LOAN AGREEMENT
for a Loan from
MERCANTILE BANK MIDWEST
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1. DATE AND PARTIES. The date of this Loan Agreement (Agreement) is November
2, 1998, and the parties are the following:
BORROWER:
TOP AIR MANUFACTURING, INC.
an Iowa corporation
000 Xxxxxxxx Xxxx Xx.
Xxxxx Xxxxx, Xxxx 00000
Tax I.D. #00-0000000
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
000 Xxxxx Xxxxxx
X.X. Xxx 00
Xxxxxxxx, Xxxx 00000
Tax I.D. #00-0000000
2. BACKGROUND. Borrower has applied for
A. A revolving draw loan (First Loan) in the principal amount of
$4,000,000.00. The Loan shall be evidenced by a promissory note,
No. ________________, (First Note) dated November 2, 1998 and
executed by Borrower payable to the order of Bank and all
extensions, renewals, modifications, or substitutions thereof.
B. Also, a second promissory note No. ________________, (Second
Note) dated November 2, 1998 and executed by Borrower payable to
the order of Bank, which evidences a loan (Second Loan) to
Borrower in the principal amount of $4,500,000.00, and all
extensions, renewals, modifications, or substitutions thereof.
C. The terms "First Note" and "Second Note" shall be collectively
referred to as "Note" herein; and the terms "First Loan" and
"Second Loan" shall be collectively referred to as "Loan"
herein.
There may be other documents (Related Documents) that secure, guaranty or
otherwise relate to the Loan, any collateral securing the Loan
(Collateral), or this Agreement. To induce Bank to make the Loan and as
part of the consideration for Bank making the Loan, Borrower and Bank agree
to the following terms, representations, warranties and covenants, which
shall prevail so long as any part of the Loan or any other obligation of
Borrower to Bank remains outstanding or Bank is obligated to make any
advances on the Loan.
3. ADVANCES ON LOAN. The Loan is to be made in one or more advances to
Borrower on or before November 30, 1999. At no time shall the outstanding
principal balances of the Loan exceed $8,500,000.00 and the terms and
amounts of any such draws shall be as permitted under, and controlled by,
the specific note. Borrower authorizes Bank to honor any written request
for an advance on the Loan from Borrower or from any one of its officers,
employees, partners, family members or any other person as may be
authorized in writing. Bank may, in its sole discretion and without
liability of any kind, honor any oral request made by Borrower for an
advance on the Loan. Such request constitutes a warranty by Borrower that
the request is in compliance with this Agreement, the Note and all Related
Documents. The written request shall be made on documents normally required
by Bank and shall be accompanied by all documents normally required by Bank
for the particular type of Loan made to Borrower. Bank's records shall be
conclusive evidence as to the amount of advances, unpaid principal balances
and the accrued interest on the Loan. A check or other charge presented
against this account in excess of the balance may be treated by Bank, at
its option, as a request for an advance under this Agreement. Any payment
by Bank of any such check or other charge may, at its option, constitute an
advance on the Loan to Borrower. Bank shall have no duty to make any
advances except as expressly stated in the Note.
4. COLLECTION EXPENSES. Borrower shall, upon demand, reimburse Bank for all
fees and expenses paid or incurred by Bank for the preparation and
recordation of all documentation, the closing, and the enforcement of the
Note, this Agreement or the Related Documents, whether or not a suit is
filed. These fees and expenses include, but are not limited to,
accountants' fees and other professional fees. All such fees and expenses
shall be additional liabilities of Borrower to Bank as advances under the
Loan and shall be secured by the Collateral securing the Loan.
5. ATTORNEYS' FEES. Upon demand and to the extent not prohibited by law,
Borrower shall reimburse Bank for all reasonable attorneys' fees paid or
incurred by Bank in connection with the preparation and recordation of all
documentation, closing, and enforcement of the Note, this Agreement or the
Related Documents, whether or not a suit is filed. Such reasonable
attorneys' fees shall be additional liabilities of Borrower to Bank as
advances under the Loan and shall be secured by the Collateral securing the
Loan.
