CREDIT AGREEMENT
Dated as of May 1, 2000
among
ML MACADAMIA ORCHARDS, L.P.
ML RESOURCES, INC.
as Borrower
and
PACIFIC COAST FARM CREDIT SERVICES, PCA
as Lender
Loan No. ____________
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INDEX OF EXHIBITS
Exhibit A - Form of Notice of Revolving Advance
Exhibit B - Form of Certification Regarding Compliance
with Financial Covenants
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THIS CREDIT AGREEMENT ("Agreement"), dated as of May 1, 2000,
is by and among ML MACADAMIA ORCHARDS, L.P., a Delaware limited partnership, and
ML RESOURCES, INC., a Hawaii corporation (collectively, "Borrower"), and PACIFIC
COAST FARM CREDIT SERVICES, PCA, ("Lender") with respect to the following facts:
RECITALS
1. Borrower has requested that Lender extend to Borrower certain
financial accommodations. Lender is willing to do so on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE I.
GENERAL TERMS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, all terms defined
in the preamble to this Agreement shall have the meanings set forth therein, and
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Acquisition" shall mean the purchase by MLO of certain assets
from Kau Agribusiness Co. Inc, a Hawaii corporation, Kau Sugar, Inc., a Hawaii
corporation, Mauna Kea Macadamia Orchards, Inc., a Hawaii corporation, and Mauna
Kea Agribusiness Co., Inc., a Hawaii corporation, pursuant to that certain Asset
Purchase Agreement dated as of March 14, 2000.
"Affiliate" shall mean any person or entity directly or
indirectly controlling, controlled by, or under common control with the
Borrower. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlled by" and "under common control with")
as used with respect to the Borrower, any person, or entity shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Borrower, any person, or entity,
whether through the ownership of voting shares, by contract or otherwise.
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"Agreement" shall mean this Credit Agreement, including all
amendments, modifications, and supplements hereto and any appendices, exhibits,
or schedules to any of the foregoing.
"Bankruptcy Code" shall mean 11 U.S.C.Section 101, ET
SEQ., as in effect from time to time. "Base Rate" shall mean a floating rate of
interest: (a) with respect to the Revolving Loan, the Prime Rate plus a margin
equal on the Closing Date to zero percent (0.00%), and thereafter to such other
margin as may become applicable under Section 2.4(c); (b) with respect to Term
Loan Tranche A, the Prime Rate plus a margin equal on the Closing Date to zero
percent (0.00%), and thereafter to such other margin as may become applicable
under Section 2.5(c); and (c) with respect to Term Loan Tranche B, the Prime
Rate plus a margin equal to three percent (3.00%).
"Borrower" shall mean ML Macadamia Orchards, L.P., a Delaware
limited partnership, and ML Resources, Inc., a Hawaii corporation.
"Business Day" shall mean any day that is not a Saturday, a
Sunday, or a day on which banks are required or permitted to be closed in the
State of California.
"Capital Lease" shall mean, with respect to any Person, any
lease of any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP, either would be required to be classified and
accounted for as a capital lease on a balance sheet of such Person or otherwise
be disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
"Charges" shall mean all federal, state, county, city,
municipal, local, foreign, or other governmental taxes (including, without
limitation, taxes owed to the Pension Benefit Guaranty Corporation or any
successor) at the time due and payable, levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Collateral, (ii) the
Obligations, (iii) the employees, payroll, income, or gross receipts of
Borrower, (iv) Borrower's ownership or use of any of its assets, or (v) any
other aspect of Borrower's business.
"Closing Date" shall mean the date set forth in the preamble
to this Agreement, or such other date on which this Agreement is closed.
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"Collateral" shall mean any and all property of Borrower in
which Lender now or hereafter has a Lien to secure all or any part of the
Obligations to Lender.
"Collection Account" shall mean a bank account in the name of
Lender at a bank chosen by Borrower and reasonably acceptable to Lender.
"Consolidated Cash Flow" shall mean, for any period, for MLO
and its Subsidiaries on a consolidated basis, the sum (without duplication) of:
(a) Consolidated Net Income; plus (b) the sum of (i) extraordinary non-cash
losses, (ii) interest expense (including the interest portion of any capitalized
lease obligations), (iii) depletion, depreciation and amortization, and (iv)
losses on asset sales (excluding the cash portion of any loss),; minus (c) the
sum of (i) extraordinary gains, (ii) gains on asset sales (excluding the cash
portion on any gain associated with the sale of property held for investment
purposes), and (iii) Maintenance Capital Expenditures.
"Consolidated Debt Coverage Ratio" shall mean, as at any date
of determination, the ratio of Consolidated Cash Flow for any period to
Consolidated Debt Service for such period.
"Consolidated Debt Service" shall mean, for any period, for
MLO and its Subsidiaries on a consolidated basis, the sum (without duplication)
of the following: (a) interest expense (including the interest portion of any
capitalized lease obligations); and (b) scheduled principal payments (including
the principal portion of capitalized lease obligations).
"Consolidated EBITDA" shall mean, for any period, for MLO and
its Subsidiaries on a consolidated basis, the sum (without duplication) of: (a)
Consolidated Net Income; plus (b) the sum of (i) Federal, state, local, and
foreign income taxes, (ii) interest expense (including the interest portion of
any capitalized lease obligations), (iii) depletion, depreciation and
amortization, and (iv) extraordinary losses; minus (c) the sum of (I) gains on
asset sales, and (II) extraordinary gains.
"Consolidated Funded Debt" shall mean, as at any date of
determination, for MLO and its Subsidiaries on a consolidated basis, the sum
(without duplication) of: (a) indebtedness for borrowed money or guarantees of
borrowed money, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, including certain contingent obligations such as letter of
credit reimbursement agreements, and (c) obligations under capitalized leases.
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"Consolidated Funded Debt to Consolidated EBITDA Ratio" shall
mean, as at any date of determination, the ratio of Consolidated Funded Debt, as
of such date of determination, to Consolidated EBITDA, as of such date of
determination.
"Consolidated Net Cash Flow" shall mean, for any period, for
MLO and its Subsidiaries on a consolidated basis, the sum (without duplication)
of: (a) Consolidated Net Income; plus (b) the sum of (i) extraordinary non-cash
losses, (ii) depletion, depreciation and amortization, and (iii) losses on asset
sales; minus (c) the sum of (i) extraordinary gains, (ii) gains on asset sales
(excluding the cash portion on any gain associated with the sale of property
held for investment purposes), (iii) principal payments on term debt (including
the interest portion of any capitalized lease obligations), and (iv) Maintenance
Capital Expenditures.
"Consolidated Net Income" shall mean, for any period, on a
consolidated basis, the net income, if any, of MLO, determined in accordance
with GAAP.
"Consolidated Partners Capital" shall mean, as at any date of
determination, the gross book value of the assets of MLO, less (a) reserves
applicable thereto, and (b) all liabilities (including subordinated
liabilities), in each case determined in accordance with GAAP and measured on a
consolidated basis..
"Consolidated Total Capitalization" shall mean, as of any date
of determination, for MLO and its Subsidiaries on a consolidated basis, the sum
(without duplication) of (a) Consolidated Funded Debt, and (b) Consolidated
Partners Capital.
"Current Assets" shall mean, as at any date of determination,
the current assets of MLO determined in accordance with GAAP.
"Current Liabilities" shall mean, as at any date of
determination, the current liabilities of MLO determined in accordance with
GAAP.
"Default" shall mean any event or circumstance which, with the
passage of time or the giving of notice or both, would unless remedied or
waived, become an Event of Default.
"Default Rate" shall mean a rate of interest that is three
percent (3.00%) per annum higher than the rate otherwise applicable.
"Disclosure Schedule" shall mean the Disclosure Schedule
delivered by Borrower to Lender in conjunction with this Agreement.
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"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable real estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws
include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Sections 9601 ET SEQ.) ("CERCLA");
the Hazardous Material Transportation Act, as amended (49 U.S.C.
Sections 1801 ET SEQ.); the Federal Insecticide, Fungicide, and
Rodenticide Act, as amended (7 U.S.C. Sections 136 ET SEQ.); the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections
6901 ET SEQ.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C.
Sections 2601 ET SEQ.); the Clean Air Act, as amended (42 U.S.C.
Sections 7401 ET SEQ.); the Federal Water Pollution Control Act, as
amended (33 U.S.C. Sections 1251 ET SEQ.); the Occupational Safety and
Health Act, as amended (29 U.S.C. Sections 651 ET SEQ.); and the Safe
Drinking Water Act, as amended (42 U.S.C. Sections 300(f) ET SEQ.), and
any and all regulations promulgated thereunder, and all analogous state and
local counterparts or equivalents and any transfer of ownership notification or
approval statutes.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974 (or any successor legislation thereto), as amended from time to time,
and any regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Borrower, any
trade or business (whether or not incorporated) under common control with
Borrower and which, together with Borrower, are treated as a single employer
within the meaning of Section 4001(a) of ERISA.
"Eurodollar Business Day" shall mean a business day on which
banks generally in the City of London are open for interbank or foreign exchange
transactions.
"Event of Default" shall have the meaning assigned to it in
Section 10.1.
"Farm Credit One-Year Discount Note Rate" shall mean, at any
time, the all-in cost paid by Western Farm Credit Bank on one-year Farm Credit
Discount Notes made available to Western Farm Credit Bank by the Federal Farm
Credit Banks Funding Corporation.
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"Farm Credit Medium Term Note Rate" shall mean, at any time,
the all-in cost paid by Western Farm Credit Bank on Farm Credit Medium Term
Notes for periods of two years, five years, or the period through the Term Loan
Termination Date, as applicable, made available to Western Farm Credit Bank by
the Federal Farm Credit Banks Funding Corporation.
"Fees" shall mean any fees referred to in Section 2.8,
including the Loan Fee and the Unused Commitment Fee, any prepayment surcharge,
and any other fees due to Lender pursuant to the Loan Documents.
"Fiscal Quarter" shall mean any of the quarterly accounting
periods of Borrower.
"Fiscal Year" shall mean the 12-month period of Borrower
ending December 31 of each year. Subsequent changes of the fiscal year of
Borrower shall not change the term "Fiscal Year," unless Lender shall consent in
writing to such change.
