a Guarantor and a Subsidiary, the
Guarantor shall be the continuing or surviving corporation, and in
each case no Default or Event of Default has occurred and is
continuing or no Material Adverse Effect has occurred.
(c) LIMITATION ON LIENS. Create or suffer to exist, or permit
any Guarantor to create or suffer to exist, any Liens on any
assets of any such Person, except for Permitted Liens.
(d) DEBT. Create, incur or suffer to exist, or permit any
Guarantor to create, incur or suffer to exist, any Debt except,
(i) Debt hereunder, (ii) intercompany Debt (iii) Debt of such
Persons in effect on the date hereof as reflected in the
financial statements identified in Section 4.1(f), (iv) Debt
consisting of trade payables incurred in the ordinary course of
business and (v) other Debt in the aggregate principal amount of
$4,000,000.00.
(e) GUARANTEES. Create or become liable, directly or
indirectly, or permit any Guarantor to create or become liable,
directly or indirectly, with respect to any guarantee of the
obligation of any other Person except, (i) guarantees resulting
from the endorsement of instruments for collection in the
ordinary course of business,(ii) guarantees in effect on the date
hereof and disclosed in the financial statements identified in
SECTION 4.1(f), (iii) the Guaranties of the Guarantors in favor
of the Bank as contemplated hereby and (iv) guarantees of
performance or obligations of any Subsidiary by the Borrower, if
such obligations were directly incurred or maintained by the
Borrower would not violate any provision of any Loan Instrument.
(f) INVESTMENTS, LOANS, ADVANCES, ETC. The Borrower shall not
directly or indirectly purchase or otherwise acquire, hold or
invest in the securities of any Person, acquire control of any
Person, make loans or advances or enter into any agreement or
other arrangement for the purpose of providing funds or credit to
any Person (other than guaranties permitted hereunder), or enter
into any partnership, joint venture or other entity or business
arrangement with or make any equity investment in any Person, or
offer or agree to do so, and will not permit any Guarantor to do
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so except for: (i) securities issued by any of its Subsidiaries;
(ii) loans or advances between the Borrower and any wholly owned
Subsidiary; (iii) securities issued or guarantied by the United
States of America; (iv) except as provided in SECTION 5.1(j), and
deposit accounts for payment of ordinary course of business
expenses by the Borrower and Guarantors, with respect to which no
limits concerning the deposit bank apply, deposits in domestic
commercial banks that have, or are members of a group of domestic
commercial banks that has, consolidated total assets of not less
than one billion dollars, or investments in the certificates of
deposit, commercial paper or other permissible market rate
instruments offered by any such bank, the holding company of any
such bank or subsidiary of any such holding company; (v) normal
business banking accounts in federally insured institutions in
amounts not exceeding the limits of such insurance; (vi) commercial
paper or other short-term debt securities rated not less than "A"
or its equivalent by Standard & Poor's Corporation or Moody's
Investors Service, Inc.; (vii) investments constituting Permitted
Swap Obligations or payments or advances under Swap Contracts
relating to Permitted Swap Obligations; (viii) overnight cash
management services offered under the Agent's Corporate Cash
program; (ix) Qualified Acquisitions and (x) other investments not
exceeding $500,000 in the aggregate at any one time in Persons that
are not Affiliates of the Borrower or any Guarantor.
(g) SALES OF ASSETS. Make any Disposition of assets of the
Borrower, or permit any Guarantor to make any Disposition of
assets of such Guarantor other than (i) sales of inventory in the
ordinary course of business or (ii) Dispositions of obsolete or
surplus equipment or other assets or (iii) up to $1,000,000 in
fair market value of other Dispositions each Fiscal Year, or (iv)
Dispositions of its assets to the Borrower or a Subsidiary.
(h) TRANSACTIONS WITH AFFILIATES. Except for transactions
existing on the Effective Date, enter into or permit any
Subsidiary to enter into any transaction or series of
transactions, whether or not related or in the ordinary course of
business of the Borrower, with any Affiliate of the Borrower or
any Subsidiary (except for transactions between the Borrower and
its
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Subsidiaries and between wholly owned subsidiaries of the
Borrower and a Subsidiary), other than pursuant to the reasonable
requirements of the Borrower's or such Subsidiaries's business
and on terms and conditions no less favorable to the Borrower or
any Subsidiary than would be obtainable by the Borrower or any
Subsidiary at the time in a comparable arm's-length transaction
with a Person not an Affiliate of the Borrower or any Subsidiary.
(i) MODIFICATION OF CERTAIN DOCUMENTS; PERFORMANCE OF MATERIAL
AGREEMENTS. Amend its articles of incorporation or bylaws in a
manner adverse to the Bank; or amend, modify, cancel, terminate,
waive any default under or breach of, in any manner any Material
Agreement other than in the ordinary course of business or permit
any Guarantor to do any of the foregoing; or enter into any new
agreement that is inconsistent with the obligations of the
Borrower or Guarantor under any Loan Instrument to which such
Person is a party, without the prior written consent of the
Required Banks, which consent shall not be unreasonably withheld.
The Borrower further agrees that it will not be in default under,
or otherwise fail to perform and will not permit any Guarantor to
be in default under or
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otherwise fail to perform all of its material obligations under
any of the Material Agreements to which any such Person is a
party.
(j) DIVIDENDS. Declare or pay or permit any Guarantor to
declare or pay cash or stock dividends or other distributions
with respect to the Borrower's stock or Guarantor's stock, except
that () any Guarantor may declare and pay dividends and make
distributions to the Borrower and (ii) the Borrower may declare
and pay a dividend payable solely in the capital stock of the
Borrower.
(k) ACCOUNTING. Change, or permit any Guarantor to change its
respective Fiscal Years or accounting methods or practices
(except to conform to changes in GAAP). If any preparation of
the financial statements referred to in SECTION 4.1(f), hereafter
occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial
Accounting Standards Board or the American Institute of Certified
Public Accountants (or successors thereto or agencies with
similar functions) result in a material change in the method of
calculation of financial covenants, standards or terms found in
this Agreement, the Borrower will, and will cause each Guarantor
to, enter into good faith negotiations with the Bank in order to
amend such provisions so as to equitably reflect such changes
with the desired result that the criteria for evaluating the
Borrower's consolidated financial condition shall be the same
after such changes as if such changes had not been made. Unless
and until such provisions have been so amended, the provisions of
this agreement shall govern and the financial covenants hereunder
shall be calculated using GAAP as in effect prior to such
changes.
(l) CHANGE OF ADDRESS; BUSINESS NAME(S). Except upon not less
than 30 days prior written notice to the Agent, change or permit
any Guarantor to change the address at which the Borrower or such
Guarantor maintains its chief executive offices and principal
place of business; nor conduct its business activities under any
names other than those set forth SCHEDULE 4.1(b) hereto unless
the Borrower notifies the Agent of any such new name not less
than 30 days prior to beginning use of such new name, except that
no more than seven days notice shall be required in the case of
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a new name resulting from an acquisition of a business or assets by
the Borrower.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT. Each of the following events shall
constitute an Event of Default hereunder:
(a) PAYMENTS UNDER THE AGREEMENT AND THE NOTES. The Borrower
shall fail to pay any principal of, or interest on, the Notes
when the same become due and payable or the Borrower shall fail
to pay any Fees or other amount due the Bank from the Borrower
hereunder and such failure, in the case of a payment other than a
payment of principal shall continue for three (3) Business Days.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made by the Borrower or any of the Guarantors (or any of
their respective officers, if applicable) under or in connection
with any Loan Instrument shall prove to have been incorrect in
any material respect when made.
(c) OTHER LOAN INSTRUMENT OBLIGATIONS. (i) The Borrower shall
fail to perform or observe any term, covenant or agreement
contained in SECTION 5.2, or (ii) the Borrower shall fail to
perform or observe any term, covenant or agreement contained in
any Loan Instrument to which it is a party (other than any such
failures addressed by SUBSECTIONS (a), (b) and (c)(i) above in
this SECTION 6.1) and such failure continues unremedied for a
period of 15 days after the Borrower receives notice or otherwise
has actual knowledge thereof, or (iii) any Guarantor shall fail
to perform or observe any term, covenant or agreement contained
in any Loan Instrument to which it is a party, and such failure
under CLAUSE (i), (ii) or (iii) continues unremedied for a period
of 15 Business Days after such Person receives notice or
otherwise has actual knowledge thereof.
(d) OTHER DEBT. The Borrower or any Guarantor shall fail to pay
any principal of or premium or interest on
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any Debt which is outstanding in a principal amount of at least
$1,000,000 in the aggregate (but excluding Debt evidenced by the
Notes) of such Person, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall
be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior
to the stated maturity thereof.
(e) INSOLVENCY. The Borrower or any of the Guarantors shall
generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or
any of the Guarantors seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial
part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of
45 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its
property) shall occur; or Borrower or any Guarantor shall take
any corporate action to authorize any of the actions set forth
above in this SUBSECTION (e).
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(f) JUDGMENTS. Any non-interlocutory judgment or order for the
payment of money which is not covered by existing insurance in
excess of $1,000,000 shall be rendered against the Borrower or
any Guarantor and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of thirty (30) consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect.
(g) TERMINATION OF CERTAIN LOAN INSTRUMENTS. Any provision of
this Agreement, the Notes, or any of the Collateral Documents
shall for any reason cease to be valid and binding on the
Borrower or Guarantors (as the case may be), or the Borrower or
any of the Guarantors shall so state in writing.
(h) COLLATERAL LIENS. The Deeds of Trust, Security Agreements,
Pledge Agreement or Collateral Assignment of Leases shall, after
delivery thereof by the Borrower or any Guarantor pursuant
hereto, for any reason (other than pursuant to the terms thereof)
cease to create a valid and perfected first priority security
interest in favor of the Agent in any of the collateral purported
to be covered thereby.
(i) CHANGE OF CONTROL. There occurs any Change of Control.
SECTION 6.2 BANK'S RIGHTS UPON AN EVENT OF DEFAULT. Upon the
occurrence and during the continuation of any Event of Default the Agent
(i) may, by notice to the Borrower, declare the obligation of the Banks to
make Advances to be terminated, whereupon the same shall forthwith
terminate, (ii) may, by notice to the Borrower, declare the Notes, all
accrued interest on the Loans and all other amounts payable under this
Agreement, the Notes and any other Loan Instrument to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly
waived by the Borrower, and (iii) may exercise the Banks rights and
remedies under the Loan Instruments and such other rights and remedies as
may be available to the Banks at law or in equity; PROVIDED, HOWEVER, that
in the event of an actual or deemed entry of an order for relief with
respect to the Borrower or any of the Guarantors
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under the Federal Bankruptcy Code, (A) the obligation of the Banks to make
Advances shall automatically be terminated and (B) the Advances, the Notes,
all such interest and all such amounts shall automatically become and be due
and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE VII
THE AGENT
SECTION 7.1 APPOINTMENT AND POWERS. Each Bank hereby irrevocably
appoints and authorizes Bank One, Colorado, N.A., and Bank One, Colorado,
N.A. hereby agrees, to act as the agent for and representative (within the
meaning of Section 9-105(m) of the Uniform Commercial Code) of such Bank
under the Loan Instruments with such powers as are delegated to the Agent and
the Secured Party by the terms thereof, together with such other powers as
are reasonably incidental thereto. The Agent's duties shall be purely
ministerial and it shall have no duties or responsibilities except those
expressly set forth in the Loan Instruments. The Agent shall not be required
under any circumstances to take any action that, in its judgment, (a) is
contrary to any provision of the Loan Instruments or Applicable Law or (b)
would expose it to any Liability or expense against which it has not been
indemnified to its satisfaction. The Agent shall not, by reason of its
serving as the Agent, be a trustee or other fiduciary for any Bank.
SECTION 7.2 LIMITATION ON AGENT'S LIABILITY. Neither the Agent nor
any of its directors, officers, employees or agents shall be liable or
responsible for any action taken or omitted to be taken by it or them under
or in connection with the Loan Instruments, except for its or their own gross
negligence, willful misconduct or knowing violations of law. The Agent shall
not be responsible to any Bank for (a) any recitals, statements,
representations or warranties contained in the Loan Instruments or in any
certificate or other document referred to or provided for in, or received by
any of the Banks under, the Loan Instruments, (b) the validity, effectiveness
or enforceability of the Loan Instruments or any such certificate or other
document, (c) the value or sufficiency of the Collateral or (d) any failure
by the Borrower or other parties to the Loan Instruments to perform any of
their obligations under the Loan Instruments. The Agent may employ agents and
attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact so long as the Agent was
not grossly
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negligent in selecting or directing such agents or attorneys-in-fact. The
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telecopier,
telegram or cable) believed by it to be genuine and correct and to have been
signed or given by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. As to any matters not expressly provided for
by the Loan Instruments, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, under the Loan Instruments in
accordance with instructions signed by the Required Banks, and such
instructions of the Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
SECTION 7.3 DEFAULTS. The Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment to it
of principal of or interest on Loans or fees) unless the Agent has received
notice from a Bank or the Borrower specifying such Default and stating that
such notice is a "Notice of Default." In the event that the Agent has
knowledge of such a non-payment or receives such a notice of the occurrence
of a Default, the Agent shall give prompt notice thereof to the Banks. In
the event of any Default, the Agent shall (a) in the case of a Default that
constitutes an Event of Default, take any or all of the actions referred to
in SECTION 6.2 if so directed by the Required Banks and (b) in the case of
any Default, take such other action with respect to such Default as shall
be reasonably directed by the Required Banks. Unless and until the Agent
shall have received such directions, in the event of any Default, the Agent
may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable
in the best interests of the Banks.
SECTION 7.4 RIGHTS AS A BANK. Each Person acting as the Agent that
is also a Bank shall, in its capacity as a Bank, have the same rights and
powers under the Loan Instruments as any other Bank and may exercise the
same as though it were not acting as the Agent, and the term "Bank" or
"Banks" shall include such Person in its individual capacity. Each Person
acting as the Agent (whether or not such Person is a Bank) and its
Affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to and generally engage in any kind of banking,
trust or other business with the Borrower and other parties to the Loan
Instruments and their Affiliates as if it were not acting as the Agent, and
such Person and its Affiliates may accept fees and other consideration from
the Borrower and
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other parties to the Loan Instruments and their Affiliates for services in
connection with the Loan Instruments or otherwise without having to account
for the same to the Banks.
SECTION 7.5 INDEMNIFICATION. The Banks agree to indemnify the
Agent (to the extent not reimbursed by the Borrower and other parties to
the Loan Instruments under the Loan Instruments), ratably on the basis of
the respective principal amounts of the Loans outstanding made by the Banks
(or, if no Loans are at the time outstanding, ratably on the basis of their
respective Commitments), for any and all Liabilities, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including the costs and expenses that the
Borrower and other parties to the Loan Instruments are obligated to pay
under the Loan Instruments) in any way relating to or arising out of the
Loan Instruments or any other documents contemplated thereby or referred to
therein or the transactions contemplated thereby or the enforcement of any
of the terms thereof or of any such other documents, provided that no Bank
shall be liable for any of the foregoing to the extent they arise from
gross negligence, willful misconduct or knowing violations of law by the
Agent.
SECTION 7.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
agrees that it has made and will continue to make, independently and
without reliance on the Agent or any other Bank, and based on such
documents and information as it deems appropriate, its own credit analysis
of the Borrower, its own evaluation of the Collateral and its own decision
to enter into the Loan Instruments and to take or refrain from taking any
action in connection therewith. The Agent shall not be required to keep
itself informed as to the performance or observance by the Borrower or
other parties to the Loan Instruments of the Loan Instruments or any other
document referred to or provided for therein or to inspect the properties
or books of the Borrower or any Subsidiary thereof or the Collateral.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent under the Loan
Instruments, the Agent shall have no obligation to provide any Bank with
any information concerning the business, status or condition of the
Borrower or any other party to the Loan Instruments or any Subsidiary
thereof, the Loan Instruments or the Collateral that may come into the
possession of the Agent or any of its Affiliates.
SECTION 7.7 EXECUTION AND AMENDMENT OF LOAN INSTRUMENTS ON BEHALF
OF THE BANKS. Each Bank hereby authorizes the Agent to
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(a) execute and deliver, in the name of and on behalf of such Bank, (i) the
Security Agreements, the Guaranty Agreements, the Deeds of Trust and the
Pledge Agreement, (ii) all Uniform Commercial Code financing and continuation
statements and other documents the filing or recordation of which are, in the
determination of the Agent, necessary or appropriate to create, perfect or
maintain the existence or perfected status of the Security Interest, (iii)
subordination agreements, subordinating the lien of the Banks to the lien of
Banc One Leasing Corporation with respect to capital equipment leased by the
Borrower or Guarantors in an aggregate principal amount not to exceed
$3,000,000 and (iv) any other Loan Instrument requiring execution by or on
behalf of such Bank, (b) release Collateral from the Security Interest to the
extent that such Collateral has been disposed of in accordance with SECTION
5.2(g). The Agent shall consent to any amendment of any term, covenant,
agreement or condition of the Security Agreements, the Guaranty Agreements,
the Deeds of Trust and the Pledge Agreement, or to any waiver of any right
thereunder, if, but only if, the Agent is directed to do so in writing by the
Required Banks; PROVIDED, HOWEVER, that (i) the Agent shall not be required
to consent to any such amendment or waiver that affects its rights or duties
and (ii) the Agent shall not, unless directed to do so in writing by each
Bank, (A) consent to any assignment by any Bank of any of its rights or
obligations under any such agreement or (B) release any Collateral from the
Security Interest, except as specified in clause (b) above.
SECTION 7.8 RESIGNATION OF THE AGENT. The Agent may at any time
give notice of its resignation to the Banks and the Borrower. Upon receipt
of any such notice of resignation, the Required Banks may, with the consent
of the Borrower which shall not be unreasonably withheld, appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment within 30 days
after the resigning Agent's giving of notice of resignation, then the
resigning Agent may, on behalf of the Banks and after consultation with the
Borrower, appoint a successor Agent. Upon the acceptance by any Person of
its appointment as a successor Agent, (a) such Person shall thereupon
succeed to and become vested with all the rights, powers, privileges,
duties and obligations of the resigning Agent and the resigning Agent shall
be discharged from its duties and obligations as Agent under the Loan
Instruments and (b) the resigning Agent shall promptly transfer all
Collateral within its possession or control to the possession or control of
the successor Agent and shall execute and deliver such notices,
instructions and assignments as may be necessary or desirable to transfer
the rights of the Agent with
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respect to the Collateral to the successor Agent. After any resigning
Agent's resignation as Agent, the provisions of this ARTICLE VII shall
continue in effect for its benefit in respect of any actions taken or omitted
to be taken by it while it was acting as the Agent.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 AMENDMENTS; WAIVERS. Any term, covenant, agreement or
condition of the Loan Instruments may be amended, and any right under the
Loan Instruments may be waived, if, but only if, such amendment or waiver
is in writing and is signed by (a) in the case of an amendment or waiver
with respect to the Loan Instruments referred to in SECTION 7.7(a), the
Agent, (b) in the case of an amendment or waiver with respect to any other
Loan Instrument, the Required Banks and, if the amendment or waiver would
affect the rights and duties of the Agent, by the Agent, and(c) in the case
of an amendment with respect to any Loan Instrument, by the Borrower;
PROVIDED, HOWEVER, that no amendment or waiver shall be effective, unless
in writing and signed by each Bank affected thereby, to the extent it
(i) changes the amount of such Bank's Commitment, (ii) reduces the
principal of or the rate of interest on such Bank's Loans or Note, or any
fees payable to such Bank hereunder, (iii) postpones any date fixed for any
reduction of the Revolving Loan Commitments or any payment of principal of
or interest on such Bank's Loans, Note or any fees payable to such Bank
hereunder, (iv) except as provided in this Agreement or any other Loan
Instrument, releases any Collateral from the Security Interest, or
(v) amends SECTION 2.9, this SECTION 8.1, the definition of "Required
Banks" contained in SECTION 1.1 or any other provision of this Agreement
requiring the consent or other action of all of the Banks. Unless
otherwise specified in such waiver, a waiver of any right under the Loan
Instruments shall be effective only in the specific instance and for the
specific purpose for which given. No election not to exercise, failure to
exercise or delay in exercising any right, nor any course of dealing or
performance, shall operate as a waiver of any right of the Agent or any
Bank under the Loan Instruments or Applicable Law, nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right of the Agent or any Bank under
the Loan Instruments or Applicable Law.
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SECTION 8.2 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied,
telegraphed, telexed, cabled or delivered,
if to the Borrower, at its address at:
Analytical Surveys, Inc.
1935 Jamboree Drive
Colorado Springs, Colorado 80920
Attn: Sidney V. Corder
Chairman of the Board, President and
Chief Executive Officer
Telecopy: (719) 528-5093
with a copy to:
Steven D. Miller, Esq.
Sherman and Howard L.L.C.
633 Seventeenth Street, Suite 3000
Denver, Colorado 80202
Telecopy: (303) 298-0940
and if to the Agent, at its address at:
Bank One, Colorado, N.A.
P.O. Box 1699
Colorado Springs, Colorado 80942
Attn: Shaun P. McCarthy
Vice President
Telecopy: (719)471-5213
with a copy to:
Ted R. Sikora II, Esq.
Davis, Graham & Stubbs LLP
370 Seventeenth Street 47th Floor
Denver, CO 80202
Telecopy: (303)893-1379
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other Party. All such notices and
communications shall, when telecopied, telegraphed, telexed or cabled, be
effective when telecopied, delivered to the telegraph company, confirmed by
telex answerback or delivered to the cable company, respectively, or when
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personally delivered. Any notice, if mailed and properly addressed with
first class postage prepaid, return receipt requested, shall be deemed given
three Business Days after deposit in the U.S. mail. Except that notices to
the Banks pursuant to the provisions of ARTICLE II shall not be effective
until received by the Bank.
SECTION 8.3 REMEDIES. The remedies provided in the Loan
Instruments are cumulative and not exclusive of any remedies provided by
law.
