Exhibit 10.18
REVOLVING LOAN AGREEMENT
THIS REVOLVING LOAN AGREEMENT made this third day of August, 1999, by
and between XXXXXXX LAND & NURSERIES, INC., a Delaware corporation with its
chief executive office and principal place of business at 0 Xxxxxxxxxxx Xxxxx,
Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000-0000 (hereinafter called the "Borrower"),
IMPERIAL NURSERIES, INC., a Delaware corporation with its chief executive office
and principal place of business at 00 Xxxxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxx
00000 (hereinafter called the "Guarantor") and FLEET NATIONAL BANK, a national
banking association with an office at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000 (hereinafter called the "Lender"). The Borrower, Guarantor and the Lender
hereby agree as follows:
SECTION 1. DEFINITIONS. As used herein:
1.1. OBLIGATIONS - means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Lender
of every kind and description (whether or not evidenced by any note
or other instrument and whether or not for the payment of money),
direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, in each case related to the
transaction described in this Loan Agreement, including without
limitation, all interest, fees, charges, expenses and attorneys' fees
chargeable to the Borrower or incurred by the Lender in connection
with the Borrower's account whether provided for herein or in any
Supplemental Agreement.
1.2. COMMITMENT AMOUNT - means twenty million ($20,000,000) dollars.
1.3. LOAN AGREEMENT - means this Revolving Loan Agreement, as the same may
hereafter be supplemented, modified or amended.
1.4. SUPPLEMENTAL AGREEMENTS - means any and all agreements, instruments,
or documents, executed by Borrower or Guarantor in connection with
the Obligations, and any amendments, modifications or replacements
thereof.
1.5. EFFECTIVE DATE - means the date of execution of this Loan Agreement.
1.6. GUARANTOR - means any person, firm or corporation which has
guaranteed or endorsed or has agreed to act as surety for any of the
Obligations, including, without limitation, Imperial Nurseries, Inc.
1.7. NOTE - means the Revolving Promissory Note from Borrower in favor of
Lender dated of even date herewith in the principal amount of
$20,000,000, as the same may be amended, restated, modified, extended
or replaced.
1.8. MATURITY DATE - means May 31, 2001.
1.9. DEFAULT RATE - shall have the meaning set forth in the Note.
1.10. ADDITIONAL DEFINITIONS. Unless otherwise specifically defined herein,
all terms used in this Loan Agreement and in all documents referred
to herein and which have been defined in Articles 1, 2 or 9, Uniform
Commercial Code, shall be interpreted and construed in light of the
sections, the definitions, the "official comment", and the
definitional and substantive cross-references of the Uniform
Commercial Code.
SECTION 2. TERMS OF BORROWING.
2.1. REVOLVING LOAN. Pursuant to the terms of this Agreement, the Lender
shall lend to the Borrower, and the Borrower may borrow from the
Lender, from time to time (the "Revolving Loan") advances not to
exceed the Commitment Amount.
Nothing shall prohibit the Lender from lending in excess of the
Commitment Amount. There will be a $10,000,000 sublimit for real
estate development-related borrowings. The Revolving Loan will
support Borrower's on-going working capital needs, real estate
development activities and loans to the Guarantor. At the time of
each advance, the Borrower shall designate the use of each such
advance in such detail as the Lender may reasonably require. The
Borrower shall be permitted to use cash on hand sourced from the
Guarantor through intercompany advances, dividends, or distributions
("Guarantor Cash Flow") to support real estate development related
activities, but not advances from the Revolving Loan allocated to
Guarantor. Requests for real estate development advances shall
contain a description of the project, a construction schedule, and
budget for the project, together with such other information as the
Lender may reasonably request. Advances which will be loaned by the
Borrower to the Guarantor to support its working capital needs shall
be required to be paid down to not more than $3,500,000 for thirty
(30) consecutive days during each 12 consecutive month period during
the term of the Loan. The minimum advance under the Revolving Loan
for real estate development-related advances shall be $500,000.
Advances for real estate development-related borrowings will be
required to be repaid within eighteen (18) months of the date of
advance. Funds used for repayment of real estate-related advances may
come from:
(1) the Borrower's own funds derived from its real estate operations
or other assets; or
(2) Guarantor Cash Flow.
Guarantor may, at any time, make a loan or pay a dividend or
distribution to Borrower provided that (i) funds from such loan,
dividend or distribution are used to repay amounts outstanding under
the Revolving Loan or for the general operating expenses of the
corporate office or (ii) for any purpose, if no borrowings are
outstanding under
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the Revolving Loan which have been used for investments, or advances,
to Guarantor. At the time of the initial borrowing under the
Revolving Loan, Borrower is permitted to make a loan or advance to
Guarantor to provide all funds necessary for Guarantor to repay
amounts outstanding under the Guarantor's existing credit agreement.
In no event shall the aggregate amount of Guarantor Cash Flow loaned
or distributed to Borrower exceed a net amount of $10,000,000 at any
time after November 28, 1998. Real estate development-related
borrowings will be reported and aged for the Lender's review on a
quarterly basis.
2.2. REPAYMENT OF THE REVOLVING LOAN. In the event the Revolving Loan at
any time exceeds the Commitment Amount, or any sublimit established
under Section 2.1, the Borrower will immediately, upon notification
thereof from the Lender, repay to the Lender the amount by which the
Revolving Loan exceeds the Commitment Amount or such sublimit.
Advances will be evidenced by the Note. However, at the time of each
advance under the Revolving Loan, the Borrower will, upon request of
the Lender, execute a replacement or supplemental promissory note
evidencing such advance, such note to be in such form and to contain
such provisions as the Lender shall deem desirable. If the Lender
shall elect not to have the Borrower execute notes, each advance
shall be recorded in an account on the Lender's books in which shall
also be recorded accrued interest on advances, payments on such
advances, and other appropriate debits and credits as herein
provided, and such account shall, absent manifest error, constitute
prima facie evidence of the information contained therein.
