SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[x] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934. For the fiscal year ended May 31, 1999.
[ ] Transition Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from _____________ to
______________.
Commission file number 1-13679
TOP AIR MANUFACTURING, INC.
(Name of Small Business Issuer in its Charter)
Iowa 42-1155462
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
317 Savannah Park Road, Cedar Falls, Iowa 50613
(Address of Principal Executive Offices) (Zip Code)
(319) 268-0473
(Issuer's Telephone Number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class: Name of each exchange on which registered:
Common Stock, No Par Value The American Stock Exchange
Securities registered under Section 12(g) of the Act: None
Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The Issuer's revenues for its most recent fiscal year are $12,295,853.
The aggregate market value of the voting stock held by non-affiliates was
approximately $1,740,616 as of August 23, 1999 (The exclusion from such amount
of the market value of the shares owned by any person shall not be deemed an
admission by the Issuer that such person is an affiliate of the Issuer.) The
Issuer had 4,968,957 shares of common stock, no par value, outstanding as of
August 23, 1999.
Portions of the definitive proxy statement of the Issuer for the Issuer's 1999
annual meeting of shareholders, which definitive proxy statement will be filed
with the Securities and Exchange Commission not later than September 28, 1999
(120 days after the end of the Issuer's most recently completed fiscal year),
are hereby incorporated by reference into Items 9, 10, 11 and 12 of Part III
hereof.
Transitional Small Business Disclosure Format Yes [ ] No [X].
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TABLE OF CONTENTS
PART I
Page
ITEM 1. Description of Business 3
ITEM 2. Description of Property 7
ITEM 3. Legal Proceedings 7
ITEM 4. Submission of Matters to a Vote of
Security Holders 8
PART II
ITEM 5. Market for Common Equity and Related
Stockholder Matters 8
ITEM 6. Management's Discussion and Analysis or
Plan of Operation 9
ITEM 7. Financial Statements 13
ITEM 8. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure 13
PART III
ITEM 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act 14
ITEM 10. Executive Compensation 14
ITEM 11. Security Ownership of Certain Beneficial Owners
and Management 14
ITEM 12. Certain Relationships and Related Transactions 14
ITEM 13. Exhibits and Reports on Form 8-K 14
SIGNATURES
INDEX TO EXHIBITS
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The information contained in this Form 10-KSB includes statements regarding
matters that are not historical facts (including statements as to the beliefs or
expectations of the Company) which are forward-looking statements within the
meaning of the federal securities laws. Because such forward-looking statements
include risks and uncertainties, the Company's actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, those discussed in the
sections captioned "Description of Business," "Management's Discussion and
Analysis or Plan of Operation" and those factors discussed in Exhibit 99.
PART I
Item 1 - Description of Business
General
Top Air Manufacturing, Inc. (hereinafter referred to as "Top Air" or
the "Company") was incorporated under the laws of the State of Iowa in
1981. Top Air is engaged in the business of manufacturing several
products used primarily in agricultural operations, including several
types of agricultural sprayers, liquid manure handling equipment, grain
carts and wagons, weigh wagons, milking parlors, seed conveyors,
feeding and forage equipment and a line of attachments and replacement
parts for all of the products that the Company manufactures. The
Company currently manufactures its products in two facilities, one in
Cedar Falls, Iowa and the other in Jefferson, Iowa.
Acquisitions
On March 5, 1999, the Company acquired substantially all of the assets
of Parker Industries, a division of Owosso Corporation ("Parker
Industries") in exchange for a cash payment of $3,500,000, a
non-interest bearing note for $3,500,000 due February 15, 2001 and the
assumption of current liabilities in the amount of $500,000. The
Company effected this transaction through its wholly-owned subsidiary,
Parker Industries, Inc., organized for purposes of the transaction,
pursuant to an Asset Purchase Agreement dated March 3, 1999. Prior to
the transaction, Parker Industries was a manufacturer of grain carts
and wagons and bulk grain handling equipment for nearly 40 years. The
Company currently intends to continue the business of Parker Industries
in substantially the same manner as it was conducted before the
completion of the transaction.
In January 1997, Top Air indirectly acquired all of the assets of
Ficklin Machine Co., Inc. ("Ficklin Machine") by purchasing all of
Ficklin Machine's capital stock in exchange for 1,150,000 shares of Top
Air's no par value common stock.
Business of Issuer
Principal Products and Markets
Sprayers. The Company currently manufactures several types of
agricultural sprayers including skid mount, two-wheel models,
three-wheel models, saddle tank models, home lawn models, trailer
sprayers, tandem wheel sprayers, T-Tank sprayers, Master Link sprayers,
and models which can be mounted in the bed of a pickup truck. The
sprayers are sold in sizes ranging in capacity from 14 to 1,100
gallons. The Company also offers various accessories for the sprayers
including several models of folding and self-leveling booms in various
lengths and designs.
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The sprayers are used primarily for farming activities. They can be
pulled directly by a tractor or they can be hooked to a disc so that
their combined functions allow the farmer to eliminate one trip over
the ground. The sprayers are used for spraying jobs of all types,
including the spraying of chemicals, fertilizers, insecticides and weed
killers. They are used by farmers and commercial sprayers primarily for
row crops, but can also be used on other crops, golf courses,
cemeteries, etc. The wheels may be adjusted to compensate for difficult
row crop widths. Trees and shrubs may be sprayed by a hand gun
attachment to the sprayers.
Manure Handling Equipment. This product group consists of a line of
tanks ranging in size from 2,600 gallons to 6,000 gallons, which are
either trailer mounted or truck mounted and are used to transport
animal manure from a storage pit or a storage lagoon to a farm field.
The manure is then spread on top of the ground or injected several
inches under the surface as a fertilizer which is very cost effective
as opposed to the purchase of a commercial substitute. In addition to
the tanks, this product group includes several types of pumps to
agitate the storage pit or storage lagoon and subsequently load the
tank.
Grain Carts and Wagons. The Company manufactures a wide variety of
agricultural grain handling equipment, including side and center
unloading (gravity) wagons, ranging in size from 190 to 720 bushel
capacity, and grain carts equipped with integral, folding augers, which
range in size from 400 to 1,000 bushel capacity. The grain wagons
consist of two basic units, the grain box and the wagon running gear,
which can be sold together or separately. Grain carts are most commonly
sold as complete units with large floatation tires.
Grain carts are used in the farm fields during the harvest season to
transport grain from the combine to nearby roads where the grain is
transferred from the cart to trucks or grain wagons for transport to
storage facilities. Carts are favored for use in the field because they
help speed up the harvest process and can be pulled across wet fields
in which trucks often get stuck. Grain wagons can also be used during
spring planting as seed tenders for grain drills and planters.
Weigh Wagons. Calibrated weigh wagons are used in the seed industry to
measure grain weight at various estimated grain moisture levels. Weigh
wagons are invaluable harvest tools that provide growers with a number
of benefits when checking yields during fall harvest. Weigh wagons help
growers confirm seed purchase decisions. Growers use weigh wagons to
weigh and measure product performance in their fields to ensure they
have chosen the right hybrids or varieties for their farms. Weigh wagon
data helps growers make future cropping decisions. Late each fall, most
seed companies publish and distribute weight wagon data to area
growers. The information allows these growers to see how products
performed across their region and helps them make decisions for the
following year. The standard capacity of a weigh wagon is 150 bushels
and optional 12" side extensions will increase capacity to 200 bushels.
An optional bulk seed attachment allows weigh wagons to be used during
spring as a method of delivering bulk seed to the growers.
Seed Conveyor. The Company believes that the trend in agriculture is
away from handling seed in bags and toward bulk handling. Because seed
is very sensitive to cracking and breaking which reduces germination,
the traditional auger elevator or chain type conveyor is less desirable
in seed handling. The seed conveyor utilizes a poly vinyl type of belt
with rubber cleats vulcanized to the belt which substantially reduces
damage to the seed. The seed conveyor is available in either a six-inch
or twelve-inch width. The six-inch wide conveyor is normally mounted on
a gravity box or a grain drill while the twelve-inch wide unit is
mounted on a trailer for mobility.
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Milking Parlors. Dairy farmers who remodel or build new facilities
normally install a milking parlor or expand the existing milking
parlor. The milking parlor substantially reduces the time required to
complete the milking process because more cows can be milked with fewer
man hours. Although the Company manufactures several types of milking
parlors, the most popular type is the rapid exit 90 degree parlor.
Feeding and Forage. Feeding and forage equipment consists of belt
feeders, belt conveyors and silo unloaders. These products are normally
used in a configuration to convey and feed chopped hay or corn silage
along with other ingredients to dairy cows or beef cattle. These
products are normally found in a small to medium size farm operations.
Replacement Parts and Attachments. The Company stocks a full line of
repair parts and attachments to fit all of the products that it
manufactures. The Company distributes these parts to retailers and
utilizes them in its own manufacturing processes. The Company has
actively promoted these parts and has established itself as a major
supplier in the replacement parts market.
Other Products. The Company also custom manufactures products for other
firms on a contract basis. Traditionally, these have been limited
production runs of new designs.
Method of Distribution
The Company has eight salesmen and twenty-seven manufacturers'
representatives calling upon dealers and distributors in seventeen
states and Canada. The Company's efforts are ongoing to continue
expanding its sales territory into additional states and to further
enhance market penetration in the current marketing areas. The Company
is selling its products primarily to implement dealers, farm supply
stores and feed stores located primarily in lesser populated
agricultural areas for resale to farmers, tradesmen and to the general
public for commercial and individual use.
Seasonal Factors
In fiscal 1999, approximately 50% (excluding incremental sales of
Parker Industries during the last 3 months of the period) of the
Company's sales occurred during the last six months of the year,
compared to approximately 60% of sales for the same period in fiscal
1998. This decrease in the seasonality of sales is primarily a result
of the acquisition of Ficklin Machine. Ficklin Machine's strongest
shipping months are August through September whereas Top Air's heaviest
shipping months are typically December through May.
Competitive Conditions
The Company competes with a large number of other agricultural
equipment manufacturers and suppliers. The Company believes, however,
that its products are considered sufficiently different so that the
Company can establish and maintain a market for its products. In
addition, the Company offers a full line of sprayer products, liquid
manure handling equipment, grain wagons and carts, milking parlors and
feeding and forage equipment that add to the Company's ability to
penetrate the market. The Company offers various dating and billing
programs that allow the Company's dealers incentive to stock larger
quantities of products without the necessity to commit financial
resources several months in advance. This also allows the Company to
plan its production on a more consistent basis.
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Major Customers
The Company's customer base is sufficiently broad so that no customer
accounts for 10% or more of the Company's sales.
Backlog Orders
The Company had a sales backlog of approximately $1,300,000 as of May
31, 1999 compared to an $800,000 sales backlog as of May 31, 1998. The
May 31, 1999 backlog consists mainly of grain carts and wagons
scheduled for summer delivery. See "Seasonal Factors."
Source and Availability of Raw Materials
The Company purchases its raw materials from a number of suppliers. The
Company has had no difficulty in obtaining component parts in the past
and does not anticipate any difficulty in obtaining sufficient
component parts and raw materials as production increases.
Patents and Trademarks
The Company has received a design patent on the three-wheel sprayer,
the master-link sprayer and the self-leveling boom, and has trademark
registrations for Top-Air(R) and E-Z Boy(R). The Company also sells a
line of agricultural spreaders under the registered trade name of
"Better-Bilt." The acquisition of Parker Industries included design
patents for grain carts equipped with hydraulically driven discharge
augers and drag augers, seed carts with loading/unloading conveyor
systems and trademark registrations for Parker(R) and a stylized letter
P. While the Company believes that its patents and trademarks have
significant value, the Company is not dependent upon patents,
trademarks, service marks or copyrights.
Environmental Compliance
The Company believes that it is presently in substantial compliance
with all existing applicable environmental laws and does not anticipate
that such compliance will have a material effect on its future capital
expenditures, earnings or competitive position.
Employees
On May 31, 1999, the Company's plant and executive offices employed 125
people on a full-time basis. Six of these employees are executive
officers and the remainder are sales representatives, office staff,
production workers and truck drivers. Forty full-time production
workers are currently covered under a collective bargaining agreement
with Local 1728 of the IAMAW, which runs through June 30, 2001.
Research and Development
Research and development costs incurred for the years ended May 31,
1999, 1998 and 1997 were $591,839, $486,985 and $448,350, respectively.
Research and development activities consist primarily of wages paid for
the design and testing of new equipment and improvements to existing
equipment.
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Item 2 - Description of Property
The Company's operations are located in Cedar Falls, Iowa, Jefferson, Iowa and
Onarga, Illinois. The Cedar Falls location is the Company's headquarters and
consists of an 112,000 square foot building (the "Cedar Falls Facility") that
was completed in November 1996. The Cedar Falls Facility is located in an
industrial park on thirteen acres of land and includes approximately 7,000
square feet of executive office space and an aggregate of approximately 95,000
square feet devoted to manufacturing, assembly, and warehousing functions. The
Company leases the Cedar Falls Facility from the City of Cedar Falls, Iowa (the
"City"). The lease term runs through 2006 and the City holds a five-year renewal
option. In the event that the City exercises such option, the Company shall have
the right to purchase the Cedar Falls Facility from the City for $1.3 million
upon the expiration of the five year renewal term. The Company completed a
27,000 square foot expansion at a cost of approximately $1,000,000 during April
1999 pursuant to a Development Agreement with the City. Under the Development
Agreement, the Company received four acres of land at no cost and will be
entitled to 20.5% of the sale proceeds from the disposition of the Cedar Falls
Facility in the event such facility is sold prior to November 2011.
In connection with its acquisition of Parker Industries, the Company entered
into a lease for a production facility in Jefferson, Iowa (the "Jefferson
Facility") on March 5, 1999. The Jefferson Facility, which is located on 10.8
acres of land, consists of two buildings totaling 60,000 square feet.
Approximately 1,500 square feet is used for administrative offices with the
remainder used for manufacturing, engineering and warehousing. The Company is
leasing the Jefferson Facility from Greene County Development Corporation for a
term of ten years. Throughout the lease term, the Company has the option to
purchase the Jefferson Facility. The purchase price is $750,000 during the first
two years of the lease and declines to $539,175 in year seven. The purchase
price during the remaining three years of the lease is at appraised value.
The Company is the owner of its Onarga, Illinois location, which consists of
four buildings totaling 41,300 square feet on eight and one-half acres (the
"Onarga Facility"). The Onarga Facility includes approximately 925 square feet
of office space, 15,750 square feet of manufacturing space and 24,625 square
feet of warehouse space. The Company relocated all production from the Onarga
Facility to the Cedar Falls Facility on June 25, 1999 and is in the process of
selling the land, buildings and machinery at this location. The Company accrued
a loss of $100,000 for year-end May 31, 1999 for the sale of these assets.
The Company believes that all of its facilities are adequately insured and are
adequate to meet the needs for which they are used.
Additional information regarding the Company's properties is included in "Note
11 - Lease Commitments" of the notes to financial statements.
Item 3 - Legal Proceedings
There are no material legal proceedings pending to which the Company is a party
or of which any of its property is the subject. No proceedings were terminated
during the fourth quarter of the fiscal year covered by this Report.
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Item 4 - Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
PART II
Item 5 - Market for Common Equity and Related Stockholder Matters
Market Information
On December 8, 1997, Top Air's common stock was approved for listing on
The American Stock Exchange under the symbol "TPC". Prior thereto, the
Company's common stock was quoted on the Nasdaq SmallCap Market.
The table below lists the high and low bid prices or sales prices, as
applicable, for each quarterly period during the years ended May 31,
1999 and 1998. The high and low bid prices from June 1, 1997 through
December 7, 1997 were provided by the Nasdaq SmallCap Market, and the
high and low sales prices from December 8, 1997 through May 31, 1999
were provided by The American Stock Exchange.
Sales Price Range Bid/Sales Price Range
Fiscal 1999 Fiscal 1998
----------------- ---------------------
High Low High Low
---- --- ---- ---
1st Quarter $2.6250 $1.6875 $2.9375 $1.5000
2nd Quarter 1.8750 1.1875 3.1250 2.2500
3rd Quarter 1.4375 .8750 2.9375 2.3750
4th Quarter 2.1250 .7500 2.7500 2.4375
The Nasdaq SmallCap Market quotations, bid prices prior to December 7,
1997, reflect interdealer prices, without retail markup, markdown or
commission and may not necessarily represent actual transactions.
Stockholders
As of May 31, 1999 the Company had approximately 800 holders of record
of the Company's common stock.
Dividends
The holders of common shares are entitled to receive dividends when, as
and if declared by the Board of Directors. Except for certain
provisions in the Company's loan agreement with Mercantile Bank
Midwest, which require the bank's prior approval for a dividend to be
paid and the maintenance of certain working capital and tangible equity
levels, there are no agreements that restrict dividend payments. The
Company has never paid a cash dividend. Because the Company currently
intends to retain any earnings to finance the development of its
business, it does not anticipate payment of any cash dividends in the
foreseeable future.
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Recent Sales of Unregistered Stock
In January 1997, the Company issued 1,150,000 shares of common stock to
Wayne W. Whalen in connection with the Company's acquisition of Ficklin
Machine in a transaction exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.
Also in January 1997, the Company issued to Gregory Wilson a ten year
option to purchase 50,000 shares of the Company's common stock at a
price of $1.375 per share in a transaction exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933. The option was
granted as partial consideration in connection with certain services
that Mr. Wilson rendered to the Company. The Company believes that the
total value of the consideration paid was commensurate with the value
of the services the Company received. The option is immediately
exercisable and includes conditional registration rights.
Item 6 - Management's Discussion and Analysis or Plan of Operation
Overview
The past year has been a difficult period for most farm equipment
manufacturers. Historically low grain prices have adversely affected
farming income which the Company believes has caused farmers to
postpone purchases of equipment in their operations. Although the
Company's sales and earnings have been negatively impacted by the
current condition of the agricultural economy, the Company believes the
actions taken by it during these recessionary times and discussed below
will improve the Company's strength and profitability in the future.
The Company believes the agriculture industry will improve in the
long-term and intends to position itself as a key manufacturer of the
best shortline equipment in the industry.
Results Of Operations
Fiscal 1999 Compared to Fiscal 1998
Net sales decreased $4,266,608 to $12,295,853 in fiscal year 1999 which
represents a 26% decrease from fiscal 1998 net sales of $16,562,461.
The sales decrease is a result of the current farm recession that began
in the spring of 1998. Sales were lower for virtually all product lines
but were offset by $1,690,069 of incremental sales of Parker Industries
since the acquisition date of March 5, 1999. Although the Company does
not believe the general outlook for the farm economy will improve
during the upcoming year, the Company does anticipate an increase in
sales for fiscal 2000 as a result of the acquisition of Parker
Industries. The Company is also increasing its volume of subcontract
work for other companies in order to increase plant utilization.
The Company's gross margin decreased to $2,170,203 in fiscal 1999, a
decrease of 60%. This decrease was primarily a result of the
significant reduction in sales. Gross margin as a percentage of net
sales decreased to 17.6% in fiscal 1999 from 32.9% in 1998. This
decrease in margin is a result of the lower net sales volume absorbing
fixed costs that were intended to support significantly higher sales
volumes. The Company is continuing its efforts to control and reduce
costs through various means, including temporary plant shutdowns
planned for both the Cedar Falls Facility and the Jefferson Facility
and the permanent closing of the Onarga Facility on June 25, 1999. All
of the Onarga Facility production has been moved to the Cedar Falls
Facility and the Company is in the process of selling the land,
buildings and machinery at the Onarga Facility. The Company believes
that the closing of the Onarga Facility will reduce manufacturing
overhead and operating expenses by approximately $300,000 annually.
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Operating expenses increased $55,690 to $3,586,115 in fiscal 1999,
which was a 2% increase from $3,530,425 in 1998. The increase was due
to incremental expenses of $250,000 associated with the acquisition of
Parker Industries for the last three months of the year and a $100,000
loss accrued for the sale of the Onarga Facility, offset by a $330,000
decrease in sales expenses related to the lower volume of sales.
Operating expenses as a percentage of net sales increased to 29.2% in
fiscal 1999 compared to 21.3% in fiscal 1998.
Interest expense increased $180,261 to $550,852 in fiscal 1999 which
was a 48.6% increase from $370,591 in fiscal 1998. The increase was due
to higher levels of short-term and long-term debt necessary to finance
the operation of Parker Industries and the completion of the 27,000
square foot expansion of the Cedar Falls Facility. Interest expense as
a percentage of net sales increased to 4.5% in fiscal year 1999 from
2.2% in fiscal 1998.
Income tax expense decreased $1,226,842 to a credit of $665,843 in
fiscal 1999 which was a 219% decrease from $560,999 expense in fiscal
1998. The decrease was a result of the loss for fiscal 1999.
Net income decreased $2,275,874 to a loss of $1,275,867 in fiscal 1999
which was a 228% decrease from net income of $1,000,007 in 1998. Net
income as a percentage of net sales decreased to (10.4%) in fiscal 1999
from 6.0% in fiscal 1998.
Fiscal 1998 Compared to Fiscal 1997
Net sales increased $2,760,195 to $16,562,461 in fiscal year 1998 which
represents a 20% increase over fiscal 1997 net sales of $13,802,266.
The increase resulted primarily from strong sales of spraying
equipment, grain wagons and grain carts. Increases in these product
groups were accomplished through continued geographic expansion of the
Company's dealer network, coupled with incremental sales of Ficklin
Machine for a full twelve months during fiscal 1998. The increases
offset a decline in the net sales of manure handling equipment, which
were negatively affected by low livestock prices throughout the year.
The Company's gross margin increased to $5,441,660 in fiscal 1998 from
$4,566,239 in fiscal 1997, an increase of 19%. This increase was
primarily due to increased sales volume. Gross margin as a percentage
of net sales decreased to 32.9% in fiscal 1998 from 33.1% in 1997. The
decrease in margin resulted from a higher percentage of consolidated
net sales coming from the Ficklin Machine product line, which typically
carries a slightly lower margin. However, gross margins of the Ficklin
Machine product line were improved for fiscal 1998 through planned
product mix changes at that facility. As a result, the consolidated
gross margin percentage for fiscal 1998 was somewhat higher than
originally anticipated.
Operating expenses increased $469,496 to $3,530,425 in fiscal 1998
which was a 15% increase from $3,060,929 in 1997. The increase was due
to incremental expenses associated with the first full year of
operation at the Onarga Facility and general expenses relating to the
higher level of business. Operating expenses as a percentage of net
sales continued its downward trend to 21.3% in fiscal 1998 compared to
22.2% in fiscal 1997.
Interest expense increased $185,543 to $370,591 in fiscal 1998 which
was a 100% increase from $185,048 in fiscal 1997. The increase was due
to higher levels of short-term and long-term debt necessary to finance
the operation of Ficklin Machine and the purchase of new production
machinery for the Cedar Falls Facility. Interest expense as a
percentage of net sales increased to 2.2% in fiscal 1998 from 1.3% in
fiscal 1997.
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Income tax expense increased $78,724 to $560,999 in fiscal 1998 which
was a 16.3% increase from $482,275 in fiscal 1997. The increase was a
result of higher earnings.
Net income increased $142,631 to $1,000,007 in fiscal 1998 which was a
16.6% increase from $857,376 in 1997. Net income as a percentage of net
sales decreased to 6.0% in fiscal 1998 from 6.2% in fiscal 1997.
Liquidity
Due to the seasonality of the period of use for the Company's products,
it is necessary for the Company to build inventories ahead and finance
accounts receivable for extended terms. As a result, the Company's need
for working capital continues to increase as sales grow.
The Company has used a combination of cash generated from operations
and short-term bank loans to fund working capital requirements. The
same combination is intended to be used to fund fiscal 2000
requirements. The Company believes it has access to sufficient working
capital for its present and foreseeable needs and anticipates borrowing
funds seasonally, as the need arises, consistent with its past
practices.
As of May 31, 1999, the Company had a $6,000,000 line of credit from a
bank pursuant to a credit and security agreement originally dated March
4, 1999 which expires November 10, 1999 and bears interest at the prime
rate less .5% (7.25% as of May 31, 1999). As of May 31, 1999, there was
$2,382,000 outstanding under the Company's line of credit.
The Company's working capital on May 31, 1999 was $8,515,944 compared
to $5,697,623 in fiscal 1998 and $5,140,589 in fiscal 1997. Working
capital increased primarily as a result of current assets being funded
by long-term borrowings associated with the acquisition of Parker
Industries. The current ratio decreased to 2.07:1 in fiscal 1999 from
2.48:1 in fiscal 1998 and 2.90:1 in fiscal 1997.
Net cash used in operations for fiscal 1999 was $588,573, a decrease of
$75,132 from the net cash used in fiscal 1998 of $663,705. The decrease
was primarily a result of reductions in inventory and current trade
receivables, offset by the loss for the year.
Net cash used in investing activities during fiscal 1999 was
$5,016,756, an increase of $4,035,718 from the net cash used in fiscal
1998 of $981,038. The increase was primarily a result of additional
investment in the building expansion and production machinery and
equipment and the acquisition of Parker Industries.
Net cash provided by financing activities in fiscal 1999 was
$5,658,340, an increase of $4,271,969 from net cash provided by
financing activities in fiscal 1998 of $1,386,371. The increase was due
to increased long-term borrowings as a result of the loss for the year
and to fund the building expansion, the purchase of production
machinery and equipment and the acquisition of Parker Industries.
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Capital Resources
In April 1999, the Company completed a 27,000 square foot expansion to
its Cedar Falls Facility. The total cost of the expansion was
approximately $1,000,000 and long-term debt was used to finance it. The
expansion has enabled the Company to move all of the Ficklin Machine
production from the Onarga Facility to the Cedar Falls Facility.
The Company anticipates no other significant outlays for property and equipment
in the near future.
Year 2000 Readiness Disclosure
The Company has developed a Year 2000 Plan to assess the Company's vulnerability
to system failures that may arise from the Millenium change and potentially
could impact the Company adversely. These threats have been identified, and
priorities have been established to address these risks, based on the financial
threat or seriousness of the implications. The project's primary emphasis has
been to look at the risks with the most severe financial implication first, and
then to address these critical problems. The Company believes its review and
identification process has been comprehensive, specifically including:
Vendors/Suppliers, including Utility Services;
Central Accounting System;
Office Systems;
Building Systems;
Factory Machinery and Equipment;
Transportation Equipment;
Engineering Systems; and
Customer Relations.
The Company believes that all mission critical risks have been reviewed or
identified and resolved. The Company has been advised that its main computer
hardware and software systems will continue to function through the Millenium
change. The Company believes its other equipment will not be adversely affected
by the Millenium change or other factors mitigate against such risks. Written
verification of certain non-critical subsystems are expected to be received in
the near future. Utilities that service the Company are unable to provide
absolute assurances on Year 2000 reliability. Each believes that their own
equipment is reliable, but can make no further assurances. The Company is
developing contingency plans to address such possibilities. To date, the Company
has met all major deadlines set by its Year 2000 Plan, and the Company
anticipates addressing all of the identified risks well before the Millenium
change.
The Company believes the implementation of the final aspects of its Year 2000
Plan, and the actions and costs required to prepare all remaining Company
systems for the Millenium change will not have a material impact on its
business, operations or financial condition.
12
<PAGE>
Based upon the actions taken by the Company and the information it has received
to date, the Company does not believe that the Millenium change will materially
affect its customers and vendors and the Company does believe that its
contingency plans, if required to be implemented, will be successful.
Item 7 - Financial Statements
The financial statements of the Company are included herein as a separate
section of this Report which begins on page F-1.
Item 8 - Changes In and Disagreements with Accountants
On Accounting and Financial Disclosure
Not Applicable.
13
<PAGE>
PART III
Items 9, 10, 11 and 12
The information called for by Items 9, 10, 11 and 12 is incorporated by
reference to the definitive proxy statement for the 1999 Annual Meeting of
Shareholders of the Company (which involves the election of Directors), which
definitive proxy statement will be filed with the Securities and Exchange
Commission (the "Commission") not later than September 28, 1999 (120 days after
the end of the Company's most recently completed fiscal year).
Item 13 - Exhibits and Reports on Form 8-K
(a) Exhibits
See Index to Exhibits of this Report.
(b) Reports on Form 8-K
A report on Form 8-K, dated March 8, 1999, was filed with the
Commission on March 9, 1999, disclosing the acquisition of Parker
Industries.
A report on Form 8-K/A-2 dated May 20, 1999 was filed with the
Commission on May 21, 1999, to provide the historical and pro forma
financial statements and exhibits required by Item 7 thereof with
respect to the acquisition of Parker Industries. The following
financial information was included with such report:
(a) Financial Statements of Business Acquired.
(i) Report of Independent Auditors.
(ii) Balance Sheets of DWZM, Inc., d/b/a Parker Industries, as
of January 31, 1999 (unaudited) and October 25, 1998 (audited).
(iii) Statements of Income, Retained Earnings (Deficit) and
Cash Flows of DWZM, Inc., d/b/a Parker Industries for the three months
ended January 31, 1999 and January 31, 1998 (unaudited) and for the
years ended October 25, 1998 and October 26, 1997 (audited).
(b) Pro forma Financial Information.
