10QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                   FORM 10-QSB

           (X)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                 January 31, 2002
                                    -------------------------------------


           ( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to
                               ------------------  -----------------------

Commission file number                0-22760
                      ------------------------------------------------

                               ELECSYS CORPORATION
        (Exact name of small business issuer as specified in its charter)

             Kansas                                     48-1099142
 -------------------------------------------------------------------------
(State or other jurisdiction of incorporation      (I.R.S. Employer Identification No.)
or organization)

                             15301 West 109th Street
                              Lenexa, Kansas 66219
                           ----------------------------
                    (address of principal executive offices)

                                 (913) 647-0158
                          ------------------------------
                           (Issuer's telephone number)

Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the previous 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                    Yes     (X)               No       (   )

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

Common stock, $0.01 par value - 2,786,500 shares outstanding as of January 31, 2002

                      ELECSYS CORPORATION AND SUBSIDIARIES
                                   FORM 10-QSB
                         Quarter Ended January 31, 2002
                                      INDEX


                                                                                        Page
PART I - FINANCIAL INFORMATION

         ITEM I - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                (UNAUDITED)
                  Condensed Consolidated Balance Sheets                                    3
                  Condensed Consolidated Statements of Operations                          4
                  Condensed Consolidated Statements of Cash Flows                          5
                  Notes to Condensed Consolidated Financial Statements                     6


         ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     FINANCIAL CONDITION AND RESULTS OF
                     OPERATIONS                                                            9

PART II - OTHER INFORMATION
         Item 3 - Defaults upon Senior Securities                                         13
         Item 6 - Exhibits and Reports on Form 8-K                                        13

SIGNATURE PAGE                                                                            15

              ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Elecsys Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
      (Unaudited)
      (In thousands)

                                                        January 31, 2002            April 30, 2001
                                                        ------------------      ------------------------

Assets
Current assets:
  Cash &cash equivalents                                           $ 530                $ 26
  Accounts receivable, net                                          1,262               1,023
  Inventories, net                                                  1,845               2,042
  Other current assets                                                 89                 217
  Net assets of discontinued operations                                 -               7,909
                                                        ------------------      --------------
Total current assets                                                3,726              11,217

Property and equipment, at cost                                     3,339               2,952
Accumulated depreciation and amortization                            (550)               (356)
                                                        ------------------      --------------
                                                                    2,789               2,596

Restricted cash                                                         -               1,153
Cost in excess of net assets acquired, net                          1,643               2,014
Other assets                                                           64                 159
                                                        ------------------      --------------
Total assets                                                      $ 8,222            $ 17,139
                                                        ==================      ==============

Liabilities and stockholders' equity Current liabilities:
  Accounts payable                                                  $ 909               $ 562
  Accrued expenses                                                    608                 656
  Notes payable to bank                                                 -               5,241
  Current portion of long-term debt                                     -               1,120
                                                        ------------------      --------------
Total current liabilities                                           1,517               7,579

Long-term debt, less current portion                                2,298               3,350

Stockholders' equity:
  Common stock                                                         28                  26
  Additional paid-in capital                                        8,138               8,088
  Receivable from officers from sale of stock                           -                 (19)
  Accumulated deficit                                              (3,759)             (1,885)
                                                        ------------------      --------------
Total stockholders' equity                                          4,407               6,210
                                                        ------------------      --------------
Total liabilities and stockholders' equity                        $ 8,222            $ 17,139
                                                        ==================      ==============

NOTE: The balance sheet at April 30, 2001 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.

See notes to condensed consolidated financial statements

 Elecsys Corporation and Subsidiaries
 Condensed Consolidated Statements of Operations
        (Unaudited)
        (In thousands, except per share amounts)

                                                           Three Months Ended                   Nine Months Ended
                                                              January 31,                         January 31,
                                                   ----------------------------------    --------------------------------
                                                          2002              2,001             2002                 2,001
                                                   --------------      --------------    -------------       ------------

 Sales                                                     1,836               1,603            5,496              5,123
 Cost of products sold                                     1,564                 989            4,368              3,252
                                                   --------------      --------------    -------------       ------------
 Gross margin                                                272                 614            1,128              1,871


 Selling, general and administrative expenses                667                 591            2,569              1,803
                                                   --------------      --------------    -------------       ------------
 Operating (loss) income from continuing operations         (395)                 23           (1,441)                68

 Other income (expense)                                       (7)                  -              169                  -
 Interest expense (net)                                      (44)               (107)            (260)              (339)
                                                   --------------      --------------    -------------       ------------
 Loss from continuing operations                            (446)                (84)          (1,532)              (271)

 Gain on sale of discontinued operations                     446                   -              155                  -
 Income (loss) from discontinued operations                    -                (125)            (497)                (8)

                                                   --------------      --------------    -------------       ------------
 Net loss                                                      -                (209)          (1,874)              (279)
                                                   ==============      ==============    =============       ============

 Earnings (loss) per share:
   Basic and fully diluted
      Continuing operations                                (0.16)              (0.03)           (0.56)             (0.11)
      Discontinued operations                               0.16               (0.05)           (0.12)             (0.00)
                                                   --------------      --------------    -------------       ------------
 Net loss                                                   0.00               (0.08)           (0.68)             (0.11)
                                                   ==============      ==============    =============       ============

 Basic and fully diluted weighted average common       2,772,000            2,579,000        2,770,000          2,579,000
shares outstanding

See notes to condensed consolidated financial statements.

Elecsys Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
     (Unaudited)
     (In thousands)                                                               Nine Months Ended
                                                                                      January 31,
                                                                           ---------------------------------
                                                                              2002                  2001
                                                                           -----------           -----------

Operating activities:
Loss from continuing operations                                              $ (1,532)               $ (385)
Adjustments to reconcile net loss from continuing operations to net cash
  used in continuing operations:
    Depreciation and amortization                                                 317                   318
    Changes in operating assets and liabilities:
      Accounts receivable, net                                                   (239)                 (148)
      Inventories, net                                                           (189)                 (485)
      Accounts payable                                                            347                   411
      Accrued expenses                                                            118                    68
      Other, net                                                                  128                   (31)
                                                                           -----------           -----------
Net cash used in continuing operations                                         (1,050)                 (252)
Gain on sale of discontinued operations                                           155                     -
Net cash provided by (used in) discontinued operations                           (624)                 (460)
                                                                           -----------           -----------
Cash used in operating activities                                              (1,519)                 (712)

Investing activities:
  Proceeds from sale of discontinued operations                                 8,036                     -
  Purchases of property and equipment                                            (400)                 (120)
  DCI dispute resolution agreement payment                                       (328)                    -
  Change in other assets                                                           95                   267
                                                                           -----------           -----------
Net cash provided by investing activities                                       7,403                   147

Financing activities:
  Net borrowings (payments) on notes payable to bank
      related to discontinued operations                                       (5,241)                1,028
  Principal payments on long-term debt                                         (1,363)                 (340)
  Proceeds from collection of shareholder loan                                     19                     -
  Proceeds from exercise of stock options                                          52                     -
  Change in restricted cash                                                     1,153                   (14)
                                                                           -----------           -----------
Net cash provided by (used in) financing activities                            (5,380)                  674
                                                                           -----------           -----------
Net increase (decrease) in cash and cash equivalents                              504                   109

Cash and cash equivalents at beginning of period                                   26                     -

                                                                           -----------           -----------
Cash and cash equivalents at end of period                                      $ 530                 $ 109
                                                                           ===========           ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
  Interest                                                                      $ 396                 $ 456
                                                                           ===========           ===========
  Income taxes                                                                    $ -                 $ 120
                                                                           ===========           ===========

See notes to condensed consolidated financial statements.

                      ELECSYS CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                January 31, 2002


1. Basis of presentation

The accompanying unaudited condensed consolidated financial statements of
Elecsys Corporation (the Company) include the accounts of the Company and its
wholly owned subsidiaries, Airport Systems International, Inc. (ASII), DCI, Inc.
(DCI), and ASII International, Inc., a foreign sales corporation incorporated in
Barbados. All significant intercompany balances and transactions have been
eliminated. The condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine months ended January 31, 2002 are not necessarily
indicative of the results that may be expected for the year ended April 30,
2002. For further information, refer to the consolidated financial statements
and footnotes included in the Elecsys Corporation and Subsidiaries annual report
on Form 10-KSB for the year ended April 30, 2001.

2. Asset Purchase Agreement

On September 10, 2001 the Company's shareholders approved an agreement for the
sale of substantially all of the assets and operations and the transfer of
certain liabilities of its aerospace business, ASII, to Alenia Marconi Systems
(ASI) Inc. (Buyer). In addition, the Buyer assumed standby letters of credit
issued by the Company under its bank line of credit and a mortgage loan on
property conveyed in the transaction. On September 11, 2001 this sale
transaction was closed with an initial purchase price of $7.7 million, subject
to a final adjustment based on a targeted net asset value as defined in the
Asset Purchase Agreement. The Company received $7.3 million in cash at closing
and the balance, $400,000, was placed in escrow. A portion of the $7.3 million
cash proceeds was used by the Company to retire the note payable to bank ($5.6
million at September 11, 2001), retire an installment note payable to bank
($362,000 at September 11, 2001), and make past due interest payments on
subordinated debt (approximately $68,000).

During October of 2001, the Buyer notified the Company that it was disputing
approximately $900,000 of the net asset value pursuant to its rights under the
Asset Purchase Agreement. In November, the Company received $261,000 in partial
settlement of this dispute, which was reflected as gain on sale of discontinued
operations in the second quarter of this fiscal year. In January of 2002, the
Company and Buyer settled the remaining disagreement. The settlement resulted in
the cash payment to Elecsys of approximately $475,000 of additional
consideration for the net assets sold. This amount, net of costs related to
reaching the settlement, was

recognized as a Gain on Sale of Discontinued Operations in the third quarter
ending January 31, 2002 of $446,000, resulting in a net Gain on Sale of
Discontinued Operations on a year to date basis of approximately $155,000, and
completes the process of adjusting the purchase price that was contemplated in
the Asset Purchase Agreement.

As a result of the sale, the operations of ASII have been reflected as
discontinued operations. Amounts previously reported as part of Company
operations have been reclassified as discontinued operations and are not
included in the line item level discussion in the RESULTS OF OPERATIONS
section of the Management's Discussion and Analysis (Item 2) below. Revenues
of this discontinued business segment totaled $ 0 and $3.0 million for the
quarters ended January 31, 2002 and 2001, respectively and $4.6 million and
$11.0 million for the nine months ended January 31, 2002 and 2001, respectively.

3. Notes Payable to Banks

The Company had a line of credit agreement with a bank that was terminated on
the closing of the Asset Purchase Agreement. All borrowings and other
obligations (standby letters of credit) under this line were either paid in full
or assumed by the Buyer, as described in Note 2 above. The Company does not
currently have a credit facility with a bank.


4. DCI Purchase Claim Resolution

At the end of the third quarter of this fiscal year, the Company and the former
stockholders of DCI, Inc. settled the disagreement that existed concerning
representations and warranties made by those former stockholders in connection
with the purchase of the stock of DCI and payment of the subordinated note held
by the former stockholders. The resolution agreement contained the following
elements:

     a.   Elecsys paid principal and interest on the existing note to the former
          stockholders of approximately $328,000.
     b.   An entity formed by the former stockholders purchased, at book value,
          inventory, fixed assets, and intellectual property primarily
          associated with the DCI instrument panel meter product line in
          exchange for a reduction in the existing note of approximately
          $405,000. No gain or loss was recorded on this transaction.
     c.   The former stockholders forgave approximately $248,000 of principal
          and interest owed on the existing note, which was recorded in the
          third quarter ended January 31, 2002 as a reduction in goodwill.
     d.   Elecsys issued two long term, subordinated notes in exchange for the
          remaining principal balance on the existing note; one note, for
          approximately $405,000 is convertible into common shares of Elecsys at
          $1.93 per share and another, non-convertible, note totals $31,650.
     e.   The parties mutually released each other from any and all existing and
          future claims under the original purchase agreements.

5. Reclassifications

Certain amounts in the condensed consolidated financial statements for the three
months and nine months ended January 31, 2001 have been reclassified to conform
to the fiscal 2002 presentation.

                 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussions set forth in this Form 10-QSB may contain forward-looking
comments based on current expectations that involve a number of risks and
uncertainties. Actual results could differ materially from those projected or
suggested in the forward-looking comments. The difference could be caused by a
number of factors, including, but not limited to, the factors and conditions
which are described under the headings "Competition", "Sources and Availability
of Raw Materials and Principal Suppliers", "Dependence on One or a Few Major
Customers" and "Results of Operations" which are included in the Company's other
SEC filings, as well as Form 10-KSB for the year ended April 30, 2001. The
reader is cautioned that the Company does not have a policy of updating or
revising forward-looking statements and thus he or she should not assume that
silence by management of the Company over time means that actual events are
bearing out as estimated in such forward-looking statements.

OVERVIEW

Elecsys Corporation (the "Company"), through its subsidiaries DCI, Inc. (DCI)
and Airport Systems International, Inc. (ASII) is a designer and manufacturer of
electronic sub-assemblies and systems, and a provider of electronic
manufacturing services (EMS) and custom liquid crystal displays. Until September
11, 2001, the Company operated two business segments, EMS and aerospace. The EMS
unit is operated through DCI and the aerospace unit, which was sold on September
11, 2001, was operated through ASII. The EMS unit provides specialized
electronic design, manufacturing and test services to original equipment
manufacturers (OEM's) and manufactures and imports custom liquid crystal display
(LCD) devices. The electronic assemblies it designs and manufactures, including
circuit board assemblies, electronic modules and full turn-key products, along
with the LCD's it manufactures or imports, are used in medical, aerospace,
industrial and consumer product applications. Sales are made primarily to
customers within the United States. The aerospace unit designed, manufactured
and installed ground-based radio navigation and landing systems (Navaids) and
airfield lighting. Its customers consisted of civil aviation authorities in the
United States and throughout the world. The business conducted by ASII was sold
on September 11, 2001, as discussed in Note 2 in the notes to Condensed
Consolidated Financial Statements.


