PROMISSORY NOTE
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Principal Loan Date Maturity Loan No Calif / Account Officer Initials
$550,000.00 09-25-2007 09-25-2010 2000208826 Coll 309275 123
5800
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References in the boxes above are for Xxxxxx's use only and do not limit the
applicability of this document to any particular loan or item. Any item above
containing "* * *" has been omitted due to text length limitations.
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Borrower: ELECSYS CORPORATION: DCI, INC.; NTG, INC.: Lender: Bank Midwest N.A.
and ER ACQUISITION CORP. City Center Square Facility
000 X. XXXXXXX XXXXX 0000 Xxxx, Xxxxx 000
XXXXXX, XX 00000 Xxxxxx Xxxx, XX 00000
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Principal Amount: $550,000.00 Interest Rate: 9.000% Date of Note: September 25, 2007
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PROMISE TO PAY. ELECSYS CORPORATION; DCI, INC.; NTG, INC,; and ER ACQUISITION
CORP. ("Borrower") jointly and severally promise to pay to Bank Midwest N.A.
("Lender"), or order, in lawful money of the United States of America, the
principal amount of Five Hundred Fifty Thousand & 00/100 Dollars ($550,000.00),
together with interest at the rate of 9.000% per annum on the unpaid principal
balance from September 25, 2007, until paid in full. The interest rate may
change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.
PAYMENT. Borrower will pay this loan in 36 payments of $17,523.57 each payment.
Xxxxxxxx's first payment is due October 25, 2007, and all subsequent payments
are due on the same day of each month after that. Xxxxxxxx's final payment will
be due on September 25, 2010, and will be for all principal and all accrued
interest not yet paid. Payments include principal and interest. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
accrued unpaid interest; then to principal; than to any unpaid collection costs;
and then to any late charges. The annual interest rate for this Note is computed
on a 365/360 basis; that is, by applying the ratio of the 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.
Borrower will pay Lender at Xxxxxx's address shown above or at such other place
as Lender may designate in writing.
PREPAYMENT. Xxxxxxxx agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Xxxxxx in writing, relieve Xxxxxxxx of
Xxxxxxxx's obligation to continue to make payments under the payment schedule.
Rather, early payments will reduce the principal balance due and may result in
Borrower's making fewer payments. Xxxxxxxx agrees not to send Lender payments
marked "paid in full", "without recourse", or similar language. If Borrower
sends such a payment, Xxxxxx may accept it without losing any of Xxxxxx's rights
under this Note, and Borrower will remain obligated to pay any further amount
owed to Lender. All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment
constitutes "payment in full" of the amount owed or that is tendered with other
conditions or limitations or as full satisfaction of a disputed amount must be
mailed or delivered to Bank Midwest N A , City Center Square Facility, 0000
Xxxx, Xxxxx 000, Xxxxxx Xxxx, XX 00000
LATE CHARGE. If a payment is more than 10 days late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the interest rate on this Note shall be increased by 5.000 percentage
points. However, in no event will the interest rate exceed the maximum interest
rate limitations under applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note
Payment Default. Borrower fails to make any payment when due under this Note
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in
any of the related documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
Borrower's ability to repay this Note or perform Borrower's obligations
under this Note or any of the related documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note
or the related documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.
Insolvency. The dissolution or termination of Xxxxxxxx's existence as a
going business, the insolvency of Xxxxxxxx, the appointment of a
receiver for any part of Xxxxxxxx's property, any assignment for the
benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against
Borrower.
Creditor or Forfeiture Proceedings, Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Xxxxxx. However, this Event of Default shall not apply
if there is a good faith dispute by Xxxxxxxx as to the validity or
reasonableness at the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Xxxxxx written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute,
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any guarantor, endorser, surety, or accommodation party of
any of the indebtedness or any guarantor, endorser, surety, or
accommodation party dies or becomes incompetent, or revokes or disputes
the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of a death, Lender, at its option,
may, but shall not be required to, permit the guarantor's estate to
assume unconditionally the obligations arising under the guaranty in a
manner satisfactory to Lender, and, in doing so, cure any Event of
Default.
Change In Ownership. Any change in ownership of twenty-five percent
(125%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Xxxxxx believes the prospect of payment or
performance of this Note is impaired.
Cure Provisions. If any default, other than a default in payment is
curable and if Borrower has not been given a notice of a breach of the
same provision of this Note within the preceding twelve (12) months, it
may be cured if Borrower, after receiving written notice from Lender
demanding cure of such default (1) cures the default within ten (10)
days; or (2) if the cure requires more than ten (10) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes
all reasonable and necessary steps sufficient to produce compliance as
soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Xxxxxx's attorneys' fees
and Xxxxxx's legal expenses whether or not there is a lawsuit, including
attorneys' fees and expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. If not
prohibited by applicable law, Xxxxxxxx also will pay any court costs, in
addition to all other sums provided by law.
GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of
Missouri without regard to its conflicts of law provisions. This Note has been
accepted by Xxxxxx in the State of Missouri.
CHOICE OF VENUE. If there is a lawsuit, Xxxxxxxx agrees upon Xxxxxx's request to
submit to the jurisdiction of the courts of XXXXXXX County, State of Missouri.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $15.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Xxxxxx, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
COLLATERAL. Borrower acknowledges this Note is secured by A COMMERCIAL SECURITY
AGREEMENT IN THE NAME OF ELECSYS CORPORATION, DATED DECEMBER 30, 2005.