(i) Unaudited Pro Forma Combined Condensed Balance Sheet of
the Company as of February 28, 1999, including notes thereto.
(ii) Unaudited Pro Forma Combined Condensed Statement of
Operations of the Company for the fiscal year ended May 31, 1998 and
for the nine months ended February 28, 1999, including notes thereto.
14
<PAGE>
TOP AIR MANUFACTURING, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT
MAY 31, 1999
CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated balance sheets F-2
Consolidated statements of operations F-4
Consolidated statements of stockholders' equity F-5
Consolidated statements of cash flows F-6
Notes to financial statements F-8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Top Air Manufacturing, Inc.
Cedar Falls, Iowa
We have audited the accompanying consolidated balance sheets of Top Air
Manufacturing, Inc. and subsidiaries as of May 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years ended May 31, 1999, 1998 and 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Top Air
Manufacturing, Inc. and subsidiaries as of May 31, 1999 and 1998, and the
results of their operations and their cash flows for the years ended May 31,
1999, 1998 and 1997 in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, L.L.P.
Waterloo, Iowa
July 23, 1999
F-1
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
May 31, 1999 and 1998
ASSETS (Note 3) 1999 1998
- --------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 58,157 $ 5,146
Trade receivables, less allowances
for doubtful accounts and discounts
1999 $628,000; 1998 $395,000 7,341,602 4,211,004
Income tax refund receivable 520,000 --
Current portion of long-term notes
receivable (Note 4) 161,315 25,934
Inventories (Note 2) 8,211,251 5,167,744
Prepaid expenses 116,956 140,918
Deferred income taxes (Note 5) 68,200 3,000
----------------------------------
Total current assets 16,477,481 9,553,746
----------------------------------
Long-Term Receivables, Intangibles
and Other Assets
Notes receivable, net of current
portion (Note 4) 126,782 286,598
Assets held for sale (Note 10) 187,150 --
Deferred income taxes (Note 5) 214,500 6,500
Goodwill (Note 10) 983,159 1,060,969
Other assets 33,572 57,182
----------------------------------
1,545,163 1,411,249
----------------------------------
Property and Equipment
Land and improvements 222,699 81,637
Buildings 655,944 357,183
Machinery and equipment 3,061,189 2,418,500
Transportation equipment 654,926 530,281
Office equipment 508,456 411,088
----------------------------------
5,103,214 3,798,689
Less accumulated depreciation 1,403,788 1,122,423
----------------------------------
3,699,426 2,676,266
----------------------------------
$ 21,722,070 $ 13,641,261
==================================
See Notes to Financial Statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Current Liabilities
Notes payable (Note 3) $ 2,382,000 $ 1,620,000
Current maturities of long-term debt (Note 3) 3,726,245 455,087
Accounts payable 722,699 1,004,707
Accrued salaries and bonuses, including amounts
due to officers 1999 none; 1998 $75,400 228,240 299,601
Accrued commissions payable 377,086 245,311
Other accrued expenses, including amounts due to
officers and related party 1999 and 1998 $6,000 389,926 176,225
Income taxes payable (Note 5) 135,341 55,192
-----------------------------------
Total current liabilities 7,961,537 3,856,123
-----------------------------------
Long-Term Liabilities
Long-term debt (Note 3) 7,655,969 2,323,567
Deferred revenue (Note 11) 120,000 --
-----------------------------------
7,775,969 2,323,567
-----------------------------------
Commitments (Notes 6 and 11)
Stockholders' Equity (Note 3)
Capital stock, common, no par value;
stated value $.0625 per share;
authorized 20,000,000 shares; issued 1999
5,170,099 shares; 1998 5,167,098 shares (Note 6) 323,131 322,944
Additional paid-in capital 2,903,324 2,900,688
Retained earnings 3,094,085 4,369,952
-----------------------------------
6,320,540 7,593,584
Less cost of common stock reacquired
for the treasury 1999 201,142 shares;
1998 83,642 shares 335,976 132,013
-----------------------------------
5,984,564 7,461,571
-----------------------------------
$ 21,722,070 $ 13,641,261
===================================
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended May 31, 1999, 1998 and 1997
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 12,295,853 $ 16,562,461 $ 13,802,266
Cost of goods sold 10,125,650 11,120,801 9,236,027
-----------------------------------------------------
Gross profit 2,170,203 5,441,660 4,566,239
-----------------------------------------------------
Operating expenses:
Selling 1,419,820 1,585,741 1,524,782
Provision for doubtful accounts (30,403) 47,208 (31,208)
Other general and administrative, including
amounts paid to related parties 1999,
1998 and 1997 $48,000 (Note 7) 2,196,698 1,897,476 1,567,355
-----------------------------------------------------
3,586,115 3,530,425 3,060,929
-----------------------------------------------------
Operating income (loss) (1,415,912) 1,911,235 1,505,310
-----------------------------------------------------
Financial income (expense):
Interest income 25,054 20,362 19,389
Interest expense (550,852) (370,591) (185,048)
-----------------------------------------------------
(525,798) (350,229) (165,659)
-----------------------------------------------------
Income (loss) before income taxes (1,941,710) 1,561,006 1,339,651
Federal and state income taxes (Note 5) (665,843) 560,999 482,275
-----------------------------------------------------
Net income (loss) $ (1,275,867) $ 1,000,007 $ 857,376
=====================================================
Earnings (loss) per share (Note 9):
Basic $ (0.25) $ 0.20 $ 0.19
=====================================================
Fully diluted $ (0.25) $ 0.19 $ 0.19
=====================================================
Weighted average shares (Note 9):
Basic 5,006,588 5,088,646 4,416,379
Fully diluted 5,006,588 5,249,873 4,504,445
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended May 31, 1999, 1998 and 1997
- -------------------------------------------------------------------------------------------------------------
Capital Additional
Stock, Paid-In Retained Treasury
Issued Capital Earnings Stock Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, May 31, 1996 $ 250,860 $ 1,388,730 $ 2,512,569 $ (19,691) $ 4,132,468
Net income -- -- 857,376 -- 857,376
Issuance of 1,150,000 shares
of common stock for the
purchase of Ficklin Machine
Co., Inc. (Note 10) 71,875 1,509,375 -- -- 1,581,250
Issuance of 1,000 shares of
common stock upon the
exercise of options 63 531 -- -- 594
---------------------------------------------------------------------------
Balance, May 31, 1997 322,798 2,898,636 3,369,945 (19,691) 6,571,688
Net income -- -- 1,000,007 -- 1,000,007
Purchase of 54,425 shares
of common stock for the
treasury -- -- -- (112,322) (112,322)
Issuance of 2,333 shares of
common stock upon the
exercise of options 146 2,052 -- -- 2,198
---------------------------------------------------------------------------
Balance, May 31, 1998 322,944 2,900,688 4,369,952 (132,013) 7,461,571
Net (loss) -- -- (1,275,867) -- (1,275,867)
Purchase of 117,500 shares
of common stock for the
treasury -- -- -- (203,963) (203,963)
Issuance of 3,001 shares of
common stock upon the
exercise of options 187 2,636 -- -- 2,823
---------------------------------------------------------------------------
Balance, May 31, 1999 $ 323,131 $ 2,903,324 $ 3,094,085 $ (335,976) $ 5,984,564
===========================================================================
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended May 31, 1999, 1998 and 1997
1999 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ (1,275,867) $ 1,000,007 $ 857,376
Adjustments to reconcile net income to
net cash (used in) operating activities:
Depreciation 482,777 409,457 331,021
Amortization 101,420 97,516 32,275
Deferred income taxes (273,200) 154,000 (87,000)
Allowance on disposal of assets held for
sale (Note 10) 100,000 -- --
(Gain) on sale of equipment -- (11,631) (79,921)
Change in assets and liabilities, net of the
effects of business acquisitions (Note 10):
(Increase) decrease in:
Trade receivables 631,485 (866,262) (1,500,679)
Income tax refund receivables (520,000) -- --
Inventories 759,753 (1,282,590) (41,043)
Prepaid expenses 27,450 (38,347) 50,630
Increase (decrease) in:
Accounts payable and accrued expenses (822,540) 110,768 (125,765)
Income taxes payable 80,149 (236,623) 227,045
Deferred revenue 120,000 -- --
----------------------------------------------------
Net cash (used in) operating activities (588,573) (663,705) (336,061)
----------------------------------------------------
Cash Flows From Investing Activities
Proceeds from sale of equipment -- 19,600 1,135,312
Purchase of property and equipment (1,518,399) (1,034,552) (996,927)
Acquisition of certain net assets of Parker
Industries (3,522,792) -- --
Payments received on long-term
notes and other receivable 24,435 34,613 148,149
Disbursements on notes receivable -- -- (193,000)
Increase in intangible and other assets -- (699) (40,472)
----------------------------------------------------
Net cash provided by (used in)
investing activities (5,016,756) (981,038) 53,062
----------------------------------------------------
Cash Flows from Financing Activities
Proceeds from short-term borrowings 9,889,699 8,712,400 7,049,000
Principal payments on short-term borrowings (9,535,274) (7,524,400) (6,617,000)
Proceeds from long-term borrowings 11,985,206 725,000 1,388,444
Principal payments on long-term borrowings (6,480,151) (416,505) (1,275,038)
Purchase of common stock for the treasury (203,963) (112,322) --
Proceeds from issuance of common stock 2,823 2,198 594
----------------------------------------------------
Net cash provided by
financing activities 5,658,340 1,386,371 546,000
----------------------------------------------------
(Continued)
F-6
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years Ended May 31, 1999, 1998 and 1997
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents $ 53,011 $ (258,372) $ 263,001
Cash and Cash Equivalents
Beginning 5,146 263,518 517
---------------------------------------------------
Ending $ 58,157 $ 5,146 $ 263,518
===================================================
Supplemental Disclosures of Cash Flow
Information
Cash payments for:
Interest $ 549,150 $ 363,444 $ 173,334
===================================================
Income taxes $ 47,195 $ 643,622 $ 344,029
===================================================
Supplemental Schedule of Noncash Investing
and Financing Activities
Deferred revenue on land received (Note 11) $ 120,000
=============
Acquisition of Parker Industries (Note 10):
Working capital acquired $ 6,754,184
Fair value of other assets acquired,
principally property and equipment 274,688
Long-term debt assumed (3,506,080)
-------------
$ 3,522,792
=============
Cash purchase price $ 3,522,792
=============
Acquisition of Ficklin Machine Co., Inc.
(Note 10):
Working capital acquired $ 1,075,457
Fair value of other assets acquired,
principally property and equipment 775,015
Goodwill 1,125,753
Long-term debt assumed (1,394,975)
-------------
$ 1,581,250
=============
Issuance of 1,150,000 shares of common stock $ 1,581,250
=============
See Notes to Financial Statements.
</TABLE>
F-7
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
Nature of business: The Company's operations consist of the design, manufacture
and sale of agricultural equipment and repair and replacement parts to dealers
located primarily in the midwestern states on credit terms that the Company
establishes for individual customers.
Significant accounting policies:
Principles of consolidation: The consolidated financial statements
include the accounts of the Company and its subsidiaries, Ficklin Machine
Co., Inc. and Parker Industries, Inc., which are wholly-owned. All
significant intercompany accounts and transactions have been eliminated.
Accounting estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash equivalents: For purposes of reporting cash flows, the
Company considers all money market funds and savings accounts to be cash
equivalents.
Inventories: Inventories are valued at the lower of cost (first-in,
first-out method) or market.
Assets held for sale: These assets are valued at the lower of cost or
fair market value minus estimated costs of disposal.
Property and equipment and depreciation: Property and equipment is
carried at cost. Depreciation on property and equipment is computed by
the straight-line method over the estimated useful lives of the assets.
Goodwill: Goodwill resulting from the Company's acquisition of Ficklin
Machine Co., Inc. is being amortized over 15 years using the
straight-line method and is periodically reviewed for impairment based
upon an assessment of future operations to ensure that they are
appropriately valued. Accumulated amortization on goodwill totaled
$178,245 and $103,195 at May 31, 1999 and 1998, respectively.
Deferred revenue: The fair market value of land contributed to the
Company by the City of Cedar Falls, Iowa has been accounted for as
deferred revenue and is being amortized to income over the estimated
useful life of the building constructed on the land. See Note 11.
Revenue recognition: Sales of all products are recognized as goods are
shipped.
F-8
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Income taxes: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences
and operating loss carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities
and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Research and development: Research and development costs are charged to
operations as they are incurred.
Stock options issued to employees: The Company has adopted the provisions
of SFAS No. 123, "Accounting for Stock-Based Compensation", which
establishes a fair value based method for the financial reporting of its
stock-based employee compensation plans. However, as allowed by the new
standard, the Company has elected to continue to measure compensation
using the intrinsic value based method as prescribed by Accounting
Principles Board Option No. 25, "Accounting for Stock Issued to
Employees." Under this method, compensation is measured as the difference
between the market value of the stock on the grant date, less the amount
required to be paid for the stock. The difference, if any, is charged to
expense over the periods of service.
Earnings (loss) per share: Basic earnings (loss) per share is computed by
dividing net income available to common stockholders by the weighted
average number of shares outstanding. In computing diluted earnings per
share, the dilutive effect of stock options during the periods presented
as well as the effect of contingently issuable shares also increase the
weighted average number of shares.
Fair value of financial instruments: The carrying amount of cash and cash
equivalents, trade receivables and accounts payable approximates fair
value because of the short maturity of these instruments. The carrying
amounts of notes receivable, current notes payable and long-term debt
approximate fair values because these instruments bear interest at
approximate current rates available to the Company for similar
instruments.
Recently issued accounting standards: In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. This statement must be adopted no
later than May 31, 2002, although earlier application is permitted. The
Company is currently evaluating the impact of adopting SFAS No. 133.
Note 2. Composition of Inventories
Inventories at May 31, 1999 and 1998 consisted of the following:
1999 1998
--------------------------------
Raw materials $ 1,239,815 $ 286,304
Work in process 830,326 383,516
Finished goods 6,141,110 4,497,924
--------------------------------
$ 8,211,251 $ 5,167,744
================================
F-9
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 3. Pledged Assets and Related Debt
The Company has a line of credit agreement with a bank which expires November
10, 1999, under which they may borrow up to $6,000,000 in current notes payable
based on a percentage of inventory, trade receivables and property and
equipment. Based on the levels of inventory, trade receivables and property and
equipment, the total amount available could be borrowed under this agreement at
May 31, 1999. The interest rate on advances under this agreement is the bank's
prime rate less .5% (effective rate of 7.25% at May 31, 1999). The Company has
borrowings on this line of $2,382,000 and $1,620,000 as of May 31, 1999 and
1998, respectively. (a)
<TABLE>
<CAPTION>
Long-term debt at May 31, 1999 and 1998 consisted of the following:
Amount Owed
---------------------------------
1999 1998
---------------------------------
<S> <C> <C>
Note payable, bank, due in monthly installments of $52,557,
including interest at 7.1%, through November 10, 2005. (a) $ 4,348,002 $ --
Note payable, bank, due in monthly installments of $42,067,
including interest at 7.75%, through March 10, 2004. (a) 3,464,816 --
Note payable, corporation, non interest bearing, due in monthly
installments equal to monthly collections of trade receivables
that were due to Parker Industries on March 5, 1999, the day
the Company acquired certain net assets of Parker Industries.
Minimum payments required under this agreement are
$1,796,745, $813,599 and $488,159 on November 15, 1999,
November 15, 2000 and February 15, 2001, respectively.
Collateralized by Parker Industries, Inc. trade receivables. 3,098,503 --
Note payable, State of Iowa, non-interest bearing, due in monthly
installments of $1,667 through July 31, 2004. Up to $200,000 of
this loan is forgiveable if certain employment goals are met on
June 30, 2002. Collateralized by substantially all assets of the
Company. 300,000 --
Contract payable, due in monthly installments of $2,625, including
interest at 7.75%, through March 10, 2004. Collateralized by three
semi tractors. 145,178 --
Notes payable, bank, paid during the year ended May 31, 1999. -- 2,690,458
Other 25,715 88,196
---------------------------------
11,382,214 2,778,654
Less current maturities 3,726,245 455,087
---------------------------------
$ 7,655,969 $ 2,323,567
=================================
<FN>
(a) These borrowings are collateralized by substantially all of the assets of
the Company. The agreements contain various restrictive covenants including,
among others, ones which require the Company to maintain a certain amount of
working capital, $6,000,000 of tangible equity and certain minimum financial
ratios. All covenants have been complied with or waived as of May 31, 1999.
</FN>
</TABLE>
F-10
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following is a schedule by years of the maturities of the long-term debt as
of May 31, 1999:
Year ending May 31:
2000 $ 3,726,245
2001 677,826
2002 713,684
2003 766,662
2004 823,357
Thereafter 4,674,440
--------------
$ 11,382,214
==============
Note 4. Notes Receivable
Notes receivable as of May 31, 1999 consist of the following:
To be received $2,500 monthly, including interest at 10%,
through March 1, 2000, with balance due at that date. $ 149,094
To be received $1,386 monthly, including interest at 8%,
through June 2009. 114,831
Stockholder, noninterest bearing, to be received in
three payments of $1,500 a year through January 2004. 24,172
---------------
288,097
Less current portion 161,315
---------------
$ 126,782
===============
Note 5. Income Taxes
Net deferred tax assets consist of the following components as of May 31, 1999
and 1998:
1999 1998
----------------------------
Deferred tax assets:
Trade receivables $ 6,000 $ 33,000
Accrued expenses 40,000 46,000
Net operating loss carryforward 419,000 128,000
Alternative minimum tax carryforward 30,000 --
Deductible goodwill of predecessor company 170,000 189,000
Property and equipment 37,000 --
Contracts payable -- 10,000
Inventory -- 28,000
----------------------------
702,000 434,000
----------------------------
Deferred tax liabilities:
Property and equipment 219,300 100,500
Inventory 114,000 210,000
Trade receivables 86,000 114,000
----------------------------
419,300 424,500
----------------------------
$ 282,700 $ 9,500
============================
F-11
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The deferred tax amounts mentioned above have been classified on the
accompanying balance sheets as of May 31, 1999 and 1998 as follows:
1999 1998
----------------------------
Current assets $ 68,200 $ 3,000
Noncurrent assets 214,500 6,500
----------------------------
$ 282,700 $ 9,500
============================
For income tax purposes, the Company has net operating loss carryforwards of
approximately $700,000 which may be used to affect future taxable income. These
loss carryforwards expire in 2019. In addition, the Company acquired operating
loss carryforwards in connection with the purchase of certain assets of Clay
Equipment Corporation in June 1995. Limitations imposed by current tax laws
limit the utilization of these acquired carryforwards to approximately $40,000
per year through 2009.
Income tax expense (benefit) is made up of the following components:
Year Ended May 31,
--------------------------------------------
1999 1998 1997
--------------------------------------------
Current tax expense (benefit):
Federal $ (344,918) $ 397,999 $ 506,827
State (47,725) 9,000 62,448
--------------------------------------------
(392,643) 406,999 569,275
Deferred tax expense (credit) (273,200) 154,000 (87,000)
--------------------------------------------
$ (665,843) $ 560,999 $ 482,275
============================================
<TABLE>
<CAPTION>
Total reported tax expense (benefit) applicable to the Company's operations
varies from the amount that would have resulted by applying the federal income
tax rate to income (loss) before income taxes for the following reasons:
Year Ended May 31,
---------------------------------------------
1999 1998 1997
---------------------------------------------
<S> <C> <C> <C>
Income tax expense (benefit) at
statutory federal income tax rate $ (679,599) $ 546,352 $ 468,878
State tax expense (benefit),
net of federal income tax benefit (31,021) 6,202 41,216
Benefit of income taxed at lower rates 19,417 (15,610) (13,397)
Other 25,360 24,055 (14,422)
---------------------------------------------
$ (665,843) $ 560,999 $ 482,275
=============================================
</TABLE>
F-12
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Stock-Based Compensation
At May 31, 1999, the Company has a stock-based compensation plan which is
described below. As permitted under generally accepted accounting principles,
grants under this plan are accounted for following APB Opinion No. 25 and
related interpretations. Accordingly, no compensation cost has been recognized
for grants under the plan. Had compensation cost for the stock based
compensation plan been determined based on the grant date fair values of the
awards (the method prescribed in SFAS No. 123), reported net income (loss) and
earnings (loss) per share would have been reduced to the pro forma amounts shown
below:
Year Ended May 31,
------------------------------------------
1999 1998 1997
------------------------------------------
Net income (loss)
As reported $(1,275,867) $ 1,000,007 $ 857,376
Pro forma (1,356,867) 940,007 830,376
Basic earnings (loss) per share
As reported (0.25) 0.20 0.19
Pro forma (0.26) 0.18 0.19
Fully diluted earnings (loss)
per share
As reported (0.25) 0.19 0.19
Pro forma (0.26) 0.18 0.18
The Company has a stock option plan adopted in 1993 which provides for the
issuance of a maximum of 425,000 shares of common stock to officers, directors
and key employees at a price per share of not less than 100% of the market price
at the date of grant. The options granted under this plan become exercisable
over three years.
In addition, the Company granted options to purchase 50,000 shares of common
stock of the Company to a non-employee in connection with the acquisition of
Ficklin Machine Co., Inc. See Note 10.
The fair value of each grant is estimated at the grant date using the
Black-Scholes option-pricing model with the following weighted-average
assumptions for grants:
Year Ended May 31,
-------------------------------------------------
1999 1998 1997
-------------------------------------------------
Risk free interest rate 5.04% 5.71% 6.35%
Expected life 10 years 10 years 10 years
Price volatility 46.2% 40.4% 29.6%
Expected dividends -- -- --
F-13
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table summarizes the options to purchase shares of the Company's
common stock:
Stock Options
---------------------------------
Weighted
Average
Exercise
Outstanding Price
--------------- ---------------
Balance at May 31, 1996 201,501 0.9332
Granted 116,000 1.3750
Exercised (1,000) 0.5938
Canceled (7,000) 1.1429
--------------- ---------------
Balance at May 31, 1997 309,501 1.0952
Granted 67,500 2.6875
Exercised (2,333) 0.9421
Canceled (5,667) 1.2831
--------------- ---------------
Balance at May 31, 1998 369,001 1.3846
Granted 88,500 1.0000
Exercised (3,001) 0.9409
Canceled (9,000) 1.5834
--------------- ---------------
Balance at May 31, 1999 445,500 1.3071
=============== ===============
Number of Options
------------------------------------------
1999 1998 1997
------------------------------------------
Exercisable, end of year 293,334 239,500 132,995
Weighted-average fair value
per option of options granted
during the year $ 0.65 $ 1.66 $ 0.78
Options are exercisable over varying periods ending on January 2009.
<TABLE>
<CAPTION>
A further summary of the fixed options outstanding at May 31, 1999 is as
follows:
Options Outstanding Options Exercisable
------------------------------------------- ----------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
- ------------------------------------------------------------------ ----------------------------
<S> <C> <C> <C> <C> <C>
0.5938 34,000 3.625 0.5938 34,000 0.5938
0.8438 36,000 4.625 0.8438 36,000 0.8438
0.7500 to 1.0000 54,500 5.578 0.8303 54,500 0.8303
1.2188 to 1.2813 56,000 6.584 1.2618 56,000 1.2618
1.3750 112,000 7.625 1.3750 91,336 1.3750
2.6875 64,500 8.660 2.6875 21,498 2.6875
1.0000 88,500 9.706 1.0000 -- --
------------------------------------------- ----------------------------
445,500 $ 7.259 $ 1.3071 293,334 $ 1.1926
=========================================== ============================
</TABLE>
F-14
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 7. Research and Development
Research and development costs included in the statements of income as part of
other general and administrative expenses totaled $591,839, $486,985 and
$448,350 for the years ended May 31, 1999, 1998 and 1997, respectively.
Note 8. Employee Benefit Plan
The Company has a 401(k) defined contribution plan covering substantially all
employees. The plan provides for a matching employer contribution based on the
employee's contributions up to 10% of compensation. Additional discretionary
contributions to the plan may also be made. Employer contributions for the years
ended May 31, 1999, 1998 and 1997 were $80,986, $52,569 and $40,444
respectively.
<TABLE>
<CAPTION>
Note 9. Earnings (loss) Per Share
Basic and diluted earnings (loss) per share are as follows:
Year Ended May 31,
-----------------------------------------------------
1999 1998 1997
-----------------------------------------------------
<S> <C> <C> <C>
Basic earnings (loss) per share:
Net income (loss) available to common
stockholders-basic $ (1,275,867) $ 1,000,007 $ 857,376
==================================================
Weighted average shares outstanding-basic 5,006,588 5,088,646 4,416,379
==================================================
Basic earnings (loss) per share $ (0.25) $ 0.20 $ 0.19
==================================================
Diluted earnings (loss) per share:
Net income available to
common stockholders-diluted $ (1,275,867) $ 1,000,007 $ 857,376
==================================================
Weighted average shares outstanding-basic 5,006,588 5,088,646 4,416,379
Effect of dilutive securities, employee
stock options -- 161,227 88,066
--------------------------------------------------
Weighted average shares outstanding-diluted 5,006,588 5,249,873 4,504,445
==================================================
Diluted earnings (loss) per share $ (0.25) $ 0.19 $ 0.19
==================================================
Antidilutive options excluded from above
calculations 445,500 67,500 --
==================================================
</TABLE>
F-15
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 10. Business Acquisitions and Subsequent Events
Parker Industries: On March 5, 1999 the Company formed a wholly owned subsidiary
which acquired certain net assets of Parker Industries ("Parker") of Jefferson,
Iowa in exchange for a cash payment of $3,522,792 and a non-interest bearing
note of $3,506,080.
Parker designs, manufactures and distributes grain wagons and carts and other
bulk seed equipment. The Company currently intends to continue the business of
Parker in substantially the same manner as conducted prior to the acquisition.
The acquisition has been accounted for by the purchase method and the results of
operations of Parker since the date of acquisition are included in the financial
statements.
Unaudited pro forma consolidated condensed financial statements for the years
ended May 31, 1999 and 1998 as though Parker had been acquired as of June 1,
1997 are as follows:
1999 1998
-------------------------------
Net sales $ 17,207,000 $ 30,849,000
Net income (loss) (2,296,000) 1,675,000
Earnings (loss) per share:
Basic (0.46) 0.33
Diluted (0.46) 0.32
Ficklin Machine Co., Inc.: On January 15, 1997 the Company acquired all of the
issued and outstanding stock of Ficklin Machine Co., Inc. ("Ficklin") of Onarga,
Illinois in exchange for 1,150,000 shares of the Company's no par value common
stock. As a result, Ficklin became a wholly-owned subsidiary of the Company.
Ficklin designs, manufactures and distributes grain wagons and carts and small
lawn and garden sprayers. The acquisition has been accounted for by the purchase
method and the results of operations of Ficklin since the date of acquisition
are included in the financial statements.
On June 25, 1999 the Company closed its Onarga, Illinois facility and began
moving production to its Cedar Falls, Iowa facility. The buildings, land and
improvements in Onarga have been classified as assets held for sale on the
accompanying balance sheet as of May 31, 1999 and have been reduced to their
estimated fair market values less costs of disposal.
Note 11. Lease Commitments
In connection with the acquisition of Parker, the Company entered into a 10 year
non cancelable agreement to lease a 60,000 square foot facility from the City of
Jefferson, Iowa ("Jefferson"). The lease requires 5 annual payments of $67,405
beginning March 5, 2002 and 3 annual payments of $175,000 beginning March 5,
2007 through March 5, 2009. Rent is being expensed by the straight-line method
over the term of the lease. In addition, the Company is required to pay all
property taxes, insurance and maintenance on the property. The Company has the
option to purchase the facility at any time for $750,000 in year one decreasing
to $539,175 in year seven and appraised value after that.
F-16
<PAGE>
TOP AIR MANUFACTURING, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company has entered into a 10 year noncancelable agreement to lease an
85,000 square foot facility from the City of Cedar Falls, Iowa ("City"). The
lease requires monthly payments of $16,722 plus insurance, utilities, and other
expenses to be paid by the Company. The City has the option to renew and extend
the lease for an additional 5 years at the end of the original lease term with
an increase in monthly rental not to exceed 3%. At the end of the lease
extension period, the Company has the option to purchase the facility for
approximately $1.3 million plus all reasonable costs and expenses incurred by
the City for the sale.
On July 13, 1998 the Company received a contribution of approximately 4 acres of
land from the City in exchange for an agreement to expand its current
manufacturing facilities. The Company completed the expansion of its Cedar Falls
facility at a cost of approximately $1,000,000 during 1999. As a part of this
agreement, in the event that the existing 85,000 square foot facility discussed
above is sold prior to the Company's right to exercise its purchase option, the
Company would receive 20.5% of the proceeds of the sale.
The total minimum rental commitment, under the above agreements, including
extension periods, at May 31, 1999 is approximately $3,362,000 which is due as
follows:
Year ending May:
2000 $ 200,000
2001 200,000
2002 267,400
2003 267,400
2004 267,400
Thereafter 2,159,800
---------------
$ 3,362,000
===============
Under these agreements, the Company incurred approximately $212,000, $200,000
and $143,000 in rent expense for the years ended May 31, 1999, 1998 and 1997,
respectively.