RESULTS OF OPERATIONS

Sales from continuing operations for the third quarter of fiscal 2002 were $1.8
million, up 15% when compared with $1.6 million for the third quarter of fiscal
year 2001. Sales from continuing operations were $5.5 million for the first nine
months of fiscal 2002, an increase of 7% over the $5.1 million reported for the
first nine months of fiscal 2001. Revenues for both the three and nine month
periods increased due to the addition of several new electronic assembly service
customers along with smaller increases in Engineering Services and Instrument
sales. These increases were partially offset by significant decreases in
microelectronic services and LCD product sales and a slight decrease in repair
revenue.

Gross margins from continuing operations for the third quarter of fiscal 2002
were $272,000, or 15% of sales, down from $614,000, or 38% of sales, for the
same period last year. The decline in gross margin, and gross margin as a
percent of sales, is due to several factors:

     1.   Significantly lower sales to one of DCI's largest and highest gross
          margin microelectronics products customers (a consumer product
          manufacturer).
     2.   Lower overhead absorption rates due to lower revenue levels than
          anticipated. A number of customers who had orders in the backlog at
          the end of the second quarter of this fiscal year that were scheduled
          to ship in the third quarter asked that those shipments be delayed.
          The Company believes this is an industry wide situation,

          caused, in part, by the economy. In order to maintain good customer
          relations, the Company accommodated the customers' requests. Overhead
          levels in place to support the expected higher shipment levels were
          not absorbed over the lower sales volume, which contributed
          significantly to the decline in gross margins. Reductions in those
          overhead rates were effected on February 1, 2002 through a reduction
          in direct and indirect labor headcount.
     3.   A significantly higher mix of sales to new customers, which requires
          additional manufacturing engineering and startup costs.
     4.   The Company's focus on and success in gaining new larger OEM
          customers, which provide for higher production volumes, but generate
          lower gross margins than the smaller, lower-volume customers the
          Company has done business with in the past. The Company achieved very
          low gross margin on one large customer's product line, in particular.
          This was a result of higher than expected labor hours required to
          complete the associated labor-intensive, through-hole technology jobs
          for this customer.
     5.   The Company is experiencing higher material costs and lower sales
          volume in its LCD manufacturing business.


For the first nine months of fiscal 2002, gross margins from continuing
operations totaled $1.1 million, or 20% of sales, versus $1.9 million or 37% of
sales for the comparable nine months of the prior fiscal year. The decrease in
gross margins, and gross margin as a percent of sales, is primarily attributable
to the items described above, which had a larger impact in the second and third
quarters of this fiscal year than in the first.

The Company's focus on serving moderate volume, high product mix customers that
have been under-served by larger EMS providers, along with our manufacturing
flexibility, and our ability to design, manufacture and import custom LCD
displays (as well as assemble the drive electronics and bond the two) have been
instrumental in our ability to replace the significant decrease in orders from
the large microelectronics products customer previously mentioned. We continue
to be encouraged by the bookings levels we experienced in the third quarter and
are optimistic that this trend will carry through the balance of fiscal 2002.
Based partially upon our increased sales activities and backlog of orders at the
end of the third quarter, we expect sales to be higher in the fourth quarter of
this fiscal year when compared to levels in the prior year, although actual
results could differ materially due to significant capacity in the EMS industry
and other factors. We anticipate gross margins to improve in the final quarter
of this fiscal year compared to previous quarters of the current fiscal year,
although no assurances can be made in this regard. We anticipate that this will
result from generally improved plant efficiency, elimination of certain
unprofitable customers, an expense reduction associated with the sale of the
Company's instrument product line, and a distribution agreement associated with
the equipment line along with the expense reductions noted above. Management
also anticipates that an increase in margins from the LCD business will result
from increased offshore sourcing and new pricing policies.

Selling, general and administrative ("SG&A") expenses were $667,000 (36% of
sales) for the third quarter of fiscal 2002 compared to $591,000 (37% of sales)
for the third quarter of fiscal 2001. This increase was due to an increase in
sales and engineering personnel and bad debts at DCI, offset by a reduction in
corporate expenses due to the management restructuring in October 2001 and other
administrative cost saving efforts implemented by the Company.

SG&A expenses for the nine months ended January 31, 2002 increased $766,000 to
$2.6 million (47% of sales), compared to $1.8 million (35% of sales), for the
nine months ended January 31, 2001. This increase is due primarily to the
restructuring charge reserve recorded in the second quarter of this year as a
result of the management reorganization, an increase in sales compensation
associated with the increased sales efforts and higher legal fees.

The restructuring charge, which was $315,000 and was recorded in the second
quarter of this fiscal year, consisted primarily of severance costs associated
with the elimination of two senior executives from the Company's employ and
related expenses. For the three and the nine months ended January 31, 2002, the
Company had net cash outflows of approximately $105,000 and $271,000,
respectively, associated with the restructuring reserve. The Company believes
that the remaining reserves are adequate to cover the outstanding liabilities.

Interest expense (net) was $44,000 in the third quarter of fiscal 2002, down
from $107,000 for the third quarter of fiscal 2001, due primarily to lower
weighted average borrowings outstanding and lower interest rates. For the nine
months ended January 31, 2002, interest expense (net) was $260,000 versus
$339,000 for the comparable period of the prior year. This decrease is
attributable to lower weighted-average borrowings outstanding and lower interest
rates as well.

The Company recorded an operating loss from discontinued operations for the
third quarter of fiscal 2002 of $ 0 as compared to $125,000 in the same period
last year, due to the sale of substantially all of the assets and operations of
ASII on September 11, 2001. For the nine months ended January 31, 2002, the
operating loss from discontinued operations was $497,000 compared to an
operating loss from discontinued operations of $8,000 for the nine months ended
January 31, 2001. Additionally, the Company recorded a gain on the sale of the
discontinued operations of $446,000 (net of certain associated expenses) in the
quarter ended January 31, 2002 as a result of the settlement of certain purchase
price disputes with the buyer. The Company recognized a final gain of $155,000
on the sale of discontinued operations for the nine months ended January 31,
2002.

No income tax provision or benefit was recorded for the third quarters of fiscal
2002 and fiscal 2001 due primarily to net operating loss carry forwards
available to the Company.

As a result of the above, the net loss for the third quarter of fiscal 2002 was
$0, compared to $209,000 in the third quarter of fiscal 2001. The net loss for
the nine months ended January 31, 2002 was $1,874,000 versus a net loss of
$279,000 for the nine months ended January 31, 2001.

Liquidity and Capital Resources

Net cash of $ 1.1 million was used by continuing operations for the nine months
ended January 31, 2002 compared to $713,000 used by operations in the first nine
months of fiscal 2001. The increase in cash used was primarily due to an
increased loss from continuing operations, and increases in accounts receivable
and inventory, partially offset by increases in accounts payable and accrued
liabilities.

Cash provided by investing activities was $7.4 million for the nine months ended
January 31, 2002 compared to $147,000 for the same period last year. This
increase is primarily attributable to the receipt of proceeds from the sale of
ASII, partially offset by purchases of fixed assets and a $328,000 payment made
in conjunction with the DCI dispute resolution agreement.

Cash used by financing activities was $5.4 million in the first nine months of
fiscal 2002 compared to cash provided of $674,000 in the nine months ended
January 31, 2001. The cash used was the result of the pay off of the Company's
credit facility following the sale of ASII and the early repayment of a portion
of the Industrial Revenue Bond, funded by a release of restricted cash.

The Company does not currently have a credit facility with any bank. The Company
expects to meet its ongoing requirements for working capital and capital
expenditures from a combination of its existing cash and cash expected to be
generated from operations of DCI, although no assurances can be made in this
regard. If operating losses are not eliminated at DCI, the existing cash balance
alone will not be adequate to sustain the Company's future operations. The
Company has begun discussions with potential lenders and investors about
providing financing to the Company, though no assurances can be made that these
efforts will be successful.

PART II - OTHER INFORMATION

Item 3.  Defaults upon Senior Securities

     During the third quarter of this fiscal year, the Company resolved its
claims against the former stockholders of DCI, Inc. Those claims were based upon
representations and warranties made by those stockholders in connection with the
purchase of the stock of DCI, Inc. As a result of those claims, the Company
exercised an offset right as to payments otherwise due under the subordinated
notes held by the former stockholders. The former DCI stockholders viewed the
exercise of that offset right as a default upon the subordinated note.
Settlement of the claims against the former stockholders of DCI included a
payment by the Company under the subordinated note, so that there was clearly no
default thereunder. See Footnote 4 of Notes to Condensed Consolidated Financial
Statements.

Item 6.  Exhibits and Reports on Form 8-K

                  (a)   Exhibits:
                        10.1     Dispute Resolution Agreement
                        10.2     Promissory Note
                        10.3     Promissory Note
                        10.4     Registration Rights Agreement

                  (b)      Reports on Form 8-K:

                  Date of Filing                     Item 2
                  --------------        ----------------------------------------

                June 18, 2001           Form 8K, announcing that Elecsys
                                        Corporation had entered into
                                        an Asset Purchase Agreement with ASI
                                        Newco, Inc., a wholly owned
                                        subsidiary of Alenia Marconi Systems
                                        Ltd. to sell substantially all of
                                        the assets of its wholly owned
                                        subsidiary, Airport Systems
                                        International Inc.

                August 31, 2001         Form 8K, announcing Elecsys
                                        Corporation's first quarter results as
                                        well as discussing the status of the
                                        sale of substantially all of the assets
                                        of its wholly owned subsidiary, Airport
                                        Systems International Inc.

                September 11,2001       Form 8K, announcing the closing of the
                                        sale of substantially all of the assets
                                        of its wholly owned subsidiary, Airport
                                        Systems International Inc.

                October 9, 2001         Form 8K, announcing that Elecsys
                                        Corporation had restructured its Board
                                        of Directors and reduced management
                                        expenses.

                January 3, 2002         Form 8K, announcing settlement and
                                        collection of the final purchase price
                                        for the sale of ASII.

                February 7, 2002        Form 8K, announcing settlement of the
                                        dispute with the former stockholders of
                                        DCI, Inc. concerning representations and
                                        warranties made in connection with the
                                        purchase of the stock of DCI, Inc.

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                      ELECSYS CORPORATION AND SUBSIDIARIES


March 14, 2002                    /s/ Thomas C. Cargin
- -----------------------       --------------------------------------------------
Date                          Thomas C. Cargin, Vice President of Finance and
                              Administration, Secretary, and Principal Accounting
                              Officer

                                  EXHIBIT INDEX


Item                                Description                               Page

10.1                                Dispute Resolution Agreement                16

10.2                                Promissory Note                             37

10.3                                Promissory Note                             46

10.4                                Registration Rights Agreement               48

EX-10.1

                                                        Exhibit 10.1


                          DISPUTE RESOLUTION AGREEMENT

     THIS DISPUTE RESOLUTION AGREEMENT ("Agreement") is made and entered into as
of the 30th day of January, 2002 by and between DCI, Inc., a Kansas corporation
("Seller"), and Design Concepts, Inc., a Kansas corporation ("Buyer"), Chris I.
Hammond, William D. Cook and Larry C. Klusman (collectively, the "Buyer's
Stockholders");

                               W I T N E S S E T H

     WHEREAS, Buyer desires to purchase certain assets of Seller associated with
Seller's Instrumentation Product Line, consisting of the products and models
listed on Schedule "A" (the "Product Line");

     WHEREAS, Seller desires to sell the Product Line to Buyer; and

     WHEREAS, Seller and Buyer's Stockholders have, over a period of time,
engaged in discussions concerning representations and warranties made by Buyer's
Stockholders in a prior transaction involving Seller and Buyer's Stockholders
and Seller wish to resolve and compromise the claims related to that
transaction.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

                                   ARTICLE I
                               PURCHASE OF ASSETS

     SALE AND PURCHASE OF ASSETS: On the Closing Date (as hereinafter defined),
Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall
purchase and accept from Seller, on the terms and conditions set forth herein,
all of Seller's right, title and interest in and to the following tangible and
intangible assets of Seller related to the Product Line (collectively, the
"Assets") described below:

     1.1 TANGIBLE ASSETS:

          a. Product Line Inventory. All inventories of raw materials,
     work-in-progress and finished goods related to the Product Line and
     described on Schedule "B" attached hereto (the "Product Line Inventory");

          b. Excess Inventory. Certain inventory not specifically related to the
     Product Line and described on Schedule "C" attached hereto (the "Excess
     Inventory");

          c. Machinery and Equipment. All of Seller's machinery, equipment,
     fixtures, and other similar miscellaneous tangible assets used exclusively
     for the Product Line as described on Schedule "D" attached hereto (the
     "Equipment");

          d. Marketing Materials. All photos, catalog information, and trade
     show equipment used exclusively for the Product Line (the "Marketing
     Materials");

          e. Miscellaneous Tangible Assets. All other tangible assets or
     properties of Seller to the extent used solely in conjunction with the
     Product Line (the "Miscellaneous Assets").

     1.2 INTANGIBLE ASSETS:

          a. Intellectual Property. All of Seller's drawings, manuals,
     procedures, computer software, and other intellectual property, but only to
     the extent it is associated with the design, manufacture, and support of
     the Product Line (the "Intellectual Property");

          b. Records. All customer lists, customer files, sales and purchase
     records, sales proposals, sales literature, office records and other books
     and records relating solely to the Product Line (the "Books and Records");

          c. Assumed Contracts. Those of Seller's contracts, agreements, leases,
     arrangements, customer orders, and commitments related to the Product Line,
     and described on Schedule "E" attached hereto (the "Assumed Contracts");

          d. Miscellaneous Intangible Assets. All other intangible assets or
     properties of Seller to the extent used solely in conjunction with the
     Product Line (the "Miscellaneous Assets").