2.3. INTEREST ON THE REVOLVING LOAN. Interest on the Revolving Loan will
be payable monthly in arrears on the first business day of each
month, commencing on the first business day of the month subsequent
to the date of this Loan Agreement, and will be charged to the
Borrower upon any and all balances due to the Lender at that rate set
forth in the Revolving Note. The Borrower agrees to pay the Lender a
late charge fee equal to five percent (5%) of any payment due to the
Lender which is not received before the expiration of ten (10) days
after the payment is due. It is further agreed that upon an Event of
Default and at any time thereafter, the Borrower shall pay interest
to the Lender at the Default Rate until the Obligations are paid in
full.
2.4. TERMINATION. All outstanding balances under the Revolving Loan shall
be payable on the Maturity Date. Notwithstanding the foregoing,
should either the Lender or the Borrower become insolvent or go out
of business, the other party shall have the right to terminate this
Agreement at any time without notice. Upon the effective date of
termination, all Obligations, whether or not incurred under this Loan
Agreement or any Supplemental Agreement or otherwise, shall become
immediately due and payable without notice or demand. Notwithstanding
termination, until all Obligations have been fully satisfied, except
for those specific covenants and conditions dealing with the making
of advances, all terms and conditions of all agreements between the
Borrower and the Lender shall remain in full force and effect.
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2.5. ADDITIONAL PAYMENTS. If the Lender shall deem applicable to this Loan
Agreement (including the borrowed and the unused portion thereof) any
requirement of any law of the United States of America, any
regulation, order, interpretation, ruling, official directive or
guideline (whether or not having the force of law) of the Board of
Governors of the Federal Reserve System, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation or any other
board or governmental or administrative agency of the United States
of America which shall impose, increase, modify or make applicable to
this Loan Agreement, or cause to be included in, any reserve, special
deposit, calculation used in the computation of regulatory capital
standards, assessment or other requirement which imposes on the
Lender any cost that is attributable to the maintenance of this Loan
Agreement, then, and in each such event, the Borrower shall promptly
pay the Lender, upon its demand, such amount as will compensate the
Lender for any such cost, which determination may be based upon the
Lender's reasonable allocation of the aggregate of such costs
resulting from such events. In the event any such cost is a
continuing cost, a fee payable to the Lender may be imposed upon the
Borrower periodically for so long as any such cost is deemed
applicable to the Lender, in an amount reasonably determined by the
Lender to be necessary to compensate the Lender for any such cost.
The determination by the Lender of the existence and amount of any
such cost shall, in the absence of manifest error, be conclusive.
2.6. LINE FEE. As further inducement for the Lender to enter into the
Revolving Loan pursuant to Section 2 hereof, Borrower shall pay on
the first business day of each month during the term of this Loan
Agreement a fee (the "Line Fee") equal to one-twelfth of one quarter
percent (0.25 %) of the average daily unused portion of the Revolving
Loan for the immediately preceding month. Said average daily unused
portion shall refer to that amount which is equal to the difference
between the Commitment Amount and the average daily outstanding
balance of the Revolving Loan for the immediately preceding month for
which such Line Fee is due. The Line Fee will, at the option of the
Lender, be charged to the account of Borrower when due.
2.7. METHOD OF PAYMENT. The Borrower hereby authorizes the Lender to
charge from time to time against its disbursement account any amount
due under this Loan Agreement. Whenever any payment to be made under
this Loan Agreement shall be stated to be due on a day other than a
Banking Day (hereafter defined), such charge shall be made in the
next Banking Day and such extension of time shall, in such case, be
included in the computation of the payment of accrued interest. For
the purpose hereof, "Banking Day" means any day other than Saturday,
Sunday or other days on which commercial banks in Hartford,
Connecticut are authorized or required to close according to the laws
of the State of Connecticut.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
As part of the consideration for this Loan Agreement and as part of the
inducement to the Lender
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to enter into and perform this Agreement, Borrower hereby makes each of the
following representations and warranties, the only exceptions to which, if any,
are expressly set forth in the applicable schedules attached hereto (all
references in this section to "initial advance" or "initial loan advance" under
this Agreement shall mean the initial loan advance to be made on the date hereof
pursuant to Section 2.1 hereof):
3.1. SOLVENCY. Upon the initial loan advance required under this
Agreement, the fair salable value of Borrower's assets shall be
greater than the amount required to pay its total liabilities and
Borrower will be able to pay its debts as they mature. The Borrower
will maintain such solvent condition, giving effect to all
indebtedness due to the Lender pursuant to this Agreement, so long as
Borrower is obligated to the Lender under this Agreement or in any
other manner whatsoever.
3.2. CORPORATE STATUS. Schedule 3.2 states (a) the correct jurisdiction of
Borrower's organization, (b) the number and nature of all outstanding
securities of Borrower, and (c) the number of authorized, issued and
treasury shares of Borrower.
3.3. GOOD STANDING; AUTHORITY. Borrower (a) is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization; (b) has all requisite power and authority and necessary
licenses and permits to own and operate its properties and to carry
on its businesses now and as proposed to be conducted; and (c) has
duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary or
desirable.
3.4. NATURE OF BUSINESS; CORPORATE NAME. Schedule 3.4 correctly describes
the general nature of the businesses and principal properties
(including all owned real property, leases and leasehold interests)
of Borrower as of the time of the initial advance pursuant to this
Agreement. Except as set forth on Schedule 3.4, Borrower has not as
of the time of the initial loan advance hereunder and within the two
(2) years prior thereto changed its name, been the surviving entity
of a merger of consolidation or acquired all or substantially all of
the assets of any person or entity.
3.5. INTENTIONALLY DELETED.
3.6. TITLE TO PROPERTY. Borrower shall, at or before the time of the
initial advance of the loan hereunder, have fee simple title
sufficient for Borrower's operations (or its equivalent under
applicable law) to all the real property, and good title to all the
other property, it then purports to own, including that reflected on
Schedule 3.4 and in the most recent financial statements provided by
said Borrower to the Lender (except as sold or otherwise disposed of
in the ordinary course of business), free from liens not permitted by
the terms of this Agreement but subject to liens to which the Lender
has expressly consented and which are expressly disclosed in the
security agreements delivered pursuant to Section 7.4 hereof.
