Unassociated Document














Exhibit 10.1


 







 


PROMISSORY NOTE


 


PRINCIPAL:       $2,500,000.00


 


LOAN DATE:      04-01-2013


 


MATURITY:       04-28-2015


 


BORROWER:    Butler National Corporation


 


19920 W. 161st Street


 


Olathe, KS  66062


 







 


LENDER:            Industrial State Bank


 


P.O. Box 6007


 


3201 Strong Ave.


 


Kansas City, KS  66106


 


913-831-2000


 







 


Principal Amount:  $2,500,000.00


 


Date of Note:  April 1, 2013


 


PROMISE TO PAY.  Butler National Corporation (“Borrower”) promises to pay to Industrial State Bank (“Lender”), or order, in lawful money of the United States of America, the principal amount of Two Million Five Hundred Thousand & 00/100 Dollars ($2,500,000.00), together with interest on the unpaid principal balance from April 1, 2013, calculated as described in the “INTEREST CALCULATION METHOD” paragraph using an interest rate of 6.000% per annum based on a year of 360 days, 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 accordance with the following payment schedule:


 


Borrower will pay this loan as follows:  6 monthly consecutive interest payments, beginning April 28, 2013, with interest calculated on the unpaid principal balance using an interest rate of 6.00% fixed, per annum based on a year of 360 days.  Beginning October 28, 2013 borrower will make monthly principal reductions and any interest due using the proceeds from the sale of Hush Kits, until time of the loan maturity of April 28, 2015.


 


Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; and then to any unpaid collections costs.  Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.


 


INTEREST CALCULATION METHOD.  Interest on this Note 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 Note 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 the 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:  Industrial State Bank, P.O. Box 6007, 3201 Strong Ave., Kansas City, KS  66106.


 


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.


 


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 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 loan.  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 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.


 


Change of 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.


 


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 Note 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 twenty (20) days; or  (2) if the cure requires more than twenty (20) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be 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 who is not Lender’s salaried employee to help collect this Note if Borrower does not pay.  Borrower will be liable for all reasonable costs incurred in the collection of this Note, including but not limited to, court costs, attorney’s fees and collection agency fees, except that such costs of collection shall not include recovery of both attorneys’ fees and collection agency fees.


 


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.


 


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 Kansas without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Kansas.


 


CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender’s request to submit to the jurisdiction of the courts of Wyandotte County, State of Kansas.


 


DISHONORED ITEM FEE.  Borrower will pay a fee to Lender of $20.00 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.


 


COLLATERAL.  Borrower acknowledges this Note is secured by UCC filing on all company assets,  assignment of all contracts for Hush Kits for older Learjets, new orders for Hush Kits and cross collateralized with loan #’s 48051 and 48052.


 


RECEIPT OF PAYMENTS.  All payments must be made by check, money order, or other instrument in U.S. dollars and must be received by us at the remittance address shown on note.  Payments received at that address prior to 3:00 PM Central Standard Time on any business day will be credited to your account as of the date received.  If Lender receives payments after 3:00 PM, payments may be delayed until the next business day.


 


LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 5.00% of the unpaid portion of the regularly scheduled payment.


 


SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower’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.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, protest 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 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 Note are joint and several.


 


PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.


 


BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.


 


BORROWER:


 


BUTLER NATIONAL CORPORATION


 


By:        /s/ Clark D. Stewart


 


Clark D. Stewart, President/CEO of Butler National Corporation