AGREEMENT
This Agreement is made this 28th day of January, 2000, by and between
MERCANTILE BANK MIDWEST ("Bank"), TOP AIR MANUFACTURING, INC., an Iowa
corporation, ("Top Air"), XXXXXX INDUSTRIES, INC., an Iowa corporation,
("Xxxxxx"), and XXXXXX ACQUISITION SUB, INC., an Iowa corporation, ("Xxxxxx
Sub").
RECITALS
WHEREAS, Top Air and Bank entered into a November 2, 1998, Loan
Agreement, which was modified by a March 4, 1999, Modification Agreement,
(collectively, the "Loan Agreement"); and
WHEREAS, Top Air borrowed money pursuant to said Loan Agreement
evidenced by promissory note No. 254839 dated March 4, 1999, as extended by a
written Loan Extension Agreement dated November 10, 1999 (collectively, the
"Note"); and
WHEREAS, the Note is secured by certain assets of Top Air and certain
assets of Top Air's subsidiaries, Xxxxxx and Xxxxxx Sub; and
WHEREAS, Top Air is in default under the terms of the Note and Loan
Agreement, but Bank has agreed, notwithstanding such default, to forbear
exercising its rights and remedies under the Note and Loan Agreement, provided
Top Air, Xxxxxx and Xxxxxx Sub perform all the terms and conditions of this
Agreement as hereinafter set forth;
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
1. Simultaneously with the execution of this Agreement, Top Air shall
execute and deliver to Bank an Overadvance Line of Credit Promissory Note and a
Line of Credit Promissory Note, (collectively, the "New Notes"), copies of which
are attached hereto as Exhibits "A" and "B" respectively. The New Notes shall
replace Top Air's indebtedness under the Note, but all the terms and conditions
of the Note and Loan Agreement, except as modified in the New Notes and in this
Agreement, shall continue in full force and effect, and Bank shall continue to
be entitled to all of the rights, remedies, benefits and security provided under
the Loan Agreement and Note. The aggregate balance of all principal amounts
advanced under the New Notes shall never exceed the sum of Six Million and
00/100 Dollars ($6,000,000.00).
2. The New Notes shall be payable according to the terms thereof, but
shall be due and payable in full, in any event, on April 18, 2000.
3. Effective with the Borrowing Base Certificate due February 1, 2000,
for the period ending December 31, 1999, there shall be excluded from "eligible
accounts receivable" the total customer balance (100%) for any account with
respect to which twenty-five percent (25%) or more of the balance is over ninety
(90) days past due. Except to the extent otherwise provided herein, none of the
accounts receivable purchased by Top Air and/or Xxxxxx Sub from DWZM, Inc.
and/or Owosso Corporation pursuant to an Asset Purchase Agreement dated as of
March 3, 1999 (the "Owosso Receivables") shall be included in the Borrowing Base
Certificate. The "total customer balance" for any account shall include all
amounts owed by the customer with respect to purchases from Top Air, plus all
amounts owed by the customer that make up part of the Owosso Receivables. Any
payments received by Top Air with respect to the Owosso Receivables may be
applied either to Top Air's obligations to Bank, or to Top Air's obligations to
DWZM, Inc. and/or Owosso Corporation under the Asset Purchase Agreement dated as
of March 3, 1999 (the "Owosso Debt"). In no event shall any payments received by
Top Air from receivables other than the Owosso Receivables be applied to any of
the Owosso Debt. In addition, within ten (10) days after the execution of this
Agreement, Top Air shall provide to Bank a complete and current listing of all
of its accounts receivable, including, but not limited to, all accounts
receivable purchased by Top Air and/or Xxxxxx Sub from DWZM, Inc. and/or Owosso
Corporation pursuant to an Asset Purchase Agreement dated as of March 3, 1999.
Top Air's "eligible accounts receivable" for purposes of its Borrowing Base
Certificate shall not include any accounts that are not identified on such
listing, or on such future listings as Top Air shall provide to Bank. All
monthly financial information that Top Air is required to provide to Bank under
the terms of the Note and Loan Agreement shall be provided within thirty (30)
days after the end of each calendar month, effective December 3 1, 1999.
