BUSINESS LOAN AGREEMENT
This Agreement dated as of February 28, 1997, is between BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank") and CALGENE, INC. (the
"Borrower").
1. DEFINITIONS
In addition to the terms which are defined elsewhere in this Agreement, the
following terms have the meanings indicated for the purposes of this Agreement:
1.1 "Acceptable Inventory" means inventory which satisfies the following
requirements:
(a) The inventory is owned by the Pledgor free of any title defects or
any liens or interests of others except the security interest in favor of
the Bank; and the Pledgor is the Borrower; Stoneville Pedigreed Seed
Company; Delinting and Seed Treating Co.; Xxxxxxxx, Inc.; or Calgene
Chemical, Inc. This does not prohibit any statutory liens which may exist
in favor of the growers of agricultural products which are purchased by the
Pledgor. Goods sold by the Borrower as a broker for other parties
("Brokered Goods") will not be considered owned by the Borrower for these
purposes.
(b) The inventory is located at locations which the Pledgor has
disclosed to the Bank and which are acceptable to the Bank. If the
inventory is covered by a negotiable document of title (such as a warehouse
receipt) that document must be delivered to the Bank. Inventory which is in
transit is not acceptable.
(c) The inventory is held for sale or use in the ordinary course of
the Pledgor's business and is of good and merchantable quality. Display
items, work-in-process and packing and shipping materials are not
acceptable. Inventory which is obsolete, unsalable, damaged, defective,
discontinued or slow-moving, or which has been returned by the buyer and is
not otherwise saleable, is not acceptable. Inventory will be considered
slow-moving if it is aged more than 18 months from its production date. In
addition, carryover cotton seed inventory exceeding 30% of the projected
sales for the year will not be acceptable. "Carryover" cotton seed
inventory means cotton seed inventory produced in the prior calendar year.
(d) The inventory has not been manufactured to the specifications of a
particular account debtor.
(e) The inventory is not subject to any licensing agreements which
would prohibit or restrict in any way the ability of the Bank to sell the
inventory to third parties.
(f) The inventory is not placed on consignment.
(g) The inventory is otherwise acceptable to the Bank.
1.2 "Acceptable Receivable" means an account receivable which satisfies the
following requirements:
(a) The account has resulted from the sale of goods or the performance
of services by the Pledgor in the ordinary course of the Pledgor's
business; and the Pledgor is the Borrower; Stoneville Pedigreed Seed
Company; Delinting and Seed Treating Co.; Xxxxxxxx, Inc.; or Calgene
Chemical, Inc.
(b) There are no conditions which must be satisfied before the Pledgor
is entitled to receive payment of the account. Accounts arising from COD
sales, consignments or guaranteed sales are not acceptable.
(c) The debtor upon the account does not claim any defense to payment
of the account, whether well founded or otherwise.
(d) The account balance does not include the amount of any
counterclaims or offsets which have been or may be asserted against the
Pledgor by the account debtor (including offsets for any "contra accounts"
owed by the Pledgor to the account debtor for goods purchased by the
Pledgor or for services performed for the Pledgor). To the extent any
counterclaims, offsets, or contra accounts exist in favor of the debtor,
such amounts shall be deducted from the account balance.
(e) The account represents a genuine obligation of the debtor for
goods sold and accepted by the debtor, or for services performed for and
accepted by the debtor. To the extent any credit balances exist in favor of
the debtor, such credit balances shall be deducted from the account
balance.
(f) The Pledgor has sent an invoice to the debtor in the amount of the
account.
(g) The Pledgor is not prohibited by the laws of the state where the
account debtor is located from bringing an action in the courts of that
state to enforce the debtor's obligation to pay the account. The Pledgor
has taken all reasonable actions to ensure access to the courts of the
state where the account debtor is located, including, where necessary, the
filing of a Notice of Business Activities Report or other similar filing
with the applicable state agency or the qualification by the Pledgor as a
foreign corporation authorized to transact business in such state.
(h) The account is owned by the Pledgor free of any title defects or
any liens or interests of others except the security interest in favor of
the Bank. Accounts arising from the sale of Brokered Goods will not be
considered to be owned by the Borrower for these purposes.
(i) The debtor upon the account is not any of the following:
(i) an employee, affiliate, parent or subsidiary of the Pledgor,
or an entity which has common officers or directors with the Pledgor.
(ii) the U.S. government or any agency or department of the U.S.
government unless the Bank agrees in writing to accept the obligation,
the Pledgor complies with the procedures in the Federal Assignment of
Claims Act of 1940 (41 U.S.C. section 15) with respect to the
obligation, and the underlying contract expressly provides that
neither the U.S. government nor any agency or department thereof shall
have the right of set-off against the Pledgor.
(iii) any state, county, city, town or municipality.
(iv) any person or entity located in a country or area other than
the United States unless either (A) the account is supported by an
irrevocable letter of credit issued by a bank acceptable to the Bank,
or (B) the account debtor carries an investment grade rating from Dun
& Bradstreet of BBB or higher.
(j) The account is not in default. An account will be considered in
default if any of the following occur:
(i) The account is not paid within 60 days from its due date;
(ii) The debtor obligated upon the account suspends business,
makes a general assignment for the benefit of creditors, or fails to
pay its debts generally as they come due; or
(iii) Any petition is filed by or against the debtor obligated
upon the account under any bankruptcy law or any other law or laws for
the relief of debtors;
(k) The account does not arise from the sale of goods which remain in
the Pledgor's possession or under the Pledgor's control.
(l) The account is not evidenced by a promissory note or chattel
paper, nor is the account debtor obligated to the Pledgor under any other
obligation which is evidenced by a promissory note.
(m) The account is otherwise acceptable to the Bank.
In addition to the foregoing limitations, the dollar amount of accounts included
as Acceptable Receivables which are the obligations of a single debtor shall not
exceed the concentration limit established for that debtor. To the extent the
total of such accounts exceeds a debtor's concentration limit, the amount of any
such excess shall be excluded. The concentration limit for each debtor shall be
equal to 20% of the total amount of the aggregate of all Pledgors' accounts at
that time. It is provided, however, if the debtor obligated upon an account is
Terra Industries, Inc., the concentration limit applicable to such debtor will
be the amount of $7,500,000.
1.3 "Borrowing Base" means the sum of:
(a) 80% of the balance due on Acceptable Receivables; and
(b) 60% of the value of Acceptable Inventory consisting of finished
goods comprised of cotton seed (including bulk cotton seed) and plant oil
and plant oil-based products (including, but not limited to, canola, palm,
and soybean oils).
In determining the value of Acceptable Inventory to be included in the
Borrowing Base, the Bank will use the lowest of (i) the Pledgor's cost,
(ii) the Pledgor's estimated market value, or (iii) the Bank's independent
determination of the resale value of such inventory in such quantities and
on such terms as the Bank deems appropriate. Prior to multiplying the value
of Acceptable Inventory by the percentage rate specified above, the Bank
will deduct any amounts the Pledgor owes to growers of agricultural
products which the Pledgor has purchased for processing or for use in
producing the inventory. In addition, prior to multiplying the value of
Acceptable Receivables by the percentage rate specified above, the Bank
will deduct any amounts the Pledgor owes to growers of perishable
agricultural products (to the extent that such grower payables have not
already been subtracted from Acceptable Inventory under the preceding
sentence) if such growers would, by timely filing of notice, be entitled to
the benefits of the federal Perishable Agricultural Commodities Act of 1930
(7 USC section 499a et seq.) Amounts owed to the growers of Brokered Goods
need not be deducted under this paragraph.
