Exhibit 10.6
CHANGE IN TERMS AGREEMENT
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Principal Loan Date Maturity Loan No. [Call/Coll] Account Officer Initials
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$3,000,000.00 08/30/2006 08/29/2007 ▇▇▇▇▇▇▇▇▇▇ [5300] 309275 123
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References in the shaded area are for Lender'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 (TIN: 48-099142): Lender: Bank Midwest, N.A.
DCI; INC. (TIN: ▇▇-▇▇▇▇▇▇▇); City Center Square Facility
and NTG, INC. (TIN: ▇▇-▇▇▇▇▇▇▇) ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Principal Amount: $3,000,000.00 Initial Rate: 8.500% Date of Agreement: August 30, 2006
DESCRIPTION OF EXISTING INDEBTEDNESS. A Promissory Note dated December 30, 2005
in the original principal sum of $2,000,000.00 with a current principal balance
of $208,000.00.
DESCRIPTION OF COLLATERAL. Three (3) Commercial Security Agreements all dated
December 30, 2005.
DESCRIPTION OF CHANGE IN TERMS. Increase principal amount from $2,000,000.00 to
$3,000,000.00 and extend maturity date.
PROMISE TO PAY: ELECSYS CORPORATION; DCI, INC.; and NTG, INC. ("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 Three
Million & 00/100 Dollars ($3,000,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until
repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on August 29, 2007. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as of each
payment date, beginning September 30, 2006, with all subsequent interest
payments to be due on the same day of each month after that. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
accrued unpaid interest; then to principal; then to any unpaid collection costs;
and then to any late charges. Interest on this loan is computed on a 365/360
simple interest 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 Lender's address shown above or at such other place
as Lender may designate in writing.
VARIABLE INTEREST RATE. The interest rate on this loan is subject to change from
time to time based on changes in an independent index which is the National
Prime Rate. That is the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks on the rate adjustment date (the "Index"). The
Index is not necessarily the lowest rate charged by Lender on its loans. If the
Index becomes unavailable during the term of this loan, Lender may designate a
substitute Index after notifying Borrower. Lender will tell Borrower the current
Index rate upon Borrower's request. The interest rate change will not occur more
often than each day. Borrower understands that Lender may make loans based on
other rates as well. The Index currently is 8.250% per annum. The interest rate
to be applied to the unpaid principal balance during this loan will be at a rate
of 0.250 percentage points over the Index, resulting gin an initial rate of
8.500% per annum. NOTICE: Under no circumstances will the interest rate on this
loan be more than the maximum rate allowed by applicable law.
PREPAYMENT. 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 Lender in
writing, relieve Borrower of Borrower's obligation to continue to make payments
of accrued unpaid interest. Rather, early payments will reduce the principal
balance due. Borrower agrees not to send Lender payments marked "paid in full,"
"without recourse," or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender's rights under this
CHANGE IN TERMS AGREEMENT
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 2
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Agreement, 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, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
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 loan shall be increased by adding a 5.000
percentage point margin ("Default Rate Margin"). The Default Rate Margin shall
also apply to each succeeding interest rate change that would have applied had
there been no default. 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 under this
Agreement:
Payment Default. Borrower fails to make any payment when due under the
indebtedness.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement 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 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 perform Borrower's obligations under this Agreement 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
Agreement 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 Borrower's existence as
a going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower'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
indebtedness. This includes a garnishment of any of Borrower's
accounts, including deposit accounts, with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by
Borrower as to the validity or reasonableness of the claim which is
the basis of the creditor or forfeiture proceeding and if Borrower
gives Lender written notice of the creditor or forfeiture proceeding
and deposits, with Lender monies or a surety bond for the creditor or
forfeiture proceeding, in any 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 of any of the indebtedness or any Guarantor
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 TERMS AGREEMENT
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Change In Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender 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 Agreement 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, Lender 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, Lender's attorneys' fees
and Lender'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, Borrower also will pay any court costs, in
addition to all other sums provided by law.
GOVERNING LAW. This Agreement 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 Agreement has
been accepted by Lender in the State of Missouri.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of ▇▇▇▇▇▇▇ County, State of Kansas.
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 ▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all amounts owing on the
indebtedness against any and all such accounts.