6. PARTICIPATION. Borrower consents to permit Bank to participate Loan and
share any and all information with the participating bank as Bank may deem
necessary.
7. AFFIRMATIVE COVENANTS. Borrower agrees:
A. PERFORMANCE OF LOAN OBLIGATIONS. To make full and timely payment
of all principal and interest obligations, and to comply with
the terms and covenants contained in this Agreement and in the
Related Documents.
B. PRESERVE EXISTENCE. To preserve Borrower's present existence
until such time as Bank consents in writing to any change.
Bank's consent to any such change will not be unreasonably
withheld provided Bank can protect Bank's security interest and
provided further Borrower can provide Bank with sufficient
security to assure repayment of the Loan.
C. MAINTENANCE OF PROPERTY. To maintain, preserve and keep
Borrower's properties in good repair, working order and
condition, and from time to time to make all needful and proper
repairs, renewals, replacements, additions, betterments and
improvements thereto so that the efficiency of the properties is
fully preserved and maintained at all times.
D. INSURANCE. To keep and maintain the Collateral insured in full
with companies acceptable to Bank, naming Bank and Borrower on
the policy in accordance with their respective interests, with
the loss payable to Bank. Insurance of the types and in amounts
customarily carried by entities in businesses similar to
Borrower's shall be maintained for the full insurable value,
including without limitation, fire, public liability, property
damage, business interruption, rent loss insurance, and worker's
compensation insurance. Certified copies of all such insurance
policies or certificates of insurance shall be delivered upon
demand to Bank.
E. LOSS OR DEPRECIATION OF COLLATERAL. To immediately notify Bank
of any material casualty, loss or depreciation to the Collateral
or to any other property of Borrower which affects Borrower's
business.
F. AGING REPORTS. To furnish Bank a certified and detailed accounts
receivable aging report upon Bank's request, and in event of no
request at least quarterly, in such form and for such period(s)
as Bank may request.
G. INSPECTION. To permit Bank, or its agents, to enter upon any of
Borrower's premises and any location where the Collateral is
located at all reasonable times for the following purposes,
without limitation: (1) to inspect, audit, check, review and
obtain copies from Borrower's books, records, journals, orders,
receipts, and any correspondence and other business related
data; (2) to make verifications concerning the Collateral,
proceeds of the Collateral and proceeds of proceeds and their
use and disposition; and (3) to discuss the affairs, finances
and business of Borrower with any person or entity who claims to
be a creditor of Borrower.
H. BOOKS AND RECORDS. To maintain accurate and complete books and
records regarding its operations and to permit Bank, or its
agents, to examine and copy all or any part of them.
I. FINANCIAL STATEMENTS. To promptly provide Bank with all
financial statements which Bank may request concerning the
Borrower, initially and from time to time, within 30 days of the
request(s), or if no request is made, at least every 12 months
from the date of this Agreement, including business and personal
financial statements; such statements shall be reasonably
current, accurate, complete, in a form acceptable to Bank and
shall be based on generally accepted accounting principles
(GAAP) then in effect.
J. FURNISH DOCUMENTS. To promptly furnish Bank with tax returns,
budgets, forecasts and such other documents, instruments, and
information as Bank may reasonably request.
K. TAXES AND LIENS. To file all federal, state and other tax and
similar returns and to pay all taxes or liens assessed against
Borrower or Borrower's properties, whether due now or hereafter,
including but not limited to sales taxes, use taxes, personal
property taxes, documentary stamp taxes, recordation taxes,
franchise taxes, income taxes, withholding taxes, FICA taxes and
unemployment taxes when due, and to promptly furnish Bank with
written evidence of such payments.
