INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT, dated as of February 7, 2000, is entered into
by and between KCEP VENTURES II, L.P., a Kansas limited partnership
("Purchaser"), and AIRPORT SYSTEMS INTERNATIONAL, INC., a Kansas corporation
("Company").
RECITALS
A. Company is in the business of developing, manufacturing and
marketing navigational aids, and is entering the business of electronic
contract manufacturing and acquiring related entities.
B. Immediately prior to the consummation of the transactions contemplated
herein, the Company will consummate the transactions contemplated by that
certain Stock Purchase Agreement by and among the Company, DCI, Inc. ("DCI"),
Chris I. Hammond, Larry C. Klusman and William D. Cook in which DCI will become
a wholly-owned subsidiary of the Company (the "Stock Purchase Agreement"),
followed by consummation of the transactions contemplated by that certain Asset
Purchase Agreement by and among DCI, KHC of Lenexa, L.L.C. ("KHC"), Hammond,
Klusman and Cook (the "Asset Purchase Agreement"). The purchases under both the
Stock Purchase Agreement and Asset Purchase Agreement shall be financed by Bank
of America, N.A. ("BOA"), which financing shall be evidenced by a Loan and
Security Agreement by and among the Company, DCI and BOA (the "Loan Agreement")
and the Assignment and Assumption among DCI, BOA, KHC, UMB Bank, N.A., and the
City of Lenexa (the "Assignment Agreement"). The Stock Purchase Agreement, the
Asset Purchase Agreement, the Loan Agreement and the Assignment Agreement and
any and all documents contemplated therein to be executed and delivered shall be
collectively referred to as the "Transaction Documents."
C. Purchaser desires to invest in Company pursuant to the terms and
conditions of this Agreement.
AGREEMENT
In consideration of the mutual promises and covenants contained in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:
1. AUTHORIZATION AND SALE OF COMMON STOCK, DEBENTURE AND WARRANT.
1.1 AUTHORIZATION. Company has, or on or before the Closing (as
defined in Section 2 below) will have, duly authorized and reserved for issuance
as described below:
(a) COMMON STOCK. Up to 410,715 shares of its voting
common stock, $.01 par value (the "Common Stock"), having the rights,
restrictions, privileges, and preferences set forth in the Articles of
Incorporation of the Company, as amended (the "Articles of Incorporation");
(b) CONVERTIBLE SUBORDINATED DEBENTURE. A convertible
subordinated debenture (the "Convertible Subordinated Debenture") in an
amount of $500,000, with a conversion price of $3.00 per share (the
"Debenture Price"), in substantially the form attached hereto as Exhibit A;
and
(c) WARRANT. A warrant (the "Warrant") granting Purchaser the
right to purchase 45,635 shares of Common Stock for $150,595.50 (or $3.30 per
share) (the "Warrant Price"), in substantially the form attached hereto as
Exhibit B.
1.2 SALE OF THE COMMON STOCK. Subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 2 below) Company will sell
and issue to Purchaser, and Purchaser will acquire, 198,413 shares of Common
Stock for $500,000 (or $2.52 per share) (the "Common Stock Purchase Price").
1.3 SALE OF CONVERTIBLE SUBORDINATED DEBENTURE. Subject to the terms
and conditions of this Agreement, at the Closing (as defined in Section 2 below)
Company will sell and issue to Purchaser, and Purchaser will acquire, the
Convertible Subordinated Debenture in the amount of $500,000.
1.4 SALE OF WARRANT TO PURCHASE COMMON STOCK. Subject to the terms
and conditions of this Agreement, Company will execute and deliver to Purchaser,
and Purchaser will acquire, at the Closing (as defined in Section 2 below), the
Warrant. Together, the shares of Common Stock acquired pursuant to Section 1.2,
the Convertible Subordinated Debenture and the Warrant are referred to herein as
the "Securities."
1.5 USE OF PROCEEDS.
(a) WORKING CAPITAL. Company will use the proceeds from the
sale of the Securities for general working capital purposes and to fund
acquisitions in the electronic contract manufacturing business pursuant to the
acquisition plan, attached hereto as Exhibit C, agreed to between Company and
Purchaser. Pending such use, Company shall place such proceeds in one or more
federally insured deposit accounts.
(b) LIMITATIONS. Notwithstanding anything herein to the
contrary, no portion of the proceeds from the sale of the Securities sold will
be used (i) for relending or reinvesting, if Company's primary purpose involves,
directly or indirectly, providing funds to others, (ii) for the purchase of debt
obligations, factoring, or the long-term leasing of equipment with no provision
for maintenance or repair, (iii) to, directly or indirectly, provide capital or
financing to a company licensed under the Small Business Investment Act of 1958,
as amended (together with the rules and regulations thereunder, the "SBI Act"),
(iv) to acquire, or to pay obligations relating to the prior acquisition of,
land or improved real estate to be held, without prompt and substantial
improvement, for resale or leasing to others, (v) outside the United States
(except that all or any portion of such proceeds may be used by Company in the
domestic production of products for distribution abroad or to acquire abroad
materials used in such production, provided the major portion of the assets and
activities of Company after such proceeds are so employed remains within the
territorial jurisdiction of the United States), (vi) for any purpose contrary to
the public interest (including but not limited to activities which are in
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violation of law or inconsistent with free competitive enterprise), (vii) to
purchase goods or services from a supplier that is an "associate" (as defined in
Section 107.50 of Title 13 of the Code of Federal Regulations (the "CFR")) of
Purchaser if 50% or more of such proceeds will be used to purchase goods or
services from any such supplier (provided, however, that (A) in no event may
such proceeds be used to purchase capital goods from an associate supplier, and
(B) such goods and services shall be at a price no greater than that charged
other customers of the associate supplier), or (viii) to acquire "farm land" (as
that term is defined in Section 107.720 of Title 13 of the CFR).
