Exhibit 10.1

Page 1

 

 

CHANGE IN TERMS AGREEMENT

 

Borrower: ECSI International, Inc.   790 Bloomfield Avenue, Suite C-1   Clifton,
NJ   07012     Lender:  Atlantic Stewardship Bank    Lending    400 Hamburg
Turnpike  Wayne, NJ   07470

 

 

Principal Amount:   $472,975.00 Date of Agreement: May 15, 2013

 

DESCRIPTION OF EXISTING INDEBTEDNESS. Original note dated March 15, 2011,
amended and extended March 15, 2012, November 15, 2012 and February 15, 2013.

 

DESCRIPTION OF CHANGE IN TERMS. 1) Term Out Line of Credit 2) Add personal
Guaranty of Arthur E. Barchenko 3) Interest Rate 4) Floor Rate 5) Payment as
indicated below and 6) Conversion Fee as indicated below.

 

PROMISE TO PAY. ECSI International, Inc. ("Borrower") promises to pay to
Atlantic Stewardship Bank ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Four Hundred Seventy-two Thousand
Nine Hundred Seventy-five & 00/100 Dollars ($472,975.00), together with interest
on the unpaid principal balance from May 15, 2013, until paid in full, together
with all applicable fees and expenses.

 

PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in accordance with the following payment schedule,
which calculates interest on the unpaid principal balances as described in the
"INTEREST CALCULATION METHOD" paragraph using the interest rates described in
this paragraph: one interest payment on June 15, 2013, with interest calculated
on the unpaid principal balances using an interest rate of 5.875% per annum
based on a year of 360 days; 23 monthly consecutive principal and interest
payments in the initial amount of $5,000.00 each, beginning July 15, 2013, with
interest calculated on the unpaid principal balances using an interest rate
based on the Prime rate as published in the Wall Street Journal. When a range of
rates has been published, the higher of the rates will be used (currently
3.250%), plus a margin of 1.000 percentage points, adjusted if necessary for the
minimum and maximum rate limitations for this loan, resulting in an initial
interest rate of 5.875% per annum based on a year of 360 days; and one principal
and interest payment of $410,558.01 on June 15, 2015, with interest calculated
on the unpaid principal balances using an interest rate based on the Prime rate
as published in the Wall Street Journal. When a range of rates has been
published, the higher of the rates will be used (currently 3.250%), plus a
margin of 1.000 percentage points, adjusted if necessary for the minimum and
maximum rate limitations for this loan, resulting in an initial interest rate of
5.875% per annum based on a year of 360 days. This estimated final payment is
based on the assumption that all payments will be made exactly as scheduled and
that the Index does not change; the actual final payment will be for all
principal and accrued interest not yet paid, together with any other unpaid
amounts on this loan. Unless otherwise agreed or required by applicable law,
payments will be applied first to any unpaid collection costs; then to any late
charges; then to any accrued unpaid interest; and then to principal. Borrower
will pay Lender at Lender's address shown above or at such other place as Lender
may designate in writing.

 

 

 

 

Exhibit 10.1

Page 2

 

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 Prime rate as
published in the Wall Street Journal. When a range of rates has been published,
the higher of the rates will be used (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 3.250% per annum. The interest rate or rates to
be applied to the unpaid principal balance during this loan will be the rate or
rates set forth herein in the "Payment" section. Notwithstanding any other
provision of this Agreement, after the first payment stream, the interest rate
for each subsequent payment stream will be effective as of the due date of the
last payment in the just-ending payment stream. NOTICE: Under no circumstances
will the interest rate on this loan be less than 5.875% per annum or more than
the maximum rate allowed by applicable law. Whenever increases occur in the
interest rate, Lender, at its option, may do one or more of the following: (A)
increase Borrower's payments to ensure Borrower's loan will pay off by its
original final maturity date, (B) increase Borrower's payments to cover accruing
interest, (C) increase the number of Borrower 's payments, and (D) continue
Borrower's payments at the same amount and increase Borrower's final payment.

 

INTEREST CALCULATION METHOD. Interest on this loan is computed on a 365/360
basis; that is, by applying the ratio of the 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. All interest payable under
this loan is computed using this method.

 

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
under the payment schedule. Rather, early payments will reduce the principal
balance due and may result in Borrower's making fewer payments. 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 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: Atlantic Stewardship Bank,
400 Hamburg Turnpike Wayne, NJ 07470.

 

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment. This late
charge shall be paid to Lender by Borrower for the purpose of defraying the
expense incident to the handling of the delinquent payment.

 

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the interest rate on this loan shall be increased by adding an
additional 3.000 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. After maturity, or after this loan would
have matured had there been no default, the Default Rate Margin will continue to
apply to the final interest rate described in this Agreement. 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.