"Fixed Rate" shall mean: (a) with respect to any portion of
the Revolving Loan that Borrower elects at any time pursuant to Section 2.4(b)
to convert to a fixed rate of interest, the applicable LIBO Rate as of the date
of such election plus a margin equal on the Closing Date to one and seventy-five
one hundredths percent (1.75%), and thereafter to such other margin as may
become applicable under Section 2.4(c); (b) with respect to any portion of Term
Loan Tranche A that Borrower elects at any time pursuant to Section 2.5(b) to
convert to a fixed rate of interest, the applicable LIBO Rate as of the date of
such election plus a margin equal on the Closing Date to one and seventy-five
one hundredths percent (1.75%), and thereafter to such other margin as may
become applicable under Section 2.5(c), and (c) with respect to Term Loan
Tranche B, (i) for Interest Periods of one (1) year, the applicable Farm Credit
One-Year Discount Note Rate plus a margin equal on the Closing Date to two
percent (2.00%), and thereafter to such other margin as may become applicable
under Section 2.6(b), (ii) for Interest Periods of two (2) years or five (5)
years, the applicable Farm Credit Medium Term Note Rate plus a margin equal on
the Closing Date to two percent (2.00%), and thereafter to such other margin as
may become applicable under Section 2.6(b), and (iii) for the Interest Periods
commencing on the Closing Date and expiring on the Term Loan Maturity Date, the
applicable Farm Credit Medium Term Note Rate plus a margin of two percent
(2.00%).
"GAAP" shall mean generally accepted accounting principles in
the United States of America as in effect from time to time.
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"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Material" shall mean any substance, material or
waste, the generation, handling, storage, treatment or disposal of which is
regulated by any local or state government authority in any jurisdiction in
which Borrower has owned, leased or operated real property or disposed of
hazardous materials, or by the United States Government, including any material
or substance which is (i) defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste" or "restricted hazardous
waste" or other similar term of phrase under any such law, (ii) petroleum, (iii)
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. Section 1251 ET SEQ. (33 U.S.C. Section 1321) or listed
pursuant to Section 307 of the Clean Water Act (33 U.S.C. Section 1317), (iv)
defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, ET SEQ. (42 U.S.C.
Section 6903), or (v) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601, ET SEQ. (42 U.S.C. Section 9601).
"Indebtedness" of any Person shall mean all obligations for
borrowed money (including the present value of capitalized lease obligations)
which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of a balance sheet as of the date at
which Indebtedness is to be determined, and guarantees, letters of credit (other
than letters of credit to support trade payables) and endorsements (other than
of notes, bills and checks presented to banks for collection or deposit in the
ordinary course of business), in each case to support indebtedness for borrowed
money of others, but excluding existing guarantees outstanding on the Closing
Date (and extensions or renewals thereof).
"Interest Determination Date" shall mean the date, as
designated by Borrower pursuant to Section 2.4, Section 2.5 or Section 2.6, on
which a portion of the Revolving Advances or a portion of the Term Loan shall
begin to bear interest at a Fixed Rate.
"Interest Period" shall mean (a) with respect to any portion
of interest on Revolving Advances that Borrower elects to have bear interest at
a Fixed Rate, a period beginning on the Interest Determination Date and ending,
at Borrower's election, either
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one (1) month, two (2) months, three (3) months, six (6) months, or twelve (12)
months thereafter, (b) with respect to any portion of interest on Term Loan
Tranche A that Borrower elects to have bear interest at a Fixed Rate, a period
beginning on the Interest Determination Date and ending, at Borrower's election,
either three (3) months, six (6) months, or twelve (12) months thereafter, and
(c) with respect to interest on Term Loan Tranche B, a period beginning on the
Interest Determination Date and ending, at Borrower's election, either one (1)
year, two (2) years, or five (5) years thereafter or, only with respect to an
election made in connection with the Closing Date, ending on the Maturity Date
for Term Loan Tranche B.
"Lender" shall mean PCFC.
"LIBO Rate" shall mean, for any Interest Determination Date,
the rate offered from time to time for U.S. Dollar deposits for the Interest
Period selected, as quoted by Telerate News Service on page 3750 recorded as of
11:00 A.M. London setting time (or, if the page 3750 of the Telerate News
Service is unavailable, the comparable reference on the Reuters Screen LIBOR
Page or such other quotation service as may be chosen by Lender) on the second
full Eurodollar Business Day preceding the beginning of the Interest Period;
PROVIDED, that if two or more of such offered rates appear on Telerate (or on
the Reuters Screen LIBOR Page or alternative service, as the case may be), the
"LIBO Rate" shall be highest of the two rates quoted.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Uniform
Commercial Code or comparable law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Revolving Loan
Note of even date herewith, the Term Note of even date herewith, the Security
Documents, and all other agreements, instruments, documents, and certificates
identified in any Schedule of Documents listing documents to be delivered by
Borrower to Lender and including all other pledges, powers of attorney,
consents, assignments, contracts and agreements whether heretofore, now, or
hereafter executed by or on behalf of Borrower or any of its Affiliates, or any
employee of Borrower or any of its Affiliates, and delivered to Lender in
connection with this Agreement, or any previous versions of this Agreement or
the transactions contemplated thereby or hereby.
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"Maintenance Capital Expenditures" shall mean capital
expenditures for maintenance and enhancement of MLO's business operations.
"Material Adverse Effect" shall mean a material adverse effect
on (i) the business, assets, operations, or financial or other condition of
Borrower, (ii) Borrower's ability to pay the Obligations in accordance with the
terms thereof, or (iii) the Collateral or Lender's Liens on the Collateral or
the priority of any such Lien, or (iv) Lender's rights and remedies under this
Agreement and the other Loan Documents.
"Maximum Lawful Rate" shall have the meaning assigned to it in
Section 2.7(e).
"Maximum Revolving Loan" shall mean Five Million Dollars
($5,000,000).
"MLO" shall mean ML Macadamia Orchards, L.P., a Delaware
limited partnership.
"Notice of Revolving Advance" shall have the meaning assigned
to it in Section 2.1(b).
"Obligations" shall mean all loans, advances, debts,
liabilities, and obligations, for the performance of covenants, tasks or duties
or for payment of monetary amounts (whether or not such performance is then
required or contingent, or amounts are liquidated or determinable and whether or
not allowed as a claim in any proceeding referred to in Section 10.1(i) or
10.1(j)) owing by Borrower to Lender, and all covenants and duties regarding
such amounts, of any kind or nature, present or future, whether or not evidenced
by any note, agreement or other instrument, arising under any of the Loan
Documents. This term includes the Revolving Loan, the Term Loan, all principal,
interest, Fees, charges, expenses, attorneys' fees and any other sum chargeable
to Borrower under this Agreement or any of the Loan Documents.
"PACA" shall mean the Perishable Agricultural Commodities Act,
7 U.S.C. Section 499e(c) (or any successor legislation thereto), as amended
from time to time, and any regulations promulgated thereunder.
"Permitted Encumbrances" shall mean the following
encumbrances: (i) Liens for taxes or assessments or other governmental Charges
or levies, either not yet due and payable or which are currently being contested
in good faith by appropriate proceedings and which at all times are junior and
subordinate to the Lien of Lender; (ii) pledges or deposits securing obligations
under workmen's compensation,
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unemployment insurance, social security or public liability laws or similar
legislation; (iii) pledges or deposits securing bids, tenders, contracts (other
than contracts for the payment of money) or leases to which Borrower is a party
as lessee made in the ordinary course of business; (iv) deposits securing public
or statutory obligations of Borrower; (v) inchoate and unperfected workers',
mechanics', suppliers' or similar Liens arising in the ordinary course of
business; (vi) carriers', warehousemen's, or other similar possessory Liens
arising in the ordinary course of business and securing indebtedness either not
yet due and payable or which are currently being contested in good faith by
appropriate proceedings; (viii) deposits securing, or in lieu of, surety, appeal
or customs bonds in proceedings to which Borrower is a party; (ix) an attachment
or judgment Lien, but only for a period of thirty (30) days following attachment
of such Lien and such attachment or judgment lien shall cease to be a Permitted
Lien if the obligation that it secures has not been satisfied or bonded during
such thirty (30) day period; (x) zoning restrictions, easements, licenses, or
other restrictions on the use of real property or other minor irregularities in
title (including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such real property, leases or
leasehold estates; (xi) Liens existing as of the Closing Date as identified in
Part (E) of the Disclosure Schedule, but only securing the debt and covering the
property referred to therein, (xii) Liens to secure Indebtedness arising from
development of investment properties, provided that the Liens do not encumber
any asset other than the asset benefitting from the improvement, and (xiii)
security interests securing purchase money indebtedness and liens covering
property other than Collateral, in each case to the extent permitted by Section
8.4.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Prime Rate" shall mean the "Prime" rate as published from
time to time in the Eastern Edition of The Wall Street Journal, regardless of
whether such rate is actually charged by any bank, or, in the event that THE
WALL STREET JOURNAL ceases publication of such rate, in such other nationally
recognized financial publication of general circulation as Lender may, from time
to time, designate in writing based on Lender's reasonable determination that
the rate so published is comparable to the "Prime" rate published in the Eastern
Edition of THE WALL STREET JOURNAL.
"Restricted Payment" shall mean (a) any payment or other
distribution, direct or indirect, in respect of any partnership interest or
stock in
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Borrower, except a distribution payable solely in additional partnership
interest or stock, and (b) any payment, direct or indirect, on account of the
redemption, retirement, purchase or other acquisition of any partnership
interest or stock or (c) any payment, loan, contribution, or other transfer of
funds or other property to any partner or stockholder of Borrower except for
reasonably equivalent value.
"Revolving Advance" shall have the meaning ascribed to such
term in Section 2.1(a).
"Revolving Loan" shall mean the aggregate amount of Revolving
Advances outstanding at any time.
"Revolving Loan Maturity Date" shall mean May 1, 2004;
provided, that if the Obligations shall become due and payable in accordance
with Section 10.2 or any other provision of this Agreement, then the Revolving
Loan Maturity Date shall be the date on which the Obligations become due and
payable.
"Security Documents" shall mean all security agreements,
assignments, and other similar documents delivered by Borrower to Lender
pursuant to which Borrower grants to Lender a security interest in, assignment
of, or Lien upon any property of Borrower, including all amendments,
modifications and supplements thereto.