1.4 "Credit Limit" means the amount indicated for each period set forth
below:
Period Amount
From the date of this
Agreement until 12/31/97 $20,000,000
From 1/1/98 until 12/31/98 $30,000,000
From 1/1/99 until the
Expiration Date (as
defined below) $40,000,000
1.5 "Guarantors" means the following subsidiaries of the Borrower, together
with any future subsidiary of the Borrower unless the Bank, in its discretion,
waives the requirement of a guaranty from such subsidiary: Stoneville Pedigreed
Seed Company; Delinting and Seed Treating Co.; Xxxxxxxx, Inc.; or Calgene
Chemical, Inc.
1.6 "Monsanto Sub Debt" means Subordinated Debt owed by the Borrower to
Monsanto Company, including the Monsanto Line of Credit.
1.7 "Monsanto Line of Credit" means the existing line of credit from
Monsanto Company to the Borrower, with terms and conditions as previously
disclosed to the Bank.
1.8 "Pledgor" means, with respect to collateral pledged under this
Agreement, the Borrower or Guarantor which owns the collateral.
1.9 "Subordinated Debt" means indebtedness subordinated, in a manner
acceptable to the Bank, to all of the Borrower's obligations to the Bank
pursuant to this Agreement.
2. LINE OF CREDIT AMOUNT AND TERMS
2.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of credit
(the "Commitment") is equal to the lesser of (i) the Credit Limit or (ii)
the Borrowing Base.
(b) This is a revolving line of credit providing for cash advances and
financing overdrafts. During the availability period, the Borrower may
repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the outstanding principal
balance of advances under the line of credit plus the amount of the
Overdraft Limit (as defined below), to exceed the Commitment. If the
Borrower exceeds this limit, the Borrower will immediately pay the excess
to the Bank upon the Bank's demand. The Bank may apply payments received
from the Borrower under this Paragraph to the obligations of the Borrower
to the Bank in the order and the manner as the Bank, in its discretion, may
determine.
2.2 Availability Period. The line of credit is available between the date
of this Agreement and December 1, 1999 (the "Expiration Date") unless the
Borrower is in default.
2.3 Interest Rate
(a) Unless the Borrower elects an optional interest rate as described
below, the interest rate is the Bank's Reference Rate minus one-quarter
(0.25) of one percentage point.
(b) The Reference Rate is the rate of interest publicly announced from
time to time by the Bank in San Francisco, California, as its Reference
Rate. The Reference Rate is set by the Bank based on various factors,
including the Bank's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some loans.
The Bank may price loans to its customers at, above, or below the Reference
Rate. Any change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a change in the
Bank's Reference Rate.
2.4 Repayment Terms
(a) The Borrower will pay interest on the first day of each month
until payment in full of any principal outstanding under this line of
credit.
(b) The Borrower will repay in full all principal and any unpaid
interest or other charges outstanding under this line of credit no later
than the Expiration Date.
2.5 Optional Interest Rates. Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect the optional interest rates listed
below during interest periods agreed to by the Bank and the Borrower. The
optional interest rates shall be subject to the terms and conditions described
later in this Agreement. Any principal amount bearing interest at an optional
rate under this Agreement is referred to as a "Portion." The following optional
interest rates are available, as described in Article 3:
(a) Fixed Rates.
(b) the LIBOR Rate plus one and one-half (1.5) percentage points.
2.6 Overdraft Financing Facility
(a) This line of credit may be used to pay overdrafts in the
Borrower's checking accounts. The total amount of all unreimbursed
overdrafts outstanding at any one time may not exceed One Million Dollars
($1,000,000) (the "Overdraft Limit"). This portion of the line of credit
may only be accessed through this overdraft facility. The total amount of
all other credit outstanding at any time may not exceed the Commitment,
minus the Overdraft Limit.
(b) The checking accounts which the Borrower may overdraw are listed
below, together with the allocated Overdraft Limit for each account:
Account Number Overdraft Limit
14899-02502 $1,000,000
(c) As part of the monthly calculation of service charges to be
assessed against the Borrower's account, the Bank will include an interest
charge calculated on the daily amount of unreimbursed overdrafts
outstanding in the account. The interest rate will be an annual rate of the
Bank's Reference Rate minus one-quarter (0.25) of one percentage point.
(d) If items are presented against an account covered by this
overdraft facility which, if paid, would exceed the allocated Overdraft
Limit for that account, the Bank will have no obligation to pay those
items, but may at its discretion pay any or all of the items. The excess
amount of unreimbursed overdrafts outstanding which exceeds the applicable
limits will incur interest at the greater of (i) the rate specified for
overdrafts above or (ii) 120% of the Bank's Reference Rate.
(e) The Bank or the Borrower may, at its discretion, at any time upon
10 days written notice to the other party, terminate this overdraft
facility and require repayment of all outstanding overdrafts. The Borrower
will in any event repay all outstanding overdrafts no later than the
Expiration Date.
(f) For the purposes of this Agreement, the amount of unreimbursed
overdrafts outstanding on any day will equal the daily net collected
balance of the account on any day when such balance is negative. In
calculating the amount of interest accruing under this facility, the daily
net collected balance will not include provisional credits for items in the
process of collection ("Uncollected Items") as determined under the Bank's
normal practices for the Borrower's account. However, in determining
whether the Borrower has exceeded the Overdraft Limit, the Commitment, or
any other dollar limits on borrowing established in this Agreement, the
Borrower shall be given credit for such Uncollected Items. The negative
daily net collected balance may include fees and charges which have been
posted to the Borrower's account, including overdraft interest charges.
This may result in compounding of interest.
(g) The Borrower agrees that overdraft interest charges and other fees
and charges relating to its accounts may be directly debited from its
accounts.
(h) The Bank may terminate this overdraft facility if a levy is
imposed on any account covered by this facility.
3. OPTIONAL INTEREST RATES
3.1 Optional Rates. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and, if the
interest period is longer than one month, then on the first day of each month
during the interest period. At the end of any interest period, the interest rate
will revert to the rate based on the Reference Rate, unless the Borrower has
designated another optional interest rate for the Portion. No Portion will be
converted to a different interest rate during the applicable interest period.
Upon the occurrence of an event of default under this Agreement and so long as
such default has not been cured, the Bank may terminate the availability of
optional interest rates for interest periods commencing after the default
occurs.
3.2 Fixed Rate. The election of Fixed Rates shall be subject to the
following terms and requirements:
(a) The "Fixed Rate" means the fixed interest rate the Bank and the
Borrower agree will apply during the applicable interest period.
(b) The interest period during which the Fixed Rate will be in effect
will be one year or less.
(c) Each Fixed Rate Portion will be for an amount not less than the
following:
(i) for interest periods of 14 days or longer, Five Hundred
Thousand Dollars ($500,000).
(ii) for interest periods of between 1 and 13 days, an amount
which, when multiplied by the number of days in the applicable
interest period, is not less than fifteen million (15,000,000)
dollar-days.