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3.7. YEAR 2000 COMPLIANCE. Borrower has reviewed the "Year 2000 Risk"
(that is the risk that computer applications used by Borrower may be
unable to recognize and perform without error date-sensitive
functions involving certain dates prior to and any date after
December 31, 1999) and represents that it is taking such actions as
may be necessary to insure that the Year 2000 Risk will not adversely
affect its business operations and/or financial condition.
3.8. EMPLOYMENT AGREEMENTS. Except as reflected in Schedule 3.8, Borrower
has never nor will have as of the time of the initial loan advance
hereunder entered into any employment agreements or other obligations
or contracts providing for the retaining or employment of personnel.
Furthermore, the employees of Borrower are not and will not be as of
the time of the initial loan advance hereunder a party to any
collective bargaining agreement with Borrower, and, to the best
knowledge of Borrower and its officers, there are no material
grievances, disputes or controversies with any union or any other
organization of any of Borrower's employees, or threats of strikes,
work stoppages or any asserted pending demands for collective
bargaining by any union or organization. Copies of all of the
foregoing agreements and contracts disclosed on Schedule 3.8 have
been provided to the Lender.
3.9. ERISA. Borrower has not nor will it have as of the time of the
initial advance of the loan any "Pension Plan," as that term is
defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). Borrower will notify Lender if it
subsequently creates such a Pension Plan and shall thereafter comply
with all laws applicable to such Plan, and notify Lender in the event
of any non-compliance.
3.10. LITIGATION. No legal action of any material nature, either in law or
in equity, has been instituted or is otherwise pending against
Borrower or with respect to any properties of Borrower and no threats
or intimations of material litigation have been received by Borrower
with respect to itself or its properties.
3.11. BUSINESS RECORDS. The books of account of Borrower since its
organization have been kept and maintained in accordance with
generally accepted accounting principles and practices applied on a
consistent basis and reflect all moneys due or to become due from or
to Borrower for any reason whatsoever.
3.12. CORPORATE DOCUMENTS. The By-laws and Charter of the Borrower as
contained in those certificates delivered to the Lender pursuant to
Section 7.10 of this Agreement, respectively, are the duly adopted
By-laws and Charter of Borrower and have not been modified, amended
or repealed.
3.13. CORPORATION TAXES. Borrower has duly paid any and all franchise and
annual corporation taxes, duties or charges, levied, assessed or
imposed upon it, or upon any of its property, of whatsoever kind or
description.
3.14. STOCKHOLDER DISTRIBUTIONS. No dividends or other payments of profits,
surplus, or
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reserves of Borrower have been declared to the stockholders of
Borrower nor are at the date hereof due and payable, declared, or
provided for by Borrower or in any other manner presently existing
obligations of Borrower.
3.15. AUTHORIZATION. This Loan Agreement, and each of the transactions
contemplated hereby, has been duly authorized by proper action of
Borrower and approved by its stockholders and directors and when
executed, this Loan Agreement will constitute a binding obligation on
Borrower in accordance with its terms.
3.16. FINANCIAL INFORMATION. The financial statements for fiscal year end
November 28, 1998 and other financial information provided by or on
behalf of Borrower to the Lender in contemplation of the loans to be
made hereunder to the best of Borrower's knowledge do not contain any
untrue statement of a material fact nor omit any material fact
necessary to reflect Borrower's financial condition or its ability to
continue ordinary business operations.
3.17. CHANGES IN OPERATIONS. There has been no change in the business,
operations, prospects, profits, properties or condition (financial or
otherwise) of Borrower since the date of the most recent financial
statement provided by Borrower to the Lender except changes in the
ordinary course of business, none of which, either individually or in
the aggregate, has been materially adverse.
3.18. INTANGIBLE RIGHTS. Borrower owns or possesses all of the patents,
trademarks, service marks, trade names, copyrights, licenses and
rights with respect to the foregoing necessary for the present and
planned future conduct of its business, without any known conflict
with the rights of others, and all patents and trademarks owned are
set forth on Schedule 3.18.
3.19. TAXES. All tax returns required to be filed by Borrower in any
jurisdiction have in fact been filed, and all taxes, assessments,
fees and other governmental charges upon Borrower or upon any of its
properties, income or franchises, which are due and payable have been
paid. The provisions for taxes on the books of Borrower are adequate
for all open years and for its current fiscal period.
3.20. PROHIBITIONS IN CONTRACTS. Borrower is not a party to any contract or
agreement or subject to any charter or other corporate restriction
which materially and adversely affects the business of Borrower.
Borrower is not a party to any material contract or agreement which
restricts its right or ability to enter into this Agreement or any of
the transactions contemplated hereby except such as will be
discharged upon conclusion of the transaction contemplated hereby.
3.21. GOVERNMENT CONSENT. Neither the nature of Borrower nor of any of its
businesses or properties, nor any relationship between the Borrower
and any other person, nor any circumstance in connection with the
execution or delivery of this Agreement or any instruments
contemplated hereby is such as to require a consent, approval or
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authorization of or filing, registration or qualification with, any
governmental authority on the part of Borrower as a condition of the
execution, delivery or performance of this Agreement and any note,
agreement or document contemplated hereby.
3.22. SECURITIES COMPLIANCE. Borrower hereby agrees that neither it nor
anyone acting on its behalf has offered or will offer the notes
issued pursuant hereto or any part thereof or any similar securities
for issue or sale to, or solicit any offer to acquire any of the same
from anyone so as to bring the issuance of said notes within the
provisions of Section 5 of the Securities Act of 1933, as amended.
3.23. COMPLIANCE WITH LAWS. Borrower to the best of its knowledge (a) is
not in violation of any laws, ordinances, governmental rules and
regulations to which it is subject, or (b) has not failed to obtain
any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its Property or to the
conduct of its business, which violation or failure to obtain
materially and adversely affects the business, prospects, profits,
properties or condition (financial or otherwise) of said Borrower.
3.24. BORROWED MONEY. At the time that the initial loan advance is made
hereunder, Borrower will not be liable in respect of any obligations
for borrowed money except in favor of Lender or except as otherwise
set forth on Schedule 3.24 hereto.