"Subsidiary" shall mean any corporation, association or
business entity of which Borrower owns, directly or indirectly, more than fifty
percent of the voting securities or which Borrower otherwise controls.
"Tangible Net Worth" shall mean the gross book value of the
assets of MLO (exclusive of goodwill, patents, trademarks, trade names,
organization expense unamortized debt discount and expense, deferred charges and
other like intangibles) less (i) reserves applicable thereto and (ii) all
liabilities (including subordinated liabilities), in each case determined in
accordance with GAAP (provided an adjustment shall be made to eliminate the
effect of FAS 109), and as reasonably determined by Lender in accordance with
GAAP.
"Working Capital" shall mean Current Assets less Current
Liabilities.
1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP consistently applied. That
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certain terms or computations are explicitly modified by the phrase "in
accordance with GAAP" shall in no way be construed to limit the foregoing.
1.3 CERTAIN MATTERS OF CONSTRUCTION. The words "herein," "hereof,"
"hereto," "hereunder," and other words of similar import refer to this Agreement
as a whole, including the Exhibits and Schedules hereto, as the same may from
time to time be amended, modified or supplemented, and not to any particular
section, subsection or clause contained in this Agreement. Any reference to a
"Section," "Exhibit," or "Schedule" shall refer to the relevant Section or,
Exhibit, or Schedule to this Agreement, unless specifically indicated to the
contrary. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine or neuter. The term "including" shall not be limiting or
exclusive, unless specifically indicated to the contrary.
ARTICLE II.
AMOUNT AND TERMS OF CREDIT
1.4 REVOLVING ADVANCES.
(1) REVOLVING ADVANCES TO BE MADE AVAILABLE. Upon and subject
to the terms and conditions hereof, Lender agrees to make available, from time
to time, until the Revolving Loan Maturity Date, for Borrower's use and upon the
request of Borrower therefor, advances (each, a "Revolving Advance") that shall
not exceed the Maximum Revolving Loan. The amount of any Revolving Advance shall
be not less than Fifty Thousand Dollars ($50,000) and shall be in integral
multiples of One Thousand Dollars ($1,000). The Revolving Loan shall be
evidenced by the Revolving Loan Promissory Note to be executed and delivered by
Borrower to Lender on the Closing Date.
(2) REQUESTS FOR ADVANCES. If Borrower desires to receive a
Revolving Advance, Borrower shall deliver a notice (a "Notice of Revolving
Advance") to Lender substantially in the form of Exhibit A no later than 2:00
p.m. (California time) on the Business Day prior to the date of the proposed
Revolving Advance. Lender shall be entitled to rely upon and shall be fully
protected under this Agreement in relying upon any Notice of Revolving Advance
reasonably believed by Lender to be genuine. Upon the close of business on the
date of the proposed Revolving Advance, Lender shall make the Revolving Advance
available to Borrower unless Lender determines that Borrower is not entitled to
such Revolving Advance under the terms of this Agreement. All notices delivered
pursuant to this Section 2.1(b) shall be delivered by facsimile to the facsimile
number set forth in Section 11.9 or to such other facsimile number as a party
hereto shall designate in writing pursuant to the provisions of Section 11.9.
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(3) REVOLVING NATURE OF LOAN; REPAYMENT OF LOAN. The Revolving
Loan is a revolving line of credit and Borrower may borrow, repay principal, and
reborrow in accordance with the terms of this Agreement; PROVIDED that Borrower
shall provide Lender with one (1) day's advance notice of any repayment.
Repayments of principal shall be not less than Fifty Thousand Dollars ($50,000)
and shall be in integral multiples of One Thousand Dollars ($1,000). The
Revolving Loan shall mature and shall become due and payable in full on the
Revolving Loan Maturity Date.
1.5 TERM LOAN.
(1) ADVANCE OF TERM LOAN. Upon and subject to the terms and
conditions hereof, Lender shall advance the Term Loan to Borrower on the Closing
Date. The Term Loan shall be evidenced by the Term Loan Promissory Note to be
executed and delivered by Borrower to Lender on the Closing Date.
(2) PRINCIPAL PAYMENTS -- TERM LOAN TRANCHE A. With respect to
Term Loan Tranche A, Borrower shall pay to Lender annual principal installments
of Two Hundred Thousand Dollars ($200,000) commencing on May 1, 2001 and
continuing on the first day of May in each year thereafter through and including
May 1, 2005; PROVIDED, that all unpaid principal, accrued interest and other
amounts evidenced by the Term Loan Promissory Note shall be due and payable in
full on the Term Loan Maturity Date.
(3) PRINCIPAL PAYMENTS -- TERM LOAN TRANCHE B. With respect to
Term Loan Tranche B, Borrower shall pay to Lender, annual principal installments
of Two Hundred Thousand Dollars ($200,000) commencing on May 1, 2001 and
continuing on the first day of May in each year thereafter through and including
May 1, 2005. Thereafter, Borrower shall pay to Lender, annual principal
installments of Four Hundred Thousand Dollars ($400,000) commencing on May 1,
2006 and continuing on the first day of May in each thereafter through and
including May 1, 2010; PROVIDED, that all unpaid principal, accrued interest and
other amounts evidenced by the Term Loan Promissory Note shall be due and
payable in full on the Term Loan Maturity Date.
1.6 PREPAYMENTS.
(1) PREPAYMENT IN FULL. Borrower shall have the right at any
time to voluntarily prepay the entire amount of the outstanding Revolving Loan
and the entire amount of the outstanding Term Loan and to terminate this
Agreement upon at least three (3) Business Days notice to Lender, without
premium or penalty except Borrower shall pay to Lender a prepayment surcharge
calculated in accordance with Section 2.3(c). Prepayment in full shall be
accompanied by the payment of all accrued and unpaid interest and all Fees and
other remaining Obligations.
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(2) PARTIAL PREPAYMENT. Borrower shall have the right at any
time to voluntarily prepay any portion of the Term Loan, or any portion of the
Revolving Loan subject to a Fixed Rate, upon at least three (3) Business Days
notice to Lender, without premium or penalty except Borrower shall pay to
Lender, a prepayment surcharge calculated in accordance with Section 2.3(c).
Unless otherwise approved by Lender, any prepayment of the Term Loan shall be
applied pro rata, based on the respective aggregate principal amounts then
outstanding, to Term Loan Tranche A and Term Loan Tranche B, shall be applied in
inverse order of maturity, and shall not reduce the amount of any installment
payments to Lender.
(3) PREPAYMENT SURCHARGE. At the time that Borrower makes any
Prepayment, Borrower shall simultaneously pay to Lender, a prepayment surcharge
for each Fixed Rate portion of the Term Loan and the Revolving Loan so prepaid,
calculated as follows:
(1) For each portion of the Revolving Loan or the
Term Loan bearing interest at a Fixed Rate calculated with respect to the LIBO
Rate or the Farm Credit One-Year Discount Note Rate, the prepayment surcharge
shall be equal to any funding losses incurred by Lender as a result of such
prepayment, including any loss or unreimbursed expense arising from the
redeployment of funds, calculated according to any reasonable methodology
established by Lender; and
(2) For each portion of the Term Loan bearing
interest at a Fixed Rate calculated with respect to the Farm Credit Medium Term
Note Rate, the prepayment surcharge shall be equal to the present value of any
loss of earnings incurred by Lender as a result of such prepayment, including
any loss or unreimbursed expense arising from the redeployment of funds,
calculated according to any reasonable methodology established by Lender.
1.7 INTEREST RATE ON REVOLVING ADVANCES.
(1) BASE RATE. Revolving Advances hereunder shall bear
interest at the Base Rate, unless Borrower elects to convert the interest rate
to a Fixed Rate for the period selected by Borrower in accordance with the
provisions of Section 2.4(b).
(2) FIXED RATE FOR REVOLVING LOAN. Borrower may, from time to
time, elect to convert all or a portion of the outstanding Revolving Advances to
a Fixed Rate; PROVIDED, that (i) at least two (2) Business Days prior to the
proposed Interest Determination Date, Borrower has provided Lender with written
notice of such election, the requested Interest Determination Date, the amount
of the Revolving Advances to be converted, and the requested Interest Period for
the amount to be converted, (ii) at the time of delivery of such written notice
and upon the date of conversion, no Default or Event of Default exists under
this Agreement, (iii) at no time shall there be more than five (5) outstanding
tranches of the Revolving Loan bearing interest at a Fixed Rate, (iv) the last
day of the Interest Period chosen by Borrower shall not extend beyond
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the Revolving Loan Maturity Date, and (v) the amount converted to a Fixed Rate
at any one time shall be not less than Fifty Thousand Dollars ($50,000) and any
amounts in excess thereof shall be in integral multiples of Fifty Thousand
Dollars ($50,000). Any election by Borrower pursuant to this Section 2.4(b)
shall be irrevocable during the Interest Period selected by Borrower, and that
portion of the Revolving Loan so converted shall bear interest at the applicable
Fixed Rate until the expiration of the applicable Interest Period at which time,
unless another Fixed Rate has been duly elected by Borrower pursuant to this
Section 2.4(b), the interest rate for such portion of the Revolving Loan will
automatically convert to the Base Rate.
(3) ADJUSTMENT IN MARGIN APPLICABLE TO BASE RATE AND TO FIXED
RATE ELECTIONS FOR REVOLVING LOAN. With respect to the Revolving Loan, the
margin applicable to the Base Rate and the Fixed Rate shall be adjusted on an
annual basis in the manner and to the extent provided in this Section 2.4(c).