F-17
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized:
TOP AIR MANUFACTURING, INC.
Date: August 27, 1999
By /s/ Steven R. Lind
-------------------------------------
Steven R. Lind,
President and Chief Executive Officer
In accordance with the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Steven R. Lind President, Chief Executive August 27, 1999
- ---------------------------- Officer and Director
Steven R. Lind (Principal Executive Officer)
/s/ Steven F. Bahlmann Chief Accounting Officer August 27, 1999
- ---------------------------- (Principal Accounting
Steven F. Bahlmann Officer)
/s/ Wayne C. Dudley Director August 27, 1999
- ----------------------------
Wayne C. Dudley
/s/ Dennis W. Dudley Director August 27, 1999
- ----------------------------
Dennis W. Dudley
Director August ____, 1999
- ----------------------------
Robert J. Freeman
/s/ Franklin A. Jacobs Director August 27, 1999
- ----------------------------
Franklin A. Jacobs
/s/ S. Lee Kling Director August 27, 1999
- ----------------------------
S. Lee Kling
- ---------------------------- Director August ____, 1999
Sanford W. Weiss
/s/ Thaddeus P. Vannice, Sr. Director August 27, 1999
- ----------------------------
Thaddeus P. Vannice, Sr.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
*2(a) Share Exchange Agreement between Wayne W. Whalen and the Company
dated January 15, 1997 under which the Company acquired Ficklin
Machine Co., Inc., filed as Exhibit 2.1 to the Company's Form 8-K
dated January 24, 1997
*2(b) Asset Purchase Agreement by and among the Company, Parker
Acquisition Sub, Inc., Owosso Corporation and DWZM, Inc., dated as
of March 3, 1999, filed as Exhibit 2.1 to the Company's Form 8-K
dated March 8, 1999
*3(a) Amended and Restated Articles of Incorporation, filed as Exhibit
3(c) to the Company's Annual Report on Form 10-KSB for fiscal year
1991 (the "1991 Form 10-KSB")
*3(b) Amended and Restated By-laws, filed as Exhibit 3(d) to the 1991 Form
10-KSB
*3(c) Amendments to the Amended and Restated By-laws, effective October
21, 1992, filed as Exhibit 3(c) to the Company's Annual Report on
Form 10-KSB for fiscal year 1993 (the "1993 Form 10-KSB)
*9 Amended and Restated Voting Trust Agreement by and among Robert J.
Freeman and Dennis W. Dudley and their successors, dated September
15, 1992, filed as Exhibit 9 to the 1993 Form 10-KSB
*10(a) Promissory Note dated January 1, 1991, between the Company and Wayne
C. Dudley (the "Dudley Note"), filed as Exhibit 10(b) to the 1991
Form 10-KSB
*10(b) Letter Amendment, dated August 5, 1994, to the Dudley Note, filed as
Exhibit 10(c) to the Company's Annual Report on Form 10-KSB for
fiscal year 1994 (the "1994 Form 10-KSB")
**10(c)+ Employment Agreement between the Company and Steven R. Lind dated as
of November 6, 1992
**10(d)+ First Amendment to Employment Agreement between the Company and
Steven R. Lind dated as of October 19, 1994
*10(e)+ 1993 Stock Option Plan adopted by the Board of Directors November 6,
1992, filed as Exhibit 10(c) to the 1993 Form 10-KSB
*10(f)+ Summary Plan description for 401(k) plan adopted by the Board of
Directors on October 22, 1991, filed as Exhibit 28(b) to the
Company's Annual Report on Form 10-KSB for fiscal year 1992 (the
"1992 Form 10-KSB")
*10(g)+ First Amendment to 1993 Stock Option Plan dated October 1, 1995,
filed as Exhibit 10(h) to the Company's Annual Report on Form 10-KSB
for the fiscal year 1997 (the "1997 Form 10-KSB")
<PAGE>
*10(h)+ Second Amendment to 1993 Stock Option Plan dated March 4, 1997,
filed as Exhibit 10(i) to the 1997 Form 10-KSB
*10(i) Consulting Agreement dated December 12, 1996 between the Company and
Gregory Wilson, together with a Stock Option Agreement issued in
connection therewith, filed as Exhibit 10(j) to the 1997 Form 10-KSB
*10(j) Building lease dated April 17, 1995 between the Company and the City
of Cedar Falls, Iowa, filed as Exhibit 10(l) to the Company's Annual
Report on Form 10-KSB for the fiscal year 1998 (the "1998 Form
10-KSB")
*10(k) Developmental Agreement dated July 13, 1998 between the Company and
the City of Cedar Falls, Iowa, filed as Exhibit 10(m) to the 1998
Form 10-KSB
**10(l) Loan Agreement between the Company and Mercantile Bank Midwest,
dated November 2, 1998
**10(m) Modification Agreement to a Loan Agreement dated November 2, 1998
between the Company and Mercantile Bank Midwest, dated March 4,
1999.
**10(n) Promissory Note in the principal amount of $4,500,000 in favor of
Mercantile Bank Midwest, dated November 2, 1998
**10(o) Promissory Note in the principal amount of $3,500,000 in favor of
Mercantile Bank Midwest, dated March 4, 1999
**10(p) Promissory Note in the principal amount of $6,000,000 in favor of
Mercantile Bank Midwest, dated March 4, 1999
**10(q) Community Economic Betterment Account ("CEBA") Agreement by and
among the Iowa Department of Economic Development, City of Jefferson
and Parker Industries, Inc., dated as of February 18, 1999
**10(r) Promissory Note in the principal amount of $300,000 in favor of The
City of Jefferson, dated as of February 18, 1999, as part of the
Iowa Department of Economic Development CEBA Program
**10(s) Lease Agreement between the Company and Greene County Development
Corporation, dated as of March 5, 1999
**10(t) Promissory Note in favor of DWZM, Inc., dated March 5, 1999, issued
in connection with the acquisition of the assets of Parker
Industries
**10(u)+ Employment Agreement between the Company and Thaddeus P. Vannice,
Sr. dated January 15, 1997
**10(v)+ Employment Agreement between the Company and James R. Harken dated
as of October 19, 1998
<PAGE>
**10(w)+ Employment Agreement between the Company and Scott L. Wildeboer
dated as of October 19, 1998
**10(x)+ Employment Agreement between the Company and Steven F. Bahlmann
dated as of October 19, 1998
**10(y)+ Employment Agreement between the Company and Jerome M. Sechler dated
as of May 11, 1999
**11 Statement re Computation of Per Share Earnings
**21 List of Subsidiaries
**23 Consent of Accountants
**27 Financial Data Schedule (Filed in EDGAR version only)
**99 Cautionary Statement Identifying Important Factors that Could Cause
the Company's Actual Results to Differ from those Projected in
Forward-Looking Statements
- ----------------
* Incorporated by reference to the indicated documents or parts
thereof, previously filed with the Commission.
** Filed herewith.
+ Management contract or compensatory plan or arrangement.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 6th day of November, 1992, by and
between TOP AIR MANUFACTURING, INC., a corporation organized and existing under
the laws of the State of Iowa (hereinafter called "Employer"), and STEVEN R.
LIND, a resident of the State of Iowa (hereinafter called "Employee").
WHEREAS, Employer represents that it wishes to employ said Employee
under any and all terms set forth in this Agreement; and
WHEREAS, Employee represents and is willing to work diligently for said
Employer under any and all terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereto, it is agreed as follows:
1. EMPLOYMENT. Employer hereby employs Employee to assume the
responsibilities of President and Chief Operating Officer of Employer or such
other senior management responsibilities as the Board of Directors of Employer
(the "Board") may from time to time prescribe, and Employee hereby accepts
employment upon the terms and conditions hereinafter set forth. Employer and
Employee acknowledge and agree that Employee's senior management
responsibilities may apply to some or all of the operations or divisions of
Employer, as determined by the Board from time to time.
2. TERM. The term of this Agreement shall begin on November 6, 1992 and
shall extend until terminated by Employer pursuant to paragraph 10(a) or 10(b)
below, or until terminated by Employee pursuant to paragraph 10(c) below.
3. DUTIES. Employee agrees that during his period of employment he will
serve Employer on a full-time basis faithfully, diligently, confidently and to
the best of his ability, and shall perform all duties incident to the offices he
may hold from time to time, and all such further duties as may reasonably be
assigned to him from time to time by the Board pursuant to paragraph 1 hereof.
4. COMPENSATION. In full consideration of the services to be rendered
by Employee during the term of this Agreement, the Employer shall compensate him
as follows:
(a) He shall receive a fixed annual salary of $52,500 payable
semi-monthly.
(b) Employee shall be entitled to receive employee benefits
including, but not limited to, medical insurance, life insurance,
disability insurance, and pension benefits or similar plans or programs
now existing or hereafter established to the extent that he is eligible
under the general provisions of the applicable plans, provided however,
that the Board may increase or decrease these benefits as long a
Employee is not discriminated against.
5. EXTENT OF SERVICE. Employee shall devote his entire time, attention
and energies to the business of the Employer, and shall not, during the term of
this Agreement, be engaged in other business activities, whether or not such
business activities are pursued for gain, profit or other pecuniary advantage;
but this shall not be construed as preventing the Employee from investing his
assets in such form or manner as will not require any services on the part of
Employee in the operation of the affairs of the companies in which such
investments are made.
6. DISCLOSURE OF INFORMATION. Employee recognizes and acknowledges that
the financial or other affairs of the Employer, as they may exist from time to
time, are valuable, special and unique assets of the Employer, and Employee
agrees that he shall not, during or after the term of his employment, disclose
financial or other affairs of the Employer or any portion thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever except for any bona fide Employer business purpose designated and
approved by the Board.
7. DISCLOSURE OF TRADE SECRETS. Employee further recognizes and
acknowledges that the secret processes, procedures, list of customers, bidding
methods, all discoveries and inventions, together with all knowledge and
information which the Employee shall acquire during the term of this Agreement
affecting the business of the Employer, are valuable, special and unique assets
of the Employer, and Employee agrees that he shall not, during or after the term
of his employment, disclose said secret processes, procedures, list of
customers, bidding methods, any discoveries and inventions, together with any
knowledge and information which the Employee shall acquire during the term of
this Agreement affecting the business of the Employer, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
except for any bona fide Employer business purpose designated and approved by
the Board. The Employee further agrees not to divulge or publish or authorize
anyone else to divulge or publish during or after the term of this Agreement
knowledge of said secret processes, procedures, list of customers, bidding
methods, discoveries or inventions or any other confidential information
acquired in the course of his employment concerning the Employer's business.
8. RESTRICTIVE COVENANT - NON-COMPETITION. Employee agrees that on the
termination for any reason whatsoever of his employment with the Employer, he
will not, for a period of two (2) years from the date of such termination,
directly or indirectly engage in or own any part of any company engaged in the
same or similar competitive line of business carried on by the Employer or work,
on a full-time, part-time or consultant basis, for any corporation, partnership,
sole proprietorship or any other legal entity engaged in such business or
similar competitive line of business within any of the States of Iowa, Illinois,
Indiana or Minnesota, nor will he in any way directly or indirectly, attempt to
hire the Employer's employees or take away any of the Employer's business or
customers or destroy, injure or damage the goodwill of the Employer with its
customers.
Employee further agrees that in the event that the Employer, its
successors or assigns, shall bring any action for the enforcement of any or all
provisions of this covenant not to compete, and if the Court shall find on the
basis of the evidence introduced in said action that this paragraph 8 is
unreasonable then the Court shall make a finding as to what is reasonable and
shall enforce this Agreement by judgment or decree to the extent of such
finding.
9. OWNERSHIP OF INVENTIONS. Employee promises and agrees that he will
disclose fully and reveal promptly to Employer any and all inventions,
discoveries, processes, methods, designs, products and know-how, which Employee
may invent, discover, acquire or develop, either alone or in conjunction with
others, during Employee's employment by Employer (hereinafter collectively
referred to as "Discoveries"), where said Discoveries (i) relate to, or in any
way pertain to or are connected with the business of Employer, or (ii) were
developed at Employer's expense or on its premises, or (iii) resulted directly
or indirectly from such employment by Employer, or relate to articles or
products made, sold, used or bought by Employer, or (iv) were being considered
for design, development, sale, purchase or use by Employer during such
employment by Employer, and Employee further promises and agrees that said
Discoveries shall be the sole and exclusive property of Employer; and Employee,
whenever requested to do so by Employer, and without further compensation or
consideration shall properly execute any and all applications, assignments and
other instruments which Employer shall deem necessary in order to (a) apply for
and obtain, in the name of Employer, a patent, trademark or copyright for said
Discoveries, and (b) assign and convey to Employer the sole and exclusive right,
title and interest in and to said Discoveries, and any applications, patents,
trademarks or copyrights thereon. Employee hereby warrants, represents and
confirms that he neither holds nor has any interest in any patent, patent right,
patent application, trademark, trademark application, license agreement or
copyright related in any way to the business of Employer; and Employee further
agrees that any future application for any patent, patent right, trademark or
copyright for any of said Discoveries shall be made in the name of Employer.
Employee agrees that, in the event that subsequent to his employment,
his assistance is needed to secure, defend, or enforce any patent, trademark or
copyright, Employee will provide any such assistance and Employer will pay
reasonable compensation for his time at a rate to be negotiated.
Employee acknowledges that the restrictions contained in this paragraph
9 are reasonable and necessary in order to protect Employer's legitimate
business interests and any violation thereof would result in irreparable injury
to Employer. Employee further acknowledges and agrees that, in the event of any
violation hereof, Employer shall be authorized and entitled to seek, from any
court of competent jurisdiction, (i) preliminary and permanent injunctive
relief; (ii) an equitable accounting of all profits or benefits arising out of
the violation; and (iii) damages arising from the breach. Such rights or
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. The prevailing party in any such lawsuit shall
further be entitled to recover his reasonable attorneys, fees, court costs and
expenses.
Employer's failure to exercise a right hereunder in the event of a
breach by Employee of any term hereof shall not be construed as a waiver of such
breach or prevent Employer from thereafter enforcing strict compliance with any
and all terms of this Employment Agreement.
10. TERMINATION OF AGREEMENT.
(a) Employer may terminate this Agreement, effective on a date
designated in a written notice to Employee upon the occurrence of any
of the following:
(i) Failure or refusal of Employee to perform his duties
and obligations under this Agreement;
(ii) Death of Employee; or
(iii) Disability of Employee, defined as an inability to
perform his work for 45 consecutive days, or for 90 days
within any 12-month period; or
(iv) The commission by Employee of any felony or any
other act constituting fraud, embezzlement or misappropriation
of funds (civil or criminal).
In the event of a termination pursuant to this paragraph 10(a), compensation
shall be paid on a prorated basis through the date of termination, subject to
any rights of offset of Employer.
(b) Employer may terminate this Agreement for any reason not
specified in paragraph 10(a) hereof, effective on a date designated in
a written notice to Employee. In the event of a termination pursuant to
this paragraph 10(b), Employee's compensation shall be paid on a
prorated basis through the effective date of termination, subject to
any rights of offset of Employer; and in addition, Employee shall be
paid a termination payment equal to $26,250. Such termination payment
shall be subject to any rights of offset of Employer. Such termination
payment shall be paid in 12 equal, consecutive semi-monthly
installments. Termination payment installments shall be made, until
fully paid, on the same days following Employee's termination that
Employee would have otherwise received his regular semi-monthly salary
payments had he not been terminated.
(c) Employee may terminate this Agreement upon sixty (60)
days, prior written notice. In the event of a termination pursuant to
this paragraph 10(c), compensation shall be paid on a prorated basis
through the date of termination, subject to any rights of offset of
Employer.
11. WAIVER OF BREACH. The waiver by the Employer of the breach of any
provisions of this Agreement by Employee shall not operate or be construed as a
waiver of any subsequent breach by Employee.
12. APPLICABLE LAW. This Agreement and the validity of this provision
shall be construed under the laws of the State of Iowa.
13. ENTIRE AGREEMENT. This instrument constitutes the entire agreement
of the parties and supersedes and replaces all previous agreements, whether
written or oral, relating to the employment relationship of Employer and
Employee. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
14. SEPARABILITY OF PROVISIONS. In the event that any provision of this
Agreement is found by a Court to be void or unenforceable, the provision shall
be construed to be separable from the other provisions of this Agreement, which
shall retain full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TOP AIR MANUFACTURING, INC.
By: /s/ S. Lee Kling
------------------------------------
S. Lee Kling, Chairman of the Board
"Employer"
/s/ Steven R. Lind
-----------------------------------------
STEVEN R. LIND
"Employee"
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("First Amendment") is
entered into as of the 19th day of October, 1994, by and between TOP AIR
MANUFACTURING, INC., an Iowa corporation ("Employer"), and STEVEN R. LIND, a
resident of the State of Iowa ("Employee").
RECITALS:
A. Employer and Employee are parties to a certain Employment Agreement,
dated as of November 6, 1992 (the "Employment Agreement").
B. The Employment Agreement provides for the employment of Employee to
assume the responsibilities of President and Chief Operating Officer of
Employer, or such other senior management responsibilities as the Board of
Directors of Employer (the "Board") may prescribe, all on the terms and
conditions set forth in the Employment Agreement.
C. The parties desire to amend the Employment Agreement in certain
respects and to acknowledge certain actions previously taken by them related to
Employee's employment.
NOW THEREFORE, in consideration of the premises, the agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Employer and Employer agree as
follows:
1. The Employment Agreement is hereby amended by deleting paragraph
4(a) thereof in its entirety and substituting the following in lieu thereof:
(a) "He shall receive an initial fixed annual salary of
$52,500.00, payable semi-monthly. The Board may, by
appropriate Board action, increase, but not decrease,
Employee's fixed annual salary under this Agreement at any
time during the term of this Agreement."
2. The Employment Agreement is hereby further amended by deleting the
second sentence of paragraph 10(b) thereof in its entirety and substituting the
following in lieu thereof:
"In the event of a termination pursuant to this paragraph
10(b), Employee's compensation shall be paid on a prorated
basis through the effective date of termination, subject to
any rights of offset of Employer; and in addition, Employee
shall be paid a termination fee equal to 50% of Employee's
then current fixed annual salary under paragraph 4(a) hereof."
3. Employer and Employee acknowledge and agree that the Board has
increased Employee's fixed annual salary under the Employment Agreement on two
previous occasions, that Employee's fixed annual salary under the Employment
Agreement is currently $59,000.00, and that Employer and Employee have at all
times intended that such increases would not limit, terminate or modify any
provision of the Employment Agreement other than modify the fixed annual salary
of Employee under paragraph 4(a) of the Employment Agreement and modify the
amount of the termination payment under the second sentence of paragraph 10(b)
of the Employment Agreement.
4. As amended by this First Amendment, the Employment Agreement is
hereby ratified and affirmed and is in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the day and year first above written.
TOP AIR MANUFACTURING, INC.
By: /s/ S. Lee Kling
--------------------------------------
S. Lee Kling, Chairman of the Board
"Employer"
/s/ Steven R. Lind
------------------------------------------
Steven R. Lind
"Employee"
LOAN AGREEMENT
for a Loan from
MERCANTILE BANK MIDWEST
- --------------------------------------------------------------------------------
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
317 Savannah Park Rd.
Cedar Falls, Iowa 50613
Tax I.D. #42-1155462
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
425 Cedar Street
P.O. Box 88
Waterloo, Iowa 50704
Tax I.D. #42-0167390
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 wells 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.
<PAGE>
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/ Steve Lind
--------------------------------------
STEVE LIND, 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/ Cathy Rottinghaus
-------------------------------------
CATHY ROTTINGHAUS, 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"
<PAGE>
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.
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
317 Savannah Park Rd.
Cedar Falls, Iowa 50613
Tax I.D. #42-1155462
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
425 Cedar Street
P.O. Box 88
Waterloo, Iowa 50704
Tax I.D. #42-0167390
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/ Steve Lind
---------------------------------------
Steve Lind, President
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
By: /s/ Steven D. Brewer
---------------------------------------
Steven D. Brewer,
Executive Vice President
- --------------------------------------------------------------------------------
LOAN NO. LOAN NAME ACCOUNT NO. NOTE DATE RATE
TOP AIR MANUFACT. 11/02/98 7.1%
NOTE AMOUNT MATURITY INITIALS
$4,500,000.00 11/10/05 CR
(For Bank Purposes Only-AC)
PROMISSORY NOTE
(Business Purpose)
MERCANTILE BANK MIDWEST
- --------------------------------------------------------------------------------
1. DATE AND PARTIES. The date of this Promissory Note (Note) is November 2,
1998. This Note evidences a loan which includes all extensions, renewals,
modifications and substitutions (Loan). The parties to this Note and Loan
are:
BORROWER:
TOP AIR MANUFACTURING, INC.
an Iowa corporation
317 Savannah Park Rd.
Cedar Falls, Iowa 50613
Tax I.D. #42-1155462
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
425 Cedar Street
P.O. Box 88
Waterloo, Iowa 50704
Tax I.D. #42-0167390
2. PROMISE TO PAY. For value received, Borrower promises to pay to Bank's
order at its office at the above address, or such other place as Bank may
designate, the sum of $4,500,000.00 (Principal) or so much thereof as may,
from time to time, be advanced to Borrower hereunder plus interest from the
date of disbursement, on the unpaid principal balance at the rate of 7.1%
per annum (Contract Rate) until this Note matures or the obligation is
accelerated. After maturity or acceleration, the unpaid balance shall bear
interest at the rate specified in the paragraph in this Note entitled
"DEFAULT RATE OF INTEREST" until paid in full. The Loan and this Note are
limited to the maximum lawful amount of interest (Maximum Lawful Interest)
permitted under federal and state laws. If the interest accrued and
collected exceeds the Maximum Lawful Interest as of the time of collection,
such excess shall be applied to reduce the principal amount outstanding,
unless otherwise required by law. If or when no principal amount is
outstanding, any excess interest shall be refunded to Borrower according to
the actuarial method. Interest shall be computed on the basis of the actual
calendar year and the actual number of days elapsed.
This is a revolving draw Note and all advances made in connection with this
Loan shall be at the sole discretion of Bank. However, the amount of
advances under this Note that are outstanding and unpaid shall never exceed
the Principal. Interest shall accrue only on the amount of outstanding
Principal that is drawn and unpaid.
Principal and accrued interest are due and payable in 84 equal monthly
payments of $52,556.96 on the 10th day of each month, beginning December
10, 1998, or the day following if the payment day is a holiday or is a
non-business day for Bank. Unless paid prior to maturity, all other unpaid
principal, accrued interest, costs and expenses are due and payable on
November 10, 2005, which is the date of maturity. These payment amounts are
based upon timely payment of each installment. All amounts shall be paid in
legal U.S. currency. Any payment made with a check will constitute payment
only when collected. These payment amounts are based upon timely payment of
each installment. All amounts shall be paid in legal U.S. currency. Any
payment made with a check will constitute payment only when collected.
3. EFFECT OF PREPAYMENT. Borrower may prepay this Loan in full, subject to any
prepayment penalty or minimum charge as agreed to below. However, no
partial prepayment shall excuse or defer Borrower's subsequent payments or
entitle Borrower to a release of any collateral. Interest will cease to
accrue on the amounts prepaid on the day actually credited by Bank.
4. MINIMUM INTEREST CHARGE. Upon prepayment in full, or if the maturity is
accelerated, Borrower agrees to pay Bank a minimum interest charge of $7.50
or the earned interest charge, whichever is greater.
5. LATE CHARGE. Borrower agrees to pay Bank a late charge equal to 5% of the
unpaid installment, if payment is not made in full on or before 15 days
after the scheduled due date.
6. 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 this Note or any other
obligations Borrower has with Bank 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 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 this
Note or any other obligations Borrower has with Bank; 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, or any co-signer, endorser, surety or
guarantor of this Note or any other obligations Borrower has
with Bank; or
D. Failure to obtain or maintain the insurance coverages required
by Bank, or insurance as is customary and proper for any
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, or any co-signer, endorser,
surety or guarantor of this Note or any other obligations
Borrower has with Bank; 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
any 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 any collateral or repayment of the Obligations;
or
I. A transfer of a substantial part of Borrower's money or
property.
7. DEFAULT RATE OF INTEREST. If there is a default in this Note, the rate of
interest, at Bank's option, shall immediately be increased by 3 percentage
points or to 6% per annum, whichever is higher, whether or not Bank
accelerates the maturity, and interest shall accrue thereafter at the
resulting rate until all obligations under this Note are paid in full.
Unless Bank has accelerated the maturity, Bank shall, within 10 days
following the effective date of such interest rate increase, notify
Borrower of the fact that the interest rate has been increased pursuant to
this provision.
8. REMEDIES ON DEFAULT. On or after the occurrence of an Event of Default, at
the option of Bank, all or any part of the Principal and accrued interest
on this Note, the Loan and all other obligations which Borrower owes Bank
shall become immediately due and payable after appropriate notice as
required by law. Bank may exercise all rights and remedies provided by law,
equity, this Note, any mortgage, deed of trust or similar instrument and
any other security, loan, guaranty or surety agreements pertaining to this
Note and all other obligations of Borrower to Bank. Bank is entitled to all
rights and remedies provided at law or equity whether or not expressly
stated in this Note. 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.
9. SET-OFF. Borrower agrees that Bank may exercise Bank's right of set-off to
pay any or all of the outstanding Principal and accrued interest, costs and
expenses, attorneys' fees, and advances due and owing on this Note against
any obligation Bank may have, now or hereafter, to pay money, securities or
other property to Borrower. This includes, without limitation:
A. any deposit account balance, securities account balance or
certificate of deposit balance Borrower has with Bank whether
general, special, time, savings or checking;
B. any money owing to Borrower on an item presented to Bank or in
Bank's possession for collection or exchange; and
C. any repurchase agreement or any other non-deposit obligation
or credit in Borrower's favor.
If any such money, securities or other property is also owned by some other
person who has not agreed to pay this Note (such as another depositor on a
joint account) Bank's right of set-off will extend to the amount which
could be withdrawn or paid directly to Borrower on Borrower's request,
endorsement or instruction alone. In addition, where Borrower may obtain
payment from Bank only with the endorsement or consent of someone who has
not agreed to pay this Note, Bank's right of set-off will extend to
Borrower's interest in the obligation. Bank's right of set-off will not
apply to an account or other obligation if it clearly appears that
Borrower's rights in the obligation are solely as a fiduciary for another,
or to an account, which by its nature and applicable law (for example an
IRA or other tax-deferred retirement account), must be exempt from the
claims of creditors. Borrower hereby appoints Bank as Borrower's
attorney-in-fact and authorizes Bank to redeem or obtain payment on any
certificate of deposit in which Borrower has an interest in order to
exercise Bank's right of set-off, Such authorization applies to any
certificate of deposit even if not matured. Borrower further authorizes
Bank to withhold any early withdrawal penalty without liability in the
event such penalty is applicable as a result of Bank's set-off against a
certificate of deposit prior to its maturity.
Bank's right of set-off may be exercised:
A. without prior demand or notice;
B. without regard to the existence or value of any Collateral
securing this Note; and
C. without regard to the number or creditworthiness of any other
persons who have agreed to pay this Note.
Bank will not be liable for dishonor of a check or other request for
payment where there are insufficient funds in the account (or other
obligation) to pay such request because of Bank's exercise of Bank's right
of set-off. Borrower agrees to indemnify and hold Bank harmless from any
person's claims and the costs and expenses, including without limitation,
attorneys' fees and paralegal fees, incurred as a result of such claims or
arising as the result of Bank's exercise of Bank's right of set-off.
10. COLLECTION EXPENSES. On or after an Event of Default, Bank may recover from
Borrower all fees and expenses in collecting, enforcing and protecting
liabilities and reasonable expenses in realizing on any security incurred
by Bank, plus expenses of collecting and enforcing this Note. Such fees and
expenses shall include, but are not limited to, filing fees, publication
expenses, deposition fees, stenographer fees, witness fees and any other
court costs. Any such fees and expenses shall be added to the Principal of
this Note and shall accrue interest at the same rate as provided for in
this Note.
11. ATTORNEYS' FEES. Upon default of this Note, Bank may recover from Borrower
reasonable attorneys' fees incurred by Bank. Such reasonable attorneys'
fees shall include, without limitation, paralegal fees. Any such reasonable
attorneys' fees shall be added to the principal amount of this Note and
shall accrue interest at the same rate as this Note. Such recovery will be
to the extent not prohibited by law.
12. NO DUTY BY BANK. Bank is under no duty to preserve or protect any
Collateral until Bank is in actual, or constructive, possession of the
Collateral. For purposes of this paragraph, Bank shall only be considered
to be in "actual" possession of the Collateral when Bank has physical,
immediate and exclusive control over the Collateral and has affirmatively
accepted such control. Bank shall only be considered to be in
"constructive" possession of the Collateral when Bank has both the power
and the intent to exercise control over the Collateral.
13. WAIVER AND CONSENT BY BORROWER AND OTHER SIGNERS. Regarding this Note, to
the extent not prohibited by law, Borrower and any other signers:
A. waive reinstatement, notice of default, protest, presentment for
payment, demand, notice of acceleration, notice of intent to
accelerate and notice of dishonor.