SECTION 4. NEGATIVE COVENANTS.
As long as any obligations are outstanding under this Loan Agreement, or
otherwise, between Borrower and the Lender, Borrower agrees that it will not,
without the prior written consent of the Lender or except as indicated on an
appropriate schedule attached hereto numbered to correspond to the specific
section to which such exception relates:
4.1. LOANS. Lend money to or guarantee the payment or performance of any
liability or obligation of any person or entity;
4.2. MERGER. Be a party to any consolidation or merger without the prior
written consent of Lender, not to be unreasonably withheld or
delayed;
4.3. INVESTMENTS. Except for acquisitions or investments in nursery or
real estate development related industries, invest in or otherwise
acquire any stock or substantially all the assets of any corporation,
firm, or business, or division thereof the value of which exceeds
$200,000 without the prior written consent of Lender, not to be
unreasonably withheld or delayed and provided, in any event, that
such investment or acquisition (i) will not, after taking into
account such investment or acquisition, cause a default hereunder and
(ii) will be considered a capital expenditure for the purposes of
Section 4.15 hereof.
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4.4. CHANGE BUSINESS. Change the general character of its business as
conducted at the date hereof, or engage in any type of business not
reasonably related to its business as normally conducted;
4.5. LIENS. Create or suffer to exist any mortgage, security interest, or
lien on any of its property other than (1) security interests or
liens which may secure any indebtedness in an aggregate amount not to
exceed $100,000 at any one time, or (2) mortgages or other liens the
proceeds of which are applied to the Revolving Loan and which are (x)
non-recourse to the Borrower and its subsidiaries, or (y) subject to
an intercreditor agreement acceptable to the Lender in its sole
discretion. The anticipated refinancing of the existing mortgage on
14, 15, and 00 Xxxxxxxxxxxxx Xxxxx are excluded from this
restriction;
4.6. SUBSIDIARIES. Cause, suffer or permit any of its subsidiaries to do
with respect to itself or its property, any of the things prohibited
in its case;
4.7. DISTRIBUTIONS. Upon or after an Event of Default, declare or pay any
dividend on its capital shares of any class, make any distribution to
any stockholders as such, purchase, redeem or otherwise acquire for
value any shares of its stock of any class and/or any warrants or
options for the acquisition of such shares, or make any loan to
stockholders;
4.8. INTENTIONALLY DELETED.
4.9. BORROWED MONEY. Incur or in any other manner become liable in respect
of any obligation for borrowed money except in favor of the Lender
provided, however, Borrower shall be permitted (i) to borrow from
Guarantor such amounts as it deems necessary and, provided no Event
of Default has occurred and is continuing, Borrower may repay any
loans or advances made by Guarantor to Borrower and (ii) to borrow on
a non-recourse basis provided that the proceeds of such borrowing
shall be applied to the real estate-related borrowings outstanding
under the Revolving Loan;
4.10. SALE OF ASSETS. Sell or otherwise dispose of any of its assets,
except that Borrower shall be permitted to sell or otherwise dispose
of any of its real estate assets, for fair value, provided that the
proceeds thereof (if they exceed $100,000) are applied to the real
estate-related borrowings outstanding under the Revolving Loan;
4.11. ACQUIRE ASSETS. Acquire assets for less than fair value;
4.12. AFFILIATE TRANSACTIONS. Except as set forth in Schedule 4.12 without
the prior written consent of Lender, not to be unreasonably withheld
or delayed, enter into any transaction, including, without
limitation, the purchase, sale or exchange of property or the
rendering of any service with any affiliate except in the ordinary
course of and pursuant to the reasonable requirements of the
Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower than would pertain in a comparable
arms-length transaction with a party other than an affiliate;
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4.13. INTENTIONALLY DELETED.
4.14. LEASES. Become lessee under any lease of real property except as
indicated on Schedule 3.4 to this Agreement.
4.15. CAPITAL EXPENDITURES. Make, directly or indirectly, capital
expenditures in excess of an aggregate of $12,000,000 per annum.
Proceeds from non-recourse debt will be added to the permitted amount
in the year received. To the extent that Borrower does not make
capital expenditures up to the permitted limit during any year, the
difference (up to a maximum of $8,000,000 per year) shall be added to
maximum dollar limit for the following year but, in any event,
Borrower shall not be permitted to make capital expenditures in
excess of the aggregate of $20,000,000 per year.
4.16 MINIMUM DEBT SERVICE COVERAGE RATIO. Permit the ratio of Cash Flow to
Debt Service to be less than 2.0 to 1.0 at all times through August
31, 1999; 2.25 to 1.0 at fiscal year end November 27, 1999 through
August 26, 2000, and 2.5 to 1.0 thereafter, tested quarterly and
measured on a rolling four quarter basis. For purposes of this
paragraph, "Cash Flow" is defined as earnings before interest, taxes,
depreciation and amortization ("EBITDA") minus dividends and
distributions. For the purposes of this paragraph, "Debt Service" is
defined as Borrower's (i) interest expense less interest income plus
(ii) current maturities of long term debt (including capital leases),
plus (iii) cash income taxes paid. Cash dividends received, net of
income taxes, from equity investments will be included in EBITDA.
Further, non-cash earnings and non-cash losses from equity
investments will be excluded from EBITDA. Interest expense and
current maturities of long term debt for all future non-recourse
mortgages shall be excluded from this coverage, as will the cash flow
from the related properties up to and including the amount necessary
to satisfy the corresponding annual non-recourse debt service,
provided Borrower is not in default under any of such obligations;
otherwise, all cashflow from non-recourse debt related properties
will be excluded from EBITDA. This includes the GE Capital $8,173,000
non-recourse mortgage loan entered into on June 24, 1999.
4.17. MAXIMUM DEBT TO WORTH. Permit the ratio of its total liabilities to
tangible net worth to exceed 0.5 to 1.0.