SECTION 8.4 COSTS, EXPENSES AND TAXES. The Borrower agrees to pay
on demand all out-of-pocket costs and expenses in connection with the
preparation, execution, delivery, administration, modification and
amendment of the Loan Instruments and the other documents to be delivered
under the Loan Instruments, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect
thereto and with respect to advising the Agent as to its rights and
responsibilities under the Loan Instruments. The Borrower further agrees
to pay on demand all costs and expenses, if any (including reasonable legal
counsel, consultants and appraisers fees and expenses), in connection with
the enforcement (whether through negotiations, legal proceedings or
otherwise) of the Loan Instruments and the other documents to be delivered
under the Loan Instruments, including, without limitation, counsel,
consultants and appraisers fees and expenses in connection with the
enforcement of rights under this SECTION 8.4, expressly including all such
costs and expenses incurred by the Agent and the Banks in connection with
or during the pendency of any bankruptcy or insolvency proceedings
involving the Borrower or any Guarantor. In addition, the Borrower shall
pay any and all recording fees and stamp and other taxes payable or
determined to be payable in connection with the execution, delivery, filing
and recording of the Loan Instruments and the other documents to be
delivered under the Loan Instruments, and agrees to save the Agent and the
Banks harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
SECTION 8.5 RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default the Banks are hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by the Banks to or for the credit or the account of the Borrower
against any and all of the obligations of the Borrower now or
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hereafter existing under any Loan Instrument, whether or not the Banks shall
have made any demand under such Loan Instrument and although such obligations
may be unmatured. The Banks agree promptly to notify the Borrower after any
such set-off and application, PROVIDED that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
the Banks under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the Banks may
have.
SECTION 8.6 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Banks and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Banks. Any assignment of rights or interests herein by the
Borrower without such prior written consent of the Bank will be void and
ineffective. It is expressly agreed that the Banks may transfer interests
herein to other lending institutions by way of assignment or participation
agreement as an to the extent permitted by SECTION 8.14.
SECTION 8.7 INDEMNITY. The Borrower agrees to indemnify the Agent and
the Banks, and their respective directors, officers, employees and agents
from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out
of or by reason of any investigation or litigation or other proceedings
(including any threatened investigation or litigation or other proceedings)
relating to the extensions of credit hereunder or any actual or proposed use
by the Borrower of the proceeds of any extensions of credit hereunder or the
past, present or future business activities of the Borrower including,
without limitation, the fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings
(but excluding any such losses, liabilities, claims, damages or expenses that
are determined pursuant to a final, non-appealable order of a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of the Person to be indemnified).
SECTION 8.8 CONSENT TO EXCLUSIVE JURISDICTION. ANY LEGAL ACTION OR
OTHER PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN INSTRUMENT
SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF COMPETENT JURISDICTION OF THE
STATE OF COLORADO OR OF THE UNITED STATES LOCATED IN THE CITY AND COUNTY OF
DENVER, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWER
AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
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PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER
AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER LOAN INSTRUMENT. THE
BORROWER AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY COLORADO
LAW.
SECTION 8.9 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. EACH OF THE
BORROWER AND THE BANKS HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG
THE BORROWER AND THE BANKS ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT OR ANY LOAN INSTRUMENT. THE BORROWER HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE RIGHT TO INTERPOSE SET OFF OR COUNTERCLAIM
OR CROSS-CLAIM IN CONNECTION WITH ANY SUCH LITIGATION, IRRESPECTIVE OF THE
NATURE OF SET OFF, COUNTERCLAIM OR CROSS-CLAIM EXCEPT TO THE EXTENT THAT THE
FAILURE SO TO ASSERT A SET OFF, COUNTERCLAIM OR CROSS-CLAIM WOULD PERMANENTLY
PRECLUDE THE PROSECUTION OF OR RECOVERY UPON THE SAME. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT OR ANY OTHER LOAN INSTRUMENT TO THE
CONTRARY, NO CLAIM MAY BE MADE BY THE BORROWER AGAINST THE BANKS FOR ANY LOST
PROFITS OR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
BREACH OR WRONGFUL CONDUCT (OTHER THAN WILLFUL MISCONDUCT CONSTITUTING ACTUAL
FRAUD) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE
TRANSACTIONS CONTEMPLATED HEREUNDER OR UNDER ANY OTHER LOAN INSTRUMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND THE
BORROWER HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM
FOR ANY SUCH DAMAGES. THE BORROWER AGREES THAT THIS SECTION 8.9 IS A
SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT THE
BANKS WOULD NOT EXTEND TO THE BORROWER THE CREDIT PROVIDED FOR HEREIN IF THIS
SECTION 8.9 WERE NOT PART OF THIS AGREEMENT.
SECTION 8.10 ARBITRATION. EACH OF THE BORROWER AND THE BANKS AGREE THAT
UPON THE WRITTEN DEMAND OF A PARTY HERETO, WHETHER MADE BEFORE OR AFTER THE
INSTITUTION OF ANY LEGAL PROCEEDINGS, BUT PRIOR TO THE RENDERING OF ANY
JUDGEMENT IN THAT PROCEEDING, ALL DISPUTES, CLAIMS AND CONTROVERSIES BETWEEN
THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE, ARISING UNDER THIS
AGREEMENT OR ANY OTHER LOAN INSTRUMENT OR OTHERWISE, INCLUDING
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WITHOUT LIMITATION CONTRACT DISPUTES AND TORT CLAIMS, SHALL BE RESOLVED BY
BINDING ARBITRATION PURSUANT TO THE COMMERCIAL RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. ANY ARBITRATION PROCEEDING HELD PURSUANT TO THIS
ARBITRATION PROVISION SHALL BE CONDUCTED IN DENVER, COLORADO, OR AT ANY OTHER
PLACE SELECTED BY MUTUAL AGREEMENT OF THE PARTIES. NO ACT TO TAKE OR DISPOSE
OF ANY COLLATERAL SHALL CONSTITUTE A WAIVER OF THIS ARBITRATION AGREEMENT OR
BE PROHIBITED BY THIS ARBITRATION AGREEMENT. THIS ARBITRATION PROVISION
SHALL NOT LIMIT THE RIGHT OF EITHER PARTY DURING ANY DISPUTE, CLAIM OR
CONTROVERSY TO SEEK, USE AND EMPLOY ANCILLARY, OR PRELIMINARY RIGHTS AND/OR
REMEDIES, JUDICIAL OR OTHERWISE, FOR THE PURPOSES OF REALIZING UPON,
PRESERVING, PROTECTING, FORECLOSING UPON OR PROCEEDING UNDER ANY FORCIBLE
ENTRY AND DETAINER FOR POSSESSION OF, ANY REAL OR PERSONAL PROPERTY, AND ANY
SUCH ACTION SHALL NOT BE DEEMED AN ELECTION OF REMEDIES. SUCH REMEDIES
INCLUDE, WITHOUT LIMITATION, OBTAINING INJUNCTIVE RELIEF OR A TEMPORARY
RESTRAINING ORDER, INVOKING A POWER OF SALE UNDER ANY DEED OF TRUST OR
MORTGAGE, OBTAINING A WRIT OF ATTACHMENT OR IMPOSITION OF A RECEIVERSHIP, OR
EXERCISING ANY RIGHTS RELATING TO PERSONAL PROPERTY, INCLUDING TAKING OR
DISPOSING OF SUCH PROPERTY WITH OR WITHOUT JUDICIAL PROCESS PURSUANT TO
ARTICLE 9 OF THE UNIFORM COMMERCIAL CODE OR WHEN APPLICABLE, A JUDGEMENT BY
CONFESSION OF JUDGEMENT. ANY DISPUTES, CLAIMS OR CONTROVERSIES CONCERNING
THE LAWFULNESS OR REASONABLENESS OF ANY ACT, OR EXERCISE OF ANY RIGHT OR
REMEDY CONCERNING ANY COLLATERAL, INCLUDING ANY CLAIM TO RESCIND, REFORM, OR
OTHERWISE MODIFY ANY AGREEMENT RELATING TO THE COLLATERAL, SHALL ALSO BE
ARBITRATED; PROVIDED, HOWEVER, THAT NO ARBITRATOR SHALL HAVE THE RIGHT OR THE
POWER TO ENJOIN OR RESTRAIN ANY ACT OF EITHER PARTY. JUDGEMENT UPON ANY
AWARD RENDERED BY ANY ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION. NOTHING IN THIS ARBITRATION PROVISION SHALL PRECLUDE ANY PARTY
HERETO FROM SEEKING EQUITABLE RELIEF FROM A COURT OF COMPETENT JURISDICTION.
THE STATUTE OF LIMITATIONS, ESTOPPEL, WAIVER, LACHES AND SIMILAR DOCTRINES
WHICH WOULD OTHERWISE BE APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE
APPLICABLE IN ANY ARBITRATION PROCEEDING, AND THE COMMENCEMENT OF AN
ARBITRATION PROCEEDING SHALL BE DEEMED THE COMMENCEMENT OF ANY ACTION FOR
THESE PURPOSES. THE FEDERAL ARBITRATION ACT (TITLE 9 OF THE UNITED STATES
CODE) SHALL APPLY TO THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT OF
THIS ARBITRATION PROVISION.
SECTION 8.11 GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of
Colorado, without giving effect to any conflict
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of law or choice of law provision or rule (whether of the State of Colorado
or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of Colorado.
SECTION 8.12 INCONSISTENT PROVISIONS. In the event of any
inconsistency or conflict between the terms of this Agreement and the terms
of any other Loan Instrument, the provisions of this Agreement will be
controlling.
SECTION 8.13 SHARING OF RECOVERIES. Each Bank agrees that, if, for any
reason, including as a result of (a) the exercise of any right of
counterclaim, set-off, banker's lien or similar right, (b) its claim in any
applicable bankruptcy, insolvency or other similar law being deemed secured
by a Debt owed by it to the Borrower and any Guarantor, including a claim
deemed secured under Section 506 of the Bankruptcy Code, or (c) the
allocation of payments by the Agent or the Borrower or any Guarantor in a
manner contrary to the provisions of SECTION 2.9, such Bank shall receive
payment of a proportion of the aggregate amount due and payable to it
hereunder as principal of or interest on the Loans or fees that is greater
than the proportion received by any other Bank in respect of the aggregate of
such amounts due and payable to such other Bank hereunder, then the Bank
receiving such proportionately greater payment shall purchase participations
(which it shall be deemed to have done simultaneously upon the receipt of
such payment) in the rights of the other Banks hereunder so that all such
recoveries with respect to such amounts due and payable hereunder (net of
costs of collection) shall be pro rata; PROVIDED that if all or part of such
proportionately greater payment received by the purchasing Bank is thereafter
recovered by or on behalf of the Borrower or any Guarantor from such Bank,
such purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such Bank to the extent of such recovery,
but without interest (unless the purchasing Bank is required to pay interest
on the amount recovered to the Person recovering such amount, in which case
the selling Bank shall be required to pay interest at a like rate). The
Borrower expressly consents to the foregoing arrangements and agrees that any
holder of a participation in any rights hereunder so purchased or acquired
pursuant to this SECTION 8.13 shall, with respect to such participation, be
entitled to all of the rights of a Bank under SECTIONS 2.9, 7.4, 7.5 AND 7.7
(subject to any condition imposed on a Bank hereunder with respect thereto)
and may exercise any and all rights of set-off with respect to such
participation as fully as though the Borrower were directly indebted to the
holder
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of such participation for Loans in the amount of such participation.
SECTION 8.14 ASSIGNMENTS AND PARTICIPATIONS.
(a) ASSIGNMENTS.
(i) The Borrower may not assign any of its rights or
obligations under the Loan Instruments without the prior
written consent of (A) in the case of the Loan Instruments
referred to in SECTION 7.7(a), the Agent and (B) in the case
of any of the other Loan Instruments, each Bank, and no
assignment of any such obligation shall release such Borrower
therefrom unless the Agent and each Bank, as applicable,
shall have consented to such release in a writing
specifically referring to the obligation from which such
Borrower is to be released.
(ii) Each Bank may from time to time assign any or all
of its rights and obligations under the Loan Instruments to
one or more Persons; PROVIDED that, except in the case of the
grant of a security interest to a Federal Reserve Bank (which
may be made without condition or restriction), no such
assignment shall be effective unless (A) the assignment is
consented to by the Borrower (unless an Event of Default
exists) and the Agent, such consents not to be unreasonably
withheld, (B) in the case of a partial assignment, the
assignment shall involve the assignment of not less than
$5,000,000 of the assignor Bank's Commitment and there shall
at no time be more than three Banks and the assignment is
consented to by the Borrower, such consent not to be
unreasonably withheld, (C) a Notice of Assignment in the form
of EXHIBIT I with respect to the assignment, duly executed by
the assignor and the assignee, shall have been given to the
Borrower and the Agent, (D) except in the case of an
assignment by the Bank that is the Agent, the Agent shall
have been paid an assignment fee of $3,500, (E) unless
otherwise agreed to by each of the Banks, such assignment is
made on or after the earlier of the date that is 90 days
following the Effective Date and the date on which the
general syndication of the credit facility provided for
herein is completed, as specified by the Agent and (F) in
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the case of an assignment of any Revolving Loan, Revolving
Loan Commitment, Term Loan, Acquisition Loan or Acquisition
Loan Commitment to any assignee, the assignment shall include
a PRO RATA portion of all of the Revolving Loans, Revolving
Loan Commitments, Term Loan, Acquisition Loans, and
Acquisition Loan Commitments of the assignor Bank. Upon any
effective assignment, the assignor shall be released from the
obligations so assigned and, in the case of an assignment of
all of its Loans and Commitment, shall cease to be a Bank.
In the event of any effective assignment by a Bank, the
Borrower shall issue new Notes to the assignee Bank (against,
other than in the case of a partial assignment, receipt of
the existing Note of the assignor Bank). Nothing in this
SECTION 8.14 shall limit the right of any Bank to assign its
interest in the Loans and its Notes to a Federal Reserve Bank
as collateral security under Regulation A of the Board of
Governors of the Federal Reserve System, but no such
assignment shall release such Bank from it obligations
hereunder.
(b) PARTICIPATIONS. Each Bank may from time to time sell or
otherwise grant participations in any or all of its rights and
obligations under the Borrower Loan Instruments. In the event of
any such grant by a Bank of a participation, such Bank's
obligations under the Loan Instruments to the other parties
thereto shall remain unchanged, such Bank shall remain solely
responsible for the performance thereof, and the Borrower, the
Agent and the other Banks may continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations thereunder. A Bank may not grant to any holder of a
participation the right to require such Bank to take or omit to
take any action under the Loan Instruments, except that a Bank
may grant to any such holder the right to require such holder's
consent to (i) reduce the principal of or the rate of interest on
such Bank's Loans, Note or any fees payable to such Bank
hereunder, (ii) postpone any date fixed for any payment of
principal of or interest on such Bank's Loans, Note or any fees
payable to such Bank hereunder, (iii) permit any Loan Party to
assign any of its obligations under the Loan Instruments to any
other Person or (iv) release any Collateral from the Security
Interest except as required or
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contemplated by the Loan Instruments. Each holder of a
participation in any rights under the Borrower Loan Instruments, if
and to the extent the applicable participation agreement so
provides, shall, with respect to such participation, be entitled to
all of the rights of a Bank as fully as though it were a Bank under
SECTIONS 2.9, 2.11, 8.1 AND 8.7 (subject to any conditions imposed
on a Bank hereunder with respect thereto) and may exercise any and
all rights of set-off with respect to such participation as fully
as though the Borrower were directly indebted to the holder of such
participation for Loans in the amount of such participation;
PROVIDED, HOWEVER, that no holder of a participation shall be
entitled to any amounts that would otherwise be payable to it with
respect to its participation under SECTION 2.9 OR 2.11 unless (x)
such amounts are payable in respect of Regulatory Changes that are
enacted, adopted or issued after the date the applicable
participation agreement was executed or (y) such amounts would have
been payable to the Bank that granted such participation if such
participation had not been granted.
SECTION 8.15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrower contained in this Agreement or
of any of its subsidiaries contained in any other Loan Instrument shall
survive delivery of the Notes and the making of the Loans.
SECTION 8.16 TERMINATION OF EXISTING LOAN AGREEMENT. Upon payment in
full of all of Borrower's and MSE Corporation's obligations under the
Existing Loan Agreement, the Agent will deliver to the Borrower the
promissory notes listed in the definition of Existing Loan Agreement in
SECTION 1.1.
SECTION 8.17 CONFIDENTIALITY. Each Bank agrees to exercise normal and
reasonable precautions and to exercise due care to keep confidential all
information of a confidential nature received by it from the Borrower or any
of its Affiliates pursuant to any Loan Instrument; PROVIDED, HOWEVER, that
such information may be disclosed: (i) to directors, officers, employees,
agents, representatives or outside counsel of such Bank or such Bank's
Affiliates, (ii) to any auditor, examiner or Governmental Authorities, (iii)
pursuant to any subpoena or other court order or otherwise as may be required
by Applicable Law, (iv) to the extent reasonably
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required in connection with any litigation or proceeding to which the Agent,
any Bank or their respective Affiliates may be party, (v) to the extent
reasonably required in connection with the exercise of any remedy hereunder
or under any other Loan Instrument, (vi) to any assignee of or participant
in, or prospective assignee of or participant in, any Bank's Loans or its
Commitment, or any part thereof, who, in each case, agrees in writing to be
bound by the terms of this provision, and PROVIDED, FURTHER, that no
confidentiality obligation shall attach to any information which (a) is or
becomes publicly known, through no wrongful act on the part of any person who
shall have received such information, (b) is rightfully received by such
person from a third party, (c) is independently developed by such person or
(d) is explicitly approved for release by the Borrower or any of its
Affiliates.
SECTION 8.18 SEVERABILITY. Any provision in any Loan Instrument that is
held to be inoperative, unenforceable or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability or validity of that provision in any other jurisdiction, and
to this end the provisions of all Loan Instruments are declared to be
severable.
SECTION 8.19 ENTIRE AGREEMENT, COMMITMENT LETTER SUPERSEDED. This
Agreement, together with the other Loan Instruments, embodies the entire
agreement and understanding among the Borrower, the Banks and the Agent, and
supersedes all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and
thereof. The Commitment Letter between the Borrower and the Agent dated May
4, 1998 is superseded by this Agreement and the Loan Instruments. Nothing
herein shall in any manner effect the validity of the Fee Letter executed in
connection with the Commitment Letter.
SECTION 8.20 COUNTERPARTS. This Agreement and any amendment hereof may
be executed in several counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall be an original,
and all of which together shall constitute one instrument. In proving the
Agreement it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective duly authorized officers, as of the date
first above written.
ANALYTICAL SURVEYS, INC.
By:
-------------------------------------
Scott C. Benger
Senior Vice President of
Finance, Treasurer and Secretary
BANK ONE, COLORADO, N.A.
as Agent and as a Bank
By:
-------------------------------------
Shaun P. McCarthy
Vice President
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PROMISSORY NOTE
(REVOLVING LOAN)
$11,000,000.00 June 3, 1998
FOR VALUE RECEIVED, the undersigned, ANALYTICAL SURVEYS, INC., a
Colorado corporation (referred to herein as the "MAKER"), hereby promises to
pay to the order of BANK ONE, COLORADO, N.A. (the "LENDER"), at the offices
of Bank One, Colorado, N.A., the Agent, on or before the Revolving Loans
Scheduled Maturity Date, ELEVEN MILLION DOLLARS AND 00/100 CENTS
($11,000,000.00) or if less, the aggregate unpaid principal amount loaned as
Revolving Loans Advanced to the Maker by the Lender pursuant to, or
otherwise outstanding under, that certain Credit Agreement, dated as of June
3, 1998 between the Maker, Bank One, Colorado N.A. as the Agent, and certain
Banks (the "CREDIT AGREEMENT"). Capitalized terms used but not defined
herein shall have the meanings given to them in the Credit Agreement.
The Maker further agrees to pay and deliver to the Agent, when and as
provided in the Credit Agreement, interest on the outstanding principal
amount hereof at the rate and at the times specified in the Credit Agreement.
This Note is the Revolving Note made by the Maker pursuant to, and is
subject to, all of the terms and conditions of the Credit Agreement. Subject
to the terms and conditions of the Credit Agreement, Maker may borrow, repay
and reborrow amounts evidenced hereby as Revolving Loans under the Credit
Agreement. Reference is made to the Credit Agreement and the documents
delivered in connection therewith for a statement of the prepayment rights
and obligations of the Maker, and for a statement of the terms and conditions
under which the due date of this Note may be accelerated.
This Note evidences the obligation of the Maker to repay all sums
Advanced pursuant to the Credit Agreement by the Lender and any holder hereof
to the Maker as Revolving Loans. The Lender and any holder hereof shall, and
are hereby authorized to, record on the Revolving Note Record attached
hereto, or to otherwise record in accordance with its usual practice, the
date, principal amount, applicable interest rate or margin and Interest
Period of each Revolving Loan and the date and amount of each principal
payment hereunder; PROVIDED, HOWEVER, that neither the failure to so record
nor any error in this recordation shall affect the Maker's obligations under
this Revolving Note.
In addition to, and not in limitation of, the foregoing and the
provisions of the Credit Agreement, the Maker further agrees, subject only to
any limitation imposed by applicable law, to pay all expenses, including
reasonable attorneys' fees and legal expenses, incurred by the Lender or
<PAGE>
any holder hereof in endeavoring to collect any amounts due and payable
hereunder which are not paid and delivered or otherwise satisfied when due,
whether by acceleration or otherwise. This includes the Lender's or holder's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings, appeals, post-judgment collection services and court costs.
The Maker, for itself and for all endorsers hereof, hereby waives
notice, demand, presentment for payment, protest and notice of dishonor.
This Note and the rights of the Maker and the Lender are governed by the
laws of the State of Colorado.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on
the date first above written.
ANALYTICAL SURVEYS, INC.
By:
----------------------------------
Scott C. Benger
Senior Vice President, Treasurer
and Secretary
<PAGE>
REVOLVING NOTE RECORD
LOANS AND PAYMENTS OF PRINCIPAL
TO
REVOLVING NOTE OF ANALYTICAL SURVEYS, INC.
DATED JUNE [ ], 1998
<TABLE>
<CAPTION>
Principal
Amount of Interest Rate Type of Principal Unpaid
Date Loan (or Margin) Loan Amount Paid Balance
- ---- --------- ------------- ------- ----------- -------
<C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT A-2
PROMISSORY NOTE
(TERM LOAN)
$ 16,000,000.00 June 3, 1998
FOR VALUE RECEIVED, the undersigned, ANALYTICAL SURVEYS, INC., a
Colorado corporation (referred to herein as the "MAKER"), hereby promises to
pay to the order of BANK ONE, COLORADO, N.A. (the "LENDER"), at the offices
of Bank One, Colorado, N.A., the Agent, on or before the Term Loan Scheduled
Maturity Date, SIXTEEN MILLION DOLLARS AND 00/100 CENTS ($ 16,000,000.00)
loaned as a Term Loan to the Maker by the Lender pursuant to, or otherwise
outstanding under, that certain Credit Agreement, dated as of June 3, 1998,
as amended, among the Maker, Bank One, Colorado, N.A., as the Agent, and
certain Banks (the "CREDIT AGREEMENT"). Capitalized terms used but not
defined herein shall have the meanings given to them in the Credit Agreement.