A COMMERCIAL SECURITY AGREEMENT IN THE NAME OF NTG, INC , DATED DECEMBER 30, 2005
A COMMERCIAL SECURITY AGREEMENT IN THE NAME OF DCI, INC., DATED DECEMBER 30, 2005
A COMMERCIAL SECURITY AGREEMENT IN THE NAME OF ER ACQUISITION CORP, DATED
SEPTEMBER 25, 2007
THIS LOAN IS GROSS COLLATERALIZED WITH LOAN NO 2000206013
IN ADDITION, COLLATERAL SECURING OTHER LOANS WITH LENDER ALSO SECURES THIS LOAN
ADDITIONAL EVENTS OF DEFAULT. I agree to provide reasonable financial/income
information including, but not limited to, signed financial statements, Federal
Tax Returns, and lease/rental documents to the Lender within 30 days of Xxxxxx's
written request. The financial statement shall consist of at least a balance
sheet, a listing of all contingent liabilities, and a statement of year-to-date
income as of the close of my last fiscal year. Failure on the part of the
borrower(s) to provide the requested information may be considered an event of
default under this note or agreement.
FINANCIAL STATEMENTS. Furnish Lender with the following.
Annual Statements. As soon as available after the end of each fiscal year,
Xxxxxxxx's balance sheet and income statement for the year ended, prepared by
Borrower in form satisfactory to Lender.
Additional Requirements: Quarterly Internal Financial Statements, Monthly
Financial Statements, Accounts Receivable Aging report, Accounts Payable Aging
report and Inventory report.
LOAN COVENANTS. Loan Covenants to be measured quarterly:
EBITDA to Debt Service - Minimum of 1.5x
Funded Debt to EBITDA - Maximum of 4 0x, stepping down to 3 5x on September 30,
2008, and 3.0x on September 30, 2009 Funded Debt to Tangible Net Worth - Maximum
of 2 0x Tangible Net Worth - Minimum of $5,000,000.00.
The above terms are defined as follows
EBITDA means, with respect to Borrower for any period, (i) the sum of (a) net
income, (b) cash interest expense, (c) depreciation and amortization expense,
(d) federal, state, and local income or franchise taxes, and (e) any losses
incurred from the sale of fixed assets, minus (ii) any gains realized from the
sale of fixed assets, in each case for such period, computed and calculated,
without duplication. For purposes of calculating the financial covenants herein,
EBITDA shall not include the EBITDA of any acquired company or division for any
period prior to the date of such acquisition.
Funded Debt means, as to Borrower at any particular time, the sum of (a) all
obligations for borrowed money (whether as a direct obligor on a promissory
note, bond, debenture, or other similar instrument, as a reimbursement obligor
with respect to an issued letter of credit or similar instrument, as an obligor
under a guaranty in respect of borrowed money, or as any other type of direct or
contingent obligor), and (b) all capitalized lease obligations (other than the
interest component of such obligations), calculated without duplication.
Debt Service means, with respect to the Borrower for any period, the aggregate
amount of scheduled principal and interest expense payments made by Borrower on
all Funded Debt.
Tangible Net Worth of Borrower means the Borrower's shareholder's equity
(included retained earnings), less the book value of all intangible assets
(including, without limitation, all (i) deposits to any person other than
deposit accounts maintained with financial institutions in the ordinary course
of business, (ii) deferred financing costs, net, (iii) deferred fees, (iv)
capitalized product development, (v) receivables where the account debtor
thereunder is a director, officer, employee or agent of the
Borrower, (vi) receivables where the debtor is a subsidiary or affiliate of the
Borrower, (vii) goodwill, and (viii) other intangible assets) determined by
Lender.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Xxxxxxxx, and
upon Xxxxxxxx's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will
not affect the rest of the Note. Lender may delay or forgo enforcing any of its
rights or remedies under this Note without losing them. Each Borrower
understands and agrees that, with or without notice to Borrower, Lender may with
respect to any other Borrower (a) make one or more additional secured or
unsecured loans or otherwise extend additional credit, (b) alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of any indebtedness, including increases and decreases of
the rate of interest on the indebtedness; (c) exchange, enforce, waive,
subordinate, fail or decide not to perfect, and release any security, with or
without the substitution of new collateral; (d) apply such security and direct
the order or manner of sale thereof, including without limitation, any
non-judicial sale permitted by the terms of the controlling security agreements,
as lender in its discretion may determine; (e) release, substitute, agree not to
sue, or deal with any one or more of Borrower's sureties, endorsers, or other
guarantors on any terms or in any manner Lender may choose; and (f) determine
how, when and what application of payments and credits shall be made on any
other indebtedness owing by such other Borrower. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Xxxxxx's security interest in the collateral, and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Xxxxxx may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FOREBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT
IS IN ANY WAY RELATED TO THE CREDIT AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND
US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
JURY WAIVER. Xxxxxx and Xxxxxxxx hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Xxxxxx or Borrower against
the other.
PRIOR TO SIGNING THIS NOTE, EACH XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE. EACH BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
ELECSYS CORPORATION
By:
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XXXX X. XXXXXXXX, President & CEO of ELECSYS
CORPORATION
DCI, INC.
By:
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XXXX X. XXXXXXXX, President of DCI, INC.
NTG, INC.
By:
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XXXX X. XXXXXXXX, Director/ Treasurer of NTG,
INC.
ER ACQUISITION CORP.
By:
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XXXX X. XXXXXXXX, Director of ER ACQUISITION
CORP.
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