     1.3 COPIES OF CUSTOMER INFORMATION. Seller reserves the right to retain
copies of customer files for any customers for which it reasonably believes it
will have future opportunities for ongoing business relationships.

     1.4 COST OF MOVING ASSETS. As soon as possible following the Closing, Buyer
shall remove the Assets from the property of Seller. All costs incurred for the
transport or transfer of any of the Assets will be borne by Buyer.

                                   ARTICLE II
                                 PURCHASE PRICE

     The Buyer's Stockholders are the holders of a $1,248,000.00 promissory note
dated as of February 7, 2000, by Airport Systems International, Inc., and the
Buyer's Stockholders (the "Old Note"), executed pursuant to the Stock Purchase
Agreement (defined in Section 8.3 below). Seller and Buyer's Stockholders have,
over a period of time, engaged in discussions concerning

representations and warranties made by Buyer's Stockholders in a prior
transaction involving Seller. Buyer's Stockholders and Seller wish to resolve
and compromise the claims related to that transaction in the following way.
First, Seller will transfer to Buyer the Excess Inventory, which Seller and
Buyer's Stockholders acknowledge to be valued at $200,000.00, and as a result of
that transfer, the Buyer's Stockholders agree to forgive $200,000.00 on the Old
Note. Next, Seller will transfer the Equipment valued at approximately
$13,000.00, and as a result of that transfer, Buyer's Stockholders agree to
forgive such amount on the Old Note. In addition, Seller will transfer to Buyer
the Product Line Inventory valued at approximately $196,000.00, and as a result
of that transfer, Buyer's Stockholders agree to forgive on the Old Note an
amount equal to the net book value thereof, calculated as described below.
Furthermore, the Buyer's Stockholders agree to forgive $158,348.00 due on the
Old Note. Buyer's Stockholders will receive $81,824.00 in interest that has
accrued and remains unpaid under the Old Note. Buyer's Stockholders will also
receive $246,375.00 of principal repayment on the Old Note. The amount remaining
after the above transactions on the Old Note will be converted into two new
notes, the first of which is a new convertible promissory note in an estimated
amount equal to $410,625.00 (the "New Note") and the Buyer's Stockholders will
deliver to Seller the Old Note, marked "CANCELLED". The final amount of the New
Note will be determined on the Closing Date in the following manner. At the
close of the business on the Closing Date, Seller will generate a computer
printout reflecting the net book value of the Equipment and the Product Line
Inventory. For every dollar that the combined net book values of both the
Equipment and the Product Line Inventory at the close of business on the Closing
Date exceed $200,000.00, the New Note will be decreased one dollar. For every
dollar that the combined net book values of both the Equipment and the Product
Line Inventory at the close of business on the Closing Date are below
$200,000.00, the New Note will be increased one dollar. Notwithstanding the
foregoing, if the combined net book value of the Product Line Inventory and
Equipment exceeds $205,000.00, it is within the discretion of the Buyer to
determine (i) if it will accept all items of Equipment and Product Line
Inventory that cause the combined net book value to exceed $205,000, and (ii) if
not, which Product Line Inventory it will not accept to reduce the net book
value of Product Line Inventory and Equipment to no less than $205,000.00. The
second new note will be in the amount of $31,652 (the "Second New Note").

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer as follows:

          a. Due Organization and Qualification. Seller is a corporation duly
     organized, validly existing and in good standing under the laws of the
     state of its organization.

          b. Authority. Seller has the corporate power and authority to sell the
     Assets and consummate the transactions provided for in this Agreement and
     this Agreement and all instruments and agreements contemplated by this
     Agreement to which Seller is a party

     or signatory have been duly authorized, executed and delivered by Seller
     and constitute the legal, valid and binding obligation of Seller
     enforceable in accordance with their terms. All necessary corporate
     proceedings of Seller have been taken to authorize this Agreement and the
     agreements and instruments contemplated by this Agreement and all
     transactions contemplated hereby.

          c. Title to Assets. Seller has, and upon conveyance, transfer and
     assignment of the Assets to Buyer by Seller at the Closing, Buyer will
     acquire and hold, good and marketable title to all of the Assets, in each
     case, free and clear of any and all options, rights, pledges, security
     interests, liens, charges, and other encumbrances whatsoever (hereinafter
     sometimes collectively referred to as "Encumbrances"), except such
     Encumbrances as are placed on the Assets by Buyer.

          d. Condition of Assets. All of the tangible Assets are transferred in
     "as is" condition, with no implied warranty.

          e. Contracts. True, correct and complete copies of the Assumed
     Contracts have heretofore been provided by Seller to Buyer, and all such
     documents are genuine and in all respects what they purport to be. Each of
     the Assumed Contracts is valid and enforceable in accordance with its
     terms. Seller is not in default in the performance, observance or
     fulfillment of any material obligation, covenant or condition contained in
     the Assumed Contracts, and no event has occurred that with the giving of
     notice or lapse of time would constitute a default thereunder.

          f. Ability to Carry Out Agreement. The execution and delivery of this
     Agreement and the consummation of the transactions contemplated hereby do
     not and will not violate the provisions of the Articles of Incorporation or
     Bylaws of Seller or any note, indenture, mortgage, lease or other agreement
     or instrument to which Seller is a party or by which it is bound.

     3.2 REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER'S STOCKHOLDERS. Buyer
represents and warrants to Seller as follows:

          a. Due Organization and Qualification. Buyer is a corporation duly
     organized, validly existing and in good standing under the laws of the
     state of its organization.

          b. Authority. Buyer has the corporate power and authority to acquire
     the Assets and consummate the transactions provided for in this Agreement
     and this Agreement and all instruments and agreements contemplated by this
     Agreement to which Buyer is a party or signatory have been duly authorized,
     executed and delivered by Buyer and constitute the legal, valid and binding
     obligation of Buyer enforceable in accordance with their terms. All
     necessary corporate proceedings of Buyer have been taken to authorize this
     Agreement and the agreements and instruments contemplated by this Agreement
     and all transactions contemplated hereby.

          c. Ability to Carry Out Agreement. The execution and delivery of this
     Agreement and the consummation of the transactions contemplated hereby do
     not and will not violate the provisions of the Articles of Incorporation or
     Bylaws of Buyer or any note, indenture, mortgage, lease or other agreement
     or instrument to which Buyer is a party or by which it is bound.

          d. Duration of Warranty Coverage. To the knowledge of the Buyer and
     the Buyer's Stockholders, there are no warranties that extend longer than
     twelve (12) months.

     3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties made in Section 3.1(c) and (e) shall survive Closing for two years
and six months, respectively. All other representations and warranties made by
the parties in this Agreement or any exhibit, schedule, instrument or
certificate provided hereunder shall expire at Closing.

                                   ARTICLE IV
                              PRE-CLOSING COVENANTS

     4.1 NEGATIVE COVENANTS OF SELLER. Except as may be otherwise expressly
provided herein, from and after the date of this Agreement and until the Closing
Date, with respect to the Assets without the consent of Buyer, Seller covenants
and agrees that it will not:

          a. Encumbrances. Execute, grant or suffer any Encumbrance upon the
     Assets;

          b. Disposition of Assets. Effect any sale, transfer, Encumbrance or
     other disposition of the Assets and properties which would otherwise be
     included in the Assets, except for sales of inventories in the ordinary
     course of business, and except for machinery, and equipment replaced with
     items of equivalent or greater value;

          c. Assumed Contracts. Amend, modify, assign, transfer, grant or
     terminate any of the Assumed Contracts;

     4.2 AFFIRMATIVE COVENANTS OF SELLER. From and after the date of this
Agreement and until the Closing Date, Seller covenants and agrees that it will:

          a. Ordinary Course of Business. Carry on the operations of the Product
     Line only in the usual, regular and ordinary course consistent with good
     business practices and with prior practices;

          b. Maintenance of Relationships. Use commercially reasonable efforts
     to maintain and preserve its business organization and to maintain its
     present relationships with customers, suppliers and others having business
     dealings with the Product Line;

          c. Maintenance of the Assets. Maintain the Assets in existing
     operating repair and maintain the level of inventories in accordance with
     past practices;

          d. Payment of Obligations in Ordinary Course. Pay and discharge all
     costs and expenses of maintaining and operating the Assets as they become
     due and pay and discharge any such costs and expenses which at the date
     hereof are past due, unless contested in good faith;

          e. Maintenance of Records. Maintain its books, accounts, including
     accounts receivable and records in the usual, regular and customary manner
     on a basis consistently applied; and

          f. Additional Inventory. Seller may, at Seller's discretion, make
     available to Buyer for purchase additional surplus/on-hand inventory at
     cost for a period of one (1) year. In addition Seller must make available
     to Buyer for purchase any additional custom manufactured or specially
     ordered parts at prices to be quoted; provided, however, any such order
     must have a minimum value of $1,000.

                                   ARTICLE V
                              CONDITIONS TO CLOSING

     5.1 CONDITIONS TO BUYER'S OBLIGATION TO CLOSE. The obligations of Buyer
under this Agreement, are subject to the satisfaction, or the written waiver
thereof, by Buyer of the following conditions on or prior to the Closing Date:

          a. Representations and Warranties of Seller. All of the
     representations and warranties of Seller contained in this Agreement shall
     have been true and correct when made, and shall be true and correct in all
     material respects on and as of the Closing Date.

          b. Covenants of Seller. All of the covenants and agreements herein on
     the part of Seller to be complied with or performed on or before the
     Closing Date, including, but not limited to, the documents or items to be
     delivered at Closing as set forth in Article VI, shall have been fully
     complied with and performed.

          c. No Material Adverse Changes. There shall not have occurred any
     material adverse change in the Assets.

     5.2 CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The obligations of Seller
under the Agreement are subject to the satisfaction, or the written waiver
thereof, of the following conditions on or prior to the Closing Date:

          a. Representations and Warranties of Buyer. All of the representations
     and warranties of Buyer contained in this Agreement shall have been true
     and correct when made, and shall be true and correct in all material
     respects on and as of the Closing Date.

          b. Covenants of Buyer. All of the covenants and agreements herein on
     the part of Buyer to be complied with or performed on or before the Closing
     Date, including, but not limited to, the documents or items to be delivered
     at Closing as set forth in Article VI, shall have been fully complied with
     and performed.

                                   ARTICLE VI
                                     CLOSING

     6.1 CLOSING DATE. The closing of the sale and purchase provided for herein
(the "Closing") shall take place at the offices of Blackwell Sanders Peper
Martin LLP, 9401 Indian Creek Parkway, Suite 1200, Overland Park, Kansas 66210,
at 10:00 a.m., on January 31, 2002 or at such other place, time and date as the
parties may mutually agree (the "Closing Date").

     6.2 ITEMS TO BE DELIVERED AT CLOSING BY SELLER. At the Closing, Seller
shall perform all acts necessary to put Buyer in actual and complete possession
and control of the Assets, including, but not limited to, the delivery to Buyer
of such instruments of sale, assignment, transfer and conveyance duly executed
and in form and content satisfactory to counsel for Buyer as are necessary to
vest in Buyer good and marketable title to and possession of the Assets. Without
limiting the generality of the foregoing, Seller shall deliver the following at
Closing:

          a. A Bill of Sale executed by Seller selling, assigning and
     transferring to Buyer all right, title and interest in and to any and all
     personal property comprising the Assets; and

          b. An executed Registration Rights Agreement by and between Elecsys
     Corporation and the Buyer's Stockholders that provides "piggyback" rights
     to the Buyer's Stockholders for two (2) years from the date of Closing;

          c. Seller will pay by wire transfer of immediately available funds the
     amount of $328,199.00, representing past due interest of $81,824.00 and
     principal of $246,375.00 on the Old Note.

     6.3 ITEMS TO BE DELIVERED AT CLOSING BY BUYER'S STOCKHOLDERS. At the
Closing, Buyer's Stockholders shall deliver the Old Note stamped "CANCELLED".

     6.4 ITEMS TO BE DELIVERED AFTER CLOSING BY SELLER On Friday February 1,
2002 Seller will deliver the New Note and the Second New Note to Buyer's
Stockholders.

     6.5 FURTHER ASSURANCES. Seller shall from time to time after the Closing,
at the request of Buyer and without further consideration, execute and deliver
such other instruments of conveyance, assignment and transfer and take such
other action as Buyer may reasonably request to more effectively convey, assign,
transfer to and vest in Buyer good and marketable title to and possession of the
Assets.

                                  ARTICLE VII
                                 INDEMNIFICATION

     7.1 INDEMNIFICATION BY SELLER. Seller shall defend, indemnify and hold
Buyer and each of Buyer's subsidiaries, shareholders, affiliates, officers,
directors, employees, agents, successors and assigns (collectively, "Buyer's
Indemnified Persons") harmless from, against and in respect of any and all
liabilities and obligations of Seller including, but not limited to, any claim
arising out of the operation of the Seller's business, or for products
manufactured or sold prior to the Closing Date except those liabilities which
have been expressly assumed by Buyer: (i) as Assumed Contracts and (ii) as
warranty obligations pursuant to Section 8.1 warranty.

     7.2 INDEMNIFICATION BY BUYER. Buyer shall defend, indemnify and hold Seller
and each of Seller's subsidiaries, shareholders, affiliates, officers,
directors, employees, agents, successors and assigns (collectively, "Seller's
Indemnified Persons") harmless from, against and in respect of any and all
liabilities and obligations of Buyer including, but not limited to, any claim
arising out of the operation of Buyer's business, or for products manufactured
or sold after the Closing Date.