(c) UNAUTHORIZED DIVERSION. Unless specifically consented to
by Purchaser, any (i) diversion by Company of the proceeds from the sale of the
Securities from the purposes set forth in this Section 1.5 or (ii) change in
Company's business activity within the 12-month period following the Closing (as
defined in Section 2 below) that renders the Securities an ineligible investment
for Purchaser pursuant to Section 107.760(b) of Title 13 of the CFR shall
constitute an event of default under this Agreement. Upon the occurrence of such
event of default, Purchaser shall have the right to demand immediate repurchase
of, and Company shall immediately repurchase, (i) all the Common Stock acquired
pursuant to Section 1.2 above and held by Purchaser, at a per share purchase
price equal to $2.52, (ii) the Convertible Subordinated Debenture held by
Purchaser, at face value plus all accrued interest thereon, (iii) any shares of
Common Stock held by Purchaser as a result of the conversion of the Convertible
Subordinated Debenture, at a per share purchase price equal to $3.00 for any
Common Stock issued to Purchaser, and (iv) any purchased and issued Common Stock
acquired pursuant to the Warrant, at a per share purchase price equal to $3.30.
In addition, the Warrant shall be cancelled.
2. THE CLOSING.
2.1 THE CLOSING. The closing of the sale and purchase of the Common
Stock, Convertible Subordinated Debenture and the Warrant (the "Closing") under
this Agreement shall take place at the offices of Blackwell Sanders Peper Martin
LLP ("Legal Counsel's Offices"), 2300 Main, Suite 1100, Kansas City, Missouri
64108 at 10:00 a.m., Central Time, on February 7, 2000 (the "Closing Date"), or
at such other time, date and place as are mutually agreeable to Company and
Purchaser, but in no event later than 5:00 p.m., Central Time, on March 15,
2000. At the Closing, Company will deliver to Purchaser a certificate or
certificates for 198,413 Common Stock shares registered in the name of Purchaser
against receipt by Company, as consideration, of the Common Stock Purchase Price
by wire transfer, check, or other method acceptable to Company. At the Closing,
Company will deliver to Purchaser the Convertible Subordinated Debenture in the
name of the Purchaser against receipt by Company, as consideration, of the
Debenture Price, by wire transfer, check or other method acceptable to Company.
At the Closing, Company will deliver to Purchaser the Warrant in the name of the
Purchaser. In addition, the Company will pay the Purchaser a commitment fee in
the amount of $20,000 at the Closing.
2.2 If at Closing any of the applicable conditions specified in
Section 5 hereof shall not have been fulfilled, Purchaser shall, at its
election, be relieved of its obligations to purchase Securities at such Closing
without thereby waiving any other rights it may have by reason of such failure
or such non-fulfillment.
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3. REPRESENTATIONS OF COMPANY. Subject to and except as disclosed
by Company in the schedules attached hereto, Company hereby represents and
warrants to Purchaser as follows:
3.1 ORGANIZATION AND STANDING. Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Kansas and has full corporate power and authority to conduct its business as
presently conducted and as proposed to be conducted by it, to enter into and
perform this Agreement, and to carry out the transactions contemplated by this
Agreement. Company is duly qualified to do business as a foreign corporation in
every other jurisdiction in which the failure to so qualify would have a
material adverse effect on Company's operations or financial condition.
3.2 CAPITALIZATION. The authorized capital stock of Company
(immediately prior to the Closing) will consist of: 5,000,000 shares of common
stock, $.01 par value, of which (i) 198,413 shares are reserved for issuance of
Common Stock, (ii) 166,667 shares are reserved for issuance upon the conversion
of the Convertible Subordinated Debenture (iii) 45,635 shares are reserved for
issuance upon the exercise of the Warrant, (iv) 475,000 shares are reserved for
issuance pursuant to the Company's option plan, and (v) 2,230,500 shares are
issued and outstanding, with 150,000 shares to be issued to three individuals
pursuant to that certain Stock Purchase Agreement (as defined below).
All of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except as
otherwise provided in this Agreement or as set forth on SCHEDULE 3.2 hereto: (i)
no subscription, warrant, option, convertible security, or other right
(contingent or otherwise) to purchase or acquire any shares of capital stock of
Company is authorized or outstanding, (ii) there is not any commitment of
Company to issue any subscription, warrant, option, convertible security, or
other such right or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of Company, and (iii)
Company has no obligation (contingent or otherwise) to purchase, redeem, or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof. Except as
otherwise provided in this Agreement or as set forth on SCHEDULE 3.2 hereto, no
person or entity is entitled to (i) any preemptive or similar right with respect
to the issuance of any capital stock of Company or (ii) any rights with respect
to the registration of any capital stock of Company under the Securities Act of
1933, as amended (the "Securities Act"). All of the issued and outstanding
shares of Common Stock have been offered, issued, and sold by Company in
compliance with applicable federal and state securities laws.
3.3 SUBSIDIARIES. Except as set forth on SCHEDULE 3.3 hereto,
Company has no subsidiaries nor owns or controls, directly or indirectly, any
other corporation, association or business entity.
3.4 DEBTHOLDERS AND STOCKHOLDERS LIST AND STOCKHOLDERS' AGREEMENTS.
The Company has no debt securities outstanding other than those notes disclosed
on SCHEDULE 3.4 hereto. Except as set forth on SCHEDULE 3.4 hereto, there are no
agreements, written or oral, between Company and any holder of its capital
stock. No provision of this Agreement activates, or will activate, the rights or
obligations of any party under a stockholder rights plan or voting agreement to
which the Company is a party. The transactions contemplated herein, including
the
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conversion and exercise of the Convertible Subordinated Debenture and the
Warrant, respectively, shall not result in any loss by the Purchaser of the
right to vote as a stockholder of the Company any shares of common stock
acquired hereunder pursuant to the provisions set forth in section 17-1286 et.
al, Control Shares Acquisitions, of the Kansas statutes.
3.5 ISSUANCE OF SECURITIES. The issuance, sale, and delivery of the
Securities in accordance with this Agreement, and the issuance and delivery of
the shares of Common Stock issuable upon conversion of the Convertible
Subordinated Debenture and exercise of the Warrant, have been or will be, on or
prior to the applicable Closing, duly authorized and reserved for issuance, as
the case may be, by all necessary corporate action on the part of Company, and
the shares when so issued, sold, and delivered against payment therefor in
accordance with the provisions of this Agreement, and the shares of Common Stock
issuable upon conversion or exercise of the Convertible Subordinated Debenture,
when issued upon such conversion or exercise, will be duly and validly issued,
fully paid, and nonassessable.