If, as of the end of any Fiscal Year, Borrower's Consolidated Funded Debt to
Consolidated EBITDA Ratio, for the period of such Fiscal Year falls within any
of the levels listed below, then the margin applicable to the Base Rate and the
Fixed Rate for the next Fiscal Year shall be adjusted, in the manner set forth
below, to the applicable margin for such level listed below:
Consolidated Funded Debt Applicable Margin Applicable Margin
to Consolidated EBITDA Ratio Level Fixed Rate Base Rate
---------------------------------- ---------- ---------
1.25:1 or greater 2.00% 0.25%
Less than 1.25:1 but equal to or greater than 0.75:1 1.75% 0.00%
Less than 0.75:1 1.50% 0.00%
Any change to the applicable margin shall become effective as of the first (1st)
day of the month after Borrower's delivery to Lender of the financial statements
required to be delivered to Lender pursuant to Section 6.1(b) demonstrating to
Lender's reasonable satisfaction that a change in the margin should occur;
provided that a change in the margin shall not change the Fixed Rate applicable
to an Interest Period that commenced prior to the date on which the margin
changes. Notwithstanding anything to the contrary in the foregoing, if a Default
or Event of Default shall have occurred and be continuing on either the date
that Borrower elects to convert a portion of the Revolving Loan to a Fixed Rate
or upon the Interest Determination Date, then Borrower shall have no right to
elect a Fixed Rate.
1.8 INTEREST RATE ON TERM LOAN TRANCHE A.
(1) BASE RATE. Term Loan Tranche A shall bear interest at the
Base Rate, unless Borrower elects to convert the interest rate to a Fixed Rate
for the period selected by Borrower in accordance with the provisions of Section
2.5(b).
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(2) DESIGNATION OF FIXED RATES. Borrower may, from time to
time, elect to convert all or a portion of Term Loan Tranche A to a Fixed Rate;
PROVIDED, that (i) at least two (2) Business Days prior to the proposed Interest
Determination Date, Borrower has provided Lender with written notice of such
election, the requested Interest Determination Date, the amount of Term Loan
Tranche A to be converted, and the requested Interest Period for the amount to
be converted, (ii) at the time of delivery of such written notice and upon the
date of conversion, no Default or Event of Default exists under this Agreement,
(iii) at no time shall there be more than four (4) outstanding tranches of Term
Loan Tranche A bearing interest at a Fixed Rate, (iv) the last day of the
Interest Period chosen by Borrower shall not extend beyond the Term Loan
Maturity Date, and (v) the amount converted to a Fixed Rate at any one time
shall be not less than Two Hundred Fifty Thousand Dollars ($250,000) and any
amounts in excess thereof shall be in integral multiples of Fifty Thousand
Dollars ($50,000). Any election by Borrower pursuant to this Section 2.5(b)
shall be irrevocable during the Interest Period selected by Borrower, and that
portion of Term Loan Tranche A so converted shall bear interest at the
applicable Fixed Rate until the expiration of the applicable Interest Period at
which time, unless another Fixed Rate has been duly elected by Borrower pursuant
to this Section 2.5(b), the interest rate for such portion of Term Loan Tranche
A will automatically convert to the Term Loan Tranche A Base Rate.
(3) ADJUSTMENT IN MARGIN APPLICABLE TO BASE RATE AND TO FIXED
RATE ELECTIONS FOR TERM LOAN TRANCHE A. With respect to Term Loan Tranche A, the
margin applicable to the Base Rate and the Fixed Rate shall be adjusted on an
annual basis in the manner and to the extent provided in this Section 2.5(c).
If, as of the end of any Fiscal Year, Borrower's Consolidated Funded Debt to
Consolidated EBITDA Ratio, for the period of such Fiscal Year falls within any
of the levels listed below, then the margin applicable to the Base Rate and the
Fixed Rate for the next Fiscal Year shall be adjusted, in the manner set forth
below, to the applicable margin for such level listed below:
Consolidated Funded Debt Applicable Margin Applicable Margin
to Consolidated EBITDA Ratio Level Fixed Rate Base Rate
---------------------------------- ---------- ---------
1.25:1 or greater 2.00% 0.25%
Less than 1.25:1 but equal to or greater than 0.75:1 1.75% 0.00%
Less than 0.75:1 1.50% 0.00%
Any change to the applicable margin shall become effective as of the first (1st)
day of the month after Borrower's delivery to Lender of the financial statements
required to be delivered to Lender pursuant to Section 6.1(b) demonstrating to
Lender's reasonable satisfaction that a change in the margin should occur;
provided that a change in the margin shall not change the Fixed Rate applicable
to an Interest Period that commenced prior to the date on which the margin
changes. Notwithstanding anything to the
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contrary in the foregoing, if a Default or Event of Default shall have occurred
and be continuing on either the date that Borrower elects to convert a portion
of Term Loan Tranche A to a Fixed Rate or upon the Interest Determination Date,
then Borrower shall have no right to elect a Fixed Rate.
1.9 INTEREST RATE ON TERM LOAN TRANCHE B.
(1) DESIGNATION OF FIXED RATES. Borrower shall, from time to
time, designate a Fixed Rate to be applicable to all or a portion of Term Loan
Trance B; PROVIDED, that (i) at least two (2) Business Days prior to the
proposed Interest Determination Date, Borrower has provided Lender with written
notice of such designation, the requested Interest Determination Date, the
amount of Term Loan Tranche B so designated, and the requested Interest Period
for the amount so designated, (ii) at the time of delivery of such written
notice and upon the date of conversion, no Default or Event of Default exists
under this Agreement, (iii) at no time shall there be more than four (4)
outstanding interest rate tranches of Term Loan Tranche B, (iv) the last day of
the Interest Period chosen by Borrower shall not extend beyond the Term Loan
Maturity Date, and (v) the amount so designated shall be not less than Five
Hundred Thousand Dollars ($500,000) and any amounts in excess thereof shall be
in integral multiples of Five Thousand Dollars ($5,000). Any designation by
Borrower pursuant to this Section 2.6(a) shall be irrevocable during the
Interest Period designated by Borrower, and that portion of Term Loan Tranche B
so designated shall bear interest at the applicable Fixed Rate until the
expiration of the applicable Interest Period. Borrower's failure to designate a
new Interest Period upon the expiration of a previous Interest Period shall
constitute an Event of Default and the portion of Term Loan Tranche B not
subject to a designated Interest Period shall bear interest at the Default Rate.
(2) ADJUSTMENT IN MARGIN APPLICABLE TO FIXED RATE DESIGNATIONS
FOR TERM LOAN TRANCHE B. With respect to Term Loan Tranche B, the margin
applicable to the Fixed Rate shall be adjusted on an annual basis in the manner
and to the extent provided in this Section 2.6(b). If, as of the end of any
Fiscal Year, Borrower's Consolidated Funded Debt to Consolidated EBITDA Ratio,
for the period of such Fiscal Year falls within any of the levels listed below,
then the margin applicable to the Fixed Rate for the next Fiscal Year shall be
adjusted, in the manner set forth below, to the applicable margin for such level
listed below:
Consolidated Funded Debt Applicable Margin
to Consolidated EBITDA Ratio Level Fixed Rate
---------------------------------- ----------
1.25:1 or greater 2.25%
Less than 1.25:1 but equal to or greater than 0.75:1 2.00%
Less than 0.75:1 1.75%
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Any change to the applicable margin shall become effective as of the first (1st)
day of the month after Borrower's delivery to Lender of the financial statements
required to be delivered to Lender pursuant to Section 6.1(b) demonstrating to
Lender's reasonable satisfaction that a change in the margin should occur;
provided that a change in the margin shall not change the Fixed Rate applicable
to an Interest Period that commenced prior to the date on which the margin
changes. Notwithstanding anything to the contrary in the foregoing, if a Default
or Event of Default shall have occurred and be continuing on either the date
that Borrower elects to convert a portion of Term Loan Tranche B to a Fixed Rate
or upon the Interest Determination Date, then Borrower shall have no right to
elect a Fixed Rate and such portion of Term Loan Tranche B shall thereafter bear
interest at the Default Rate.
1.10 OTHER INTEREST PROVISIONS.
(1) INTEREST PAYMENT DATES. Interest shall be due and payable
on the first day of each calendar quarter with respect to all interest accrued
on the Revolving Loan and the Term Loan during the preceding calendar quarter;
PROVIDED, that if any Interest Period shall mature prior to the first day of a
calendar quarter, then interest accrued at a Fixed Rate during the particular
Interest Period shall be due and payable upon expiration of the Interest Period.
Interest accrued on the Revolving Loan but not otherwise due and payable on the
Revolving Loan Maturity Date shall become due and payable on the Revolving Loan
Maturity Date. Interest accrued on the Term Loan but not otherwise due and
payable on the Term Loan Maturity Date shall become due and payable on the Term
Loan Maturity Date.
(2) PAYMENTS DUE ON BUSINESS DAYS. If any installment of
interest or any other amount payable under any Loan Document becomes due and
payable on a day other than a Business Day, the payment date for such payment
shall be extended to the next succeeding Business Day and, with respect to
payments of principal or other payments that bear interest (other than interest
first due on such date), interest thereon shall be payable at the then
applicable rate during such extension; PROVIDED, HOWEVER, if any installment of
interest relating to (i) Revolving Advances that have been converted to a Fixed
Rate or (ii) the Term Loan, shall become due and payable on a Saturday, the
payment date for such payment shall be the preceding Business Day.
(3) COMPUTATION OF INTEREST. All computations of interest
calculated with respect to the LIBO Rate shall be made by Lender on the basis of
a three hundred sixty (360) day year, in each case for the actual number of days
occurring in the period for which such interest is payable. All computations of
interest calculated with respect to the Farm Credit One-Year Discount Note Rate,
the Farm Credit Medium Term Note Rate, or at the Base Rate shall be made by
Lender on the basis of a three hundred sixty five (365) day year, in each case
for the actual
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number of days occurring in the period for which such interest is payable. Any
change in the applicable rate shall become effective on the day such change
occurs. Each determination by Lender of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error or bad faith.
(4) DEFAULT RATE. Any overdue principal of or interest with
respect to any Revolving Advance, or the Term Loan, and the amount of any fees,
costs, or expenses that Borrower is obligated to pay to Lender under this
Agreement or any Loan Document not paid when due, shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the Default
Rate. In addition, upon and after the occurrence of an Event of Default and
continuing until such Event of Default has been cured or waived in writing by
Lender in accordance with the terms of this Agreement, interest shall accrue on
the Obligations at the Default Rate. The interest rate increase to the Default
Rate shall take effect immediately upon the occurrence of an Event of Default,
without prior notice to Borrower.
(5) INTEREST NOT TO EXCEED MAXIMUM LAWFUL RATE.