COLLATERAL. Borrower acknowledges this Agreement is secured by THREE (3)
COMMERCIAL SECURITY AGREEMENTS ALL DATED DECEMBER 30, 2005. IN ADDITION,
COLLATERAL SECURING OTHER LOANS WITH LENDER ALSO SECURES THIS LOAN.
LINE OF CREDIT. This Agreement evidences a revolving line of credit. Advances
under this Agreement may be requested orally by Borrower or as provided in this
paragraph. All oral requests shall be confirmed in writing on the day of the
request. All communications, instructions, or directions by telephone or
otherwise to lender are to be directed to lender's office shown above. The
following persons currently are authorized, except as provided in this
paragraph, to request advances and authorize payments under the line of credit
until Lender receives from Borrower, at Lender's address shown above, written
notice of revocation of their authority: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President & CEO of
ELECSYS CORPORATION; and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President & CFO. FUNDS ARE TO BE
DISBURSED AT BORROWER'S REQUEST AND LOAN OFFICER'S APPROVAL. A MONTHLY BORROWING
BASE CERTIFICATED IS REQUIRED. Borrower agrees to the liable for all sums
either: (A)
CHANGE IN TERMS AGREEMENT
Loan No. ▇▇▇▇▇▇▇▇▇▇ (Continued) Page 4
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advanced in accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Lender. The unpaid principal balance
owing on this Agreement at any time may be evidenced by endorsements on this
Agreement or by lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Agreement if: (A)
Borrower or any guarantor is in default under the terms of this Agreement or any
agreement that Borrower or any guarantor has with Lender, including any
agreement made in connection with the signing of this Agreement; (B) Borrower or
any guarantor ceases doing business or is insolvent; (C) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Agreement or ay other loan with Lender; or (D) Borrower has
applied funds provided pursuant to this Agreement for purposes other than those
authorized by Lender.
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing he obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
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 Lender'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.
DECLINE IN COLLATERAL VALUE. If the value of the collateral identified in any of
the documents (such documents are sometimes collectively called "Related
Documents") which secure repayment of this Note declines below the Borrowing
Base (as defined below), lender shall so notify Borrower in writing and instruct
Borrower, by a date specified in such writing, to either: a) pay to Lender in
immediately available funds such sum as is necessary to reduce the outstanding
principal balance of this Note to equal the Borrowing Base; or b) pledge
additional collateral satisfactory to Lender in its sole discretion in an amount
not less than the difference between the then-outstanding balance of this Note
and the Borrowing Base. Borrower's failure to comply with the requirements of
this section shall constitute an event of default under this Note and the
Related Documents. As used herein, "Borrowing Base" means the lesser of the face
amount of this Note or the aggregate then-current value of the collateral
multiplied by the percentages corresponding to each item of collateral, all as
set forth on Exhibit A.
SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Agreement on
transfer of Borrower's interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. If ownership of the
Collateral becomes vested in a person other than Borrower, Lender, without
notice to Borrower, may deal with Borrower's successors with reference to this
Agreement and the indebtedness by way of forbearance or extension without
releasing Borrower from the obligations of this Agreement or liability under the
indebtedness.
MISCELLANEOUS PROVISIONS. If any part of this Agreement cannot be enforced, this
fact will not affect the rest of the Agreement. Lender may delay or forgo
enforcing any of its rights or remedies under this Agreement 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 documents 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
CHANGE IN TERMS AGREEMENT
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Lender in its discretion may determine; (e) release, substitute, agree not to
▇▇▇, 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 owning by such other Borrower, Borrower and any other person
who signs, guarantees or endorses this Agreement, to the extent allowed by law,
waive presentment, demand for payment and notice of dishonor. Upon any change in
the terms of this Agreement, and unless otherwise expressly stated in writing,
no party who signs this Agreement, whether as maker, guarantor, accommodation
maker or endorser, shall be released from liability. All such parties agree that
Lender may renew or extend (reportedly and for any length of time) this loan or
release any party or guarantor or collateral, or impair, fail to release upon or
perfect Lender's security interest in this collateral; and take any other action
deemed necessary by lender without the consent of or notice to anyone. All such
parties also agree that Lender 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 Agreement 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 (LENDER) 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. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE AGREEMENT.
BORROWER:
ELECSYS CORPORATION
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President & CEO of
ELECSYS CORPORATION
DCI, INC.
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President of DCI, INC.
NTG, INC.
By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director/Treasurer of NTG, INC.