3.6 AUTHORITY FOR AGREEMENT. The execution, delivery, and
performance by Company of this Agreement and all other agreements required to be
entered into pursuant to this Agreement have been or will be, on or prior to the
applicable Closing, duly authorized by all necessary corporate action, and duly
executed and delivered by Company. This Agreement and such other agreements
constitute valid and binding obligations of Company enforceable in accordance
with their respective terms. The execution and performance of the transactions
contemplated by this Agreement and such other agreements to be executed and
delivered by Company hereunder and compliance with their provisions by Company
will not violate any provision of law and will not conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute a
default under, its Articles of Incorporation or bylaws, any indenture, lease,
agreement, or other instrument to which Company is a party or by which it or any
of its properties is bound, or any decree, judgment, order, statute, rule or
regulation applicable to Company.
3.7 GOVERNMENTAL CONSENTS. No consent, approval, order, or
authorization of, or registration, qualification, designation, declaration, or
filing with, any governmental authority is required on the part of Company in
connection with the execution and delivery of this Agreement, the offer, issue,
sale and delivery of the Securities, or the other transactions to be consummated
at the applicable Closing, as contemplated by this Agreement, except such
filings as shall have been made prior to and shall be effective on and as of
such Closing. Based on the representations made by Purchaser in Section 4 of
this Agreement, the offer and sale of the Securities to Purchaser will be exempt
from registration under applicable federal and state securities laws.
3.8 LITIGATION. Except as set forth on SCHEDULE 3.8, there is no
action, suit, proceeding, or investigation pending, or, to the best of Company's
knowledge, any basis therefor or threat thereof, against Company which questions
the validity of this Agreement or Company's right to enter into it, or which
might result, either individually or in the aggregate, in any material adverse
change in Company's assets, condition (financial or otherwise), business, or
prospects, nor is there any litigation pending, or, to the best of Company's
knowledge, any basis therefor or threat thereof, against Company by reason of
the past employment relationships, the proposed activities of Company, or
negotiations by Company with possible investors in Company.
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3.9 FINANCIAL STATEMENTS; ABSENCE OF LIABILITIES. On or before the
date hereof, Company has furnished to Purchaser a complete and correct copy of
the balance sheet of Company (the "Audited Balance Sheet") as of April 30, 1999
(the "Audited Balance Sheet Date"), and the related statements of operations and
of changes in financial position for the 12 months then ended (collectively, the
"Audited Financial Statements"), a complete and correct copy of the balance
sheet of the Company (the "Unaudited Balance Sheet") as of October 31, 1999 (the
"Unaudited Balance Sheet Date"), and the related unaudited statements of
operations and of changes in financial position for the six months then ended,
(collectively, the "Unaudited Financial Statements"). (The Audited Financial
Statements and the Unaudited Financial Statements are collectively referred to
herein as the "Financial Statements"). The Financial Statements are complete and
correct, are in accordance with the books and records of Company, and present
fairly the financial condition and results of operations of Company, as of the
dates and for the periods indicated, and the Audited Financial Statements have
been prepared in accordance with generally accepted accounting principles
("GAAP") in all material respects. Company did not have, at the Unaudited
Balance Sheet Date, any liabilities of any type which in the aggregate exceeded
$25,000, whether absolute or contingent, which were not fully reflected on the
Unaudited Balance Sheet, and, since the Unaudited Balance Sheet Date, (x) no
material change to Company's net worth has occurred and (y) Company has not
incurred or otherwise become subject to any such liabilities or obligations
except in the ordinary course of business, incurred in connection with
acquisitions publicly disclosed, or in connection with and as disclosed in this
Agreement. Attached as EXHIBIT 3.9 is certain financial and operating
information relating to DCI that was provided by the Company to the Purchaser;
provided, however, that no representation in this Section 3.9 is made as to the
accuracy of any projections, pro formas or forecasts. The projections, pro
formas and forecasts delivered to the Purchaser by the Company were prepared in
good faith on the basis of the assumptions stated therein, which assumptions
were fair in light of conditions existing at the time of delivery.
3.10 TAXES. Company has set aside sufficient funds for the payment
of all accrued and unpaid federal, state, county, local, and foreign taxes for
all current and prior periods. Company has filed or has obtained presently
effective extensions with respect to all federal, state, county, local, and
foreign tax returns which are required to have been filed by it, such returns
are true and correct and all taxes shown thereon to be due have been timely
paid. Federal income tax returns of Company have not been audited by the
Internal Revenue Service, and no controversy with respect to taxes of any type
is pending or, to Company's knowledge, threatened.
3.11 PROPERTY AND ASSETS. Company has good title to all of its
material properties and assets, including all material properties and assets
reflected in the Balance Sheet, except those disposed of in the ordinary course
of business, and none of such properties or assets is subject to any mortgage,
pledge, lien, security interest, lease, charge, or encumbrance other than those
encumbrances described in the Balance Sheet or the most recent balance sheet
delivered to Purchaser pursuant to Subsection 7.2(a)(i) below (the "Most Recent
Balance Sheet"), if any.
3.12 PATENTS AND TRADEMARKS. Company owns or possesses, or can
obtain by payment of royalties in amounts which, in the aggregate, do not
materially and adversely affect Company's proposed business and prospects, all
of the patents, trademarks, service marks, trade
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names, copyrights, proprietary rights, trade secrets, and licenses or rights to
the foregoing, necessary for the conduct of Company's business as conducted and
as proposed to be conducted. To Company's knowledge, the contract electronics
manufacturing business proposed by Company will not cause Company to infringe or
violate any of the patents, trademarks, service marks, trade names, copyrights,
licenses, trade secrets, or other proprietary rights of any other person or
entity.
3.13 INSURANCE. Company maintains valid policies of insurance with
respect to its properties and business of the kinds and in amounts not less than
is customarily obtained by corporations of established reputation engaged in the
same or similar business and similarly situated, including, without limitation,
insurance against loss, damage, fire, theft, public liability, and
employment-related accidents of Company's employees.
3.14 MATERIAL CONTRACTS AND OBLIGATIONS. Company has disclosed to
Purchaser a list of all material agreements of any nature to which Company is a
party or by which it is bound, including, without limitation, (a) each agreement
which requires future expenditures by Company in excess of $100,000 in the
aggregate, (b) all employment and consulting agreements, employee benefit,
bonus, pension, profit-sharing, stock option, stock purchase, and similar plans
and arrangements, and (c) any agreement to which any stockholder, officer, or
director of Company, or any "affiliate" or "associate" of such persons (as such
terms are defined in the rules and regulations promulgated under the Securities
Act), is presently a party, including any agreement or other arrangement
providing for the furnishing of services by, rental of real or personal property
from, or otherwise requiring payments to, any such person or entity. All of such
agreements and contracts are, to Company's knowledge, valid, binding, and in
full force and effect.