Notwithstanding anything to the contrary set forth in this Agreement, if at any
time until payment in full of all of the Obligations, the rate of interest
payable hereunder exceeds the highest rate of interest permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto (the "Maximum Lawful Rate"), then in such event and so long as
the Maximum Lawful Rate would be so exceeded, the rate of interest payable
hereunder shall be equal to the Maximum Lawful Rate; PROVIDED, that if at any
time thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Lender hereunder,
is equal to the total interest which Lender would have received had the interest
rate payable hereunder been (but for the operation of this Section 2.7(e)) the
interest rate payable since the Closing Date. Thereafter, the interest rate
payable hereunder shall be the rate of interest set forth herein, unless and
until the rate of interest again exceeds the Maximum Lawful Rate, in which event
this paragraph shall again apply. In no event shall the total interest received
by Lender pursuant to the terms hereof exceed the amount which Lender could
lawfully have received had the interest due hereunder been calculated for the
full term hereof at the Maximum Lawful Rate. In the event the Maximum Lawful
Rate is calculated pursuant to this SECTION 2.7(e), such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. In the event that
a court of competent jurisdiction, notwithstanding the provisions of this
Section 2.7(e), shall make a final determination that Lender has received
interest hereunder or under any of the Loan Documents in excess of the Maximum
Lawful Rate, Lender shall to the extent permitted by applicable law, promptly
apply such excess first to any interest due and not yet paid under the Revolving
Loan and the Term Loan, then to the outstanding principal of the Revolving Loan,
and the Term Loan (without premium or penalty), and then to Fees and any other
unpaid Obligations and thereafter shall refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.
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(6) ADDITIONAL FIXED RATE PROVISIONS. If at any time Lender
reasonably determines that for any reason adequate and reasonable means do not
exist for ascertaining the LIBO Rate or the LIBO Rate generally becomes
unavailable to Lender, Lender shall promptly give notice thereof to Borrower,
and upon the giving of such notice, no new Fixed Rate may be selected by
Borrower, until Lender is reasonably able to ascertain the LIBO Rate and Lender
shall promptly notify Borrower at such time; PROVIDED, that Lender's
determination under this SECTION 2.7(f) as to Borrower shall be in accordance
with its treatment of other borrowers under commercial loans generally. In the
event that any law, treaty, rule, regulation, or determination of a court or
governmental authority or any change therein or in the interpretation or
application thereof or compliance by Lender with any request or directive
(whether or not having the force of law) from any central bank or governmental
authority:
(1) shall subject Lender to any tax of any kind
whatsoever with respect to any LIBO Rate, or change the basis of taxation of
payments to Lender of principal, interest or any other amount payable under any
Loan Document (except for changes in the rate of tax on the overall net income
of a Lender); or
(2) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan, or similar requirement against assets
held by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds by, any
office of Lender; or
(3) shall impose on Lender any other condition; and
the result of any of the foregoing is to increase the cost to Lender of making,
renewing, or maintaining any portion of the Revolving Loan or Term Loan with
interest rates tied to the LIBO Rate and/or to reduce any amount receivable by
Lender in connection therewith;
then in any such case, Borrower shall pay to Lender, immediately upon demand,
such amount or amounts as may be necessary to compensate Lender for any
additional costs incurred by Lender and/or reductions in amounts received by
Lender which are attributable to LIBO Rates made available to Borrower
hereunder. In determining which costs incurred by a Lender and/or reductions in
amounts received by a Lender are attributable to such LIBO Rates, any reasonable
allocation made by Lender among its operations shall be conclusive and binding
upon Borrower; PROVIDED, that Lender's determination under this SECTION 2.7(f)
as to Borrower is in accordance with its treatment of other borrowers under
commercial loans generally.
1.11 FEES. In addition to the other Fees listed in this Agreement,
Borrower shall pay to Lender the following Fees:
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(1) LOAN FEE. Upon the Closing Date, Borrower shall pay to
Lender a loan fee in the amount of Thirty Thousand Dollars ($30,000).
(2) UNUSED COMMITMENT FEE. In consideration of the commitment
made by Lender under this Agreement, commencing on April 1, 2001 and continuing
until the Revolving Loan Maturity Date, Borrower shall pay to Lender, a
quarterly unused commitment fee (the "Unused Commitment Fee") equal to
one-quarter of one percent (.25%) per annum of the average daily amount by which
the Maximum Revolving Loan exceeds the outstanding balance of the Revolving
Loan; PROVIDED, that the Unused Commitment Fee shall be subject to adjustment as
provided below. If, as of the end of any Fiscal Year, Borrower's Consolidated
Funded Debt to Consolidated EBITDA Ratio, for the period of such Fiscal Year
falls within any of the levels listed below, then the Unused Commitment Fee
applicable for the next Fiscal Year shall be adjusted, in the manner set forth
below, to the applicable Unused Commitment Fee for such level listed below:
Consolidated Funded Debt Applicable Unused
to Consolidated EBITDA Ratio Commitment Fee
---------------------------- --------------
1.25:1 or greater .250%
Less than 1.25:1 but equal to or greater than 0.75:1 .200%
Less than 0.75:1 .175%
Any change to the applicable Unused Commitment Fee shall become effective as of
the first (1st) day of the month after Borrower's delivery to Lender of the
financial statements required to be delivered to Lender pursuant to Section
6.1(b) demonstrating to Lender's reasonable satisfaction that a change in the
Unused Commitment Fee should occur. Notwithstanding anything to the contrary in
the foregoing, if a Default or Event of Default shall have occurred and be
continuing on the date that the Commitment Fee would otherwise adjust, then the
Unused Commitment Fee shall remain or become two and one-half tenths of one
percent (.25%) per annum. The Unused Commitment Fee shall be paid to Lender on
(i) the first day of each calendar quarter with respect to the previous calendar
quarter, and (ii) the Revolving Loan Maturity Date, with respect to the period
from the last full calendar quarter through the Revolving Loan Maturity Date.
1.12 FEES CUMULATIVE AND NON-REFUNDABLE. All Fees payable under any
Loan Document shall be cumulative and all Fees shall be considered fully earned
on the date of payment and shall not be refundable under any circumstances.
1.13 PURCHASE OF FARM CREDIT STOCK. On the Closing Date, Borrower shall
purchase One Thousand Dollars ($1,000) of stock in PCFC and shall execute and
deliver to PCFC such documents as may be required to consummate such purchase.
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1.14 RECEIPT OF PAYMENTS. Borrower shall make each payment under this
Agreement not later than 10:30 A.M. (California time) on the day when due in
lawful money of the United States of America by wire transfer of immediately
available funds to the Collection Account. Borrower shall have advised Lender in
writing of each payment being made by Borrower no later than 2:00 p.m.
(California time) on the Business Day prior to the date of making of such
payment. For purposes of computing interest and fees and determining the amount
of funds available for borrowing by Borrower pursuant to ARTICLE II, payments of
immediately available funds by wire transfer deposited in the Collection Account
not later than 10:30 a.m. (California time) (and for which Lender has received
notice prior to the making of such payment) shall be deemed received by Lender
upon that Business Day. If payment shall be deposited later than 10:30 a.m.
(California time) on any particular Business Day (or if Lender was not given
prior notice of the payment by 2:00 p.m. (California time) on the Business Day
preceding the date of payment), such payment shall be deemed received on the
following Business Day. If Lender, in its sole discretion, determines to accept
from Borrower payment by checks, drafts, or similar non-cash items, payment
shall be deemed received by Lender two (2) Business Days after notice to Lender
and deposit of such payment in the Collection Account.
1.15 ACCOUNTING. Lender will provide a monthly accounting of
transactions under the Revolving Loan, and a quarterly accounting of
transactions under the Term Loan to Borrower. Each and every such accounting
shall (absent manifest error) be deemed final, binding, and conclusive in all
respects as to all matters reflected therein, unless Borrower or a Lender,
within one hundred twenty (120) days after the date any such accounting is
rendered, shall notify Lender in writing of any objection which Borrower or
Lender may have to any such accounting, describing the basis for such objection
with specificity. In that event, only those items expressly objected to in such
notice shall be deemed to be disputed by Borrower or Lender. Lender's
determination, based upon the facts available, of any item objected to by
Borrower or a Lender in such notice shall (absent manifest error) be final,
binding, and conclusive, unless Borrower shall commence a judicial proceeding to
resolve such objection within sixty (60) days following Lender's notifying
Borrower of such determination.
1.16 TAXES.
(1) Any and all payments by Borrower hereunder or under the
Revolving Notes or Term Notes shall be made, in accordance with this Section
2.13, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, Charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the
net income of Lender by the jurisdiction under the laws of which Lender is
organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, Charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Revolving Note or Term Note to Lender, (i) the sum payable shall be increased as
may be
88
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13) Lender receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) Borrower shall make such deductions, and (iii) Borrower shall pay the
full amount deducted to the relevant taxing or other authority in accordance
with applicable law.
(2) In addition, Borrower agrees to pay any present or future
stamp or documentary taxes or any other sales, transfer, excise, mortgage
recording, or property taxes, Charges or similar levies that arise from any
payment made hereunder or under the Revolving Notes, Term Notes, or from the
execution, sale, transfer, delivery or registration of, or otherwise with
respect to, this Agreement or the Revolving Notes, Term Notes, the Loan
Documents and any other agreements and instruments contemplated thereby
(hereinafter referred to as "Other Taxes").
(3) Borrower shall indemnify each Lender for the full amount
of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date Lender makes written demand therefor.
(4) Within thirty (30) days after the date of any payment of
Taxes, Borrower shall furnish to each Lender the original or a certified copy of
a receipt evidencing payment thereof.
(5) Without prejudice to the survival of any other agreement
of Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 2.13 shall survive the payment in full of all Obligations and the
Termination Date.
1.17 CAPITAL ADEQUACY.
(1) Borrower shall pay to Lender from time to time on written
request such amounts as Lender may reasonably determine to be necessary to
compensate Lender for any increased costs to Lender that it reasonably
determines are attributable to any law or regulation, or any interpretation,
directive, or request (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful) of any court or governmental or
monetary authority (i) following any Regulatory Change or (ii) implementing
after the Closing Date any risk-based capital guideline or other capital
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any Governmental Authority in respect of Lender's Percentage of the Revolving
Loan or Term Loan (such compensation to include an amount equal to any reduction
of the rate of return on assets or equity of Lender to a level below that which
Lender could have achieved but
89
for such law, regulation, interpretation, directive or request); PROVIDED that
with respect to this Section 2.14, each Lender shall treat Borrower as Lender
generally treats its other similarly situated borrowers.