     7.3 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification under this Section 7, the Buyer, the Buyer's Stockholder's or
the Sellers, as the case may be, seeking indemnification (the "Indemnified
Party"), shall promptly notify the other party (the "Indemnifying Party") of the
claim and, when known, the facts constituting the basis for such claim. In the
event of any such claim for indemnification hereunder resulting from or in
connection with any claim or legal proceedings by a third party, the notice
shall specify, if known, the amount or an estimate of the amount of the
liability arising therefrom. The Indemnified Party shall not settle or
compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent, which shall not be
unreasonably withheld or delayed, of the Indemnifying Party; provided, however,
that if suit shall have been instituted against the Indemnified Party and the
Indemnifying Party shall not have taken control of such suit after notification
thereof as provided in this Section 7.3, the Indemnified Party shall have the
right to settle or compromise such claim upon giving notice to the Indemnifying
Party as provided in this Section 7.3.

     7.4 DEFENSE BY THE INDEMNIFYING PARTY. In connection with any claim which
may give rise to indemnity hereunder resulting from or arising out of any claim
or legal proceeding by a person other than the Indemnifying Party, at the sole
cost and expense of the Indemnifying Party, may, upon written notice to the
Indemnified Party, assume the defense of any such claim or legal proceeding if
the Indemnifying Party acknowledges to the Indemnified Party in writing the
obligation of the Indemnifying Party to indemnify the Indemnified Party with
respect to all elements of such claim. If the Indemnifying Party assumes the
defense of any such claim or legal proceeding, the Indemnifying Party shall
select counsel reasonably acceptable to the Indemnified Party to conduct the
defense of such claims or legal proceedings and at the sole cost and expense of
the Indemnifying Party shall take all steps necessary in the

defense or settlement thereof. The Indemnified Party shall thereafter be
entitled to participate in and assume control of the defense of any such action
only if the Indemnified Party has a reasonable basis for concluding that its
interests are in conflict with those of the Indemnifying Party. The Indemnifying
Party shall not consent to a settlement of, or the entry of any judgment arising
from, any such claim or legal proceeding, without the prior written consent of
the Indemnified Party (which consent shall not be unreasonably withheld or
delayed). The Indemnified Party shall be entitled to participate in (but not
control) the defense of any such action, with its own counsel and at its own
expense. If the Indemnifying Party does not assume the defense of any such claim
or litigation resulting therefrom within 30 days after the date such claim is
made: (a) the Indemnified Party may defend against such claim or litigation in
such manner as it may deem appropriate, including, but not limited to, settling
such claim or litigation, after giving notice of the same to the Indemnifying
Party, on such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
Indemnifying Party or the Indemnifying Party thereafter seeks to question the
manner in which the Indemnified Party defended such third party claim or the
amount or nature of any such settlement, the Indemnifying Party shall have the
burden to prove by a preponderance of the evidence that the Indemnified Party
did not defend or settle such third party claim in a reasonably prudent manner.

                                  ARTICLE VIII
                            POST CLOSING COMMITMENTS

     8.1 POST CLOSING COVENANTS.

          a. Use of Brand Name. Buyer, as soon as practical after the Closing,
     will establish a new logo that differs substantially in color and design
     from that of Seller's existing logo. Seller hereby grants Buyer permission
     to use existing materials and literature containing Seller's current logo
     until the supply of those materials is depleted, but in no event beyond
     twelve (12) months after Closing. Notwithstanding the previous sentence,
     the Buyer shall under no circumstances refer to itself as "DCI" nor shall
     the Buyer use the "DCI" logo or name in any form of advertisement or
     tradeshow.

          b. Access to IMPACT. Seller must, during reasonable business hours,
     afford to Buyer and authorized representatives of Buyer access to those
     portions of the IMPACT Encore data files that include information both (i)
     gathered prior to the Closing, and (ii) relating to the Product Line.

          c. Marketing/Sales Representatives. Seller will assign to Buyer and
     cooperate with Buyer's effort to transfer to Buyer any rights Seller may
     have with respect to the contracts by and between the sales representatives
     selling the Product Line (the "Representatives") and Seller. Seller will
     only pay commissions to the Representatives for established
     contracts on Product Line products shipped by Seller. Except for sales of
     the Series 1093 Heat Bonders, all commissions earned for Product Line sales
     by former employees of Seller will cease to accrue on the date of this
     Agreement. Any sales

     commissions relating to the Series 1093 Heat Bonders will continue to
     accrue pursuant to the terms of any original severance agreement.

          d. Warranty Work. Except as set forth in (e) below, Buyer hereby
     assumes all warranty liability, including any repair and calibration
     liability, resulting from the remaining period on the standard twelve (12)
     month warranty given in conjunction with the sale of any products included
     in the Product Line. Buyer will not be responsible for granting any credits
     on any products included in the Product Line that are sold prior to the
     Closing and subsequently returned for credit. However, if at any time
     Seller needs components to service or repair any products it has accepted
     back from a Product Line customer, Buyer will provide available components
     from initial inventory to Seller at no charge.

          e. Seller's Obligation for Returned Products. Although, Seller is
     under no obligation to grant credit, or any other favorable accommodation
     to Product Line customers for any products sold by it, any products
     returned to Seller for credit will be the property of Seller. Seller will
     communicate customer requests for credit, or any other accommodation, to
     Buyer in order to provide Buyer an opportunity to build customer
     relationships. Notwithstanding the obligation of Buyer set forth in
     subsection (d) above, and except for problems arising from incorrect
     specification or unsuitability for use due to errant technical sales
     activity, Seller will retain responsibility for defects in workmanship,
     materials and design performance for a period of twelve (12) months from
     the Closing Date for the following programs:

                    (i) University of Alabama at Birmingham P.O. #523581 (Seller
               Sales Order #32023),

                    (ii) ADI Limited P.O. #FF0742 (Seller Sales Order #31830)

                    (ii) Bussman products associated with DCI RMA #1281.

          f. Software Licenses for MAS90. Buyer will acquire all licenses and
     pay all fees required for the transfer of the software for the MAS90
     accounting system.

          g. Seller's Obligation for Transition period remittances, etc. For a
     period of two (2) years, Seller shall refer to Buyer all calls, faxes, and
     e-mails received by Seller regarding the Product Line or related services.
     Furthermore, Seller shall deliver to Buyer any correspondence and/or
     remittances incorrectly received by Seller on a weekly basis.

          h. Buyer's Obligation for Transition period remittances, etc. For a
     period of two (2) years, Buyer shall refer to Seller all calls, faxes, and
     e-mails received by Buyer for Seller's products and services. Furthermore,
     Buyer shall deliver to Seller any correspondence and/or remittances
     incorrectly received by Buyer on a weekly basis.

          i. Transition Period Shipping and Accounts Receivable. Seller shall
     continue shipping customer orders relating to the Product Line on schedule
     until Buyer assumes responsibility for delivery at a mutually agreed upon
     date. Furthermore, all accounts receivable derived from shipments made by
     Seller shall be the sole property of Seller.

          j. Seller's Existing Purchase Orders to Vendors. Upon Buyer's request,
     Seller will cancel, or transfer to Buyer, any existing purchase orders
     relating to the Product Line and for which the ordered material has not yet
     been received by Seller. Furthermore, any accounts payable derived from
     Product Line materials received by Seller after the Closing will be the
     sole responsibility of the Buyer.

          k. Use of phone numbers (913) 782-5672 and (913) 782-5766. Buyer will
     pay all fees associated with the transfer of the phone numbers (913)
     782-5672 and (913) 782-5766. The foregoing numbers will be transferred from
     Seller to Buyer promptly following the Closing.

          l. Use of Seller's P.O. Box (P.O. Box 2877). Buyer will pay all fees
     associated with the transfer of the P.O. Box 2877. Such P.O. Box will be
     transferred by the Seller to the Buyer promptly following the Closing.

          m. Health Insurance. Seller and Buyer's Stockholders acknowledge that
     the Buyer's Stockholders are currently covered under Seller's family health
     insurance plan pursuant to an agreement previously entered with Seller or
     its Stockholders. That prior commitment related to health insurance is
     hereby terminated. The Buyer's Stockholders are electing today to obtain
     COBRA coverage under that plan, effective February 1, 2002, and Seller
     acknowledges its commitment to permit the Buyer's Stockholders to maintain
     coverage for eighteen months from February 1, 2002. During that period,
     Seller shall pay 73% of family coverage for each of Buyer's Stockholders.

          n. Limitations on Other Debt. As long as the New Note remains unpaid
     and outstanding, Seller shall not incur debt for borrowed money except the
     following:

                  (i) borrowed money from a commercial bank; and

                  (ii) currently outstanding subordinated debt; and

                  (iii) borrowed money from a source other than (i) and (ii)
         above in an aggregate amount not to exceed $1,000,000.00 provided such
         indebtedness is (i) pari passu in all respects with the New Note and
         (ii) subordinated to any debt incurred under Section 8.1 n(i) above.

8.2      AMENDMENT TO NON-COMPETE AGREEMENTS

         The Buyer's Stockholders entered into agreements with the Seller or the
sole stockholder of the Seller that included non-compete provisions (the
"Non-Compete Agreements"). In order

to operate the Product Line business acquired pursuant to this Agreement, the
following provisions of the Non-Compete Agreements are amended to provide as
follows:

     a. Section 1.1 of the Noncompetition And Nondisclosure Agreement dated
February 7, 2000, by and between Airport Systems International, Inc., a Kansas
corporation, and William D. Cook is amended to read as follows:

          1.1 Scope. Cook covenants and agrees that commencing today and
     continuing for a period of two years from and after the date of this
     Agreement, Cook will not, anywhere in the world, directly or indirectly,
     without the express prior written permission of the Company:

               (a) Other than Design Concepts, Inc. or any entity (i) wholly
          owned by Cook, Larry C. Klusman, or Chris I. Hammond and (ii) that
          conducts business related to the product line acquired from the
          Company, own, have any interest in, or be, serve, or act as an
          individual proprietor, partner, agent, stockholder, officer, employee,
          consultant, director, joint venturer, investor (other than as an
          investor holding less than three percent of the stock of a public
          company), lender, or in any other capacity whatsoever of or with, or
          assist in any way, any person, corporation, partnership, firm, or
          business enterprise (other than the Company or a subsidiary or
          affiliate of the Company) which is in direct or indirect competition
          with the business as carried on by DCI on the date first preceding the
          date hereof.

               (b) Section 7.1 of the Employment Agreement dated February 7,
          2000, by and between DCI, Inc. and Larry C. Klusman:

          7.1 Scope. Employee covenants and agrees that commencing today and
     continuing for a period of three years from and after the date of
     termination of his employment by the Company, Employee will not, anywhere
     in the world, directly or indirectly, without the express prior written
     permission of the Company:

               (a) Other than Design Concepts, Inc. or any entity (i) wholly
          owned by the Employee, William D. Cook, or Chris I. Hammond and (ii)
          that conducts business related to the product line acquired from the
          Company, own, have any interest in, or be, serve, or act as an
          individual proprietor, partner, agent, stockholder, officer, employee,
          consultant, director, joint venturer, investor (other than as an
          investor holding less than three percent of the stock of a public
          company), lender, or in any other capacity whatsoever of or with, or
          assist in any way, any person, corporation, partnership, firm, or
          business enterprise (other than ASII or the Company or a subsidiary or
          affiliate of either) which is in direct or indirect competition with
          the business as carried on by ASII or the Company on the date first
          preceding the date hereof.

               (c) Section 7.1 of the Employment Agreement dated February 7,
          2000, by and between DCI, Inc. and Chris I. Hammond:

               7.1 Scope. Employee covenants and agrees that commencing today
          and continuing for a period of three years from and after the date of
          termination of his employment by the Company, Employee will not,
          anywhere in the world, directly or indirectly, without the express
          prior written permission of the Company:

               (a) Other than Design Concepts, Inc. or any entity (i) wholly
          owned by the Employee, William D. Cook, or Larry C. Klusman and (ii)
          that conducts business related to the product line acquired from the
          Company, own, have any interest in, or be, serve, or act as an
          individual proprietor, partner, agent, stockholder, officer, employee,
          consultant, director, joint venturer, investor (other than as an
          investor holding less than three percent of the stock of a public
          company), lender, or in any other capacity whatsoever of or with, or
          assist in any way, any person, corporation, partnership, firm, or
          business enterprise (other than ASII or the Company or a subsidiary or
          affiliate of either) which is in direct or indirect competition with
          the business as carried on by ASII or the Company on the date first
          preceding the date hereof.

     8.3 SELLER'S RELEASE. The Buyer's Stockholders and all of their agents,
affiliates, and representatives, jointly and severally, hereby release, acquit
and forever discharge Seller, all of its present and past partners, associates,
employees, agents or affiliates and its sole stockholder, all of its present and
past partners, associates, employees, agents or affiliates (collectively, the
"Releasees") from any and all manner of action or actions, cause or causes of
action, cross-claims or counter-claims, in law or in equity, suits, claims,
demands, damages, loss, costs or expenses, of any nature whatsoever, known or
unknown, fixed or contingent, whether or not ascertainable at the time of
execution of this Agreement, and whether or not based upon common law or any
federal or state statute, which the Buyer's Stockholders now have or may
hereafter have against each or any of the Releasees, by reason of any matter,
cause, or thing whatsoever, arising in connection with the Old Note, the Asset
Purchase Agreement between Seller, KHC of Lenexa, LLC, and the Buyer's
Stockholders (the "Asset Purchase Agreement"), or the Stock Purchase Agreement
dated as of January 10, 2000, by and among Airport Systems International, Inc.,
the Buyer (the "Stock Purchase Agreement") and any matters affecting the Old
Note, the Asset Purchase Agreement, or the Stock Purchase Agreement.