 

False Statements. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf, or made by Guarantor, or any other
guarantor, endorser, surety, or accommodation party, under this Agreement or the
Related Documents in connection with the obtaining of the Indebtedness evidenced
by this Agreement or any security document directly or indirectly securing
repayment of this Agreement 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.

 

 

 

 

Exhibit 10.1

Page 3

 

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 cred1tor 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.

 

Execution; Attachment. Any execution or attachment is levied against the
Collateral, and such execution or attachment is not set aside, discharged or
stayed within thirty (30) days after the same is levied.

 

Change in Zoning or Public Restriction. Any change in any zoning ordinance or
regulation or any other public restriction is enacted, adopted or implemented,
that limits or defines the uses which may be made of the Collateral such that
the present or Intended use of the Collateral,

 

Default Under Other Lien Documents. A default occurs under any other mortgage,
deed of trust or security agreement covering all or any portion of the
Collateral.

 

Judgment. Unless adequately covered by insurance in the opinion of Lender, the
entry of a final judgment for the payment of money involving more than ten
thousand dollars ($10,000.00) against Borrower and the failure by Borrower to
discharge the same, or cause it to be discharged, or bonded off to Lender's
satisfaction, within thirty (30) days from the date of the order, decree or
process under which or pursuant to which such judgment was entered.

 

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor, or any other guarantor, endorser, surety, or accommodation party
of any of the Indebtedness or any Guarantor, or any other 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.

 

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 the
Indebtedness is impaired.

 

Insecurity. Lender in good faith believes itself insecure.

 

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 Lender sends written notice to Borrower demanding cure of such
default: (1) cures the default within thirty (30) days; or (2) it the cure
requires more than thirty (30) 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 Agreement 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 Agreement 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, 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.

 

 

 

 

Exhibit 10.1

Page 4

 

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
New Jersey without regard to its conflicts of law provisions. This Agreement has
been accepted by Lender in the State of New Jersey.

 

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 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 Keogh 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 sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

 

COLLATERAL. Borrower acknowledges this Agreement is secured by a lien on all
business assets of ECSI International, Inc.

 

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the 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.

 

FINANCIAL STATEMENTS. The Borrower will provide the Lender within one hundred
twenty (120) days of the end of each fiscal I calendar year, annual audited
Financial Statements prepared by a certified public accountant satisfactory to
the lender and quarterly company prepared 10-Q Financial Statements, Accounts
Receivable Aging and Accounts Payable Aging will be required annually. In
addition, the Borrower will furnish upon request, any additional financial
information the Bank deems necessary in support of and during the term of this
loan within thirty (30) days of such request. In addition to but not in lieu of
any other remedies available to the Bank, upon the Borrower's failure to provide
the statements and/or financial records required to be provided by the Borrower
and the Guarantor, and until such statements and/or financial records are
furnished, the interest rate under the note shall be increased one percent
(1.00%) above the rate of interest then in effect on the note.

 

DEPOSIT RELATIONSHIP. As part of the consideration to the Lender, the Borrower
shall maintain business deposit accounts with Atlantic Stewardship Bank during
the term of the loan. If the account relationship is not maintained with the
Bank, the interest rate shall immediately be increased one percent (1.00%).
Lender acknowledges that Borrower maintains an account outside of Atlantic
Stewardship Bank for the purpose of transacting international business and
Lender further acknowledges that this is not a violation under this agreement.

 

CROSS DEFAULT. This Loan shall be cross-defaulted with all present and future
Loans to the Borrower and Guarantor.

 

CONVERSION FEE PAYMENT. $10,000.00 total conversion fee due with $3,000.00
payable on 6/26/13. If payoff occurs on or before September 30, 2013, Atlantic
Stewardship Bank will reduce the remaining fee due to $3,000.00. If payoff
occurs after September 30, 2013 but before December 31, 2013, Atlantic
Stewardship Bank will reduce the remaining fee to $5,000.00. After December 31,
2013, the full remaining fee of $7,000.00 will be due and payable no later than
October 15, 2014.

 

 

 

 

Exhibit 10.1

Page 5

 

AUTOMATIC DEBIT. If payment method is other than automatic debit from a demand
deposit account at Atlantic Stewardship Bank, your rate will increase by one
percent (1.00%).

 

WAIVER MINIMUM DEBT SERVICE COVERAGE COVENANT. Lender agrees to eliminate the
Debt Service Coverage Covenant from this credit facility entirely.

 

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. Borrower and any other person who signs, guarantees or endorses this
Agreement, to the extent allowed by la w, 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
(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 Lender'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 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.

 

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:

 

ECSIINTERNATIONAL, INC.

By: /s/ Arthur E. Barchenko

Arthur E. Barchenko, President of ECSI

International, Inc.

 

LENDER:

 

ATLANTIC STEWARDSHIP BANK

X /s/ Cynthia Perrotta

Authorized Signer