L. LICENSES, PERMITS, BONDS AND OTHER RIGHTS. To acquire and
maintain in full force and effect all licenses, permits, bonds
and other documents or certificates reasonably necessary or
required to engage in and to carry on its business or venture as
contemplated by Borrower and Bank.
M. NOTICE TO BANK BY BORROWER. To promptly notify Bank of the
occurrence of any Event of Default under the terms of this
Agreement, of any material change in Borrower's financial
condition, of any litigation involving Borrower and of the
occurrence of any default against Borrower by third parties
which materially affects Borrower's business.
N. CERTIFICATION OF NO DEFAULT. To furnish Bank a written
certification upon Bank's request, or in event of no request at
least quarterly, that there exists no Event of Default under the
terms of this Agreement or under the Related Documents, and that
there exists no other action, condition or event which with the
giving of notice or lapse of time or both would constitute an
Event of Default. If such a condition does exist, the
certificate must accurately and fully disclose the extent and
nature of such condition and state what action is being taken to
correct it.
8. NEGATIVE COVENANTS. Without Bank's prior written consent, which shall not
be unreasonably withheld, Borrower agrees:
A. NO CHANGE IN STRUCTURE. Not to change the structure or ownership
of Borrower's entity or business venture, which includes a
change in the management, shareholders, directors, or officers
of any corporate borrower and to notify Bank in writing of any
change in name or management of Borrower.
B. NOT TO FORM. Not to form, organize or participate in the
organization of any other corporation, partnership or other
entity, or in the creation of any other business entity or
merge, consolidate with or into any other corporation,
partnership or other entity.
C. PAY NO DIVIDENDS. Not to pay or declare any dividends (including
but not limited to any cash dividend or stock dividend) or
similar distribution.
D. NO CHANGE IN CAPITAL STRUCTURE OR STOCK. Not to release, redeem,
retire, purchase or otherwise acquire, directly or indirectly,
any of its capital stock or other equity security or partnership
interest, or make any change in Borrower's capital structure
except to the extent required by the terms of any agreements
signed prior to this Agreement.
E. DEALINGS WITH INSIDERS. Not to purchase, acquire or lease any
property or services from, or sell, provide or lease any
property or service to, or otherwise deal with, any insiders.
The term "insiders" includes but is not limited to any officer,
employee, stockholder, director, partner, or any immediate
family member thereof, or any business entity who owns a
controlling interest in Borrower.
F. LOANS TO INSIDERS. Not to lend or advance or permit to be
outstanding any loans or advances to any of its "insiders" which
term is defined above.
G. INCUR NO OTHER LIABILITIES. Not to incur, assume or otherwise
permit any liability to exist for money borrowed, except from
Bank, or incur, assume or otherwise permit any other debts or
obligations outside of the ordinary course of business, or loan
money to, or guaranty or otherwise become in any way liable for
the debt or obligations of any other person or entity.
H. USE OF LOAN PROCEEDS. Not to permit the loan proceeds to be used
to purchase, carry, reduce, or retire any loan incurred to
purchase or carry any margin stock.
I. DISPOSE OF NO ASSETS. Not to sell or dispose of or make any
other distribution of any of Borrower's assets, properties or
business other than as permitted in the Related Documents.
J. NO OTHER LIENS OR ENCUMBRANCES. Not to permit or suffer any lien
or encumbrance upon any of Borrower's properties, except to
Bank, and except for any valid purchase money security
interests, or any other liens specifically agreed to by Bank in
writing.
9. REPRESENTATIONS. Borrower represents, guaranties and warrants to Bank that:
A. AUTHORITY TO DO BUSINESS. Borrower is authorized to do business
in this state and in each state where it may be doing business
and has full power and authority to execute and deliver the Note
and enter into this Agreement and the Related Documents.
B. CORPORATE STATUS. Borrower is duly incorporated and validly
existing and in good standing in the jurisdiction of Borrower's
incorporation and where Borrower conducts Borrower's business.