3.15 COMPLIANCE. To Company's knowledge, Company has, in all
material respects, complied with all laws, regulations, and orders applicable to
its present and proposed business and has all material permits and licenses
required thereby. There is no term or provision (other than those requiring
payment of amounts owed) of any material mortgage, indenture, contract,
agreement, or instrument to which Company is a party or by which it is bound,
or, to the knowledge of Company, of any provision of any state or federal
judgment, decree, order, statute, rule, or regulation applicable to or binding
upon Company, which materially and adversely affects or, so far as Company may
now foresee, in the future is reasonably likely to materially and adversely
affect, the business, prospects, condition, affairs, or operations of Company or
any of its properties or assets.
3.16 ABSENCE OF CHANGES. Since the Unaudited Balance Sheet Date
there has been no material adverse change in the condition, financial or
otherwise, net worth, or results of operations of Company, other than changes
occurring in the ordinary course of business, which changes have not,
individually or in the aggregate, had a material adverse effect on the business,
prospects, properties, or condition, financial or otherwise, of Company.
3.17 EMPLOYEES. Company is not aware that any employee is obligated
under any contract (including any license, covenant, or commitment of any
nature), or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the use of such employee's best
efforts to promote the interests of Company or would conflict with
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Company's business as conducted. To Company's knowledge, no prior employer of
any employee of Company has any right to or interest in any inventions,
improvements, discoveries, or other information assigned to Company by such
employee. All non-management employees of Company who have access to
confidential or proprietary information of Company have executed and delivered
proprietary information agreements with nondisclosure and assignment of
invention provisions ("Non-Disclosure Agreements"), and all of such agreements
are in full force and effect. None of the employees of Company is represented by
any labor union, and there is no labor strike or other labor trouble pending
with respect to Company (including, without limitation, any organizational
drive) or, to Company's knowledge, threatened.
3.18 ERISA. To the Company's knowledge, the employee benefit plans
sponsored by the Company and subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), are in compliance with ERISA. The Company is
not subject to any audit involving any of such plans and such plans are not
subject to any litigation or disputed claims for benefits.
3.19 BOOKS AND RECORDS. The minute books of Company contain complete
and accurate records of all official meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. To the Company's
knowledge, the stock records of Company are complete and reflect all issuances,
transfers, repurchases and cancellations of shares of Company's capital stock.
3.20 DISCLOSURES. Neither this Agreement nor any exhibit or schedule
hereto, nor any certificate or instrument furnished to Purchaser (or its legal
counsel) in connection with the transactions contemplated by this Agreement when
read together, contains any material misstatement of fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading. Company knows of no information or fact which has or would have a
material adverse effect on the financial condition, business or prospects of
Company which has not been disclosed to Purchaser.
3.21 SMALL BUSINESS CONCERN. Company, together with its "affiliates"
(within the meaning set forth in Section 121.103 of Title 13 of the CFR), is a
"small business concern" (as that term is defined in the SBI Act, including
Section 121.105(a) of Title 13 of the CFR). The information set forth in the
documents provided to Purchaser pursuant to the SBI Act remain accurate and
complete.
3.22 SECURITIES AND EXCHANGE COMMISSION DOCUMENTS. The Company has
made available to the Purchaser a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by the
Company with the Securities and Exchange Commission (the "SEC") since January 1,
1997 (the "Company SEC Documents") which are all the documents (other than
preliminary material) that the Company was required to file with the SEC since
such date. As of their respective dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act, or the
Securities and Exchange Act of 1934, as amended, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under
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which there were made, not misleading. The financial statements of the Company
included in the Company SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in accordance with applicable requirements of GAAP
(subject, in the case of the Unaudited Financial Statements, to normal,
recurring adjustments, none of which are material) the consolidated financial
position of the Company and its consolidated subsidiaries as of their respective
dates and the consolidated results of operations and the consolidated cash flows
of the Company for the periods presented therein.
3.23 COMPLIANCE WITH SMALL BUSINESS INVESTMENT ACT REQUIREMENTS.
(a) The Company has not engaged in any activities and does not
intend to use directly or indirectly the proceeds from the issuance of the
Securities or any other proceeds received from the Purchaser, for any purpose
for which a Small Business Investment Company is prohibited from providing funds
by the Small Business Investment Act and the regulations thereunder, including
Title 13, Code of Federal Regulations, Part 107 (collectively "SBIA").
(b) Neither the Company nor any of its officers, directors, or
shareholders or, to the best of the Company's knowledge, its employees directly
or indirectly own or control, or are related to any Person who owns or controls,
any interest in, or is an officer, director, employee, stockholder, or agent of,
the Purchaser or any entity in any way related to or affiliated with the
Purchaser or any other Small Business Investment Company.
(c) The Company has not received, is not receiving and has no
intention to apply for any assistance from the Small Business Administration or
any Small Business Investment Company other than the Purchaser.
(d) The Company qualifies as a "small business concern" under,
and is in full compliance with, the provisions of SBIA. The aggregate
consolidated net worth of the Company and all other business entities affiliated
with the Company does not exceed $18,000,000, and the Company's average
consolidated net income in each of its last two Fiscal Years has not exceeded
$6,000,000.
3.24 TRANSACTION DOCUMENTS. The Company has furnished the Purchaser
with complete and correct copies of each Transaction Document and all
appendices, schedules, and exhibits attached thereto. This Agreement and the
Transaction Documents are the only agreements relating to the transactions
contemplated hereby to which the Company is a party. The Company is not, and
after giving effect to the transactions contemplated by this Agreement will not
be, in default of any of its obligations under this Agreement or any Transaction
Document, and no other party to any such Transaction Document is in default on
any covenant or agreement thereunder. In connection with the entering into of
the Transaction Documents, the Company and each opposing party in such
Transaction Document (such opposing parties collectively referred to herein as
the "Third Parties") have made certain representations and warranties to each
other. The Company hereby represents and warrants to the Purchaser that all of
the representations and warranties made by the Company in each of the
Transaction
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Documents, and in any certificates or schedules or exhibits delivered in
connection therewith, are true and correct in all material respects as of the
date hereof with the same force and effect as though made on and as of the date
hereof, and such representations and warranties are hereby confirmed to the
Purchaser as if such representations and warranties were set forth herein. In
addition, the Company hereby represents and warrants to the Purchaser that the
representations and warranties made by each of the Third Parties in each of the
Transaction Documents, and that any certificates or schedules or exhibits
delivered in connection therewith, are true and correct in all material respects
as of the date hereof with the same force and effect as though made on and as of
the date hereof, and such representations and warranties are hereby confirmed to
the Purchaser in all material respects as if such representations and warranties
were set forth herein. For purposes of the foregoing sentence (the "Pass Through
Representation"), the term "material" shall mean any inaccuracy in any
representation or warranty having an adverse effect on the Company in excess of
$100,000.