4.18 OPERATING LOSS. Permit Xxxxxxx Land (a division of Borrower) to have
during any fiscal year an operating loss (after interest and
depreciation but before gain on sale of real estate) greater than One
Million Dollars ($1,000,000) AND Borrower's EBITDA (exclusive of
income from equity investments) shall not be less than Three Million
Dollars ($3,000,000) in such fiscal year.
4.19 OUTCOME-ORIENTED YEAR 2000 COVENANT. The Borrower will be "Year 2000
Compliant" by January 1, 2000. As used herein, the term "Year 2000
Compliant" means with respect to the Borrower, that all software,
imbedded microchips, and other
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processing capabilities utilized by and material to the business
operations or a financial condition of, such entity are able to
interpret and manipulate data on and involving all calendar dates
correctly and without causing any abnormal ending scenario, including
in relation to dates on and after January 1, 2000.
SECTION 5. AFFIRMATIVE COVENANTS.
So long as any obligations are outstanding under this Loan Agreement between
Borrower and the Lender, the Borrower expressly covenants and agrees with the
Lender that, except as the Lender may expressly agree in writing and except as
otherwise expressly permitted by any appropriate Schedule attached hereto
numbered to correspond to the specific section to which such exception relates:
5.1. PAYMENT OF LOANS. It will promptly pay or cause to be paid the
principal and interest to become due on the notes provided for herein
and the Line Fee at the times and places and in the manner specified
therein and herein.
5.2. FINANCIAL INFORMATION. The Borrower will deliver to the Lender, so
long as Lender remains a holder of any of the notes provided for
herein:
A. As soon as practical and in any event within
thirty (30) days after the end of each monthly
period, interim financial statements for
Borrower and for Guarantor disclosing results
for such month and results for the period from
the beginning of the current fiscal year to the
end of such monthly period and a balance sheet
as of the end of such monthly period, all in
reasonable detail and certified as correct,
except for such changes as may result from
year-end adjustments, by an authorized
financial officer of the Borrower and
Guarantor, and in a form consistent with those
previously provided to Lender and which need
not include footnotes.
B. Within fifty (50) days of the end of each
quarter a report containing an itemization and
aging of all real estate development-related
advances. Such report shall further contain a
description of each project for which real
estate development-related advances remain
outstanding and the status of construction and
completion of the project, together with an
anticipated completion date. Borrower shall
submit to Lender its quarterly 10-Q report
prepared on a consolidated and consolidating
basis within fifty (50) days of the end of each
quarter, and audited year-end financial
statements within one hundred (100) days of
Borrower's fiscal year end prepared by a
certified public accountant acceptable to
Lender presented on a consolidated basis
without
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qualification. Such annual audit and statements
shall set forth in reasonable detail the
results of operations and financial condition
of the Borrower and Guarantor and shall be
prepared by and accompanied by the certificate
of a certified public accountant or firm of
certified public accountants reasonably
satisfactory to the Lender (who may be the
accountant or firm of accountants regularly
employed by the Borrower to audit and examine
its books). Such statement shall be prepared in
conformity with generally accepted accounting
principles applied on a basis consistent with
that of the preceding year and accompanied by a
statement thereon containing an opinion
unqualified as to scope limitations imposed by
such firm of certified public accountants.
Borrower shall also provide to Lender promptly
upon receipt thereof, (i) copies of all
detailed audit reports, if any, submitted by
the Borrower's independent certified public
accountant in connection with each annual audit
of the books of Borrower, (ii) internal reports
prepared by Borrower as they relate to
Guarantor, and (iii) copies of all financial
statements and reports the Borrower shall send
to its stockholders and with reasonable
promptness such other financial data in such
manner and in such detail as the Lender may
reasonably request.
C. As soon as practicable, and in any event within
fifty (50) days of the end of each quarterly
period in each fiscal year of Borrower, a
covenant compliance certificate certifying that
the Borrower and Guarantor are each in
compliance with all of the covenants set forth
in this Loan Agreement in such form as Lender
may reasonably require.
D. As soon as practicable, and in any event within
sixty (60) days of the end of each fiscal year
of Borrower and Guarantor, an annual budget
projection for the immediately succeeding
fiscal year, all in reasonable detail and in
such form as Lender may reasonably require.
E. With reasonable promptness, such other
financial data as Lender may reasonably
request.
5.3. FINANCIAL CERTIFICATE. Borrower and Guarantor will deliver to the
Lender annually and within one hundred (100) days after the end of
each fiscal year, a certificate by their independent certified public
accountant and by an officer of the Borrower that to the best of
their knowledge no default exists under this Loan Agreement, or under
any indenture pursuant to which any other indebtedness of the
Borrower is outstanding in excess of $50,000, and that all the terms
of this Loan Agreement have been fully performed, or if to the
knowledge of either of them, any of the terms of this Loan
12
Agreement have not been fully performed, such certificate shall
specify the nature of the default and the steps taken by the Borrower
to correct such default.
5.4. BOOKS AND RECORDS. Borrower and Guarantor will at all times keep
proper books and records of account in which full, true, and correct
entries will be made of each of their transactions in accordance with
sound accounting practice.
5.5. INSURANCE. Borrower will at all times keep all its insurable
properties insured against loss or damage by fire and by other risks
usually insured against by entities operating like properties and
will maintain liability insurance and all such workmen's
compensation, motor vehicle or similar insurance as may be required
by law, in such reasonable amounts as Lender may reasonably require
sufficient to cover the lendable value thereof. All such insurance
shall be effected under valid and enforceable policies of insurance
issued by insurers of recognized responsibility.
5.6. NO WASTE. Borrower will maintain, preserve, and keep its buildings,
machinery, and equipment in good condition, repair and working order
for the proper and efficient operation of its business.
5.7. TAXES. Borrower will pay all taxes, assessments, or governmental
charges levied, assessed, or imposed against it or its properties or
arising out of its operations promptly as they become due and
payable, provided, however, that if Borrower shall have set aside on
its books reserves deemed by the Borrower adequate therefor, said
Borrower shall have the right to contest in good faith by appropriate
proceedings any such taxes, assessments, or governmental charges or
levies, and pending such contest may delay or defer the payment
thereof unless thereby property of the Borrower will be in danger of
being forfeited or lost.