C. AUTHORITY TO ENTER AGREEMENTS. This Agreement, the Note, and the
Related Documents will constitute legal, valid, and binding
agreements and are enforceable against Borrower and all other
parties thereto.
D. TITLE AND POSSESSION. Borrower has good and marketable title to
its assets, and enjoys peaceful and undisturbed possession under
all leases under which Borrower now operates.
E. LABOR LAWS. Borrower is complying with all applicable federal or
state labor laws, including but not limited to the Federal Fair
Labor Standards Act.
F. TAX LAWS. Borrower has complied with all federal, state and
local tax laws, licensing laws and permit laws.
G. OTHER LAWS. Borrower is not in violation of other federal laws
or state laws, including but not limited to, ERISA (Employee
Retirement Income Security Act) or RICO (Racketeer Influenced
and Corrupt Organizations).
H. COMPLIANCE. Borrower is in compliance with all laws, orders,
judgments, decrees and regulations (Laws) of all federal,
foreign, state and local governmental authorities relating to
the business operations and the assets of Borrower, the
violation of which would have an adverse effect on the value of
or Bank's interest in any of the Collateral or would have a
materially adverse effect on Borrower's financial condition,
business or conduct of its business.
I. ADVERSE AGREEMENTS. Borrower is not a party to, nor is Borrower
bound by, any agreement that materially or adversely affects
Borrower's business, properties, assets or operations.
J. OTHER CLAIMS. There are no outstanding claims or rights that
would conflict with the execution, delivery or performance by
Borrower of the terms of the Note, this Agreement or the Related
Documents or that would cause a lien to be placed on the
Collateral given for this Loan, including proceeds of the
Collateral and proceeds of proceeds, except those, if any,
disclosed to and agreed to by Bank in writing prior to the
execution of this Agreement.
K. ACCURATE STATEMENTS. All financial statements, books, records,
documents, and instruments submitted by Borrower to Bank in
connection with the Loan are accurate and complete, and there
has been no material adverse change in the financial condition
of Borrower as shown by such statements, books, records,
documents or instruments.
L. SOLVENCY. Borrower is solvent, able to pay its debts as they
mature, and has sufficient capital to carry on its business and
all businesses in which Borrower is or will be engaged.
Borrower's total assets, at a present, fair market value, are
greater than the amount of Borrower's total obligations.
Borrower will not be rendered insolvent by the execution of the
Note, this Agreement or Related Documents or by any other
transactions.
M. LITIGATION. There are no proceedings pending or threatened
before any court or administrative agency which will or could
have a materially adverse affect upon the financial condition or
operations of Borrower.
N. SURVIVAL OF WARRANTIES. All representations, warranties,
statements, guaranties and covenants contained in the Note, this
Agreement or any Related Documents shall survive the execution
of such documents.
10. ENVIRONMENTAL LAWS AND HAZARDOUS SUBSTANCES.
A. As used in this paragraph:
(1) "Environmental Law" means, without limitation, the
Comprehensive Environmental Response, Compensation,
and Liability Act ("CERCLA", 42 U.S.C. 9601 at
seq.), all federal, state and local laws,
regulations, ordinances, court orders, attorney
general opinions or interpretive letters concerning
the public health, safety, welfare, environment or a
Hazardous Substance (as defined herein).
(2) "Hazardous Substance" means any toxic, radioactive
or hazardous material, waste, pollutant or
contaminant which has characteristics which render
the substance dangerous or potentially dangerous to
the public health, safety, welfare or the
environment. The term includes, without limitation,
any substances defined as "hazardous material,"
"toxic substances," "hazardous waste" or "hazardous
substance" under any Environmental Law.
B. Borrower represents, warrants and agrees that:
(1) Except as previously disclosed and acknowledged in
writing to Bank, no Hazardous Substance has been, is
or will be located, transported, manufactured,
treated, refined, or handled by any person on, under
or about the Property except in the ordinary course
of business and in strict compliance with all
applicable Environmental Law.