The Maker furthers agrees to pay and deliver to the Agent, when and as
provided in the Credit Agreement, interest on the outstanding principal
amount hereof at the rate and at the times specified in the Credit Agreement.
This Note is the Term Note made by the Maker pursuant to, and is subject
to, all of the terms and conditions of the Credit Agreement. Maker may not
repay and reborrow amounts evidenced hereby. Reference is made to the Credit
Agreement and the documents delivered in connection therewith for a statement
of the prepayment rights and obligations of the Maker, and for a statement of
the terms and conditions under which the due date of this Note may be
accelerated.
This Note evidences the obligation of the Maker to repay all sums
Advanced pursuant to the Credit Agreement by the Lender and any holder
hereof to the Maker as a Term Loan. The Lender and any holder hereof shall,
and are hereby authorized to, record on the Term Note Record attached hereto,
or to otherwise record in accordance with its usual practice, the date,
principal amount, applicable interest rate or margin and Interest Period of
each Term Loan and the date and amount of each principal payment hereunder;
PROVIDED, HOWEVER, that neither the failure to so record nor any error in the
recordation shall affect the Maker's obligations under this Term Note.
In addition to, and not in limitation of, the foregoing and the
provisions of the Credit Agreement, the Maker further agrees, subject only to
any limitation imposed by applicable law, to pay all expenses, including
reasonable attorneys' fees and legal expenses, incurred by the Lender or any
holder hereof in endeavoring to collect any amounts due and payable hereunder
which are not paid and delivered or otherwise satisfied when due, whether by
acceleration or otherwise. This
<PAGE>
includes Lender's or any holder's reasonable attorneys' fees and legal
expenses whether or not there is a lawsuit, including attorneys' fees and
legal expenses for bankruptcy proceedings, appeals, post-judgment collection
services and court costs.
The Maker, for itself and for all endorsers hereof, hereby waives
notice, demand, presentment for payment, protest and notice of dishonor.
This Note and the rights of the Maker and the Lender are governed by the
laws of the State of Colorado.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on
the date first above written.
ANALYTICAL SURVEYS, INC.
By:
------------------------------------
Scott C. Benger
Senior Vice President, Treasurer
and Secretary
-2-
<PAGE>
TERM NOTE RECORD
LOANS AND PAYMENTS OF PRINCIPAL
TO
TERM LOAN NOTE OF ANALYTICAL SURVEYS, INC.
DATED JUNE [ ], 1998
<TABLE>
<CAPTION>
Principal
Amount of Interest Rate Principal Unpaid
Date Loan (or Margin) Amount Paid Balance
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
-3-
<PAGE>
EXHIBIT A-3
PROMISSORY NOTE
(ACQUISITION LOAN)
$10,000,000.00 June 3, 1998
FOR VALUE RECEIVED, the undersigned, ANALYTICAL SURVEYS, INC., a
Colorado corporation (referred to herein as the "MAKER"), hereby promises to
pay to the order of BANK ONE, COLORADO, N.A. (the "LENDER"), at the offices
of Bank One, Colorado, N.A., the Agent, on or before the Acquisition Loans
Scheduled Maturity Date, TEN MILLION DOLLARS AND 00/100 CENTS
($10,000,000.00) or if less, the aggregate unpaid principal amount loaned as
Acquisition Loans to the Maker by the Lender pursuant to, or otherwise
outstanding under, that certain Credit Agreement, dated as of June 3, 1998
among the Maker, Bank One, Colorado N.A. as the Agent, and certain Banks (the
"CREDIT AGREEMENT"). Capitalized terms used but not defined herein shall
have the meanings given to them in the Credit Agreement.
The Maker further agrees to pay and deliver to the Agent, when and as
provided in the Credit Agreement, interest on the outstanding principal
amount hereof at the rate and at the times specified in the Credit Agreement.
This Note is the Acquisition Loans Note made by the Maker pursuant to,
and is subject to, all of the terms and conditions of the Credit Agreement.
Maker may repay and reborrow amounts evidenced hereby as Acquisition Loans
under the Credit Agreement. Reference is made to the Credit Agreement and
the documents delivered in connection therewith for a statement of the
prepayment rights and obligations of the Maker, and for a statement of the
terms and conditions under which the due date of this Note may be accelerated.
This Note evidences the obligation of the Maker to repay all sums
Advanced pursuant to the Credit Agreement by the Lender and any holder hereof
to the Maker as Acquisition Loans. The Lender and any holder hereof shall,
and are hereby authorized to, record on the Acquisition Note Record attached
hereto, or to otherwise record in accordance with its usual practice, the
date, principal amount, applicable interest rate or margin and Interest
Period of each Acquisition Loan and the date and amount of each principal
payment hereunder; PROVIDED, HOWEVER, that neither the failure to so record
nor any error in this recordation shall affect the Maker's obligations under
this Revolving Note.
In addition to, and not in limitation of, the foregoing and the
provisions of the Credit Agreement, the Maker further agrees, subject only to
any limitation imposed by applicable law, to pay all expenses, including
reasonable attorneys' fees and legal expenses, incurred by the Lender or
<PAGE>
any holder hereof in endeavoring to collect any amounts due and payable
hereunder which are not paid and delivered or otherwise satisfied when due,
whether by acceleration or otherwise. This includes the Lender's or holder's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings, appeals, post-judgment collection services and court costs.
The Maker, for itself and for all endorsers hereof, hereby waives
notice, demand, presentment for payment, protest and notice of dishonor.
This Note and the rights of the Maker and the Lender are governed by the
laws of the State of Colorado.
IN WITNESS WHEREOF, the Maker has executed and delivered this Note on
the date first above written.
ANALYTICAL SURVEYS, INC.
By:
------------------------------------
Scott C. Benger
Senior Vice President, Treasurer
and Secretary
<PAGE>
ACQUISITION LOANS NOTE RECORD
LOANS AND PAYMENTS OF PRINCIPAL
TO
ACQUISITION LOANS NOTE OF ANALYTICAL SURVEYS, INC.
DATED JUNE [ ], 1998
<TABLE>
<CAPTION>
Principal
Amount of Interest Rate Principal Unpaid
Date Loan (or Margin) Amount Paid Balance
- ---- --------- ------------- ----------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
GUARANTY
THIS GUARANTY AGREEMENT, dated as of June 3, 1998, is entered into by
ASI LANDMARK, INC., a Colorado corporation ("GUARANTOR"), and BANK ONE,
COLORADO, N.A., a national banking association having an office at the Denver
Banking Center, 30 Pikes Peak Avenue, Colorado Springs, Colorado 80903, in
its capacity as Agent for the Banks (the "AGENT").
RECITALS
ARTICLE 1
The Guarantor is a wholly-owned subsidiary of ANALYTICAL SURVEYS, INC.,
a Colorado corporation (the "BORROWER").
ARTICLE 2
The Borrower, the Banks and the Agent have entered into a Credit
Agreement dated June 3, 1998 (together with all schedules and exhibits
thereto, as the same may be supplemented, modified, amended or restated from
time to time in the manner provided therein, the "CREDIT AGREEMENT," which is
incorporated herein by reference as if fully set forth), pursuant to which
the Agent, for the ratable benefit of the Banks, has agreed to make available
to the Borrower a revolving line of credit in the maximum principal amount
outstanding at any one time of ELEVEN MILLION DOLLARS ($11,000,000), a term
loan in the principal amount of SIXTEEN MILLION DOLLARS ($16,000,000) and an
acquisition loan in the principal amount of TEN MILLION DOLLARS ($10,000,000).
ARTICLE 3
The Guarantor will benefit by the making of loans under the Credit
Agreement.
<PAGE>
ARTICLE 4
As a condition precedent to the extension of loans under the Credit
Agreement, the Agent requires, among other things, that the Guarantor
unconditionally and irrevocably guarantees the full and punctual repayment of
all loans advanced under the Credit Agreement and all other related Obligations
owing by the Borrower to the Agent, for the ratable benefit of the Banks.
AGREEMENT
NOW, THEREFORE, for and in consideration of the foregoing recitals, the
extension of the loans under the Credit Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the Guarantor and the Agent agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND REFERENCES
SECTION 1.1 Terms Defined in Credit Agreement. Reference is hereby
made to the Credit Agreement for statements of terms thereof. All
capitalized terms used in this Guaranty which are defined in the Credit
Agreement but which are not otherwise defined herein shall have the meanings
provided in the Credit Agreement.
SECTION 1.2 GENERAL DEFINITIONS. As used in this Guaranty, in addition
to the terms defined in the preamble and the Recitals hereto, the following
capitalized terms shall have the meanings respectively assigned to them below:
"AGENT" shall mean Bank One, Colorado, N.A., a national banking
association having its principal offices at 1125 Seventeenth Street, Third
Floor, Denver, Colorado 80202.
"BANKS" shall mean (a) the Agent and the Banks under that certain
Credit Agreement dated as of June 3, 1998, by and among the Borrower, the
Banks listed therein and the Agent; and (b) any Person that has been assigned
any or all of the rights or obligations of a Bank pursuant to SECTION 8.14 of
the Credit Agreement.
"BORROWER" shall have the meaning assigned to it in the Recitals
hereto.
"CODE" shall mean the Uniform Commercial Code as enacted in the
State of Colorado, C.R.S. Section 4-1-101 ET SEQ., and any successor
statutes thereto.
2
<PAGE>
"COLLATERAL" shall mean, collectively all property of whatever
type, in which the Banks shall receive a security interest pursuant to the
Credit Agreement or any other Loan Instrument.
"CREDIT AGREEMENT" shall have the meaning assigned to it in the
Recitals hereto.
"DEFAULT" means any event or state of affairs that, with the giving
of notice or the passage of time (or both) would constitute an Event of
Default.
"EVENT OF DEFAULT" shall mean the occurrence of any one or more of
the events identified in SECTION 6.1 of the Credit Agreement.
"GUARANTOR" shall have the meaning specified in the introductory
paragraph hereof.
"GUARANTY" shall mean this Guaranty Agreement, together with all
schedules and exhibits hereto, as the same may be supplemented, modified,
amended or restated from time to time in the manner provided herein.
"LOAN OR LOANS" shall have the meaning assigned to the terms "Loan"
and "Loans" in SECTION 1.1 of the Credit Agreement.
"LOAN INSTRUMENTS" shall mean and include collectively: (a) the
Credit Agreement; (b) the Notes; and (c) all other instruments, agreements
and documents, whether now or hereafter existing or executed, executed and
delivered by Borrower or any guarantor in connection with the Obligations, as
any such instrument may be supplemented, modified, amended or restated from
time to time in the manner provided therein.
"MATERIAL ADVERSE EFFECT" means any material and adverse effect,
whether individually or in the aggregate, upon (a) the assets, business,
operations, properties or condition, financial or otherwise, of the Borrower
and its Subsidiaries, taken as a whole, (b) the ability of the Borrower to
make payment as and when due of all or any part of the Obligations, or (c)
the Collateral.
"NOTES" shall have the meaning assigned to the term "Notes" in
SECTION 1.1 of the Credit Agreement.
"OBLIGATIONS" shall have the meaning assigned to the term
"Obligations" in SECTION 1.1 of the Credit Agreement.
"PERSON" means any individual, corporation, company, voluntary
association, partnership, joint venture, limited liability company, limited
liability partnership, trust, unincorporated organization or government (or
any agency, instrumentality or political subdivision thereof).
3
<PAGE>
SECTION 1.3 TERMS DEFINED IN CODE. All terms used in this Guaranty
which are defined in the Code and not otherwise defined herein or in the
Credit Agreement shall have the meanings provided in the Code.
SECTION 1.4 AMENDMENT OF DEFINED INSTRUMENTS. Unless the context
otherwise requires or unless otherwise provided herein, references in this
Guaranty to a particular agreement, instrument or document also refer to and
include all renewals, extensions, amendments, modifications, supplements or
restatements of any such agreement, instrument or document.
SECTION 1.5 REFERENCES, TITLES, ETC. All references in this Guaranty
to Articles, Sections, Subsections and other subdivisions refer to the
Articles, Sections, Subsections and other subdivisions of this Guaranty
unless expressly provided otherwise. The words "this Guaranty", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Guaranty as a whole and not to any particular subdivision unless expressly so
limited. Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender. Words in the singular form shall be
construed to include the plural and words in the plural form shall be
construed to include the singular, unless the context otherwise requires.
ARTICLE II
GUARANTY OF PAYMENT
SECTION 2.1 GUARANTY. The Guarantor hereby irrevocably, absolutely and
unconditionally: (a) guarantees the due and punctual payment and performance
when due, whether at stated maturity, by acceleration or otherwise, of the
Obligations; and (b) agrees to pay any and all expenses (including reasonable
attorneys' fees and disbursements) which may be paid or incurred by the Agent
in enforcing any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting
against, the Guarantor under this Guaranty.
SECTION 2.2 GUARANTY OF PAYMENT AND NOT OF COLLECTION. This Guaranty
is a guarantee of payment, and not of collection, and a debt of the Guarantor
for its own account. Accordingly, the Agent shall not be obligated or
required before enforcing this Guaranty against Guarantor: (a) to pursue any
right or remedy the Agent may have against the Borrower or any other
guarantor of the Obligations in any court, tribunal or otherwise; (b) to make
any claim in a liquidation or bankruptcy of the Borrower, or any other
guarantor of the Obligations; (c) to make demand of the Borrower, or any
other guarantor of the Obligations; or (d) to enforce or seek to enforce or
realize upon any Collateral or other security held by the Agent or any other
party which may secure any of the
4
<PAGE>
Obligations. In this connection, the Guarantor hereby waives any right it
may have to require the Agent to take action against the Borrower or any
other guarantor of the Obligations.
SECTION 2.3 CONTINUING GUARANTY. The Guarantor agrees that: (a) this
is an open and continuing guaranty of payment and satisfaction, whether the
Obligations are now or hereafter existing, acquired or created, and
irrespective of the fact that from time to time under the terms and
provisions of the Loan Instruments, monies may be advanced, repaid and
readvanced and the outstanding balance of the Loans may be zero; and (b) the
Obligations shall not be deemed to have been otherwise fully paid and
satisfied so long as the Notes, or any other evidence of indebtedness shall
have any continuing force or effect. This Guaranty of payment and
satisfaction will not be discharged until payment in full of all of the
Obligations, and the Banks' Commitments under the Credit Agreement have been
terminated. No payment or payments made by any other person in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability or limitations of the Guarantor hereunder until the
Obligations are indefeasibly paid in full and the Banks' Commitments under
the Credit Agreement have been terminated.
SECTION 2.4 GUARANTY ABSOLUTE, SURVIVAL OF REPRESENTATIONS, ETC. The
Guarantor covenants and agrees that all of the representations, warranties,
covenants and other agreements and obligations of Guarantor under this
Guaranty and the other Loan Instruments:
(a) shall be absolute and unconditional irrespective of the
validity, legality, binding effect or enforceability of any of the terms and
provisions of any of the Loan Instruments;
(b) shall survive the execution and delivery of this Guaranty and
the other Loan Instruments and the advance, repayment and readvance of any or
all of the monies to be lent thereunder;
(c) shall remain and continue in full force and effect without
regard to any waiver, modification, extension, renewal, consolidation,
spreading, amendment or restatement of any other term or provision of any
Loan Instrument (including without limitation any increase in the
Obligations), to any full, partial or non-exercise of any of the Agent's
rights, powers, privileges, remedies and interests under any Loan Instrument,
against any person or with respect to any Collateral, to any release or
subordination of all or any part of any Collateral, to any statute of
limitations or similar time constraint under any applicable law, to any
investigation, analysis or evaluation by the Agent or its designees of the
assets, business, operations, properties or condition (financial or
otherwise) of the Guarantor, the Borrower or any other person, to any act or
omission on the part of the Agent or any other person, or to any other event
that otherwise might constitute a legal or equitable counterclaim, defense or
discharge of a surety or guarantor;
5
<PAGE>
(d) shall not be subject to any defense, counterclaim, set-off,
right of recoupment, abatement, reduction or other claim or determination
that the Guarantor or the Borrower may have against the Agent, the Banks, or
any other person;
(e) shall not be diminished or qualified by the death, disability,
dissolution, reorganization, insolvency, bankruptcy, custodianship or
receivership of the Guarantor, the Borrower or any other guarantor, surety or
pledgor or any other person, or the inability of any of them to pay their
debts or perform or otherwise satisfy their obligations as they become due
for any reason whatsoever; and
(f) shall remain and continue in full force and effect regardless
of any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Guarantor; it being agreed that the
obligations of the Guarantor under this Guaranty shall not be satisfied or
discharged except as expressly provided in this Guaranty.
ARTICLE III
CONSENTS AND WAIVERS
SECTION 3.1 CONSENT. Without limiting the generality of the foregoing
Sections or any other term or provision of this Guaranty, the Guarantor
agrees and consents that, without notice to the Guarantor, at any time, and
from time to time:
(a) the amount of the Loans, the rates of interest thereon or any
other Obligations may be increased or otherwise changed;
(b) the time, manner, place and other terms and provisions of
payment or performance of the Obligations may be extended, modified, amended,
restated or otherwise changed;
(c) any partial or late payment or any payment during the
continuance of any default under the Loan Instruments may be accepted in
whole or in part or rejected;
(d) any Collateral securing or intended to secure any obligations
under any Loan Instrument may be sold, conveyed, assigned or otherwise
realized upon, dealt with or disposed of in whole or in part;
(e) any mortgage or other security interest in any such Collateral
may be held without due recordation or other perfection (whether
intentionally or otherwise), may be recorded or otherwise perfected, or may
be assigned, released, subordinated or otherwise impaired, dealt with or
disposed of in whole or in part;
6
<PAGE>
(f) any one or more payments, distributions and proceeds received
from or in respect of the Guarantor, the Borrower, any other guarantor,
surety or pledgor or any other person or any such Collateral may be applied
to any of the Obligations, or if not designated therefore, or otherwise
restricted thereto, may be applied to other indebtedness of the Guarantor,
the Borrower, or any such other guarantor, surety, pledgor or other person
owed to the Agent or any of its affiliates;
(g) the liability of the Guarantor, the Borrower, any other
guarantor, surety or pledgor or any other person to pay any and all of the
Obligations may be settled, or compromised or released, in whole or in part;
(h) the rights of set-off of the Agent may be exercised as
provided under this Guaranty, any other Loan Instrument or applicable law
against any of the deposits, assets, properties and indebtedness subject
thereto, without any demand on or notice to the Guarantor or the Borrower,
without regard to the frequency of exercise thereof, and whether or not the
relevant Obligations shall then be matured;
(i) any representation, warranty, covenant or other term or
provision of any Loan Instrument, or any part thereof, may be a subject of
one or more waivers of applicability or consents to nonperformance,
noncompliance or nonobservance, whether or not constituting defaults, or may
be otherwise not exercised or enforced (whether intentionally or otherwise);
(j) any one or more of this Guaranty, the Notes and any other Loan
Instrument, or any one or more of the rights, powers, privileges, remedies
and interests of the Agent herein or therein, may be sold, conveyed, assigned
or otherwise transferred in whole or part (including participations or other
undivided interests) to any other person; and/or
(k) any other right, power, privilege, remedy or interest of the
Agent under the Guaranty, the Notes, any other Loan Instrument or applicable
law may be exercised or enforced by the Agent or its designee, which exercise
or enforcement may be delayed, discontinued or otherwise not pursued or
exhausted for any or no reason whatsoever, or any such right, power,
privilege, remedy or interest may be waived, omitted or otherwise not
exercised or enforced (whether intentionally or otherwise), in the sole and
absolute discretion of the Agent.
SECTION 3.2 WAIVER. The Guarantor, to the fullest extent permitted by
law, hereby irrevocably waives each of the following:
(a) any duty on the part of the Agent to disclose to the Guarantor
any matter, fact or thing relating to the business, operation or condition of
the Borrower, or its assets now known or hereafter known by the Agent;
7
<PAGE>
(b) any and all notice of: (i) acceptance of this Guaranty; (ii)
any action taken or omitted in reliance hereon; and (iii) any default in the
payment of any sums due pursuant to the Obligations, or any Loan Instrument
or otherwise;
(c) presentment, demand for payment, protest or notice of protest
relating to this Guaranty, the Obligations and/or any of the Loan Instruments;
(d) any and all notice of the occurrence or continuance of any
Default, Event of Default or any event that (with the giving of notice or the
passage of time or both) could constitute a Default, under any of the Loan
Instruments, or of any other material or adverse event or Material Adverse
Effect;
(e) any and all notice of the terms, time, and place of any public
or private sale of any of the Collateral whether required by the Code or
otherwise;
(f) any "one action" or anti-deficiency law or any other law which
may prevent the Agent from bringing any action, including a claim for
deficiency, against the Guarantor, before or after the Agent's commencement
or completion of any foreclosure action, either judicially or by exercise of
a power of sale;
(g) any election of remedies by the Agent which destroys or
otherwise adversely affects the Guarantor's subrogation rights or the
Guarantor's rights to proceed against the Borrower for reimbursement,
including without limitation, any loss of right the Guarantor may suffer by
reason of any law limiting, qualifying, or discharging the Obligations;
(h) any disability or other defense of the Borrower or any other
guarantor, or of any other person, or by reason of the cessation of the
liability of the Borrower from any cause whatsoever, other than payment in
full in legal tender, of the Obligations;
(i) any right to claim discharge of the Obligations on the basis
of unjustified impairment of any Collateral;
(j) any statute of limitations, if at any time any action or suit
brought by the Agent against the Guarantor is commenced there is outstanding
any of the Obligations which are not barred by any applicable statute of
limitations;
(k) any defenses given to guarantors at law or in equity other
than actual payment and performance of the Obligations including all
defenses based upon suretyship or impairment of collateral pursuant to C.R.S.
Section 4-3-603;
8
<PAGE>
(l) any and all right, if any, to require the Agent to: (i)
continue lending money or to extend other credit to the Borrower; (ii)
proceed directly against, marshall or exhaust any of the Collateral; (iii)
pursue any remedy within the Agent's power; or (iv) commit any act or
omission of any kind, at any time, with respect to any matter whatsoever; and
(m) any other proof, notice or demand of any kind whatsoever with
respect to any or all of the Obligations or promptness in making any claim or
demand under this Guaranty or any of the Loan Instruments. No act or
omission of any kind in connection with any of the foregoing shall in any way
impair or otherwise affect the legality, validity, binding effect or
enforceability of any term or provision of this Guaranty or any of the
obligations of the Guarantor hereunder.