4. REPRESENTATIONS OF PURCHASER. Purchaser represents and warrants
to Company as follows:
4.1 INVESTMENT. Purchaser is an "accredited investor" as defined in
Rule 501(a) of Regulation D promulgated pursuant to the Securities Act.
Purchaser has carefully reviewed the representations concerning the Company
contained in this Agreement and has made a detailed inquiry concerning Company,
its business and its personnel. The officers of Company have made available to
Purchaser any and all written information which Purchaser has requested and have
answered to Purchaser's satisfaction all inquiries made by Purchaser. Purchaser
is acquiring the Securities, for its own account for investment and not with a
view to, or for sale in connection with, any distribution thereof, nor with any
present intention of distributing or selling the same. Except as contemplated by
this Agreement and the Exhibits hereto, Purchaser has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness, or commitment
providing for the disposition thereof.
4.2 AUTHORITY. Purchaser has full power and authority to enter into
and perform this Agreement in accordance with its terms. Purchaser has not been
organized specifically for the purpose of investing in Company.
4.3 EXPERIENCE. Purchaser has carefully reviewed the representations
concerning Company contained in this Agreement and has made a detailed inquiry
concerning Company, its business and its personnel. The officers of Company have
made available to Purchaser any and all written information Purchaser has
requested and have answered to Purchaser's satisfaction all inquiries made by
Purchaser.
4.4 ACKNOWLEDGMENT OF RELATED TRANSACTIONS. Purchaser acknowledges
that the transactions contemplated by this Agreement are subject to the
consummation of the transactions described in the Stock Purchase Agreement, the
Asset Purchase Agreement and the Loan Agreement. Purchaser acknowledges that the
consummation of the transactions contemplated by those agreements is vital to
this Agreement and is a condition to the obligation of the Company to sell the
Securities as described herein.
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5. CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The obligations of
Purchaser to purchase the Securities at the Closing is subject to the
fulfillment, or the waiver by Purchaser, of the following conditions on or
before the Closing Date (except as expressly provided herein):
5.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty contained in Section 3 shall be true on and as of the Closing Date
with the same effect as though such representation and warranty had been made on
and as of the Closing Date, with the exception that such representations and
warranties do not take into account the prior closing of the transactions
contemplated by the Transaction Documents.
5.2 PERFORMANCE. Company shall have substantially performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by Company prior to or at the Closing.
5.3 OPINION OF COUNSEL. Purchaser shall have received an opinion
from Blackwell Sanders Peper Martin LLP, counsel for Company, dated the Closing
Date, addressed to Purchaser, and in substantially the form and substance
attached hereto as Exhibit D.
5.4 INVESTOR'S RIGHTS AGREEMENT. The Investor's Rights Agreement
attached hereto as Exhibit E (the "Investor's Rights Agreement") shall have been
executed and delivered by Company and Purchaser.
5.5 BOARD OF DIRECTORS. Company's Board of Directors shall comprise
seven members appointed in accordance with the Investor's Rights Agreement.
5.6 SECURITIES REGISTRATIONS AND EXCHANGE LISTING. Company shall
register the Securities with the securities commissioner of each jurisdiction in
which registration is required (and such registrations shall be in compliance
with the laws of such jurisdiction on the Closing Date), or Company shall be
entitled to rely on an exemption from registration on the Closing Date. The
Company shall, no later than such date as the Securities shall be registered in
accordance with the Investor's Rights Agreement, cause the Common Stock to be
issued at the Closing to be listed for trading on the American Stock Exchange.
5.7 CERTIFICATES AND DOCUMENTS. All corporate and other proceedings
required to be taken on the part of Company to authorize and carry out this
Agreement shall have been taken, and Company shall have delivered to legal
counsel of Purchaser:
(a) GOOD STANDING CERTIFICATE. The Certificate, as of
the most recent practicable date prior to the Closing, issued by the
Secretary of State of the State of Kansas, confirming the corporate good
standing of Company on such date; and
(b) RESOLUTIONS. Resolutions of the Board of Directors of
Company, authorizing and approving all matters in connection with this Agreement
and the transactions contemplated hereby, certified by an officer of Company as
of the Closing Date.
5.8 SECURITIES COMPLIANCE. Company shall comply with any and
all required federal and state securities rules and regulations relating to
the transactions contemplated by this Agreement.
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5.9 OTHER MATTERS. All corporate and other proceedings in connection
with the transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to Purchaser and its legal counsel, and Purchaser and its
legal counsel shall have received all such counterpart originals or certified or
other copies of such documents as they may reasonably request.
5.10 DUE DILIGENCE. The Purchaser shall have been satisfied, in its
sole and reasonable opinion with the results of its investigation of Company.
Purchaser's due diligence shall in no way limit Seller's representations,
warranties and agreements contained in this Agreement. Purchaser must also be
satisfied that the transactions contemplated by the Transaction Documents have
closed.
6. CONDITIONS TO THE OBLIGATIONS OF COMPANY. The obligations of Company
under this Agreement are subject to fulfillment, on or before the Closing Date,
of each of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser contained in Section 4 shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.
6.2 SECURITIES REGISTRATIONS AND EXCHANGE LISTING. Company shall
register the Securities with the securities commissioner of each jurisdiction in
which registration is required (and such registrations shall be in compliance
with the laws of such jurisdiction on the Closing Date), or Company shall be
entitled to rely on an exemption from registration on the Closing Date. The
Company shall, no later than such date as the Securities shall be registered in
accordance with the Investor's Rights Agreement, cause the Common Stock to be
issued at the Closing to be listed for trading on the American Stock Exchange.
