Exhibit 10.4
PROMISSORY NOTE
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Borrower:
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ART’S-WAY MANUFACTURING COMPANY, INC.
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Lender:
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WEST
BANK
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(TIN: _________________)
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MAIN
BANK
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5556 HIGHWAY
9 WEST, BOX 288
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1601 22ND
STREET
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WEST DES
MOINES, IA 50266
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(515)
222-2300
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Principal
Amount: $6,000,000.00
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Date of Note: June 8,
2009
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PROMISE TO
PAY. ART’S-WAY MANUFACTURING COMPANY,
INC. (“Borrower”) promises to pay to WEST
BANK (“Lender”), or order, in lawful money of the
United States of America, the principal amount of Six Million &
00/100 Dollars ($6,000,000.00) or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance
of each advance. Interest shall be calculated from the
date of each advance until repayment of each
advance.
PAYMENT. Borrower will pay this loan
in one payment of all outstanding principal plus all accrued unpaid
interest on April 30, 2010. In addition, Borrower will
pay regular monthly payments of all accrued unpaid interest due as
of each payment date, beginning June 30, 2009, with all subsequent
interest payments to be due on the same day of each month after
that. Unless otherwise agreed or required by applicable
law, payments will be applied first to any accrued unpaid interest;
then to principal; then to any unpaid collection costs; and then to
any late charges. Borrower will pay Lender at
Lender’s address shown above or at such other place as Lender
may designate in writing.
VARIABLE
INTEREST RATE . The interest rate on this Note is
subject to change from time to time based on changes in an index
which is Lender’s Prime Rate (the
“Index”). This is the rate Lender charges,
or would charge, on 90-day unsecured loans to the most creditworthy
corporate customers. This rate may or may not be the
lowest rate available from Lender at any given
time. Lender will tell Borrower the current Index rate
upon Borrower’s request. The interest rate change
will not occur more often than each DAY. Borrower
understands that Lender may make loans based on other rates as
well. The Index currently is 3.250% per
annum. The interest rate to be applied to the unpaid
principal balance of this Note will be calculated as described in
the “INTEREST CALCULATION METHOD” paragraph using a
rate equal to the Index, adjusted if necessary for any minimum and
maximum rate limitations described below, resulting in an initial
rate of 4.000% per annum based on a year of 360
days. NOTICE: Under no circumstances will the
interest rate on this Note be less than 4.000% per annum or more
than the maximum rate allowed by applicable law.
INTEREST
CALCULATION METHOD . Interest on this Note is computed
on a 365/360 basis; that is, by applying the ratio of the interest
rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the
principal balance is outstanding. All interest payable
under this Note is computed using this method.
PREPAYMENT;
MINIMUM INTEREST CHARGE . In any event, even upon full
prepayment of this Note, Borrower understands that Lender is
entitled to a minimum interest charge of $7.50. Other
than Borrower’s obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will
not, unless agreed to by Lender in writing, relieve Borrower of
Borrower’s obligation to continue to make payments of accrued
unpaid interest. Rather, early payments will reduce the
principal balance due. Borrower agrees not to send
Lender payments marked “paid in full”, “without
recourse”, or similar language. If Borrower sends
such a payment, Lender may accept it without losing any of
Lender’s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment
constitutes “payment in full” of the amount owed or
that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered
to: WEST BANK, MAIN BANK, 1601 22ND STREET, WEST DES
MOINES, IA 50266.
LATE
CHARGE . If a
payment is 11 days or more late, Borrower will be charged
$15.00.
INTEREST
AFTER DEFAULT . Upon default, including failure to
pay upon final maturity, the interest rate on this Note shall be
increased by adding a 2.000 percentage point margin (“Default
Rate Margin”). The Default Rate Margin shall also
apply to each succeeding interest rate change that would have
applied had there been no default. However, in no event
will the interest rate exceed the maximum interest rate limitations
under applicable law.
DEFAULT . Each of the following shall
constitute an event of default (“Event of Default”)
under this Note:
Payment
Default . Borrower fails to make any payment
when due under this Note.
Other
Defaults . Borrower fails to comply with or to
perform any other term, obligation, covenant or condition contained
in this Note or in any of the related documents or to comply with
or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.
Default in
Favor of Third Parties . Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase
or sales agreement, or any other agreement, in favor of any other
creditor or person that may materially affect any of
Borrower’s property or Borrower’s ability to repay this
Note or perform Borrower’s obligations under this Note or any
of the related documents.