(2) Lender will furnish to Borrower a certificate setting
forth the basis and amount of each request by Lender for compensation under this
Section 2.14. Determinations and allocations by Lender for purposes of this
Section 2.14 of the effect of any Regulatory Change pursuant to or of capital
maintained pursuant to this Section 2.14, on its costs or rate of return of
maintaining Revolving Advances or the Term Loan and or its commitment to make
Revolving Advances or the Term Loan, and of the amounts required to compensate
Lender under this Section 2.14, shall be conclusive absent manifest error or bad
faith.
(3) As used in this Section 2.14, "Regulatory Change" shall
mean any change after the Closing Date in federal, state, or foreign law or
regulations (including Regulation D) or the adoption or making after such date
of any interpretation, directive or request applying to a class of lenders
including Lender of or under any Federal, state, or foreign law or regulations
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
ARTICLE III.
COLLATERAL
1.18 BORROWER'S OBLIGATIONS. The Obligations of Borrower to pay all
sums due to Lender and to perform all other covenants and agreements under this
Agreement and the other Loan Documents to which Borrower is a party, shall be
secured by all Collateral to the extent provided in the Security Documents.
1.19 ASSURANCES. Borrower shall, at its sole cost and expense, execute
and deliver to Lender all such further documents, instruments, and agreements
and to perform all such other acts which may be reasonably required in the
opinion of Lender to enable Lender to perfect, protect, exercise, or enforce
their respective rights as the secured parties or beneficiaries under the
Security Documents. To the extent permitted by applicable law, Borrower hereby
authorizes Lender to file financing statements and continuation statements with
respect to the security interests granted under the Security Documents in favor
of Lender and to execute such financing statements and continuation statements
on behalf of Borrower and hereby grants Lender with a limited power-of-attorney
to do so. Such power-of-attorney is coupled with an interest and is irrevocable.
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ARTICLE IV.
CONDITIONS PRECEDENT
1.20 CONDITIONS PRECEDENT TO CLOSING DATE. Notwithstanding any other
provision of this Agreement and without affecting in any manner the rights of
Lender hereunder, the Closing Date shall not occur until and unless each and
every one of the following conditions has been satisfied or waived, in Lender's
sole discretion:
(1) Borrower shall have delivered to Lender all documents
required by Lender to be delivered on or before the Closing Date.
(2) Lender shall have received from Borrower all financial
statements and from Borrower all agreements, documents, and schedules that
Lender shall consider necessary or appropriate in connection with this
Agreement;
(3) Borrower shall concurrently consummate the Acquisition;
(4) No Material Adverse Effect shall have occurred or shall
exist; and
(5) No Default or Event of Default shall have occurred and be
continuing.
1.21 CONDITIONS PRECEDENT TO EACH REVOLVING ADVANCE AND THE TERM LOAN.
It shall be a condition to the funding of the initial and each subsequent
Revolving Advance and the Term Loan that the following statements shall be true
on the date of each such funding or advance:
(1) All of Borrower's representations and warranties contained
herein or in any of the Loan Documents shall be true and correct in all material
respects on and as of the Closing Date and the date of each such Revolving
Advance is incurred as though made on and as of such date, except to the extent
that any such representation or warranty expressly relates to an earlier date
and for changes therein permitted or contemplated by this Agreement.
(2) No event shall have occurred and be continuing, or would
result from the funding of any Revolving Advance or the Term Loan, which (i)
constitutes or would constitute a Default or an Event of Default, or (ii) which
has a Material Adverse Effect.
(3) After giving effect to each Revolving Advance, the
aggregate principal amount of the Revolving Loan shall not exceed the Maximum
Revolving Loan.
The acceptance by Borrower of the proceeds of (i) any Revolving Advance or (ii)
the Term Loan, shall be deemed to constitute, as of the date of such acceptance,
a
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representation and warranty by Borrower that the conditions in this Section 4.2
have been satisfied.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Revolving Loan and Term Loan, as
herein provided for, Borrower makes the following representations and warranties
to Lender, each and all of which shall be true and correct as of the date of
execution and delivery of this Agreement, and shall survive the execution and
delivery of this Agreement:
1.22 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. MLO is a limited
partnership duly organized, validly existing, and in good standing under the
laws of the State of Delaware. ML Resources, Inc. is the managing general
partner of MLO. ML Resources, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Neither
Borrower has any Subsidiaries. Each Borrower (i) is duly qualified as a foreign
corporation or limited partnership and is in good standing under the laws of
each jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (ii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate all real
property that it owns, to lease the real property it operates under lease, and
to conduct its business as now, heretofore, and proposed to be conducted; (iii)
has all material licenses, permits, consents, or approvals from or by, and has
made all material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for such
ownership, operation, and conduct; (iv) is in compliance with its certificate of
incorporation and by-laws, or its agreement of limited partnership, as
applicable; and (v) is in compliance with all applicable provisions of law where
the failure to comply would have a Material Adverse Effect.
1.23 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery, and performance by Borrower of the Loan Documents to which
it is a party, and all instruments and documents required to be delivered by
Borrower under any of the Loan Documents, and the creation of all Liens provided
for in any Loan Documents: (i) are within Borrower's corporate or partnership
power; (ii) have been duly authorized by all necessary or proper corporate or
partnership action; (iii) are not in contravention of any provision of
Borrower's certificate of incorporation or by-laws or agreement of limited
partnership, as applicable; (iv) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality; (v) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any material indenture,
mortgage, deed of trust, lease, agreement or other instrument to which Borrower
is a party or by
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which Borrower or any of its property is bound; (vi) will not result in the
creation or imposition of any Lien upon any of the property of Borrower other
than those in favor of Lender, all pursuant to the Loan Documents; and (vii) do
not require the consent or approval of any Governmental Authority or any other
Person, except for consents or approvals which have been duly obtained or
specifically waived in writing by Lender. At or prior to the Closing Date, each
of the Loan Documents required hereunder to be delivered at or prior to the
Closing Date shall have been duly executed and delivered on behalf of Borrower
and each shall then constitute a legal, valid, and binding obligation of
Borrower, to the extent it is a party thereto, enforceable against it in
accordance with its terms except for general principles of equity and the effect
of bankruptcy, insolvency, and other laws affecting the rights of creditors
generally.
1.24 ACQUISITION; SOLVENCY; PROJECTIONS. The Acquisition has been duly
consummated in accordance with its terms, neither Borrower nor any other party
are in default thereunder, and all of the transactions engaged in by Borrower as
part of such agreement were legal and valid and in compliance with all
applicable law. True and correct copies of all documents relating thereto were
delivered to Lender. Borrower is solvent and will be solvent after completion of
such acquisition and after giving effect to the initial advance hereunder. All
budget forecasts and projections of Borrower delivered to Lender are based upon
reasonable estimates and assumptions, all of which are fair in light of current
conditions, have been prepared on the basis of the assumptions stated therein,
and reflect the reasonable estimate of Borrower of the results of operations and
other information projected therein.
1.25 OWNERSHIP OF PROPERTY; LIENS. None of the properties and assets of
Borrower are subject to any Liens, except Permitted Encumbrances and the Lien in
favor of Lender pursuant to the Security Documents. All real property owned or
leased by Borrower on the Closing Date is set forth on Parts (A) and (B) of the
Disclosure Schedule. Neither Borrower nor any other party to any such lease is
in default of its obligations thereunder, except for any default which would not
have a Material Adverse Effect. All permits required to have been issued to
enable the real property owned or leased by Borrower to be lawfully occupied and
used for all of the purposes for which they are currently occupied and used,
have been lawfully issued and are, as of the date hereof, in full force and
effect, except for any permit for which the failure of such permit to be issued
and in full force and effect would not have a Material Adverse Effect. Borrower
has not received any notice, and to Borrower's knowledge does not have, any
pending, threatened, or contemplated condemnation proceeding affecting any real
property owned or leased by Borrower or any part thereof, or of any sale or
other disposition of any real property owned or leased by Borrower or any part
thereof in lieu of condemnation.
1.26 NO DEFAULT. Borrower is not in default, and to Borrower's
knowledge no third party is in default, under or with respect to any contract,
agreement, lease or other instrument to which it is a party which default in
each case or in the aggregate would have a Material Adverse Effect. No Default
or Event of Default has occurred and is continuing.
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1.27 BURDENSOME RESTRICTIONS. No contract, lease, agreement, or other
instrument to which Borrower is a party or is bound and no provision of
applicable law or governmental regulation has a Material Adverse Effect, or
insofar as Borrower can reasonably foresee, may have a Material Adverse Effect.
1.28 LABOR MATTERS. There are no strikes or other labor disputes
against Borrower that are pending or, to Borrower's knowledge, threatened which
would have a Material Adverse Effect. Hours worked by and payment made to
employees of Borrower have not been in violation of the Fair Labor Standards Act
or any other applicable law dealing with such matters which would have a
Material Adverse Effect. All payments due from Borrower on account of employee
health and welfare insurance which would have a Material Adverse Effect if not
paid have been paid or accrued as a liability on the books of Borrower.
1.29 OTHER VENTURES. Except as set forth in Part (C) of the Disclosure
Schedule, Borrower is not engaged in any joint venture or partnership with any
other Person.
1.30 INVESTMENT COMPANY ACT. Borrower is not an "investment company" or
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. The making of the Revolving Loan and Term Loan by Lender, the
application of the proceeds and repayment thereof by Borrower and the
consummation of the transactions contemplated by this Agreement and the other
Loan Documents will not violate any provision of such Act or any rule,
regulation, or order issued by the Securities and Exchange Commission
thereunder.
1.31 MARGIN REGULATIONS. Borrower does not own any "margin security",
as that term is defined in Regulations U of the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). The Revolving Advances and
Term Loan will not be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the loans
under this Agreement to be considered a "purpose credit" within the meaning of
Regulation T, U, or X of the Federal Reserve Board.