SECTION 3.3 WAIVER OF SUBROGATION. The Guarantor hereby irrevocably
waives any and all claims and other rights that it now has or may hereafter
acquire against the Borrower, or any other guarantor, that arise from the
existence, payment, performance or enforcement of this Guaranty or any other
Loan Instruments, including any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in
any claim or remedy of the Agent against the Borrower, any other guarantor or
any Collateral that the Guarantor now has or hereafter acquires, whether or
not such claim, remedy or right arises in equity or under contract, statute
or common law, including the right to take or receive from the Borrower,
directly or indirectly, in cash or other property, by set-off or in any other
manner, payment or security on account of any such claim or other right. If
any amount is paid to the Guarantor in violation of the preceding sentence
and the Obligations have not been paid in full, such amounts shall be deemed
to have been paid to the Guarantor for the benefit of, and held in trust for
the benefit of, the Agent and shall be forthwith paid to the Agent to be
credited and applied to the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Instruments. This waiver of
subrogation is for the benefit of the Agent and the foregoing waiver may not
be revoked by the Guarantor without the prior written consent of the Agent.
SECTION 3.4 ACKNOWLEDGMENT OF BENEFIT. The Guarantor acknowledges that
it has received and will receive direct and indirect benefits from the
financing arrangements contemplated by the Loan Instruments and that the
consents and waivers set forth in this Article are knowingly made in
contemplation of such benefits.
SECTION 3.5 MISCELLANEOUS. The Guarantor understands and agrees that
the foregoing waivers and the other waivers, consents, releases and
agreements contained in this Guaranty will, among other things, adversely and
materially effect, and under certain circumstances may eliminate entirely,
the Guarantor's rights or ability to collect monies from the Borrower that
the Guarantor may have paid to the Borrower and defenses that the Guarantor
might have to payment of the Obligations. This result may occur because of
the actions of the Agent or the Borrower, such as electing certain remedies
and foregoing or delaying others, releasing security, or modifying the
Obligations, all without notice to or consent from the Guarantor. The
Guarantor agrees that the foregoing waivers
9
<PAGE>
and the other waivers, consents, releases and agreements contained in this
Guaranty are made with the Guarantor's full knowledge of their significance
and consequences and that, under the circumstances, the waivers are
reasonable and not contrary to public policy or law. If any such waiver is
determined to be contrary to any applicable law or public policy, such waiver
shall be effective only to the extent permitted by law or public policy.
ARTICLE IV
SUBORDINATION OF INDEBTEDNESS
SECTION 4.1 SUBORDINATION OF INDEBTEDNESS. The Guarantor covenants and
agrees that until all of the Obligations have been fully paid and satisfied,
all indebtedness of the Borrower together with interest thereon, owed
directly or indirectly to the Guarantor, whether now or hereafter existing,
acquired or created, whether as a result of any payment made by the Guarantor
or otherwise, shall be subordinate, junior and inferior in dignity and
deferred as to payment to the full payment and satisfaction of all of the
Obligations. The Guarantor shall not seek any payment or exercise or enforce
any right, power, privilege, remedy or interest that it may have with respect
to any such indebtedness except with the prior written consent of the Agent
and except in connection with a bankruptcy of the Borrower, in which case the
Guarantor may file any claims it may have against the Borrower, subject to
the provisions of Section 4.3 below to pay over any amounts received to the
Agent. Any payment, asset or property delivered to or for the benefit of the
Guarantor in respect of any such indebtedness shall be accepted in trust for
the benefit of the Agent and shall be promptly paid or delivered to the Agent
to be credited and applied to the payment and satisfaction of the
Obligations, whether matured or unmatured, or to be held by the Agent as
additional Collateral. The Guarantor agrees to execute such additional
documents as the Agent may reasonably request to evidence the subordination
provided in this Section.
SECTION 4.2 SECURITY INTEREST IN INDEBTEDNESS. The Guarantor hereby
assigns and grants to the Agent a continuing security interest in and to all
indebtedness owing from the Borrower to the Guarantor, whether or not
hereafter existing, acquired or created, together with the proceeds thereof,
all payments and other distributions with respect thereto and any and all
renewals, substitutions, modifications and extensions of any and all of the
foregoing, as security for the timely and full payment and satisfaction of
the Obligations as and when due. The Guarantor shall endorse and deliver to
the Agent such instruments representing that indebtedness and shall execute
and deliver to the Agent such financing statements and other documents as the
Agent may deem necessary or desirable to evidence, confirm or perfect the
foregoing security interest (which financing statements may be signed by the
Agent on behalf and in the name of the Guarantor if the Guarantor does not
promptly sign and return the same). In addition to the rights, powers,
privileges, remedies and interest afforded to the Agent by this Guaranty and
applicable law, if an Event of Default has occurred, the Agent may exercise
any voting, consent, enforcement or other right, power, privilege,
10
<PAGE>
remedy or interest pertaining to any item of such collateral to the same
extent as if the Agent were the outright owner thereof. The Agent is hereby
authorized, in the name of the Guarantor, from time to time to execute and
file financing statements and continuation statements and to execute such
other documents and to take such other actions as the Agent deems necessary
or appropriate to perfect, preserve and enforce its rights under this
Guaranty.
SECTION 4.3 BANKRUPTCY. In the event of insolvency, reorganization, or
liquidation of the assets of the Borrower through bankruptcy, by an
assignment for the benefit of creditors, by voluntary liquidation, or
otherwise, the assets of the Borrower applicable to the payment of the claims
of both the Agent and the Guarantor shall be paid to the Agent and shall,
subject to Applicable Law, be applied by the Agent to the Obligations in such
order and manner as the Agent may determine. The Guarantor does hereby
assign to the Agent all claims which it may have or acquire against the
Borrower or against any assignee or trustee in bankruptcy of the Borrower;
provided, however, that such assignment shall be effective only for the
purpose of assuring to the Agent full payment in legal tender of all
Obligations.
ARTICLE V
RIGHT OF SET-OFF
SECTION 5.1 RIGHT OF SET-OFF, ETC. Upon the occurrence and during the
continuance of any Event of Default, the Agent hereby is authorized at any
time and from time to time, without notice to the Guarantor (any such notice
being hereby expressly waived by the Guarantor), to set-off and apply,
directly or through any of its affiliates, custodians, participants and
designees, any and all deposits (whether general or special, time or demand,
provisional or final, or individual or joint) and other assets and properties
at any time held in the possession, custody or control of the Agent and any
of its affiliates, custodians, participants and designees, and any
indebtedness or other amount at any time held in the possession, custody or
control of the Agent and any of its affiliates, custodians, participants and
designees, and any indebtedness or other amount at any time owing by the
Agent or any of its affiliates or participants, to or for the credit, account
or benefit of the Guarantor against any and all of the Obligations now or
hereafter existing under this Guaranty, whether or not the Agent shall have
declared a Default, accelerated the Obligations or made any demand or taken
any other action under this Guaranty, and although such Obligations may be
unmatured. The Guarantor hereby grants to the Agent a security interest in
and to, among other things, all such deposits, assets, properties and
indebtedness in the possession of the Agent's affiliates, custodians,
participants and designees, and the Guarantor hereby authorizes any such
person to so set-off and apply such amounts at such times and in such manner
as the Agent may direct pursuant to this Section. The Agent shall notify the
Guarantor subject to such set-off after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. In debiting any such account, the
Obligations shall be
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deemed to have been paid or repaid only to the extent of the funds actually
available in the account notwithstanding any internal procedure of the Agent
or any of its affiliates, custodians, participants and designees to the
contrary. The rights of the Agent under this Section are in addition to and
without limitation of any other rights, powers, privileges, remedies and
other interests (including, without limitation, other rights of set-off and
security interests) that the Agent may have under this Guaranty and
applicable law.
ARTICLE VI
REPRESENTATIONS, WARRANTIES,
AGREEMENTS AND COVENANTS
SECTION 6.1 GENERAL REPRESENTATIONS, WARRANTIES AND AGREEMENTS. So
long as any of the Obligations remain outstanding, the Guarantor hereby
represents and warrants to, and agrees with, the Agent that:
(a) LEGAL CAPACITY. The Guarantor has the legal capacity and
power to execute and deliver this Guaranty.
(b) VALID AND BINDING. This Guaranty, when executed and delivered
by the Guarantor, will be a legal, valid and binding obligation of the
Guarantor enforceable in accordance with the terms and provisions of this
Guaranty, except as enforceability may be limited by applicable bankruptcy,
insolvency or Applicable Laws affecting the enforcement and creditors' rights
generally or by equitable principles relating to enforceability.
(c) NO VIOLATION OF LAW OR CONTRACT. The execution and delivery
of this Guaranty and the performance by the Guarantor of the obligations
hereunder: (i) will not violate or be in conflict with (A) any provision of
applicable law, or (B) any judgment, order, writ, injunction, decree or
consent of any court or other judicial authority, and (ii) will not violate,
be in conflict with, result in a breach of or constitute a default under, any
material instrument, indenture, agreement or obligation of the Guarantor.
(d) NO OTHER CONDITIONS PRECEDENT. There are no conditions
precedent to the effectiveness of this Guaranty that have not been satisfied
or waived.
(e) INDEPENDENT INVESTIGATION. The Guarantor has, independently
and without reliance upon the Agent and based on documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Guaranty.
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(f) FINANCIAL STATEMENTS. The audited consolidated balance sheets
of the Borrower and the Guarantors (for purposes of this Section 6.1(f), as
"Guarantors" is defined in the Credit Agreement) at March 31, 1998, and the
related consolidated statements of income and retained earnings of the
Borrower and the Guarantors for the fiscal year then ended, and the related
consolidated statements of income and retained earnings of the Borrower and
Guarantors for the fiscal year ended March 31, 1998, copies of which have
been furnished to the Banks, fairly present the financial condition of the
Borrower and the Guarantors as at such date and the results of the operations
of the Borrower and the Guarantors for the period ended on such date, all in
accordance with Regulation S-X promulgated under the Securities Exchange Act
of 1934, and since March 31, 1998, there has been no material adverse change
in such condition or operations except as disclosed in SCHEDULE 4.1(f) of the
Credit Agreement.
(g) LITIGATION. Except as set forth in SCHEDULE 4.1(g) of the
Credit Agreement, the Guarantor represents and warrants that there is no
pending, or to the Guarantor's knowledge, threatened action or proceeding
affecting the Guarantor or its properties or business activities, before any
court, governmental agency or arbitrator, in which there is a reasonable
possibility of a Material Adverse Effect or which purports to affect the
legality, validity or enforceability of this Agreement or any Loan Instrument
to which the Guarantor will be a party.
(h) SOLVENCY. As of the date hereof, after giving effect to the
direct and indirect indebtedness and other liabilities of the Guarantor
arising under this Guaranty, the Guarantor: (i) is solvent (I.E., the
aggregate fair value of its assets exceeds the sum of its liabilities); (ii)
has adequate capital; and (iii) is able to pay its debts as they mature. Any
term or provision of this Guaranty to the contrary notwithstanding, the
aggregate amount of the Obligations guaranteed hereunder shall be reduced to
the minimum extent necessary to prevent this Guaranty from violating or
becoming voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors
generally.
(i) REVIEW OF CREDIT AGREEMENTS. The Guarantor has reviewed and
understands the Credit Agreement.
(j) NO MATERIAL MISREPRESENTATIONS OF OMISSIONS. No
representation, warranty, agreement or covenant of the Guarantor made or
contained in this Guaranty and no report, statement, certificate, schedule or
other document or information furnished by the Guarantor in connection with
the transactions contemplated by this Guaranty contains or will contain a
misstatement of a material fact or omits or will omit to state a material
fact required to be stated therein in order to make it, in the light of the
circumstances under which made, not misleading in any material respect as of
the date made or deemed made.
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SECTION 6.2 AFFIRMATIVE COVENANTS. So long as any of the Obligations
remain outstanding, the Guarantor hereby covenants and agrees that, unless
the Agent shall consent otherwise in writing:
(a) NOTICE OF CERTAIN CHANGES. Upon receipt of knowledge thereof,
the Guarantor shall give, or cause to be given, immediate written notice to
the Agent of (i) any change in the name or the location of the principal
place of business of the Guarantor; (ii) any change in location or material
change in the status of the Collateral, (iii) any act or event that violates,
is in conflict with, results in a breach of or constitutes a Default (with or
without the giving of notice or the passage of time or both) under (A) this
Guaranty or the Loan Instruments, or (B) any other material instrument,
indenture, agreement or obligation to which the Guarantor or the Borrower is
a party or by which any part of the Collateral may be bound or subject; (iv)
the occurrence of a Material Adverse Effect; (v) any information required
under SECTION 5.1(b) of the Credit Agreement applicable to the Guarantor.
(b) INSPECTION OF RECORDS. The Guarantor shall, upon two weeks'
notice (unless an Event of Default has occurred), allow the Agent or any
representatives permitted by the terms of SECTION 5.1(h) of the Credit
Agreement access to and right of inspection of the financial records of the
Guarantor, all to the extent and in the same manner as provided in
SECTION 5.1(h) of the Credit Agreement.
(c) PAYMENT OF TAXES AND CHARGES. The Guarantor shall pay
promptly when due all federal and material state and local taxes,
assessments, liens and governmental charges and levies, in each case before
the same become delinquent and before penalties accrue thereon, unless and to
the extent that the same are being contested in good faith by appropriate
proceedings.
(d) MAINTENANCE OF INSURANCE. The Guarantor shall procure and
maintain the third-party insurance identified in SCHEDULE 4.1(g) to the
Credit Agreement, but in no event shall such insurance be for an amount less
than the replacement cost of the assets so incurred, and issued by a
financially sound and reputable independent insurance company or companies
reasonably acceptable to the Agent.
(e) PERFORMANCE OF GUARANTY. The Guarantor shall do and perform
every act and discharge all of the obligations provided to be performed and
discharged by the Guarantor under this Guaranty, at the times and in the
manner specified herein.
(f) FURTHER ASSURANCES. The Guarantor shall promptly cure any
defects in the creation and issuance of this Guaranty. The Guarantor at its
expense will promptly execute and deliver to the Agent upon request all such
other and further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Guarantor in this
Guaranty, or to correct any omissions in this Guaranty, or more fully to
state the security obligations set out herein, or to perfect, protect or
preserve any liens created pursuant to this Guaranty, or to
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make any recordings, to file any notices, or obtain any consents, all as may
be necessary or appropriate in connection herewith.
SECTION 6.3 NEGATIVE COVENANTS. So long as any Obligations remain
outstanding, the Guarantor hereby covenants and agrees that, unless the Agent
shall consent otherwise in writing:
(a) NO NEW DEBT. The Guarantor shall not directly or indirectly
permit, create, incur, assume, permit to exist, increase, renew or extend on
or after the date hereof any material additional indebtedness on its part,
except as otherwise permitted by Section 5.2(d) of the Credit Agreement;
(b) NO NEW LIABILITY. The Guarantor shall not directly or
indirectly guaranty, assume or otherwise become liable or responsible for the
indebtedness or other obligations of any other persons, except any guarantee
of indebtedness owed to the Agent, and except as otherwise permitted by
SECTION 5.2(e) of the Credit Agreement; and
(c) NO DISPOSAL OF ALL ASSETS. The Guarantor shall not sell,
lease, assign, encumber, hypothecate, transfer, or otherwise dispose of all
or substantially all of the Guarantor's assets, or any interest therein,
except as permitted by SECTIONS 5.2(c) AND (g) of the Credit Agreement.
ARTICLE VII
REMEDIES
SECTION 7.1 DEFAULT. Upon the occurrence and during the continuation
of any Event of Default or an event that would require or permit acceleration
pursuant to the Credit Agreement of any outstanding indebtedness, then all of
the Obligations shall be immediately due and payable by the Guarantor to the
Agent.
SECTION 7.2 REMEDIES. In addition to all other rights, powers and
remedies conferred herein, and through applicable law, upon the occurrence
and during the continuation of an Event of Default, the Agent may reduce its
claim to judgment or otherwise enforce, in whole or in part, this Guaranty.
SECTION 7.3 OTHER RECOURSE. The Guarantor waives any right it may have
to require the Agent to proceed against any other person, exhaust any
Collateral or other security for the Obligations, or pursue any other remedy
in the Agent's power.
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SECTION 7.4 REINSTATEMENT. In the event any payment to the Agent of
any of the Obligations, or any part thereof, at any time is rescinded or must
otherwise be restored or returned by the Agent upon the insolvency,
bankruptcy or reorganization of the Borrower, any guarantor or any other
person, whether by order of any court, by any settlement approved by any
court, or otherwise, then the terms and provisions of this Guaranty shall
continue to apply, or shall be reinstated if not then in effect, as the case
may be, with respect to the Obligations so rescinded, restored or returned,
all as though such payment had never been made.
SECTION 7.5 REMEDIES NOT EXCLUSIVE. All rights, powers and remedies
herein conferred are cumulative, and not exclusive, of: (i) any and all
other rights and remedies herein conferred or provided for; and (ii) any and
all rights, powers and remedies conferred, provided for or existing at law or
in equity, and the Agent shall, in addition to the rights, powers and
remedies herein conferred or provided for, be entitled to avail itself of all
such other rights, powers and remedies as may now or hereafter exist at law
or in equity for the collection of and enforcement of the Obligations and the
enforcement of the representations, warranties, agreements, covenants and
indemnities contained in this Guaranty.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.1 PAYMENTS. All payments of principal, interest, fees or
other amounts due the Agent pursuant to this Guaranty shall be made in
immediately available funds by 12:00 noon (Denver, Colorado time) on the date
payment is due in U.S. Dollars to the Agent at the address contained in this
Article for notices to the Agent.
SECTION 8.2 JOINT AND SEVERAL OBLIGATIONS. Although this Guaranty is
made solely by the Guarantor, other persons or entities are also guaranteeing
all or a portion of the Obligations. The obligations of the Guarantor
hereunder and such other guarantors, sureties or pledgors as may exist from
time to time are joint and several. Accordingly, the Guarantor is liable for
the full amount of the Obligations notwithstanding the existence of other
guarantors, sureties or pledgors.
SECTION 8.3 ATTORNEYS' FEES; EXPENSES. The Guarantor agrees to pay
upon demand all of the Agent's costs and expenses, including reasonable
attorneys' fees and the Agent's reasonable legal expenses, incurred in
connection with the enforcement of this Guaranty. The Agent may pay someone
else to help enforce this Guaranty, and the Guarantor shall pay the costs and
expenses of such enforcement. The costs and expenses include the Agent's
reasonable attorneys' fees and legal expenses whether or not there is a
lawsuit, including reasonable attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any
automatic stay or injunction), appeals, any anticipated post-judgment
collection services, reasonable experts' fees and
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consultants' fees. The Guarantor also shall pay all court costs and such
additional fees as may be directed by the court.
SECTION 8.4 MERGER OF THE BORROWER. This Guaranty shall not be
affected by any change in the name of the Borrower, or by the acquisition of
the business of the Borrower by any person, firm or corporation, or by any
change whatsoever in the capital structure or constitution of the Borrower,
or by any merger, amalgamation or consolidation of the Borrower with any
corporation, or by any dissolution or liquidation of the Borrower, but shall,
notwithstanding the happening of any such event, continue to apply to all the
Obligations.
SECTION 8.5 INFORMATION. The Guarantor assumes all responsibility for
being and keeping informed of the financial condition and assets of the
Borrower, and of all other circumstances bearing upon the risk of nonpayment
of the Obligations and the nature, scope and extent of the risks that the
Guarantor assumes and incurs hereunder, and agrees that the Agent will not
have any duty to advise the Guarantor of information known to it or any Bank
regarding such circumstances or risks.
SECTION 8.6 FURTHER ASSURANCES. The Guarantor agrees to do such
further acts and things and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the Agent from
time to time reasonably may request in connection with the administration
maintenance, enforcement or adjudication of this Guaranty in order (a) to
evidence, confirm, perfect or protect any lien or security interest granted
or required to have been granted under this Guaranty, (b) to give the Agent
or its designee confirmation and assurance of the Agent's rights, powers,
privileges, remedies and interests under this Guaranty and applicable law,
(c) to better enable the Agent to exercise any such right, power, privilege
or remedy, or (d) to otherwise effectuate the purpose and the terms and
provisions of this Guaranty, each in the form and substance as may be
reasonably acceptable to the Agent. The Agent shall execute, acknowledge and
deliver to the Guarantor such documents and take such other actions as the
Guarantor reasonably may request in order to effectuate the purpose and terms
and provisions of this Guaranty.
SECTION 8.7 RELIANCE. The Agent shall be entitled to reasonably rely
upon any notice, consent, certificate, affidavit, statement, paper, document,
writing or other communication reasonably believed by the Agent to be genuine
and correct and to have been signed, sent or made by the proper person or
persons, and upon opinions and advice of legal counsel (including counsel for
the Guarantor), independent public accountants and other experts selected by
the Agent. The Agent shall be entitled to rely, and in entering into this
Guaranty in fact has relied, upon the representations, warranties and other
information respecting the Guarantor contained in this Guaranty
notwithstanding any investigation, analysis or evaluation that may have been
made or from time to time may be made by the Agent or its designees of all or
any part of the assets, business, operations, properties or condition
(financial or otherwise) of the Guarantor.
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SECTION 8.8 EXCULPATION. The Agent, the Banks and their designees, and
their respective directors, officers, employees, attorneys and agents, shall
not incur any liability (other than for a person's own acts or omissions
breaching a duty owed to the Guarantor and amounting to gross negligence or
willful misconduct as finally determined pursuant to applicable law by a
governmental authority having jurisdiction) for acts and omissions arising
out of or related directly or indirectly to this Guaranty or any of the Loan
Instruments; and the Guarantor hereby expressly waives any and all claims and
actions (other than those attributable to a person's own acts or omissions
breaching a duty owed to a Guarantor and amounting to gross negligence or
willful misconduct as finally determined pursuant to applicable law by a
governmental authority having jurisdiction) against the Agent, the Banks and
their designees, and their respective directors, officers, employees,
attorneys and agents, arising out of or related directly or indirectly to any
and all of the foregoing acts, omissions and circumstances.
SECTION 8.9 INDEMNIFICATION. The Agent, the Banks and their designees,
and their respective directors, officers, employees, attorneys and agents,
shall be indemnified, reimbursed, held harmless and, at the request of the
Agent, defended by the Guarantor from and against any and all claims,
liabilities, losses and expenses (including, without limitation, the
reasonable disbursements, expenses and fees of their respective attorneys)
that may be imposed upon, incurred by, or asserted against any of them, or
any of their respective directors, officers, employees, attorneys and agents,
arising out of or related directly or indirectly to this Guaranty or any of
the Loan Instruments, except such as are occasioned by the indemnified
person's own acts or omissions breaching a duty owed to a Guarantor or
amounting to gross negligence or willful misconduct as finally determined
pursuant to applicable law by a governmental authority having jurisdiction.