4. Simultaneously with the execution of this Agreement, Top Air shall
provide Bank with a file-stamped copy of a UCC-3 Termination Statement with
respect to UCC-1 Financing Statement #K666812 filed with the Iowa Secretary of
State of July 31, 1995, and a file-stamped copy of a UCC-3 Termination Statement
with respect to UCC-1 Financing Statement #K989290 filed with the Iowa Secretary
of State on February 5, 1999. For as long as Top Air has any outstanding
obligation to Bank, Top Air shall not grant or permit the placing of any lien
against any of the property securing Top Air's obligations to Bank, and shall
not pay any amount to any creditor holding a lien against any such property,
without Bank's prior written consent.
5. Top Air, as further security for its obligations to Bank, hereby
grants Bank a security interest in, and assigns to Bank, all of Top Air's right
to receive 20.5% of the proceeds of the sale of the real property at 000 Xxxxxxx
Xxxx Xxxx, Xxxxx Xxxxx, Xxxx 00000 (the "Real Property"). The Real Property is
currently owned by the City of Cedar Falls, Iowa, subject to Top Air's right to
receive 20.5% of the proceeds of the sale of the Real Property if the Real
Property is sold.
6. From and after the execution of this Agreement, Top Air shall comply
with all of the Affirmative Covenants and Negative Covenants provided in the
Note and Loan Agreement as though fully set forth herein. Top Air acknowledges
and agrees that it is currently in default of such Covenants under the Note and
Loan Agreement. Notwithstanding such default, Bank agrees that it will take no
action against Top Air as a result of such default, provided Top Air complies
with all the terms and conditions of this Agreement, and Top Air does not cause,
permit or allow any further defaults with respect to such Covenants from and
after the execution of this Agreement.
7. Top Air represents, guaranties and warrants to Bank that:
A. Top Air is an Iowa corporation authorized to do business in
the State of Iowa and in each state where it may be doing business and
has full power and authority to execute and deliver this Agreement and
all documents incident thereto;
B. Top Air is duly incorporated and validly existing and in good
standing in the State of Iowa, and in each jurisdiction where Top Air
conducts business;
C. This Agreement, and all documents incident thereto, will
constitute legal, valid, and binding agreements and are enforceable
against Top Air and all other parties thereto;
D. Top Air has good and marketable title to its assets, and
enjoys peaceful and undisturbed possession under all leases under which
Top Air now operates;
E. Top Air is complying with all applicable federal or state
labor laws, including but not limited to the Federal Fair Labor
Standards Act;
F. Top Air has complied with all federal, state and local tax
laws, licensing laws and permit laws;
G. Top Air is not in violation of other federal laws or state
laws, including but not limit to, ERISA (Employee Retirement Income
Security Act) or RICO (Racketeer Influenced and Corrupt Organizations);
H. Top Air 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 Top Air, the violation of which would have an adverse
effect on the value of or Bank's interest in any of the property
securing Top Air's obligations to Bank, or would have a materially
adverse effect on Top Air's financial condition, business or conduct of
its business;
I. Top Air is not a party to, nor is Top Air bound by, any
agreement that materially or adversely affects Top Air's business,
properties, assets or operations;
J. There are no outstanding claims or rights that would conflict
with the execution, delivery or performance by Top Air of the terms of
this Agreement or the documents incident thereto, or that would cause a
lien to be placed on any of the property securing Top Air's obligations
to Bank, except those, if any, disclosed to and agreed to by Bank in
writing;
K. All financial statements, books, records, documents, and
instruments submitted by Top Air to Bank in connection with the Loan
Agreement, Note, and this Agreement are accurate and complete, and
there has been no material adverse change in the financial condition of
Top Air as shown by such statements, books, records, documents or
instruments;
L. Top Air is solvent, able to pay its debts as they mature, and
has sufficient capital to carry on its business and all businesses in
which Top Air is or will be engaged. Top Air's total assets, at a
present, fair market value, are greater than the amount of Top Air's
total obligations. Top Air will not be rendered insolvent by the
execution of this Agreement or the documents incident thereto;
M. There are no proceedings pending or threatened before any
court or administrative agency which will or could have a materially
adverse effect upon the financial condition or operations of Top Air;
N. All representations, warranties, statements guaranties and
covenants contained in the Loan agreement, Note or this Agreement or
any documents incident thereto, shall survive the execution of such
documents.