1.32 TAXES. All federal, state, local, and foreign tax returns,
reports, and statements, including information returns required to be filed by
Borrower, have been filed with the appropriate Governmental Authority and all
Charges and other impositions shown thereon to be due and payable have been paid
prior to the date on which any fine, penalty, interest, or late charge may be
added thereto for nonpayment thereof, or any such fine, penalty, interest, late
charge, or loss has been paid. Borrower has paid when due and payable all
Charges required to be paid by it. Proper and accurate amounts have been
withheld by Borrower from their respective employees for all periods in full and
complete compliance with the tax, social security, and unemployment withholding
provisions of applicable federal, state, local and foreign law and
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such withholdings have been timely paid to the respective governmental agencies.
None of Borrower's tax returns with respect to Borrower's corporate income are
currently being audited by the Internal Revenue Service or any other applicable
Governmental Authority.
1.33 ERISA. Each "Plan" (as defined below) is in compliance in all
material respects with the applicable provisions of ERISA and the Internal
Revenue Code ("IRC") and with respect to each Plan, other than a Qualified Plan,
all required contributions and benefits have been paid in accordance with the
provisions of each such Plan to the extent that the failure to pay any such
contribution or benefit would have a Material Adverse Effect. There are no
pending or, to Borrower's knowledge, threatened claims, actions or lawsuits
(other than claims for benefits in the normal course), asserted or instituted
against Borrower or any Plan or its assets. Neither Borrower nor any ERISA
Affiliate of either has incurred or reasonably expects to incur any Withdrawal
Liability under Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan. Borrower has not engaged in a prohibited
transaction, as defined in Section 4975 of the IRC or Section 406 of ERISA, in
connection with any Plan, which would subject Borrower (after giving effect to
any exemption) to a material tax on prohibited transactions imposed by Section
4975 of the IRC or any other material liability. As used above, the term "Plan"
means, with respect to Borrower or any ERISA Affiliate of either, at any time,
an employee benefit plan, as defined in Section 3(3) of ERISA, which Borrower
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them. The terms "Qualified Plan"
and "Multiemployer Plan" shall have the meaning given them in ERISA.
1.34 NO LITIGATION. Except as set forth in Part (D) of the Disclosure
Schedule, no action, claim or proceeding is now pending or, to Borrower's
Knowledge, threatened against Borrower, at law, in equity or otherwise, before
any court, board, commission, agency, or instrumentality of any federal, state,
or local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators, which, if determined adversely, could have a
Material Adverse Effect, nor to Borrower's knowledge does a state of facts exist
which is reasonably likely to give rise to such proceedings. None of the matters
set forth in Part (D) of the Disclosure Schedule questions the validity of any
of the Loan Documents or any action taken or to be taken pursuant thereto, or
would have either individually or in the aggregate a Material Adverse Effect.
1.35 BROKERS. No broker or finder acting on behalf of Borrower brought
about the obtaining, making, or closing of the loans made pursuant to this
Agreement or the transactions contemplated by the Loan Documents and has no
obligation to any Person in respect of any finder's or brokerage fees in
connection therewith.
1.36 PATENTS, TRADEMARKS, COPYRIGHTS, AND LICENSES. Borrower owns or
possess all licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that individually
or in the aggregate are necessary to the conduct of
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Borrower's business, without known conflict with the rights of others. To the
best knowledge of Borrower, no product of Borrower infringes in any material
respect any license, permit, franchise, authorization, patent, copyright,
service xxxx, trademark and trade name or other right owned by any other Person.
To the best knowledge of Borrower, there is no material violation by any Person
of any right of Borrower with respect to any patent, copyright, service xxxx,
trademark and trade name or other right owned by Borrower.
1.37 FULL DISCLOSURE. To Borrower's Knowledge, no information contained
in this Agreement, the other Loan Documents, any budget forecasts or
projections, the financial statements delivered to Lender, or any written
statement furnished by or on behalf of Borrower pursuant to the terms of this
Agreement, which has previously been delivered to Lender, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading in light of the
circumstances under which made.
1.38 ENVIRONMENTAL MATTERS. Borrower is and has been in compliance with
all Environmental Laws, except for such noncompliance which would not result in
Environmental Liabilities which could reasonably be expected to exceed $100,000.
Borrower has obtained, and is in compliance with, all environmental permits
required by Environmental Laws for the operations of its business, except where
the failure to so obtain or comply with such environmental permits would not
result in Environmental Liabilities that could reasonably be expected to exceed
$100,000, and all such Environmental Permits are valid, uncontested and in good
standing. Borrower is not involved in operations and does not know of any facts,
circumstances or conditions, including any releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of Borrower that could
reasonably be expected to exceed $100,000. There is no litigation arising under
or related to any Environmental Laws, environmental permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess of
$50,000 or injunctive relief against, or that alleges criminal misconduct by,
Borrower. No notice has been received by Borrower identifying it as a
"potentially responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of Borrower, there are no facts,
circumstances or conditions that may result in Borrower being identified as a
"potentially responsible party" under CERCLA or analogous state statutes.
1.39 INSURANCE POLICIES. Borrower has disclosed to Lender in writing
all insurance of any nature maintained for current occurrences by Borrower, as
well as a summary of the terms of such insurance. Borrower shall maintain "All
Risk" physical damage insurance on all of Borrower's tangible real and personal
property and assets, wherever located, and covers, without limitation, fire and
extended coverage, boiler and machinery coverage, liquids, theft, burglary,
explosion, collapse, and all other hazards and risks ordinarily insured against
by owners or users of such properties in similar businesses. All policies of
insurance on such real and personal property contain an endorsement, in form and
substance acceptable to Lender, showing loss
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payable to Lender (Form 438 BFU or its equivalent) and extra expense and
business interruption endorsements. Such endorsement, or an independent
instrument furnished to Lender, provides that the insurance companies will give
Lender at least thirty (30) days prior written notice before any such policy or
policies of insurance shall be altered or canceled and that no act or default of
Borrower or any other Person shall affect the right of Lender to recover under
such policy or policies of insurance in case of loss or damage. In addition,
Borrower shall maintain the following types of insurance coverage, in such
amounts as may be approved by Lender: (a) comprehensive general liability
insurance on an "occurrence basis" against claims for personal injury, bodily
injury and property damage, including premises/operations, broad form
contractual liability, underground, explosion and collapse hazard, independent
contractors, broad form property coverage, products and completed operations
liability; (b) statutory limits of worker's compensation insurance, (c)
automobile liability insurance for all owned, non-owned or hired automobiles
against claims for personal injury, bodily injury, and property damage; and (d)
umbrella insurance. All of such policies are in full force and effect and in
form and with insurers recognized as adequate by Lender, and provide coverage of
such risks and for such amounts as are customarily maintained for businesses of
the scope and size of Borrower's and as otherwise acceptable to Lender. Each
insurance policy contains a clause which provides that Lender's interest under
such policy shall not be invalidated by any act or omission to act of, or any
breach of warranty by, the insured, or by any change in the title, ownership or
possession of the insured property, or by the use of the property for purposes
more hazardous than is permitted in such policy. Borrower has delivered to
Lender a certificate of insurance that evidences the existence of each policy of
insurance, payment of all premiums therefor and compliance with all provisions
of this Agreement.
1.40 PACA. Borrower is not a "dealer," "commission merchant," or
"broker" under PACA, and Borrower's assets are not subject to the trust
provisions provided for under PACA.
ARTICLE VI.
FINANCIAL STATEMENTS AND INFORMATION
1.41 REPORTS AND NOTICES. Borrower covenants and agrees that it shall
deliver to each Lender:
(1) Within forty-five (45) days after the end of each Fiscal
Quarter, (i) financial and other information requested by Lender, including an
internally-prepared statement of income and cash flow, balance sheet, and
management letter, each of which would provide comparisons to the prior year's
equivalent period and to the budgets provided to Lender, (ii) the certification
of the chief financial officer of Borrower that all such financial statements
and schedules are complete and correct and present fairly in accordance with
GAAP (subject to normal year-end adjustments), the financial position, the
results of operations and the statements of cash flows of Borrower as at the end
of such month and for the period then ended, that there
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was no Default or Event of Default in existence as of such time; (iii) a
certificate in the form attached hereto as Exhibit B, containing the
certification of Borrower's chief financial officer that Borrower has complied
with all of the covenants set forth in Section 8.12 as of the end of such Fiscal
Quarter;
(2) Within ninety (90) days after the end of each Fiscal Year,
audited financial statements, consisting of balance sheets and statements of
income and retained earnings and cash flows, setting forth in comparative form
in each case the figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, certified without
qualification by a firm of independent certified public accountants of
recognized national standing selected by Borrower and acceptable to Lender, and
accompanied by (i) a report from such accountants to the effect that in
connection with their audit examination, nothing has come to their attention to
cause them to believe that a Default or Event of Default had occurred and that,
to the best of their knowledge, Borrower was in compliance with all the
covenants set forth in Section 8.12 as of the end of such Fiscal Year, (ii) the
annual letter from Borrower's chief financial officer to such accountants in
connection with their audit examination detailing Borrower's contingent
liabilities and material litigation matters involving Borrower, (iii) a
certification of the chief financial officer of Borrower that all such financial
statements are complete and correct and present fairly in accordance with GAAP
the financial position, the results of operations and the statements of cash
flow of Borrower as at the end of such year and for the period then ended and
that there was no Default or Event of Default in existence as of such time, and
(iv) a certificate in the form attached hereto as Exhibit B, containing the
certification of Borrower's chief financial officer that Borrower has complied
with all of the covenants set forth in Section 8.12 as of the end of such Fiscal
Year;
(3) Within ninety (90) days after the start of any Fiscal
Year, an annual budget and forecast for such Fiscal Year, substantially in the
form provided to Lender prior to the Closing Date, and containing such
information as Lender shall request;
(4) Within ninety (90) days after completion of crop
harvesting, an annual crop production report containing such information as
Lender shall request;
(5) As soon as practicable, but in any event within one (1)
Business Day after Borrower becomes aware of the existence of any Default or
Event of Default, or any development or other information which would have a
Material Adverse Effect, telephonic notice specifying the nature of such Default
or Event of Default or development or information, including the anticipated
effect thereof, which notice shall be promptly confirmed in writing within three
(3) Business Days;
(6) Copies of all federal, state, local and foreign tax
returns, information returns and reports in respect of income, franchise or
other taxes on or measured by income (excluding sales, use or like taxes) filed
by Borrower; and
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(7) Such other information respecting Borrower's business,
financial condition or prospects as Lender may, from time to time, reasonably
request.