B. consent to any renewals and extensions for payment on this Note,
regardless of the number of such renewals or extensions.
C. consent to Bank's release of any borrower, endorser, guarantor,
surety, accommodation maker or any other co-signer.
D. consent to the release, substitution or impairment of any
collateral.
E. consent that Borrower is authorized to modify the terms of this
Note or any instrument securing, guarantying or relating to this
Note.
F. consent to Bank's right of set-off as well as any right of
set-off of any bank participating in the Loan.
G. consent to any and all sales, repurchases and participations of
this Note to any person in any amounts and waive notice of such
sales, repurchases or participations of this Note.
14. SECURITY. To the extent not prohibited by law, this Note is secured by
virtue of cross-collateralization by the following described real estate
liens: a Real Estate Mortgage dated November 2, 1998. However, this Note
will not be secured by such liens if:
A. Bank fails to make any disclosure of the existence of the liens
as required by law; or
B. any of the liens are in Borrower's principal dwelling and Bank
fails to provide (to all persons entitled) any notice of right
of rescission required by law for such lien.
Additionally, to the extent not prohibited by law, this Note is secured by
the following described security agreements: a Security Agreement dated
November 2, 1998. However, this Note will not be secured by such security
agreements if:
A. Bank fails to make any disclosure of the existence of the
security agreements as required by law; or
B. to the extent such security agreements are "consumer" loans in
"household goods" (as those terms are defined in applicable
federal regulations governing unfair and deceptive credit
practices); or
C. to the extent such security agreements are in margin stock
subject to the requirements of 12 C.F.R. Section 207 or 221.
15. PAYMENTS APPLIED. All payments, including but not limited to regular
payments or prepayments, received by Bank shall be applied first to costs,
then to accrued interest and the balance, it any, to Principal except as
otherwise required by law.
16. LOAN PURPOSE. Borrower represents and warrants that the purpose of this
Loan is to refinance existing debt.
17. JOINT AND SEVERAL. Borrower or any other signers shall be jointly and
severally liable under this Note.
18. FINANCIAL STATEMENTS. Until this Note is paid in full, Borrower shall
furnish Bank upon Bank's request and in the event of no request, at least
annually a current financial statement which is certified by Borrower and
Borrower's accountant to be true, complete and accurate.
19. 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 Note.
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 Note, 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 Note may not be
amended, except through a written amendment which is signed by
Borrower and Bank.
D. INTEGRATION CLAUSE. This written Note 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
this Note or confirm any lien.
F. GOVERNING LAW. This Note 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
Note, 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 Note 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
Note.
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 Note, it not defined herein,
shall have their meanings as defined in the other documents
executed contemporaneously, or in conjunction, with this Note.
K. PARAGRAPH HEADINGS. The headings at the beginning of any
paragraph, or any subparagraph, in this Note are for convenience
only and shall not be dispositive in interpreting or construing
this Note.
L. IF HELD UNENFORCEABLE. If any provision of this Note 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 Note.
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 Note 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
Note. 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 Note. Such addresses may be
changed by written notice to the other party.
O. HOLDER. The term "Bank" shall include any transferee and
assignee of Bank or other holder of this Note.
P. BORROWER DEFINED. The term "Borrower" includes each and every
person signing this Note as a Borrower and any co-signers.
20. ADDITIONAL TERMS. This loan is subject to the terms and conditions of a
Loan Agreement dated November 2, 1998.
21. RECEIPT OF COPY. By signing below, Borrower acknowledges that Borrower has
read and received a copy of this Note.
- --------------------------------------------------------------------------------
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/ Steve Lind
------------------------------------
STEVE LIND, 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/ Cathy Rottinghaus
------------------------------------
CATHY ROTTINGHAUS, VICE PRESIDENT
(*Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
THIS IS THE LAST PAGE OF A 3 PAGE DOCUMENT. EXHIBITS AND/OR ADDENDA MAY FOLLOW.
- --------------------------------------------------------------------------------
LOAN NO. LOAN NAME ACCOUNT NO. NOTE DATE RATE
TOP AIR MAN. $3.5MM 2580342413 03/04/99 7.75%
NOTE AMOUNT MATURITY INITIALS
$3,500,000.00 03/10/04 SDB
(For Bank Purposes Only-AC)
PROMISSORY NOTE
(Business Purpose)
MERCANTILE BANK MIDWEST
- --------------------------------------------------------------------------------
1. DATE AND PARTIES. The date of this Promissory Note (Note) is March 4, 1999.
This Note evidences a loan which includes all extensions, renewals,
modifications and substitutions (Loan). The parties to this Note and Loan
are:
BORROWER:
TOP AIR MANUFACTURING, INC.
an Iowa corporation
317 Savannah Park Rd.
Cedar Falls, Iowa 50613
Tax I.D. #42-1155462
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
425 Cedar Street
P.O. Box 88
Waterloo, Iowa 50704
Tax I.D. #42-0167390
2. PROMISE TO PAY. For value received, Borrower promises to pay to Bank's
order at its office at the above address, or such other place as Bank may
designate, the sum of $3,500,000.00 (Principal) plus interest from March 4,
1999, on the unpaid principal balance at the rate of 7.75% per annum
(Contract Rate) until this Note matures or the obligation is accelerated.
After maturity or acceleration, the unpaid balance shall bear interest at
the rate specified in the paragraph in this Note entitled "DEFAULT RATE OF
INTEREST" until paid in full. The Loan and this Note are limited to the
maximum lawful amount of interest (Maximum Lawful Interest) permitted under
federal and state laws. If the interest accrued and collected exceeds the
Maximum Lawful Interest as of the time of collection, such excess shall be
applied to reduce the principal amount outstanding, unless otherwise
required by law. If or when no principal amount is outstanding, any excess
interest shall be refunded to Borrower according to the actuarial method.
Interest shall be computed on the basis of the actual calendar year and the
actual number of days elapsed.
Principal and accrued interest are due and payable in 59 equal monthly
payments of $42,067.03 on the 10th day of each month, beginning April 10,
1999, or the day following if the payment day is a holiday or is a
non-business day for Bank. Unless paid prior to maturity, the last
scheduled payment plus all other unpaid principal, accrued interest, costs
and expenses are due and payable on March 10, 2004, which is the date of
maturity. These payment amounts are based upon timely payment of each
installment. All amounts shall be paid in legal U.S. currency. Any payment
made with a check will constitute payment only when collected.
3. EFFECT OF PREPAYMENT. Borrower may prepay this Loan in full, subject to any
prepayment penalty or minimum charge as agreed to below. However, no
partial prepayment shall excuse or defer Borrower's subsequent payments or
entitle Borrower to a release of any collateral. Interest will cease to
accrue on the amounts prepaid on the day actually credited by Bank.
4. MINIMUM INTEREST CHARGE. Upon prepayment in full, or if the maturity is
accelerated, Borrower agrees to pay Bank a minimum interest charge of $7.50
or the earned interest charge, whichever is greater.
5. 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 this Note or any other
obligations Borrower has with Bank 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 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 this
Note or any other obligations Borrower has with Bank; 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, or any co-signer, endorser, surety or
guarantor of this Note or any other obligations Borrower has
with Bank; or
D. Failure to obtain or maintain the insurance coverages required
by Bank, or insurance as is customary and proper for any
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, or any co-signer, endorser,
surety or guarantor of this Note or any other obligations
Borrower has with Bank; 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
any 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 any collateral or repayment of the Obligations;
or
I. A transfer of a substantial part of Borrower's money or
property.
6. DEFAULT RATE OF INTEREST. If there is a default in this Note, the rate of
interest, at Bank's option, shall immediately be increased by 3 percentage
points or to 6% per annum, whichever is higher, whether or not Bank
accelerates the maturity, and interest shall accrue thereafter at the
resulting rate until all obligations under this Note are paid in full.
Unless Bank has accelerated the maturity, Bank shall, within 10 days
following the effective date of such interest rate increase, notify
Borrower of the fact that the interest rate has been increased pursuant to
this provision.
7. REMEDIES ON DEFAULT. On or after the occurrence of an Event of Default, at
the option of Bank, all or any part of the Principal and accrued interest
on this Note, the Loan and all other obligations which Borrower owes Bank
shall become immediately due and payable after appropriate notice as
required by law. Bank may exercise all rights and remedies provided by law,
equity, this Note, any mortgage, deed of trust or similar instrument and
any other security, loan, guaranty or surety agreements pertaining to this
Note and all other obligations of Borrower to Bank. Bank is entitled to all
rights and remedies provided at law or equity whether or not expressly
stated in this Note. 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.
8. SET-OFF. Borrower agrees that Bank may exercise Bank's right of set-off to
pay any or all of the outstanding Principal and accrued interest, costs and
expenses, attorneys' fees, and advances due and owing on this Note against
any obligation Bank may have, now or hereafter, to pay money, securities or
other property to Borrower. This includes, without limitation:
A. any deposit account balance, securities account balance or
certificate of deposit balance Borrower has with Bank whether
general, special, time, savings or checking;
B. any money owing to Borrower on an item presented to Bank or in
Bank's possession for collection or exchange; and
C. any repurchase agreement or any other non-deposit obligation or
credit in Borrower's favor.
If any such money, securities or other property is also owned by some other
person who has not agreed to pay this Note (such as another depositor on a
joint account) Bank's right of set-off will extend to the amount which
could be withdrawn or paid directly to Borrower on Borrower's request,
endorsement or instruction alone. In addition, where Borrower may obtain
payment from Bank only with the endorsement or consent of someone who has
not agreed to pay this Note, Bank's right of set-off will extend to
Borrower's interest in the obligation. Bank's right of set-off will not
apply to an account or other obligation if it clearly appears that
Borrower's rights in the obligation are solely as a fiduciary for another,
or to an account, which by its nature and applicable law (for example an
IRA or other tax-deferred retirement account), must be exempt from the
claims of creditors. Borrower hereby appoints Bank as Borrower's
attorney-in-fact and authorizes Bank to redeem or obtain payment on any
certificate of deposit in which Borrower has an interest in order to
exercise Bank's right of set-off. Such authorization applies to any
certificate of deposit even if not matured. Borrower further authorizes
Bank to withhold any early withdrawal penalty without liability in the
event such penalty is applicable as a result of Bank's set-off against a
certificate of deposit prior to its maturity.
Bank's right of set-off may be exercised:
A. without prior demand or notice;
B. without regard to the existence or value of any Collateral
securing this Note; and
C. without regard to the number or creditworthiness of any other
persons who have agreed to pay this Note.
Bank will not be liable for dishonor of a check or other request for
payment where there are insufficient funds in the account (or other
obligation) to pay such request because of Bank's exercise of Bank's right
of set-off. Borrower agrees to indemnify and hold Bank harmless from any
person's claims and the costs and expenses, including without limitation,
attorneys' fees and paralegal fees, incurred as a result of such claims or
arising as the result of Bank's exercise of Bank's right of set-off.
9. COLLECTION EXPENSES. On or after an Event of Default, Bank may recover from
Borrower all fees and expenses in collecting, enforcing and protecting
liabilities and reasonable expenses in realizing on any security incurred
by Bank, plus expenses of collecting and enforcing this Note. Such fees and
expenses shall include, but are not limited to, filing fees, publication
expenses, deposition fees, stenographer fees, witness fees and any other
court costs. Any such fees and expenses shall be added to the Principal of
this Note and shall accrue interest at the same rate as provided for in
this Note.
10. ATTORNEYS' FEES. Upon default of this Note, Bank may recover from Borrower
reasonable attorneys' fees incurred by Bank. Such reasonable attorneys'
fees shall include, without limitation, paralegal fees. Any such reasonable
attorneys' fees shall be added to the principal amount of this Note and
shall accrue interest at the same rate as this Note. Such recovery will be
to the extent not prohibited by law.
11. NO DUTY BY BANK. Bank is under no duty to preserve or protect any
Collateral until Bank is in actual, or constructive, possession of the
Collateral. For purposes of this paragraph, Bank shall only be considered
to be in "actual" possession of the Collateral when Bank has physical,
immediate and exclusive control over the Collateral and has affirmatively
accepted such control. Bank shall only be considered to be in
"constructive" possession of the Collateral when Bank has both the power
and the intent to exercise control over the Collateral.
12. WAIVER AND CONSENT BY BORROWER AND OTHER SIGNERS. Regarding this Note, to
the extent not prohibited by law, Borrower and any other signers:
A. waive reinstatement, notice of default, protest, presentment for
payment, demand, notice of acceleration, notice of intent to
accelerate and notice of dishonor.
B. consent to any renewals and extensions for payment on this Note,
regardless of the number of such renewals or extensions.
C. consent to Bank's release of any borrower, endorser, guarantor,
surety, accommodation maker or any other co-signer.
D. consent to the release, substitution or impairment of any
collateral.
E. consent that Borrower is authorized to modify the terms of this
Note or any instrument securing, guarantying or relating to this
Note.
F. consent to Bank's right of set-off as well as any right of
set-off of any bank participating in the Loan.
G. consent to any and all sales, repurchases and participations of
this Note to any person in any amounts and waive notice of such
sales, repurchases or participations of this Note.
13. SECURITY. To the extent not prohibited by law, this Note is secured by
virtue of cross-collateralization by the following described real estate
liens: a Real Estate Mortgage dated November 2, 1998. However, this Note
will not be secured by such liens if:
A. Bank fails to make any disclosure of the existence of the liens
as required by law; or
B. any of the liens are in Borrower's principal dwelling and Bank
fails to provide (to all persons entitled) any notice of right
of rescission required by law for such lien.
Additionally, to the extent not prohibited by law, this Note is secured by
the following described security agreements: a Security Agreement dated
November 2, 1998. However, this Note will not be secured by such security
agreements if:
A. Bank fails to make any disclosure of the existence of the
security agreements as required by law; or
B. to the extent such security agreements are "consumer" loans in
"household goods" (as those terms are defined in applicable
federal regulations governing unfair and deceptive credit
practices); or
C. to the extent such security agreements are in margin stock
subject to the requirements of 12 C.F.R. Section 207 or 221.
14. PAYMENTS APPLIED. All payments, including but not limited to regular
payments or prepayments, received by Bank shall be applied first to costs,
then to accrued interest and the balance, if any, to Principal except as
otherwise required by law.
15. LOAN PURPOSE. Borrower represents and warrants that the purpose of this
Loan is to purchase assets of Parker Industries, Jefferson, Iowa.
16. JOINT AND SEVERAL. Borrower or any other signers shall be jointly and
severally liable under this Note.
17. FINANCIAL STATEMENTS. Until this Note is paid in full, Borrower shall
furnish Bank upon Bank's request and in the event of no request, at least
annually a current financial statement which is certified by Borrower and
Borrower's accountant to be true, complete and accurate.
18. 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 Note.
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 Note, 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 Note may not be
amended, except through a written amendment which is signed by
Borrower and Bank.
D. INTEGRATION CLAUSE. This written Note 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
this Note or confirm any lien.
F. GOVERNING LAW. This Note 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
Note, 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 Note 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
Note.
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 Note, if not defined herein,
shall have their meanings as defined in the other documents
executed contemporaneously, or in conjunction, with this Note.
K. PARAGRAPH HEADINGS. The headings at the beginning of any
paragraph, or any subparagraph, in this Note are for convenience
only and shall not be dispositive in interpreting or construing
this Note.
L. IF HELD UNENFORCEABLE. If any provision of this Note 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 Note.
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 Note 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
Note. 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 Note. Such addresses may be
changed by written notice to the other party.
O. HOLDER. The term "Bank" shall include any transferee and
assignee of Bank or other holder of this Note.
P. BORROWER DEFINED. The term "Borrower" includes each and every
person signing this Note as a Borrower and any co-signers.
19. ADDITIONAL TERMS. This loan is subject to the terms and conditions of a
Loan Agreement dated November 2, 1998 and as modified March 4, 1999.
20. RECEIPT OF COPY. By signing below, Borrower acknowledges that Borrower has
read and received a copy of this Note.
- --------------------------------------------------------------------------------
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/ Steve Lind
-------------------------------------
STEVE LIND, 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/ Steven D. Brewer
-------------------------------------
STEVEN D. BREWER, EXECUTIVE VICE PRES.
(*Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
THIS IS THE LAST PAGE OF A 3 PAGE DOCUMENT. EXHIBITS AND/OR ADDENDA MAY FOLLOW.
- --------------------------------------------------------------------------------
LOAN NO. LOAN NAME ACCOUNT NO. NOTE DATE RATE
2580342413 TOP AIR MAN 254839 254839 03/04/99 PRIME-.5
7.75%-.5
NOTE AMOUNT MATURITY INITIALS
$6,000,000.00 11/10/99 CR
Revolving Draw
(For Bank Purposes Only-AC)
PROMISSORY NOTE
(Business Purpose)
MERCANTILE BANK MIDWEST
- --------------------------------------------------------------------------------
1. DATE AND PARTIES. The date of this Promissory Note (Note) is March 4, 1999.
This Note evidences a loan which includes all extensions, renewals,
modifications and substitutions (Loan). The parties to this Note and Loan
are:
BORROWER:
TOP AIR MANUFACTURING, INC.
an Iowa corporation
317 Savannah Park Rd.
Cedar Falls, Iowa 50613
Tax I.D. #42-1155462
BANK:
MERCANTILE BANK MIDWEST
an IOWA banking corporation
425 Cedar Street
P.O. Box 88
Waterloo, Iowa 50704
Tax I.D. #42-0167390
2. PROMISE TO PAY. For value received, Borrower promises to pay to Bank's
order at its office at the above address, or such other place as Bank may
designate, the sum of $6,000,000.00 (Principal) or so much thereof as may,
from time to time, be advanced to Borrower hereunder plus interest from the
date of disbursement, on the unpaid principal balance at an annual rate
equal to .5 percentage point below Bank's Prime Rate, as adjusted and
announced from time to time until this Note matures or the obligation is
accelerated. The Prime Rate, minus .5 percentage points, may also be
referred to hereafter as the "Contract Rate".
"Prime Rate" shall mean a rate per annum equal to the interest rate
announced from time to time by Mercantile Bank National Association as its
"prime rate" on Commercial loans (which rate shall fluctuate as and when
said prime rate shall change). The Contract Rate is the sum of Bank's Prime
Rate (7.75%) minus .5 percentage point. The effective Contract Rate today
is 7.25%. Bank's Prime Rate today is not necessarily the lowest rate at
which Bank lends its funds. The Prime Rate is only an index rate from which
interest rates actually charged to customers may be measured. The use of
the Prime Rate is for convenience only and does not constitute a commitment
by Bank to lend money at a preferred rate of interest. The Prime Rate is a
benchmark for pricing certain types of loans. Depending on the
circumstances, such as the amount and term of the loan, the
creditworthiness of the borrower or any guarantor, the presence and nature
of collateral and other relationships between a borrower and Bank, loans
may be priced at, above or below the Prime Rate.
All adjustments to the Contract Rate will be made on each day that the
Prime Rate changes. Any increase to the Prime Rate may be carried over to a
subsequent adjustment date without resulting in a waiver or forfeiture of
such adjustment, provided an adjustment to the Contract Rate is made within
one year from the date of such increase. Any change in the Contract Rate
will take the form of different payment amounts. After maturity or
acceleration, the unpaid balance shall bear interest at the rate specified
in the paragraph in this Note entitled "DEFAULT RATE OF INTEREST" until
paid in full. The Loan and this Note are limited to the maximum lawful
amount of interest (Maximum Lawful Interest) permitted under federal and
state laws. If the interest accrued and collected exceeds the Maximum
Lawful Interest as of the time of collection, such excess shall be applied
to reduce the principal amount outstanding, unless otherwise required by
law. If or when no principal amount is outstanding, any excess interest
shall be refunded to Borrower according to the actuarial method. Interest
shall be computed on the basis of the actual calendar year and the actual
number of days elapsed.
This is a revolving draw Note and all advances made in connection with this
Loan shall be at the sole discretion of Bank. However, the amount of
advances under this Note that are outstanding and unpaid shall never exceed
the Principal. Interest shall accrue only on the amount of outstanding
Principal that is drawn and unpaid.
Accrued interest is due and payable in 7 monthly payments on the 10th day
of each month, beginning April 10, 1999, or the day following if the
payment day is a holiday or is a non-business day for Bank. Unless paid
prior to maturity, the last scheduled payment plus all unpaid principal,
accrued interest, costs and expenses are due and payable on November 10,
1999, which is the date of maturity. If the Contract Rate changes, any
remaining payments may be a different amount. All amounts shall be paid in
legal U.S. currency. Any payment made with a check will constitute payment
only when collected.
3. EFFECT OF PREPAYMENT. Borrower may prepay this Loan in full, subject to any
prepayment penalty or minimum charge as agreed to below. However, no
partial prepayment shall excuse or defer Borrower's subsequent payments or
entitle Borrower to a release of any collateral. Interest will cease to
accrue on the amounts prepaid on the day actually credited by Bank.
4. MINIMUM INTEREST CHARGE. Upon prepayment in full, or if the maturity is
accelerated, Borrower agrees to pay Bank a minimum interest charge of $7.50
or the earned interest charge, whichever is greater.
5. 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 this Note or any other
obligations Borrower has with Bank 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 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 this
Note or any other obligations Borrower has with Bank; 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, or any co-signer, endorser, surety or
guarantor of this Note or any other obligations Borrower has
with Bank; or
D. Failure to obtain or maintain the insurance coverages required
by Bank, or insurance as is customary and proper for any
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, or any co-signer, endorser,
surety or guarantor of this Note or any other obligations
Borrower has with Bank; 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
any 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 any collateral or repayment of the Obligations;
or
I. A transfer of a substantial part of Borrower's money or
property.
6. DEFAULT RATE OF INTEREST. If there is a default in this Note, the rate of
interest, at Bank's option, shall immediately be increased by 3 percentage
points (floating with the prime rate) or to 6% per annum, whichever is
higher, whether or not Bank accelerates the maturity, and interest snail
accrue thereafter at the resulting rate until all obligations under this
Note are paid in full. Unless Bank has accelerated the maturity, Bank
shall, within 10 days following the effective date of such interest rate
increase, notify Borrower of the fact that the interest rate has been
increased pursuant to this provision.
7. REMEDIES ON DEFAULT. On or after the occurrence of an Event of Default, at
the option of Bank, all or any part of the Principal and accrued interest
on this Note, the Loan and all other obligations which Borrower owes Bank
shall become immediately due and payable after appropriate notice as
required by law. Bank may exercise all rights and remedies provided by law,
equity, this Note, any mortgage, deed of trust or similar instrument and
any other security, loan, guaranty or surety agreements pertaining to this
Note and all other obligations of Borrower to Bank. Bank is entitled to all
rights and remedies provided at law or equity whether or not expressly
stated in this Note. 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.
8. SET-OFF. Borrower agrees that Bank may exercise Bank's right of set-off to
pay any or all of the outstanding Principal and accrued interest, costs and
expenses, attorneys' fees, and advances due and owing on this Note against
any obligation Bank may have, now or hereafter, to pay money, securities or
other property to Borrower. This includes, without limitation:
A. any deposit account balance, securities account balance or
certificate of deposit balance Borrower has with Bank whether
general, special, time, savings or checking;
B. any money owing to Borrower on an item presented to Bank or in
Bank's possession for collection or exchange; and
C. any repurchase agreement or any other non-deposit obligation or
credit in Borrower's favor.
If any such money, securities or other property is also owned by some other
person who has not agreed to pay this Note (such as another depositor on a
joint account) Bank's right of set-off will extend to the amount which
could be withdrawn or paid directly to Borrower on Borrower's request,
endorsement or instruction alone. In addition, where Borrower may obtain
payment from Bank only with the endorsement or consent of someone who has
not agreed to pay this Note, Bank's right of set-off will extend to
Borrower's interest in the obligation. Bank's right of set-off will not
apply to an account or other obligation if it clearly appears that
Borrower's rights in the obligation are solely as a fiduciary for another,
or to an account, which by its nature and applicable law (for example an
IRA or other tax-deferred retirement account), must be exempt from the
claims of creditors. Borrower hereby appoints Bank as Borrower's
attorney-in-fact and authorizes Bank to redeem or obtain payment on any
certificate of deposit in which Borrower has an interest in order to
exercise Bank's right of set-off. Such authorization applies to any
certificate of deposit even if not matured. Borrower further authorizes
Bank to withhold any early withdrawal penalty without liability in the
event such penalty is applicable as a result of Bank's set-off against a
certificate of deposit prior to its maturity.
Bank's right of set-off may be exercised:
A. without prior demand or notice;
B. without regard to the existence or value of any Collateral
securing this Note; and
C. without regard to the number or creditworthiness of any other
persons who have agreed to pay this Note.
Bank will not be liable for dishonor of a check or other request for
payment where there are insufficient funds in the account (or other
obligation) to pay such request because of Bank's exercise of Bank's right
of set-off. Borrower agrees to indemnify and hold Bank harmless from any
person's claims and the costs and expenses, including without limitation,
attorneys' fees and paralegal fees, incurred as a result of such claims or
arising as the result of Bank's exercise of Bank's right of set-off.
9. COLLECTION EXPENSES. On or after an Event of Default, Bank may recover from
Borrower all fees and expenses in collecting, enforcing and protecting
liabilities and reasonable expenses in realizing on any security incurred
by Bank, plus expenses of collecting and enforcing this Note. Such fees and
expenses shall include, but are not limited to, filing fees, publication
expenses, deposition fees, stenographer fees, witness fees and any other
court costs. Any such fees and expenses shall be added to the Principal of
this Note and shall accrue interest at the same rate as provided for in
this Note.
10. ATTORNEYS' FEES. Upon default of this Note, Bank may recover from Borrower
reasonable attorneys' fees incurred by Bank. Such reasonable attorneys'
fees shall include, without limitation, paralegal fees. Any such reasonable
attorneys' fees shall be added to the principal amount of this Note and
shall accrue interest at the same rate as this Note. Such recovery will be
to the extent not prohibited by law.
11. NO DUTY BY BANK. Bank is under no duty to preserve or protect any
Collateral until Bank is in actual, or constructive, possession of the
Collateral. For purposes of this paragraph, Bank shall only be considered
to be in "actual" possession of the Collateral when Bank has physical,
immediate and exclusive control over the Collateral and has affirmatively
accepted such control. Bank shall only be considered to be in
"constructive" possession of the Collateral when Bank has both the power
and the intent to exercise control over the Collateral.
12. WAIVER AND CONSENT BY BORROWER AND OTHER SIGNERS. Regarding this Note, to
the extent not prohibited by law, Borrower and any other signers:
A. waive reinstatement, notice of default, protest, presentment for
payment, demand, notice of acceleration, notice of intent to
accelerate and notice of dishonor.
B. consent to any renewals and extensions for payment on this Note,
regardless of the number of such renewals or extensions.
C. consent to Bank's release of any borrower, endorser, guarantor,
surety, accommodation maker or any other co-signer.
D. consent to the release, substitution or impairment of any
collateral.
E. consent that Borrower is authorized to modify the terms of this
Note or any instrument securing, guarantying or relating to this
Note.
F. consent to Bank's right of set-off as well as any right of
set-off of any bank participating in the Loan.
G. consent to any and all sales, repurchases and participations of
this Note to any person in any amounts and waive notice of such
sales, repurchases or participations of this Note.
13. SECURITY. To the extent not prohibited by law, this Note is secured by
virtue of cross-collateralization by the following described real estate
liens: a Real Estate Mortgage dated November 2, 1998. However, this Note
will not be secured by such liens if:
A. Bank fails to make any disclosure of the existence of the liens
as required by law; or
B. any of the liens are in Borrower's principal dwelling and Bank
fails to provide (to all persons entitled) any notice of right
of rescission required by law for such lien.
Additionally, to the extent not prohibited by law, this Note is secured by
the following described security agreements: a Security Agreement dated
November 2, 1998. However, this Note will not be secured by such security
agreements if:
A. Bank fails to make any disclosure of the existence of the
security agreements as required by law; or
B. to the extent such security agreements are "consumer" loans in
"household goods" (as those terms are defined in applicable
federal regulations governing unfair and deceptive credit
practices); or
C. to the extent such security agreements are in margin stock
subject to the requirements of 12 C.F.R. Section 207 or 221.
14. PAYMENTS APPLIED. All payments, including but not limited to regular
payments or prepayments, received by Bank shall be applied first to costs,
then to accrued interest and the balance, if any, to Principal except as
otherwise required by law.
15. LOAN PURPOSE. Borrower represents and warrants that the purpose of this
Loan is operating expenses; renewal.
16. JOINT AND SEVERAL. Borrower or any other signers shall be jointly and
severally liable under this Note.
17. FINANCIAL STATEMENTS. Until this Note is paid in full, Borrower shall
furnish Bank upon Bank's request and in the event of no request, at least
annually a current financial statement which is certified by Borrower and
Borrower's accountant to be true, complete and accurate.
18. 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 Note.
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 Note, 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 Note may not be
amended, except through a written amendment which is signed by
Borrower and Bank.
D. INTEGRATION CLAUSE. This written Note 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
this Note or confirm any lien.
F. GOVERNING LAW. This Note 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
Note, 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 Note 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
Note.
