CHANGE IN TERMS AGREEMENT
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Principal
$3,898,161.13
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Loan Date
05-01-2008
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Maturity
05-01-2013
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Loan No
0000000000
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Call/Coll
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Account
0000128524
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Officer
322
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Initials
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References
in the boxes above are for Xxxxxx’s use only and do not limit the
applicability of this document to any particular loan or
item. Any item above containing “* * *” has been omitted due to
text length
limitations.
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Borrower:
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ART’S-WAY MANUFACTURING CO., INC.
(TIN: 00-0000000)
0000 XXXXXXX 0 XXXX, XX XXX 000
XXXXXXXXX, XX 00000
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Lender:
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WEST BANK
MAIN BANK
0000 00XX XXXXXX
XXXX XXX XXXXXX, XX 00000
(515) 222-2300
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Principal Amount: $3,898,161.13
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Interest Rate: 5.750%
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Date of Agreement: May 1, 2008
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DESCRIPTION OF EXISTING
INDEBTEDNESS. LOAN #1260080536 IN THE ORIGINAL AMOUNT OF
$4,100,000.00 DATED 06/07/07 WITH A MATURITY DATE OF 05/01/17.
DESCRIPTION OF
COLLATERAL. UNLIMITED SECURED GUARANTEES OF ARTS-WAY
SCIENTIFIC, INC, AND ARTS-WAY VESSELS, INC.; SECURITY AGREEMENTS DATED 04/25/03
AND 04/20/07; REAL ESTATE MORTGAGES DATED 04/25/03, 10/09/07, AND
11/30/07.
DESCRIPTION OF CHANGE IN
TERMS. MODIFY MATURITY DATE, INTEREST RATE AND
PAYMENTS.
PROMISE
TO PAY. ART’S-WAY MANUFACTURING CO., INC. (“Borrower”) promises to
pay to WEST BANK (“Lender”), or order, in lawful money of the United States of
America, the principal amount of Three Million Eight Hundred Ninety-eight
Thousand One Hundred Sixty-one & 13/100 Dollars ($3,898,161.13), together
with interest at the rate of 5.750% per annum on the unpaid principal balance
from May 1, 2008, until paid in full. The interest rate may change
under the terms and conditions of the “INTEREST AFTER DEFAULT”
section.
PAYMENT. Borrower
will pay this loan in 59 regular payments of $42,500.00 each and one irregular
last payment estimated at $2,304,789.08. Xxxxxxxx’s first payment Is
due June 1, 2008, and all subsequent payments are due on the same day of each
month after that. Xxxxxxxx’s final payment will be due on May 1,
2013, and will be for all principal and all accrued interest not yet
paid. Payments include principal and interest. Unless
otherwise agreed or required by applicable law, payments will be applied first
to any accrued unpaid interest; then to principal; then to any unpaid collection
costs; and then to any late charges. Interest on this loan Is
computed on a 365/360 simple interest basis; that is, by applying the ratio of
the annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Xxxxxx’s address shown
above or at such other place as Lender may designate in writing.
MAXIMUM INTEREST
RATE. Under no circumstances will the interest rate on this
loan exceed (except for any higher default rate shown below) the lesser of
7.500% per annum or the maximum rate allowed by applicable law.
PREPAYMENT PENALTY; MINIMUM INTEREST
CHARGE. In any event, even upon full prepayment of this
Agreement, Xxxxxxxx understands that Lender is entitled to a minimum interest charge of
$7.50. Upon prepayment of this Agreement, Xxxxxx is entitled to the
following prepayment penalty: 3% IF REFINANCED
ELSEWHERE. Other than Xxxxxxxx’s obligation to pay any minimum
interest charge and prepayment penalty, Borrower may pay all or a portion of the
amount owed earlier than it is due. Early payments will not, unless
agreed to by Xxxxxx in writing, relieve Xxxxxxxx of Xxxxxxxx’s obligation to
continue to make payments under the payment schedule. Rather, early
payments will reduce the principal balance due and may result in Xxxxxxxx’s
making fewer payments. Xxxxxxxx agrees not to send Lender payments
marked “paid in full”, “without recourse”, or similar language. If
Borrower sends such a payment, Xxxxxx may accept it without losing any of
Xxxxxx’s rights under this Agreement, and Borrower will remain obligated to pay
any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes “payment in full” of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: WEST BANK, MAIN
BANK, 0000 00XX XXXXXX, XXXX XXX XXXXXX, XX 00000.