5.8. COMPLIANCE WITH LAW. Borrower will comply in all material respects
with all laws and regulations of the Federal Government and of any
State of the United States or any of their subdivisions, departments,
or agencies applicable to the business or properties of the Borrower,
provided, however, that if the Borrower shall have set aside on its
books reserves deemed by the Borrower adequate to defray the cost of
such compliance, the Borrower shall have the right to contest in good
faith by appropriate proceedings any such laws or regulations and
pending such contest may delay or defer compliance therewith unless
by such delay property of the Borrower will be in danger of being
forfeited or lost.
5.9. FICA. Borrower will, upon request after an Event of Default or in
connection with any audit conducted by Lender, furnish Lender with
proof satisfactory to the Lender of the payment or deposit of FICA
and withholding taxes required of Borrower by applicable law. Such
proof shall be furnished within a reasonable time after request.
5.10. MAINTENANCE OF EXISTENCE. Borrower will maintain its corporate
existence and will maintain its right to carry on business and will
continuously operate its businesses
13
except for interruptions caused by acts of God, catastrophe, or any
other events over which it has no control.
5.11. INSPECTION. Borrower will permit representatives of the Lender, at
the Lender's reasonable request, to visit and inspect any of the
properties of Borrower and to examine Borrower's books of account,
records, reports and other papers, to make copies and extracts
therefrom and to discuss Borrower's affairs, finances and accounts
with the officers, employees and independent public accountants of
Borrower, in each case at such reasonable times as the Lender may
request.
5.12. BENEFIT PLANS. Borrower shall, with respect to all pension, profit
sharing or other employee benefit plans maintained at any time by
Borrower, meet all requirements on its part to be met and pay all
sums required to be paid in connection therewith.
5.13. INTENTIONALLY DELETED
5.14. COOPERATION. Borrower will from time to time execute and deliver to
the Lender such other instruments, certificates and documents and
will take such other action and do all other things as may from time
to time be reasonably requested by the Lender in order to implement
or effectuate the provisions of, or more fully perfect the rights
granted or intended to be granted by Borrower to the Lender pursuant
to the terms of, this Agreement or any other agreement or instrument
contemplated hereby.
5.15. LEGAL ACTIONS. In the event any material legal action is commenced
against Borrower, Borrower shall promptly notify the Lender of same.
To the extent Borrower disputes such legal action, Borrower shall
contest same in good faith by appropriate proceedings and shall
maintain reserves deemed adequate by the Borrower in the exercise of
reasonable discretion (giving effect to the likelihood of any adverse
judgment and the nature and amount of the obligation which would be
imposed thereby) to satisfy the obligations which would be imposed by
any adverse judgment rendered in such legal action.
5.16. PERMIT COMPLIANCE. Borrower shall maintain in full force and effect
all of its material franchises, leases, commitments, consents,
permits, agreements, contracts and licenses (whether written or
oral), materially affecting or relating to the business of Borrower,
in full force and effect.
5.17. ENVIRONMENTAL COMPLIANCE. The Borrower will comply withany and all
orders, ordinances, laws or statutes of any city, state or other
governmental department having jurisdiction with respect to
Borrower's owned or leased business premises or the conduct of
business thereon.
SECTION 6. DEFAULT.
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If any one of the following events shall occur and be continuing
beyond any cure period (each herein referred to as an Event of Default), all
obligations of the Borrower to the Lender, whether pursuant to those notes
described in Sections 1 and 2 to this Agreement or otherwise, together with the
accrued interest thereon, shall, at the option of the Lender, forthwith become
due and payable without presentment, demand, protest or notice of any kind, all
of which are expressly waived; and the Borrower shall thereupon forthwith pay in
full, or make provisions for the payment in full, of all said obligations, and
the Lender shall be entitled to exercise all rights, and avail itself of all
remedies, in order to effect such payment in full:
6.1. Borrower defaults in the payment of any sum due pursuant to any of
the notes described in Sections 1 and 2 to this Agreement which
default continues for more that five (5) Business Days beyond the
applicable due date; or
6.2. The failure to pay the Line Fee when due pursuant to Section 2.6
hereof; or
6.3. Borrower defaults in the performance of any covenant or agreement
contained in this Agreement, other than the defaults described in
Sections 6.1 and 6.2 hereof and such default shall not have been
remedied within twenty (20) days after Lender notifies Borrower of
the occurrence of said default, provided that if such default cannot
reasonably be cured within such twenty (20) day period it shall not
be an Event of Default if Borrower commences to cure such default
within such twenty (20) day period and diligently pursues the cure to
completion within sixty (60) days thereafter; or
6.4. Any of the following events occur with respect to Borrower or any
Guarantor:
A. Borrower or any Guarantor makes an assignment
for the benefit of creditors; or
B. A trustee or receiver of the Borrower or any
Guarantor or of any substantial part of the
assets of the Borrower or any Guarantor is
appointed, and if such trustee or receiver is
appointed in a proceeding brought against the
Borrower or any Guarantor, the Borrower or the
Guarantor by any action indicates its approval
of, consent to, or acquiescence in such
appointment, or any such trustee or receiver is
not discharged within sixty (60) days; or
C. Any proceeding involving the Borrower or any
Guarantor is commenced by or against the
Borrower or any Guarantor under any bankruptcy,
reorganization, insolvency, readjustment of
debt, dissolution or liquidation laws or
statute of the Federal Government or any State
Government, and if such proceeding is
instituted against the Borrower or any
Guarantor, the Borrower or any Guarantor by any
action indicates its approval of, consent to,
15
or acquiescence therein, or the same shall
remain undismissed for sixty (60) days; or
6.5. Borrower or any Guarantor defaults in the performance of any other
term, condition, or covenant contained in any Supplemental Agreement
which now or hereafter exists between the Lender and Borrower or any
Guarantor which default continues beyond the expiration of all
applicable notice and cure periods; or
6.6. Borrower defaults in any payment of principal or interest on any
obligation for borrowed money in excess of $50,000 beyond any period
of grace provided with respect thereto, or in the performance of any
other term, condition, or covenant contained in any agreement under
which any such obligation is created, the effect of which default is
to cause such obligation to become due and payable prior to its
stated maturity; or
6.7. If any material representation or warranty made by Borrower or any
Guarantor herein or pursuant hereto or to any agreement executed
pursuant hereto is untrue or incomplete in any material respect, or
any Schedule, statement, report, notice or writing furnished by
Borrower or any Guarantor or on behalf of Borrower or any Guarantor
to the Lender is untrue or incomplete in any material respect as of
the date to which the facts set forth are stated or certified.