     8.4 BUYER'S STOCKHOLDERS'S RELEASE. Seller and all of its agents,
affiliates, and representatives, jointly and severally, hereby release, acquit
and forever discharge Buyer's Stockholders, all of their present and past
partners, associates, employees, agents or affiliates (the "Releasees") from any
and all manner of action or actions, cause or causes of action, cross-claims or
counter-claims, in law or in equity, suits, claims, demands, damages, loss,
costs or expenses, of any nature whatsoever, known or unknown, fixed or
contingent, whether or not ascertainable at the time of execution of this
Agreement, and whether or not based upon

common law or any federal or state statute, which Seller now has or may
hereafter have against each or any of the Releasees, by reason of any matter,
cause, or thing whatsoever, arising in connection with the Old Note, the Asset
Purchase Agreement, or the Stock Purchase Agreement and any matters affecting
the Old Note, the Asset Purchase Agreement, or the Stock Purchase Agreement.

                                   ARTICLE IX
                                  MISCELLANEOUS

     9.1 EXPENSES. Each party to this Agreement shall pay its own expenses
incidental to the negotiation, preparation, execution and performance of this
Agreement and the transactions contemplated hereby, including, but not limited
to, the fees and expenses of their respective legal counsel, brokers and
accountants. Seller shall pay any sales, use or transfer taxes or fees in
connection with the transactions contemplated hereby.

     9.2 NEWS RELEASE. The parties agree that they will cooperate with each
other in the preparation of a joint news release announcing the transactions
contemplated by this Agreement.

     9.3 NOTICES. Any notice or demand desired or required to be given hereunder
shall be in writing and deemed given when personally delivered or three (3) days
after it is deposited in the United States mail, postage prepaid, sent certified
or registered and addressed as follows:

               a. If to Seller, to:

                           DCI, Inc.
                           15301 W.  109th Street
                           Lenexa, Kansas 66215
                           Attention: Michael J. Meyer
                           Fax Number: (913) 982-5766

               b. If to Buyer, to:

                           Design Concepts, Inc.
                           P.O Box 2877
                           Olathe, Kansas 66062

or to such other address or person as hereafter shall be designated in writing
by the applicable party.

     9.4 ENTIRE AGREEMENT. This Agreement and the exhibits and schedules hereto
constitute the entire agreement between the parties hereto pertaining to the
subject matters hereof, an supersede all negotiations, preliminary agreements
and all prior and contemporaneous

discussions and understandings of the parties in connection with the subject
matters hereof. All exhibits and schedules hereto are hereby incorporated into
and made a part of this Agreement.

     9.5 AMENDMENTS. No amendment, waiver, change or modification of any of the
terms, provisions or conditions of this Agreement shall be effective unless made
in writing and signed or initialed by the parties or by their duly authorized
agents. Waiver of any provision of this Agreement shall not be deemed a waiver
of future compliance therewith and such provision shall remain in full force and
effect.

     9.6 SEVERABILITY. In the event any provision of this Agreement is held
invalid, illegal or unenforceable, in whole or in part, the remaining provisions
of this Agreement shall not be affected thereby and shall continue to be valid
and enforceable, and, if, for any reason, a court finds that any provision of
this Agreement is invalid, illegal or unenforceable as written, but that by
limiting such provision it would become valid, legal and enforceable, then such
provision shall be deemed to be written and shall be construed and enforced as
so limited.

     9.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Kansas.

     9.8 HEADINGS AND CAPTIONS. The titles or captions of paragraphs in this
Agreement are provided for convenience of reference only, and shall not be
considered a part hereof for purposes of interpreting or applying this
Agreement, and such titles or captions do not define, limit, extend, explain or
describe the scope or extent of this Agreement or any of its terms or
conditions.

     9.9 GENDER AND NUMBER. Words and phrases herein shall be construed as in
the singular or plural number and as masculine, feminine or neuter gender,
according to the context.

     9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument, and in making proof
hereof, it shall not be necessary to produce or account for more than one such
counterpart.

     9.11 BINDING EFFECT ON SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, heirs, successors and assigns; provided,
however, none of the parties to this Agreement may assign their rights or
obligations hereunder without the prior written consent of the other parties,
which consent shall not be unreasonably withheld, and in the event of any such
assignment, all of the terms, covenants, agreements and conditions of this
Agreement shall continue to be in full force and effect and the parties hereto
shall continue to remain respectively liable and responsible for the due
performance of all of the terms, covenants, agreements and conditions of this
Agreement which they are respectively obligated to observe and perform. Nothing
in this Agreement, express or implied, is intended to confer upon any party,
other than

the parties hereto (and their respective legal representatives, heirs,
successors and assigns), any rights, remedies, obligations or liabilities.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.


DCI, INC.                                      DESIGN CONCEPTS, INC.



BY:                                             BY:
   ----------------------------------               --------------------------------------------

NAME:                                           NAME:
       ------------------------------                 ------------------------------------------

TITLE:                                          TITLE:
       ------------------------------                 ------------------------------------------



                                                ------------------------------------------------
                                                Chris I. Hammond


                                                ------------------------------------------------
                                                William D. Cook


                                                -------------------------------------------------
                                                Larry C. Klusman

                         SCHEDULE A--PRODUCTS AND MODELS

Includes all Models, Options and Modifications (Specials) for the following:


Series            Function

200               Voltmeters
300               Comparators
400               Clocks
500               Comparators
700               Counters
800               Counters/Timers
900               Remotes
1000              Remotes and Custom Meters
2000              Meters
2600              Process Meters

2700              Voltmeters
2900              Counters/Timers
6100              Counters/Timers
7000              Meters
7600              Strain Gage Meters
7700              Voltmeters
8000              Counters/Timers/Clocks
9000              Process Meters
PPI100            Pressure Readouts

All Velenex Equivalent Meters

                              SCHEDULE B--INVENTORY

         1)       Inventory Used Non-Exclusively On Instruments Products

         2)       Inventory Valuation Report for INST Product Class

                          SCHEDULE C--EXCESS INVENTORY



1) Non-Moving Inventory, the value of which was agreed upon by Buyer and Seller
on 1/7/02.

                             SCHEDULE D--EQUIPMENT


Instrument Product Line Associated Equipment Assets                                                                        1/29/2002

Item                                                                        Acquired Value         Depreciation           Book Value                                      # of Months
- -------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                    24
Tapmatic Model 30X Auto Tapping Attachment                                               0                    0                    0
Di-Acro No. 2 Hand Punch                                                               350                 -140                  210
Di-Acro Model 24HS Hand Shear                                                          425                 -170                  255
Di-Acro No. 4 Hand Brake                                                                 0                    0                    0
Pexto No. 137-J Foot Shear                                                           1,500                 -600                  900
Baldor No. 2048 Belt Grinder                                                           500                 -200                  300
Makita Model LS1013 Mitre Saw w/ Fixtures                                              150                  -60                   90
Instrument Test Stand                                                                    0                    0                    0
Stag Model PP28 EPROM Programmer                                                         0                    0                    0
Modular Circuit Technologies EPROM Programmer                                            0                    0                    0
Starrett No. 716 Micrometer & LVDT Tester                                                0                    0                    0
DCI Model 1001 Time Standard                                                             0                    0                    0
1 Model 5100B Fluke Calibrator                                                         550                 -220                  330
1 Model 341A Fluke Calibrator                                                        1,050                 -420                  630
All Required Test Software                                                               0                    0                    0
Miscellaneous Custom Fixtures                                                            0                    0                    0
Quad Model 100 P&P with 4 inoperative feeders included                              16,500               -6,600                9,900
Assembly Fixtures, Jigs and Samples                                                      0                    0                    0
2 Worktables                                                                             0                    0                    0
Microprocessor Emulators and Software - Instrument                                       0                    0                    0
Tango CAD Software - TBD to license and register                                         0                    0                    0
Fax Machine - Surplus unit requires repair                                               0                    0                    0
Silkscreens for Lens Backplates                                                          0                    0                    0
Solder Paste Stencils for PC Boards                                                      0                    0                    0
Instrument Trade Show Demo Equipment                                                     0                    0                    0
Carlson System Strapper (Yellow Banding Machine)                                       750                 -300                  450
Tape Machine - DCI's #3 unit, not currently in use                                       0                    0                    0
                                                                                                                                   0
                                                                      ---------------------------------------------------------------
                                                                                   $21,775              -$8,710              $13,065

                          SCHEDULE E--ASSUMED CONTRACTS
         DCI Instrument Product Line Sales Representative Organizations
                          with Contracts to be assigned




Brett Associates                                        L-Tron
201 S.W. 153rd, Suite B                                 1169 Pittsford-Victor Road, Suite 120
Seattle, WA  98166-2313                                 Pittsford, NY  14534

Jim Smith & Associates, Inc.                            RG Associates
6822 Academy Pkwy West                                  184 Foster Street
Albuquerque, NM  87109                                  Lowell, MA  01851

Instrumentation Resources, Inc.                         Analectro
11900 Wayzata Blvd., Suite 226                          1950 Old Cuthbert Road, Suite K
Minnetonka, MN 55305                                    Cherry Hill, NJ  08034

Vertec Associates, Inc.                                 CP&F-Atlantic
410 Sovereign Court, Suite 7                            1 Centerview Drive, Suite 306
Manchester, MO  63011                                   Greensboro, NC  27407

Kemp Instruments, Inc.                                  CP&F-Dixie
1201 Richardson Drive, Suite 160                        2317 Starmount Circle
Richardson, TX  75080                                   Huntsville, AL  35807

Precision Measurement Products                          Techno-Data Co., Ltd.
510 Market Loop, Suite 202                              Yoido PO Box 529
West Dundee, IL  60118                                  Seoul, Korea 150-605

Saber Enterprises                                       Complete International Solutions
2760 East Spring Street, Suite 210                      2 North Meadows
Long Beach, CA  90806                                   Woodbury, CT  06798

EX-10.2

                                                        Exhibit 10.2

                                 PROMISSORY NOTE



$410,625.00

                                                           February 1, 2002

         FOR VALUE RECEIVED, DCI, INC., a Kansas corporation (the "Maker"),
hereby promises to pay to the order of CHRIS I. HAMMOND, LARRY C. KLUSMAN AND
WILLIAM D. COOK (together with their assigns, collectively the "Holders"), the
principal sum of Four Hundred Ten Thousand Six Hundred and Twenty-Five Dollars
($410,625.00), together with interest at a fixed rate of 10% per annum, with
such interest payable quarterly commencing April 30, 2002 and continuing on the
last day of July, October, January, and April until maturity, and such principal
payable in a single installment on February 7, 2005 (the "Promissory Note").
Elecsys Corporation is a party hereto exclusively for purposes of honoring the
conversion obligations set forth herein.

         Interest shall be computed on the basis of a 360-day year. If any
installment of this Promissory Note becomes due and payable on a Saturday,
Sunday or business holiday in the State of Kansas, payment shall be made no
later than the next successive business day with the same effect as though made
on the due date. Upon the occurrence of an Event of Default, as defined below,
this Promissory Note shall accrue interest at a rate of 12% per annum until the
first to occur of the date this Promissory Note is paid in full or the Event of
Default is cured.

         The Maker reserves the right to prepay all or any portion of this
Promissory Note at any time and from time to time without premium or penalty of
any kind. The Maker shall provide the Holders written notice of its intention to
prepay all or any portion of this Promissory Note and shall afford the Holders a
two (2) week period from the date on which the notice of intention to prepay is
received to elect to convert such prepayment amount in accordance with the
provisions of this Promissory Note. The failure of the Holder or Holders, as the
case may be, to provide a Conversion Notice, as defined herein, within the two
(2) week period shall constitute acceptance of the right of the Maker to prepay.

         If any of the events specified below shall occur (herein individually
referred to as an "Event of Default"), and in each such event, the Holders may,
at their collective option, by notice in writing to the Maker, declare the
remaining unpaid principal balance of this Promissory Note and all accrued
interest thereon immediately due and payable in full. Such written declaration
shall require the signature of at least one of the Holders as representative of
all Holders, or their successors or assigns, in order to be effective. For
purposes of this paragraph, and until such time that the Holders collectively
change this designation, Chris I. Hammond shall serve as representative of the
Holders. Each of the following shall be an "Event of Default" under this
Promissory Note:

     (a)  a default in the payment of interest or principal due hereunder; or

     (b)  the Maker or any other person liable hereon should make an assignment
          for the benefit of creditors; or

     (c)  attachment or garnishment proceedings are commenced against the Maker
          or any other person liable hereon; or

     (d)  a receiver, trustee or liquidator is appointed over or execution
          levied upon any property of the Maker; or

     (e)  proceedings are instituted by or against the Maker, or any other
          person liable hereon under any bankruptcy, insolvency, reorganization
          or other law relating to the relief of debtors, including without
          limitation the United States Bankruptcy Code, as amended; or

     (f)  the Maker liquidates or dissolves; or

     (g)  a Change of Control (as defined below) of the Maker.

         The term "Change of Control" as used in this Paragraph shall mean the
occurrence of any of the following: (i) any "person" (as such term is defined in
Sections 13(d) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) shall be or become the "beneficial owner" (as described in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities representing 50%
or more of the combined voting power of the Maker; (ii) the Maker shall merge,
consolidate, or enter into any other transaction resulting in the dissolution or
liquidation of the Maker; (iii) a change in the composition of the Board of
Directors of the Maker over a two-year period resulting in a majority of the
Directors at the beginning of such two-year period being removed, resigning or
being replaced by individuals not nominated or appointed by a majority of the
individuals who were Directors at the beginning of such two-year period; or (iv)
the Maker experiences any other event that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A under the Exchange Act.

         All payments made hereunder shall be made in lawful currency of the
United States of America in immediately available funds. Each principal and
interest payment from Maker to Holders, unless otherwise agreed to, shall be
divided equally by Maker among the Holders and each Holder shall receive his
respective payment from Maker at his address as follows:

Larry C. Klusman             Chris I. Hammond             William D. Cook
9011 Greenway Lane           12620 S. Hallet              12913 W. 78th Street
Lenexa, KS  66215            Olathe, KS  66062            Lenexa, KS  66216

or at such other place, or to such bank account, as the individual Holder may
designate in writing. All payments made hereunder, whether a scheduled
installment, prepayment, or payment as a result of acceleration, shall be
allocated first to accrued but unpaid interest and then to principal remaining
outstanding hereunder.