(2) Except as previously disclosed and acknowledged in
writing to Bank, Borrower has not and shall not
cause, contribute to or permit the release of any
Hazardous Substance on the Property.
(3) Borrower shall immediately notify Bank if: (a) a
release or threatened release of Hazardous Substance
occurs on, under or about the Property or migrates
or threatens to migrate from nearby property; or (b)
there is a violation of any Environmental Law
concerning the Property. In such an event, Borrower
shall take all necessary remedial action in
accordance with any Environmental Law.
(4) Except as previously disclosed and acknowledged in
writing to Bank, Borrower has no knowledge of or
reason to believe there is any pending or threatened
investigation, claim, or proceeding of any kind
relating to (a) any Hazardous Substance located on,
under or about the Property or (b) any violation by
Borrower or any tenant of any Environmental Law.
Borrower shall immediately notify Bank in writing as
soon as Borrower has reason to believe there is any
such pending or threatened investigation, claim, or
proceeding. In such an event, Bank has the right,
but not the obligation, to participate in any such
proceeding including the right to receive copies of
any documents relating to such proceedings.
(5) Except as previously disclosed and acknowledged in
writing to Bank, Borrower and every tenant have
been, are and shall remain in full compliance with
any applicable Environmental Law.
(6) Except as previously disclosed and acknowledged in
writing to Bank, there are no underground storage
tanks, private dumps or open xxxxx located on or
under the Property and no such tank, dump or well
shall be added unless Bank first agrees in writing.
(7) Borrower will regularly inspect the Property,
monitor the activities and operations on the
Property, and confirm that all permits, licenses or
approvals required by any applicable Environmental
Law are obtained and complied with.
(8) Borrower will permit, or cause any tenant to permit,
Bank or Bank's agent to enter and inspect the
Property and review all records at any reasonable
time to determine: (a) the existence, location and
nature of any Hazardous Substance on, under or about
the Property; (b) the existence, location, nature,
and magnitude of any Hazardous Substance that has
been released on, under or about the Property; (c)
whether or not Borrower and any tenant are in
compliance with any applicable Environmental Law.
(9) Upon Bank's request, Borrower agrees, at Borrower's
expense, to engage a qualified environmental
engineer to prepare an environmental audit of the
Property and to submit the results of such audit to
Bank. The choice of the environmental engineer who
will perform such audit is subject to the approval
of Bank.
(10) Bank has the right, but not the obligation, to
perform any of Borrower's obligations under this
paragraph at Borrower's expense.
(11) As a consequence of any breach of any
representation, warranty or promise made in this
paragraph, (a) Borrower will indemnify and hold Bank
and Bank's successors or assigns harmless from and
against all losses, claims, demands, liabilities,
damages, cleanup, response and remediation costs,
penalties and expenses, including without limitation
all costs of litigation and reasonable attorneys'
fees to the extent not prohibited by law, which Bank
and Bank's successors or assigns may sustain; and
(b) at Bank's discretion, Bank may release this
Agreement and in return Borrower will provide Bank
with collateral of at least equal value to the
Property secured by this Agreement without prejudice
to any of Bank's rights under this Agreement.
(12) Notwithstanding any of the language contained in
this Agreement to the contrary, the terms of this
paragraph shall survive any foreclosure or
satisfaction of any deed of trust, mortgage or any
obligation regardless of any passage of title to
Bank or any disposition by Bank of any or all of the
Property. Any claims and defenses to the contrary
are hereby waived.