7. AFFIRMATIVE COVENANTS OF COMPANY.
7.1 INSPECTION. So long as the Convertible Subordinated Debenture
remains outstanding, and consistent with but not as a limitation to any similar
rights granted in the Convertible Subordinated Debenture, during normal business
hours following reasonable notice and as often as may be reasonably requested,
Company shall permit Purchaser, or any authorized representative thereof, to
visit and inspect the properties of Company, including its corporate and
financial records (and to make copies thereof and take extracts therefrom), and
to discuss its business and finances with officers of Company. Purchaser shall
be responsible for all expenses relating to all of such visits and inspections.
7.2 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) FINANCIAL STATEMENTS AND BUDGETS. So long as the
Convertible Subordinated Debenture remains outstanding, Company will deliver
to Purchaser upon request:
(i) Within 90 days after the end of each fiscal
year of Company, a balance sheet of Company as of the end of such year and
statements of income and of changes in financial condition of Company for such
year (A) prepared in accordance with
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generally accepted accounting principles, (B) audited by an independent
accounting firm acceptable to Purchaser, and (C) including (x) verification of
the use of the proceeds from the sale of the Securities for the purposes
intended by the SBI Act and regulations thereunder and (y) such other
information as is necessary to verify the financial condition of Company and the
continued eligibility of Company pursuant to Sections 107.700 to 107.880 of
Title 13 of the CFR;
(ii) Within 30 days after the end of each calendar
month (other than a calendar month during which any fiscal quarter or fiscal
year of Company ends), an unaudited balance sheet of Company as of the end of
such month and unaudited statements of income and of changes in financial
condition of Company for such month and for the current fiscal year to the end
of such month;
(iii) As soon as available, but in any event within
30 days after commencement of each new fiscal year, a business plan that shall
contain projected quarterly and annual financial statements and quarterly and
annual operating and capital budgets for such fiscal year, which such plan shall
be submitted to Company's Board of Directors for approval within such time; and
(iv) With reasonable promptness, such other
information and financial data concerning Company as Purchaser may reasonably
request, including, without limitation, quarterly and annual budgets and
summaries of financial plans.
(b) SBA INFORMATION. Company will upon request furnish from
time to time to Purchaser promptly (and in any event within 10 days of the
request) all information necessary, in the opinion of Purchaser, to enable
Purchaser to prepare and file its financial statement and its economic impact
statement on SBA Form 468 and any other information requested or required by any
governmental agency asserting jurisdiction over Purchaser. Notwithstanding any
other provision contained herein to the contrary, the covenants contained in
this subsection 7.2(b) shall continue to be effective for such period of time in
which (i) Purchaser owns or has the option to own any Common Stock, or other
securities convertible into Common Stock, of Company and (ii) Purchaser is a
licensee under the SBI Act.
(c) PREPARATION AND DELIVERY. The foregoing financial
statements shall be prepared on a consolidated basis if Company then has any
subsidiaries and shall be accompanied by a certificate of an officer of Company
that, to the best knowledge of such officer, Company is in compliance with the
covenants in this Section 7. The financial statements delivered pursuant to
clause (ii) of paragraph (a) also shall be accompanied by a certificate of an
officer of Company that, to the best knowledge of such officer, such statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied (except as noted), and fairly present the financial
condition of Company at the date thereof and for the periods covered thereby,
subject to changes to reflect year-end adjustments.
7.3 MATERIAL CHANGES AND LITIGATION. So long as the Purchaser owns
Securities or Common Stock representing not less than fifty percent (50%) of the
total potential amount of Common Stock, with respect to events of which Company
has knowledge, Company promptly will notify Purchaser of any material adverse
change in the business, properties, assets,
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or condition, financial or otherwise, of Company and of any litigation or
governmental proceeding or investigation pending or, to Company's knowledge,
threatened against Company, or any officer, director, key employee, or principal
stockholder of Company and materially and adversely affecting or which, if
adversely determined, would materially and adversely affect the present or
proposed business, properties, assets, or condition of the Company taken as a
whole.
7.4 NONDISCLOSURE AGREEMENTS. So long as the Purchaser owns
Securities or Common Stock representing not less than fifty percent (50%) of the
total potential amount of Common Stock, Company will require all persons now or
hereafter employed by Company who have access to confidential or proprietary
information of Company to enter into Non-Disclosure Agreements, unless the Board
of Directors of Company, by unanimous vote, elects to waive such requirement of
an employee of Company.
7.5 TRANSACTIONS WITH AFFILIATES. So long as the Purchaser owns
Securities or Common Stock representing not less than fifty percent (50%) of the
total potential amount of Common Stock, except as specifically acknowledged and
consented to in this Agreement, Company will not, and will not permit any
subsidiary of Company to, directly or indirectly enter into any transaction or
group of related transactions with any affiliate of Company except pursuant to
the reasonable requirements of Company's or the subsidiary's business and upon
fair and reasonable terms no less favorable to Company or the subsidiary than
would be obtainable in a comparable arm's-length transaction. For purposes of
this Section 7.5, (a) a person that directly or indirectly controls, is
controlled by, or is under common control with another person is an "affiliate"
of such other person, (b) the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, by
contract or otherwise, and (c) a corporation or other entity, a majority of the
voting stock or equity interests having voting rights of which is owned or
controlled by Company, is a "subsidiary" of Company.
7.6 POST-CLOSING BLUE SKY FILINGS. Company agrees to timely make all
required post-closing filings, if any, with state blue sky authorities and the
American Stock Exchange.
7.7 CONDUCT OF THE COMPANY PENDING THE CLOSING. Company agrees that
from the date hereof to the Closing Date (subject to written consent by
Purchaser to the contrary):
(a) (i) Company will carry on its business in the usual
and ordinary course;
(ii) Company will not, except in the ordinary course
of its business and consistent with its past practice, increase the rates of
pay or benefits from any officers, employees or agents;
(iii) Company will not make any material change to
its material agreements and will not enter into any contract or commitment or
engage in any transaction not in the usual and ordinary course of its business
and the best interest of its business;
(iv) Company will not take any actions that would
result in any of the representations or warranties set forth herein being
untrue;
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(v) Company will deliver or cause to be delivered
to the Buyer supplemental information concerning events subsequent to the date
hereof that would render any statement, representation or warranty in this
Agreement or any information contained in any Schedule inaccurate or incomplete
in any material respect at any time after the date hereof until the Closing
Date.
