MODIFICATION AGREEMENT
to a Loan Agreement dated November 2, 1998
MERCANTILE BANK MIDWEST
--------------------------------------------------------------------------------
1. DATE and PARTIES. The date of this Modification Agreement (Agreement) is
March 4, 1999, 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. An increase in the revolving draw loan (First Loan) for a new
principal amount of $6,000,000.00 (increase from $4,000,000.00).
The loan shall be evidenced by a promissory note, No. 254839
(First Note) dated March 4, 1999 and executed by Borrower
payable to the order of Bank and all extensions, renewals,
modifications, or substitutions thereof.
B. A new term loan (Third Loan) in the principal amount of
$3,500,000. The loan shall be evidenced by a promissory note No.
________________ (Third Note) dated March 4, 1999 and executed
by Borrower payable to the order of Bank and all extensions,
renewals, modifications, or substitutions thereof.
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 modifications to
the loan covenants outlined in the Addendum to Loan Agreement dated
November 2, 1998 and executed by Borrower on November 9, 1998:
A. The Borrower is to maintain a Minimum Working Capital position
of $8,500,000 at all times. Working Capital is measured by
Current Assets less Current Liabilities as reported on Borrowers
Monthly Financial Statements prepared according to generally
accepted accounting principals (GAAP).
B. The Borrower is to maintain a Tangible Net Worth of not less
than $6,000,000 as reported by Annual Audited Financial
Statements.
C. The Borrower's Leverage Ratio shall not exceed 2.35x at FYE 1999
and 1.75X each FYE thereafter. Leverage is measured by Total
Liabilities divided by Net Worth as reported by Annual Audited
Financial Statements.
D. Certified Monthly Borrowing Base Certificates shall be provided
in form and according to Exhibit A attached. The term Fixed
Assets shall mean the net book value of property and equipment
as reported on Monthly Financial Statements prepared according
to GAAP. Loans outstanding shall mean all principal amounts owed
Bank and OWOSSO Corporation.
4. CONTINUATION OF ALL OTHER TERMS AND CONDITIONS. This Agreement shall
operate as a modification only and shall relate back to the execution and
delivery of the original Loan Agreement. By permitting this modification
Bank is not agreeing to permit other modifications in the future. This
modification does not constitute a satisfaction of the Loans. All other
terms and conditions of this Loan contained in the loan documents not
specifically referred to and modified herein continue in full force and
effect, and Borrower hereby ratifies and confirms the security, priority
and enforceability of each document securing the Loan.
5. RECEIPT OF COPY. Borrower acknowledges receiving a copy of this Agreement.
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
By: /s/ Xxxxx Xxxx
---------------------------------------
Xxxxx Xxxx, President
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------
Xxxxxx X. Xxxxxx,
Executive Vice President