11. EVENTS OF DEFAULT. Borrower shall be in default upon the occurrence of any
of the following events, circumstances or conditions (Events of Default):
A. Failure by any person obligated on the Loan to make payment when
due; or
B. A default or breach by Borrower or any co-signer, endorser,
surety, or guarantor under any of the terms of this Agreement,
the Note, any construction loan agreement or other loan
agreement, any security agreement, mortgage, deed to secure
debt, deed of trust, trust deed, or any other document or
instrument evidencing, guarantying, securing or otherwise
relating to the Loan; or
C. The making or furnishing of any verbal or written
representation, statement or warranty to Bank which is or
becomes false or incorrect in any material respect by or on
behalf of Borrower, owner, or any co-signer, endorser, surety or
guarantor of the Loan; or
D. Failure to obtain or maintain the insurance coverages required
by Bank, or insurance as is customary and proper for the
Collateral (as herein defined); or
E. The death, dissolution or insolvency of, the appointment of a
receiver by or on behalf of, the assignment for the benefit of
creditors by or on behalf of, the voluntary or involuntary
termination of existence by, or the commencement of any
proceeding under any present or future federal or state
insolvency, bankruptcy, reorganization, composition or debtor
relief law by or against Borrower, owner, or any co-signer,
endorser, surety or guarantor of the Loan; or
F. A good faith belief by Bank at any time that Bank is insecure
with respect to Borrower, or any co-signer, endorser, surety or
guarantor, that the prospect of any payment is impaired or that
the Collateral (as herein defined) is impaired; or
G. Failure to pay or provide proof of payment of any tax,
assessment, rent, insurance premium, escrow or escrow deficiency
on or before its due date; or
H. A material adverse change in Borrower's business, including
ownership, management, and financial conditions, which in Bank's
opinion, impairs the Collateral or repayment of the Obligations;
or
I. A transfer of a substantial part of Borrower's money or
property.
12. REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default, Bank, at
its option, may declare the Loan immediately due and payable as well as
invoke any or all other remedies provided in the Note, any Related Document
or by law. Bank is entitled to all rights and remedies provided at law or
equity whether or not expressly stated in this Agreement. By choosing any
remedy, Bank does not waive its right to an immediate use of any other
remedy if the event of default continues or occurs again.
13. NOTICE. All notices, requests, and demands under this Agreement shall be
given by regular United States mail, postage prepaid, or personal delivery,
at the address set forth above or such other address as the parties may
designate in writing.
14. GENERAL PROVISIONS.
A. TIME IS OF THE ESSENCE. Time is of the essence in Borrower's
performance of all duties and obligations imposed by this
Agreement.
B. NO WAIVER BY BANK. Bank's course of dealing, or Bank's
forbearance from, or delay in, the exercise of any of Bank's
rights, remedies, privileges or right to insist upon Borrower's
strict performance of any provisions contained in this
Agreement, or other loan documents, shall not be construed as a
waiver by Bank, unless any such waiver is in writing and is
signed by Bank.
C. AMENDMENT. The provisions contained in this Agreement may not be
amended, except through a written amendment which is signed by
Borrower and Bank.
D. INTEGRATION CLAUSE. This written Agreement and all documents
executed concurrently herewith, represent the entire
understanding between the parties as to the Obligations and may
not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties.
E. FURTHER ASSURANCES. Borrower agrees, upon request of Bank and
within the time Bank specifies, to provide any information, and
to execute, acknowledge, deliver and record or file such further
instruments or documents as may be required by Bank to secure
the Note or confirm any lien.
F. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of IOWA, provided that such laws are not otherwise
preempted by federal laws and regulations.
G. FORUM AND VENUE. In the event of litigation pertaining to this
Agreement, the exclusive forum, venue and place of jurisdiction
shall be in the State of IOWA, unless otherwise designated in
writing by Bank or otherwise required by law.
H. SUCCESSORS. This Agreement shall inure to the benefit of and
bind the heirs, personal representatives, successors and assigns
of the parties; provided however, that Borrower may not assign,
transfer or delegate any of the rights or obligations under this
Agreement.
I. NUMBER AND GENDER. Whenever used, the singular shall include the
plural, the plural the singular, and the use of any gender shall
be applicable to all genders.
J. DEFINITIONS. The terms used in this Agreement, if not defined
herein, shall have their meanings as defined in the other
documents executed contemporaneously, or in conjunction, with
this Agreement.