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 Note, if not defined herein,
shall have their meanings as defined in the other documents
executed contemporaneously, or in conjunction, with this Note.
K. PARAGRAPH HEADINGS. The headings at the beginning of any
paragraph, or any subparagraph, in this Note are for convenience
only and shall not be dispositive in interpreting or construing
this Note.
L. IF HELD UNENFORCEABLE. If any provision of this Note 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 Note.
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 Note 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
Note. 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 Note. Such addresses may be
changed by written notice to the other party.
O. HOLDER. The term "Bank" shall include any transferee and
assignee of Bank or other holder of this Note.
P. BORROWER DEFINED. The term "Borrower" includes each and every
person signing this Note as a Borrower and any co-signers.
19. ADDITIONAL TERMS. This loan is subject to the terms and conditions of a
Loan Agreement dated November 2, 1998 as modified March 4, 1999.
20. RECEIPT OF COPY. By signing below, Borrower acknowledges that Borrower has
read and received a copy of this Note.
<PAGE>
- --------------------------------------------------------------------------------
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/ Steve Lind
------------------------------------
STEVE LIND, 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/ Cathy A. Rottinghaus
------------------------------------
CATHY A. ROTTINGHAUS, VICE PRESIDENT
(*Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
THIS IS THE LAST PAGE OF A 3 PAGE DOCUMENT. EXHIBITS AND/OR ADDENDA MAY FOLLOW.
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA LOAN AGREEMENT
CEBA LOAN NUMBER: 99-CEBA-23
AWARD DATE: February 18,1999
KIND OF AWARD: Loan/Forgivable Loan
AWARD AMOUNT: $300,000
THIS COMMUNITY ECONOMIC BETTERMENT ACCOUNT ("CEBA") AGREEMENT is made
by and among the IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT, 200 East Grand Avenue,
Des Moines, Iowa 50309 ("Department" or "IDED"), City of Jefferson
("Community"), City Hall, 220 North Chestnut Street, Jefferson, Iowa 50129, and
Parker Industries, Inc. ("Business"), 900 East Highway 30, Jefferson, Iowa
50129.
The Department desires to make a loan to the Community for the benefit
of the Business and the Community desires to accept this loan, all upon the
terms and conditions set forth in this Agreement. The Community desires to make
a loan to the Business and the Business desires to accept this loan, all upon
the terms and conditions set forth in this Agreement.
THEREFORE, in consideration of the mutual promises contained in this
Agreement and other good and valuable consideration, it is agreed as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall apply:
1.1 AGREEMENT EXPIRATION DATE. "Agreement Expiration Date" means the
date the Agreement ceases to be in force and effect. The Agreement expires upon
the occurrence of one of the following: a) the Loan is repaid in full or
required part, including accrued interest, court costs and any penalties; b) the
Agreement is terminated by the Department due to any default under Article X; c)
no disbursement of CEBA funds has occurred within the twenty four months
immediately following the Award Date; or d) if the Agreement includes only a
Forgivable Loan. At the end of the three (3) year contract period if the
Business or Community has demonstrated successful completion of the project Job
Attainment and Wage Obligation.
1.2 AWARD DATE. "Award Date" means the date on which the Economic
Development Board approved the IDED CEBA participation.
1.3 COMMUNITY BASE JOBS. "Community Base Jobs" means the number of
Full-time Equivalent (FTE) Jobs the Department determines are in place in the
Community at the time of application for CEBA funds and which will remain in the
Community whether or not CEBA funds are awarded. Said jobs must be maintained
for a minimum of thirteen (13) weeks beyond the Project Completion Date.
1.4 CREATED JOBS. "Created Jobs" means the number of new Full-time
Equivalent (FTE) Jobs the Business will add to the Community which meet the
Project Wage Obligation over and above the number of Community Base Jobs and/or
Retained Jobs. Said jobs must be maintained for a minimum of thirteen (13) weeks
beyond the Project Completion Date.
1.5 FORGIVABLE LOAN. "Forgivable Loan" means a loan for which repayment
is eliminated in part or entirely if the Community and Business satisfy the
terms of this Agreement, including the Job Attainment and Wage Obligations
stated in Article VII.
1.6 FULL-TIME EQUIVALENT (FTE) JOB. "Full-time Equivalent (FTE) Job"
means the equivalent of employment of one (1) person for eight (8) hours per day
for a five (5) day forty (40) hour workweek for fifty two (52) weeks per year.
1.7 JOB ATTAINMENT OBLIGATION. "Job Attainment Obligation" means the
aggregate total number of Community Base Jobs, Retained Jobs, Created Jobs and
State Employment Level pledged by the Community and Business.
1.8 LOAN. "Loan" means either a Conventional loan or a Forgivable Loan,
or both, the terms of which are or may be set forth in this Loan Agreement.
1.9 LOAN AGREEMENT OR AGREEMENT. "Loan Agreement" or "Agreement" means
this Agreement, the Project budget and all of the notes, leases, assignments,
mortgages, and similar documents referred to in the Agreement and all other
instruments or documents executed by the Business or Community or otherwise
required in connection with the Agreement, including but not limited to the
following:
(a) Attachment A, Project Budget.
(b) Attachment B1, Promissory Note of the Business.
(c) Attachment B2, Promissory Note of the Community.
(d) Attachment C, CEBA Application for Assistance.
(e) List of positions and associated hourly rate of pay to be
created and/or retained as a result of this project. Those positions paying
equal to or greater than the project Wage Threshold must be highlighted.
1.10 PROJECT. "Project" means the detailed description of the work,
services, job attainment requirements and other obligations to be performed or
accomplished by the Community and Business as described in this Agreement and
the CEBA application approved by the Department.
1.11 PROJECT COMPLETION DATE. "Project Completion Date" means March 31,
2002 and is the date by which the Project tasks shall have been fully
accomplished including fulfillment of the Job Attainment Obligation.
1.12 PROJECT WAGE OBLIGATION. The "Project Wage Obligation" is at least
90% of the County Average wage as compiled from data from the Department of
Employment Services. The "Project Wage Obligation" for this project is a
starting wage of at least $8.36/hour.
1.13 RETAINED JOBS. "Retained Jobs" means the number of Full-time
Equivalent (FTE) Jobs the Department determines are in place in the Community at
the time of application for CEBA assistance and which the Business and Community
agree will be retained due to receipt of the CEBA funds. Said jobs must be
maintained for a minimum of thirteen (13) weeks beyond the Project Completion
Date.
ARTICLE II
FUNDING
2.1 FUNDING SOURCE. The source of funding for the Loan is an
appropriation by the State legislature for the CEBA Program. With respect to the
closing of the Loan, processing of post-closing documents and administration of
the Loan until paid in full, the Business and Community shall comply with the
requirements, conditions and rules of the Department and any other public or
private entity having authority over the funds or the Loan.
2.2 RECEIPT OF FUNDS. All payments under this Agreement are subject to
receipt by the Department of sufficient State funds for the CEBA program. Any
termination, reduction or delay of CEBA funds to the Department shall, at the
option of the Department, result in the termination, reduction or delay of CEBA
funds to the Community and the Business.
2.3 PRIOR COSTS. No expenditures made prior to the Award Date may be
included as Project costs for the purposes of this Agreement.
2.4 DISBURSEMENT OF LESS THAN THE TOTAL AWARD AMOUNT. If the total
award amount has not been disbursed within one hundred twenty (120) days of the
Project Completion Date, then the Department shall be under no obligation for
further disbursement. And, the Community and Business shall be obligated to the
extent of Loan proceeds received.
ARTICLE III
TERMS OF LOAN
3.1 LOAN. The Department agrees to make a Loan/Forgivable Loan with a
loan in the amount of $100,000 with interest at 0% for 5 years to the Community
on behalf of the Business to assist in the financing of the Project. And, the
Department agrees to make a forgivable loan in the amount of $200,000 with
interest at 6%, for 3 years to the Community on behalf of the business to assist
in the financing of the Project. Interest begins accruing at the date of
disbursement of funds.
3.2 PROMISSORY NOTES. The obligation to repay the Loan shall be
evidenced by Promissory Notes executed by the Business and the Community.
3.3 OTHER TERMS.
Corporate Guaranty and Blanket UCC-1
3.4 PREPAYMENT. The outstanding principal and accrued interest of this
Loan, or any part thereof that is not forgiven, may be prepaid in part or in
full at any time without penalty.
3.5 ACCELERATION UPON DEFAULT. If there is a failure to pay any
installment of principal and interest when due, or only a portion is paid, or in
the event of any other default under this Loan, the Department may declare the
entire unpaid principal and all accrued interest immediately due and payable.
3.6 FORGIVABLE LOAN REPAYMENT OR WAIVER. If the award includes a
Forgivable Loan, the Department will, in its sole discretion, determine if the
Business has satisfied the terms of this Agreement, including fulfillment of the
Job Attainment and Wage Obligation by the Project Completion Date. If the
Department determines that the Business has satisfied said terms and has
continued to satisfy said terms for thirteen (13) weeks past the Project
Completion Date, then barring any other default, repayment of principal and
interest which would otherwise have accrued for the time period beginning with
the Award Date and ending with the Project Completion Date shall be permanently
waived. If the Department does not waive repayment, the Loan shall be repaid in
accordance with the terms Article 10.4(a) of this agreement.
ARTICLE IV
CONDITIONS TO DISBURSEMENT OF FUNDS
Unless and until the following conditions have been satisfied, the
Department shall be under no obligation to disburse to the Community or Business
any amounts under the Loan Agreement:
4.1 AUTHORITY. The Business shall have submitted the following
documents to the Department:
(a) Certificate of Good Standing of the corporation.
(b) Certified copy of the corporation's Articles of incorpora-
tion.
(c) Certificate of Incumbency naming the current officers and
directors of the corporation.
(d) Resolution of the Board of Directors authorizing the
corporation's execution and delivery of this Loan Agreement and the Note and
borrowing hereunder, and such other papers as the Department may reasonably
request; and specifying the officer(s) authorized to execute the Loan Agreement
and bind the corporation, and a Resolution of the Board of Directors of Top Air
Manufacturing, Inc. authorizing the corporation's execution and delivery of the
corporate guaranty required by said Loan Agreement.
4.2 PROJECT SCHEDULE. The Community and the Business shall have
submitted a completed Project schedule on the form provided by the Department
and received the Department's approval of the Project schedule.
4.3 CONSULTATION WITH EMPLOYMENT SERVICES. The Business shall have
provided documentation to the Department that it has consulted with the area
Department of Employment Services (DES) Workforce Center office to discuss
employment services available. In addition, the Business must provide to DES
agencies a list of positions to be created including job descriptions and
qualifications.
4.4 LOAN AGREEMENT EXECUTED. The Loan Agreement shall have been
properly executed and, where required, acknowledged.
4.5 PROJECT FINANCIAL COMMITMENTS. The Business and Community shall
have submitted a letter from each of the following committing to the specified
financial involvement in the Project and received the Department's approval of
the letters of commitment including rate and terms:
- --------------------------------------------------------------------------------
SOURCE TYPE AMOUNT
- --------------------------------------------------------------------------------
City of Jefferson Building Lease 750,000
- --------------------------------------------------------------------------------
Bank Loans Loan 5,450,000
- --------------------------------------------------------------------------------
Seller Loan Loan 3,750,000
- --------------------------------------------------------------------------------
Top Air Manufacturing, Inc. Seller's Liability 550,000
- --------------------------------------------------------------------------------
Each letter shall include the amount, terms and conditions of the financial
commitment, as well as any applicable schedules.
4.6 RECORDING. The Business and Community shall have properly recorded
in the appropriate office of the Recorder of Deeds and/or the Secretary of State
any mortgage, security agreement, financing statement or similar document
required by the Department under the Loan Agreement, with all recording charges
paid.
4.7 SOLID AND HAZARDOUS WASTE REDUCTION PLAN. A Business which
generates solid or hazardous waste shall have submitted the following
information concerning the project site:
(a) A copy of the completed audit and management plan if the
Business has conducted an in-house or an external audit and a corresponding
management plan within the last three years; or
(b) If the Business has not conducted an in-house or external
audit and corresponding management plan within the last three years, a copy of a
letter from the Iowa Department of Natural Resources or the Iowa Waste Reduction
Center indicating they have met with the Business and an external audit has been
initiated, or, a copy of the outline of the Business' proposed in-house audit
and a description of how and when the audit will be performed. Furthermore, the
Business shall submit a copy of the completed in-house or external audit within
30 days of its completion or receipt, which time period shall not exceed 90 days
from the disbursement date of the financial assistance.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUSINESS
To induce the Department to make the Loan referred to in this
Agreement, the Business represents, covenants and warrants that:
5.1 AUTHORITY. The Business is a corporation duly organized and validly
existing under the laws of the state of incorporation and is in good standing,
and has complied with all applicable laws of the State of Iowa. The Business is
duly authorized and empowered to execute and deliver the Loan Agreement. All
action on the Business' part, such as appropriate resolution of its Board of
Directors for the execution and delivery of the Loan Agreement, has been
effectively taken.
5.2 FINANCIAL INFORMATION. All financial statements and related
materials concerning the Business and the Project provided to the Department are
true and correct in all material respects and completely and accurately
represent the subject matter thereof as of the effective date of the statements
and related materials, and no material adverse change has occurred since that
date.
5.3 APPLICATION. The contents of the application the Business submitted
to the Department for CEBA funding is a complete and accurate representation of
the Business and the Project as of the date of submission and there has been no
material adverse change in the organization, operation, business prospects,
fixed properties or key personnel of the Business since the date the Business
submitted its CEBA application to the Department.
5.4 CLAIMS AND PROCEEDINGS. There are no actions, lawsuits or
proceedings pending or, to the knowledge of the Business, threatened against the
Business affecting in any manner whatsoever their rights to execute the Loan or
the ability of the Community or Business to make the payments required under the
Loan, or to otherwise comply with the obligations of the Business contained
under the Loan. There are no actions, lawsuits or proceedings at law or in
equity, or before any governmental or administrative authority pending or, to
the knowledge of the Business, threatened against or affecting the Business or
any property or collateral pledged as security for the Loan.
5.5 PRIOR AGREEMENTS. The Community and the Business separately or
jointly have not entered into any verbal or written contracts, agreements or
arrangements of any kind which are inconsistent with the Loan Agreement.
5.6 EFFECTIVE DATE. The covenants, warranties and representations of
this Article are made as of the date of this Agreement and shall be deemed to be
renewed and restated by the Business at the time of each advance or request for
disbursement of funds.
ARTICLE VI
COVENANTS OF BUSINESS
6.1 AFFIRMATIVE COVENANTS. Until payment in full or required part, or
forgiveness of the Loan, the Business covenants with the Community and IDED
that:
(a) PROJECT WORK AND SERVICES. The Business shall complete the
work and services detailed in its CEBA application by the Project Completion
Date.
(b) JOB ATTAINMENT OBLIGATION. By the Project Completion Date
and as the Agreement may require for additional time periods thereafter, the
Business shall have fulfilled its Job Attainment Obligation described in Article
VII of this Agreement.
(c) BUSINESS RETENTION. The Business shall have and maintain
in the Community (and State, if required) the Business premises and operations
at least through the Agreement Expiration Date.
(d) RECORDS AND ACCOUNTS. The Business shall maintain job data
information, books, records, documents and other evidence pertaining to all
costs and expenses incurred and revenues received under this Loan Agreement
concerning the Project, in sufficient detail to reflect all costs, direct and
indirect, of labor, materials, equipment, supplies, services and other costs and
expenses of whatever nature, for which payment is claimed under this Loan
Agreement. The Business shall retain all records for a period of three (3) years
from the Agreement Expiration Date.
(e) ACCESS TO RECORDS/INSPECTIONS. The Business shall, upon
reasonable notice and at any time (during normal business hours), permit the
Community and its representatives and the Department, its representatives or the
State Auditor to examine, audit and/or copy (i) any plans and work details
pertaining to the Project, (ii) all of the Business' books, records and accounts
relating to the Project, and (iii) all other documentation or materials related
to this Loan; the Business shall provide proper facilities for making such
examination and/or inspection.
(f) USE OF LOAN FUNDS. The Business shall expend funds
received under the Loan only for the purposes and activities described in its
CEBA Application and approved by the Department.
(g) DOCUMENTATION. The Business shall deliver to the Community
and/or IDED, upon request, (i) copies of all contracts or agreements relating to
the Project, (ii) invoices, receipts, statements or vouchers relating to the
Project, (iii) a list of all unpaid bills for labor and materials in connection
with the Project, (iv) budgets and revisions showing estimated Project costs and
funds required at any given time to complete and pay for the Project, and (v)
current and year-to-date operating statements, including but not limited to a
Profit and Loss and Balance Sheet, not older than sixty (60) days from the date
of request.
(h) NOTICE OF PROCEEDINGS. The Business shall promptly notify
the Community and IDED of the initiation of any claims, lawsuits, bankruptcy
proceedings or other proceedings brought against the Business which would
adversely impact the Project, including, but not limited to, any proceedings to
assert or enforce liens against collateral securing the Loan.
(i) REPORTS. The Business shall prepare, sign and submit the
following reports to the Community throughout the Project period:
Report Due Date
------ --------
Project Schedule Prior to the first draw of CEBA Loan
proceeds
Semi-Annual Progress May 10th and November 10th for the period
Report ending April 30th and October 31st
respectively
Quarterly "Employer's May 10th and November 10th for the previous
Contribution and Payroll calendar quarter
Report"
Semi-Annual Payroll Register May 10th and November 10th for the payroll
with created and/or retained period ending April 30th and October 31st
jobs paying at least respectively
$8.36/hr. highlighted
Status of CEBA Funds Report To request funds
Annual Report Within 90 days after the Business' fiscal
year end
Final "Employer's Contribution Within 30 days after the Project Completion
and Payroll Report" with created Date
and/or retained jobs paying at
least $8.36/hr. highlighted
Final Expenditure Summary Within 30 days of Project Completion Date
Solid and Hazardous Waste Plan Within 30 days of completion which shall
not exceed 90 days from the date of fund
disbursement
Annual Solid and Hazardous March 31 of each calendar year
Waste Progress Report
Payroll Register and "Employer's Within 120 days of Project Completion Date
Contribution Payroll Register"
90 days past the Project
Completion Date with created
and/or retained jobs
highlighted
(j) NOTICE OF BUSINESS CHANGES. The Business shall provide
prompt advance notice to the Community and the Department of any proposed change
in the Business ownership, structure or control which would materially affect
the Project.
(k) NOTICE OF MEETINGS. The Business shall notify the
Community and the Department at least ten (10) working days in advance of all
Board of Directors and Stockholders meetings at which the subject matter of this
Loan Agreement or Project is proposed to be discussed. The Business shall
provide the Department with copies of the agenda and minutes of such meetings
and expressly agrees that a representative of the Department has a right to
attend any and all such meetings for the purposes of the discussion of the
Project and the Loan.
(l) MAINTENANCE OF PROJECT PROPERTY AND INSURANCE. The
Business shall maintain the Project property in good repair and condition,
ordinary wear and tear excepted, and shall not suffer or commit waste or damage
upon the Project property. At the Department's request, the Business shall pay
for and maintain insurance against loss or damage by fire, tornado, and other
hazards, casualties, and contingencies and all risks from time to time included
under "extended coverage" policies. This insurance shall be in an amount not
less than the full insurable value of the Project property. The Business shall
name the Community and Department as a mortgagee and/or an additional loss payee
as appropriate and submit copies of the policies to the Department.
(m) INDEMNIFICATION. The Business shall indemnify and hold
harmless the Department, its officers and employees, from and against any and
all losses, except those losses incurred by the Department resulting from
willful misconduct or negligence on its or their part. The Business shall
indemnify and hold harmless the Community, its officers and employees from and
against any and all losses, except those losses incurred by the Community
resulting from willful misconduct or negligence on its or their part, which
losses shall include losses of the Community incurred in indemnifying and
holding harmless the Department.
(n) PROJECT FEES. The Business shall promptly pay all
appraisal, survey, recording, title, license, permit and other fees and expenses
incurred incident to the Loan.
(o) INTEREST AND SURPLUS PROCEEDS. The Business shall return
all unexpended Loan proceeds and interest accrued on Loan proceeds to the
Community within thirty (30) days after the Project Completion Date.
(p) (PROJECTS WITH CEBA AWARDS GREATER THAN $500,000).
Business shall provide at least 80% of the cost of standard medical and dental
insurance for Full-time Equivalent (FTE) employees.
6.2 NEGATIVE COVENANTS. So long as the Business is indebted to IDED
and/or Community, the Business shall not, without prior written disclosure to
the Community and IDED and prior written consent of IDED (unless IDED prior
approval is expressly waived below), directly or indirectly:
(a) BUSINESS' INTEREST. Assign, waive or transfer any of
Business' rights, powers, duties or obligations under this Loan Agreement.
(b) PROPERTY/COLLATERAL. Sell, transfer, convey, assign,
encumber or otherwise dispose of any of the real property or other collateral
securing the Loan.
(c) RESTRICTIONS. Place or permit any restrictions, covenants
or any similar limitations on the real property and/or other collateral securing
the Loan.
(d) REMOVAL OF COLLATERAL. Remove from the Project site or the
State all or any part of the collateral securing the Loan.
(e) RELOCATION OR ABANDONMENT. Relocate its operations,
physical facilities or jobs (including Created, Retained and Community Base
Jobs) assisted with the Loan proceeds outside the Community or abandon its
operations or facilities or a substantial portion thereof within the Community
during the Loan term.
(f) BUSINESS OWNERSHIP. Materially change the ownership
structure or control of the business affecting the Project, including but not
limited to, entering into any merger or consolidation with any person, firm or
corporation or permitting substantial distribution, liquidation or other
disposal of business assets directly associated with the Project. Changes in the
business ownership, structure or control which do not materially affect the
Project shall require forty-five (45) days prior written notice of the Community
and Department, but not written consent of, the Department. The materiality of
the change and whether or not the change affects the Project shall be determined
by the Department.
(g) BUSINESS OPERATION. Materially change the nature of the
business being conducted, or proposed to be conducted, as described in the
Business' application for CEBA funding.
ARTICLE VII
JOB ATTAINMENT AND WAGE OBLIGATION
7.1 COMMUNITY EMPLOYMENT LEVEL. On the Project Completion Date, the
Business shall have in the Community a total of 100 FTE Jobs as set forth below:
- --------------------------------------------------------------------------------
ATTAINMENT
PROJECT EMPLOYMENT OBLIGATION WAGE OBLIGATION
- --------------------------------------------------------------------------------
Community Based Jobs N/A N/A
- --------------------------------------------------------------------------------
Jefferson Retained Jobs 45 $8.36/hr
- --------------------------------------------------------------------------------
Jefferson Created Jobs 45 $8.36/hr
- --------------------------------------------------------------------------------
Cedar Falls Created Jobs 10 $8.36/hr
- --------------------------------------------------------------------------------
TOTAL 100 100 @ at least $8.36/hr and an
average wage of at least 12.58/hr
- --------------------------------------------------------------------------------
7.2 STATE EMPLOYMENT LEVEL. On the Project Completion Date, the
Business shall have a minimum employment level in the State of Iowa, exclusive
of its Community and project employment levels, of at least 100 FTE Jobs. This
State minimum employment level shall also be maintained through the thirteenth
(13th) week after the Project Completion Date.
7.3 CALCULATION OF JOB ATTAINMENT OBLIGATION. The Department has the
final authority to assess whether the Business has met its Job Attainment and
Wage Obligation at the Project Completion Date. The Department shall determine
the number of Community Base, Retained and Created FTE Jobs maintained, retained
and created by the Business. The Community and the Department reserve the right
to monitor and measure at any time during the Agreement term the number of FTE
Jobs maintained and/or retained and/or created by the Business.
ARTICLE VIII
COVENANTS OF THE COMMUNITY
8.1 AFFIRMATIVE COVENANTS. Until payment in full or required part, or
forgiveness of the Loan, the Community covenants with IDED that:
(a) PROJECT WORK AND SERVICES. The Community shall perform
work and services detailed in the CEBA application by the Project Completion
Date.
(b) REPORTS REVIEW. The Community shall review and sign the
reports prepared by the Business as required under the Loan Agreement and
forward them to the Department. The reports shall be submitted by the Community
by the 15th of the month of receipt, and for the final reports, within sixty
(60) days after the Project Completion Date or Agreement Expiration Date period,
whichever is applicable.
(c) RECORDS. The Community shall maintain books, records and
documents in sufficient detail to demonstrate compliance with the Loan Agreement
and shall maintain these materials for a period of three (3) years beyond the
Agreement Expiration Date.
(d) FILING. The Community shall file in a proper and timely
manner any and all Security Instruments required in connection with the Loan,
naming the Department as co-security holder as required in Article 9.1 and
promptly providing the Department with date-stamped copies of said Security
Instruments. The Community shall, at the Department's request, obtain and
provide to the Department lien searches or attorney's title opinions.
(e) INDEMNIFICATION. The Community shall indemnify and hold
harmless the Department, its officers and employees from and against any and all
losses, including any loss due to the failure of the Community to file any and
all Security Instruments in a proper and timely manner.
(f) REQUESTS FOR LOAN FUNDS. The Community shall review the
Business' requests for Loan funds to ensure that the requests are in compliance
with the Department's requisition procedures and shall execute and forward the
requests to the Department for processing.
(g) REPAYMENTS. The Community shall promptly forward to the
Department all Loan repayments received from the Business.
(h) UNUSED LOAN PROCEEDS. The Community shall return all
unused Loan proceeds, including interest accrued on Loan proceeds, to the
Department within thirty (30) days after the Project Completion Date.
(i) NOTICE OF MEETINGS. The Community shall notify the
Department at least ten (10) days in advance of all public or closed meetings at
which the subject matter of this Loan and/or the Project is proposed to be
discussed. The Community shall provide the Department with copies of the agenda
and minutes of such meetings and expressly agrees that a representative of the
Department has the right to attend any such meetings for the purposes of the
discussion of the Project and/or the Loan.
(j) NOTICE TO DEPARTMENT. In the event the Community becomes
aware of any material alteration in the Project, initiation of any investigation
or proceeding involving the Project or Loan, change in the Business' ownership,
structure or operation, or any other similar occurrence, the Community shall
promptly notify the Department.
(k) RESPONSIBILITY UPON DEFAULT. If the Business fails to
perform under the terms of the Loan Agreement and the Department declares the
Business in default, the Community shall be primarily responsible for recovery
of Loan proceeds, as well as penalties, interest, costs and foreclosure on
collateral. The Department may also initiate an action to recover such proceeds,
or may intervene in any action commenced by the Community.
8.2 NEGATIVE COVENANTS. So long as the Business is indebted to IDED and
loan payments are in arrears or past due, the Community shall not, without
written consent of IDED:
(a) ACCEPTANCE OF LOAN REPAYMENTS. Accept any loan repayments
and/or settlements on community funds considered local effort in this
agreement.
(b) ASSIGNMENT. Assign its rights and responsibilities under
this Loan Agreement.
(c) ALTER FINANCIAL COMMITMENTS. Alter, accelerate or
otherwise change the terms of the Community's financial commitment to the
Business as set forth in Article 4.5.
(d) ADMINISTRATION. Discontinue administration or loan
servicing activities under the Loan Agreement.
ARTICLE IX
SECURITY
9.1 SECURITY INSTRUMENTS. The Business shall execute in joint favor of
the Community and the Department all security agreements, financing statements,
mortgages, personal and/or corporate guarantees (hereafter, "Security
Instruments") as required by the Department. The following Security Instruments
shall be executed by the Business:
Corporate Guaranty and Blanket UCC-1
9.2 FINANCING STATEMENT. If the Department requires the filing of a
financing statement, the Community shall provide the Department with a copy of
the date-stamped financing statement and a certified lien search which reflects
the recordation of the security interests of the Department and the Community
and all other lien-holder of record. The Community shall ensure that the
financing statement(s) include language approved by the Department to secure its
interests.
9.3 MORTGAGE. If the Department requires the filing of a mortgage, the
Community shall provide the Department with a copy of the date-stamped, recorded
mortgage and an attorney's Opinion of Title reflecting the interests of the
Community and the Department.
9.4 COMMUNITY LIABILITY.
(a) The Community shall be solely responsible for the proper
and timely filing of all Security Instruments executed by the Business pursuant
to this Article.
(b) The Community's liability under this Loan Agreement is
limited to those amounts which the Community recovers from the Business in
unused Loan proceeds, enforcement of judgments against the Business and through
its good faith enforcement of the Security Instruments executed by the Business
under this Article. Notwithstanding this limited financial liability, the
Community shall indemnify and hold harmless the Department, its officers and
employees from and against any and all losses related to the Project, including
those which are the result of the Community's failure to file, or improper or
untimely filing, of any Security Instrument executed by the Business pursuant to
this Article. Nothing in this paragraph shall limit the recovery of principal
and interest by the Department in the event of Community's fraud, negligence, or
gross mismanagement in the application for, or use of, sums loaned under the
Loan Agreement.
9.5 COST VARIATION. In the event that the total Project cost is less
than the amount specified in this Agreement, the CEBA participation shall be
reduced at the same ratio as CEBA funds are to the total Project cost, and any
disbursed excess above the reduced CEBA participation amount shall be returned
immediately to IDED with interest at the rate of six percent (6%) per annum from
the date of disbursement by IDED.