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Loan No: 1260080536
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(Continued)
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Page 2
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LATE CHARGE. If a
payment is 11 days or more late, Borrower will be charged $15.00.
INTEREST AFTER DEFAULT. Upon
default, including failure to pay upon final maturity, the interest rate on this
loan shall be increased by 2.000 percentage points. However, in no
event will the interest rate exceed the maximum interest rate limitations under
applicable law.
DEFAULT. Each of
the following shall constitute an Event of Default under this
Agreement:
Payment
Default. Borrower fails to make any payment when due under the
Indebtedness.
Other
Defaults. Borrower fails to comply with or to perform any
other term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement between
Lender and Borrower.
Default in Favor of Third
Parties. Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially affect any of
Borrower’s property or ability to perform Borrower’s obligations under this
Agreement or any of the Related Documents.
False
Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or
the Related Documents is false or misleading in any material respect, either now
or at the time made or furnished or becomes false or misleading at any time
thereafter.
Insolvency. The
dissolution or termination of Xxxxxxxx’s existence as a going business, the
insolvency of Xxxxxxxx, the appointment of a receiver for any part of Xxxxxxxx’s
property, any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower or by any governmental agency against any collateral
securing the Indebtedness. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with
Lender. However, this Event of Default shall not apply if there is a
good faith dispute by Xxxxxxxx as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Borrower
gives Xxxxxx written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.
Events Affecting
Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
Indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any Guaranty of the Indebtedness evidenced by this Note.
Change In
Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.
Adverse Change. A
material adverse change occurs in Borrower’s financial condition, or Xxxxxx
believes the prospect of payment or performance of the Indebtedness is
impaired.
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Loan No: 1260080536
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(Continued)
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Page 3
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Insecurity. Lender
in good faith believes itself insecure.
Cure Provisions. If
any default, other than a default in payment is curable and if Borrower has not
been given a notice of a breach of the same provision of this Agreement within
the preceding twelve (12) months, it may be cured if Borrower, after receiving
written notice from Lender demanding cure of such default: (1) cures
the default within twenty (20) days; or (2) if the cure requires more than
twenty (20) days, immediately initiates steps which Lender deems in Lender’s
sole discretion to be sufficient to cure the default and thereafter continues
and completes all reasonable and necessary steps sufficient to produce
compliance as soon as reasonably practical.
LENDER’S
RIGHTS. Upon default, Xxxxxx may declare the entire unpaid
principal balance under this Agreement and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.
ATTORNEYS’ FEES;
EXPENSES. Lender may hire or pay someone else to help collect
this Agreement if Borrower does not pay. Borrower will pay Lender
that amount. This includes, subject to any limits under applicable
law, Xxxxxx’s attorneys’ fees and Xxxxxx’s legal expenses, whether or not there
is a lawsuit, including without limitation all attorneys’ fees and legal
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), and appeals. If not prohibited by
applicable law, Xxxxxxxx also will pay any court costs, in addition to all other
sums provided by law.
GOVERNING
LAW. This Agreement will be governed by federal law applicable to
Lender and, to the extent not preempted by federal law, the laws of the State of
Iowa without regard to its conflicts of law provisions. This
Agreement has been accepted by Xxxxxx in the State of Iowa.
CHOICE OF VENUE. If
there is a lawsuit, Xxxxxxxx agrees upon Xxxxxx’s request to submit to the
jurisdiction of the courts of POLK County, State of Iowa.