(d) Each prepayment of a Fixed Rate Portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid, and a prepayment fee as described
below. A "prepayment" is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this Agreement. The
prepayment fee shall be equal to the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been prepaid,
exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the domestic certificate
of deposit market, the eurodollar deposit market, or other appropriate
money market selected by the Bank for a period starting on the date on
which it was prepaid and ending on the last day of the interest period
for such Portion (or the scheduled payment date for the amount
prepaid, if earlier).
3.3 LIBOR Rate. The election of the LIBOR Rate shall be subject to the
following terms and requirements:
(a) The interest period during which the LIBOR Rate will be in effect
will be one, two, three, four, five, six, seven, eight, nine, ten, eleven,
or twelve months. The first day of the interest period must be a day other
than a Saturday or a Sunday on which the Bank is open for business in
California, New York and London and dealing in offshore dollars (a "LIBOR
Banking Day"). The last day of the interest period and the actual number of
days during the interest period will be determined by the Bank using the
practices of the London inter-bank market.
(b) Each LIBOR Rate Portion will be for an amount not less than Five
Hundred Thousand Dollars ($500,000).
(c) The "LIBOR Rate" means the average per annum interest rate,
rounded upward to the nearest 1/100 of one percent, of rates at which U.S.
dollar deposits would be offered for the applicable interest period by
major banks in the London inter-bank market, as shown on the Telerate Page
3750 (or such other page as may replace it) at approximately 11:00 a.m.
London time two (2) London Banking Days before the commencement of the
interest period. If such rate does not appear on the Telerate Page 3750 (or
such other page that may replace it), the rate for that interest period
will be determined by such alternate method as reasonably selected by Bank.
A "London Banking Day" is a day on which the Bank's London Branch is open
for business and dealing in offshore dollars. All amounts in the
calculation will be determined by the Bank as of the first day of the
interest period.
(d) The Borrower shall irrevocably request a LIBOR Rate Portion no
later than 12:00 noon San Francisco time on the LIBOR Banking Day preceding
the day on which the London Inter-Bank Offered Rate will be set, as
specified above.
(e) Any Portion of the principal balance already bearing interest at
the LIBOR Rate will not be converted to a different rate during its
interest period.
(f) Each prepayment of a LIBOR Rate Portion, whether voluntary, by
reason of acceleration or otherwise, will be accompanied by the amount of
accrued interest on the amount prepaid and a prepayment fee as described
below. A "prepayment" is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this Agreement. The
prepayment fee shall be equal to the amount (if any) by which:
(i) the additional interest which would have been payable during
the interest period on the amount prepaid had it not been prepaid,
exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the domestic certificate
of deposit market, the eurodollar deposit market, or other appropriate
money market selected by the Bank, for a period starting on the date
on which it was prepaid and ending on the last day of the interest
period for such Portion (or the scheduled payment date for the amount
prepaid, if earlier).
(g) The Bank will have no obligation to accept an election for a LIBOR
Rate Portion if any of the following described events has occurred and is
continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of a LIBOR Rate Portion are not
available in the London inter-bank market; or
(ii) the LIBOR Rate does not accurately reflect the cost of a
LIBOR Rate Portion.
4. FEES, AND EXPENSES
4.1 Unused Commitment Fee. The Borrower agrees to pay a fee on any
difference between the Credit Limit and the amount of credit it actually uses,
determined by the weighted average credit outstanding during the specified
period. The fee will be calculated at 0.20% per year. This fee is due on the
first day of each month until the Expiration Date.
4.2 Expenses. The Borrower agrees to immediately repay the Bank for
reasonable expenses that include, but are not limited to, filing, recording and
search fees, and title report fees.
4.3 Reimbursement Costs.
(a) The Borrower agrees to reimburse the Bank for any reasonable
expenses it incurs in the preparation of this Agreement and any agreement
or instrument required by this Agreement. Expenses include, but are not
limited to, reasonable attorneys' fees, including any allocated costs of
the Bank's in-house counsel.
(b) The Borrower agrees to reimburse the Bank for the reasonable cost
of periodic audits of the collateral securing this Agreement, at such
intervals as the Bank may reasonably require; provided, however, that the
Borrower shall not be required to reimburse the Bank for more than 2 such
audits (in addition to the pre-closing audit) unless there has been an
event of default under this Agreement, with each such audit costing no more
than $10,000.
5. COLLATERAL
The Borrower's and the Guarantors' obligations to the Bank under this
Agreement will be secured by personal property the Borrower and Guarantors now
own or will own in the future as listed below. The collateral is further defined
in security agreement(s) executed by the Borrower and Guarantors. In addition,
all personal property collateral securing this Agreement shall also secure all
other present and future obligations of the Borrower to the Bank. All personal
property collateral securing any other present or future obligations of the
Borrower to the Bank shall also secure this Agreement.
(a) A blanket lien on machinery and equipment.
(b) Inventory.
(c) Receivables.
6. DISBURSEMENTS, PAYMENTS AND COSTS
6.1 Requests for Credit. Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.
6.2 Disbursements and Payments. Each disbursement by the Bank and each
payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by the Bank
from time to time;
(b) made for the account of the Bank's branch selected by the Bank
from time to time;
(c) made in immediately available funds, or such other type of funds
selected by the Bank;
(d) evidenced by records kept by the Bank. In addition, the Bank may,
at its discretion, require the Borrower to sign one or more promissory
notes.
6.3 Telephone and Telefax Authorization.
(a) The Bank may honor telephone or telefax instructions for advances
or repayments or for the designation of optional interest rates given by
any one of the individuals authorized to sign loan agreements on behalf of
the Borrower, or any other individual designated by any one of such
authorized signers.
(b) Advances will be deposited in and repayments will be withdrawn
from the Borrower's account number 14899-02502, or such other of the
Borrower's accounts with the Bank as designated in writing by the Borrower.
(c) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions it
reasonably believes are made by any individual authorized by the Borrower
to give such instructions; except to the extent that such liability, loss
or costs arises from the Bank's gross negligence or willful misconduct.
This indemnity and excuse will survive this Agreement's termination.
6.4 Direct Debit (Pre-Billing)
(a) The Borrower agrees that the Bank will debit the Borrower's
account number 14899-02502, or such other of the Borrower's accounts with
the Bank as designated in writing by the Borrower (the "Designated
Account") on the date each payment of interest and any fees from the
Borrower becomes due (the "Due Date"). If the Due Date is not a banking
day, the Designated Account will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will mail
to the Borrower a statement of the amounts that will be due on that Due
Date (the "Billed Amount"). The calculation will be made on the assumption
that no new extensions of credit or payments will be made between the date
of the billing statement and the Due Date, and that there will be no
changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed Amount,
regardless of the actual amount due on that date (the "Accrued Amount"). If
the Billed Amount debited to the Designated Account differs from the
Accrued Amount, the discrepancy will be treated as follows:
(i) If the Billed Amount is less than the Accrued Amount, the
Billed Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrower will not be in default by
reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount, the
Billed Amount for the following Due Date will be decreased by the
amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The Bank will
not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the Designated
Account to cover each debit. If there are insufficient funds in the
Designated Account on the date the Bank enters any debit authorized by this
Agreement, the debit will be reversed.
6.5 Banking Days. Unless otherwise provided in this Agreement, a banking
day is a day other than a Saturday or a Sunday on which the Bank is open for
business in California. All payments and disbursements which would be due on a
day which is not a banking day will be due on the next banking day. All payments
received on a day which is not a banking day will be applied to the credit on
the next banking day.