ARTICLE X
DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The following shall constitute Events of
Default under this Loan Agreement:
(a) MATERIAL MISREPRESENTATION. If at any time any
representation, warranty or statement made or furnished to the Department by, or
on behalf of, the Business or Community in connection with this Loan Agreement
or to induce the Department to make a loan to the Community and/or Business
shall be determined by the Department to be incorrect, false, misleading or
erroneous in any material respect when made or furnished and shall not have been
remedied to the Department's satisfaction within thirty (30) days after written
notice by the Department is given to the Business or Community.
(b) NON-PAYMENT. If the Business fails to make a payment when
due under the terms of this Loan Agreement within thirty (30) days following
written notice of such overdue payment is given to the Business by the
Department.
(c) NONCOMPLIANCE. If there is a failure by the Business or
Community to comply with any of the covenants, terms or conditions contained in
this Agreement or Security Instruments executed pursuant to this Agreement.
(d) PROJECT COMPLETION DATE. If the Project, in the sole
judgment of the Department, is not completed on or before the Project Completion
Date.
(e) JOB ATTAINMENT OBLIGATION. If the Business, in the
exclusive judgment of the Department, fails to meet its Job Attainment and Wage
Obligation.
(f) BUSINESS CHANGES. If there is a material change in the
Business ownership, structure or control which occurs without the prior written
disclosure to and if required, written permission of the Department.
(g) RELOCATION OR ABANDONMENT. If there is a relocation or
abandonment of the Business or jobs created or retained under the Project.
(h) MISSPENDING. If the Business or Community expends Loan
proceeds for purposes not described in the CEBA application or authorized by the
Department.
(i) INSOLVENCY OR BANKRUPTCY. If the Business becomes
insolvent or bankrupt, or admits in writing its inability to pay its debts as
they mature, or makes an assignment for the benefit of creditors, or the
Business applies for or consents to the appointment of a trustee or receiver for
the Business or for the major part of its property; or if a trustee or receiver
is appointed for the Business or for all or a substantial part of the assets of
the Business and the order of such appointment is not discharged, vacated or
stayed within sixty (60) days after such appointment; or if bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceedings or other
proceedings for relief under any bankruptcy or similar law or laws for the
relief of debtors, are instituted by or against the Business and, if instituted
against the Business, is consented to, or, if contested by the Business is not
dismissed by the adverse parties or by an order, decree or judgment within sixty
(60) days after such institution.
(j) INSURANCE. If loss, theft, damage or destruction of any
substantial portion of the property of the Business occurs for which there is
either no insurance coverage or for which, in the opinion of the Department,
there is insufficient insurance coverage.
(k) INSECURITY. The Department shall deem itself insecure in
good faith and reasonably believes, after consideration of all the facts and
circumstances then existing, that the prospect of payment and satisfaction of
the obligations under this Agreement, or the performance of or observance of the
covenants in this Agreement, or the value of its collateral is or will be
materially impaired.
10.2 NOTICE OF DEFAULT. The Department shall issue a written notice of
default providing therein a thirty (30) day period in which the Business shall
have an opportunity to cure, provided that cure is possible and feasible.
10.3 REMEDIES UPON DEFAULT. If the default remains unremedied, IDED
shall have the right, in addition to any rights and remedies available to it
under any of the Security Instruments, to do one or more of the following:
(a) exercise any remedy provided by law;
(b) declare the unpaid principal plus interest then accrued on
the Note due and payable immediately without presentment, demand, protest,
notice of protest, notice of intention to accelerate or other notice of any
kind, all of which are expressly waived by the Business.
10.4 FAILURE TO MEET JOB ATTAINMENT OBLIGATION. If the Business is
determined by the Department to be in default of the Loan Agreement due to
meeting less than one hundred percent (100%) of its Job Attainment and Wage
Obligation, the Department may require full Loan repayment as described in
section 10.3 above or, at its discretion, the Department may permit repayment of
Loan proceeds using the following criteria:
(a) FORGIVABLE LOANS. If the CEBA award is a Forgivable Loan,
interest buy-down or interest subsidy, the Department may require repayment of
Loan proceeds as follows:
A three-year $200,000 forgivable loan. There will be no
principal or interest payments or accruals for years one, two, and three. At the
project completion date, if the Business has fulfilled at least 50% of its job
creation/retention (if applicable) and wage obligation, $2,000 will be forgiven
for each new FTE job created/retained (if applicable) and maintained for at
least ninety days past the project completion date. Any balance (shortfall) will
be amortized over a two year period (beginning at the project completion date)
at six (6%) percent interest per annum with equal monthly payments, and,
interest will be charged at six (6%) percent per annum from the date of the
first CEBA disbursement on the shortfall amount with that amount accrued as of
the project completion date being due and payable immediately. If the Business
has a current loan balance, the shortfall balance and existing balance will be
combined to reflect a single monthly payment.
(b) CONVENTIONAL LOANS. If the Business received a Loan at a
rate that is below the annual interest rate for non-compliance as set
periodically by the IDED Board, the remaining principal amount of the Loan may
be prorated between the percentage of FTE Jobs created/retained (if applicable)
at the Project Wage Threshold and the percentage of the shortfall. The shortfall
principal portion may be amortized over the remaining term of the Loan,
beginning at the Project Completion Date, at an annual interest rate as
determined periodically by the IDED Board. Interest will be charged beginning
from the date Loan proceeds were disbursed to the Community on behalf of the
Business; interest accrued from this date will be due immediately. The pro rata
portion of the Loan associated with the percentage of FTE Jobs created will be
amortized at the original rate and term.
ARTICLE XI
DISBURSEMENT PROCEDURES
11.1 REQUEST FOR REIMBURSEMENT. All disbursements of proceeds shall be
subject to receipt by the Department of requests for disbursement submitted by
the Community. Requests for disbursement shall be in form and content acceptable
to the Department.
ARTICLE XII
GENERAL TERMS AND PROVISIONS
12.1 BINDING EFFECT. This Loan Agreement shall be binding upon and
shall inure to the benefit of the Department, Community and Business and their
respective heirs, successors, legal representatives and assigns. The
obligations, covenants, warranties, acknowledgments, waivers, agreements, terms,
provisions and conditions of this Loan Agreement shall be jointly and severally
enforceable against the parties to this Loan Agreement.
12.2 COMPLIANCE WITH LAWS AND REGULATIONS. The Community and Business
shall comply with all applicable State and Federal laws, rules (including the
administrative rules adopted by the Department for the CEBA Program - 261 Iowa
Administrative Code, chapter 53), ordinances, regulations and orders.
12.3 TERMINATION FOR CONVENIENCE. In addition to termination due to an
Event of Default or non-appropriation of CEBA funds, this Loan Agreement may be
terminated in whole, or in part, when the Department, Community and the Business
agree that the continuation of the Project would not produce beneficial results
commensurate with the future disbursement of Loan funds. The Department,
Community and Business shall agree upon the termination conditions. The
Community and Business shall not incur new obligations after the effective date
of the termination and shall cancel as many outstanding obligations as is
reasonably possible. The Department will allow full credit to the Community or
the Business for the Department share of the non-cancelable obligations
allowable under the Loan Agreement and properly incurred by the Community or
Business prior to termination.
12.4 PROCEDURE UPON TERMINATION. If the Loan Agreement is terminated
for convenience, an Event of Default or non-appropriation of CEBA funds,
disbursements shall be allowed for costs up to the date of termination
determined by the Department to be in compliance with this Loan Agreement. The
Community and the Business shall return to the Department all unencumbered Loan
proceeds within one (1) week of receipt of Notice of Termination. Any costs
previously paid by the Department which are subsequently determined to be
unallowable through audit, monitoring or closeout procedures shall be returned
to the Department within thirty (30) days of the disallowance.
12.5 SURVIVAL OF AGREEMENT. If any portion of this Loan Agreement is
held to be invalid or unenforceable, the remainder shall be valid and
enforceable. The provisions of this Loan Agreement shall survive the execution
of all instruments herein mentioned and shall continue in full force until the
Loan is paid in full.
12.6 GOVERNING LAW. This Loan Agreement and all Security Instruments
shall be interpreted in accordance with the law of the State of Iowa, and any
action relating to the Loan Agreement shall only be commenced in the Iowa
District Court for Polk County or the United States District Court for the
Southern District of Iowa.
12.7 MODIFICATION. Neither this Loan Agreement nor any provision of the
Security Instruments executed in connection with this Loan Agreement may be
changed, waived, discharged or terminated orally, but only by a written document
signed by the party against whom enforcement of the change, waiver, discharge or
termination is sought.
12.8 NOTICES. Whenever this Loan Agreement requires or permits any
notice or written request by one party to another, it shall be in writing,
enclosed in an envelope, addressed to the party to be notified at the address
heretofore stated (or at such other address as may have been designated by
written notice), properly stamped, sealed and deposited in the United State
Mail. Any such notice given hereunder shall be deemed delivered upon the earlier
of actual receipt or two (2) business days after posting. The Department may
rely on the addresses of the Business and Community set forth heretofore, as
modified from time to time, as being the addresses of the Community and
Business. Whenever any Notice of Default is required by Article 10 to be given
by Department to Business under this Loan agreement, a copy of such Notice of
Default shall also be given by Department to the Community at the same time and
in the manner herein required.
12.9 INVESTMENT OF LOAN FUNDS. Temporarily idle Loan proceeds held by
the Community or Business may be invested provided such investments shall be in
accordance with State law, shall be controlled by the Community or Business, and
any interest accrued shall be credited to and expended on the Project prior to
the expenditure of other Loan proceeds. All Loan proceeds remaining, including
accrued interest, after all allowable Project costs have been paid or obligated
shall be returned to the Department within thirty (30) days after the Project
Completion Date.
12.10. WAIVERS. No waiver by the Department of any default hereunder
shall operate as a waiver of any other default or of the same default on any
future occasion. No delay on the part of the Department in exercising any right
or remedy hereunder shall operate as a waiver thereof. No single or partial
exercise of any right or remedy by the Department shall preclude future exercise
thereof or the exercise of any other right or remedy.
12.11 LIMITATION. It is agreed between the Community and the Business
that the Department shall not, under any circumstances, be obligated financially
under this Loan Agreement except to disburse funds according to the terms of the
Agreement.
12.12 ENFORCEMENT EXPENSES. The Business shall pay upon demand any and
all reasonable fees and expenses of the Community and/or the Department,
including the fees and expenses of their attorneys, experts and agents, in
connection with the exercise or enforcement of any of the rights of the
Department and/or Community under the Loan Agreement.
12.13 HEADINGS. The headings in this Loan Agreement are intended solely
for convenience of reference shall be given no effect in the construction and
interpretation of this Loan Agreement.
12.14 FINAL AUTHORITY. The Department shall have the final authority to
assess whether the Business has met its Job Attainment Obligation and whether
the Community and Business have otherwise complied with the terms of this
Agreement.
12.15 INTEGRATION. This Loan Agreement contains the entire
understanding between the Community, Business and the Department and any
representations that may have been made before or after the signing of this Loan
Agreement, which are not contained herein, are non-binding, void and of no
effect. None of the parties have relied on any such prior representation in
entering into this Loan Agreement.
12.16 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 but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement
effective as of the Award Date first stated.
COMMUNITY: COMMUNITY:
Attorney for City of Jefferson City of Jefferson
Approved as to form and
content.
BY: /s/ Robert A. Schwarzkopf BY: /s/ Charles Davis
---------------------------------- ------------------------------------
Charles Davis, Mayor
City Hall, 220 North Chestnut Street
Jefferson, Iowa 50129
IOWA DEPARTMENT OF ECONOMIC
DEVELOPMENT:
BY:
---------------------------------
Michael E. Miller, Chief
Bureau of Business Finance
BUSINESS:
Parker Industries, Inc.
BY: /s/ Steven R. Lind
---------------------------------
Steven R. Lind, President
900 East Highway 30
Jefferson, Iowa 50129
<PAGE>
ATTACHMENT B2
PROMISSORY NOTE -
COMMUNITY
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA PROGRAM
PROMISSORY NOTE
Loan Number: 99-CEBA-23
Des Moines, Iowa
-----------------
(City and State)
$300,000 February 18, 1999
- -------- -----------------
(Date)
FOR VALUE RECEIVED, the undersigned (hereafter called the "Maker")
promises to pay to the order of the State of Iowa, Department of Economic
Development (hereafter called the "Payee"), at its office at 200 East Grand
Avenue, Des Moines, Iowa 50309, or upon notice to the Maker, at such other place
as may be designated from time to time by the holder, the principal sum of
$300,000, to be paid as follows:
A $100,000 loan at (0%) interest to be paid as follows:
60 equal monthly payments of $1,666.67 beginning on the last day of the
third month from the date CEBA funds are disbursed. Final payment may vary
depending upon dates payments are received. Such payments shall be applied first
on interest then due and the remainder on principal.
And, a $200,000 forgivable loan at six (6%) percent interest to be paid as
follows:
A three-year $200,000 forgivable loan. There will be no principal or
interest payments or accruals for years one, two, and three. At the project
completion date, if the Business has fulfilled at least 50% of its job
creation/retention (if applicable) and wage obligation, $2,000 will be forgiven
for each new FTE job created/retained (if applicable) and maintained for at
least ninety days past the project completion date. Any balance (shortfall) will
be amortized over a two year period (beginning at the project completion date)
at six (6%) percent interest per annum with equal monthly payments, and,
interest will be charged at six (6%) percent per annum from the date of the
first CEBA disbursement on the shortfall amount with that amount accrued as of
the project completion date being due and payable immediately. If the Business
has a current loan balance, the shortfall balance and existing balance will be
combined to reflect a single monthly payment.
1. Payments. All payments under the Note shall be applied in this
order: (1) to interest, and (2) to principal.
2. Loan Agreement; Acceleration Upon Default. This Note is issued by
Maker to evidence an obligation to repay a loan according to the terms of Loan
Agreement #99-CEBA-23 of February 18, 1999 between the Payee and Maker and, at
the election of the holder without notice to the Maker, shall become immediately
due and payable in the event any payment is not made when due or upon the
occurrence of any event of default under the terms of the Loan Agreement.
3. Limitation. Maker's liability for the repayment of this Note is
limited to those amounts Maker collects through its good faith enforcement of
security interest which Maker represents that it has obtained or will obtain as
required by the above-referenced Loan Agreement. Upon exhaustion of its rights
in the collateral granted by such security interest, the Maker will have no
liability for any deficiency owing Payee under this Note. Nothing in this
paragraph shall limit the recovery of principal and interest by Payee in the
event of Maker's fraud, negligence, or gross mismanagement in the application
for, or use of, sums loaned under the above-referenced Loan Agreement.
4. Reduced Amount. In the event the Maker fails to requisition and
spend the full face amount of the Note as set out above, then the amount of each
installment payment shall be reduced accordingly in equal amounts.
5. Security. Payment of this Note is secured by Corporate Guaranty and
Blanket UCC-1 and the holder is entitled to the benefits of the security therein
described.
In case of a decline in the market value of the collateral, or any part
thereof, the Payee may demand that additional collateral of quality and value
satisfactory to holder be delivered, pledged and transferred to holder.
6. Waiver. No delay or omission on the part of the holder in exercising
any right under this Note shall operate as a waiver of that right or of any
other right under this Note. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right and/or remedy on any future occasion.
7. Waiver of Protest. Each maker, surety, endorser and guarantor of
this Note, expressly waives presentment, protest, demand, notice of dishonor or
default, and notice of any kind with respect to this Note.
8. Costs of Collection. The Maker will pay on demand all costs of
collection, maintenance of collateral, legal expenses, and attorneys' fees
incurred or paid by the holder in collecting and/or enforcing this Note on
default.
9. Meaning of Terms. As used in this Note, "holder" shall mean the
Payee or other endorsee of this Note, who is in possession of it, or the bearer
hereof, if this Note is at the time payable to the bearer. The word "Maker"
shall mean each of the undersigned. If this Note is signed by more than one
person, it shall be the joint and several liabilities of such persons.
10. Miscellaneous. The captions of paragraphs in this Promissory Note
are for the convenience of reference only, shall not define or limit the
provisions hereof and shall not have any legal or other significance whatsoever.
ADDRESS: City of Jefferson:
City Hall, 220 North Chestnut Street
Jefferson, Iowa 50129
BY: /s/ Charles Davis
---------------------------------
Charles Davis, Mayor
ATTEST: /s/ Diane M. Kennedy
--------------------------------
(Signature of City Clerk)
ATTACHMENT B1
PROMISSORY NOTE -
BUSINESS
IOWA DEPARTMENT OF ECONOMIC DEVELOPMENT
CEBA PROGRAM
PROMISSORY NOTE
Loan Number: 99-CEBA-23
Des Moines, Iowa
-----------------
(City and State)
$300,000 February 18, 1999
- -------- -----------------
(Date)
FOR VALUE RECEIVED, the undersigned (hereafter called the "Maker")
promises to pay to the order of City of Jefferson (hereafter called the
"Payee"), at its office at City Hall, 220 North Chestnut Street, Jefferson, Iowa
50129, or upon notice to the Maker, at such other place as may be designated
from time to time by the holder, the principal sum of $300,000, to be paid as
follows:
A $100,000 loan at (0%) interest to be paid as follows:
60 equal monthly payments of $1,666.67 beginning on the last day of the
third month from the date CEBA funds are disbursed. Final payment may vary
depending upon dates payments are received. Such payments shall be applied first
on interest then due and the remainder on principal.
And, a $200,000 forgivable loan at six (6%) percent interest to be paid as
follows:
A three-year $200,000 forgivable loan. There will be no principal or
interest payments or accruals for years one, two, and three. At the project
completion date, if the Business has fulfilled at least 50% of its job
creation/retention (if applicable) and wage obligation, $2,000 will be forgiven
for each new FTE job created/retained (if applicable) and maintained for at
least ninety days past the project completion date. Any balance (shortfall) will
be amortized over a two year period (beginning at the project completion date)
at six (6%) percent interest per annum with equal monthly payments, and,
interest will be charged at six (6%) percent per annum from the date of the
first CEBA disbursement on the shortfall amount with that amount accrued as of
the project completion date being due and payable immediately. If the Business
has a current loan balance, the shortfall balance and existing balance will be
combined to reflect a single monthly payment.
1. Payments. All payments under the Note shall be applied in this
order: (1) to interest, and (2) to principal.
2. Loan Agreement; Acceleration Upon Default. This Note is issued by
Maker to evidence an obligation to repay a loan according to the terms of Loan
Agreement #99-CEBA-23 of February 18, 1999 between the Payee and Maker and, at
the election of the holder without notice to the Maker, shall become immediately
due and payable in the event any payment is not made when due or upon the
occurrence of any event of default under the terms of the Loan Agreement.
3. Reduced Amount. In the event the Maker fails to requisition and
spend the full face amount of the Note as set out above, then the amount of each
installment payment shall be reduced accordingly in equal amounts.
4. Security. Payment of this Note is secured by Corporate Guaranty and
Blanket UCC-1 and the holder is entitled to the benefits of the security therein
described.
In case of a decline in the market value of the collateral, or any part
thereof, the Payee may demand that additional collateral of quality and value
satisfactory to holder be delivered, pledged and transferred to holder.
5. Waiver. No delay or omission on the part of the holder in exercising
any right under this Note shall operate as a waiver of that right or of any
other right under this Note. A waiver on any one occasion shall not be construed
as a bar to or waiver of any right and/or remedy on any future occasion.
6. Waiver of Protest. Each maker, surety, endorser and guarantor of
this Note, expressly waives presentment, protest, demand, notice of dishonor or
default, and notice of any kind with respect to this Note.
7. Costs of Collection. The Maker will pay on demand all costs of
collection, maintenance of collateral, legal expenses, and attorneys' fees
incurred or paid by the holder in collecting and/or enforcing this Note on
default.
<PAGE>
8. Meaning of Terms. As used in this Note, "holder" shall mean the
Payee or other endorsee of this Note, who is in possession of it, or the bearer
hereof, if this Note is at the time payable to the bearer. The word "Maker"
shall mean each of the undersigned. If this Note is signed by more than one
person, it shall be the joint and several liabilities of such persons.
9. Miscellaneous. The captions of paragraphs in this Promissory Note
are for the convenience of reference only, shall not define or limit the
provisions hereof and shall not have any legal or other significance whatsoever.
ADDRESS: Parker Industries, Inc.:
900 East Highway 30
Jefferson, Iowa 50129
BY: /s/ Steven R. Lind
------------------------------------
Steven R. Lind, President
ATTEST: /s/ Thaddeus P. Vannice
-----------------------------------
(Signature of Secretary)
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made as of March 5, 1999 by and
between Greene County Development Corporation, an economic development
corporation formed pursuant to I.C.A. chapter 496B, ("Landlord") and Parker
Acquisition Sub, Inc., an Iowa corporation ("Tenant").
WITNESSETH:
Landlord for and in consideration of the rents, covenants and
agreements hereinafter reserved, mentioned and contained on the part of Tenant
to be paid, kept, observed and performed, has leased, rented, let and demised
and by these presents does lease, rent, let and demise unto Tenant, and Tenant
does hereby take and hire, upon and subject to the conditions or limitations
hereinafter expressed, that parcel of improved land owned in fee by Landlord and
situated in the City of Jefferson, County of Greene, Iowa situated at 900 East
Highway 30, Jefferson, Iowa 50129 and more particularly described on Exhibit A
attached hereto and made a part hereof ("Demised Premises").
1. Term of Lease. The term of this lease shall commence on the date
hereof ("Commencement Date") and shall end ten (10) years after the Commencement
Date ("Termination Date") unless terminated sooner pursuant to the provisions of
this Lease.
2. Improvements. Tenant, at its sole cost and expense, is authorized to
maintain and/or construct manufacturing and/or administrative facilities on the
Demised Premises ("Facilities"). The Demised Premises shall be graded and the
Facilities shall be maintained and/or constructed in accordance with sound
engineering standards.
3. Rent. Tenant agrees to pay Landlord rent on an annual basis, in
advance due on the anniversary of the Commencement Date in each year (or the
next business day if such day is a weekend or holiday observed by the state
government of Iowa), in an amount as follows:
Year Amount Due
---- ----------
1 (Commencement Date) $0
2 $0
3 $67,405
4 $67,405
5 $67,405
6 $67,405
7 $67,405
8 $175,000
9 $175,000
10 $175,000
4. Use of the Demised Premises. The Demised Premises and the Facilities
currently existing and/or hereafter to be erected thereon by Tenant shall be
used primarily as a manufacturing facility for the manufacture and the
warehousing of finished products prior to shipment. Tenant shall not use or
occupy the Demised Premises or knowingly permit them to be used or occupied
contrary to any statute, rule, order, ordinance, requirement or regulation
applicable thereto, or in any manner which would violate any certificate of
occupancy affecting the same, or which would cause the value or usefulness of
the Demised Premises or any portion thereof substantially to diminish or which
would constitute a public or private nuisance or waste; and Tenant agrees that
it will promptly upon discovery of any such use, take all necessary steps to
discontinue such use.
5. Real Estate Taxes. All real estate taxes on the Demised Premises and
the Facilities shall be paid by Tenant.
6. Insurance. At all times during the term of this Lease the Tenant
shall maintain and keep in force liability insurance coverage which names
Landlord as an additional insured. Tenant shall from time to time deliver to
Landlord certificates of insurance evidencing such coverage. Policies providing
such insurance coverage shall prevent termination by the insurers without at
least ten days prior written notice to Landlord.
7. Utilities. Landlord shall have no obligation to provide utilities to
the Demised Premises. However, if Tenant extends any utility service to the
Demised Premises, it shall not remove them on or before the Termination Date
without the prior written consent of Landlord. Tenant shall pay the cost of any
and all utilities.
8. Compliance with Law. Throughout the term of this Lease, at Tenant's
sole cost and expense, Tenant shall promptly correct upon discovery any
violations and shall promptly comply with any and all present and future laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments and appropriate departments, commissions, boards and
officers thereof applicable to the Demised Premises or any part thereof or to
the operations of Tenant thereon.
9. Mechanic's Liens and Other Liens. Tenant shall not suffer or permit
any mechanics' liens to be filed against the Demised Premises or any part
thereof by reason of work, labor, services and materials supplied or claimed to
have been supplied to Tenant. If any such mechanics' liens shall at any time be
filed against the Demised Premises or any part thereof, Tenant shall cause the
same to be discharged of record within sixty days after the date of filing the
same, or shall deliver to Landlord a bond satisfactory to Landlord protecting
Landlord against such lien if Tenant decides to contest any such lien.
10. Defaults. If default shall be made by Tenant or Landlord by
operation of law or otherwise under the provisions hereof in keeping, observing
or performing any of the terms contained in this Lease, and such default shall
continue for a period of thirty days after written notice thereof given by the
non-defaulting party, such non-defaulting party may give notice to the
defaulting party specifying such default and stating that this Lease and the
term hereby demised shall expire and terminate on a date to be specified on such
notice. Upon any expiration or termination of this Lease, Tenant shall quit and
peaceably surrender the Demised Premises to Landlord and shall remove all
improvements placed thereon by Tenant.
11. Purchase Option. (a) From the Commencement Date until the
Termination Date, Tenant (or at the sole discretion of Tenant, any affiliate of
Tenant) shall have the right to purchase the Premises, together with the
Facilities thereon, all of Landlord's interest in, to and under this Lease, and
all of Landlord's interest in, to and under that certain Option to purchase
Parcel B of Lot 6 of the SE1/4 of Section 32, Township 84 North, Range 30 West
of the 5th P.M., Greene County, Iowa, all for a purchase price as set forth in
paragraph 11(b) below, and on the terms and conditions set forth in paragraph
11(c) below. Tenant shall exercise such right by delivery of written notice to
Landlord.
(b) The purchase price (the "Purchase Price") payable by Tenant for the
interests of Landlord, as aforesaid, shall be as follows:
During Year Purchase Price
----------- --------------
1 $750,000
2 $750,000
3 $682,595
4 $649,320
5 $614,381
6 $577,695
7 $539,175
8 Appraised Value
9 Appraised Value
10 Appraised Value;
where the term "Appraised Value" shall mean the fair market value as determined
by an independent real estate appraiser selected to the mutual satisfaction of
Landlord and Tenant.
(c) If Tenant elects to exercise the purchase option set forth in this
Section 11, the closing of the transaction shall take place at a time and date
not less than thirty (30) days and not more than 120 days after receipt by
Landlord of Tenant's notice of such exercise, at the business office of Tenant.
At the closing, Landlord shall deliver to Tenant a general warranty deed,
together with appropriate resolutions confirming the authority of Landlord to
make the contemplated conveyance to Tenant. At the closing, the Tenant shall
deliver to Landlord by cashier's check or bank certified check, or by wire
transfer of funds, the Purchase Price. Upon conveyance of title and payment of
the Purchase Price, Tenant's obligations to Landlord and Landlord's obligations
to Tenant under this Lease shall terminate. Any assignment or transfer of
Landlord's interest in this Lease and/or the Premises shall be conditioned upon
and subject to this purchase option. Any assignment or transfer of Tenant's
rights under this Lease shall include, without any specific language, action or
deed, the assignment or transfer of this purchase option.
12. Assignment. Tenant shall not assign this Lease either in whole or
in part or sublet the Demised Premises without first obtaining, in each and
every instance, Landlord's consent thereto in writing, which consent shall not
be unreasonably withheld. Notwithstanding the foregoing, Tenant may assign this
Lease in whole or in part to any affiliate of Tenant upon notice to Landlord
within thirty (30) days of such assignment.
13. Entry by Landlord. Tenant agrees to permit Landlord and the
authorized representatives of Landlord to enter upon the Demised Premises upon
prior notice at all reasonable times during ordinary business hours for the
purpose of inspecting the same.
14. Indemnification. Tenant agrees to indemnify and save Landlord
harmless against and from any and all claims by or on behalf of any persons,
entity or governmental agency arising from the conduct, management or from any
work or thing whatsoever done in or about the Demised Premises, including
without limitation any work or thing resulting in environmental contamination of
the Demised Premises unless caused by Landlord's negligence.
15. Net Lease. Except as specifically stated in this Lease, Landlord
shall have no obligation to pay any costs or expenses with respect to the
Demised Premises during the term of this Lease.
16. Notices. All notices which are required or permitted under the
terms of this Lease shall be given by either party to the other in writing. All
such notices shall be sent by United States mail, postage prepaid, or personal
delivery to the addresses set forth below the signatures of the parties to this
Lease.
17. Binding Effect. Covenants and agreements herein contained shall
bind and inure to the benefit of Landlord and its successors and assigns, and
Tenant and its permitted successors and assigns.
18. Captions. The captions of this Lease are for convenience in
reference only and in no way define, limit or describe the scope or intent of
this Lease, nor in any way affect this Lease.
19. Relation. This Lease does not create the relationship of principal
and agent or of partnership or joint venture or of any association between
Landlord and Tenant, the sole relationship between Landlord and Tenant being
that of Landlord and Tenant.