SECTION 8.10 INTERPRETATION. The parties acknowledge and agree that:
each party and its counsel have reviewed and negotiated the terms and
provisions of this Guaranty and have contributed to its revision; the normal
rule of construction, to the effect that any ambiguities are resolved against
the drafting party, shall not be employed in the interpretation of it; and
its terms and provisions shall be construed fairly to all parties hereto and
not in favor of or against any party, regardless of which party was generally
responsible for the preparation of this Guaranty.
SECTION 8.11 WAIVER AND MODIFICATION. This Guaranty constitutes the
entire agreement and understanding of the parties as to matters set forth in
this Guaranty. This Guaranty and the provisions hereof may be waived,
amended, modified, changed, discharged or terminated only by an instrument in
writing and signed by the Guarantor and the Agent. No delay or omission on
the part of the Agent in exercising any right under this Guaranty shall
operate as a waiver of such right or any other right. A waiver by the Agent
of a provision of this Guaranty shall not prejudice or constitute a waiver of
the Agent's right otherwise to demand strict compliance with that provision
or any other provision of this Guaranty. No prior waiver by the Agent, nor
any course of dealing between the Agent and the Guarantor, shall constitute a
waiver of any of the Agent's rights or any of the Guarantor's obligations as
to any future transactions. Whenever the consent of the Agent is
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required under this Guaranty, the granting of such consent by the Agent in
any instance shall not constitute continuing consent to subsequent instances
where such consent is required and, unless otherwise provided herein, such
consent may be granted or withheld in the sole and absolute discretion of the
Agent.
SECTION 8.12 BINDING AGREEMENT. This Guaranty shall be binding upon
the Guarantor and its successors and shall inure, together with the rights
and remedies of the Agent, to the benefit of the Agent and its successors and
assigns.
SECTION 8.13 ASSIGNMENT. The Guarantor may not assign its rights or
delegate its duties hereunder without the Agent's prior written consent.
However, the Agent may assign or otherwise transfer any rights under this
Guaranty to the extent provided in Section 7.8 of the Credit Agreement, and
such other person or entity shall thereupon become vested with all the
benefits in respect thereof granted to the Agent herein or otherwise.
SECTION 8.14 NOTICES. Except as otherwise expressly provided in this
Guaranty, any notice, request, demand or other communication permitted or
required to be given under this Guaranty shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth below
(or at such other address as shall be designated hereunder by notice to the
other parties and persons receiving copies, effective upon actual receipt)
and shall be deemed conclusively to have be given: (i) on the first business
day following the day timely deposited with Federal Express (or other
equivalent national overnight courier) or United States Express Mail, with
the cost of delivery prepaid; (ii) on the fifth business day following the
day duly sent by certified or registered United States mail, postage prepaid
and return receipt requested; or (iii) when otherwise actually delivered to
the addressee. If a written notice, certificate or signed item is expressly
required by another provision of this Guaranty, a manually signed original
must be delivered by the party giving it; any other notice, request, demand
or other communication also may be sent by tested telex, telegram or
telecopy, with the cost of transmission prepaid, and shall be deemed
conclusively to have been given on the first business day following the day
duly sent. Copies may be sent by regular first-class mail, postage prepaid,
to the persons, if any, set forth below, but any failure or delay in sending
copies shall not affect the validity of any such notice, request, demand or
other communication so given to a party. The addresses of the parties and
those persons receiving copies are as follows:
If to the Agent, at the following address:
Bank One, Colorado, N.A.
30 Pikes Peak Avenue
Colorado Springs, Colorado 80903
Attn: Shaun P. McCarthy, Vice President
Telecopy: (719) 471-5213
With a copy of all notices to:
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Ted R. Sikora II, Esq.
Davis, Graham & Stubbs LLP
370 Seventeenth Street, 47th Floor
Denver, Colorado 80202
Telecopy: (303) 893-1379
If to the Guarantor, at the following address:
ASI Landmark, Inc.
c/o Analytical Surveys, Inc.
1935 Jamboree Drive
Colorado Springs, CO 80920
Attn: Scott C. Benger
Telecopy: (719) 528-5093
With a copy of all notices to:
Steven D. Miller, Esq.
Sherman & Howard L.L.C.
633 Seventeenth Street, Suite 3000
Denver, CO 80202
Telecopy: (303) 298-0940
SECTION 8.15 PARTIAL INVALIDITY. In the event that any provision hereof
shall be deemed to be invalid by any reason of the operation of any law or by
reason of the interpretation placed thereon by any court, this Guaranty shall be
construed as not containing such provision with respect to any jurisdiction
where such law or interpretation is operative, and the invalidity of such
provision shall not affect the validity of any remaining provision hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
SECTION 8.16 GOVERNING LAW, JURISDICTION, VENUE AND WAIVER OF JURY TRIAL
RIGHTS. THIS GUARANTY AND ALL MATTERS RELATING HERETO SHALL, EXCEPT TO THE
EXTENT OTHERWISE REQUIRED BY APPLICABLE LAW, BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES. THE GUARANTOR HEREBY SUBMITS TO THE
JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF COLORADO AND AGREES
THAT THE AGENT MAY, AT ITS OPTION, ENFORCE ITS RIGHTS IN SUCH COURTS. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY IRREVOCABLY WAIVES THE
DEFENSE OF AN INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR PROCEEDING BY
THE BANK IN SUCH COURTS. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL
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BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.17 COUNTERPARTS. This Guaranty may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each
constituting an original, but all together one and the same instrument.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed as of the date first above written.
ASI LANDMARK, INC.
By:
------------------------------
Scott C. Benger
Vice President
BANK ONE, COLORADO, N.A.,
AS AGENT
By:
------------------------------
Shaun P. McCarthy
Vice President
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PLEDGE AND SECURITY AGREEMENT
ANALYTICAL SURVEYS, INC.
THIS PLEDGE AND SECURITY AGREEMENT, dated as of June 3, 1998, is by
ANALYTICAL SURVEYS, INC., a Colorado corporation ("Pledgor") to BANK ONE,
COLORADO, N.A., ("Agent") for the ratable benefit of the Banks under that
certain Credit Agreement dated as of June 3, 1998, by and among Pledgor (as
Borrower thereunder), Agent, and the Banks, with such Credit Agreement, as
hereafter amended, modified or extended by the parties thereto referred to as
the "Credit Agreement".
RECITALS
A. The Banks are willing to extend credit facilities to Pledgor subject
to the terms and conditions of the Credit Agreement. One of the terms of the
Credit Agreement is the requirement for execution and delivery of this Pledge
Agreement by Pledgor.
B. In order to induce the Banks to enter into the Credit Agreement,
Pledgor is willing to enter into this Pledge Agreement to secure the due and
punctual performance of the obligations of Pledgor under the Credit Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINED TERMS. (a) As used herein, the following terms shall have
the following meanings:
"PLEDGE AGREEMENT" shall mean this Pledge and Security Agreement, as
the same may be further amended, supplemented or otherwise modified from
time to time.
"PLEDGED COLLATERAL" shall mean the Pledged Stock and all Proceeds.
"PLEDGED STOCK" shall mean the shares of capital stock or limited
liability company membership interests of each Subsidiary Issuer listed in
Schedule I hereto, in each case together with all stock certificates,
options, warrants or rights of any nature whatsoever that may be issued or
granted by any Subsidiary Issuer to the Pledgor in respect of the Pledged
Stock while this Pledge Agreement is in effect.
<PAGE>
"PROCEEDS" shall have the meaning given thereto by C.R.S. 4-9-306.
"SUBSIDIARY ISSUER" shall mean the company listed on SCHEDULE 1
hereto, which is a wholly-owned Subsidiary of Pledgor.
(b) Unless otherwise defined herein, the capitalized terms used
herein which are defined in, or by reference in, the Credit Agreement shall
have the meanings specified therein.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import shall refer to this Pledge Agreement as a whole and not to any
particular provision of this Pledge Agreement, and section, subsection,
exhibit and schedule references are to this Pledge Agreement unless otherwise
specified.
2. PLEDGE AND GRANT OF SECURITY INTEREST. For value received and to
induce the Banks to make the Loans and otherwise to extend credit to
Borrower, Pledgor, for the ratable benefit of the Banks, hereby pledges,
charges, assigns, transfers and delivers, by way of a first lien, security
interest and assignment, to Agent, and grants a security interest to Agent
in, all of its right, title and interest in and to the Pledged Collateral as
security for all present and future obligations and liabilities of all kinds
of Pledgor to the Banks under the Loan Instruments or hereunder, whether
incurred by Pledgor as maker, endorser, drawer, acceptor, guarantor,
accommodation party or otherwise, and whether due or to become due, secured
or unsecured, absolute or contingent, joint or several, and howsoever or
whensoever incurred by Pledgor or acquired by any Bank (collectively referred
to as the "Obligations").
3. DELIVERY; STOCK POWERS; ENDORSEMENTS. All certificates or
instruments representing or evidencing the Pledged Stock pledged pursuant to
SECTION 2 hereof have previously been delivered or are being delivered to and
held by Agent concurrently with the execution of this Pledge Agreement and
are in suitable form for transfer by delivery, endorsed in blank or
accompanied by duly executed undated instruments of transfer or assignments
in blank, having attached thereto or to such certificates all requisite
federal, state or provincial stock transfer tax stamps, all in form and
substance satisfactory to Agent.
4. WARRANTIES, COVENANTS AND AGREEMENTS OF PLEDGOR.
Pledgor warrants, covenants and agrees that:
(a) the Subsidiary Issuers are all of the directly-owned Subsidiaries of
the Pledgor, and the Pledged Stock, consisting of the shares of the
Subsidiary Issuers listed on SCHEDULE 1 hereto, is all of the issued and
outstanding common stock or other equity interests in the Subsidiary Issuers,
(b) except for the security interests granted hereby,
(i) Pledgor is, and as to Pledged Collateral acquired after the
date hereof, Pledgor shall and will be at the time of acquisition, the
owner and holder of the Pledged Collateral free from any adverse claim,
security interest, encumbrance, lien,
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<PAGE>
charge, or other right, title or interest of any person other than Agent
and covenants that at all times the Pledged Collateral will be and remain
free of all such adverse claims, security interests, or other liens or
encumbrances;
(ii) Pledgor has full power and lawful authority to enter into
this Pledge and Security Agreement and to pledge, assign and transfer the
Pledged Collateral to Agent and to grant to Agent a first and prior
security interest therein as herein provided, all of which have been duly
authorized by all necessary corporate action;
(iii) the execution and delivery and the performance hereof are not
in contravention of any charter, article of incorporation or by-law
provision, or of any indenture, agreement or undertaking to which Pledgor
is a party or by which Pledgor or its property is bound;
(iv) this Pledge and Security Agreement constitutes the valid and
legally binding obligation of Pledgor enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; and
(v) Pledgor will defend the Pledged Collateral against all claims
and demands of all persons at any time claiming the same or any interest
therein. Any officer, agent or representative acting for or on behalf of
Pledgor in connection with this Pledge and Security Agreement or any aspect
hereof, or entering into or executing this Pledge and Security Agreement on
behalf of Pledgor, has been duly authorized to do so, and is fully
empowered to act for and represent Pledgor in connection with this Pledge
and Security Agreement and all matters related thereto or in connection
therewith.
(c) (i) Pledgor has not heretofore signed any financing statement or
security agreement which covers any of the Pledged Collateral, and no such
financing statement or security agreement is now on file in any public office.
(ii) As long as any amount remains unpaid on any of the
Obligations or under any agreements entered into in connection with the
Obligations, except as expressly permitted by any such agreements,
(A) Pledgor will not enter into or execute any security agreement or
financing statement covering the Pledged Collateral, other than those
security agreements and financing statements in favor of Agent hereunder,
and further (B) there will not be on file in any public office any
financing statement or statements (or any documents or papers filed as
such) covering the Pledged Collateral, other than financing statements in
favor of Agent hereunder, unless in any case the prior written consent of
Agent shall have been obtained.
(iii) At the request of Agent, Pledgor will join Agent in
executing such documents as Agent may determine from time to time to be
necessary or desirable under provisions of any applicable laws in effect
where the Pledged Collateral is
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<PAGE>
located or where Pledgor conducts business; without limiting the
generality of the foregoing, Pledgor agrees to join Agent, at Agent's
request, in executing one or more financing statements or other
instruments in form satisfactory to Agent, and Pledgor will pay the
costs of filing or recording the same, or of filing or recording this
Pledge Agreement, in all public offices at any time and from time to
time whenever filing or recording of any such financing statement or of
this Pledge Agreement is deemed by Agent to be necessary or desirable.
In connection with the foregoing, it is agreed and understood between
the parties hereto (and Agent is hereby authorized to carry out and
implement this agreement and understandings, and Pledgor hereby agrees
to pay the costs thereof) that Agent may, at any time or times, file as
a financing statement any counterpart, copy or reproduction of this
Pledge Agreement.
(d) In the event that Pledgor receives any promissory notes or
evidences of indebtedness of any Subsidiary Issuer, Pledgor shall hold the
same in trust as property of the Banks and forthwith assign, pledge and
deliver the same to Agent for the ratable benefit of the Banks.
5. RIGHTS OF AGENT AND PLEDGOR RELATED TO PLEDGED COLLATERAL.
Agent may from time to time following the occurrence of an Event of
Default, as defined in SECTION 7 hereof:
(a) Transfer any of the Pledged Collateral into the name of Agent or
its nominee.
(b) Notify parties obligated on any of the Pledged Collateral to make
payment to Agent of any amounts due or to become due thereunder.
(c) Enforce collection of any of the Pledged Collateral by suit or
otherwise; surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any obligation of any nature of any party with respect
thereto; and exercise all other rights of Pledgor in any of the Pledged
Collateral, except as hereinafter provided with respect to income from or
interest on the Pledged Collateral and except that, prior to an Event of
Default, Pledgor may exercise its voting and consensual rights with respect
to any Pledged Collateral constituting voting securities.
(d) Take possession or control of any proceeds of the Pledged
Collateral.
Until the occurrence of an Event of Default, Pledgor shall have the
right to receive all income from or interest on the Pledged Collateral, and
if Agent receives any such income or interest prior to the occurrence of an
Event of Default, Agent shall pay the same promptly to Pledgor, except that
in the case of securities or other property distributed by way of a dividend
or otherwise with respect to the Pledged Collateral, such securities or other
property (other than cash) shall be promptly delivered to Agent to be held as
Pledged Stock or other Pledged Collateral hereunder. Upon the occurrence of
an Event of Default, Pledgor will not demand or receive any income from or
interest on the Pledged Collateral, and if Pledgor receives any such income
or interest without any demand by it, the same shall be held by Pledgor in
trust for Agent in the same medium in which received, shall not be commingled
with any assets of Pledgor and shall be delivered to Agent in the
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<PAGE>
form received, properly endorsed to permit collection, not later than the
next business day following the day of its receipt. Agent shall promptly
apply the net cash received from such income or interest to payment of any of
the Obligations, provided that Agent shall account for and pay over to
Pledgor any such income or interest remaining after payment in full of the
Obligations then outstanding.
So long as no Event of Default or event which, with the giving of notice
or the lapse of time, or both, would become an Event of Default shall have
occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Pledge
Agreement or the Credit Agreement; PROVIDED, HOWEVER, that Pledgor shall
not exercise or refrain from exercising any such right if, in Agent's
judgment, such action would have a material adverse effect on the value of
the Pledged Collateral or any part thereof; and, PROVIDED, FURTHER, that
upon the request of Agent, Pledgor shall give Agent at least five days'
written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such rights; and
(ii) Agent shall execute and deliver (or cause to be executed and
delivered) to Pledgor all such proxies and other instruments as Pledgor may
reasonably request for the purpose of enabling Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant to
PARAGRAPH (i) above.
Agent shall never be under any obligation to collect, attempt to
collect, protect or enforce the Pledged Collateral or any security therefor,
which Pledgor agrees and undertakes to do at Pledgor's expense, but Agent may
do so in its discretion at any time after the occurrence of an Event of
Default and at such time Agent shall have the right to take any steps by
judicial process or otherwise as it may deem proper to effect the collection
of all or any portion of the Pledged Collateral or to protect or to enforce
the Pledged Collateral or any security therefor. All reasonable expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred or paid by Agent in connection with any such collection or attempt
to collect the Pledged Collateral or actions to protect or enforce the
Pledged Collateral or any security therefor shall be borne by Pledgor or
reimbursed by Pledgor to Agent upon demand. The proceeds received by Agent
as a result of any such actions in collecting or enforcing or protecting the
Pledged Collateral shall be held by Agent without liability for interest
thereon and shall be promptly applied by Agent as Agent may deem appropriate
toward payment of any of the Obligations secured hereby in such order or
manner as Agent may elect.
In the event Agent shall pay any taxes, assessments, interests, costs,
penalties or expenses incident to or in connection with the collection of the
Pledged Collateral or protection or enforcement of the Pledged Collateral or
any security therefor, Pledgor, upon demand of Agent, shall pay to Agent the
full amount thereof with interest at a rate per annum (based on a 360-day
year for the actual number of days involved) from the date expended by Agent
until repaid equal to the sum of three percent (3%) plus the Prime Rate in
effect under and defined by the Credit Agreement. So long as Agent shall be
entitled to any such payment, this Pledge Agreement shall operate as security
therefor as fully and to the same extent as it operates as security for
payment of the other Obligations
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<PAGE>
secured hereunder, and for the enforcement of such repayment, Agent shall
have every right and remedy provided hereunder for enforcement of payment of
the Obligations.
6. FURTHER ASSURANCES; AGENT AS AGENT.
Pledgor agrees to take such actions and to execute such stock or bond
powers and such other or different writings as Agent may request (and
irrevocably authorizes Agent to execute such writings as Pledgor's agent and
attorney-in-fact) further to perfect, confirm and assure Agent's security
interest in the Pledged Collateral and to assist Agent's realization thereon
including, without limitation, the right to receive, indorse, and collect all
instruments made payable to Pledgor representing any dividend, interest
payment or other distribution in respect of the Pledged Collateral or any
part thereof except to the extent Pledgor is entitled to receive any cash
dividend pursuant to Section 5.
7. EVENT OF DEFAULT.
The occurrence of any of the following shall constitute an "Event of
Default" hereunder:
(a) Failure of Pledgor to pay any Obligation (including any installment
of principal or interest thereon) when due and payable (after the expiration
of any grace period provided by the applicable Loan Instruments), whether at
maturity, by notice of intention to prepay or otherwise;
(b) Default in the timely performance by Pledgor of any obligation or
covenant contained herein or an Event of Default under the Credit Agreement
or any other Collateral Document to which Pledgor is a party, which default
shall not have been cured during any applicable grace period;
(c) Any representation or warranty made by Pledgor herein or in any
other agreement with or instrument delivered to Agent, or any statement or
representation made in any certificate, report or opinion delivered in
connection herewith or in connection with any such other agreement or
instrument that proves to be false or misleading in any material respect when
made; or
(d) The insolvency of Pledgor, the admission by Pledgor of its
inability to pay its debts as they become due, the commencement of any case
by or against Pledgor under any bankruptcy or insolvency law (and, in the
event such case is not instituted by Pledgor, it shall remain undismissed or
unstayed for a period of 45 days or any of the actions sought in such
proceeding shall occur), or the making by Pledgor of any assignment for the
benefit of creditors.
8. RIGHTS AND REMEDIES OF AGENT UPON DEFAULT.
If an Event of Default shall have occurred:
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<PAGE>
(a) Agent shall have and may exercise with reference to the Pledged
Collateral and the Obligations any or all of the rights and remedies of a
secured party under the Uniform Commercial Code ("UCC"), as applicable, and
as otherwise granted herein or under any other applicable law or under any
other agreement now or hereafter in effect executed by Pledgor, including,
without limitation, the right and power to sell, at public or private sale or
sales, or otherwise dispose of, or otherwise utilize the Pledged Collateral
and any part or parts thereof in any manner authorized or permitted under
said UCC after default by a debtor, and to apply the proceeds thereof toward
payment of any costs and expenses and attorneys' fees and expenses thereby
incurred by Agent and toward payment of the Obligations in such order or
manner as Agent may elect. Specifically and without limiting the foregoing,
Agent shall have the right to take possession of all or any part of the
Pledged Collateral or any security thereof and of all books, records, papers
and documents of Pledgor or in Pledgor's possession or control relating to
the Pledged Collateral which are not already in Agent's possession, and for
such purpose may enter upon any premises upon which any of the Pledged
Collateral or any security therefor or any of said books, records, papers and
documents are situated and remove the same therefrom without any liability
for trespass or damages thereby occasioned. To the extent permitted by law,
Pledgor expressly waives any notice of sale or other disposition of the
Pledged Collateral and all other rights or remedies of Pledgor or formalities
prescribed by law relative to sale or disposition of the Pledged Collateral
or exercise of any other right or remedy of Agent existing after default
hereunder; and to the extent any such notice is required and cannot be
waived, Pledgor agrees that if such notice is given in the manner provided in
SECTION 14 hereof at least ten days before the time of the sale or
disposition, such notice shall be deemed reasonable and shall fully satisfy
any requirement for giving of said notice. Agent shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given. Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed thereof, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(b) Upon notice by Agent to Pledgor, Agent or its nominee or nominees
shall have the sole and exclusive right to exercise all voting and consensual
powers pertaining to the Pledged Collateral or any part thereof and may
exercise such powers in such manner as Agent may elect.
(c) All dividends, payments of interest and other distributions of
every character made upon or in respect of the Pledged Collateral or any part
thereof shall be deemed to be Pledged Collateral and shall be paid directly
to and shall be held by Agent as additional Pledged Collateral pledged under
and subject to this Pledge Agreement.
(d) All rights to marshaling of assets of Pledgor, including any such
right with respect to the Pledged Collateral, are hereby waived by Pledgor.
(e) All recitals in any instrument of assignment or any other
instrument executed by Agent incident to sale, lease, transfer, assignment or
other disposition, lease or utilization of the Pledged Collateral or any part
thereof hereunder shall be full proof of the matters stated therein and no
other proof shall be requisite to establish full legal propriety of the sale
or other action taken by Agent or of any fact, condition or thing incident
thereto, and all requisites of such sale or other action or of any fact,
condition or thing incident thereto shall be presumed conclusively to have
been performed or to have occurred.
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<PAGE>
9. SPECIAL PROVISIONS FOR PLEDGED STOCK.
Pledgor hereby acknowledges that the sale by Agent of any of the Pledged
Stock pursuant to the terms hereof in compliance with applicable federal or
state securities laws (as now in effect or as hereafter amended, or any
similar statute hereafter adopted with similar purpose or effect, the
"Securities Laws") may require strict limitations as to the manner in which
Agent or any subsequent transferee of the Pledged Stock may dispose of such
securities. Pledgor understands that in order to protect Agent's interest it
may be necessary to sell the Pledged Stock at a price less than the maximum
price attainable if a sale were delayed or were made in another manner, such
as a public offering requested under the Securities Laws. Pledgor has no
objection to a sale in such a manner.