6.6 Taxes.
(a) If any payments to the Bank under this Agreement are made from
outside the United States, the Borrower will not deduct any foreign taxes
from any payments it makes to the Bank. If any such taxes are imposed on
any payments made by the Borrower (including payments under this
paragraph), the Borrower will pay the taxes and will also pay to the Bank,
at the time interest is paid, any additional amount which the Bank
specifies as necessary to preserve the after-tax yield the Bank would have
received if such taxes had not been imposed. The Borrower will confirm that
it has paid the taxes by giving the Bank official tax receipts (or
notarized copies) within 30 days after the due date.
(b) Payments made by the Borrower to the Bank will be made without
deduction of United States withholding or similar taxes. If the Borrower is
required to pay U.S. withholding taxes, the Borrower will pay such taxes in
addition to the amounts due to the Bank under this Agreement. If the
Borrower fails to make such tax payments when due, the Borrower indemnifies
the Bank against any liability for such taxes, as well as for any related
interest, expenses, additions to tax, or penalties asserted against or
suffered by the Bank with respect to such taxes.
6.7 Interest Calculation. Except as otherwise stated in this Agreement, all
interest and fees, if any, will be computed on the basis of a 360-day year and
the actual number of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used.
6.8 Default Rate. Upon the occurrence and during the continuation of any
default under this Agreement, principal amounts outstanding under this Agreement
will at the option of the Bank bear interest at a rate which is one (1.0)
percentage point higher than the rate of interest otherwise provided under this
Agreement. This will not constitute a waiver of any default. Installments of
principal which are not paid when due under this Agreement shall continue to
bear interest until paid. Any interest, fees or costs which are not paid when
due shall bear interest at the Bank's Reference Rate plus three-quarters of one
(0.75) percentage point. This may result in compounding of interest.
6.9 Payments in Kind. If the Bank requires delivery in kind of the proceeds
of collection of the Borrower's accounts receivable, such proceeds shall be
credited to interest, principal, and other sums owed to the Bank under this
Agreement in the order and proportion determined by the Bank in its sole
discretion. All such credits will be conditioned upon collection and any
returned items may, at the Bank's option, be charged to the Borrower.
7. CONDITIONS
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower under
this Agreement:
7.1 Authorizations. Evidence that the execution, delivery and performance
by the Borrower (and each Guarantor) of this Agreement and any instrument or
agreement required under this Agreement have been duly authorized.
7.2 Governing Documents. A copy of the Borrower's and each Guarantor's
articles of incorporation.
7.3 Security Agreements. Signed original security agreements, assignments,
and financing statements (together with collateral in which the Bank requires a
possessory security interest), which the Bank requires.
7.4 Evidence of Priority. Evidence that security interests and liens in
favor of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing.
7.5 Consent to Removal. For any personal property collateral located on
real property which is subject to a mortgage or deed of trust or which is not
owned by the grantor of the security interest, if the Bank so requires in its
discretion, a Consent to Removal from the owner of the real property and the
holder of any mortgage or deed of trust.
7.6 Insurance. Evidence of insurance coverage, as required in the
"Covenants" section of this Agreement.
7.7 Guaranties. Guaranties signed by each Guarantor, covering the entire
amount of the Borrower's obligations to the Bank.
7.8 Subordination Agreement. A subordination agreement in favor of the Bank
signed by Monsanto Company, covering the Monsanto Line of Credit and other
obligations of the Borrower to Monsanto Company, together with evidence that the
outstanding principal amount of the Monsanto Sub Debt is not less than Twenty
Four Million Seven Hundred Sixty Thousand Dollars ($24,760,000).
7.9 Payment of Fees. Payment of all accrued and unpaid expenses incurred by
the Bank as required by the paragraph entitled "Reimbursement Costs."
7.10 Equity Contribution. Evidence that Monsanto Company has contributed an
additional Fifty Million Dollars ($50,000,000) of cash equity to the Borrower,
as approved by the shareholders in November, 1996.
7.11 Other Items. Any other items that the Bank reasonably requires.
8. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a renewed representation:
8.1 Organization of Borrower. The Borrower is a corporation duly formed and
existing under the laws of the state where organized.
8.2 Authorization. This Agreement, and any instrument or agreement required
hereunder, are within the Borrower's powers, have been duly authorized, and do
not conflict with any of its organizational papers.
8.3 Enforceable Agreement. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
8.4 Good Standing. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with
fictitious name statutes.
8.5 No Conflicts. This Agreement does not conflict with any law, agreement,
or obligation by which the Borrower is bound.
8.6 Financial Information. All financial and other information that has
been or will be supplied to the Bank, including the Borrower's consolidated
financial statement dated as of December 31, 1996, is:
(a) sufficiently complete to give the Bank accurate knowledge of the
Borrower's and Guarantors' financial condition.
(b) in compliance with all government regulations that apply.
Since the date of the financial statement specified above, there has been no
material adverse change in the business condition (financial or otherwise),
operations, properties or prospects of the Borrower or any Guarantor.
8.7 Lawsuits. There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been disclosed
in writing to the Bank.
8.8 Collateral. All collateral required in this Agreement is owned by the
grantor of the security interest free of any title defects and, with respect to
accounts receivable and inventory, free of any liens or interests of others.
8.9 Permits, Franchises. The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade name
rights, patent rights and fictitious name rights necessary to enable it to
conduct the business in which it is now engaged.
8.10 Other Obligations. The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation, except as have been disclosed in
writing to the Bank.
8.11 Income Tax Matters. The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year, except as have been
disclosed in writing to the Bank.
8.12 No Tax Avoidance Plan. The Borrower's obtaining of credit from the
Bank under this Agreement does not have as a principal purpose the avoidance of
U.S. withholding taxes.
8.13 No Event of Default. There is no event which is, or with notice or
lapse of time or both would be, a default under this Agreement.
8.14 Merchantable Inventory. All inventory which is included in the
Borrowing Base is of good and merchantable quality and free from defects.
8.15 ERISA Plans.
(a) Each Plan (other than a multiemployer plan) is in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law. Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of the
Borrower, nothing has occurred which would cause the loss of such
qualification. The Borrower has fulfilled its obligations, if any, under
the minimum funding standards of ERISA and the Code with respect to each
Plan, and has not incurred any liability with respect to any Plan under
Title IV of ERISA.
(b) There are no claims, lawsuits or actions (including by any
governmental authority), and there has been no prohibited transaction or
violation of the fiduciary responsibility rules, with respect to any Plan
which has resulted or could reasonably be expected to result in a material
adverse effect.
(c) With respect to any Plan subject to Title IV of ERISA:
(i) No reportable event has occurred under Section 4043(c) of
ERISA for which the PBGC requires 30 day notice.
(ii) No action by the Borrower or any ERISA Affiliate to
terminate or withdraw from any Plan has been taken and no notice of
intent to terminate a Plan has been filed under Section 4041 of ERISA.
(iii) No termination proceeding has been commenced with respect
to a Plan under Section 4042 of ERISA, and no event has occurred or
condition exists which might constitute grounds for the commencement
of such a proceeding.
(d) The following terms have the meanings indicated for purposes of
this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(ii) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
(iii) "ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Borrower within the
meaning of Section 414(b) or (c) of the Code.