20. Entire Agreement; Modification. All preliminary and contemporaneous
negotiations are merged into and incorporated in this Lease. This Lease contains
the entire agreement between the parties and shall not be modified or amended in
any manner except by an instrument in writing executed by the parties hereto.
[remainder of page intentionally blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Lease to
be executed as of the day and year first above written.
Landlord:
GREENE COUNTY DEVELOPMENT
CORPORATION
By: /s/ Michael F. Mumma
------------------------------------
Name: Michael F. Mumma
Title: Vice President
Tenant:
PARKER ACQUISITION SUB, INC.
By: /s/ Steven R. Lind
------------------------------------
Name: Steven R. Lind
Title: President
<PAGE>
Exhibit A
---------
Demised Premises
----------------
Lots 1 and 2 in the SE1/4 of Section 32, Township 84 North, Range 30 West of the
5th P.M., Greene County, Iowa and Parcel A (except Lot 1 of Parcel A) of Lot 6
of the E1/2 of the SE1/4 of Section 32, Township 84 North, Range 30 West of the
5th P.M., Greene County, Iowa.
NON-INTEREST BEARING SECURED
PROMISSORY NOTE
$3,254,395 Cedar Falls, Iowa
March 5, 1999
FOR VALUE RECEIVED, the undersigned, PARKER ACQUISITION SUB., INC., an
Iowa corporation ("Maker"), hereby promises to pay to DWZM, INC., a Pennsylvania
corporation or to its permitted assigns ("Payee"), at The Triad Building, 2200
Renaissance Boulevard, Suite 150, King of Prussia, Pennsylvania 19406, or at
such other place as Payee may designate in writing, the principal sum of Three
Million, Two Hundred Fifty-four Thousand, Three Hundred Ninety-five and no/100
Dollars ($3,254,395.00).
This Note is delivered pursuant to an Asset Purchase Agreement dated as
of March 3, 1999 between Maker and its parent, Top Air Manufacturing, Inc., an
Iowa corporation, on the one hand, and Payee and its parent, Owosso Corporation,
a Pennsylvania corporation, on the other hand (the "Agreement"). Payments of
principal shall be paid by the undersigned to Payee in monthly installments as
and to the extent the accounts receivable acquired by Maker from Payee pursuant
to the Agreement (the "Accounts Receivable") are reduced (other than by
write-off) in an amount equal to the amount of any such reduction in the
immediately preceding calendar month payable on the 15th day of each succeeding
month commencing April 15, 1999, until the entire principal amount hereof shall
have been paid; provided, however, that irrespective of the amounts collected on
said accounts receivable by such date, Maker shall have paid to Payee no less
than One Million, Nine Hundred Fifty-two Thousand, Six Hundred Thirty-seven and
no/100 Dollars ($1,952,637.00) of principal by November 15, 1999, Two Million
Seven Hundred Sixty-six Thousand, Two Hundred Thirty-six and no/100 Dollars
($2,766,236.00) of principal by November 15, 2000, with a final payment of all
then outstanding principal (if any) of this Note due on February 15, 2001.
No interest shall accrue on this Note, provided, however, that if any
portion of this Note is not paid when due, the principal outstanding hereunder
shall, in Payee's discretion and without waiving any of the Payee's other rights
and remedies, bear interest at a rate equal to the lesser of eighteen percent
(18%) per annum or the maximum rate allowable under law (the "Default Rate"),
said amount to be payable on demand. In the event any installment of principal
is not paid when due and such failure is not cured within forty-five (45) days
of written demand from Payee, Payee shall have the right to accelerate the
principal of this Note by written notice of such acceleration to Maker and
thereafter Payee shall be entitled to recover from Maker the full amount of
principal then outstanding hereunder together with interest due at the Default
Rate until paid.
This Note is the note referred to in Section 2.2(a)(ii) and is secured
by a first priority security interest in certain accounts receivable of Maker.
Maker shall have the right to set off any and all amounts due hereunder against
any amounts due to Maker pursuant to Section 12.8 of the Agreement in the manner
provided in said Agreement.
The undersigned, on demand from Payee, shall pay to Payee all costs and
expenses incurred or paid by Payee for any reason in enforcing or attempting to
enforce any of the Payee's rights and remedies in connection with the Note,
including representation in any insolvency, receivership or bankruptcy
proceedings and including, but not limited to, all attorneys' fees and expenses,
whether or not legal proceedings relating to this Note are commenced. Until
Payee is fully paid, such costs and expenses shall be added to the amounts due
under this Note, shall be payable on demand and shall bear interest at the
Default Rate.
The undersigned hereby waives presentment, demand for payment, notice
of non-payment, protests, notice or protests, notice of dishonor and all other
notices in connection with this Note.
No waiver by Payee of any obligation of the undersigned under this Note
shall be deemed to have been made unless such waiver is in writing and signed by
Payee. Payee reserves the right to waive or refrain from waiving any right or
remedy under this Note. No delay or omission on the part of Payee in exercising
any right or remedy under this Note shall operate as a waiver of such right or
remedy or of any other right or remedy under this Note. A waiver on any one
occasion shall not be construed as a bar to or waiver of any such right or
remedy on any future occasion.
If any court of competent jurisdiction determines any provision
hereunder to be prohibited or invalid or unenforceable under applicable law,
such provision shall be ineffective only to the extent of such prohibition,
invalidity or unenforceability without prohibiting, invalidating or rendering
unenforceable the remainder of the provisions of this Note.
This Note shall be governed by the internal substantive laws of the
State of Iowa without regard to its conflict-of-law provisions or
interpretations. Any litigation arising under this Note or relating to the
obligations of the undersigned or any guarantor, surety or endorser of or under
this Note shall be subject to the jurisdiction of any state or federal court
located in the State of Iowa as Payee may designate. Any of the foregoing courts
shall have personal jurisdiction over the undersigned and any guarantor, surety
or endorser of this Note and jurisdiction over matters arising under or out of
the obligations of the undersigned under this Note. This Note may be assigned by
DWZM, Inc. to any affiliate of DWZM, Inc., including its parent, Owosso
Corporation, and may be pledged as security to any bank lending funds to Owosso
Corporation.
STATUTORY NOTICE
THE OBLIGATIONS OF THE UNDERSIGNED ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN ASSET PURCHASE AGREEMENT DATED MARCH 3, 1999 BETWEEN
MAKER AND ITS AFOREMENTIONED PARENT, ON THE ONE HAND AND PAYEE AND ITS
AFOREMENTIONED PARENT, ON THE OTHER HAND, INCLUDING WITHOUT LIMITATION, THE
RIGHT OF SET OFF AGAINST AMOUNTS OTHERWISE PAYABLE UNDER THIS NOTE IN THE MANNER
PROVIDED IN SAID AGREEMENT.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING PAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT PAYEE AND MAKER FROM MISUNDERSTANDING
OR DISAPPOINTMENT, ANY AGREEMENTS PAYEE AND MAKER HAVE REACHED COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING AND IN THE OTHER WRITTEN AGREEMENTS
REFERENCED HEREIN, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE
AGREEMENT BETWEEN PAYEE AND THE UNDERSIGNED, EXCEPT AS PAYEE AND THE UNDERSIGNED
MAY LATER AGREE TO MODIFY, IN WRITING.
Signed and delivered in the State of Iowa by the undersigned as of the
date first above written.
PARKER ACQUISITION SUB, INC.,
An Iowa corporation
By: /s/ Steven R. Lind
---------------------------------------
Title: President
-------------------------------------
EMPLOYMENT AGREEMENT
Employment Agreement ("Agreement"), dated January 15, 1997, between Top
Air Manufacturing, Inc., an Iowa corporation (the "Company"), and Thaddeus P.
Vannice, Sr. ("Employee").
WITNESSETH:
WHEREAS, Employee has great expertise in the Company's business;
WHEREAS, Employee's use of such expertise in competition with the
Company would have an extremely detrimental effect on the Company and Employee;
WHEREAS, the Company desires to obtain the services of Employee, as its
employee; and
WHEREAS, in consideration of Employee's agreement to provide such
services to company, Company has agreed to assure to Employee at least three (3)
full years of retention in such capacity.
NOW, THEREFORE, the parties hereto agree as follows:
1. Recitals. Each of the above recitals is incorporated herein and made
a part hereof.
2. Employment. The Company employs Employee, as Chief Financial Officer
of Company, and Employee accepts such employment by the Company upon the terms
and conditions set forth in this Agreement, for the period beginning on the date
of this Agreement and ending upon termination pursuant to paragraph 5 hereof
(the "Employment Period"), to perform such duties as are customarily performed
by the Chief Financial Officer. In connection herewith, no later than January
22, 1997, Employee shall be elected by the board of directors of the Company to
the position of Chief Financial Officer of the Company.
3. Compensation. During the Employment Period, the Company will pay
Employee base compensation at the rate of $75,000 per annum which may be
increased, but not decreased, by the Company in accordance with its customary
salary review and adjustment policies. In addition, Employee shall be entitled
to (i) receive during the Employment Period bonus compensation (whether payable
in cash, options to acquire common stock of the Company or common stock of the
Company) in accordance with the Company's bonus policy; provided, however, that
any bonus compensation payable in cash to Employee shall be at the discretion of
the Company, taking into account Employee's higher base compensation relative to
other officers of the Company; (ii) participate in any and all life insurance,
disability insurance, and other employee benefit plans which are made available
during the Employment Period to executives of the Company of the Employee's
rank; and (iii) reimbursement for all expenses reasonably incurred by him on
behalf of the Company including travel, accommodations and the costs of
maintaining an office at 1930 South Main Street, Princeton, Illinois (the
"Office"). The Employee shall be entitled to vacation (taken consecutively or in
segments), aggregating three (3) weeks each calendar year during the Employment
Period. In the event Employee's site of employment is relocated to Cedar Falls,
Iowa or other site more than 50 miles from the Office, the Company shall pay
reasonable relocation costs incurred in connection with such move as determined
in good faith by the parties.
4. Services. During the Employment Period, Employee shall devote his
best efforts and time and attention to the business affairs of the Company in
his capacity as Chief Financial Officer. At the Company's discretion, Employee
shall be allowed to work with Mr. Wayne W. Whalen ("Whalen") on other business
opportunities to the extent said activities do not interfere with Employee's
obligations to Company hereunder.
5. Termination.
A. The Employment Period will continue from the date hereof through and
during the period ending on the third anniversary of the date hereof, unless
terminated earlier by (a) Employee's death or permanent disability; (b) the
Company, for cause; or (c) by Employee following reduction in his
responsibilities or diminution of his duties in a manner inconsistent with the
position of chief financial officer. For purpose of this Section 5, "cause"
shall mean (i) gross inattention or neglect to duty or any other willful,
reckless or grossly negligent act (or omission to act) by Employee, which
materially injures the Company, and (ii) the commission by Employee of a felony
or other crime involving moral turpitude or the commission by Employee of an act
of financial dishonesty against the Company. Except in the case of death or
permanent disability, termination will not be effective until 3 days after the
Company has given written notice to Employee of such termination.
B. In the event Employee is terminated by the Company without cause
prior to the expiration of the Employment Period or Employee is terminated
pursuant to Section 5.A(c) hereof, Employee's obligations hereunder shall cease
and all compensation and other benefits which would have been received by
Employee following the date of termination and prior to the end of the
Employment Period shall become immediately due and payable.
C. In the event the Employment Period is terminated by the Company for
cause, by the Employee for any reason other than pursuant to Section 5.A(c)
hereof or pursuant to Section 5.A(a) hereof, Employee shall forfeit all unearned
compensation remaining hereunder.
6. Health Insurance. Notwithstanding Section 3(ii) hereof, for so long
as Employee is employed by the Company, the Company will provide to Employee,
his wife and children, health insurance substantially comparable to that
currently provided for other executive officers of the Company. In the event
such insurance is not available through the Company, then Company shall pay
Employee the cost of comparable insurance through another carrier.
7. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, sent by overnight courier
(e.g., Federal Express) or mailed by first class mail, to the recipient at the
address below indicated:
To the Company: Top Air Manufacturing, Inc.
317 Savannah Park Road
Cedar Falls, Iowa 50613
To Employee: Thaddeus P. Vannice, Sr.
1930 South Main Street
Princeton, Illinois 61356
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered,
sent or mailed.
8. Non-competition and Solicitation Agreement. For and during the
period of eighteen (18) months after the termination of the Employment Period,
Employee will not, directly or indirectly, individually or as partner, agent,
employee of any other person or entity, or otherwise, solicit Company's
customers located in the Region (as defined below) nor will he compete in the
Region with the business of the Company, in the manufacture or sale of any
product previously or currently manufactured or sold by Top Air Manufacturing,
Inc. (or any product substantially similar thereto). For purposes of this
Agreement, the Region is defined to be the states of North Dakota, South Dakota,
Nebraska, Kansas, Oklahoma, Minnesota, Iowa, Missouri, Wisconsin, Illinois,
Michigan, Indiana and Ohio. Notwithstanding anything herein to the contrary,
Employee shall not be subject to the terms and provisions of this Section 8 in
the event (i) Employee is terminated without cause pursuant to Section 5(A)(c);
or (ii) following the expiration of the Employment Period, Employee is not
offered employment on substantially the same terms as that offered to the other
executive officers of the Company.
9. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. The parties agree that (i) the provisions of this Agreement shall be
severable in the event that any of the provisions hereof are for any reason
whatsoever invalid, void or otherwise unenforceable, (ii) such invalid, void or
otherwise unenforceable provisions shall be automatically replaced by other
provisions which are as similar as possible in terms to such invalid, void or
otherwise unenforceable provisions but are valid and enforceable and (iii) the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
10. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
11. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
12. Governing Law. All questions concerning the construction, validity
and interpretation of the Agreement will be governed by the internal law, and
not the law of conflicts, of the State of Iowa.
13. Remedies. Each of the parties to this Agreement will be entitled to
enforce such party's rights under this Agreement specifically, and to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in such party's favor.
14. Amendments and Waivers; Third Party Beneficiaries. Any provision of
this Agreement may be amended or waived only with the prior written consent of
the Company and Employee. The failure of either party to insist, in any one or
more instances, upon performance of the terms and conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
15. Attorney fees and litigation venue. Any dispute regarding the terms
of this agreement shall be resolved in:
(a) Blackhawk County, Iowa, if relief is sought against Company
(although enforcement of such an award may be had in Cook
County, Illinois, as Employee may elect); and
(b) Bureau County, Illinois, if relief is sought against Employee,
and the prevailing party shall be entitled to recover from the other party all
such prevailing party's reasonable attorney fees and costs incurred in
connection therewith. All disputes shall be submitted to arbitration, in
accordance with the laws of Iowa, according to the Rules of the American
Arbitration Association and arbitrated under the auspices thereof.
16. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors and assigns. Neither party may assign such party's
rights or delegate such party's obligations hereunder without the prior written
consent of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
TOP AIR MANUFACTURING, INC.
By: /s/ Steven R. Lind
--------------------------------
Its: President
--------------------------------
/s/ Thaddeus P. Vannice, Sr.
-------------------------------------
THADDEUS P. VANNICE, SR.
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 19th day of October, 1998, between Top
Air Manufacturing, Inc., an Iowa Corporation (the "Company" or "Employer"), and
James R. Harken ("Employee").
WITNESSETH:
WHEREAS, Employer represents that it wishes to employ said Employee
under any and all terms set forth in this Agreement; and
WHEREAS, Employee represents and is willing to work diligently for said
Employer under any and all terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereto, it is agreed as follows:
1. Employment. The Company hereby employs Employee, as Vice President
of Operations of the Company, and Employee accepts such employment by the
Company upon the terms and conditions set forth in this Agreement, for the
period beginning on the date of this Agreement, and ending upon termination
pursuant to paragraph S hereof (the "Employment Period").
2. Compensation. During the Employment Period, the Company will
compensate Employee as follows:
(a) Employee shall receive an initial annual fixed salary of
$70,000.00, payable in bi-weekly installments of $2,692.31. The Board
of Directors may, by appropriate Board action, adjust Employees fixed
annual salary under this agreement at any time during the term of this
agreement.
(b) Employee shall be entitled to receive employee benefits
including, but not limited to, medical insurance, life insurance,
disability insurance and pension benefits or similar plans or programs
now existing or hereafter established to the extent that he is eligible
under the general provisions of the applicable plans, provided however,
that the Board may increase or decrease these benefits as long as
Employee is not discriminated against.
3. Services. Employee agrees that during his period of employment he
will serve Employer on a full-time basis faithfully, diligently, confidently and
to the best of his ability, and shall perform all duties incident to the office
he holds pursuant to paragraph 1 hereof.
4. Extent of Service. Employee shall devote his entire time, attention
and energies to the business of the Employer, and not, during the term of this
Agreement, be engaged in other business activities, whether or not such business
activities are pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Employee from investing his assets in
such form or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments are
made.
5. Termination. The Employment Period will continue from its effective
date, to wit: October 19, 1998, and shall extend until terminated by Employer or
Employee, pursuant to this section of the Agreement.
(a) Employer may terminate this Agreement, effective on a date
designated in a written notice to Employee upon the occurrence of any
of the following:
(i) Failure or refusal of Employee to perform his duties
and obligations under this Agreement;
(ii) Death of Employee; or
(iii) Disability of Employee, defined as an inability to
perform his work for 45 consecutive days, or for 90 days
within any 12-month period; or
(iv) The commission by Employee of any felony or any
other act constituting fraud, embezzlement or misappropriation
of funds (civil or criminal).
In the event of a termination pursuant to this paragraph 5(a) compensation shall
be paid on a prorated basis through the date of termination, subject to any
rights of offset of Employer.
(b) Employer may terminate this Agreement for any reason not
specified in paragraph 5(a) hereof, effective with ninety (90) days
written notice to Employee. In the event of a termination pursuant to
this paragraph 5(b), Employee's compensation shall be paid on a
prorated basis through the effective date of termination, subject to
any rights of offset of the Employer.
(c) Employee may terminate this Agreement upon thirty (30)
days' prior written notice. In the event of a termination pursuant to
this paragraph 5(c), compensation shall be paid on a prorated basis
through the date of termination, subject to any rights of offset of
Employer.
6. Restrictive Covenant - Non-Competition. Employee agrees that on the
termination for any reason whatsoever of his employment with the Employer, other
than in connection with the sale of a controlling interest of the Company's
common stock, he will not, for a period of one (1) year from the date of such
termination, directly or indirectly engage in or own any part of any company
engaged in the design, manufacture or sale of products substantially the same as
those offered by the Employer at the time of the termination, or work, on a
full-time, part-time or consultant basis, for any corporation, partnership, sole
proprietorship or any other legal entity engaged in such business within the
states of Iowa, Illinois, Indiana or Minnesota, nor will he in any way directly
or indirectly, attempt to hire the Employer's employees or take away any of the
Employer's business or customers or destroy, injure or damage the goodwill of
the Employer with its customers.
Employee further agrees that in the event that the Employer, its
successors or assigns, shall bring any action for the enforcement of any or all
provisions of this covenant not to compete, and if the Court shall find on the
basis of the evidence introduced in said action that this paragraph 6 is
unreasonable then the Court shall make a finding as to what is reasonable and
shall enforce this Agreement by judgment or decree to the extent of such
finding.
In the event that a controlling interest in the Company's common stock
is sold to any person or entity during the Employment Period, and the Employee
is not offered employment in a similar position as described in paragraph 1,
this restrictive covenant shall not apply.
7. Disclosure of Information. Employee recognizes and acknowledges that
the financial or other affairs of the Employer, as they may exist from time to
time, are valuable, special and unique assets of the Employer, and Employee
agrees that he shall not, during or after the term of his employment, disclose
financial or other affairs of the Employer or any portion thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever except for any bona fide Employer business purpose designated and
approved by the Board.
8. Ownership of Inventions. Employee promises and agrees that he will
disclose fully and reveal promptly to Employer any and all inventions,
discoveries, processes, methods, designs, products and know-how, which Employee
may invent, discover, acquire or develop, either alone or in conjunction with
others, during Employee's employment by Employer (hereinafter collectively
referred to as "Discoveries"), where said Discoveries (i) relate to, or in any
way pertain to or are connected with the business of Employer, or (ii) were
developed at Employer's expense or on its premises, or (iii) resulted directly
or indirectly from such employment by Employer, or relate to articles or
products made, sold, used or bought by Employer, or (iv) were being considered
for design, development, sale, purchase or use by Employer during such
employment by Employer, and Employee further promises and agrees that said
Discoveries shall be the sole and exclusive property of Employer; and Employee,
whenever requested to do so by Employer, and without further compensation or
consideration shall properly execute any and all applications, assignments and
other instruments which Employer shall deem necessary in order to (a) apply for
and obtain, in the name of Employer, a patent, trademark or copyright for said
Discoveries, and (b) assign and convey to Employer the sole and exclusive right,
title and interest in and to said Discoveries, and any applications, patents,
trademarks or copyrights thereon.
Employee hereby warrants, represents and confirms that he neither holds
nor has any interest in any patent, patent right, patent application, trademark,
trademark application, license agreement or copyright related in any way to the
business of Employer; and Employee further agrees that any future application
for any patent, patent right, trademark or copyright for any of said Discoveries
shall be made in the name of Employer.
Employee agrees that, in the event that subsequent to his employment,
his assistance is needed to secure, defend, or enforce any patent, trademark or
copyright, Employee will provide any such assistance and Employer will pay
reasonable compensation for his time at a rate to be negotiated.
Employee acknowledges that the restrictions contained in this paragraph
8 are reasonable and necessary in order to protect Employer's legitimate
business interests and any violation thereof would result in irreparable injury
to Employer. Employee further acknowledges and agrees that, in the event of any
violation hereof, Employer shall be authorized and entitled to seek, from any
court of competent jurisdiction, (i) preliminary and permanent injunctive
relief; (ii) an equitable accounting of all profits or benefits arising out of
the violation, and (iii) damages arising from the breach. Such rights or
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. The prevailing party in any such lawsuit shall
further be entitled to recover his reasonable attorneys' fees, court costs and
expenses.
9. Disclosure of Trade Secrets. Employee further recognizes and
acknowledges that the secret processes, procedures, list of customers, bidding
methods, all discoveries and inventions, together with all knowledge and
information which the Employee shall acquire during the term of this agreement
affecting the business of the Employer, are valuable, special and unique assets
of the employer, and Employee agrees that he shall not, during or after the term
of his employment, disclose said secret processes, procedures, list of
customers, bidding methods, any discoveries and inventions, together with any
knowledge and information which the Employee shall acquire during the term of
this Agreement affecting the business of the Employer, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
except for any bona fide Employer business purpose designated and approved by
the Board. The Employee further agrees not to divulge or publish or authorize
anyone else to divulge or publish during or after the term of this Agreement
knowledge of said secret processes, procedures, list of customers, bidding
methods, discoveries or inventions or any other confidential information
acquired in the course of his employment concerning the Employer's business.
10. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. The parties agree that (i) the provisions of this Agreement shall be
severable in the event that any of the provisions hereof are for any reason
whatsoever invalid, void or otherwise unenforceable, (ii) such invalid, void or
otherwise unenforceable provisions shall be automatically replaced by other
provisions which are as similar as possible in terms to such invalid, void or
otherwise unenforceable provisions but are valid and enforceable and (iii) the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
11. Complete Agreement. This instrument constitutes the entire
Agreement of the parties and supersedes and replaces any prior agreements,
whether written or oral, relating to the employment relationship of Employer and
Employee. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Remedies. Each of the parties to this Agreement will be entitled to
enforce such party's rights under this Agreement specifically, and to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in such party's favor. Company acknowledges
and agrees that Employee relies on the agreement, employment, compensation and
benefits provided for herein and that all of same are material inducement to and
consideration for Employee's execution of this agreement.
13. Waiver of Breach. The failure of either party to insist, in any one
or more instances, upon performance of the terms and conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
14. Applicable Law. This Agreement and the validity of this provision
shall be construed under the laws of the State of Iowa.
15. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors and assigns. Neither party may assign such party's
rights or delegate such party's obligations hereunder without the prior written
consent of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Top Air Manufacturing, Inc.
BY: /s/ Steven R. Lind
---------------------------------------
Steven R. Lind, President & CEO
/s/ James R. Harken
---------------------------------------
James R. Harken, "Employee"
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 19th day of October, 1998, between Top
Air Manufacturing, Inc., an Iowa Corporation (the "Company" or "Employer"), and
Scott L. Wildeboer ("Employee").
WITNESSETH:
WHEREAS, Employer represents that it wishes to employ said Employee
under any and all terms set forth in this Agreement; and
WHEREAS, Employee represents and is willing to work diligently for said
Employer under any and all terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereto, it is agreed as follows:
1. Employment. The Company hereby employs Employee, as Vice President
of Manufacturing of the Company, and Employee accepts such employment by the
Company upon the terms and conditions set forth in this Agreement, for the
period beginning on the date of this Agreement, and ending upon termination
pursuant to paragraph 5 hereof (the "Employment Period").
2. Compensation. During the Employment Period, the Company will
compensate Employee as follows:
(a) Employee shall receive an initial annual fixed salary of
$70,000.00, payable in bi-weekly installments of $2,692.31. The
Board of Directors may, by appropriate Board action, adjust Employees
fixed annual salary under this agreement at any time during the term of
this agreement.
(b) Employee shall be entitled to receive employee benefits
including, but not limited to, medical insurance, life insurance,
disability insurance and pension benefits or similar plans or programs
now existing or hereafter established to the extent that he is eligible
under the general provisions of the applicable plans, provided however,
that the Board may increase or decrease these benefits as long as
Employee is not discriminated against.
3. Services. Employee agrees that during his period of employment he
will serve Employer on a full-time basis faithfully, diligently, confidently and
to the best of his ability, and shall perform all duties incident to the office
he holds pursuant to paragraph 1 hereof.
4. Extent of Service. Employee shall devote his entire time, attention
and energies to the business of the Employer, and not, during the term of this
Agreement, be engaged in other business activities, whether or not such business
activities are pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Employee from investing his assets in
such form or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments are
made.
5. Termination. The Employment Period will continue from its effective
date, to wit: October 19, 1998, and shall extend until terminated by Employer or
Employee, pursuant to this section of the Agreement.
(a) Employer may terminate this Agreement, effective on a date
designated in a written notice to Employee upon the occurrence of any
of the following:
(i) Failure or refusal of Employee to perform his duties
and obligations under this Agreement;
(ii) Death of Employee; or
(iii) Disability of Employee, defined as an inability to
perform his work for 45 consecutive days, or for 90 days
within any 12-month period; or
(iv) The commission by Employee of any felony or any
other act constituting fraud, embezzlement or misappropriation
of funds (civil or criminal).
In the event of a termination pursuant to this paragraph 5(a) compensation shall
be paid on a prorated basis through the date of termination, subject to any
rights of offset of Employer.
(b) Employer may terminate this Agreement for any reason not
specified in paragraph 5(a) hereof, effective with ninety (90) days
written notice to Employee. In the event of a termination pursuant to
this paragraph 5(b), Employee's compensation shall be paid on a
prorated basis through the effective date of termination, subject to
any rights of offset of the Employer.
(c) Employee may terminate this Agreement upon thirty (30)
days' prior written notice. In the event of a termination pursuant to
this paragraph 5(c), compensation shall be paid on a prorated basis
through the date of termination, subject to any rights of offset of
Employer.
6. Restrictive Covenant - Non-Competition. Employee agrees that on the
termination for any reason whatsoever of his employment with the Employer, other
than in connection with the sale of a controlling interest of the Company's
common stock, he will not, for a period of one (1) year from the date of such
termination, directly or indirectly engage in or own any part of any company
engaged in the design, manufacture or sale of products substantially the same as
those offered by the Employer at the time of the termination, or work, on a
full-time, part-time or consultant basis, for any corporation, partnership, sole
proprietorship or any other legal entity engaged in such business within the
states of Iowa, Illinois, Indiana or Minnesota, nor will he in any way directly
or indirectly, attempt to hire the Employer's employees or take away any of the
Employer's business or customers or destroy, injure or damage the goodwill of
the Employer with its customers.
Employee further agrees that in the event that the Employer, its
successors or assigns, shall bring any action for the enforcement of any or all
provisions of this covenant not to compete, and if the Court shall find on the
basis of the evidence introduced in said action that this paragraph 6 is
unreasonable then the Court shall make a finding as to what is reasonable and
shall enforce this Agreement by judgment or decree to the extent of such
finding.
In the event that a controlling interest in the Company's common stock
is sold to any person or entity during the Employment Period, and the Employee
is not offered employment in a similar position as described in paragraph 1,
this restrictive covenant shall not apply.
7. Disclosure of Information. Employee recognizes and acknowledges that
the financial or other affairs of the Employer, as they may exist from time to
time, are valuable, special and unique assets of the Employer, and Employee
agrees that he shall not, during or after the term of his employment, disclose
financial or other affairs of the Employer or any portion thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever except for any bona fide Employer business purpose designated and
approved by the Board.
