Exhibit 10.2

 

 

 

PROMISSORY NOTE

 

 

Principal

$2,600,000.00

Loan Date

09-28-2017

Maturity

10-01-2037

Loan No

xxxxxxxx885

Call / Coll
RC-C 1e2 1 40

Account

720

Officer

*v.v., 

Initials

References in the boxes above are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing "'" has been omitted due to text length limitations.

 

Borrower:

Art's-Way Manufacturing Co., Inc.

5556 Highway 9

Armstrong, IA 50514-7566

Lender:

Bank Midwest

Armstrong Branch

PO Box 136

500 6th Street

Armstrong, IA 50514

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  Principal Amount: $2,600,000.00 Date of Note: September 28, 2017  

    

PROMISE TO PAY. Art's-Way Manufacturing Co., Inc. ("Borrower") promises to pay
to Bank Midwest ("Lender"), or order, in lawful money of the United States of
America, the principal amount of Two Million Six Hundred Thousand & 00/100
Dollars ($2,600,000.00), together with interest on the unpaid principal balance
from September 28, 2017, until paid in full.

PAYMENT. Borrower will pay this loan in full immediately upon Lender's demand.
If no demand is made, subject to any payment changes resulting from changes in
the Index, Borrower will pay this loan in accordance with the following payment
schedule, which calculates interest on the unpaid principal balances as
described in the "INTEREST CALCULATION METHOD" paragraph using the interest
rates described in this paragraph: 60 monthly consecutive principal and interest
payments in the initial amount of $17,270.57 each, beginning November 1, 2017,
with interest calculated on the unpaid principal balances using an initial
interest rate of 5.000% per annum based on a year of 360 days; 179 monthly
consecutive principal and interest payments in the initial amount of $17,270.57
each, beginning November 1, 2022, with interest calculated on the unpaid
principal balances using an interest rate based on the Wall Street Journal Rate
as published in the Wall Street Journal Money Rates section (currently 4.250%),
plus a margin of 0.750%, resulting in an initial interest rate of 5.000% per
annum based on a year of 360 days; and one principal and interest payment of
$17,270.46 on October 1, 2037, with interest calculated on the unpaid principal
balances using an interest rate based on the Wall Street Journal Rate as
published in the Wall Street Journal Money Rates section (currently 4.250%),
plus a margin of 0.750%, resulting in an initial interest rate of 5.000% per
annum based on a year of 360 days. This estimated final payment is based on the
assumption that all payments will be made exactly as scheduled and that the
Index does not change; the actual final payment will be for all principal and
accrued interest not yet paid, together with any other unpaid amounts under this
Note. Unless otherwise agreed or required by applicable law, payments will be
applied first to any escrow or reserve account payments as required under any
mortgage, deed of trust, or other security instrument or security agreement
securing this Note; then to any accrued unpaid interest; and then to principal.
Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing. All payments must be made in U.S. dollars
and must be received by Lender consistent with any wriften payment instructions
provided by Lender. If a payment is made consistent with Lender's payment
instructions but received after 5:30 PM Central Time, Lender will credit
Borrower's payment on the next business day.

ADJUSTABLE INTEREST RATE CHANGE. This is a variable rate loan and the payment
amounts may change after the 60th payment and every 60th payment thereafter.

VARIABLE INTEREST RATE. For the first 60 payments, the interest rate on this
loan will be 5.000%. Thereafter, the interest rate on this Note is subject to
change from time to time based on changes in an independent index which is the
Wall Street Journal Rate as published in the Wall Street Journal Money Rates
section (the "Index"). The Index is not necessarily the lowest rate charged by
Lender on its loans. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute index after notifying Borrower. Lender
will tell Borrower the current Index rate upon Borrower's request. The interest
rate change will not occur more often than each five (5) years. Borrower
understands that Lender may make loans based on other rates as well. The Index
currently is 4.250% per annum. The interest rate or rates to be applied to the
unpaid principal balance during this Note will be the rate or rates set forth
herein in the "Payment" section. Notwithstanding any other provision of this
Note, after the first payment stream, the interest rate for each subsequent
payment stream will be effective as of the due date of the last payment in the
just-ending payment stream. NOTICE: Under no circumstances will the interest
rate on this Note be less than 4.150% per annum or more than the maximum rate
allowed by applicable law. Whenever increases occur in the interest rate,
Lender, at its option, may do one or more of the following: (A) increase
Borrower's payments to ensure Borrower's loan will pay off by its original final
maturity date, (B) increase Borrower's payments to cover accruing interest, (C)
increase the number of Borrower's payments, and (D) continue Borrower's payments
at the same amount and increase Borrower's final payment.

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. 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
under the payment schedule. Rather, early payments will reduce the principal
balance due and may result in Borrower's making fewer payments. 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 wriften 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: Bank Midwest, Armstrong
Branch, PO Box 136, 500 6th Street, Armstrong, IA 50514.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, the total sum due under this Note will continue to accrue interest at
the interest rate under this Note, with the final interest rate described in
this Note applying after maturity, or after maturity would have occurred 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

   

 

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  PROMISSORY NOTE   Loan No: (Continued)

 Page 2

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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.

False Statements. Any warranty, representation or statement made or fumished to
Lender by Borrower or on Borrower's behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or fumished or becomes false or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to
any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any guaranty of the indebtedness evidenced by this Note.

Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.

Insecurity. Lender in good faith believes itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance under this Note and all accrued unpaid interest immediately due, and
then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including
without limitation all attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), and appeals. If not prohibited by applicable law, Borrower also
will pay any court costs, in addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by federal law applicable to Lender
and, to the extent not preempted by federal law, the laws of the State of Iowa
without regard to its conflicts of law provisions. This Note has been accepted
by Lender in the State of Iowa.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.

COLLATERAL. Borrower acknowledges this Note is secured by any and all security
documents, including, but not limited to, all Security Agreements, Supplemental
Security Agreements, all Guaranties, Real Estate Mortgages and Assignment of
Rents including Real Estate Mortgage dated 9/28/2017.

PURPOSE OF LOAN. The specific purpose of this loan is: Refinance U.S. Bank LT
Debt-Armstrong, Monona, Ohio, Dubuque.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without losing
them. Borrower and any other person who signs, guarantees or endorses this Note,
to the extent allowed by law, waive presentment, demand for payment, and notice
of dishonor. Upon any change in the terms of this Note, and unless otherwise
expressly stated in writing, no party who signs this Note, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. The obligations under this Note are joint
and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE AND
ALL OTHER DOCUMENTS RELATING TO THIS DEBT.

 

BORROWER:

  

 

ART'S-WAY MANUFACTURING CO., INC.

  

 By: /s/ Carrie Gunnerson   By: /s/ Amber J. Murra   Carrie Gunnerson,
CEO/Secretary of Art's-Way      Amber J Murra, CFO/Treasurer of Art's-Way  
Manufacturing Co., Inc.     Manufacturing Co., Inc.

     

 

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  PROMISSORY NOTE   Loan No: (Continued)  Page 3

 

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LENDER:

 

 

BANK MIDWEST

 

  

 X  /s/ Jeffrey J Newlin       Jeffrey J Newlin, SVP Community Bank President  
 

 

 

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LaserPro, Ver. 17.2.10.037 Copr. D*H USA Corporation 1997, 2017. All Rights
Reserved. - IA ROSIALASERPRMCF1',LPLT:120.FC TR-2211 PR-140

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rPro, Ver. 17.2.10.037 Copr. D-tH USA Corporation 1997, 2017. All Rights
Reserved. - IA R1DSMLASERPROCFALP01213.FC TR-2211 PR-140

R-140