8. To induce Bank to enter this Agreement, Top Air:
A. Warrants that it has no existing defenses or right of offset
against the Note, Loan Agreement or any other document executed in
connection therewith;
B. Reaffirms all of its obligations under the Loan Agreement and
Note and any other documents executed in connection therewith;
C. Warrants that since the Note and Loan Agreement were signed by
Top Air, the ownership of the property securing the Note has not been
altered nor has any lien or claim been filed or threatened to be filed
against the property securing Top Air's obligations to Bank;
D. For itself, its successors and assigns, hereby irrevocably and
unconditionally releases and forever discharges Bank, its employees,
officers, attorneys, representatives and assigns from any and all
claims and defenses with respect to the Note, Loan Agreement and any
other documents executed in connection therewith that have been or
could be asserted against Bank as of the date of this Agreement.
9. Each party is executing this Agreement solely in reliance upon their
own knowledge, belief and judgment and not upon the representations made by any
other party or others on their behalf.
10. This Agreement shall be binding upon and inure to the benefit of
and shall be enforceable by the parties hereto, their respective personal
representatives, heirs, administrators, successors and assigns.
11. Except as modified by this Agreement and the New Notes, all of the
terms and conditions of the Note and Loan Agreement remain unchanged and in full
force and effect.
12. No delay or failure by Bank to exercise any right under this
Agreement, and no partial or single exercise of that right, shall constitute a
waiver of that or any other right, unless otherwise express provided by Bank.
13. Top Air acknowledges receiving a copy of this Agreement.
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IMPORTANT: READ BEFORE SIGNING.
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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.
TOP AIR MANUFACTURING, INC. MERCANTILE BANK MIDWEST
By: /s/ Xxxxxx X. Xxxx, Pres. By:
------------------------------- ---------------------------------
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxx, Pres.
------------------------------
XXXXXX ACQUISITION SUB, INC.
By: /s/ Xxxxxx X. Xxxx, Pres.
------------------------------
OVERADVANCE LINE OF CREDIT PROMISSORY NOTE
Maximum Line of Credit: $1,000,000.00 January 28, 0000
Xxxxx Xxxxxx, Xxxx
FOR VALUE RECEIVED, Top Air Manufacturing, Inc., an Iowa Corporation
(the "Borrower"), hereby promises to pay Mercantile Bank Midwest (the "Bank"),
at 000 Xxxxxx Xxxxxx X.X., Xxxxx Xxxxxx, Xxxx 00000, the aggregate unpaid
principal balance of all extensions of credit made by the Bank to the Borrower
up to the Maximum Line of Credit available to Borrower under this Note pursuant
to the Loan Agreement by and between Borrower and Bank dated November 2, 1998,
as modified by a written Modification Agreement on March 4, 1999, and as further
modified by a written Agreement dated January 28, 2000, between the Bank and the
Borrower (collectively, the "Agreement"), together with interest from the date
hereof on the unpaid principal balance from time to time outstanding (the
"Balance"), in lawful money of the United States of America in immediately
available funds as required by the terms of the Agreement. This Note shall
mature on April 18, 2000, and Borrower shall repay in full not later than such
maturity date the Balance, together with all interest and charges accrued
thereon and unpaid as of such date.
The Balance shall bear interest at a rate per annum equal to the Bank's
floating Prime Rate as established from time to time, plus 3%, payable monthly
in arrears on the first day of each month commencing February 1, 2000, and at
maturity. Each change in the rate of interest hereon shall be effective on the
date of the corresponding change in the Prime Rate. In no event shall the rate
stated herein, either prior to or after default, exceed the maximum rate
permitted by law for transactions of this type.