10. APPLICATION OF PROCEEDS BY AGENT.
In the event Agent sells or otherwise disposes of the Pledged Collateral
in the course of exercising the remedies provided for in SECTION 8 hereof,
any amounts held, realized or received by Agent pursuant to the provisions
hereof, including the proceeds of the sale of any of the Pledged Collateral
or any part thereof, shall be applied by Agent first toward the payment of
any costs and expenses incurred by Agent in enforcing this Pledge Agreement,
in realizing on or protecting any Pledged Collateral and in enforcing or
collecting any Obligations or any guaranty thereof, including, without
limitation, the reasonable, actual attorneys' fees and expenses incurred by
Agent (all of which costs and expenses are secured by the Pledged
Collateral), all of which costs and expenses Pledgor agrees to pay, and then
as provided in the Credit Agreement. Any amounts and any Pledged Collateral
remaining after such application and after payment to the Banks of all of the
Obligations in full shall be paid or delivered to Pledgor, its successor or
assigns, or as a court of competent jurisdiction may direct.
Agent shall be deemed to have exercised reasonable care in the custody
and preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which Agent
accords its own property, it being understood that Agent shall not have any
responsibility for (x) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not Agent has or is deemed to have knowledge
of such matters or (y) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.
11. ABSOLUTE INTEREST.
(a) So long as any Obligations are unsatisfied, all rights of Agent
hereunder, and all obligations of Pledgor hereunder, shall be absolute and
unconditional irrespective of (i) any lack of validity or enforceability of
any provision of the Credit Agreement, any agreement with respect to the
Obligations or any other agreement or instrument relating to any of the
foregoing, (ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit Agreement or any
other agreement or instrument, (iii) any exchange, release or non-perfection
of any Pledged Collateral, or any release or amendment or waiver of or any
consent to or departure from any guarantee, for all or any of the Obligations
or (iv) any other circumstance which might constitute
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<PAGE>
a defense available to, or a discharge of, Pledgor in respect of the
Obligations or this Pledge Agreement.
(b) This Pledge Agreement shall not be construed as relieving Pledgor
from full liability on the Obligations and any and all future and other
indebtedness secured hereby and for any deficiency thereon.
(c) Agent is hereby subrogated to all of Pledgor's interests, rights
and remedies in respect to the Pledged Collateral and all security now or
hereafter existing with respect thereto and all guaranties and endorsements
thereof and with respect thereto.
12. TERMINATION.
This Pledge Agreement and the security interests created hereunder shall
terminate when all the Obligations have been indefeasibly paid in full and
when Agent has no further obligation to extend credit under the Credit
Agreement, at which time Agent shall execute and deliver to Pledgor all
documents which Pledgor shall reasonably request to evidence termination of
such security interest and shall return physical possession of any Pledged
Collateral then held by Agent to Pledgor; PROVIDED, HOWEVER, that all
indemnities of Pledgor contained in this Pledge Agreement shall survive, and
remain in full force and effect regardless of the termination of the security
interest of this Pledge Agreement.
13. ADDITIONAL INFORMATION.
Pledgor agrees to furnish Agent from time to time such additional
information and copies of such documents relating to this Pledge Agreement,
the Pledged Collateral, the Obligations and Pledgor's financial condition to
the extent and at such times as provided under Section 5.1(h) of the Credit
Agreement as Agent may reasonably request.
14. NOTICES.
Any communication, notice or demand to be given hereunder shall be in
writing (including telex and facsimile communication) and mailed, sent
by facsimile, or delivered,
if to Pledgor,
Analytical Surveys, Inc.
1935 Jamboree Drive
Colorado Springs, Colorado 80902
Attention: Scott C. Benger
Senior Vice President-Finance,
Secretary and Treasurer
Facsimile: (719) 528-5093
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and if to Agent,
Bank One, Colorado, N.A.
30 East Pikes Peak Avenue
Colorado Springs, Colorado 80903
Attention: Shaun P. McCarthy
Vice President
Facsimile: (719) 471-5213
as to each party, at such other address or numbers as shall be designated by
either party hereto to the other party in a written notice. All such notices
and communications shall be effective (a) when received, if mailed by
registered or certified mail or physically delivered, (b) five (5) days after
being sent by mail, if sent by ordinary mail, and (c) upon confirmation of
transmission, if sent by telex or telecopier, addressed in each case as
aforesaid.
15. INDEMNITY AND EXPENSES.
The Pledgor agrees to indemnify Agent from and against any and all
claims, losses and liabilities growing out of or resulting from this Pledge
Agreement (including, without limitation, enforcement of this Pledge
Agreement and other Collateral Documents, and all claims and demands of all
persons at any time claiming the Pledged Collateral or any interest therein),
except claims, losses or liabilities resulting from Agent's gross negligence
or willful misconduct. Pledgor agrees to pay on demand all out-of-pocket
expenses of the Agent (including the reasonable fees and expenses of Agent's
attorneys, experts and agents) in any way relating to the enforcement or
protection of the rights of the Banks hereunder and further agrees that the
Pledged Collateral secures such payment.
16. NO WAIVER; CUMULATIVE RIGHTS.
No failure on the part of Agent to exercise, and no delay in exercising,
any right, remedy or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by Agent of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy and power hereby granted to Agent or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other and may be exercised by Agent from time to time.
17. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER,
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF COLORADO, WITHOUT, HOWEVER, GIVING EFFECT TO THE CONFLICTS OF LAW
PROVISIONS THEREOF. PLEDGOR, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS,
HEREBY IRREVOCABLY (a) AGREES THAT ANY LEGAL OR EQUITABLE ACTION, SUIT OR
PROCEEDING AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE SUBJECT MATTER HEREOF MAY BE
INSTITUTED IN ANY COURT OF
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APPROPRIATE JURISDICTION IN THE CITY AND COUNTY OF DENVER, COLORADO; (b)
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF SUCH
ACTION, SUIT OR PROCEEDING OR ANY CLAIM OF FORUM NON CONVENIENS; (c) SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT, FOR THE PURPOSES
OF SUCH ACTION, SUIT OR PROCEEDING; (d) WAIVES ANY IMMUNITY FROM JURISDICTION
TO WHICH IT MIGHT OTHERWISE BE ENTITLED IN ANY SUCH ACTION, SUIT OR
PROCEEDING WHICH MAY BE INSTITUTED IN ANY SUCH COURT, AND WAIVES ANY IMMUNITY
FROM THE MAINTAINING OF AN ACTION AGAINST IT TO ENFORCE IN ANY SUCH COURT,
ANY JUDGMENT FOR MONEY OBTAINED IN SUCH ACTION, SUIT OR PROCEEDING AND, TO
THE EXTENT PERMITTED BY APPLICABLE LAW, ANY IMMUNITY FROM EXECUTION; AND
(e) AGREES THAT ANY LEGAL OR EQUITABLE ACTION, SUIT OR PROCEEDING BROUGHT BY
PLEDGOR AGAINST AGENT OR OTHER LENDING PARTY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE SUBJECT MATTER
HEREOF SHALL BE INSTITUTED IN SUCH COURTS.
18. JURY TRIAL.
PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PLEDGE
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THE SUBJECT
MATTER HEREOF. THE PROVISIONS OF THIS SECTION 18 ARE A MATERIAL INDUCEMENT
FOR AGENT AND THE BANKS TO ENTER INTO THIS PLEDGE AGREEMENT AND THE CREDIT
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN AND THEREIN. PLEDGOR
HEREBY ACKNOWLEDGES THAT IT HAS REVIEWED THE PROVISIONS OF THIS SECTION 18
WITH ITS INDEPENDENT COUNSEL.
19. INCONSISTENCY OF AGREEMENTS.
In case of any inconsistency between this Pledge Agreement and the
Credit Agreement, the provisions of the Credit Agreement shall be controlling
except with respect to SECTIONS 1 and 2 hereof as to which the terms of this
Pledge Agreement shall be controlling.
20. EXECUTION IN COUNTERPARTS.
This Pledge Agreement may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed as of the date first above written.
ANALYTICAL SURVEYS, INC.
By: ________________________________
Scott C. Benger
Senior Vice President, Treasurer
and Secretary
BANK ONE, COLORADO, N.A.,
as Agent for the Banks
By: ________________________________
Shaun P. McCarthy
Vice President
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SCHEDULE I
Pledge and Security Agreement
ANALYTICAL SURVEYS, INC.
DESCRIPTION OF PLEDGED STOCK
OF SUBSIDIARY ISSUERS
---------------------
<TABLE>
<CAPTION>
Stock % Shares
ISSUER Class of Stock Certificate No. of Shares Outstanding
No. by Pledgor
<S> <C> <C> <C> <C>
MSE Common Stock, 100,000 100
Corporation No par value
ASI Landmark, Common Stock 1,000 100
Inc. No par value
</TABLE>
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ACKNOWLEDGMENT AND CONSENT
The undersigned, MSE CORPORATION (the "Issuer"), hereby (i)
acknowledges receipt of the attached Pledge and Security Agreement, dated as
of June 3, 1998 (the "Pledge Agreement") made by ANALYTICAL SURVEYS, INC.
("Pledgor") with and in favor of BANK ONE, COLORADO, N.A., as Agent (the
"Agent") for the Banks under that certain Credit Agreement (as defined in the
Pledge Agreement), (ii) consents to the pledge pursuant to the Pledge
Agreement of the shares of stock of the Issuer owned by Pledgor and listed in
Schedule I thereto (the "Pledged Stock"), (iii) agrees to notify the Agent
promptly in writing of the breach of any warranty or covenant or the
occurrence of any of the events described in SECTIONS 4 or 7 of the Pledge
Agreement and (iv) agrees that, if an Event of Default has occurred, (a) the
Agent shall have the right to receive any and all cash dividends paid in
respect of the Pledged Stock and make application thereof to the Obligations
in such order as provided in the Credit Agreement, and (b) all shares of the
Pledged Stock shall be registered in the name of the Agent or its nominee and
the Agent or its nominee may thereafter exercise all voting, corporate and
other rights pertaining to such shares of the Pledged Stock at any meeting of
shareholders or otherwise, and any and all rights of conversion, exchange,
subscription or any other rights, privileges or options existing at such time
and pertaining to such shares of the Pledged Stock as if it were the absolute
owner thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of the Issuer, or upon the exercise by the Pledgor or the Agent of
any right, privilege or option pertaining to such share of the Pledged Stock,
and in connection therewith, the right to deposit and deliver any and all of
the Pledged Stock with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions (as it may
determine to be appropriate), all without liability to the Agent except to
account for property actually received by it, but the Agent shall have no
duty to the Pledgor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing).
Capitalized terms used herein but not defined have the meanings
specified in the Pledge Agreement.
This Acknowledgment and Consent when executed by the Issuer and
accepted by the Agent by executing the acceptance at the foot hereof, shall be
deemed to be a contract under the laws of Colorado and for all purposes, shall
be construed in accordance with the laws of said jurisdiction.
MSE CORPORATION.
By:____________________________________
Scott C. Benger
Vice President
ACCEPTED:
BANK ONE, COLORADO, N.A.,
as Agent for the Banks
By:_______________________
Shaun P. McCarthy
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Vice President
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ACKNOWLEDGMENT AND CONSENT
The undersigned, ASI LANDMARK, INC. (the "Issuer"), hereby
(i) acknowledges receipt of the attached Pledge and Security Agreement, dated as
of June 3, 1998 (the "Pledge Agreement") made by ANALYTICAL SURVEYS, INC.
("Pledgor") with and in favor of BANK ONE, COLORADO, N.A., as Agent (the
"Agent") for the Banks under that certain Credit Agreement (as defined in the
Pledge Agreement), (ii) consents to the pledge pursuant to the Pledge Agreement
of the shares of stock of the Issuer owned by Pledgor and listed in Schedule I
thereto (the "Pledged Stock"), (iii) agrees to notify the Agent promptly in
writing of the breach of any warranty or covenant or the occurrence of any of
the events described in SECTIONS 4 or 7 of the Pledge Agreement and (iv) agrees
that, if an Event of Default has occurred, (a) the Agent shall have the right to
receive any and all cash dividends paid in respect of the Pledged Stock and make
application thereof to the Obligations in such order as provided in the Credit
Agreement, and (b) all shares of the Pledged Stock shall be registered in the
name of the Agent or its nominee and the Agent or its nominee may thereafter
exercise all voting, corporate and other rights pertaining to such shares of the
Pledged Stock at any meeting of shareholders or otherwise, and any and all
rights of conversion, exchange, subscription or any other rights, privileges or
options existing at such time and pertaining to such shares of the Pledged Stock
as if it were the absolute owner thereof (including, without limitation, the
right to exchange at its discretion any and all of the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of the Issuer, or upon the exercise by the
Pledgor or the Agent of any right, privilege or option pertaining to such share
of the Pledged Stock, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Stock with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions (as it may determine to be appropriate), all without liability to the
Agent except to account for property actually received by it, but the Agent
shall have no duty to the Pledgor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing).
Capitalized terms used herein but not defined have the meanings
specified in the Pledge Agreement.
This Acknowledgment and Consent when executed by the Issuer and
accepted by the Agent by executing the acceptance at the foot hereof, shall be
deemed to be a contract under the laws of Colorado and for all purposes, shall
be construed in accordance with the laws of said jurisdiction.
ASI LANDMARK, INC.
By:_________________________________
Scott C. Benger
President
ACCEPTED:
BANK ONE, COLORADO, N.A.,
as Agent for the Banks
By:_______________________________
Shaun P. McCarthy
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Vice President
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<PAGE>
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SECURITY AGREEMENT AND ASSIGNMENT
THIS SECURITY AGREEMENT AND ASSIGNMENT is entered into as of June 3,
1998 by and between ASI LANDMARK, INC., a Colorado corporation (the "Debtor")
and BANK ONE, COLORADO, N.A., a national banking association (the "Agent"),
for the ratable benefit of the Banks under that certain Credit Agreement
dated as of June 3, 1998, by and among the Analytical Surveys, Inc. (as
Borrower thereunder), Agent and the Banks, with such Credit Agreement, as
hereafter amended, modified or extended by the parties thereto referred to as
the "Credit Agreement."
Section 1
DEFINITIONS
SECTION 1.1 Specific Definitions. The following definitions shall
apply:
(a) "Account Debtors" means Debtor's customers and all other persons
who are obligated or indebted to Debtor in any manner, whether directly or
indirectly, primarily or secondarily, contingently or otherwise, with respect
to Accounts or General Intangibles.
(b) "Accounts" shall have the meaning set forth at SECTION 2.1(a).
(c) "Agent" shall have the meaning assigned to it in the Recitals hereto.
(d) "Banks" shall have the meaning assigned to it in the Recitals hereto.
(e) "Code" shall mean the Uniform Commercial Code of the State of
Colorado.
(f) "Credit Agreement" shall have the meaning assigned to it in the
Recitals hereto, and pursuant to which this Security Agreement and Assignment
is given.
(g) "Debtor" shall have the meaning assigned to it in the Recitals hereto.
(h) "Debtor's Obligations" shall mean the full and prompt payment and
performance of all of the indebtedness, obligations, convents, agreements and
liabilities of Debtor to Agent together with all interest and other charges
thereon, whether direct or indirect, existing, future, contingent or
otherwise, due or to become due, under or arising out of or in connection
with (i) Debtor's guaranty; (ii) any pledge or guaranty; (iii) any overdraft;
(iv) any Loan Document and (v) any and all modifications, extensions and
renewals of any of the foregoing.
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(i) "Debtor's Books" means all of Debtor's books and records including,
but not limited to: minute books; ledgers; records indicating, summarizing,
or evidencing Debtor's assets, liabilities, and the Accounts; all information
relating to Debtor's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs, and other
computer-prepared information.
(j) "Debtor's Guaranty" shall mean the unlimited guaranty of prompt
payment dated June 3, 1998 given by Debtor to Agent as the same may be
supplemented, modified, amended or restated from time to time.
(k) "Equipment" shall have the meaning set forth at SECTION 2.1(c).
(l) "Event of Default" shall have the meaning set forth in SECTION 9.
(m) "General Intangibles" shall have the meaning set forth at
SECTION 2.1(d).
(n) "Guarantor" and "Guarantors" shall mean, respectively, any one or
more of Debtor and ASI Landmark, Inc., a Colorado corporation.
(o) "Inventory" shall have the meaning set forth at SECTION 2.1(b).
(p) "Lien" means any security interest, mortgage, pledge, assignment,
lien, or other encumbrance of any kind, including any interest of a vendor
under a conditional sale contract or consignment and any interest of a lessor
under a capital lease.
(q) "Loan Documents" shall mean the Credit Agreement, the Notes, this
Security Agreement and Assignment, and any other instrument now or hereafter
given to evidence, secure or guaranty Debtor's Obligations.
(r) "Permitted Liens" means:
a. Liens imposed by any Governmental Authority for taxes,
assessments or charges not yet due or which are being
contested in good faith and with due diligence and with
respect to which adequate reserves have been established;
b. carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like Liens arising in the ordinary
course of business not yet delinquent or which are being
contested in good faith and with due diligence and with
respect to which adequate reserves have been established;
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c. Liens (other than Liens imposed by ERISA) consisting of
pledges or deposits under workers' compensation, unemployment
insurance and other social security legislation;
d. easements, rights-of-way, zoning restrictions and other
similar encumbrances of record on real property incurred in
the ordinary course of business which, in the aggregate, are
not material in dollar amount, and which do not in any case
interfere with the ordinary conduct of the business of the
Borrower or any Guarantor;
e. Liens existing on the date hereof and disclosed in SCHEDULE
4.1(o) to the Credit Agreement;
f. purchase money security interests securing payment by the
Borrower or any Guarantor of a portion of the purchase price
of any asset, PROVIDED THAT (i) any such Lien attaches to such
property concurrently with or within 20 days after the
acquisition thereof, (ii) such Lien attaches solely to the
property so acquired in such transaction, (iii) the principal
amount of the debt secured thereby does not exceed 100% of the
cost of such property, and (iv) the aggregate outstanding
principal of such purchase money security interest Liens shall
not at any one time exceed $4,000,000;
g. Liens, deposits or pledges to secure the non-delinquent
performance of bids, tenders, contracts (other than contracts
for the payment of money), leases (permitted under this
Agreement), public or statutory obligations, surety, stay,
appeal, indemnity, performance or other similar bonds, or
other similar obligations arising in the ordinary course of
business; or
h. Liens arising out of the lease of capital equipment in the
aggregate amount at any one time not exceed $4,000,000; or
i. any attachment or judgment Lien either in existence less than
30 calendar days after the entry thereof, or with respect to
which execution has been stayed, or with respect to which
payment in full above any deductible is covered by insurance.
(s) "Proceeds" shall have the meaning set forth in SECTION 2.1(g).
(t) "Secured Obligations" shall mean Debtor's Notes, Debtor's
Obligations and "Secured Party Expenses."
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(u) "Secured Party Expenses" means: (i) all costs and expenses
(including, without limitation, taxes and insurance premiums) required to be
paid by Debtor under this Security Agreement and Assignment or under any of
the other Loan Documents that are paid or advanced by Agent; (ii) filing,
recording, publication, and search fees paid or incurred by Agent in
connection with Agent's transactions with Debtor, (iii) costs and expenses
incurred by Agent to correct any default or enforce any provision of the Loan
Documents or in gaining possession of, maintaining, handling, preserving,
storing, shipping, selling, and preparing for sale and/or advertising to sell
the Collateral, whether or not a sale is consummated (including reasonable
counsel, consultant and appraiser fees and expenses); (iv) costs and expenses
of suit incurred by Agent as Agent in enforcing or defending the Loan
Documents or any portion thereof, and (v) Agent's reasonable attorney fees
and expenses incurred (before or after execution of this Security Agreement
and Assignment) in advising Agent with respect to, or in structuring,
drafting, reviewing, negotiating, amending, terminating, enforcing,
defending, or otherwise concerning, the Loan Documents or any portion
thereof, irrespective of whether suit is brought.
SECTION 1.2 Uniform Commercial Code Terms.
Terms used in this Security Agreement and Assignment, other than those
defined in this SECTION 1.1, have the meanings accorded to them in the
Uniform Commercial Code of the State of Colorado.
SECTION 1.3 Construction.
(a) Unless the context of this Security Agreement and Assignment
clearly requires otherwise, the plural includes the singular, the singular
includes the plural, the part includes the whole, "including" is not limited,
and "or" has the inclusive meaning of the phrase "and/or." The words
"hereof," "herein," "hereunder," and other similar terms in this Security
Agreement and Assignment refer to this Security Agreement and Assignment as a
whole and not exclusively to any particular provision of this Security
Agreement and Assignment.
(b) It is intended that the Credit Agreement expresses the primary
understandings and agreements of the parties. In the event of any
inconsistency or conflict between the terms of this document and the terms of
the Credit Agreement, the provisions of the Credit Agreement shall control.
Any schedule required by this document which duplicates the requirement of a
schedule attached to the Credit Agreement shall be deemed to be fulfilled by
the schedule to the Credit Agreement. Capitalized terms used but not defined
herein, and defined in the Credit Agreement, shall have the meaning given
thereto in the Credit Agreement.
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Section 2
SECURITY INTEREST
SECTION 2.1 Grant of Security Interest. In order to secure prompt
payment and performance of Debtor's Guaranty and Debtor's Obligations, Debtor
hereby grants to Agent a continuing first-priority pledge and security
interest in the following property of Debtor (the "Collateral"), whether now
owned or existing or hereafter acquired or arising and regardless of where
located:
(a) All Accounts, which shall mean all accounts, contract rights,
notes, drafts, instruments, documents, chattel paper, and obligations in any
form owing to Debtor arising out of the sale or lease of goods or the
rendition of services by Debtor whether or not earned by performance; all
credit insurance, guaranties, letters of credit, advices of credit, and other
security for any of the above; all merchandise returned to or reclaimed by
Debtor; and Debtor's Books relating to any of the foregoing.
(b) All Inventory, which shall mean any and all goods, supplies, wares,
merchandise, and other tangible personal property, including raw materials,
work in process, supplies and components, and finished goods, whether held
for sale or lease or to be furnished under any contract for service or so
leased or furnished, or used or consumed in Debtor's business, and also
including products of and accessions to inventory, packing and shipping
materials, and all documents of title, whether negotiable or nonnegotiable,
representing any of the foregoing.
(c) All Equipment, which shall mean all equipment, fixtures, machinery,
machine tools, office equipment, furniture, furnishings, motors, motor
vehicles, tractors, trailers, non-titled vehicles, tools, dies, parts, jigs,
goods, all attachments, accessories, accessions, parts, replacements,
substitutions, additions, and improvements thereto, and all supplies used or
to be used in connection therewith, including without limitation those items
of Equipment set forth on SCHEDULE 2.1(c) attached.