6.8. Notice of termination of guaranty is given by any party who has
executed and delivered to the Lender a guaranty agreement pursuant to
Section 7.3 of this Agreement.
6.9. The issuance, filing or levy against the Borrower or any Guarantor of
an attachment, injunction, execution, lien or judgment for an amount
in excess of $100,000 which is not discharged in full or stayed
within thirty (30) days after issuance or filing.
6.10. Material loss, theft, damage, destruction or diminution in market
value of any material portion of Borrower's assets; provided,
however, that such event shall not be deemed an Event of Default if
such loss is covered by insurance in such amounts as Lender
reasonably deems satisfactory.
6.11. Termination by Borrower of the loan arrangement provided
pursuant to Section 2 of this Agreement.
SECTION 7. - CLOSING CONDITIONS.
The closing shall be held at the offices of Brown, Rudnick, Freed &
Gesmer in Hartford, Connecticut on August 3, 1999 (herein referred to as the
Closing Date). The obligation of the Lender to make the initial loan advances
specified pursuant to this Agreement shall be subject to the satisfaction or
waiver by Lender of each of the following conditions precedent (all references
to the Closing Checklist hereinafter contained shall mean that Closing Checklist
attached hereto as Schedule 7):
16
7.1. The Lender shall have received from counsel for the Borrower and the
Guarantor a closing opinion in form and substance reasonably
satisfactory to the Lender and its counsel dated as of the date of
the initial loan advance.
7.2. The Note shall have been duly executed and delivered to the Lender.
7.3. Each of the guaranty agreements identified in the Closing Checklist
shall have been duly executed and delivered to the Lender.
7.4. There shall have been duly executed and delivered to the Lender such
agreements as the Lender may require, in form and substance
reasonably satisfactory to the Lender.
7.5. There shall have been duly executed and delivered to the Lender a
clerk's certificate with respect to the Borrower, together with all
schedules and exhibits thereto, in form and substance satisfactory to
the Lender.
SECTION 8. MISCELLANEOUS.
8.1. COSTS AND EXPENSES. Borrower agrees to pay (1) all reasonable costs
and expenses, including reasonable counsel fees and expenses,
incurred by the Lender in connection with the financing being
concluded hereunder, Lender's commitment fee of $45,000 and its loan
service fee of $30,000, and (2) any fees and expenses, including
reasonable counsel fees and expenses, which the Lender may hereafter
incur in reasonably protecting, enforcing or realizing any of its
rights against Borrower in connection with any security held by the
Lender or against any guarantor or endorser. All said fees and
expenses referenced in Clause (2) of this Section 8.1 shall be
repayable on demand, together with interest from the date incurred
until repaid, at the Default Rate. Borrower specifically authorizes
Lender to pay all such fees and expenses and charge the same to its
disbursement account.
8.2. WAIVERS. Every right and remedy provided in this Loan Agreement shall
be cumulative of every other right or remedy of the Lender, whether
herein or by law conferred, and may be enforced concurrently
herewith; and no waiver by the Lender of the performance of any
obligation by Borrower shall be construed as a waiver of the same or
any other default then, theretofore, or thereafter existing.
8.3. ADDITIONAL DOCUMENTS. Borrower agrees that, any time or from time to
time upon the written request of Lender, Borrower will execute and
deliver such further documents and do such other acts and things as
Lender may reasonably request in order to fully effect the purpose of
this Agreement.
8.4. SUCCESSORS. This Loan Agreement and all of the covenants and
conditions hereinabove contained shall be for the benefit of and
shall apply to and bind the parties hereto and
17
their respective successors, assigns, heirs and legal
representatives.
8.5. GOVERNING LAW. This Loan Agreement shall be governed in all respects
by the laws of the State of Connecticut.
8.6. SURVIVAL. All agreements, representations and warranties made herein
and in any statement, notices, invoices, certificates, schedules,
consignments, designations, documents or other instruments delivered
to Lender hereunder or as security in connection with this Agreement
shall survive the closing of the loans provided for hereunder.
8.7. REFERENCES. Whenever used, the singular number shall include the
plural, the plural the singular, and the use of any gender shall
include all genders and the use of reference to any entity as a
Borrower herein shall refer and include all entities who are
Borrowers hereunder.
8.8. NOTICES. All notices or demands by any party to the other relating to
this Agreement shall, except as otherwise provided herein, be in
writing and sent by Certified Mail, Return Receipt Requested or by
telecopier to the following fax numbers if also delivered by
certified mail, return receipt requested. Notice shall be deemed
received on the earlier of (i) when received by telecopier if
transmitted on a Business Day during normal business hours or (ii)
three (3) Business Days after deposit in a United States Post Office
Box, postage prepaid, properly addressed to recipient at the mailing
addresses set forth below or to such other addresses as Borrower or
the Lender may from time to time specify in writing:
As to Guarantor:
00 Xxxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx Xxxxxx
Fax No. (000) 000-0000
As to Borrower:
0 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000-0000
Attention: Xx. Xxxxxxxxx X. Xxxxxxxx
Fax No. (000) 000-0000
18
As to Lender:
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxx
Fax No. (000) 000-0000
8.9. PRIOR AGREEMENTS. This Agreement, including the Exhibits, Schedules
and other agreements referred to herein, is the entire agreement
between the parties relating to the subject matter hereof,
incorporates or rescinds all prior agreements and understanding
between the parties hereto relating to the subject matter hereof, and
cannot be changed or terminated orally.
8.10. ADDITIONAL TERMS. The additional terms and conditions set forth on
Exhibit A hereto are specifically made a part hereof.