(iv) "PBGC" means the Pension Benefit Guaranty Corporation.
(v) "Plan" means a pension, profit-sharing, or stock bonus plan
intended to qualify under Section 401(a) of the Code, maintained or
contributed to by the Borrower or any ERISA Affiliate, including any
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.
8.16 Location of Borrower. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrower's signature on this Agreement.
8.17 Environmental Matters. Except as has been disclosed to the Bank in
writing, the Borrower (a) is not in violation of any health, safety, or
environmental law or regulation regarding hazardous substances and (b) is not
the subject of any claim, proceeding, notice, or other communication regarding
hazardous substances. "Hazardous substances" means any substance, material or
waste that is or becomes designated or regulated as "toxic," "hazardous,"
"pollutant," or "contaminant" or a similar designation or regulation under any
federal, state or local law (whether under common law, statute, regulation or
otherwise) or judicial or administrative interpretation of such, including
without limitation petroleum or natural gas.
9. COVENANTS
The Borrower agrees, so long as credit is available under this Agreement
and until the Bank is repaid in full:
9.1 Use of Proceeds. To use the proceeds of the credit only for general
working capital purposes.
9.2 Financial Information. To provide the following financial information
and statements in form and content acceptable to the Bank, and such additional
information as reasonably requested by the Bank from time to time:
(a) Copies of the Borrower's Form 10-K Annual Report within 90 days
after the date of filing with the Securities and Exchange Commission.
(b) Copies of the Borrower's Form 10-Q Quarterly Report and Form 8-K
Current Report within 45 days after the date of filing with the Securities
and Exchange Commission.
(c) Within 45 days of the period's end, the Borrower's quarterly
financial statements. These financial statements may be Borrower prepared.
The statements shall be prepared on a consolidated and consolidating basis.
(d) Within 30 days of each month end, a borrowing certificate setting
forth the amount of Acceptable Receivables and Acceptable Inventory as of
the last day of such month.
(e) Within 30 days of each month end, a compliance certificate of the
Borrower signed by an authorized financial officer of the Borrower setting
forth (i) the information and computations (in sufficient detail) to
establish that the Borrower is in compliance with all financial covenants
at the end of the period covered by the financial statements then being
furnished and (ii) whether there existed as of the date of such financial
statements and whether there exists as of the date of the certificate, any
default under this Agreement and, if any such default exists, specifying
the nature thereof and the action the Borrower is taking and proposes to
take with respect thereto.
(f) By December 31 of each year, projected income statements, balance
sheets and cash flow statements for (i) the Borrower on a consolidated
basis; (ii) Xxxxxxxx, Inc.; and (iii) all subsidiaries other than Xxxxxxxx,
Inc. The projections shall include an annual projection by month covering
the subsequent year, as well as a five year projection.
(g) promptly upon receipt, copies of all notices, orders, or other
communications regarding (i) any material enforcement action by any
governmental authority relating to health, safety, the environment, or any
hazardous substances with regard to the Borrower's property, activities, or
operations, or (ii) any material claim against the Borrower regarding
hazardous substances.
(h) Statements showing an aging of the Borrower's receivables within
thirty (30) days after the end of each month.
(i) A statement showing an aging of accounts payable within thirty
(30) days after the end of each month.
(j) If the Borrower purchases agricultural products from growers for
use in the Borrower's business, a listing of accounts payable to growers
within 30 days after the end of each month.
(k) An inventory listing, covering cotton seed (including bulk seed)
and plant oil and plant oil-based products (including, but not limited to,
canola, palm, and soybean oils) within thirty (30) days after the end of
each month; the listing must include a description of the inventory, its
location and cost, and such other information as the Bank may require.
(l) Promptly upon the Bank's reasonable request, such other
statements, lists of property and accounts, budgets, forecasts or reports
as to the Borrower and as to each Guarantor of the Borrower's obligations
to the Bank as the Bank may request.
9.3 Limitation on Losses. Not to incur on a consolidated basis a net loss
after taxes and extraordinary items in excess of the following:
(a) In any one fiscal year, the sum of:
(i) Ten Million Dollars ($10,000,000); plus
(ii) the increase, since the beginning of the fiscal year, in the
principal amount outstanding under the Monsanto Sub Debt; plus
(iii) cash received during the fiscal year from the sale of the
Borrower's stock; plus
(iv) the increase, since the beginning of the fiscal year, in the
amount of accrued but unpaid interest on the Subordinated Debt.
(b) From the date of this Agreement through any calculation date up to
and including December 1, 1999, the sum of:
(i) Fifteen Million Dollars ($15,000,000); plus
(ii) the increase, since December 31, 1996, in the principal
amount outstanding under the Monsanto Sub Debt; plus
(iii) cash received, since December 31, 1996, from the sale of
the Borrower's stock; plus
(iv) the increase, since December 31, 1996, in the amount of
accrued but unpaid interest on Subordinated Debt.
9.4 Adjusted Tangible Net Worth. To maintain on a consolidated basis
Adjusted Tangible Net Worth equal to at least Fifty Million Dollars
($50,000,000).
"Adjusted Tangible Net Worth" means Tangible Net Worth, plus Subordinated Debt,
plus Monsanto R&D Advances.
"Monsanto R&D Advances" means the amount of cash research and development
advances made by Monsanto Company to the Borrower and accounted for as deferred
revenue.
"Tangible Net Worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, capitalized or deferred
research and development costs, deferred marketing expenses, deferred
receivables, and other like intangibles, and monies due from affiliates,
officers, directors, employees, or shareholders of the Borrower) plus
Subordinated Debt, less total liabilities, including but not limited to accrued
and deferred income taxes, and any reserves against assets.
9.5 Leverage. To maintain on a consolidated basis a ratio of (a) Total
Liabilities, minus Subordinated Debt, minus Monsanto R&D Advances, to (b)
Adjusted Tangible Net Worth, not exceeding 1.50:1.0.
"Total liabilities" means the sum of current liabilities plus long term
liabilities.
9.6 Adjusted Cash Flow. To maintain on a consolidated basis for each fiscal
year Adjusted Cash Flow not less than negative Three Million Dollars
($-3,000,000).
"Adjusted Cash Flow" means the sum of net income from operations and
investments, after taxes, plus the increase in the principal amount outstanding
under the Monsanto Sub Debt, plus depreciation, depletion, amortization and
other non-cash charges, plus accrued but unpaid interest on Subordinated Debt,
minus Unfinanced Acquisitions of Fixed or Capital Assets.
"Unfinanced Acquisitions of Fixed or Capital Assets" means acquisitions of fixed
or capital assets with cash or with the proceeds of revolving lines of credit.
9.7 Other Debts. Not to have outstanding or incur (or permit any Guarantor
to have outstanding or incur) any direct or contingent liabilities or lease
obligations (other than those to the Bank), or become liable for the liabilities
of others without the Bank's written consent. This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal trade credit.
(b) Endorsing negotiable instruments received in the usual course of
business.
(c) Obtaining surety bonds in the usual course of business.
(d) Liabilities and lines of credit and leases in existence on the
date of this Agreement disclosed in writing to the Bank in the Borrower's
financial statement dated December 31, 1996.
(e) Additional debts and lease obligations for the acquisition of
fixed or capital assets (to the extent permitted in paragraph 9.9 below) in
an amount not exceeding Six Million Dollars ($6,000,000) outstanding at any
one time.