         This Promissory Note shall be governed by and construed and enforced in
accordance with the laws of the State of Kansas, without regard to conflict of
laws principles.

         The Holders shall collectively or individually have the right at any
time during usual business hours on or before the close of business on or prior
to February 7, 2005, to convert the principal, accrued interest and/or any
proposed prepayment amount of this Promissory Note or

any portion of the principal, accrued interest and/or any proposed prepayment
amount thereof into shares of Common Stock of Elecsys Corporation (the
"Company"), at a conversion price equal to $1.93 aggregate principal, accrued
interest or proposed prepayment amount, as the case may be, for each share of
common stock of Elecsys (the "Common Stock") or, in case an adjustment of such
price has taken place pursuant to the provisions of this Promissory Note, then
at the price as last adjusted (referred to herein as the "Conversion Price"),
upon surrender of this Promissory Note to the Company at its office in Lenexa,
Kansas with a conversion notice executed by the Holder or Holders, as the case
may be, (hereinafter referred to as the "Conversion Notice") evidencing the
Holder's intention to convert this Promissory Note or a specified portion (as
above provided) hereof, specifying the name in which the shares of Common Stock
deliverable upon such conversion shall be registered, with the address of the
person (and taxpayer identification numbers, if applicable) so named, and, if so
required by the Company, accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company duly executed by the Holder or
Holders, as the case may be, duly authorized in writing. For convenience, the
conversion of the principal, accrued interest or any proposed prepayment amount
of this Promissory Note into Common Stock is herein sometimes referred to as the
"conversion" of this Promissory Note. Notwithstanding anything to the contrary,
the Holders shall not be entitled to make a partial conversion of this
Promissory Note unless such partial conversion results in the issuance of no
less than 10,000 shares of Common Stock of the Company to the Holders
collectively.

         As promptly as practicable after the surrender, as herein provided, of
this Promissory Note for conversion and the receipt of the Conversion Notice, as
herein provided, relating thereto, and, if applicable, the payment of the funds
provided for below, the Company shall deliver or cause to be delivered at said
office or agency, to or upon the written order of the Holder or Holders, a
certificate representing the number of fully-paid and non-assessable shares of
Common Stock into which this Promissory Note may be converted in accordance with
the provisions hereof, registered in such name as is specified in the Conversion
Notice, together with any cash payable in respect of a fractional share. In case
this Promissory Note shall be surrendered for partial conversion, the Maker
shall execute and deliver to or upon the written order of the Holder or Holders,
without charge to the Holder or Holders (subject to the provisions hereof), a
new Promissory Note in an aggregate principal amount equal to the unconverted
portion of the surrendered Promissory Note. Subject to the following provisions
of this paragraph, such conversion shall be deemed to have been effected at the
close of business on the date when this Promissory Note shall have been
surrendered for conversion together with the Conversion Notice and any funds
required by other provisions hereof (the date of the last of such events to
occur is sometimes referred to hereinafter as the "Conversion Date"), so that
the rights of the Holders as such Holders shall cease at such time and the
person entitled to receive the shares of Common Stock upon conversion of this
Promissory Note shall be treated for all purposes as having become the record
holder of such shares of Common Stock at such time and such conversion shall be
at the Conversion Price in effect at such time; provided, however, that no such
surrender on any date when the stock transfer books of the Company shall be
closed shall be effective to constitute the person entitled to receive the
shares of Common Stock upon such conversion as the record holder of such shares
of Common Stock of such date, but such surrender shall be effective to
constitute the person entitled to receive such shares of Common Stock as the
record holder thereof for all purposes at the opening of business on the next
succeeding business day on which such stock transfer books are open.

         If the last day for the exercise of the conversion right at the place
of surrender shall not be a business day, then the last day for the exercise of
such right at such place shall be the next succeeding business day.

         No payment or adjustment shall be made upon any conversion in respect
of any dividends on the Common Stock delivered upon conversion which were
declared for payment to holders of Common Stock of record as of a date prior to
the Conversion Date.

         The Conversion Price shall be subject to adjustment as follows:

         In case the Company shall (i) pay a dividend in shares of its capital
stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issue by reclassification of its shares of Common Stock any shares of the
Company, the Conversion Price in effect immediately prior thereto shall be
adjusted so that the holder of this Promissory Note thereafter surrendered for
conversion shall be entitled to receive the number of shares of the Company
which he would have owned or have been entitled to receive after the happening
of any of the events described above, had this Promissory Note been converted
immediately prior to the happening of such event. An adjustment made pursuant to
this paragraph shall become effective immediately after the record date in the
case of a dividend and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification.

         In case the Company shall issue Additional Shares of Common Stock at a
price per share of Common Stock less than the current conversion price in effect
on the date of and immediately prior to such issue, then, and in such event, the
price per share at which this Promissory Note may thereafter be converted into
Common Stock shall be determined by dividing the price per share for which this
Promissory Note was theretofore convertible into Common Stock by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of such Additional Shares of Common Stock plus the number
of Additional Shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such Additional Shares of Common Stock
plus the number of shares which the aggregate offering consideration of the
total number of Additional Shares of Common Stock so offered would purchase at
such current Conversion Price. Such adjustments shall be made whenever such
Additional Shares of Common Stock are issued. For the purpose of this paragraph,
the term "Additional Shares of Common Stock" shall mean all shares of Common
Stock, plus rights, options or warrants to subscribe for, purchase or otherwise
acquire shares of Common Stock, or securities convertible or exchangeable into
shares of Common Stock; provided, however, that such term shall not mean: (i)
stock awards, rights, options or warrants granted to directors, management or
employees of the Company pursuant to any director, management or employee plans
approved by the Board of Directors of the Company, or (ii) any shares of Common
Stock or any security convertible into, exchangeable or redeemable for, or
otherwise granting the holder thereof the right to acquire shares of Common
Stock and that is issued as part of any acquisition of any of the stock or
assets of LCD Systems, Inc. prior to twelve months from the date hereof.

         In case the Company shall distribute to all holders of its Common Stock
evidences of its indebtedness or assets (excluding cash dividends or other cash
distributions) or rights or warrants to subscribe (excluding those referred to
in the preceding paragraph and other than pursuant to a shareholder's rights
plan) for shares of Common Stock, then in each such case the price per share at
which this Promissory Note may thereafter be converted into Common Stock shall
be determined by dividing the price per share for which this Promissory Note was
theretofore convertible into Common Stock by a fraction, of which the numerator
shall be the current market price per share of Common Stock (as defined in the
following paragraph) on the date of such distribution and of which the
denominator shall be such current market price per share of the Common Stock,
less the then fair market value (as determined by the Board of Directors of the
Company, whose determination shall be conclusive, and described in a statement
provided to the Holders of this Promissory Note) of the portion of the assets or
evidences of indebtedness so distributed or of such subscription rights or
warrants applicable to one share of the Common Stock. Such adjustment shall be
made whenever any such distribution is made and shall become effective
retroactively immediately after the record date for the determination of
stockholders entitled to receive such distribution.

         For the purpose of any computation under the preceding paragraph,
subsection (c) above, the current market price per share of Common Stock at any
date shall be deemed to be the average of the daily closing prices for the 30
consecutive trading days commencing 45 trading days before the day in question.

         For the purposes of this Promissory Note, any change solely in the par
value of the Common Stock or from par value to no par value or from no par value
to par value of such stock, shall not be deemed to be a reclassification or
recapitalization.

         No fractional shares or script representing fractional shares shall be
issued upon the conversion of this Promissory Note. If any fractional interest
in a share of Common Stock would, except for the provisions of this paragraph,
be deliverable upon the conversion of this Promissory Note, the Company shall,
in lieu of delivering a fractional share therefor, adjust such fractional
interest by paying the Holders an amount in cash equal (computed to the nearest
cent) to the closing price of such fractional interest on the trading day next
preceding the date of conversion.

         In case of any capital reorganization, or of any reclassification of
the Common Stock (other than a reclassification covered above), of the Company
or in case of the merger of the Company into any other corporation, or of any
transfer of the properties and assets of the Company as, or substantially as, an
entirety to any other corporation, there shall be no adjustment of the
Conversion Price hereof, but this Promissory Note shall, after such capital
reorganization, reclassification of Common Stock, merger or transfer, be
convertible into the kind and amount of shares of stock or other securities or
property (including cash) to which the holder of the number of shares of Common
Stock deliverable (immediately prior to the time of such capital reorganization,
reclassification of Common Stock, merger or transfer) upon conversion of this
Promissory Note would have been entitled upon such capital reorganization,
reclassification of Common Stock, merger, or transfer; and in any case, if
necessary, appropriate adjustment shall be made in the application of the
provisions set forth herein with respect to the rights and interests thereafter
of the Holders of this Promissory Note, to the end that the

provisions set forth herein shall thereafter correspondingly be made applicable,
as nearly as may reasonably be, in relation to any shares of stock or other
securities or property (including cash) thereafter deliverable on the conversion
of this Promissory Note. Any such adjustment shall be confirmed as being
accurately determined by a certificate of a firm of independent public
accountants; and any adjustment so approved shall for all purposes hereof
conclusively be deemed to be an appropriate adjustment. The above provisions of
this paragraph shall similarly apply to successive reorganizations,
reclassifications, mergers, or transfers.

         Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly provide the Holders a certificate of a firm of
independent public accountants with respect thereto setting forth the Conversion
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment and the effective date thereof.

         The Company shall also forthwith cause to be mailed to the Holders a
notice stating that the Conversion Price has been adjusted and setting forth the
adjusted Conversion Price.

         In case:

               (1) the Company shall declare a dividend payable, or shall make
          any other distribution of its Common Stock (excluding cash dividends
          or other cash distributions); or

               (2) the Company shall authorize the granting to all the holders
          of its Common Stock of rights or warrants to subscribe for or purchase
          any shares of stock of any class or of any other rights or warrants;
          or

               (3) of any capital reorganization or reclassification of the
          Common Stock of the Company (other than a subdivision or combination
          or change in the par value of its outstanding Common Stock), or of any
          merger to which the Company is a party and for which approval of any
          stockholders of the Company is required, or of any transfer of all or
          substantially all of the assets of the Company, in the event any such
          merger or transfer will result in a change in the shares held by the
          holders of Common Stock; or

               (4) of the voluntary or involuntary dissolution, liquidation or
          winding-up of the Company;

then the Company shall cause to be mailed to the Holders, as promptly as
practicable but in any event at least 10 days prior to the applicable record
date, entitlement date or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution or granting of rights (the "record date"), or, if a record is not
to be taken, the date or anticipated date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or granting of
rights are to be determined (the "entitlement date"), or (y) the date or
anticipated date on which such capital reorganization, reclassification, merger,
transfer, dissolution, liquidation or winding-up is expected to become effective
(the "effective date"), and which notice, in the case of the notice specified in
clause (y), shall also state the date as of which it is expected that holders of
Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such capital
reorganization, reclassification, merger, transfer, dissolution, liquidation or
winding-up.

         The Company covenants that it will at all times reserve and keep
available, free from pre-emptive rights, out of the aggregate of its authorized
but unissued Common Stock or its issued Common Stock held in its treasury, or
both, for the purpose of effecting conversions of this Promissory Note, the full
number of shares of Common Stock then deliverable upon the conversion of this
Promissory Note; and if at any time the number of authorized but unissued shares
of Common Stock shall not be sufficient to effect the conversion of this
Promissory Note, the Company will take such corporate action as may in the
opinion of its counsel be necessary to increase its authorized but unissued
Common Stock to such number of shares as shall be sufficient for that purpose.

         Before taking any action that would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
issuable upon conversion of this Promissory Note, the Company will take any
corporate action that may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of such Common Stock at such adjusted Conversion Price.

         The Company covenants that if any shares of Common Stock reserved for
conversion of this Promissory Note require listing upon any national securities
exchange before such shares may be delivered upon conversion, the Company will
in good faith, and as expeditiously as possible, endeavor to cause such shares
to be duly listed.

         The Company will pay any and all documentary, stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of Common
Stock on conversion of this Promissory Note pursuant hereto; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any registration of transfer involved in the issue or delivery of
Common Stock in a name other than that of the Holders of this Promissory Note to
be converted, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax
or has established, to the satisfaction of the Company, that such tax has been
paid.

         This Promissory Note is made pursuant to the terms and provisions of
the Dispute Resolution Agreement, dated as of January 31, 2002 to which Maker
and Holder are parties.

         As long as this Promissory Note remains unpaid and outstanding, Maker
shall not incur debt for borrowed money except the following:

                  (i) borrowed money from a commercial bank; and

                  (ii) currently outstanding subordinated debt; and

                  (iii) borrowed money from a source other than (i) and (ii)
         above in an aggregate amount not to exceed $1,000,000.00 provided such
         indebtedness is (i) pari passu in all respects with this Promissory
         Note and (ii) subordinated to any debt incurred under (i) above.

         The rights and obligations of the Maker, the Company and the Holder
shall be binding upon and inure to the benefit of the permitted successors,
assigns, heirs, administrators

and transferees of the parties. Maker may not assign its rights or obligations
under this Promissory Note without the prior written unanimous consent of the
Holders. Each of the Holders may not assign his individual rights or obligations
under this Promissory Note without the prior consent of the Maker.

         IN WITNESS WHEREOF, the undersigned had duly caused this Promissory
Note to be executed and delivered at the place specified above and as of the
date first written above.

                                    DCI, INC.

                     By:
                          ------------------------------------------------------

                     Name:
                          ------------------------------------------------------

                     Title:
                          ------------------------------------------------------


                     ELECSYS CORPORATION

                     By:
                          ------------------------------------------------------

                     Name:
                          ------------------------------------------------------

                     Title:
                          ------------------------------------------------------

                                 ACKNOWLEDGMENTS

STATE OF MISSOURI                       )
                                        )  ss.
COUNTY OF JACKSON                       )

         On this ____ day of January, 2002, before me,
_______________________________ the undersigned, personally appeared
____________________, known personally to me to be the President of DCI, INC.,
and that he, as such officer, being authorized to do so, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as such officer.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on the day and year above written.