RIGHT OF SETOFF. To
the extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower’s accounts with Lender (whether checking, savings, or some other
account). This includes all accounts Borrower holds jointly with
someone else and all accounts Borrower may open in the
future. However, this does not include any IRA or Xxxxx accounts, or
any trust accounts for which setoff would be prohibited by
law. Borrower authorizes Xxxxxx, to the extent permitted by
applicable law, to charge or setoff all sums owing on the indebtedness against
any and all such accounts, and, at Xxxxxx’s option, to administratively freeze
all such accounts to allow Lender to protect Xxxxxx’s charge and setoff rights
provided in this paragraph.
COLLATERAL. Borrower
acknowledges this Agreement is secured by UNLIMITED SECURED GUARANTEES OF
ARTS-WAY SCIENTIFIC, INC, AND ARTS-WAY VESSELS, INC.; SECURITY AGREEMENTS DATED
04/25/03 AND 04/20/07; REAL ESTATE MORTGAGES DATED 04/25/03, 10/09/07, AND
11/30/07.
CONTINUING VALIDITY. Except as
expressly changed by this Agreement, the terms of the original obligation or
obligations, including all agreements evidenced or securing the obligation(s),
remain unchanged and in full force and effect. Consent by Xxxxxx to
this Agreement does not waive Xxxxxx’s right to strict performance of the
obligation(s) as changed, nor obligate Lender to make any future change in
terms. Nothing in this Agreement will constitute a satisfaction of
the obligation(s). It is the intention of Lender to retain as liable
parties all makers and endorsers of the original obligation(s), including
accommodation parties, unless a party is expressly released by Xxxxxx in
writing. Any maker or endorser, including accommodation makers, will
not be released by virtue of this Agreement. If any person who signed
the original obligation does not sign this Agreement below, then all persons
signing below acknowledge that this Agreement is given conditionally, based on
the representation to Lender that the non–signing party consents to the changes
and provisions of this Agreement or otherwise will not be released by
it. This waiver applies not only to any initial extension,
modification or release, but also to all such subsequent
actions.
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Loan No: 1260080536
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(Continued)
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Page 4
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SUCCESSORS AND
ASSIGNS. Subject to any limitations stated in this Agreement
on transfer of Xxxxxxxx’s interest, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns. If
ownership of the Collateral becomes vested in a person other than Xxxxxxxx,
Lender, without notice to Xxxxxxxx, may deal with Xxxxxxxx’s successors with
reference to this Agreement and the Indebtedness by way of forbearance or
extension without releasing Borrower from the obligations of this Agreement or
liability under the Indebtedness.
MISCELLANEOUS
PROVISIONS. If any part of this Agreement cannot be enforced,
this fact will not affect the rest of the Agreement. Lender may delay
or forgo enforcing any of its rights or remedies under this Agreement without
losing them. Borrower and any other person who signs, guarantees or
endorses this Agreement, to the extent allowed by law, waive presentment, demand
for payment, and notice of dishonor. Upon any change in the terms of
this Agreement, and unless otherwise expressly stated in writing, no party who
signs this Agreement, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree
that Lender may renew or extend (repeatedly and for any length of time) this
loan or release any party or guarantor or collateral; or impair, fail to realize
upon or perfect Lender’s security interest in the collateral; and take any other
action deemed necessary by Xxxxxx without the consent of or notice to
anyone. All such parties also agree that Xxxxxx may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Agreement are joint
and several.
PRIOR
TO SIGNING THIS AGREEMENT, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS AGREEMENT. XXXXXXXX AGREES TO THE TERMS OF THE
AGREEMENT.
XXXXXXXX
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS CHANGE IN TERMS AGREEMENT AND
ALL OTHER DOCUMENTS RELATING TO THIS DEBT.
BORROWER:
ART’S-WAY
MANUFACTURING CO., INC.
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By:
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COPY
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XXXXXX X. XXXXXXX, President of ART’S-WAY
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MANUFACTURING CO., INC.
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