(b) Company will not, directly or indirectly, through any
officer, director, agent or otherwise (i) solicit, initiate, or encourage
submission of proposals or offers from any person relating to any acquisition or
purchase of all or a material portion of its assets, or any merger,
consolidation or business combination with Company (except as may relate to the
contemplated acquisitions of the stock of DCI, Inc. and the assets of KHC of
Lenexa, L.L.C.), or (b) participate in any discussions or negotiations
regarding, or furnish to any other person, any non-public information with
respect to, or otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other person to do or seek
any of the foregoing. Company shall promptly notify Purchaser if any such
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made.
(c) Company agrees to use its best efforts to obtain the
satisfaction of the conditions specified in this Agreement.
7.8 NAME CHANGE. At the next meeting of the stockholders of the
Company following the Closing of the transactions contemplated herein, the Board
of Directors of the Company shall recommend for approval by the stockholders
that the name "Airport Systems International, Inc." be changed to a name
selected by the Board of Directors and undertake a reorganization of the
Company's corporate structure.
7.9 OBLIGATION RELATING TO PASS THROUGH REPRESENTATION. The Company
shall be deemed not to have breached the Pass Through Representation in Section
3.23 above if it diligently pursues, and the Company agrees that it shall
diligently pursue, its rights and remedies relating to the breach of any
material representation or warranty made by any Third Party described therein.
8. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon, and inure to the benefit of, the respective successors, assigns,
heirs, executors and administrators of the parties hereto. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
9. TRANSFERS OF CERTAIN RIGHTS.
(a) APPLICABLE PROVISIONS. Without the prior written consent
of Company, only the rights under this Agreement granted to Purchaser under
Section 7 may be transferred by Purchaser and such rights may be transferred
only to a person or entity acquiring at least that portion of the Securities
from the Purchaser that is greater than 50% of the Common Stock or rights or
securities convertible into more than 50% of the Common Stock; PROVIDED,
HOWEVER, that Company is given written notice by the transferee at the time of
such transfer
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stating the name and address of the transferee and identifying the securities
with respect to which such rights are being assigned; AND, PROVIDED FURTHER that
the transferor shall only retain such rights if, following the transfer, the
transferor retains not less than such threshold amount of the Securities.
(b) TRANSFEREES. Any transferee to whom rights under Section 7
are transferred shall, as a condition to such transfer, deliver to Company a
written instrument by which such transferee agrees to be bound by the
obligations imposed upon Purchaser under this Agreement to the same extent as if
such transferee were Purchaser hereunder.
(c) SUBSEQUENT TRANSFEREES. A transferee to whom or to which
rights are transferred pursuant to this Section 9 may not again transfer such
rights to any other person or entity, other than as provided in Subsection 9(a)
or (b) above.
10. CONFIDENTIALITY. Purchaser agrees that it will keep confidential and
will not disclose or divulge any confidential, proprietary, or secret
information that Purchaser may obtain from Company pursuant to financial
statements, reports, and other materials submitted by Company to Purchaser
pursuant to this Agreement, or pursuant to visitation or inspection rights
granted hereunder, unless such information is known, or until such information
becomes known, to the public.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All agreements,
representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the closing of the transactions
contemplated hereby.
12. EXPENSES. Company shall pay at the closing all legal and other
out-of-pocket costs incurred by Purchaser with respect to the transaction (in an
aggregate amount not to exceed $30,000), including the reasonable costs and
expenses of Stinson, Mag & Fizzell, P.C. legal counsel representing Purchaser,
in connection with the review of this Agreement and the closing of the
transactions contemplated hereby. If the transaction contemplated herein does
not close, Company shall only be obligated to pay such expenses if the failure
to close is (i) due to the decision by the Company not to proceed, or (ii) due
to the decision by the Purchaser not to proceed if, and only if, the Company
failed to perform a condition of Closing as provided in this Agreement. Upon
receipt of the payment described in the foregoing sentence, Purchaser shall have
no other rights or claims against Company hereunder.
13. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand or
mailed by first class certified or registered mail, return receipt requested,
postage prepaid, or by facsimile, receipt confirmed:
If to Purchaser, at 233 West 47th Street, Kansas City, Missouri 64112,
facsimile number (816) 960-1777, Attention: David J. Schulte, or at
such other address or facsimile number as may have been furnished to
Company in writing by Purchaser with a copy to: Stinson, Mag & Fizzell,
P.C., 1201 Walnut, Suite 2800, Kansas City, Missouri 64141, Attention:
Lynn Snelgrove, Esq.
If to Company, at 11300 West 89th Street, Overland Park, Kansas, 66214
facsimile number (913) 492-0861, Attention: Keith S. Cowan, or at such
other address or facsimile
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number as may have been furnished to Purchaser in writing by Company, with
a copy to: Blackwell Sanders Peper Martin LLP, 2300 Main Street, Suite
1000, Kansas City, Missouri 64108, Attention: Steven F. Carman, Esq.; and
Notices provided in accordance with this Section 13 shall be deemed delivered
upon personal delivery, three days after deposit in the mail, or upon facsimile
delivery.
14. BROKERS. Each of Company and Purchaser (a) represents and warrants to
the other parties hereto that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement and (b) will indemnify and
save the other party harmless from and against any and all claims, liabilities,
or obligations with respect to consulting fees or brokerage or finders' fees or
commissions in connection with the transactions contemplated by this Agreement
asserted by any person on the basis of any statement or representation alleged
to have been made by such indemnifying party.
15. COMPLIANCE AND FURTHER ASSURANCES. Each party to this Agreement agrees
to execute and deliver, or cause to be executed and delivered, all certificates,
instruments, agreements, and other documents contemplated to be executed and
delivered on or before the Closing Date and such other documents and instruments
as may be requested by such other party to consummate the transactions
contemplated by this Agreement.
16. INDEMNIFICATION.
16.1 INDEMNIFICATION BY THE COMPANY. The Company hereby indemnifies
and holds harmless, for a period of eighteen (18) months from the date hereof,
the Purchaser, its officers, directors, agents, attorneys, and affiliates, and
their respective successors and assigns, from and against any loss, damage, or
expense (including reasonable attorneys' fees) caused by or arising out of:
(a) any breach or default in the performance by the Company of
any covenant or agreement of the Company contained in this Agreement or in any
agreement executed in conjunction herewith or transaction contemplated hereby;
(b) any breach of any representation or warranty made by the
Company herein, in any Exhibit hereto, or in any certificate or other instrument
delivered by the Company pursuant hereto; or
(c) any liability arising out of any and all actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal and accounting fees) incident to any of the foregoing.