The Balance shall be paid by Borrower in installments of $208,000 on or
before January 31, 2000, $208,000.00 on or before February 29, 2000, $208,000.00
on or before March 31, 2000, and the entire remaining Balance on or before April
18, 2000.
This Note, along with a Line of Credit Promissory Note executed of even
date herewith, replaces a portion of Borrower's indebtedness under the Agreement
evidenced by promissory note No. 254839 dated March 4, 1999, as extended by a
written Loan Extension Agreement dated November 10, 1999, (collectively, the
"Note"). Except as otherwise provided herein, all the terms and conditions of
the Note and Agreement continue in full force and effect, and the Bank continues
to be entitled to all of the rights, remedies, benefits and security provided
under the Agreement and Note. The Borrower may, at its option, at any time
prepay all or any portion of the Balance. Borrower hereby waives any requirement
of presentment, demand, notice, and diligence in bringing suit.
This Note shall be governed by and construed in accordance with the
laws of the State of Iowa.
TOP AIR MANUFACTURING, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Xxxxxx X. Xxxx, President
LINE OF CREDIT PROMISSORY NOTE
Maximum Line of Credit: $5,000,000.00 January 28, 0000
Xxxxx Xxxxxx, Xxxx
FOR VALUE RECEIVED, Top Air Manufacturing, Inc., an Iowa Corporation
(the "Borrower"), hereby promises to pay Mercantile Bank Midwest (the "Bank"),
at 000 Xxxxxx Xxxxxx X.X., Xxxxx Xxxxxx, Xxxx 00000, the aggregate unpaid
principal balance of all extensions of credit made by the Bank to the Borrower
up to the Maximum Line of Credit available to Borrower under this Note pursuant
to the Loan Agreement by and between Borrower and Bank dated November 2, 1998,
as modified by a written Modification Agreement on March 4, 1999, and as further
modified by a written Agreement dated January 28, 2000, between the Bank and the
Borrower (collectively, the "Agreement"), together with interest from the date
hereof on the unpaid principal balance from time to time outstanding (the
"Balance"), in lawful money of the United States of America in immediately
available funds as required by the terms of the Agreement. This Note shall
mature on April 18, 2000, and Borrower shall repay in full not later than such
maturity date the Balance, together with all interest and charges accrued
thereon and unpaid as of such date.
The Balance shall bear interest at a rate per annum equal to the Bank's
floating Prime Rate as established from time to time, plus 1/4 %, and shall be
payable in accordance with the terms of the Agreement, provided that the entire
Balance and all accrued interest shall mature and be due and payable in full on
April 18, 2000. Each change in the rate of interest hereon shall be effective on
the date of the corresponding change in the Prime Rate. in no event shall the
rate stated herein, either prior to or after default, exceed the maximum rate
permitted by law for transactions of this type.
This Note, along with an Overadvance Line of Credit Promissory Note
executed of even date herewith, replaces a portion of Borrower's indebtedness
under the Agreement evidenced by promissory note No. 254839 dated March 4, 1999,
as extended by a written Loan Extension Agreement dated November 10, 1999,
(collectively, the "Note"). Except as otherwise provided herein, all the terms
and conditions of the Note and Agreement continue in full force and effect, and
the Bank continues to be entitled to all of the rights, remedies, benefits and
security provided under the Agreement and Note. The Borrower may, at its option,
at any time, prepay all or any portion of the Balance, without premium or
penalty, all subject to and in accordance with the provisions hereof and of the
Agreement. Borrower hereby waives any requirement of presentment, demand,
notice, and diligence in bringing suit.
This Note shall be governed by and construed in accordance with the
laws of the State of Iowa.
TOP AIR MANUFACTURING, INC.
By: /s/ Xxxxxx X. Xxxx
-------------------------------------
Xxxxxx X. Xxxx, President