                                  -----------------------------------------
                                  Notary Public

My Commission Expires:




STATE OF MISSOURI                       )
                                        )  ss.
COUNTY OF JACKSON                       )

         On this ____ day of January, 2002, before me,
_______________________________ the undersigned, personally appeared
____________________, known personally to me to be the Chairman of ELECSYS
CORPORATION, and that he, as such officer, being authorized to do so, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as such officer.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on the day and year above written.


                                  -------------------------------------------
                                  Notary Public

My Commission Expires:

EX-10.3

                                                        Exhibit 10.3

                              PROMISSORY NOTE



$31,650.00

                                                                February 1, 2002

     FOR VALUE RECEIVED, DCI, INC., a Kansas corporation (the "Maker"), hereby
promises to pay to the order of CHRIS I. HAMMOND, LARRY C. KLUSMAN AND WILLIAM
D. COOK (together with their assigns, collectively the "Holder"), the principal
sum of Thirty-One Thousand Six Hundred And Fifty Dollars ($31,650.00), together
with interest at the rate of Five percent (5%) per annum on the unpaid principal
balance hereof, payable in monthly installments of principal and interest in the
amount of $1,971.00 on the last day of each month commencing September 30, 2003
and ending February 28, 2005, with the entire amount of indebtedness hereunder
then outstanding, including principal and all accrued interest, due February 28,
2005. Interest shall be computed on the basis of a 365-day year.

     If any installment of this Promissory Note becomes due and payable on a
Saturday, Sunday, or business holiday in the State of Kansas, payment shall be
made on the next successive business day with the same effect as though made on
the due date.

     The Maker reserves the right to prepay all or any portion of this
Promissory Note at any time and from time to time without premium or penalty of
any kind.

     If (i) there should be a default in the payment of interest or principal
due hereunder and such default shall continue for a period of five (5) days
after the giving of notice of such default to the Maker at the Maker's last
known address, or (ii) the Maker or any other person liable hereon should make
an assignment for the benefit of creditors, or (iii) a receiver, trustee, or
liquidator is appointed over or execution levied upon any property of the Maker
or any other person liable hereon, or (iv) proceedings are instituted by or
against the Maker or any other person liable hereon under any bankruptcy,
insolvency, reorganization, or other law relating to the relief of debtors,
including without limitation the United States Bankruptcy Code, as amended,
then, and in each such event, the Holder may, at its option, without notice or
demand, declare the remaining unpaid principal balance of this Promissory Note
and all accrued interest thereon immediately due and payable in full.

     Any amount hereunder which is not paid when due, whether at stated
maturity, by acceleration, or otherwise, shall bear interest from the date when
due until paid at the foregoing rate per annum plus five percent (5%).

     All payments made hereunder shall be made in lawful currency of the United
States of America in immediately available funds. Each principal and interest
payment from Maker to Holder, unless otherwise agreed to, shall be divided
equally by Maker among the Holder and each individual Holder shall receive his
respective payment from Maker at his address as follows:

Larry C. Klusman         Chris I. Hammond                   William D. Cook
9011 Greenway Lane       12620 S. Hallet                    12913 W. 78th Street
Lenexa, KS  66215        Olathe, KS  66062                  Lenexa, KS  66216

or at such other place, or to such bank account, as the individual Holder may
designate in writing. All payments made hereunder, whether a scheduled
installment, prepayment, or payment as a result of acceleration, shall be
allocated first to accrued but unpaid interest and then to principal remaining
outstanding hereunder.

     The Maker agrees to pay, to the extent permitted by law, all reasonable
costs of collection, including reasonable attorneys' fees, paid or incurred by
the Holder in enforcing this Promissory Note or obtaining the rights and
remedies herein provided.

     All notices required or permitted to be given under this Promissory Note
shall be in writing and shall be deemed to have been properly given and received
(i) if sent by hand delivery, then upon delivery, (ii) if sent by facsimile,
then upon receipt by the sender of electronic confirmation of transmittal, (iii)
if sent by overnight courier, then one (1) day after dispatch, and (iv) if
mailed by certified or registered U.S. mail, postage prepaid and return receipt
requested, then two (2) days after deposit in the mail.

     The delay or failure to exercise any right, power, privilege or remedy
hereunder shall not waive such right, power, privilege or remedy or in any way
affect the future exercise of such right, power, privilege or remedy.

     The rights and obligations of the Maker and the Holder under this
Promissory Note shall be binding upon and inure to the benefit of their
respective permitted successors, heirs, beneficiaries, administrators and
transferees.

     This Promissory Note may not be amended or modified except by a written
agreement signed by the Maker and the Holder.

     This Promissory Note shall be governed by and construed and enforced in
accordance with the laws of the State of Kansas.

     IN WITNESS WHEREOF, the undersigned had duly caused this Promissory Note to
be executed and delivered at the place specified above and as of the date first
written above.


                                    DCI, INC.

                                    By:
                                        ---------------------------------------------------------

                                    Name:
                                         -------------------------------------------------------

                                    Title:
                                          ------------------------------------------------------

EX-10.4

                                                                  Exhibit 10.4

                               ELECSYS CORPORATION
                          REGISTRATION RIGHTS AGREEMENT


         This Registration Rights Agreement (this "Agreement"), is made as of
January 30, 2002, by and among Elecsys Corporation, a Kansas corporation (the
"Company"), and Chris I. Hammond, William D. Cook, and Larry C. Klusman
(collectively, the "Investors").

         WHEREAS, pursuant to the promissory note executed by DCI, Inc. in favor
of the Investors dated January 31, 2002 (the "Promissory Note"), the Investors
have acquired conversion rights pursuant to which they may convert the
outstanding balance of the Promissory Note into shares of common stock of the
Company (the "Converted Shares"); and

         WHEREAS, the Investors wish to obtain and the Company wishes to grant
registration rights for the Converted Shares.

         NOW THEREFORE, in consideration of the agreements set forth herein, the
Company and the Investors agree as follows:

     Section 1. Definitions. The following terms shall have the following
                meanings:

               (a) "Commission" means the Securities and Exchange Commission, or
          any other federal agency at the time administering the Securities Act.

               (b) "Exchange Act" means the Securities Exchange Act of 1934, as
          amended, or any similar federal statute and the rules and regulations
          thereunder, all as the same shall be in effect at the time.

               (c) "Holder" means any Investor holding outstanding Registrable
          Securities.

               (d) "Register," "registered" and "registration" refers to a
          registration effected by preparing and filing a registration statement
          in compliance with the Securities Act, and the declaration or ordering
          of the effectiveness of such registration statement, and compliance
          with applicable state securities laws of such states in which Holders
          notify the Company of their intention to offer Registrable Securities.

               (e) "Registrable Securities" means all of the following to the
          extent the same have not been sold to the public (i) Converted Shares;
          (ii) stock issued in respect of the stock referred to in (i) as a
          result of a stock split, stock dividend, recapitalization or
          combination. Notwithstanding the foregoing, Registrable Securities
          shall not include otherwise Registrable Securities sold in a
          transaction exempt from the registration and prospectus delivery
          requirements of the Securities Act under Section 4(l) thereof so that
          all transfer restrictions, and restrictive legends with respect
          thereto, if any, are removed upon the consummation of such sale.

               (f) "Securities Act" means the Securities Act of 1933, as
          amended, or any similar federal statute and the rules and regulations
          thereunder, all as the same shall be in effect at the time.

               (g) "Rule 144" means Rule 144 under the Securities Act or any
          successor or similar rule as may be enacted by the Commission from
          time to time, but shall not include Rule 144A.

               (h) "Rule 144A" means Rule 144A under the Securities Act or any
          successor or similar rule as may be enacted by the Commission from
          time to time, but shall not include Rule 144.

          Section 2. Piggyback Registration.

               (a) If at any time or from time to time, the Company shall
          determine to register any of its securities, for its own account or
          the account of any of its shareholders, other than a registration
          relating solely to securities (or securities underlying such
          securities) issued to an employee or employees in connection with
          services provided to the Company, a registration relating solely to a
          Securities Act Rule 145 transaction, a registration relating solely to
          the sale of debt or convertible debt instruments, or a registration on
          any form (other than Form SB-1, SB-2, S-1, S-2 or S-3, or their
          successor forms) which does not include substantially the same
          information as would be required to be included in a registration
          statement covering the sale of Registrable Securities, the Company
          will:

                    i. give to each Holder written notice thereof as soon as
               practicable prior to filing the registration statement; and

                    ii. include in such registration and in any underwriting
               involved therein, all the Registrable Securities specified in a
               written request or requests, made within 15 days after receipt of
               such written notice from the Company, by any Holder or Holders,
               except as set forth in subsection (b) below.

               (b) If the registration is for a registered public offering
          involving an underwriting, the Company shall so advise the Holders as
          a part of the written notice given pursuant to subsection 2(a)(i). In
          such event, the right of any Holder to registration pursuant to this
          Section 2 shall be conditioned upon such Holder's participation in
          such underwriting and the inclusion of such Holder's Registrable
          Securities in the underwriting to the extent provided herein. All
          Holders proposing to distribute their securities through such
          underwriting shall (together with the Company and the other holders
          distributing their securities through such underwriting) enter into an
          underwriting agreement in customary form with the underwriter or
          underwriters selected for such underwriting by the Company.
          Notwithstanding any other provision of this Section 2, if the managing
          underwriter advises the Company in writing that marketing factors
          require a limitation of the number of shares to be underwritten, the
          managing underwriter may limit the number of Registrable Securities to
          be included in the registration and underwriting (provided that no
          shares held by officers and directors of the Company, other than
          Registrable Securities that may be owned by officers and directors,
          are included in the registration and underwriting). The Company shall
          so advise all Holders, and the number of shares of Registrable
          Securities and other securities that may be included in the
          registration and underwriting shall be allocated among all Holders, in

          proportion, as nearly as practicable, to the respective amounts of
          Registrable Securities offered for sale by such Holders at the time of
          filing the registration statement. If any Holder disapproves of the
          terms of any such underwriting, he may elect to withdraw therefrom by
          written notice to the Company and the managing underwriter. If, by the
          withdrawal of such Registrable Securities, a greater number of
          Registrable Securities held by other Holders may be included in such
          registration (up to the limit imposed by the underwriters), the
          Company shall offer to all Holders who have included Registrable
          Securities in the registration the right to include additional
          Registrable Securities. Any Registrable Securities excluded or
          withdrawn from such underwriting shall be withdrawn from such
          registration.

     Section 3. Registration Procedures. (a) In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep each
Holder participating therein advised in writing as to the initiation of each
registration and as to the completion thereof. The Company will use reasonable
efforts to:

               i. keep such registration pursuant to Sections 2 continuously
          effective for such reasonable period as necessary to permit the Holder
          or Holders to complete the distribution described in the registration
          statement relating thereto, but in no event for periods of more than
          90 days;

               ii. prepare and file with the Commission such amendments and
          supplements to such registration statement and the prospectus used in
          connection therewith as may be necessary to comply with the provisions
          of the Securities Act, and to keep such registration statement
          effective for the applicable period of time specified in Section
          3(a)(i) above;

               iii. furnish such number of prospectuses and other documents
          incident thereto as a Holder from time to time may reasonably request;

               iv. obtain the withdrawal of any order suspending the
          effectiveness of a registration statement, or the lifting of any
          suspension of the qualification of any of the Registrable Securities
          for sale in any jurisdiction;

               v. register or qualify such Registrable Securities for offer and
          sale under the securities or Blue Sky laws of such jurisdictions as
          any Holder or underwriter reasonably requires, and keep such
          registration or qualification effective for the applicable period
          specified in Section 3(a)(i) above;

               vi. cause all Registrable Securities covered by such
          registrations to be listed on each securities exchange, including
          NASDAQ, on which similar securities issued by the Company are then
          listed;

               vii. cause its accountants to issue to the underwriter, if any,
          or the Holders, if there is no underwriter, comfort letters and
          updated versions thereof, in customary form and covering matters of
          the type customarily covered in such letters with respect to
          underwritten offerings;

               viii. enter into such customary agreements (including
          underwriting agreements in customary form) and take all such other
          actions as the holders of a majority of the Registrable Securities
          being sold or the underwriters, if any, reasonably request in order to
          expedite or facilitate the disposition of such Registrable Securities
          (including, without limitation, effecting a stock split or a
          combination of shares);

               ix. if the offering is underwritten, comply with the request of
          any Holder of Registrable Securities to furnish on the date that
          Registrable Securities are delivered to the underwriters for sale
          pursuant to such registration: (i) an opinion dated such date of
          counsel representing the Company for the purposes of such
          registration, addressed to the underwriters and to such Holder,
          stating that such registration statement has become effective under
          the Securities Act and that (A) to the best knowledge of such counsel,
          no stop order suspending the effectiveness thereof has been issued and
          no proceedings for that purpose have been instituted or are pending or
          contemplated under the Securities Act, and (B) the registration
          statement, the related prospectus and each amendment or supplement
          thereof comply as to form in all material respects with the
          requirements of the Securities Act (except that such counsel need not
          express any opinion as to financial statements or other financial data
          contained therein), and (ii) a letter dated such date from the
          independent public accountants retained by the Company, addressed to
          the underwriters and to such seller, stating that they are independent
          public accountants within the meaning of the Securities Act and that,
          in the opinion of such accountants, the financial statements of the
          Company included in the registration statement or the prospectus, or
          any amendment or supplement thereof, comply as to form in all material
          respects with the applicable accounting requirements of the Securities
          Act;

               x. notify each Holder, at any time a prospectus covered by such
          registration statement is required to be delivered under the
          Securities Act, of the happening of any event of which it has
          knowledge as a result of which the prospectus included in such
          registration statement, as then in effect, includes an untrue
          statement of a material fact or omits to state a material fact
          required to be stated therein or necessary to make the statements
          therein not misleading in the light of the circumstances then
          existing; and

               xi. take such other actions as shall be requested by any
          underwriter or Holder that is reasonably necessary to obtain
          effectiveness of the registration statement.