(d) All General Intangibles, which shall mean all general intangibles,
choses in action, causes of action, and all other personal property of every
kind and nature (other than goods and Accounts), including, without
limitation: (i) all tax refunds, (ii) all inventions, processes, production
methods, proprietary information, know-how and trade secrets used or useful
in the business of Debtor, (iii) all trade names, trademarks, and service
marks; all trademark and service mark registrations (other than intent to use
applications for trademarks and service marks, if any) and applications for
trademark and service mark registrations and all renewals of trademark and
service mark registrations, all rights relating thereto, including without
limitation, the right to recover for all past, present and future
infringements thereof, and all other rights of any kind whatsoever accruing
thereunder or pertaining thereto, together with the goodwill of the business
connected with
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the use of, and symbolized by, each such trade name, trademark, and service
mark, (iv) all logos, copyrights, patents and applications for patents, (v)
all licenses or other agreements relating to any of the foregoing, (vi) all
information, customer lists, identifications of suppliers, data, plans,
blueprints, specifications, designs, drawings, recorded knowledge, surveys,
engineering reports, test reports, manuals, materials standards, processing
standards, performance standards, catalogs, computer and automatic machinery
software and programs, and the like pertaining to any present or future
operations by Debtor, (vii) all field repair data, sales data and other
information relating to sales or service of all present or future products,
(viii) all accounting information and all media in which or on which any of
the information or knowledge or data or records which pertain to any present
or future operations of Debtor may be recorded or stored and all computer
programs used for the compilation or printout of such information, knowledge,
records or data, (ix) all licenses, consents, permits, variances,
certifications and approvals of any governmental authority or any other
person pertaining to any operations now or hereafter conducted by Debtor
(including, without limitation, all franchises, licenses, consents, permits,
variances, certifications and approvals specifically described on
SCHEDULE 2.1(d)(ix) attached), (x) all licenses, franchises, permits or other
rights to use any processes, production methods, proprietary information,
know-how, trade secrets and software in connection with Debtor's business
(including, without limitation, any of the foregoing described on
SCHEDULE 2.1(d)(x), attached), (xi) all causes of action, claims and
warranties relating to any of the foregoing, (xii) all certificates of
deposits evidencing a deposit by Debtor with Agent or any other financial
institution, (xiii) all promissory notes payable to Debtor which are
determined not to be instruments, (xiv) all Debtor's interest as lessee under
all leases of real and personal property (including, without limitation, the
leases set forth on SCHEDULE 4.1(o) to the Credit Agreement or any other
schedule that is either now or hereafter delivered by Debtor to Agent and
incorporated herein by reference) and (xv) all Debtor's interest in contracts
and agreements (including, without limitation, the contracts set forth on
SCHEDULE 4.1(n) of the Credit Agreement or any other schedule that is either
now or hereafter delivered by Debtor to Agent and incorporated herein by
reference).
(e) Investment Property, which shall mean all certificated or
uncertificated securities, security entitlements, security accounts,
commodity contracts or commodity accounts.
(f) Possessory Collateral, which shall mean notes, drafts, instruments,
documents, securities, money, letters of credit, advices of credit, or other
assets, properties or indebtedness owned by Debtor or in which Debtor has an
interest that now or thereafter are at any time in the possession or control
of Agent, Agent's affiliates, custodians, participants and designees or in
transit by mail or carrier to Agent, Agent's affiliates, custodians,
participants and designees or in the possession of any other third party
acting on behalf of Agent, without regard to whether Agent received the same
in pledge, for safekeeping, as agent for collection or transmission or
otherwise, or whether Agent had conditionally released the same, and all
deposit accounts of Debtor with Agent, Agent's affiliates, custodians,
participants and designees, including all demand, time, savings, passbook, or
other accounts.
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(g) Proceeds, which shall mean all proceeds and products of Collateral
and all additions and accessions to, replacements of, insurance or
condemnation proceeds of, and documents covering Collateral; all property
received wholly or partly in trade or exchange for Collateral; all claims
against third parties arising out of damage, destruction, or decrease in
value of the Collateral; all leases of Collateral; and all rents, revenues,
issues, profits, and proceeds, arising from the sale, lease, license,
encumbrance, collection, or any other temporary or permanent disposition of
the Collateral or any interest therein.
Section 3
PROVISIONS CONCERNING ACCOUNTS
SECTION 3.1 Office and Records of Debtor. Debtor's chief executive
office is located at: 1903 North Harrison Avenue, Cary, North Carolina
27513. Debtor maintains all of its records with respect to its Accounts in
Indiana. Debtor shall not maintain its chief executive office or its records
with respect to its Accounts at any other location except after thirty (30)
days prior written notice to the Agent.
SECTION 3.2 Representations. Debtor represents and warrants that
each Account of the Debtor at the time of its assignment to Agent (a) will be
owned solely by Debtor; (b) will be for a liquidated amount maturing as
stated in Debtor's Books; (c) will be a bona fide existing obligation created
by the final sale and delivery of goods or the rendition of services to
Account Debtors by Debtor in the ordinary course of its business; and (d)
will not be subject to any known deduction, offset, counterclaim, return
privilege, or other condition, except as reflected on Debtor's Books.
SECTION 3.3 Shipment Arrangements. After two (2) weeks notice,
unless an Event of Default has occurred then promptly upon the request of the
Agent, Debtor shall deliver to Agent, as Agent may request no more often than
annually, so long as an Event of Default has not occurred, copies of delivery
receipts, customer purchase orders, shipping instructions, bills of lading,
and other documentation respecting shipment arrangements. Absent such a
request by Agent, copies of all such documentation shall be held by Debtor as
custodian for Agent.
SECTION 3.4 Agent's Rights. Upon and after the occurrence of an
Event of Default and at any time Agent reasonably believes an Event of
Default has occurred or is likely to occur with the passage of time, any
officer, employee, or agent of Agent shall have the right, at any time or
times hereafter, in the name of Agent or its nominee (including Debtor), to
verify the validity, amount, or any other matter relating to any Accounts by
mail, telephone, or otherwise; and all reasonable costs thereof shall be
payable by Debtor to Agent. At such time, Agent or its designee may at any
time notify customers or Account Debtors that Accounts have been assigned to
Agent or of Agent's security interest therein and collect the same directly
and charge all collection costs and expenses to Debtor's account.
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SECTION 3.5 Post Default Rights. After a declared Event of Default
hereunder, no discount, credit, or allowance shall be granted by Debtor to any
Account Debtor and no return of merchandise shall be accepted by Debtor without
Agent's consent. Agent may thereafter settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms that Agent considers
advisable, and in such cases, Agent will credit Debtor's account with only the
net amounts received by Agent in payment of such disputed Accounts, after
deducting all Agent Expenses incurred in connection therewith.
Section 4
PROVISIONS CONCERNING INVENTORY
SECTION 4.1 Locations. SCHEDULE 4.1(o) of the Credit Agreement is a
true and correct list showing all states where inventory is located (except for
Inventory in transit), including, without limitation, facilities leased and
operated by Debtor and locations neither owned nor leased by Debtor, and showing
all such places where Inventory of Debtor has been located in the past four
months. Such list indicates whether the premises are those of a warehouseman or
other party. No Inventory will be removed from states set forth in such
Schedule except for the purpose of sale in the ordinary course of Debtor's
business provided that Inventory may be moved from one location set forth in
such Schedule to another in the ordinary course of Debtor's business. Debtor
will promptly notify Agent of any new Inventory location.
SECTION 4.2 Inventory, Books and Records. Debtor shall keep all
Inventory in good order and condition and shall maintain full, accurate, and
complete books and records with respect to Inventory at all times.
SECTION 4.3 Inspection of Collateral. Agent may, during Debtor's usual
business hours and consistent with SECTION 5.1(m) of the Credit Agreement,
inspect and examine the Inventory and check and test the same as to quality,
quantity, value, and condition.
SECTION 4.4 Sales of Inventory. Subject to the rights of Agent upon the
occurrence of an Event of Default, Debtor may sell Inventory in the ordinary
course of its business (which does not include a transfer in full or partial
satisfaction of indebtedness or a transfer for less than fair equivalent value).
SECTION 4.5 Warehouses and Landlords. Except as set forth on
SCHEDULE 4.1(o) of the Credit Agreement, Inventory is not now and shall not at
any time hereafter be stored with a bailee, warehouse, or similar party without
Agent's prior written consent.
Section 5
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PROVISIONS CONCERNING EQUIPMENT
SECTION 5.1 Maintenance and Repair. Debtor shall keep and maintain
Equipment material to its business in good operating condition and repair and
make all necessary repairs thereto so that the value and operating efficiency
thereof shall at all times be maintained and preserved. Debtor shall
immediately notify Agent of any material loss or damage to the Equipment.
SECTION 5.2 Fixtures. Debtor shall not permit any item of Equipment
that is not a fixture to become a fixture to real estate or an accession to
other property without the prior written consent of Agent, and the Equipment is
now and shall at all times remain personal property except with Agent's prior
written consent. If any of the Collateral is or will be attached to real estate
in such a manner as to become a fixture under applicable state law and if such
real estate is encumbered and such encumbrance attaches to such Collateral,
Debtor will obtain from the holder of each Lien or encumbrance a written consent
and subordination to the security interest hereby granted, or a written
disclaimer of any interest in the Collateral, in a form acceptable to Agent in
its reasonable judgment.
SECTION 5.3 Additional Acquisitions. Debtor shall promptly notify Agent
in writing of its acquisition, by purchase, lease, or otherwise, of any material
after-acquired Equipment, including a description of the Equipment and of its
present locations and (if different) its intended permanent locations.
Section 6
PROVISIONS CONCERNING GENERAL INTANGIBLES
SECTION 6.1 Title to General Intangibles. Debtor represents and
warrants that all of the General Intangibles assigned to Agent or in which
Debtor grants Agent a Lien are owned by Debtor.
SECTION 6.2 Intellectual Property.
(a) A true and complete schedule setting forth all patents, federal and/or
state trademarks, service marks, trade name or brand name registrations and
copyright registrations, and all pending applications and applications (other
than intent to use applications) to be filed therefore, owned or controlled by
Debtor or licensed to Debtor is contained in SCHEDULE 2.1(d)(x) hereto. No
licenses, sublicenses, covenants, or agreements have been entered into by Debtor
in respect of any of such items, and each such item is in full force and effect,
free and clear of all Liens and encumbrances of every nature, is not currently
being challenged in any way, and is not involved in any pending (or, to the
knowledge of Debtor, threatened) interference proceeding.
(b) Concurrently with its execution and delivery of this Security
Agreement and Assignment, Debtor shall execute and deliver to Agent collateral
assignments of all registered
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patents, trademarks, trade names, copyrights, and applications (other than
intent to use applications) for any of them, in a form satisfactory to Agent
and suitable for recording in the records of the registering authority.
SECTION 6.3 Contracts and Leases.
(a) SCHEDULE 4.1(o) and SCHEDULE 4.1(n) of the Credit Agreement are,
respectively, true and complete lists (i) of all leases of real property and
(ii) of all Material Agreements to which Debtor is a party. Debtor represents
and warrants that each of the leases, contracts, and other agreements listed on
such Schedules is in full force and effect; that neither Debtor nor, to Debtor's
knowledge, any other party thereto is in default under or in breach of the terms
or conditions of any such lease, contract, or other agreement; and that there
has not occurred any event of default or event that, after the giving of notice
or the lapse of time or both, would constitute a default under or breach of any
such lease.
(b) Debtor shall not amend, modify or supplement any Material Agreement or
waive any provision thereof other than in the ordinary course of business,
without the prior written consent of the Agent, which consent will not be
unreasonably withheld.
(c) Debtor shall remain liable to perform all of its duties and
obligations under any leases, contracts, and agreements included in the
Collateral to the same extent as if this Security Agreement and Assignment had
not been executed, and Agent shall not have any obligation or liability under
such leases, contracts, and agreements by reason of this Security Agreement and
Assignment or otherwise.
Section 7
OTHER PROVISIONS CONCERNING COLLATERAL
SECTION 7.1 Title. Debtor has good title to the Collateral, and the
Liens granted to Agent pursuant to this Security Agreement and Assignment are
fully perfected first priority Liens in and to the Collateral with priority over
the rights of every person in the Collateral other than the rights of Debtor and
other than Permitted Liens, and the Collateral is free, clear, and unencumbered
by any Liens in favor of any person other than Agent except for Permitted Liens.
SECTION 7.2 Further Assurances. Debtor shall execute and deliver to
Agent, concurrent with Debtor's execution of this Security Agreement and
Assignment and at any time or times hereafter at the request of Agent, all
financing statements, continuation financing statements, fixture filings,
security agreements, chattel mortgages, assignments, endorsements of
certificates of title, applications for titles, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents Agent may
reasonably request, in form satisfactory to Agent, to perfect and
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maintain perfected Agent's Liens in the Collateral and in order to consummate
fully all of the transactions contemplated under the Loan Documents. Debtor
hereby irrevocably makes, constitutes, and appoints Agent (and any of Agent's
officers, employees, or agents designated by Agent) as Debtor's true and
lawful attorney with power to sign the name of Debtor on any of the
above-described documents or on any other similar documents that need to be
executed, recorded, and/or filed in order to perfect or continue perfected
Agent's Liens in the Collateral. The appointment of Agent as Debtor's
attorney is irrevocable as long as any Secured Obligations are outstanding.
Any person dealing with Agent shall be entitled to rely conclusively on any
written or oral statement of Agent that this power of attorney is in effect.
SECTION 7.3 Transfer of Collateral. Debtor shall not sell, lease,
license, transfer, or otherwise dispose of any interest in any Collateral except
for sales of Inventory in the ordinary course of its business (sales of
Inventory in full or partial satisfaction of existing obligations of Debtor are
not considered to be sales in the ordinary course of business) and except for
sales, transfers or other dispositions permitted by SECTION 5.2(g) of the Credit
Agreement.
SECTION 7.4 Agent's Duty of Care. Agent shall have no duty of care with
respect to the Collateral except that Agent shall exercise reasonable care with
respect to the Collateral in Agent's custody. Agent shall be deemed to have
exercised reasonable care if such property is accorded treatment substantially
equal to that which Agent accords its own property or if Agent takes such action
with respect to the Collateral as the Debtor shall request or agree to in
writing, provided that no failure to comply with any such request nor any
omission to do any such act requested by the Debtor shall be deemed a failure to
exercise reasonable care. Agent's failure to take steps to preserve rights
against any parties or property shall not be deemed to be failure to exercise
reasonable care with respect to the Collateral in Agent's custody. All risk of
loss, damage, or destruction of the Collateral shall be borne by Debtor.
SECTION 7.5 Debtor's Contracts. Debtor shall remain liable to perform
its obligations under any contracts and agreements included in the Collateral to
the same extent as though this Security Agreement and Assignment had not been
entered into, and Agent shall not have any obligation or liability under such
contracts and agreements by reason of this Security Agreement and Assignment or
otherwise.
SECTION 7.6 Reinstatement of Liens. If at any time after payment in
full of all Secured Obligations and termination of Agent's Liens, any payment on
Secured Obligations previously made must be disgorged by Agent for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy, or
reorganization of Debtor or any Guarantor), this Security Agreement and
Assignment and Agent's Liens granted hereunder shall be reinstated as to all
disgorged payments as though such payments had not been made, and Debtor shall
sign and deliver to Agent all documents and things necessary to reperfect all
terminated Liens.
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SECTION 7.7 Agent Expenses. If Debtor fails to pay any moneys (whether
taxes, assessments, insurance premiums, or otherwise) due to third persons or
entities, fails to make any deposits or furnish any required proof of payment or
deposit, or fails to discharge any Lien prohibited hereby, all as required under
the terms of this Security Agreement and Assignment, then Agent may, to the
extent that it determines that such failure by Debtor could have a material
adverse effect on Agent's interests in the Collateral, in its discretion and
with three (3) days prior notice to Debtor, make payment of the same or any part
thereof. Any amounts paid or deposited by Agent shall constitute Agent
Expenses, shall become part of the Secured Obligations and shall be secured by
the Collateral. Any payments made by Agent shall not constitute (a) an
agreement by Agent to make similar payments in the future or (b) a waiver by
Agent of any Event of Default under this Security Agreement and Assignment.
Agent need not inquire as to, or contest the validity of, any such expense, tax,
security interest, encumbrance, or Line, and the receipt of the usual official
notice for the payment of moneys to a governmental entity shall be conclusive
evidence that the same was validly due and owing.
Debtor shall immediately and without demand reimburse Agent for all sums
expended by Agent that constitute Agent Expenses, and Debtor hereby authorizes
and approves all advances and payments by Agent for items constituting Agent
Expenses.
SECTION 7.8 Inspection of Collateral and Records. Subject to and
consistent with the provisions of SECTIONS 5.1(h) and 5.1(m) of the Credit
Agreement, during Debtor's usual business hours, Agent may inspect and examine
the Collateral and check and test the same as to quality, quantity, value and
condition. Agent shall also have the right at any time or times hereafter,
during Debtor's usual business hours or during the usual business hours of any
third party having control over the records of Debtor, to inspect and verify
Debtor's Books in order to verify the amount or condition of, or any other
matter relating to, the Collateral and Debtor's financial condition and to copy
and make extracts therefrom. Debtor waives the right to assert a confidential
relationship. If any, it may have with any accounting firm and/or service
bureau in connection with any information requested by Agent pursuant to this
Security Agreement and Assignment and agrees that Agent may directly contact any
such accounting firm and/or service bureau in order to obtain such information.
Section 8
COVENANTS
SECTION 8.1 Encumbrance of Assets. Debtor shall not create, incur,
assume, or permit to exist any Lien on any asset now owned or hereafter acquired
by Debtor, except for Liens to Agent and Permitted Liens or as otherwise
provided by SECTION 5.2(c).
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SECTION 8.2 Condition and Repair. Debtor shall maintain in good repair
and working order all properties used in its business and from time to time
shall make all appropriate repairs and replacements thereof.
SECTION 8.3 Insurance. Debtor shall maintain, with financially sound
and reputable insurers, insurance with respect to the Collateral against loss or
damage of the kinds and in the amounts customarily insured against by
corporations of established reputation engaged in the same or similar
businesses. Each such policy shall name Agent as an additional insured and,
where applicable, as loss payee under a lender loss payable endorsement
satisfactory to Agent and shall provide for thirty (30) days' written notice to
Agent before such policy is altered or canceled. Debtor shall provide evidence
satisfactory to Agent that all such coverages are in full force and effect.
Section 9
EVENTS OF DEFAULT
Any of the following events shall be deemed an Event of Default or a
default hereunder:
(a) if default shall be made in payment or performance of any Secured
Obligations as and when the same shall become due and payable after the
expiration of the applicable grace period, if any; or
(b) if Debtor fails to perform or observe any other term, provision,
covenant or agreement of this Security Agreement and Assignment (within 15 days
of Debtor's receipt of written notice or actual knowledge thereof) or in any of
the Loan Instruments to which it is a party, and Debtor shall not cure such
failure within the applicable grace period, if any; or
(c) if there occurs an event of default under the Credit Agreement or any
other Loan Instrument; or
(d) if any warranty, representation, certification, financial statement or
other information made or furnished at any time pursuant to the terms of this
Security Agreement and Assignment, by Debtor or any Guarantor, shall prove to be
materially false as of the date made.
Section 10
REMEDIES
SECTION 10.1 General Remedies. Upon the occurrence of any Event of
Default, in addition to all other rights, powers and remedies conferred herein,
in the Credit Agreement or by law, the Agent may declare the Secured Obligations
immediately due, payable and performable, including
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all principal and interest remaining unpaid on the Debtor's Notes and all
other amounts secured hereby, all without demand, presentment or notice, all
of which are expressly waived. The Agent shall also have, in addition to all
other rights provided herein, in the Credit Agreement, or by law, the rights
and remedies of Agent under the Code and applicable common law (regardless of
whether the Code is the law of the jurisdiction where the rights or remedies
are asserted and regardless of whether the Code applies to the affected
Collateral), and further, but not by way of limitation, the Agent may take
(and/or may cause one or more of its designees to take) any or all of the
following actions upon the occurrence of any Event of Default:
(a) Notify other parties with respect to or interested in any item of the
Collateral of the Agent's interest therein or of any action proposed to be taken
with respect thereto, and direct one or more of those parties to make all
payments, distributions and proceeds otherwise payable to the Debtor with
respect thereto directly to the Agent or its order until notified by the Agent
that all the Secured Obligations have been fully paid and satisfied.
(b) Require the Debtor to, and the Debtor hereby agrees that it shall at
its expense and upon request of the Agent forthwith, assemble all or part of the
Collateral as directed by the Agent and make it available to the Agent at a
place to be designated by the Agent reasonably convenient to both parties.
(c) Receive and retain all payments, distributions and proceeds of any
kind with respect to any and all of the Collateral.
(d) Enter any premises where any item of Collateral may be located, with
or without permission or process of law but without breach of the peace, and
seize and remove such Collateral or remain upon such premises and use or dispose
of such Collateral as contemplated under this Security Agreement and Assignment.
(e) Request the judicial appointment of a receiver respecting the
Collateral or any portion thereof in any action, suit or proceeding in which
claims are asserted against the Collateral by the Agent or its designee,
irrespective of the solvency of the Debtor or any other person or the adequacy
of any Collateral, and without notice to or the approval of the Debtor, which
receiver shall have the power to manufacture, operate, sell, lease or rent such
items of Collateral pending the sale of all of the Collateral and to collect the
rent, issues and profits therefrom, together with such other powers as may have
been requested by the Agent and shall apply the amounts received (net of all
proper charges and expenses) to the Obligations as provided in this Security
Agreement and Assignment. Such a receiver may serve without bond or under such
minimal bond as may be required by applicable law.
(f) Reduce its claim to judgment or foreclose or otherwise enforce, in
whole or in part, the security interest created hereby by any available judicial
procedure.