8. Ownership of Inventions. Employee promises and agrees that he will
disclose fully and reveal promptly to Employer any and all inventions,
discoveries, processes, methods, designs, products and know-how, which Employee
may invent, discover, acquire or develop, either alone or in conjunction with
others, during Employee's employment by Employer (hereinafter collectively
referred to as "Discoveries"), where said Discoveries (i) relate to, or in any
way pertain to or are connected with the business of Employer, or (ii) were
developed at Employer's expense or on its premises, or (iii) resulted directly
or indirectly from such employment by Employer, or relate to articles or
products made, sold, used or bought by Employer, or (iv) were being considered
for design, development, sale, purchase or use by Employer during such
employment by Employer, and Employee further promises and agrees that said
Discoveries shall be the sole and exclusive property of Employer; and Employee,
whenever requested to do so by Employer, and without further compensation or
consideration shall properly execute any and all applications, assignments and
other instruments which Employer shall deem necessary in order to (a) apply for
and obtain, in the name of Employer, a patent, trademark or copyright for said
Discoveries, and (b) assign and convey to Employer the sole and exclusive right,
title and interest in and to said Discoveries, and any applications, patents,
trademarks or copyrights thereon.
Employee hereby warrants, represents and confirms that he neither holds
nor has any interest in any patent, patent right, patent application, trademark,
trademark application, license agreement or copyright related in any way to the
business of Employer; and Employee further agrees that any future application
for any patent, patent right, trademark or copyright for any of said Discoveries
shall be made in the name of Employer.
Employee agrees that, in the event that subsequent to his employment,
his assistance is needed to secure, defend, or enforce any patent, trademark or
copyright, Employee will provide any such assistance and Employer will pay
reasonable compensation for his time at a rate to be negotiated.
Employee acknowledges that the restrictions contained in this paragraph
8 are reasonable and necessary in order to protect Employer's legitimate
business interests and any violation thereof would result in irreparable injury
to Employer. Employee further acknowledges and agrees that, in the event of any
violation hereof, Employer shall be authorized and entitled to seek, from any
court of competent jurisdiction, (i) preliminary and permanent injunctive
relief, (ii) an equitable accounting of all profits or benefits arising out of
the violation; and (iii) damages arising from the breach. Such rights or
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. The prevailing party in any such lawsuit shall
further be entitled to recover his reasonable attorneys' fees, court costs and
expenses.
9. Disclosure of Trade Secrets. Employee further recognizes and
acknowledges that the secret processes, procedures, list of customers, bidding
methods, all discoveries and inventions, together with all knowledge and
information which the Employee shall acquire during the term of this agreement
affecting the business of the Employer, are valuable, special and unique assets
of the employer, and Employee agrees that he shall not, during or after the term
of his employment, disclose said secret processes, procedures, list of
customers, bidding methods, any discoveries and inventions, together with any
knowledge and information which the Employee shall acquire during the term of
this Agreement affecting the business of the Employer, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
except for any bona fide Employer business purpose designated and approved by
the Board. The Employee further agrees not to divulge or publish or authorize
anyone else to divulge or publish during or after the term of this Agreement
knowledge of said secret processes, procedures, list of customers, bidding
methods, discoveries or inventions or any other confidential information
acquired in the course of his employment concerning the Employer's business.
10. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. The parties agree that (i) the provisions of this Agreement shall be
severable in the event that any of the provisions hereof are for any reason
whatsoever invalid, void or otherwise unenforceable, (ii) such invalid, void or
otherwise unenforceable provisions shall be automatically replaced by other
provisions which are as similar as possible in terms to such invalid, void or
otherwise unenforceable provisions but are valid and enforceable and (iii) the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
11. Complete Agreement. This instrument constitutes the entire
Agreement of the parties and supersedes and replaces any prior agreements,
whether written or oral, relating to the employment relationship of Employer and
Employee. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Remedies. Each of the parties to this Agreement will be entitled to
enforce such party's rights under this Agreement specifically, and to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in such party's favor. Company acknowledges
and agrees that Employee relies on the agreement, employment, compensation and
benefits provided for herein and that all of same are material inducement to and
consideration for Employee's execution of this agreement.
13. Waiver of Breach. The failure of either party to insist, in any one
or more instances, upon performance of the terms and conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
14. Applicable Law. This Agreement and the validity of this provision
shall be construed under the laws of the State of Iowa.
15. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors and assigns. Neither party may assign such party's
rights or delegate such party's obligations hereunder without the prior written
consent of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Top Air Manufacturing, Inc.
BY: /s/ Steven R. Lind
------------------------------------
Steven R. Lind, President & CEO
/s/ Scott L. Wildeboer
------------------------------------
Scott L. Wildeboer, "Employee"
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 19th day of October, 1998, between Top
Air Manufacturing, Inc., an Iowa Corporation (the "Company" or "Employer"), and
Steven F. Bahlmann ("Employee").
WITNESSETH:
WHEREAS, Employer represents that it wishes to employ said Employee
under any and all terms set forth in this Agreement; and
WHEREAS, Employee represents and is willing to work diligently for said
Employer under any and all terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereto, it is agreed as follows:
1. Employment. The Company hereby employs Employee, as Chief Accounting
Officer of the Company, and Employee accepts such employment by the Company upon
the terms and conditions set forth in this Agreement, for the period beginning
on the date of this Agreement, and ending upon termination pursuant to paragraph
5 hereof (the "Employment Period").
2. Compensation. During the Employment Period, the Company will
compensate Employee as follows:
(a) Employee shall receive an initial annual fixed salary of
$70,000.00, payable in bi-weekly installments of $2,692.31. The Board
of Directors may, by appropriate Board action, adjust Employees fixed
annual salary under this agreement at any time during the term of this
agreement.
(b) Employee shall be entitled to receive employee benefits
including, but not limited to, medical insurance, life insurance,
disability insurance and pension benefits or similar plans or programs
now existing or hereafter established to the extent that he is eligible
under the general provisions of the applicable plans, provided however,
that the Board may increase or decrease these benefits as long as
Employee is not discriminated against.
3. Services. Employee agrees that during his period of employment he
will serve Employer on a full-time basis faithfully, diligently, confidently and
to the best of his ability, and shall perform all duties incident to the office
he holds pursuant to paragraph 1 hereof.
4. Extent of Service. Employee shall devote his entire time, attention
and energies to the business of the Employer, and not, during the term of this
Agreement, be engaged in other business activities, whether or not such business
activities are pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Employee from investing his assets in
such form or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments are
made.
5. Termination. The Employment Period will continue from its effective
date, to wit: October 19, 1998, and shall extend until terminated by Employer or
Employee, pursuant to this section of the Agreement.
(a) Employer may terminate this Agreement, effective on a date
designated in a written notice to Employee upon the occurrence of any
of the following:
(i) Failure or refusal of Employee to perform his duties
and obligations under this Agreement;
(ii) Death of Employee; or
(iii) Disability of Employee, defined as an inability to
perform his work for 45 consecutive days, or for 90 days
within any 12-month period; or
(iv) The commission by Employee of any felony or any
other act constituting fraud, embezzlement or misappropriation
of funds (civil or criminal).
In the event of a termination pursuant to this paragraph 5(a), compensation
shall be paid on a prorated basis through the date of termination, subject to
any rights of offset of Employer.
(b) Employer may terminate this Agreement for any reason not
specified in paragraph 5(a) hereof, effective with ninety (90) days
written notice to Employee. In the event of a termination pursuant to
this paragraph 5(b), Employee's compensation shall be paid on a
prorated basis through the effective date of termination, subject to
any rights of offset of the Employer.
(c) Employee may terminate this Agreement upon thirty (30)
days' prior written notice. In the event of a termination pursuant to
this paragraph 5(c), compensation shall be paid on a prorated basis
through the date of termination, subject to any rights of offset of
Employer.
6. Restrictive Covenant - Non-Competition. Employee agrees that on the
termination for any reason whatsoever of his employment with the Employer, other
than in connection with the sale of a controlling interest of the Company's
common stock, he will not, for a period of one (1) year from the date of such
termination, directly or indirectly engage in or own any part of any company
engaged in the design, manufacture or sale of products substantially the same as
those offered by the Employer at the time of the termination, or work, on a
full-time, part-time or consultant basis, for any corporation, partnership, sole
proprietorship or any other legal entity engaged in such business within the
states of Iowa, Illinois, Indiana or Minnesota, nor will he in any way directly
or indirectly, attempt to hire the Employer's employees or take away any of the
Employer's business or customers or destroy, injure or damage the goodwill of
the Employer with its customers.
Employee further agrees that in the event that the Employer, its
successors or assigns, shall bring any action for the enforcement of any or all
provisions of this covenant not to compete, and if the Court shall find on the
basis of the evidence introduced in said action that this paragraph 6 is
unreasonable then the Court shall make a finding as to what is reasonable and
shall enforce this Agreement by judgment or decree to the extent of such
finding.
In the event that a controlling interest in the Company's common stock
is sold to any person or entity during the Employment Period, and the Employee
is not offered employment in a similar position as described in paragraph 1,
this restrictive covenant shall not apply.
7. Disclosure of Information. Employee recognizes and acknowledges that
the financial or other affairs of the Employer, as they may exist from time to
time, are valuable, special and unique assets of the Employer, and Employee
agrees that he shall not, during or after the term of his employment, disclose
financial or other affairs of the Employer or any portion thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever except for any bona fide Employer business purpose designated and
approved by the Board.
8. Ownership of Inventions. Employee promises and agrees that he will
disclose fully and reveal promptly to Employer any and all inventions,
discoveries, processes, methods, designs, products and know-how, which Employee
may invent, discover, acquire or develop, either alone or in conjunction with
others, during Employee's employment by Employer (hereinafter collectively
referred to as "Discoveries"), where said Discoveries (i) relate to, or in any
way pertain to or are connected with the business of Employer, or (ii) were
developed at Employer's expense or on its premises, or (iii) resulted directly
or indirectly from such employment by Employer, or relate to articles or
products made, sold, used or bought by Employer, or (iv) were being considered
for design, development, sale, purchase or use by Employer during such
employment by Employer, and Employee further promises and agrees that said
Discoveries shall be the sole and exclusive property of Employer; and Employee,
whenever requested to do so by Employer, and without further compensation or
consideration shall properly execute any and all applications, assignments and
other instruments which Employer shall deem necessary in order to (a) apply for
and obtain, in the name of Employer, a patent, trademark or copyright for said
Discoveries, and (b) assign and convey to Employer the sole and exclusive right,
title and interest in and to said Discoveries, and any applications, patents,
trademarks or copyrights thereon.
Employee hereby warrants, represents and confirms that he neither holds
nor has any interest in any patent, patent right, patent application, trademark,
trademark application, license agreement or copyright related in any way to the
business of Employer; and Employee further agrees that any future application
for any patent, patent right, trademark or copyright for any of said Discoveries
shall be made in the name of Employer.
Employee agrees that, in the event that subsequent to his employment,
his assistance is needed to secure, defend, or enforce any patent, trademark or
copyright, Employee will provide any such assistance and Employer will pay
reasonable compensation for his time at a rate to be negotiated.
Employee acknowledges that the restrictions contained in this paragraph
8 are reasonable and necessary in order to protect Employer's legitimate
business interests and any violation thereof would result in irreparable injury
to Employer. Employee further acknowledges and agrees that, in the event of any
violation hereof, Employer shall be authorized and entitled to seek, from any
court of competent jurisdiction, (i) preliminary and permanent injunctive
relief; (ii) an equitable accounting of all profits or benefits arising out of
the violation; and (iii) damages arising from the breach. Such rights or
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. The prevailing party in any such lawsuit shall
further be entitled to recover his reasonable attorneys' fees, court costs and
expenses.
9. Disclosure of Trade Secrets. Employee further recognizes and
acknowledges that the secret processes, procedures, list of customers, bidding
methods, all discoveries and inventions, together with all knowledge and
information which the Employee shall acquire during the term of this agreement
affecting the business of the Employer, are valuable, special and unique assets
of the employer, and Employee agrees that he shall not, during or after the term
of his employment, disclose said secret processes, procedures, list of
customers, bidding methods, any discoveries and inventions, together with any
knowledge and information which the Employee shall acquire during the term of
this Agreement affecting the business of the Employer, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
except for any bona fide Employer business purpose designated and approved by
the Board. The Employee further agrees not to divulge or publish or authorize
anyone else to divulge or publish during or after the term of this Agreement
knowledge of said secret processes, procedures, list of customers, bidding
methods, discoveries or inventions or any other confidential information
acquired in the course of his employment concerning the Employer's business.
10. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. The parties agree that (i) the provisions of this Agreement shall be
severable in the event that any of the provisions hereof are for any reason
whatsoever invalid, void or otherwise unenforceable, (ii) such invalid, void or
otherwise unenforceable provisions shall be automatically replaced by other
provisions which are as similar as possible in terms to such invalid, void or
otherwise unenforceable provisions but are valid and enforceable and (iii) the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
11. Complete Agreement. This instrument constitutes the entire
Agreement of the parties and supersedes and replaces any prior agreements,
whether written or oral, relating to the employment relationship of Employer and
Employee. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
12. Remedies. Each of the parties to this Agreement will be entitled to
enforce such party's rights under this Agreement specifically, and to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in such party's favor. Company acknowledges
and agrees that Employee relies on the agreement, employment, compensation and
benefits provided for herein and that all of same are material inducement to and
consideration for Employee's execution of this agreement.
13. Waiver of Breach. The failure of either party to insist, in any one
or more instances, upon performance of the terms and conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
14. Applicable Law. This Agreement and the validity of this provision
shall be construed under the laws of the State of Iowa.
15. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors and assigns. Neither party may assign such party's
rights or delegate such party's obligations hereunder without the prior written
consent of the other party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Top Air Manufacturing, Inc.
BY: /s/ Steven R. Lind
--------------------------------------
Steven R. Lind, President & CEO
/s/ Steven F. Bahlmann
--------------------------------------
Steven F. Bahlmann, "Employee"
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 11th day of May, 1999, between Top Air
Manufacturing, Inc., an Iowa Corporation (the "Company" or "Employer"), and
Jerome M. Sechler ("Employee").
WITNESSETH:
WHEREAS, Employer represents that it wishes to employ said Employee
under any and all terms set forth in this Agreement; and
WHEREAS, Employee represents and is willing to work diligently for said
Employer under any and all terms set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants of the parties
hereto, it is agreed as follows:
1. Employment. The Company hereby employs Employee, as Vice President
of Sales and Marketing for the Company, and Employee accepts such employment by
the Company upon the terms and conditions set forth in this Agreement, for the
period beginning on the date of this Agreement, and ending upon termination
pursuant to paragraph 5 hereof (the "Employment Period").
2. Compensation. During the Employment Period, the Company will
compensate Employee as follows:
(a) Employee shall receive an initial annual fixed salary of
$83,200.00, payable in bi-weekly installments of $3,200.00. The Board
of Directors may, by appropriate Board action, adjust Employees fixed
annual salary under this agreement at any time during the term of this
agreement.
(b) Employee shall be entitled to receive employee benefits
including, but not limited to, medical insurance, life insurance,
disability insurance and pension benefits or similar plans or programs
now existing or hereafter established to the extent that he is eligible
under the general provisions of the applicable plans, provided however,
that the Board may increase or decrease these benefits as long as
Employee is not discriminated against.
3. Services. Employee agrees that during his period of employment he
will serve Employer on a full-time basis faithfully, diligently, confidently and
to the best of his ability, and shall perform all duties incident to the office
he holds pursuant to paragraph 1 hereof.
4. Extent of Service. Employee shall devote his entire time, attention
and energies to the business of the Employer, and not, during the term of this
Agreement, be engaged in other business activities, whether or not such business
activities are pursued for gain, profit or other pecuniary advantage; but this
shall not be construed as preventing the Employee from investing his assets in
such form or manner as will not require any services on the part of Employee in
the operation of the affairs of the companies in which such investments are
made.
5. Termination. The Employment Period will continue from its effective
date, to wit: May 11, 1999, and shall extend until terminated by Employer or
Employee, pursuant to this section of the Agreement.
(a) Employer may terminate this Agreement, effective on a date
designated in a written notice to Employee upon the occurrence of any
of the following:
(i) Failure or refusal of Employee to perform his duties
and obligations under this Agreement;
(ii) Death of Employee; or
(iii) Disability of Employee, defined as an inability to
perform his work for 45 consecutive days, or for 90 days
within any 12-month period; or
(iv) The commission by Employee of any felony or any
other act constituting fraud, embezzlement or misappropriation
of funds (civil or criminal).
In the event of a termination pursuant to this paragraph 5(a),
compensation shall be paid on a prorated basis through the date of
termination, subject to any rights of offset of Employer.
(b) Employer may terminate this Agreement for any reason not
specified in paragraph 5(a) hereof, effective with ninety (90) days
written notice to Employee. In the event of a termination pursuant to
this paragraph 5(b), Employee's compensation shall be paid on a
prorated basis through the effective date of termination, subject to
any rights of offset of the Employer.
(c) Employee may terminate this Agreement upon thirty (30)
days' prior written notice. In the event of a termination pursuant to
this paragraph 5(c), compensation shall be paid on a prorated basis
through the date of termination, subject to any rights of offset of
Employer.
6. Restrictive Covenant - Non-Competition. Employee agrees that on the
termination for any reason whatsoever of his employment with the Employer, other
than in connection with the sale of a controlling interest of the Company's
common stock, he will not, for a period of one (1) year from the date of such
termination, directly or indirectly engage in or own any part of any company
engaged in the design, manufacture or sale of products substantially the same as
those offered by the Employer at the time of the termination, or work, on a
full-time, part-time or consultant basis, for any corporation, partnership, sole
proprietorship or any other legal entity engaged in such business within the
states of Iowa, Illinois, Indiana or Minnesota, nor will he in any way directly
or indirectly, attempt to hire the Employer's employees or take away any of the
Employer's business or Customers or destroy, injure or damage the goodwill of
the Employer with its customers.
Employee further agrees that in the event that the Employer, its
successors or assigns, shall bring, any action for the enforcement of any or all
provisions of this covenant not to compete, and if the Court shall find on the
basis of the evidence introduced in said action that this paragraph 6 is
unreasonable then the Court shall make a finding as to what is reasonable and
shall enforce this Agreement by judgment or decree to the extent of such
finding.
In the event that a controlling interest in the Company's common stock
is sold to any person or entity during the Employment Period, and the Employee
is not offered employment in a similar position as described in paragraph 1,
this restrictive covenant shall not apply.
7. Disclosure of Information. Employee recognizes and acknowledges that
the financial or other affairs of the Employer, as they exist from time to time,
are valuable, special and unique assets of the Employer, and Employee agrees
that he shall not, during or after the term of his employment, disclose
financial or other affairs of the Employer or any portion thereof to any person,
firm, corporation, association or other entity for any reason or purpose
whatsoever except for any bona fide Employer business purpose designated and
approved by the Board.
8. Ownership of Inventions. Employee promises and agrees that he will
disclose fully and reveal promptly to Employer any and all inventions,
discoveries, processes, methods, designs, products and know-how, which Employee
may invent, discover, acquire or develop, either alone or in conjunction with
others, during Employee's employment by Employer (hereinafter collectively
referred to as "Discoveries"), where said Discoveries (i) relate to, or in any
way pertain to or are connected with the business of Employer, or (ii) were
developed at Employer's expense or on its premises, or (iii) resulted directly
or indirectly from such employment by Employer, or relate to articles or
products made, sold, used or bought by Employer, or (iv) were being considered
for design, development, sale, purchase or use by Employer during such
employment by Employer, and Employee further promises and agrees that said
Discoveries shall be the sole and exclusive property of Employer; and Employee,
whenever requested to do so by Employer, and without further compensation or
consideration shall properly execute any and all applications, assignments and
other instruments which Employer shall deem necessary in order to (a) apply for
and obtain, in the name of Employer, a patent, trademark or copyright for said
Discoveries, and (b) assign and convey to Employer the sole and exclusive right,
title and interest in and to said Discoveries, and any applications, patents,
trademarks or copyrights thereon.
Employee hereby warrants, represents and confirms that he neither holds
nor has any interest in any patent, patent right, patent application, trademark,
trademark application, license agreement or copyright related in any way to the
business of Employer; and Employee further agrees that any future application
for any patent, patent right, trademark or copyright for any of said Discoveries
shall be made in the name of Employer.
Employee agrees that, in the event that subsequent to his employment,
his assistance is needed to secure, defend, or enforce any patent, trademark or
copyright, Employee will provide any such assistance and Employer will pay
reasonable compensation for his time at a rate to be negotiated.
Employee acknowledges that the restrictions contained in this paragraph
8 are reasonable and necessary in order to protect Employer's legitimate
business interests and any violation thereof would result in irreparable injure
to Employer. Employee further acknowledges and agrees that, in the event of any
violation hereof, Employer shall be authorized and entitled to seek, from any
court of competent jurisdiction, (i) preliminary and permanent injunctive
relief; (ii) an equitable accounting of all profits or benefits arising out of
the violation; and (iii) damages arising from the breach. Such rights or
remedies shall be cumulative and in addition to any other rights or remedies to
which Employer may be entitled. The prevailing party in any such lawsuit shall
further be entitled to recover his reasonable attorneys' fees, court costs and
expenses.
9. Disclosure - of Trade Secrets. Employee further recognizes and
acknowledges that the secret processes, procedures, list of customers, bidding
methods, all discoveries and inventions, together with all knowledge and
information which the Employee shall acquire during the term of this agreement
affecting the business of the Employer, are valuable, special and unique assets
of the employer, and Employee agrees that he shall not, during or after the term
of his employment, disclose said secret processes, procedures, list of
customers, bidding methods, any discoveries and inventions, together with any
knowledge and information which the Employee shall acquire during the term of
this Agreement affecting the business of the Employer, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever
except for any bona fide Employer business purpose designated and approved by
the Board. The Employee further agrees not to divulge or publish or authorize
anyone else to divulge or publish during or after the term of this Agreement
knowledge of said secret processes, procedures, list of customers, bidding
methods, discoveries or inventions or any other confidential information
acquired in the course of his employment concerning the Employer's business.
10. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law. The parties agree that (i) the provisions of this Agreement shall be
severable in the event that any of the provision hereof are for any reason
whatsoever invalid, void or otherwise unenforceable, (ii) such invalid, void or
otherwise unenforceable provisions shall be automatically replaced by other
provisions which are as similar as possible in terms to such invalid, void or
otherwise unenforceable provisions but are valid and enforceable and (iii) the
remaining provisions shall remain enforceable to the fullest extent permitted by
law.
11. Complete Agreement. This instrument constitutes the entire
Agreement of the parties and supersedes and replaces any prior agreements,
whether written or oral, relating to the employment relationship of Employer and
Employee. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change modification,
extension or discharge is sought.
12. Remedies. Each of the parties to this Agreement will be entitled to
enforce such party's rights under this Agreement specifically, and to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other tights existing in such party's favor. Employer acknowledges
and agrees that Employee relies on the agreement, employment, compensation and
benefits provided for herein and that all of same are material inducement to and
consideration for Employee's execution of this agreement.
13. Waiver of Breach. The failure of either party to insist, in any one
or more instances, upon performance of the terms and conditions of this
Agreement shall not be construed as a waiver or a relinquishment of any right
granted hereunder or of the future performance of any such term, covenant or
condition.
14. Applicable Law. This Agreement and the validity of this provision
shall be construed under the laws of the State of Iowa.
15. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors and assigns. Neither party may assign such party's
rights or delegate such party's obligations hereunder without the prior written
consent of the other party.
(remainder of page left blank intentionally)
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Top Air Manufacturing, Inc.
By: /s/ Steven R. Lind
---------------------------------
Steven R. Lind, President
/s/ Jerome M. Sechler
---------------------------------
Jerome M. Sechler, Employee
<TABLE>
<CAPTION>
COMPUTATIONS OF EARNINGS PER SHARE
--------------------------------------------------------------
Basic earnings per share: 1999 1998 1997
--------------------------------------------------------------
<S> <C> <C> <C>
Computation of weighted average number of
common shares outstanding and common
equivalent shares:
Common Shares outstanding at the
beginning of the period 5,083,456 5,135,548 3,984,548
Weighted average number of shares issued
(retired) during the period (76,868) (46,902) 431,831
----------------- ----------------- ---------------
Weighted average number of common and
common equivalent shares 5,006,588 5,088,646 446,379
=============== =============== ==============
Net Income available to common
stockholders $ (1,275,867) $ 1,000,007 $ 857,376
================ =============== ==============
Earnings per common and common
equivalent share $ (.25) $ .20 $ .19
=============== =============== ==============
--------------------------------------------------------------
Diluted earnings per share: 1999 1998 1997
--------------------------------------------------------------
Computation of weighted average number of
common shares outstanding and common
equivalent shares:
Common Shares outstanding at the beginning
of the period 5,083,456 5,135,548 3,984,548
Weighted average number of shares issued
(retired) during the period (76,868) (46,902) 431,831
Weighted average of the common equivalent shares
attributable to stock options granted,
computed under the treasury stock method(1) -- 161,227 88,066
--------------- --------------- --------------
Weighted average number of common and common
equivalent shares - diluted 5,006,588 5,249,873 4,504,445
=============== =============== ==============
Net Income available to common stockholders -
diluted $ (1,275,867) $ 1,000,007 $ 857,376
=============== =============== ==============
Earnings per common and common equivalent
share - diluted $ ( .25) $ .19 $ .19
=============== =============== ==============
<FN>
- ---------------
1 At May 31, 1999, 1998 and 1997, respectively, 445,500, 67,500 and
none stock options have not been included because they are
anti-dilutive.
</FN>
</TABLE>
Subsidiaries of Top Air Manufacturing, Inc.
Subsidiary Jurisdiction of Incorporation
- ---------- -----------------------------
Ficklin Machine Co., Inc. Illinois
Parker Industries, Inc. Iowa
One hundred percent of the capital stock of each of the above listed
subsidiaries is owned directly by Top Air Manufacturing, Inc.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference into the registration statements of
Top Air Manufacturing, Inc. on Form S-8 (Registration No.'s 33-74378 and
333-24287) of our report dated July 23, 1999 with respect to the financial
statements of Top Air Manufacturing, Inc. included in its Annual Report on Form
10-KSB for the fiscal year ended May 31, 1999.
/s/ McGLADREY & PULLEN, L.L.P.
Waterloo, Iowa
August 27, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> MAY-31-1999
<CASH> 58,157
<SECURITIES> 0
<RECEIVABLES> 7,969,602
<ALLOWANCES> 628,000
<INVENTORY> 8,211,251
<CURRENT-ASSETS> 16,477,481
<PP&E> 5,103,214
<DEPRECIATION> 1,403,788
<TOTAL-ASSETS> 21,722,070
<CURRENT-LIABILITIES> 7,961,537
<BONDS> 0
0
0
<COMMON> 323,131
<OTHER-SE> 5,661,433
<TOTAL-LIABILITY-AND-EQUITY> 21,722,070
<SALES> 12,295,853
<TOTAL-REVENUES> 12,320,907
<CGS> 10,125,650
<TOTAL-COSTS> 13,711,765
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 550,857
<INCOME-PRETAX> (1,941,710)
<INCOME-TAX> (665,843)
<INCOME-CONTINUING> (1,275,867)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,275,867)
<EPS-BASIC> (.25)
<EPS-DILUTED> (.25)
</TABLE>
TOP AIR MANUFACTURING, INC.
EXHIBIT 99
CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS
THAT COULD CAUSE THE COMPANY'S ACTUAL RESULTS
TO DIFFER FROM THOSE PROJECTED IN
FORWARD-LOOKING STATEMENTS
The following factors could affect the Company's actual results, including its
revenues, expenses and net income, and could cause them to differ from any
forward-looking statements made by or on behalf of the Company:
The Company competes with a large number of other agricultural equipment
manufacturers and suppliers who distribute sprayers, liquid manure
equipment, grain handling equipment, weigh wagons, seed conveyors,
milking parlors, feeding and forage equipment and related parts. Although
the Company believes that its products are sufficiently different from
other products to enable it to establish and maintain a market for such
products, many of the Company's principal competitors are larger than the
Company and have substantial resources. There can be no assurance that
competitors will not be able to take actions, including developing new
products or offering reduced pricing, which could materially adversely
affect the sales revenues of the Company.
The Company has warranted the products it manufactures to be free from
defects in material and workmanship under normal use and service for a
period ranging from twelve to twenty-four months after date of purchase.
Although the Company carries product liability insurance and casualty
insurance customary for manufacturing operations of its type, there are
certain types of losses which are uninsurable or not economically
insurable. There can be no guaranty against uninsured losses of any kind.
The continued success of the Company will depend upon the efforts and
abilities of certain key officers and employees, particularly Steven R.
Lind, its President and Chief Executive Officer. The Company could be
adversely affected if for any reason such officers and employees should
no longer be active in the Company's operations. Steven R. Lind,
President and Chief Executive Officer of the Company, has entered into an
employment agreement with the Company.
The Company's executive officers and directors as a group beneficially
own approximately 39% of the outstanding shares of the Company's common
stock. Accordingly, these officers and directors acting together have
effective voting control of the Company, including the election of all of
the Company's directors and on any other matter being voted on by the
Company's shareholders. There are no provisions for cumulative voting by
stockholders in the Company's Articles of Incorporation. These facts may
tend to discourage attempts to acquire control of the Company by persons
other than those holders.