8.11. WAIVER OF RIGHT TO PREJUDGMENT REMEDY NOTICE AND HEARING. The
Borrower acknowledges its understanding that the Lender may have
rights against the Borrower, now or in the future, in its capacity as
secured party, creditor, or in any other capacities. Such rights may
include the right to deprive the Borrower of or affect the use of or
possession or enjoyment of the Borrower's property; and in the event
the Lender deems it necessary to exercise any of such rights prior to
the rendition of a final judgment against the Borrower, or otherwise,
the Borrower may be entitled to notice and/or hearing under the
Constitution of the United States and/or State of Connecticut,
Connecticut statutes (to determine whether or not the Lender has a
probable cause to sustain the validity of the Lender's claim), or the
right to notice and/or hearing under other applicable state or
federal laws pertaining to prejudgment remedies, prior to the
exercise by the Lender of any such rights. The Borrower expressly
waives any such right to prejudgment remedy notice or hearing to
which the Borrower may be entitled; and further waives any
requirement that the Lender post a bond or other security in
connection with such action, provided, however, that this waiver
shall not include a waiver of such rights as the Borrower shall have
to prior notice of the proposed disposition of Collateral by the
Lender. Specifically and without limiting the generality of the
foregoing, the Borrower recognizes that the Lender has and shall
continue to have an absolute right after the occurrence of an Event
of Default to effect collection of any of the Receivables or
Collateral with respect to which the Lender holds a security interest
without the necessity of according to the Borrower any prior notice
or hearing. This shall be a continuing waiver and remain in full
force and effect so long as the Borrower is obligated to the Lender.
8.12. WAIVER OF RIGHT TO TRIAL BY JURY AND CONSENT TO JURISDICTION. THE
BORROWER
19
AND EACH GUARANTOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING OF ANY KIND OR NATURE IN ANY COURT IN WHICH AN
ACTION MAY BE COMMENCED ARISING OUT OF THIS LOAN AGREEMENT, THE
SUPPLEMENTAL AGREEMENTS OR ANY ASSIGNMENT THEREOF OR BY REASON OF ANY
OTHER CAUSE OR DISPUTE BETWEEN THE BORROWER, ANY GUARANTOR AND THE
LENDER.
The Borrower and each Guarantor hereby further agrees that the
following courts:
State Court - Any state or local court of the State of
Connecticut
Federal Court - United States District Court for the
District of Connecticut
or at the option of the Lender, any court in which the Lender shall
initiate legal or equitable proceedings and which has subject matter
jurisdiction over the matter in controversy, shall have exclusive
jurisdiction to hear and determine any claims or disputes between the
Borrower, Guarantor and the Lender pertaining directly or indirectly
to this Loan Agreement or to any matter arising in connection with
this Loan Agreement. The Borrower and Guarantor expressly submits and
consents in advance to such jurisdiction in any action or proceeding
commenced in such courts. The exclusive choice of forum set forth
herein shall not be deemed to preclude the enforcement of any
judgment obtained in such forum or the taking of any action under
this Loan Agreement to enforce the same in any appropriate
jurisdiction.
8.13. PARTICIPATIONS. Lender shall have the unrestricted right at any time
and from time to time, and without the consent of or notice to, but
at no cost or expense to, Borrower or any Guarantor, to grant to one
or more banks or other financial institutions (each a "Participant")
participating interest in Lender's obligations to lend hereunder
and/or any or all of the loans held by Lender hereunder. In the event
that any such grant by Lender of a participating interest to a
Participant, whether or not upon notice to the Borrower, Lender shall
remain responsible for the performance of its obligations hereunder
and Borrower shall continue to deal solely and directly with Lender
in connection with Lender's rights and obligations hereunder. Lender
may furnish any information concerning Borrower and Guarantor in its
possession from time to time to prospective assignees and
Participants, provided that Lender shall require any such prospective
assignee or Participant to agree in writing to maintain the
confidentiality of such information. Lender shall notify Borrower of
the names of such participants and the percentage interest sold to a
participant within thirty (30) days after such grant.
8.14 LOST NOTES. Upon receipt of an affidavit of an officer of Lender as
to the loss, theft, destruction or mutilation of the Note or any
other security document which is not of public record, and, in the
case of any such loss, theft, destruction or mutilation, upon
cancellation of such Note or other security document, Borrower will
issue, in lieu
20
thereof, a replacement note or other security document in the same
principal amount thereof and otherwise of like tender.
IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be duly
executed and delivered by the proper and duly authorized officers as of the date
and year first above written.
WITNESS: BORROWER:
XXXXXXX LAND & NURSERIES, INC.
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Its Vice President and Chief
Financial Officer Duly Authorized
/s/ Xxxxx Xxxxxxxx
21
LENDER:
FLEET NATIONAL BANK
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Its Senior Vice President
Duly Authorized
/s/ Xxxxxxx Xxxxxx
ACCEPTED AND AGREED TO BY THE GUARANTOR
WITNESS: GUARANTOR:
IMPERIAL NURSERIES, INC.
/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxxx Xxxxxx
Its Senior Vice President
Duly Authorized
/s/ Xxxxxxx X. Xxxxx
22
EXHIBIT A
TO REVOLVING LOAN AND TERM LOAN AGREEMENT
OTHER TERMS AND CONDITIONS
1. USE OF PROCEEDS. The proceeds of the Revolving Loan shall be used by
the Borrower for general working capital purposes and/or the purposes
set forth in Section 2.1 hereof.
2. ACCOUNTING TERMS. All accounting terms not specifically defined in
this Loan Agreement shall be construed in accordance with generally
accepted accounting principles and all financial data submitted
pursuant to this Loan Agreement shall be prepared in accordance with
such principles.
3. MAINTENANCE OF DEPOSITORY ACCOUNTS. The Borrower shall maintain all
of its disbursement accounts with the Lender and shall pay all
associated bank fees for maintenance and service of those accounts.
The Lender acknowledges that the Borrower maintains depository
accounts with banks other than the Lender for each of the Borrower's
wholesale locations.