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(g) Take any action with respect to the offer, sale, lease or other
disposition, and delivery of the whole of, or from time to time any one or more
items of, the Collateral, including, without limitation: to sell, assign, lease
or otherwise dispose of the whole of, or from time to time any part of, the
Collateral, or offer or agree to do so, in any established market or at any
broker's board, private sale or public auction or sale (with or without demand
on the Debtor or any advertisement or other notice of the time, place or terms
of sale, except such reasonable notice of the time and place of any public sale
or the time after which a private sale or other disposition may be made as may
be required by the Code) for cash, credit or any other asset or property, for
immediate or future delivery, and for such consideration and upon such terms and
subject to such conditions as the Agent in its sole and absolute discretion may
determine. The requirements of reasonable notice shall be met if such notice is
mailed or delivered to the Debtor at the address designated at SECTION 12.4 at
least ten (10) days before the time of the sale or disposition. The Agent may
purchase (the consideration for which may consist in whole or in part of
cancellation of indebtedness) or any other person may purchase the whole or any
one or more items of the Collateral so sold free and clear of any and all
rights, powers, privileges, remedies and interests of the Debtor (which the
Debtor has expressly waived); to postpone or adjourn any such auction, sale or
other disposition or cause the same to be postponed or adjourned from time to
time to a subsequent time and place, or to abandon or cause the abandonment of
the same, all without any advertisement or other notice thereof; and to carry
out any agreement to sell any item or items of the Collateral in accordance with
the terms and provisions of such agreement, notwithstanding that, after the
Agent shall have entered into such an agreement, all the Obligations may have
been paid and satisfied in full. Agent may dispose of the Collateral in its
then existing condition or, at its election, may take such measures as it deems
necessary or advisable to refurbish, repair, improve, process, finish, operate,
demonstrate, and prepare for sale the Collateral and may store, ship, reclaim,
recover, protect, advertise for sale or lease, and insure the Collateral.
(h) Pay, purchase, contest, or compromise any encumbrance, charge, or Lien
that, in the opinion of Agent, appears to be prior or superior to its Lien and
pay all expenses incurred in connection therewith.
(i) Agent may (i) notify Account Debtors to make payment on Accounts, and
General Intangibles directly to Agent; (ii) settle, adjust, compromise, extend,
or renew Accounts, or General Intangibles, either before or after legal
proceedings to collect such Accounts, or General Intangibles have commenced;
(iii) prepare and file any bankruptcy proofs of claim or similar documents
against any Account Debtor; (iv) prepare and file any notice, assignment,
satisfaction, or release of Lien, UCC termination statement, or any similar
document; (v) sell or assign Accounts, and General Intangibles, individually or
in bulk, upon such terms, for such amounts, and at such time or times as Agent
deems advisable; and (vi) complete the performance required of Debtor under any
contract or agreement to which Debtor is a party and out of which Accounts, or
General Intangibles arise or may arise. Agent may use and operate Debtor's
Equipment for all such purposes.
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(j) Agent may (i) endorse Debtor's name on all checks, notes, drafts,
money orders, or other forms of payment of or security for Accounts or other
Collateral; (ii) sign Debtor's name on drafts drawn on Account Debtors or
issuers of letters of credit; and (iii) notify the postal authorities in
Debtor's name to change the address for delivery of Debtor's mail to an address
designated by Agent, receive and open all Mail addressed to Debtor, copy all
mail, retain copies of all mail relating to Collateral, and hold all mail
available for pickup by Debtor.
(k) Exercise any voting, consent, enforcement or other right, power,
privilege, remedy or interest of the Debtor pertaining to any item of Collateral
to the same extent as if the Agent were the outright owner thereof.
(l) Take possession of and thereafter deal with or use from time to time
all or any part of the Collateral in all respects as if the Agent were the
outright owner thereof.
(m) At the Agent's sole and absolute discretion, retain the Collateral or
any part thereof in satisfaction of the Secured Obligations.
(n) Transfer or cause the transfer of the ownership of all or any part of
the Collateral to its own name and have such transfer recorded in any
jurisdiction(s) and publicized in any manner deemed appropriate by the Agent.
SECTION 10.2 Non-Judicial Remedies. In granting to the Agent the power
to enforce its rights hereunder without prior judicial process or judicial
hearing, the Debtor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require the Agent to enforce its rights by
judicial process. In so providing for non-judicial remedies, the Debtor
recognizes and concedes that such remedies are consistent with the usage of
trade, are responsive to commercial necessity, and are the result of a bargain
at arm's length. Nothing herein is intended to prevent the Agent from resorting
to judicial process at its option.
SECTION 10.3 Proceeds. The Agent shall collect the cash and non-cash
proceeds received from any sale or other disposition or from any other source
contemplated by SECTION 10.1, and, after deducting all reasonable costs and
expenses incurred by the Agent and any person designated by the Agent to take
any of the action enumerated in this Security Agreement and Assignment in
connection with such collection and sale or disposition (including reasonable
attorneys' disbursements, expenses and reasonable fees and the reasonable fees
and expenses of any appraisers or consultants employed by Agent), the Agent in
its discretion may retain the same as additional or substitute Collateral or may
apply the same in accordance with the terms and provisions of this Security
Agreement and Assignment. In the event any funds remain after satisfaction in
full of the Secured Obligations, then the remainder shall be returned to the
Debtor, subject, however, to any other rights or interests the Agent may have
therein under any other instrument, agreement or document or applicable law.
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SECTION 10.4 Application of Proceeds. Any funds received from or on
behalf of the Debtor (whether pursuant to the terms and provisions of this
Security Agreement and Assignment or otherwise) by the Agent shall be applied to
the following items in such manner and order as the Agent may determine in its
sole and absolute discretion.
(a) The payment to or reimbursement for any fees and expenses for which
the Agent is entitled to be paid or reimbursed pursuant to any of the provisions
of this Security Agreement and Assignment.
(b) The payment of accrued and unpaid interest on the Secured Obligations.
(c) The payment of the outstanding principal on the Secured Obligations.
(d) The payment in full of all other Obligations under this Security
Agreement and Assignment.
All advances and payments made pursuant to this Security Agreement and
Assignment may be recorded by the Agent on its books and records, and such books
and records shall be conclusive absent manifest error as to the existence and
amounts thereof.
SECTION 10.5 Deficiency. If the amount of all proceeds received with
respect to and in liquidation of the Collateral that shall be applied to payment
of the Secured Obligations shall be insufficient to pay and satisfy all of the
Secured Obligations in full, the Debtor acknowledges that it shall remain liable
for any deficiency, together with interest thereon and costs of collection
thereof (including attorneys' disbursements, expenses and reasonable fees and
the reasonable fees of any appraisers or consultants employed by Agent), and in
accordance with the terms and provisions of this Security Agreement and
Assignment.
SECTION 10.6 Other Recourse. The Debtor waives any right to require the
Agent to proceed against any other person, exhaust or marshal any Collateral or
other security for the Secured Obligations, or pursue any other remedy in the
Agent's power. Until all of the Secured Obligations shall have been paid in
full, the Debtor shall have no right to subrogation and the Debtor waives the
right to enforce any remedy which the Agent has or may hereafter have against
any other party liable for the Secured Obligations, and waives any benefit of
and any right to participate in any other security whatsoever now or hereafter
held by the Agent.
SECTION 10.7 Remedies Not Exclusive. All rights, powers and remedies
conferred in this SECTION 10 are cumulative, and not exclusive, of: (i) any and
all other rights and remedies herein conferred or provided for; (ii) any and all
other rights, powers and remedies conferred or provided for in the Credit
Agreement or in any other Loan Document; and (iii) any and all rights, powers
and remedies conferred, provided for or existing at law or in equity, and the
Agent shall, in addition to
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the rights, powers and remedies herein conferred or provided for, be entitled
to avail itself of all such other rights, powers and remedies as may now or
hereafter exist at law or in equity for the collection of and enforcement of
the Secured Obligations and the enforcement of the representations,
warranties, agreements, covenants and indemnities contained in this Security
Agreement and Assignment, the Credit Agreement and in any other Loan
Document. The Agent, in its sole discretion, may proceed to exercise or
enforce any right, power, privilege, remedy or interest that the Agent may
have under this Security Agreement and Assignment, the Credit Agreement any
other Loan Document, or applicable law, without notice except as otherwise
expressly provided herein; without pursuing, exhausting or otherwise
exercising or enforcing any other right, power, privilege, remedy or interest
that the Agent may have against or in respect of the Debtor or the
Collateral, or other person or thing, and without regard to any act or
omission of the Agent or any other person. The Agent may institute separate
proceedings with respect to this Security Agreement and Assignment in such
order and at such times as the Agent may elect in its sole and absolute
discretion. This Security Agreement and Assignment may be enforced without
possession of any Note or its production in any action, suit or proceeding.
SECTION 10.8 Equitable Relief. The Debtor acknowledges that it will be
impossible to measure in money the damage to the Agent in the event of a breach
of any of the terms and provisions of this Security Agreement and Assignment,
and the Debtor agrees that, in the event of any such breach, the Agent will not
have an adequate remedy at law, although the foregoing shall not constitute a
waiver of any of the Agent's rights, powers, privileges and remedies against or
in respect of a breaching party, any Collateral or any other person or thing
under this Security Agreement and Assignment or applicable law. It is therefore
agreed that the Agent, in addition to all other such rights, powers, privileges
and remedies that it may have, shall be entitled to injunctive relief, specific
performance or such other equitable relief as the Agent may request to exercise
or otherwise enforce any of the terms and provisions of this Security Agreement
and Assignment and to enjoin or otherwise restrain any act prohibited thereby,
and the Debtor will not urge and hereby waives any defense that there is an
adequate remedy of law.
SECTION 10.9 License. Agent is hereby granted a license or other right
to use, without charge, Debtor's patents, copyrights, trade secrets, technical
processes, rights of use of any name, trade names, trademarks, labels, and
advertising matter, or any property of a similar nature, as it pertains to the
Collateral, in completing production of, advertising for sale, and selling any
Collateral, and Debtor's rights under all licenses and shall inure to Agent's
benefit.
SECTION 10.10 Power of Attorney. Debtor hereby appoints Agent (and any of
Agent's officers, employees, nominees, designees or agents designated by Agent)
as Debtor's attorney, with power after the occurrence of an Event of Default and
at any time Agent reasonably believes an Event of Default has occurred or is
likely to occur with the passage of time, with respect to the various assets and
properties included in the Collateral, and in addition to any other powers of
attorney contained herein: (a) to take possession of and endorse (to Agent or
otherwise) Debtor's
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name on any checks, bills of exchange, notes, acceptances, money orders,
drafts, or other documents, forms of payment or security received in payment
for or on account of those assets and properties; (b) demand, collect and
receive any monies due on account of those assets and properties and give
receipts and acquittances in connection therewith; (c) negotiate and
compromise any claim, and commence, prosecute, defense, settle or withdraw
and claims, suits or proceedings pertaining to or arising out of those assets
and properties; (d) pay any indebtedness or other liability or perform any
other Secured Obligation required to be paid or performed under this Security
Agreement and Assignment or the Credit Agreement by the Debtor; (e) prepare
and execute on behalf of the Debtor any mortgage, financing statement or
other evidence of a security interest contemplated by this Security Agreement
and Assignment, or any modification, refiling, continuation or extension
thereof; (f) to sign Debtor's name on drafts against Account Debtors, on
schedules and assignments of Accounts, on verifications of Accounts, and on
notices to Account Debtors; (g) to notify the post office authorities to
change the address for delivery of Debtor's mail to an address designated by
Agent, to receive and open all mail addressed to Debtor, and to retain copies
of all mail relating to the Collateral and hold all mail available for pick
up by Debtor; (h) to send requests for verification of Accounts; (i) take any
other action contemplated by this Security Agreement and Assignment or the
Credit Agreement; (j) sign, execute, acknowledge, swear to, verify, deliver,
file, record and publish any one or more of the foregoing; and (k) to do all
things necessary to carry out this Security Agreement and Assignment. The
appointment of Agent as Debtor's attorney and each and every one of Agent's
rights and powers, being coupled with an interest, are irrevocable as long as
any Secured Obligations are outstanding. Any person dealing with Agent shall
be entitled to rely conclusively on any written or oral statement of Agent
that this power of attorney is in effect. This Power of Attorney shall
survive the dissolution, reorganization or bankruptcy of the Debtor and shall
extend to and be binding upon the Debtor's successors, assigns, heirs and
legal representatives. To the extent permitted by applicable law, the Debtor
hereby ratifies and approves all acts of any such attorney and agrees that
neither the Agent nor any such attorney will be liable for any acts or
omissions nor for any error of judgment or mistake of fact or law other than
their gross negligence, willful misconduct or unlawful misconduct. Agent may
also use Debtor's stationary solely in connection with exercising its rights
and remedies hereunder and performing the Obligations of Debtor.
SECTION 10.11 Expenses Secured. The Debtor agrees to pay on demand all
reasonable costs and expenses, if any (including reasonable counsel, consultant
and appraiser fees and expenses), in connection with the exercise and
enforcement (whether through negotiations, legal proceedings or otherwise) of
Agent's rights and remedies provided by this Security Agreement and Assignment,
the Credit Agreement or any other Loan Document, or which by law shall be
payable by the Debtor, expressly including all such costs and expenses incurred
by the Agent in connection with or during the pendency of any bankruptcy or
insolvency proceedings involving the Debtor or any Guarantor. All such expenses
shall be part of the Secured Obligations, and shall be secured by the
Collateral.
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SECTION 10.12 Miscellaneous. The Debtor acknowledges and agrees that the
rights, powers, privileges, remedies and interests conferred upon the Agent in
respect of the Collateral by this Security Agreement and Assignment and
applicable law are solely to enable the Agent to protect and preserve the
Collateral, as well as to realize upon it in accordance with this Security
Agreement and Assignment, all in such manner as the Agent in its discretion may
elect, and shall not impose upon the Agent any duty or other obligation to
exercise or enforce any such right, power, privilege, remedy or interest. Any
exercise or other enforcement of any such right, power, privilege, remedy or
interest, if undertaken by the Agent in its discretion, may be delayed,
discontinued or otherwise not pursued or exhausted for any reason whatsoever
(whether intentionally or otherwise). Without limiting the generality of the
foregoing, the Agent shall be under no duty or obligation to protect or preserve
any of the Collateral, perform any obligation or duty of the Debtor under any of
the Collateral, or take any action to mitigate or otherwise reduce any damage or
other loss or to otherwise collect, exercise or enforce any claim, right or
other interest arising under or with respect to the Collateral, except as
specifically provided in this Security Agreement and Assignment.
Section 11
RIGHT OF SET-OFF
SECTION 11.1 Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, the Agent hereby is authorized at any time
and from time to time, without notice to the Debtor (any such notice being
hereby expressly waived by the Debtor), to set-off and apply, directly or
through any of its affiliates, custodians, participants and designees, any and
all deposits (whether general or special, time or demand, provisional or final,
or individual or joint) and other assets and properties at any time held in the
possession, custody or control of the Agent and any of its affiliates,
custodians, participants and designees, and any indebtedness or other amount at
any time held in the possession, custody or control of the Agent and any of its
affiliates, custodians, participants and designees, and any indebtedness or
other amount at any time owing by the Agent or any of its
affiliates or participants, to or for the credit, account or benefit of the
Debtor against any and all of the Secured Obligations now or hereafter
existing, whether or not the Agent shall have declared a default, accelerated
the Secured Obligations or made any demand or taken any other action under
this Security Agreement and Assignment, and although such Secured Obligations
may be unmatured. The Debtor acknowledges that pursuant to SECTION 2.1(f)
hereof it granted to the Agent a senior security interest in and to, among
other things, all such deposits, assets, properties and indebtedness in the
possession of the Agent's affiliates, custodians, participants and designees,
and the Debtor hereby authorizes any such person to so set-off and apply such
amounts at such times and in such manner as the Agent may direct pursuant to
this SECTION 11.1. The Agent shall notify the Debtor after any such set-off
and application; provided, however, that the failure to give such notice
shall not affect the validity of such set-off and application. In debiting
any such account, the Secured Obligations shall be deemed to have been paid
or repaid only to the extent of the funds actually available in the account
notwithstanding any internal procedure of the Agent or any of its
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affiliates, custodians, participants and designees to the contrary. The
rights of the Agent under this Section are in addition to and without
limitation of any other rights, powers, privileges, remedies and other
interests (including, without limitation, other rights of set-off and
security interests) that the Agent may have under this Security Agreement and
Assignment and applicable law.
Section 12
MISCELLANEOUS PROVISIONS
SECTION 12.1 Delay and Waiver. No delay or omission to exercise any
right shall impair any such right or be a waiver thereof, but any such right may
be exercised from time to time and as often as may be deemed expedient. A
waiver on one occasion shall be limited to that particular occasion.
SECTION 12.2 Severability; Headings. If any part of this Security
Agreement and Assignment or the application thereof to any person or
circumstance is held invalid, the remainder of this Security Agreement and
Assignment shall not be affected thereby. The section headings herein are
included for convenience only and shall not be deemed to be a part of this
Security Agreement and Assignment.
SECTION 12.3 Binding Effect. This Security Agreement and Assignment
shall be binding upon and inure to the benefit of the respective legal
representatives, successors, and assigns of the parties hereto; however, Debtor
may not assign any of its rights or delegate any of its obligations hereunder.
Agent (and any subsequent assignee) may transfer and assign this Security
Agreement and Assignment and deliver the Collateral to the assignee, who shall
thereupon have all of the rights of Agent; and Agent (or such subsequent
assignee who in turn assigns as aforesaid) shall then be relieved and discharged
of any responsibility or liability with respect to this Security Agreement and
Assignment and said Collateral.
SECTION 12.4 Notices. Any notices under or pursuant to this Security
Agreement and Assignment shall be deemed duly sent when delivered in hand or
when mailed by registered or certified mail, return receipt requested, or when
delivered by courier or when transmitted by facsimile, telecopy, or similar
electronic medium to the following addresses:
To Debtor: ASI LANDMARK, INC.
c/o Analytical Surveys, Inc.
1935 Jamboree Drive
Colorado Springs, Colorado 80920
Attention: Scott C. Benger
Telecopy: (719) 528-5093
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With a copy to: Steven D. Miller, Esq.
Sherman & Howard L.L.C.
633 17th Street, Suite 3000
Denver, Colorado 80202
Telecopy: (303) 298-0940
To Agent: Bank One, Colorado, N.A.
30 Pikes Peak Avenue
Colorado Springs, Colorado 80903
Attention : Shaun P. McCarthy
Vice President
Telecopy: (719) 471-5213
With a copy to: Ted R. Sikora II, Esq.
Davis, Graham & Stubbs LLP
370 Seventeenth Street, Suite 4700
Denver, Colorado 80202
Telecopy: (303) 893-1379
Either party may change such address by sending notice of the change to the
other party; such change of address shall be effective only upon actual receipt
of the notice by the other party.
SECTION 12.5 CONSENT TO JURISDICTION. ANY LEGAL ACTION OR OTHER
PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT AND ASSIGNMENT OR ANY OTHER
LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF COLORADO OR OF THE
UNITED STATES LOCATED IN THE CITY AND COUNTY OF DENVER (TO THE EXTENT THAT SUCH
COURTS WOULD OTHERWISE HAVE SUBJECT MATTER JURISDICTION), AND BY EXECUTION AND
DELIVERY OF THIS SECURITY AGREEMENT AND ASSIGNMENT, EACH OF THE DEBTOR AND THE
AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION
OF THOSE COURTS. EACH OF THE DEBTOR AND THE AGENT IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
SECURITY AGREEMENT AND ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS. THE DEBTOR AND
THE AGENT EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY COLORADO LAW.
SECTION 12.6 WAIVER OF JURY TRIAL AND CERTAIN DAMAGES. EACH OF THE
DEBTOR AND THE AGENT HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TRIAL BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
WITH, OR ARISING OUT OF THIS SECURITY AGREEMENT AND ASSIGNMENT OR ANY OTHER LOAN
DOCUMENT OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF; AND THE DEBTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
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LAW, THE RIGHT TO INTERPOSE ANY SETOFF OR COUNTERCLAIM OR CROSS-CLAIM IN
CONNECTION WITH ANY SUCH LITIGATION, IRRESPECTIVE OF THE NATURE OF SUCH SETOFF,
COUNTERCLAIM OR CROSS-CLAIM EXCEPT TO THE EXTENT THAT THE FAILURE SO TO ASSERT
ANY SUCH SETOFF, COUNTERCLAIM OR CROSS-CLAIM WOULD PERMANENTLY PRECLUDE THE
PROSECUTION OF OR RECOVERY UPON THE SAME. NOTWITHSTANDING ANYTHING CONTAINED IN
THIS SECURITY AGREEMENT AND ASSIGNMENT OR ANY OTHER LOAN DOCUMENTS TO THE
CONTRARY, NO CLAIM MAY BE MADE BY THE DEBTOR AGAINST THE AGENT FOR ANY LOST
PROFITS OR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN RESPECT OF ANY
BREACH OR WRONGFUL CONDUCT (OTHER THAN WILLFUL MISCONDUCT CONSTITUTING ACTUAL
FRAUD) IN CONNECTION WITH, ARISING OUT OF OR IN ANY WAY RELATED TO THE
TRANSACTIONS CONTEMPLATED HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENTS, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH; AND THE DEBTOR HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY SUCH CLAIM FOR ANY SUCH DAMAGES.
THE DEBTOR AGREES THAT THIS SECTION 12.6 IS A SPECIFIC AND MATERIAL ASPECT OF
THIS SECURITY AGREEMENT AND ASSIGNMENT AND ACKNOWLEDGES THAT THE AGENT WOULD NOT
EXTEND TO THE DEBTOR ANY ADVANCES PURSUANT TO THE CREDIT AGREEMENT IF THIS
SECTION 12.6 WERE NOT PART OF THIS SECURITY AGREEMENT AND ASSIGNMENT.
SECTION 12.7 Governing Law. All acts and transactions hereunder and the
rights and obligations of the parties hereto shall be governed, construed, and
interpreted in accordance with the domestic laws of Colorado.
IN WITNESS WHEREOF, the Debtor and the Agent have executed this Security
Agreement and Assignment by their duly authorized officers as of the date first
above written.
AGENT: DEBTOR:
BANK ONE, COLORADO, N.A. ASI LANDMARK, INC.
By:______________________________ By:________________________________
Shaun P. McCarthy Scott C. Benger
Vice President Vice President
-23-
<PAGE>
-24-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,571
<SECURITIES> 0
<RECEIVABLES> 52,668
<ALLOWANCES> 179
<INVENTORY> 0
<CURRENT-ASSETS> 56,771
<PP&E> 14,050
<DEPRECIATION> 6,708
<TOTAL-ASSETS> 90,118
<CURRENT-LIABILITIES> 18,187
<BONDS> 0
0
0
<COMMON> 28,030
<OTHER-SE> 13,804
<TOTAL-LIABILITY-AND-EQUITY> 90,118
<SALES> 0
<TOTAL-REVENUES> 60,105
<CGS> 0
<TOTAL-COSTS> 50,098
<OTHER-EXPENSES> (115)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,425
<INCOME-PRETAX> 8,697
<INCOME-TAX> 3,455
<INCOME-CONTINUING> 5,242
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,242
<EPS-PRIMARY> .84
<EPS-DILUTED> .78
</TABLE>