16.2 INDEMNIFICATION BY PURCHASER. The Purchaser hereby indemnifies
and holds harmless, for a period of eighteen (18) months from the date hereof,
the Company, its officers, directors, agents, attorneys and affiliates, and
their respective successors and assigns from and against any loss, damage, or
expense (including reasonable attorneys' fees) caused by or arising out of:
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(a) any breach of any representation or warranty made by the
Purchaser herein, in any Exhibit hereto, or in any certificate or other
instrument delivered by the Purchaser pursuant hereto; or
(b) any liability arising out of any and all actions, suits,
proceedings, claims, demands, judgments, costs and expenses (including
reasonable legal and accounting fees) incident to the foregoing.
16.3 CONDITIONS OF INDEMNIFICATION. The respective obligations and
liabilities of the Company and the Purchaser to the other under Sections 16.1
and 16.2 hereof with respect to claims resulting from the assertion of liability
by third parties shall be subject to the following terms and conditions:
(a) within 10 days (or such earlier time as might be required
to avoid prejudicing the indemnifying party's position) after receipt of notice
of commencement of any action evidenced by service of process or other legal
pleading, or with reasonable promptness after the assertion in writing of any
claim by a third party, the party to be indemnified shall give the indemnifying
party written notice thereof together with a copy of such claim, process, or
other legal pleading, and the indemnifying party shall have the right to
undertake the defense thereof by representatives of its own choosing and at its
own expense; provided, however, that the party to be indemnified may participate
in the defense with counsel of its own choice and at its own expense.
(b) in the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earlier, by the 10th day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the party to be indemnified will
(upon further notice to the indemnifying party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the indemnifying party and at the indemnifying party's expense,
subject to the right of other indemnifying party to assume the defense of such
claims at any time prior to settlement, compromise or final determination
thereof.
(c) anything in this Section 16.3 to the contrary
notwithstanding, the indemnifying party shall not settle any claim without the
consent of the party to be indemnified unless such settlement involves only the
payment of money and the claimant provides to the party to be indemnified a
release from all liability in respect of such claim. If the settlement of the
claim involves more than the payment of money, the indemnifying party shall not
settle the claim without the prior consent of the party to be indemnified, which
consent shall not be unreasonably withheld.
(d) the party to be indemnified and the indemnifying party
will each cooperate with all reasonable requests of the other.
17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to such subject matter.
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18. AMENDMENTS AND WAIVERS. This Agreement may only be amended and the
observance of any term of this Agreement may only be waived (either generally or
in a particular instance and either retroactively or prospectively) with the
written consent of the parties hereto. Any amendment or waiver effected in
accordance with this Section 18 shall be binding upon each holder of any
Securities (including shares of Common Stock into which such Securities have
been converted), each future holder of all such securities, and Company. No
waivers of or exceptions to any term, condition, or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition, or provision.
19. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. HEADINGS; EXHIBITS. The headings of the sections, subsections,
and paragraphs of this Agreement have been added for convenience only and
shall not be deemed to be a part of this Agreement. The exhibits attached
hereto are incorporated herein by reference and are part and parcel of this
Agreement.
21. SEVERABILITY. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such provisions
to other persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
22. EQUITABLE REMEDIES. The rights and remedies of any of the parties
hereto shall not be mutually exclusive (i.e., the exercise of one or more of the
provisions hereof shall not preclude the exercise of any other provision
hereof). Each party acknowledges and confirms that its breach or threatened
breach of this Agreement may cause irreparable injury to the one or more of the
other parties for which damages at law (i.e., monetary damages) may be an
inadequate remedy and agrees that, in such event, the respective rights and
obligations hereunder shall be enforceable by specific performance, injunction,
or other equitable remedy; provided, however, that nothing herein contained is
intended to, nor shall it, limit or affect any right or rights at law or by
statute or otherwise of any party aggrieved as against the other for a breach or
threatened breach of any provision hereof, it being the intention hereof to make
clear the agreement of the parties that the respective rights and obligations of
the parties hereunder shall be enforceable in equity as well as at law or
otherwise.
23. INTERPRETATION.
23.1 DIRECTLY OR INDIRECTLY. Any provision of this Agreement which
refers to an action which may be taken by a party hereto, or which a party
hereto is prohibited from taking, shall include any such action taken directly
or indirectly by or on behalf of such party, including by or on behalf of any
affiliate or agent of such party.
23.2 NO PRESUMPTION. In the event any claim is made by either
party hereto relating to any conflict, omission, or ambiguity in this
Agreement, no presumption or burden of
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proof or persuasion shall be implied by virtue of the fact that this Agreement
was prepared by or at the request of a particular party or its counsel.
23.3 REFERENCES TO THIS AGREEMENT. References to numbered or
lettered articles, sections, and subsections refer to articles, sections and
subsections, respectively, of this Agreement unless otherwise expressly stated.
23.4 PERSON. Except as otherwise expressly provided in this
Agreement, all references to the word "person" in this Agreement include
individuals, partnerships, corporations, limited liability companies, trusts,
and any other legal entities or associations.
24. GOVERNING LAW. This Agreement, the rights and obligations of the
parties hereto and their successors and assigns hereunder, shall be interpreted,
construed, and enforced in accordance with the laws of the State of Kansas,
excluding any conflict-of-laws rule or principle that might refer the governance
or construction of this Agreement to the law of another jurisdiction.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of
the day and year first above written.
COMPANY:
AIRPORT SYSTEMS INTERNATIONAL, INC.
By:________________________________
Keith S. Cowan
President
PURCHASER:
KCEP VENTURES II, L.P.
By: KCEP II, L.C., its General Partner
By:________________________________
Name: David J. Schulte
Title: Managing Director
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EXHIBIT A
CONVERTIBLE SUBORDINATED DEBENTURE
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EXHIBIT B
WARRANT
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EXHIBIT C
ACQUISITION PLAN
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EXHIBIT D
LEGAL OPINION
-24-
EXHIBIT E
INVESTOR'S RIGHTS AGREEMENT
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