(f) Subordinated Debt acceptable to the Bank in its sole discretion.
(g) Debts and lease obligations, acceptable to the Bank in its sole
discretion, which are assumed by the Borrower or Guarantor in an
acquisition permitted under paragraph 9.21(d) below.
(h) Operating leases.
9.8 Other Liens. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower or any Guarantor now or
later owns, except:
(a) Deeds of trust and security agreements in favor of the Bank.
(b) Liens for taxes not yet due.
(c) Liens outstanding on the date of this Agreement.
(d) Additional purchase money security interests in fixed assets or
equipment acquired after the date of this Agreement, if the total principal
amount of debts secured by such liens does not exceed Six Million Dollars
($6,000,000) at any one time.
(e) Additional liens on fixed assets or equipment with a net book
value of no more than Six Million Dollars ($6,000,000) to secure purchase
money financing permitted by the foregoing paragraphs.
(f) Liens arising by operation of law and in the ordinary course of
the Borrower's or Guarantor's business securing amounts the Borrower or
Guarantor owes to growers of agricultural products purchased by the
Borrower or Guarantor for resale, processing, or use in producing the
Borrower's or Guarantor's inventory, provided such obligations are not past
due.
9.9 Monsanto Line of Credit. To continue to maintain the Monsanto Line of
Credit in an amount not less than Fifteen Million Dollars ($15,000,000), with
terms and conditions substantially identical to those in the existing credit
agreement dated March 31, 1996.
9.10 Dividends. Not to declare or pay any dividends on any of its shares
except dividends payable in capital stock of the Borrower, and not to purchase,
redeem or otherwise acquire for value any of its shares, or create any sinking
fund in relation thereto.
9.11 Notices to Bank. To promptly notify the Bank in writing of:
(a) any lawsuit claiming damages of over Two Hundred Fifty Thousand
Dollars ($250,000) against the Borrower or any Guarantor.
(b) any substantial dispute between the Borrower (or any Guarantor)
and any government authority.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's (or any Guarantor's)
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the credit.
(e) any change in the Borrower's or any Guarantor's name, legal
structure, or chief executive office.
(f) the receipt of any notice or communication regarding (i) any
threatened or pending investigation or enforcement action by any
governmental authority or any other claim relating to health, safety, the
environment, or any hazardous substances with regard to the Borrower's or
any Guarantor's property, activities, or operations or (ii) any knowledge
on the part of the Borrower that hazardous substances exist on or under the
Borrower's or any Guarantor's real property.
9.12 Books and Records. To maintain, and cause each Guarantor to maintain,
adequate books and records.
9.13 Audits.
(a) To allow the Bank and its agents, upon ten days' notice, to
inspect the Borrower's and each Guarantor's properties (including taking
and removing samples related to any investigation regarding hazardous
substances) and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's or Guarantor's properties, books
or records are in the possession of a third party, the Borrower authorizes
that third party to permit the Bank or its agents to have access to perform
inspections or audits and to respond to the Bank's requests for information
concerning such properties, books and records.
(b) The Bank has no duty to inspect the Borrower's or Guarantor's
properties or to examine, audit or copy books and records and the Bank
shall not incur any obligation or liability by reason of not making any
such inspection or inquiry. In the event that the Bank inspects the
Borrower's or Guarantor's properties or examines, audits or copies books
and records, the Bank will be acting solely for the purposes of protecting
the Bank's security and preserving the Bank's rights under this Agreement.
Neither the Borrower nor any other party is entitled to rely on any
inspection or other inquiry by the Bank. The Bank owes no duty of care to
protect the Borrower, the Guarantor or any other party against, or to
inform the Borrower, the Guarantor or any other party of, any adverse
condition that may be observed as affecting the Borrower's or Guarantor's
properties or premises, or the Borrower's or Guarantor's business.
(c) The Bank shall hold all nonpublic information concerning the
Borrower obtained from the Borrower through such audits and inspections,
including information obtained through the Bank's agents, confidential
pursuant to the Bank's normal practices and procedures for handling
confidential information of such nature, provided that the Bank shall not
be precluded from making disclosure regarding such information: (i) to
counsel of the Bank, accountants and other professional advisors of the
Bank; (ii) in response to a subpoena or order of a court or governmental
agency; (iii) at the request of any bank regulatory authority or in
connection with an examination of the Bank by such authority; (iv) as
required by law or applicable regulation; or (v) to the extent required in
connection with the exercise of any remedy hereunder. Notwithstanding the
foregoing, the Bank may in its discretion disclose to the Borrower, the
Guarantor or any other party any findings relating to hazardous substances
(as defined in paragraph 10 below) made as a result of, or in connection
with, any inspection of the Borrower's or Guarantor's properties.
9.14 Compliance with Laws. To comply (and cause each Guarantor to comply)
with the laws (including any fictitious name statute), regulations, and orders
of any government body with authority over the Borrower's or the Guarantor's
business.
9.15 Preservation of Rights. To maintain and preserve all rights,
privileges, and franchises the Borrower and each Guarantor now has.
9.16 Maintenance of Properties. To make any repairs, renewals, or
replacements to keep the Borrower's and each Guarantor's properties in good
working condition.
9.17 Perfection of Liens. To help the Bank perfect and protect its security
interests and liens, and reimburse it for related reasonable costs it incurs to
protect its security interests and liens.
9.18 Cooperation. To take any action reasonably requested by the Bank to
carry out the intent of this Agreement.
9.19 Insurance.
(a) Insurance Covering Collateral. To maintain all risk property
damage insurance policies covering the tangible property comprising the
collateral. Each insurance policy must be for the full replacement cost of
the collateral and include a replacement cost endorsement, and may have a
deductible of up to $25,000. The insurance must be issued by an insurance
company acceptable to the Bank and must include a lender's loss payable
endorsement in favor of the Bank in a form acceptable to the Bank.
(b) General Business Insurance. To maintain insurance satisfactory to
the Bank as to amount, nature and carrier covering property damage
(including loss of use and occupancy) to any of the Borrower's or
Guarantor's properties, public liability insurance including coverage for
contractual liability, product liability and workers' compensation, and any
other insurance which is usual for the Borrower's or Guarantor's business.
(c) Evidence of Insurance. Upon the request of the Bank, to deliver to
the Bank a copy of each insurance policy, or, if permitted by the Bank, a
certificate of insurance listing all insurance in force.
9.20 Additional Negative Covenants. Not to, without the Bank's written
consent (and not permit any Guarantor to):
(a) engage in any business activities substantially different from the
Borrower's or Guarantor's present business.
(b) liquidate or dissolve the Borrower's or Guarantor's business.
(c) enter into any consolidation, merger, or other combination.
(d) sell, assign, lease, transfer or otherwise dispose of all or a
substantial part of the Borrower's or Guarantor's business or the
Borrower's or Guarantor's assets.
(e) sell, assign, lease, transfer or otherwise dispose of any material
assets, or enter into any agreement to do so, except as follows: (i) with
respect to accounts receivable, for a consideration at least equal to the
balance outstanding thereunder; (ii) with respect to inventory, for a
consideration at least equal to the Borrower's or Guarantor's cost thereof;
(iii) with respect to fixed assets or equipment, sales or dispositions in
the ordinary course of business, including dispositions of used, worn-out
or surplus equipment; and (iv) the sale of equipment to the extent that
such equipment is exchanged for credit against the purchase price of
similar replacement equipment, or the proceeds of such sale are reasonably
promptly applied to the purchase price of such replacement equipment.