          (b) Notwithstanding anything in the Agreement to the contrary, if,
     after a registration statement becomes effective, the Company advises the
     holders of registered shares that the Company considers it appropriate for
     the registration statement to be amended, the holders of such shares shall
     suspend any further sales of their registered shares until the Company
     advises them that the registration statement has been amended. The 90-day
     time period referred to in 3(a)(i) above during which the registration
     statement must be kept current after its effective date shall be extended
     for an additional

     number of business days equal to the number of business days during which
     the rights to sell shares was suspended pursuant to the preceding sentence,
     but in no event will the company be required to update the registration
     statement after the first anniversary of the date hereof.

          (c) So long as the Company is publicly traded on a nationally
     recognized exchange, the Company agrees to make and keep public information
     available, as those terms are understood and defined in Rule 144 and Rule
     144A.

     Section 4. Indemnification.

          (a) In the event of a registration of any of the Registrable
     Securities under the Securities Act pursuant to Section 3, the Company will
     indemnify and hold harmless each Holder of such Registrable Securities
     thereunder, each underwriter of such Registrable Securities thereunder and
     each other person, if any, who controls such Holder or underwriter within
     the meaning of the Securities Act, against any losses, claims, damages or
     liabilities, joint or several, to which such Holder, underwriter or
     controlling person may become subject under the Securities Act or
     otherwise, insofar as such losses, claims, damages or liabilities (or
     actions in respect thereof) arise out of or are based upon any untrue
     statement or alleged untrue statement of any material fact contained in any
     registration statement under which such Registrable Securities were
     registered under the Securities Act, any preliminary prospectus or final
     prospectus contained therein, or any amendment or supplement thereof, or
     arise out of or are based upon the omission or alleged omission to state
     therein a material fact required to be stated therein or necessary to make
     the statements therein not misleading, or any violation by the Company of
     any rule or regulation promulgated under the Securities Act or any state
     securities law applicable to the Company and relating to action or inaction
     required of the Company in connection with any such registration, and will
     reimburse each such Holder, each of its officers, directors and partners,
     and each person controlling such Holder, each such underwriter and each
     person who controls any such underwriter, for any reasonable legal and any
     other expenses incurred in connection with investigating, defending or
     settling any such claim, loss, damage, liability or action, provided that
     the Company will not be liable in any such case to the extent that any such
     claim, loss, damage or liability arises out of or is based on any untrue
     statement or omission based upon information furnished to the Company by
     any Holder or underwriter in writing specifically for use therein.

          (b) Each Holder will, if Registrable Securities held by or issuable to
     such Holder are included in the securities as to which such registration is
     being effected, indemnify and hold harmless the Company, each of its
     directors and officers, each underwriter, if any, of the Company's
     securities covered by such a registration statement, each person who
     controls the Company and each underwriter within the meaning of the
     Securities Act, and each other Holder, each of its officers, directors and
     partners and each person controlling such Holder, against all claims,
     losses, expenses, damages and liabilities (or actions in respect thereof)
     arising out of or based on any untrue statement (or alleged statement) of a
     material fact contained in any such registration statement, prospectus,
     offering circular or other document, or any omission (or alleged omission)
     to state therein a material fact required to be stated therein or necessary
     to make the

     statements therein not misleading, and will reimburse the Company, such
     Holders, such directors, officers, partners, persons or underwriters for
     any reasonable legal or any other expenses incurred in connection with
     investigating, defending or settling any such claim, loss, damage,
     liability or action, in each case to the extent, but only to the extent
     that such untrue statement (or alleged untrue statement) or omission (or
     alleged omission) is made in such registration statement, prospectus,
     offering circular or other document in reliance upon and in conformity with
     information furnished to the Company by such Holder in writing specifically
     for use therein.

          (c) Each party entitled to indemnification under this Section 4 (the
     "Indemnified Party") shall give notice to the party required to provide
     indemnification (the "Indemnifying Party") promptly after such Indemnified
     Party has actual knowledge of any claims as to which indemnity may be
     sought, and shall permit the Indemnifying Party to assume the defense of
     any such claim or any litigation resulting therefrom, provided that counsel
     for the Indemnifying Party, who shall conduct the defense of such claim or
     litigation, shall be approved by the Indemnified Party (whose approval
     shall not be unreasonably withheld), and the Indemnified Party may
     participate in such defense at such party's expense, and provided further
     that the failure of any Indemnified Party to give notice as provided herein
     shall not relieve the Indemnifying Party of its obligations hereunder,
     unless such failure resulted in actual detriment to the Indemnifying Party.
     No Indemnifying Party, in the defense of any such claim or litigation,
     shall, except with the consent of each Indemnified Party, consent to entry
     of any judgment or enter into any settlement which does not include as an
     unconditional term thereof the giving by the claimant or plaintiff to such
     Indemnified Party of a full and unconditional release from all liability in
     respect of such claim or litigation.

          (d) Notwithstanding the foregoing, to the extent that the provisions
     on indemnification contained in the underwriting agreements entered into
     among the Holders, the Company and the underwriters in connection with an
     underwritten public offering are in conflict with the foregoing provisions,
     the provisions in the underwriting agreement shall be controlling as to the
     Registrable Securities included in the public offering;

          (e) If the indemnification provided for in this Section 4 is held by a
     court of competent jurisdiction to be unavailable to an indemnified party
     with respect to any loss, liability, claim, damage or expense referred to
     therein, then the indemnifying party, in lieu of indemnifying such
     indemnified party thereunder, shall contribute the amount paid or payable
     by such indemnified party as a result of such loss, liability, claim,
     damage or expense in such proportion as is appropriate to reflect the
     relative fault of the indemnifying party on the one hand and of the
     indemnified party on the other hand in connection with the statements or
     omissions which resulted in such loss, liability, claim, damage or expense
     as well as any other relevant equitable considerations. The relevant fault
     of the indemnifying party and the indemnified party shall be determined by
     reference to, among other things, whether the untrue or alleged untrue
     statement of a material fact or the omission to state a material fact
     relates to information supplied by the indemnifying party or by the
     indemnified party and the parties' relative intent,

     knowledge, access to information and opportunity to correct or prevent such
     statement or omission.

          (f) Survival of Indemnity. The indemnification provided by this
     Section 4 shall be a continuing right to indemnification and shall survive
     the registration and sale of any securities by any Person entitled to
     indemnification hereunder and the expiration or termination of this
     Agreement.

     Section 5. Lockup Agreement. In consideration for the Company agreeing to
its obligations under this Agreement, each Holder agrees in connection with any
registration of the Company's securities (whether or not such Holder is
participating in such registration) upon the request of the Company and the
underwriters managing any underwritten offering of the Company's securities, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any common stock of the Company (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time from the effective
date of such registration as the Company and the underwriters may specify, but
in no event beyond six (6) months.

     Section 6. Obligations of the Holders. If any of the Registrable Securities
are included in any registration pursuant to this Agreement, each Holder shall
take such actions and furnish the Company with such information regarding and
relating to the distribution of the Registrable Securities as the Company may
from time to time reasonably request and as shall be required in connection with
any registration, qualification or compliance referred to in this Agreement,
including, without limitation, the following: (i) enter into an appropriate
underwriting agreement containing terms and provisions then customary in
agreements of that nature and cause each underwriter of the Registrable
Securities to be sold that is selected by the Holder to agree in writing with
the Company to provisions with respect to indemnification and contribution that
are substantially the same as set forth in Section 4 hereof; (ii) enter into
such custody agreements, powers of attorney, and related documents at such time
and on such terms and conditions as may then be customarily required in
connection with such offering; and (iii) distribute the Registrable Securities
only in accordance with and in the manner of the distribution contemplated by
the applicable registration statement and prospectus. In addition, the Holders
shall notify the Company of any request by the Commission or any state
securities commission or agency for additional information or for such
registration statement or prospectus to be amended or supplemented.

     Section 7. Expenses of Registration. The Holders shall bear all of their
legal, accounting and underwriting expenses and commissions incurred in
connection with a registration pursuant to this Agreement including any
registration fees related to the Registrable Securities incurred in connection
with any such registration or exchange listing; such expenses shall not include
the Company's legal or investment banking fees, salaries of the Company
personnel or general overhead expenses of the Company, auditing, or any other
expenses for the preparation of financial statements or other data normally
prepared by the Company in the ordinary course of its business or which the
Company would have incurred in any event. The Company shall not, under any
circumstances, be required in connection with a registration hereunder, to (i)
conduct any road shows or similar sales efforts for the Holders, or (ii) pay any
expenses of the Holders for any road shows or similar sales efforts.

     Section 8. Certificate Legends.

          (a) Future Events. The Company will notify the Holder participating in
     a registration of the occurrence of any of the following events, and when
     so notified, each Holder will immediately discontinue any disposition of
     the Registrable Securities until notified by the Company that the event is
     no longer applicable:

               i. the issuance by the Commission or any state securities
          commission or agency of any stop order suspending the effectiveness of
          the registration statement or the initiation of any proceedings for
          that purpose (in which case the Company will make reasonable effort to
          obtain the withdrawal of any such order or the cessation of any such
          proceedings); or

               ii. the existence of any fact which makes untrue any material
          statement made in the registration statement or prospectus or any
          document incorporated therein by reference or which requires the
          making of any changes in the registration statement or prospectus or
          any document incorporated therein by reference in order to make the
          statements therein not misleading (in which case the Company will make
          reasonable effort to amend the applicable document to correct the
          deficiency).

     Section 9. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration referred to herein.

     Section 10. Termination of Rights. All rights of any particular
Holder under this Agreement shall terminate at 5:00 P.M. Central time on January
31, 2004.

     Section 11. Representations and Warranties of the Company. The Company
represents and warrants to the Holders as follows:

          (a) The execution, delivery and performance of this Agreement by the
     Company have been duly authorized by all requisite corporate action and
     will not violate any provision of law, any order of any court or other
     agency of government, the Articles of Incorporation or Bylaws of the
     Company or any provision of any indenture, agreement or other instrument to
     which it or any of its properties or assets is bound, conflict with, result
     in a breach of or constitute (with due notice or lapse of time or both) a
     default under any such indenture, agreement or other instrument or result
     in the creation or imposition of any lien, charge or encumbrance of any
     nature whatsoever upon any of the properties or assets of the Company.

          (b) This Agreement has been duly executed and delivered by the Company
     and constitutes the legal, valid and binding obligation of the Company,
     enforceable in accordance with its terms, subject to (i) applicable
     bankruptcy, insolvency, reorganization, fraudulent conveyance and
     moratorium laws and other laws of general application affecting enforcement
     of creditors' rights generally and (ii) the availability of

     equitable remedies as such remedies may be limited by equitable principles
     of general applicability (regardless of whether enforcement is sought in a
     proceeding in equity or at law).

     Section 12. Miscellaneous.

          (a) Amendments. This Agreement may be amended only by a writing signed
     by the Company and the Holders of more than 51% of the Registrable
     Securities, as constituted from time to time. The Holders hereby consent to
     future amendments to this Agreement that permit future investors to be made
     parties hereto and to become Holders of Registrable Securities; provided,
     however, that no such future amendment may materially impair the rights of
     the Holders hereunder without obtaining the requisite consent of the
     Holders, as set forth above. For purposes of this Section, Registrable
     Securities held by the Company or beneficially owned by any officer or
     employee of the Company shall be disregarded and deemed not to be
     outstanding.

          (b) Counterparts. This Agreement may be executed in any number of
     counterparts, all of which shall constitute a single instrument.

          (c) Notices, Etc. All notices and other communications required or
     permitted hereunder shall be in writing and may be sent by facsimile
     transmission (with written confirmation of successful transmission), by
     registered or certified mail, postage prepaid, or delivered by hand or by
     messenger, addressed (a) if to a Holder, at such Holder's address set forth
     on the books of the Company, or at such other address as such Holder shall
     have furnished to the Company in writing pursuant to this Section, or (b)
     if to the Company, to the Company's then current executive office address,
     or at such other address as the Company shall have furnished to the Holders
     pursuant to this Section. Each such notice or other communication shall for
     all purposes of this Agreement be treated as effective or having been given
     when delivered if delivered personally, or, if sent by registered or
     certified mail or facsimile transmission, upon its receipt.

          (d) Severability. If any provision of this Agreement shall be held to
     be illegal, invalid or unenforceable, such illegality, invalidity or
     unenforceability shall attach only to such provision and shall not in any
     manner affect or render illegal, invalid or unenforceable any other
     provision of this Agreement, and this Agreement shall be carried out as if
     any such illegal, invalid or unenforceable provision were not contained
     herein.

          (e) Specific Performance. The parties hereto acknowledge that they
     will be irreparably damaged in the event that this Agreement is not
     specifically enforced. Upon any breach threatened, breach of the terms,
     covenants or conditions of this Agreement by any party hereto, the other
     party shall, in addition to all other remedies, be entitled to a temporary
     permanent injunction, without showing any actual damage or posting any
     bond, or a decree for specific performance, in accordance with the
     provisions hereof.

          (f) Governing Law. This Agreement shall be governed by and construed
     under the laws of the State of Kansas without regard to principles of
     conflict of law.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.

                                            ELECSYS CORPORATION


                                         By:
                                                -----------------------------
                                         Name:
                                                -----------------------------
                                         Title:
                                                -----------------------------


                                          -----------------------------
                                          CHRIS I. HAMMOND




                                          --------------------------------
                                          LARRY C. KLUSMAN




                                          ---------------------------------
                                          WILLIAM D. COOK