K. PARAGRAPH HEADINGS. The headings at the beginning of any
paragraph, or any subparagraph, in this Agreement are for
convenience only and shall not be dispositive in interpreting or
construing this Agreement.
L. IF HELD UNENFORCEABLE. If any provision of this Agreement shall
be held unenforceable or void, then such provision to the extent
not otherwise limited by law shall be severable from the
remaining provisions and shall in no way affect the
enforceability of the remaining provisions nor the validity of
this Agreement.
M. CHANGE IN APPLICATION. Borrower will notify Bank in writing
prior to any change in Borrower's name, address, or other
application information.
N. NOTICE. All notices under this Agreement must be in writing. Any
notice given by Bank to Borrower hereunder will be effective
upon personal delivery or 24 hours after mailing by first class
United States mail, postage prepaid, addressed to Borrower at
the address indicated below Borrower's name on page one of this
Agreement. Any notice given by Borrower to Bank hereunder will
be effective upon receipt by Bank at the address indicated below
Bank's name on page one of this Agreement. Such addresses may be
changed by written notice to the other party.
15. ACKNOWLEDGMENT OF RECEIPT OF THIS DOCUMENT. Borrower acknowledges that
Borrower has received a copy of, read and understood this Loan Agreement on
November 2, 1998, prior to consummation of the Loan.
IMPORTANT: READ BEFORE SIGNING.
THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE
ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE
LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT
ONLY BY ANOTHER WRITTEN AGREEMENT.
BORROWER:
TOP AIR MANUFACTURING, INC.
an Iowa corporation
[Corporate Seal*]
By: /s/ Xxxxx Xxxx
--------------------------------------
XXXXX XXXX, PRESIDENT
(*Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
[Corporate Seal*]
By: /s/ Xxxxx Xxxxxxxxxxx
-------------------------------------
XXXXX XXXXXXXXXXX, VICE PRESIDENT
(*Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
THIS IS THE LAST PAGE OF A 4 PAGE DOCUMENT. EXHIBITS AND/OR ADDENDA MAY FOLLOW.
Please see attached "Exhibit A"
Addendum to Loan Agreement dated 11-2-1998
Top Air Manufacturing, Inc.
The following additional terms will apply to loans to Top Air Manufacturing:
A penalty fee for prepayment of the $4,500,000 fixed rate loan would apply if
the loan was refinanced by another lending institution.
o In years 1 through 3 the penalty would be 3% of the outstanding balance.
o In years 4 and 5 a penalty of 2% of the outstanding balance would apply.
o In years 6 and 7 the penalty would be 1% of the outstanding balance.
Use of the revolving feature of the loan, in the ordinary course of business,
would not constitute a penalty for repayment.
All loans to Top Air are to be cross collateralized and a borrowing base
utilized allowing a value of 50% of inventory (excluding work in process) and
75% of eligible accounts receivable (defined as those with an aging of 90 days
or less). Monthly borrowing base certificates are to be submitted to the bank
within 30 days of month end.
The following covenants will apply to all loans:
o The company is to maintain a Minimum working capital requirement of
$5,000,000 at all times.
o The company is to maintain a Current ratio at Fiscal year end of 2.25 or
more.
o The company is to maintain a Minimum tangible net worth requirement at
Fiscal year end of not less than $5,000,000.
o The company is to maintain a Leverage ratio at Fiscal year end of not
greater than 1.25.
o The company is to maintain an annual debt service coverage ratio in excess
of 1.25 times coverage.
o Annual capital expenditures for the company are not to exceed $250,000
(excluding the current $1,000,000 building expansion).
o Financial statement requirements -- Bank to receive monthly internally
prepared balance sheet and income statements within 45 days of month end.
Annual audited statements prepared by a CPA to be submitted within 120 days
of Fiscal year end.
o All deposit accounts are to be maintained at Mercantile Bank.