(f) enter into any sale and leaseback agreement covering any of its
fixed or capital assets, except to the extent permitted by paragraphs 9.7
and 9.8 above.
(g) voluntarily suspend its business for more than one day (except for
weekends and state or federal holidays).
9.21 ERISA Plans. With respect to a Plan subject to Title IV of ERISA, to
give prompt written notice to the Bank of:
(a) The occurrence of any reportable event under Section 4043(c) of
ERISA for which the PBGC requires 30 day notice.
(b) Any action by the Borrower or any ERISA Affiliate to terminate or
withdraw from a Plan or the filing of any notice of intent to terminate
under Section 4041 of ERISA.
(c) The commencement of any proceeding with respect to a Plan under
Section 4042 of ERISA.
9.22 Compliance with Environmental Requirements. With regard to the
Borrower's and each Guarantor's property, activities, or operations, to comply
with the recommendations of any qualified environmental engineer or orders or
directions issued by any governmental authority relating to health, safety, the
environment, or any hazardous substances including those orders or directives
requiring the investigation, clean-up, or removal of hazardous substances.
9.23 Loans and Investments. Not to (and not permit any Guarantor to) make
any loans or other extensions of credit to, or make any investments in, or make
any capital contributions or other transfers of assets to, any individual or
entity, or acquire or purchase a business or its assets, or become a partner in
any partnership or member of any joint venture (collectively, "Investments"),
except for:
(a) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the
ordinary course of business.
(b) investments in any of the following:
(i) certificates of deposit;
(ii) U.S. treasury bills and other obligations of the federal
government;
(iii) other investments in accordance with the Borrower's
investment policy previously provided to the Bank;
(c) intercompany loans among the Borrower and the Guarantors;
(d) Investments not covered by (a) through (c) above, for an aggregate
consideration (including assumption of liabilities) not exceeding the
following:
(i) Five Million Dollars ($5,000,000) in 1997; and
(ii) Ten Million Dollars ($10,000,000) from the date of this
Agreement through December 1, 1999.
10. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's property or
operations or property leased to the Borrower. The indemnity includes but is not
limited to reasonable attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys and assigns. "Hazardous substances" means any
substance, material or waste that is or becomes designated or regulated as
"toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or natural gas. This indemnity
will survive repayment of the Borrower's obligations to the Bank.
11. DEFAULT
If any of the following events occurs, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. If an event of default occurs under the
paragraph entitled "Bankruptcy," below, with respect to the Borrower, then, the
entire debt outstanding under this Agreement will automatically be due
immediately.
11.1 Failure to Pay. The Borrower fails to make a payment under this
Agreement within 5 days after the date when due.
11.2 Lien Priority. The Bank fails to have an enforceable first lien
(except for liens on equipment and except for any prior liens to which the Bank
has consented in writing) on or security interest in any property given as
security for this loan. If, in the Bank's reasonable opinion, the breach is
capable of being remedied, the breach will not be considered an event of default
under this Agreement for a period of five (5) days after the date on which the
Bank gives written notice of the breach to the Borrower; provided, however, that
the Bank will not be obligated to extend any additional credit to the Borrower
during that period.
11.3 False Information. The Borrower (or any Guarantor) has given the Bank
materially false or misleading information or representations.
11.4 Bankruptcy. The Borrower (or any Guarantor) files a bankruptcy
petition, a bankruptcy petition is filed against the Borrower (or any Guarantor)
or the Borrower (or any Guarantor) makes a general assignment for the benefit of
creditors.
11.5 Receivers. A receiver or similar official is appointed for the
Borrower's (or any Guarantor's) business, or the business is terminated.
11.6 Lawsuits. Any lawsuit or lawsuits are filed on behalf of one or more
trade creditors against the Borrower in an aggregate amount of Four Million
Dollars ($4,000,000) or more in excess of any insurance coverage, and the
lawsuit(s) are not dismissed within thirty (30) days of the date of filing.
11.7 Judgments. Any judgments or arbitration awards are entered against the
Borrower (or any Guarantor), or the Borrower (or any Guarantor) enters into any
settlement agreements with respect to any litigation or arbitration, in an
aggregate amount of Four Million Dollars ($4,000,000) or more in excess of any
insurance coverage.
11.8 Government Action. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any Guarantor's)
financial condition or ability to repay.
11.9 Material Adverse Change. A material adverse change occurs in the
Borrower's (or any Guarantor's) business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the credit.
11.10 Cross-default. Any default occurs under any agreement in connection
with any credit the Borrower, any Guarantor, or any of the Borrower's related
entities or affiliates (except Monsanto Company) has obtained from anyone else
or which the Borrower, any Guarantor, or any of the Borrower's related entities
or affiliates has guaranteed in the amount of Two Hundred Fifty Thousand Dollars
($250,000) or more in the aggregate, if (a) any applicable cure period in the
relevant credit agreement has expired, and (b) the default either consists of
failing to make a payment when due or gives the other lender the right to
accelerate the obligation.
11.11 Default under Related Documents. Any guaranty, subordination
agreement, security agreement, or other document in favor of the Bank required
by this Agreement is defaulted or no longer in effect. If, in the Bank's
reasonable opinion, the breach is capable of being remedied, the breach will not
be considered an event of default under this Agreement for a period of thirty
(30) days after the date on which the Bank gives written notice of the breach to
the Borrower; provided, however, that the Bank will not be obligated to extend
any additional credit to the Borrower during that period.
11.12 Other Bank Agreements. The Borrower, any Guarantor, or any of the
Borrower's related entities or affiliates (except Monsanto Company) materially
fails to meet the conditions of, or fails to perform any material obligation
under any other agreement such company has with the Bank or any affiliate of the
Bank. If, in the Bank's reasonable opinion, the breach is capable of being
remedied, the breach will not be considered an event of default under this
Agreement for a period of thirty (30) days after the date on which the Bank
gives written notice of the breach to the Borrower; provided, however, that the
Bank will not be obligated to extend any additional credit to the Borrower
during that period.
11.13 ERISA Plans. The occurrence of any one or more of the following
events with respect to a Plan subject to Title IV of ERISA, provided such event
or events could reasonably be expected, in the judgment of the Bank, to subject
the Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate, could have a material adverse effect on the
financial condition of the Borrower:
(a) A reportable event shall occur under Section 4043(c) of ERISA with
respect to a Plan.
(b) Any Plan termination (or commencement of proceedings to terminate
a Plan) or the full or partial withdrawal from a Plan by the Borrower or
any ERISA Affiliate.
11.14 Change of Ownership. Monsanto Company ceases to own a majority of the
capital stock of the Borrower.
11.15 Monsanto Agreements. Any term or condition of the Monsanto Sub Debt
or any credit agreement or technology licensing agreement between the Borrower
and Monsanto Company is modified, amended or waived, or any such agreement is
terminated, if such action would have a material adverse effect on the financial
condition or prospects of the Borrower or the Borrower's ability to repay the
credit.
11.16 Financial Covenants. The Borrower breaches the terms of paragraph
9.3, 9.4, 9.5 or 9.6; whether such failure is evidenced by financial statements
delivered to the Bank or is otherwise known to the Borrower or the Bank. If
there is credit available to the Borrower under the Monsanto Sub Debt line of
credit in an amount sufficient to cure such breach, there shall be no event of
default if the Borrower cures the breach by obtaining an advance under such line
of credit within five (5) business days after the date on which the breach of
the covenant is first known; provided, however, that such advance must be used
by the Borrower to reduce any amounts outstanding under this Agreement.
11.17 Other Breach Under Agreement. The Borrower materially fails to meet
the conditions of, or fails to perform any material obligation under, any term
of this Agreement not specifically referred to in this Article. If, in the
Bank's reasonable opinion, the breach is capable of being remedied, the breach
will not be considered an event of default under this Agreement for a period of
thirty (30) days after the date on which the Bank gives written notice of the
breach to the Borrower; provided, however, that the Bank will not be obligated
to extend any additional credit to the Borrower during that period.
12. ENFORCING THIS AGREEMENT; MISCELLANEOUS
12.1 GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.
12.2 California Law. This Agreement is governed by California law.
12.3 Successors and Assigns. This Agreement is binding on the Borrower's
and the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the right
of set-off against the Borrower.
12.4 Arbitration.
(a) This paragraph concerns the resolution of any controversies or
claims between the Borrower and the Bank, including but not limited to
those that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or delivered
in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business conducted
between the Borrower and the Bank, including claims for injury to
persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such controversies
or claims will be settled by arbitration in accordance with the United
States Arbitration Act. The United States Arbitration Act will apply even
though this Agreement provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
(d) For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of
the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether any
such claim or controversy is barred by the statute of limitations and, if
so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the controversy or
claim, at the time of the proposed submission to arbitration, arises from
or relates to an obligation to the Bank secured by real property located in
California. In this case, both the Borrower and the Bank must consent to
submission of the claim or controversy to arbitration. If both parties do
not consent to arbitration, the controversy or claim will be settled as
follows:
(i) The Borrower and the Bank will designate a referee (or a
panel of referees) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are selected
in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will be
appointed by a court as provided in California Code of Civil Procedure
Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel) will be
an active attorney or a retired judge; and
(iv) The award that results from the decision of the referee (or
the panel) will be entered as a judgment in the court that appointed
the referee, in accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or the
Bank to:
(i) exercise self-help remedies such as setoff;
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim, additional
or supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank,
including the suing party, to submit the controversy or claim to
arbitration if the other party contests the lawsuit. However, if the
controversy or claim arises from or relates to an obligation to the
Bank which is secured by real property located in California at the
time of the proposed submission to arbitration, this right is limited
according to the provision above requiring the consent of both the
Borrower and the Bank to seek resolution through arbitration.
(j) If the Bank forecloses against any real property securing
this Agreement, the Bank has the option to exercise the power of sale
under the deed of trust or mortgage, or to proceed by judicial
foreclosure.
12.5 Severability; Waivers. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
12.6 Administration Costs. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
12.7 Attorneys' Fees. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement and
any other documents executed in connection with this Agreement, and including
any amendment, waiver, "workout" or restructuring under this Agreement. In the
event of a lawsuit or arbitration proceeding, the prevailing party is entitled
to recover costs and reasonable attorneys' fees incurred in connection with the
lawsuit or arbitration proceeding, as determined by the court or arbitrator. In
the event that any case is commenced by or against the Borrower under the
Bankruptcy Code (Title 11, United States Code) or any similar or successor
statute, the Bank is entitled to recover costs and reasonable attorneys' fees
incurred by the Bank related to the preservation, protection, or enforcement of
any rights of the Bank in such a case. As used in this paragraph, "attorneys'
fees" includes the allocated costs of the Bank's in-house counsel.
12.8 One Agreement. This Agreement and any related security or other
agreements required by this Agreement, collectively:
(a) represent the sum of the understandings and agreements between the Bank
and the Borrower concerning this credit;
(b) replace any prior oral or written agreements between the Bank and the
Borrower concerning this credit; and
(c) are intended by the Bank and the Borrower as the final, complete and
exclusive statement of the terms agreed to by them.
In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.
12.9 Disposition of Schedules, Reports, Etc. Delivered by Borrower. The
Bank will not be obligated to return any schedules, invoices, statements,
budgets, forecasts, reports or other papers delivered by the Borrower. The Bank
will destroy or otherwise dispose of such materials at such time as the Bank, in
its discretion, deems appropriate.
12.10 Returned Merchandise. Until the Bank exercises its rights to collect
the accounts receivable as provided under any security agreement required under
this Agreement, the Borrower may continue its present policies for returned
merchandise and adjustments. Credit adjustments with respect to returned
merchandise shall be made immediately upon receipt of the merchandise by the
Borrower or upon such other disposition of the merchandise by the debtor in
accordance with the Borrower's instructions. If a credit adjustment is made with
respect to any Acceptable Receivable, the amount of such adjustment shall no
longer be included in the amount of such Acceptable Receivable in computing the
Borrowing Base.
12.11 Verification of Receivables. The Bank may at any time, either orally
or in writing, request confirmation from any debtor of the current amount and
status of the accounts receivable upon which such debtor is obligated.
12.12 Waiver of Confidentiality. The Borrower authorizes the Bank to
discuss the Borrower's financial affairs and business operations with any
accountants, auditors, business consultants, or other professional advisors
employed by the Borrower, and to request from such parties such financial and
business information or reports (including management letters) concerning the
Borrower as the Bank deems appropriate.
12.13 Indemnification. The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower hereunder, (c) any claim, whether well-founded or otherwise, that
there has been a failure to comply with any law regulating the Borrower's sales
or leases to or performance of services for debtors obligated upon the
Borrower's accounts receivable and disclosures in connection therewith, and (d)
any litigation or proceeding related to or arising out of this Agreement, any
such document, any such credit, or any such claim. This indemnity includes but
is not limited to attorneys' fees (including the allocated cost of in-house
counsel). This indemnity extends to the Bank, its parent, subsidiaries and all
of their directors, officers, employees, agents, successors, attorneys, and
assigns. This indemnity will survive repayment of the Borrower's obligations to
the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand. This indemnity shall not
apply to any liability, loss or costs which arise from the Bank's gross
negligence or willful misconduct.
12.14 Notices. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on the signature page of this Agreement, or to such other addresses as
the Bank and the Borrower may specify from time to time in writing.
12.15 Headings. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.
12.16 Counterparts. This Agreement may be executed in as many counterparts
as necessary or convenient, and by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.
This Agreement is executed as of the date stated at the top of the first page.
BANK OF AMERICA NATIONAL CALGENE, INC.
TRUST AND SAVINGS ASSOCIATION
By /s/ Xxxxxx X. Xxxx, Xx. By /s/ Xxxxxxxxx Xxxxx
Typed Name Xxxxxx X. Xxxx, Xx. Typed Name Xxxxxxxxx Xxxxx
Title V.P. Title Chief Financial Officer
By By /s/ Xxxxx X. Xxxxxxxx
Typed Name Typed Name Xxxxx X. Xxxxxxxx
Title Title President
Address where notices to Address where notices to
the Bank are to be sent: the Borrower are to be sent:
000 Xxxxxxx Xxxx, Xxxxx 000 0000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxxxx, XX 00000