1.42 COMMUNICATION WITH ACCOUNTANTS. Lender is authorized to
communicate directly with Borrower's independent certified public accountants
and tax advisors, and such accountants and tax advisors are hereby authorized to
disclose directly to Lender any and all financial information requested by
Lender.
ARTICLE VII.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, unless Lender shall have
otherwise consented, Borrower shall comply with and observe each of the
following covenants.
1.43 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. Borrower shall: (a)
do or cause to be done all things necessary to preserve and keep in full force
and effect its corporate or partnership existence and its rights and franchises;
(b) continue to conduct its business substantially as now conducted or as
otherwise permitted hereunder; and (c) maintain all of its property that is
necessary or useful in the proper conduct of its business in good working
condition (taking into consideration ordinary wear and tear).
1.44 PAYMENT OF OBLIGATIONS. Borrower shall pay and discharge or cause
to be paid and discharged promptly all Charges imposed upon it, its income, and
profits, or any of its property, and lawful claims for labor, materials,
supplies, and services or otherwise before any thereof shall become in default,
except for those that are being contested in good faith by proper legal actions
or proceedings.
1.45 BOOKS AND RECORDS. Borrower shall keep adequate records and books
of account with respect to its business activities, in which proper entries,
reflecting all of its financial transactions, are made in accordance with GAAP
and on a basis consistent with the financial statements delivered to Lender.
1.46 LITIGATION. Borrower shall notify Lender in writing, promptly upon
learning thereof, of any litigation commenced or threatened against Borrower,
and of the institution against it of any suit or administrative proceeding that
(a) may involve an amount in excess of One Hundred Thousand Dollars ($100,000)
or (b) may have a Material Adverse Effect if adversely determined.
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1.47 INSURANCE. Borrower shall, at its sole cost and expense, maintain
the policies of insurance described in Section 5.18 in form and with insurers
recognized as adequate by Lender, and all such policies shall be in such amounts
as may be reasonably satisfactory to Lender. In addition, Borrower shall notify
Lender promptly of any occurrence causing a material loss or decline in value of
any real or personal property and the estimated (or actual, if available) amount
of such loss or decline. Borrower hereby directs all present and future insurers
under its "All Risk" policies of insurance to pay all proceeds payable
thereunder directly to Lender. Borrower irrevocably makes, constitutes and
appoints Lender (and all officers, employees, or agents designated by Lender) as
Borrower's true and lawful agent and attorney-in-fact for the purpose of making,
settling, and adjusting claims under the "All Risk" policies of insurance,
endorsing the name of Borrower on any check, draft, instrument or other item of
payment for the proceeds of such "All Risk" policies of insurance, and for
making all determinations and decisions with respect to such "All Risk" policies
of insurance; provided Lender agrees that it shall not exercise its right to
settle or adjust any claim unless an Event of Default has occurred and is
continuing. In the event Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, Lender, without waiving or
releasing any Obligations or Default or Event of Default hereunder, may at any
time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which Lender deems advisable. All sums so disbursed by Lender,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, on demand, by Borrower to Lender and shall
be additional Obligations hereunder secured by the Collateral. Lender reserves
the right at any time, upon review of Borrower's risk profile, to require
additional forms and limits of insurance to, in Lender's reasonable judgment,
after consultation with Borrower, adequately protect Lender's interests.
1.48 COMPLIANCE WITH LAWS AND AGREEMENTS. Borrower shall comply in all
material respects with all federal, state and local laws and regulations
applicable to it. Borrower shall perform, within all required time periods, all
of its obligations and enforce all of its rights under each material agreement
to which it is a party.
1.49 ENVIRONMENTAL MATTERS. Borrower shall (i) comply in all material
respects with the Environmental Laws applicable to it, (ii) notify Lender
promptly after knowledge in the event of any spill or release which is
reportable to any Governmental Authority upon any premises owned or occupied by
it, and (iii) promptly forward to Lender a copy of any order, notice, permit,
application, or any other communication or report received by Borrower in
connection with any matter relating to the Environmental Laws that may
materially affect such premises.
1.50 INTEREST RATE PROTECTION. Borrower shall provide evidence to
Lender, within thirty (30) days after the Closing Date, that Borrower shall have
fixed or hedged interest rates for not less than sixty-five percent (65%) of
Term Loan Tranche B for a period of not less than two (2) years.
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ARTICLE VIII.
NEGATIVE COVENANTS
Borrower covenants and agrees that, unless Lender shall have
otherwise consented, Borrower shall comply with and observe each of the
following covenants.
1.51 MERGERS, ETC.; CHANGE OF BUSINESS. Borrower shall not, directly or
indirectly, by operation of law or otherwise, merge with, consolidate with,
acquire all or substantially all of the assets or capital stock of, or otherwise
combine with, any Person or form any Subsidiary. Borrower shall not engage in
any business other than those businesses in which Borrower is engaged on the
Closing Date.
1.52 CAPITAL STRUCTURE. Borrower shall not make any material changes in
its capital structure or amend its certificate of incorporation, by-laws,
limited partnership agreement without the prior written consent of Lender, which
consent will not be unreasonably withheld.
1.53 INVESTMENTS; LOANS AND ADVANCES. Borrower shall not make any
investment in, or make or accrue loans or advances of money to any Person,
through the direct or indirect holding of securities or otherwise; provided,
that Borrower may: (a) make and maintain investments in cash equivalents, (b)
make and maintain loans or advances to, any of its wholly-owned Subsidiaries
(provided that the creation of such wholly-owned Subsidiary has been approved by
Lender and has guaranteed all Obligations and secured such guarantee by a first
priority security interest in all of such Subsidiary's assets), (c) loans to
employees to the extent disclosed to an approved by Lender, (d) investments
existing on the Closing Date to the extent approved by Lender.
1.54 INDEBTEDNESS. Except as otherwise expressly permitted by this
Agreement, Borrower shall not create, incur, assume, or permit to exist any
Indebtedness, except (a) Indebtedness secured by Permitted Encumbrances, (b) the
Revolving Loan, (c) the Term Loan, (d) all unfunded pension fund and other
employee benefit plan obligations and liabilities but only to the extent they
are permitted to remain unfunded under applicable law, (e) Indebtedness under
Capital Leases to the extent permitted under this Agreement, but not to exceed
One Million Two Hundred Thousand Dollars ($1,200,000) at any time outstanding,
(f) Indebtedness secured by property of Borrower other than the Collateral in an
aggregate amount not to exceed Five Hundred Thousand Dollars ($500,000), (g)
unsecured Indebtedness in an aggregate amount not to exceed Six Million Dollars
($6,000,000), and (h) purchase money indebtedness with respect to the
acquisition of new capital assets so long as such Indebtedness is secured only
by the particular asset being acquired.
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1.55 TRANSACTIONS WITH AFFILIATES. Borrower shall not enter into or be
a party to any transaction with (including the purchase from, sale to, or
exchange of property with, or the rendering of any service by or for) any
Affiliate of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms that are fully disclosed to Lender and are no less favorable to Borrower
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of Borrower; provided, that MLO may reimburse ML Resources,
Inc. for reasonable management expenses.
1.56 LIENS. Borrower shall not create or permit any Lien on any of its
properties or assets except the Lien of Lender under the Loan Documents and
Permitted Encumbrances.
1.57 SALES OF ASSETS. Borrower shall not sell, transfer (including any
consensual transfer such as the execution of a deed in lieu of foreclosure),
convey, assign, or otherwise dispose of any of its assets or properties involved
in Borrower's macadamia operations; provided, that the foregoing shall not
prohibit (i) the sale of inventory in the ordinary course of business, (ii)
disposal of worn out or obsolete assets, (iii) the sale or other disposal of
used equipment which is being replaced by equipment having a similar value or
serving a similar function, and (iv) sale of other assets in an aggregate amount
not to exceed One Million Dollars ($1,000,000) from and after the Closing Date.
1.58 CANCELLATION OF CLAIMS. Borrower shall not cancel any claim or
debt owing to it, except for reasonable consideration or in the ordinary course
of business.
1.59 RESTRICTED PAYMENTS. Borrower shall not make any Restricted
Payments; provided, that so long as no Default or Event of Default then exists,
has occurred within the twelve (12) months immediately preceding such proposed
Restricted Payment, or would result from such Restricted Payment, Borrower may
make Restricted Payments if all of the following requirements are fulfilled: (a)
the making of such Restricted Payment, if it had been made in the preceding
Fiscal Quarter, would not have caused Borrower to breach any of the financial
covenants set forth in Section 8.12, (b) after giving effect to such Restricted
Payment, MLO's Working Capital would not be less than Two Million Five Hundred
Thousand Dollars ($2,5000,000), (c) after giving effect to such Restricted
Payment, the ratio of MLO's Current Assets to Current Liabilities shall not be
less than one and one-half to one (1.5:1.0); (d) the aggregate amount of all
Restricted Payments made during the period from and after January 1, 2000 to and
including the date of the Restricted Payment in question shall not have exceeded
the sum of (i) Three Million Dollars ($3,000,000), plus (ii) the aggregate
amount of MLO's Consolidated Net Cash Flow, on a cumulative basis, from January
1, 2000 to and including the last day of the most recently completed Fiscal
Quarter.
1.60 ENVIRONMENTAL COMPLIANCE. Borrower shall not and shall not
knowingly permit any other Person within the control of Borrower to cause or
permit the presence, use, generation,
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manufacture, installation, release, discharge, storage or disposal of any
Hazardous Materials on, under, in or about any of its real estate or the
transportation of any Hazardous Materials to or from any real estate where such
presence, use, generation, manufacture, installation, release, discharge,
storage or disposal would violate any Environmental Laws, the violation of which
would have a Material Adverse Effect.
1.61 PACA LICENSE. Borrower shall not obtain or attempt to obtain a
dealer license under PACA.
1.62 FINANCIAL COVENANTS.
(1) MINIMUM TANGIBLE NET WORTH. MLO shall not permit its
Tangible Net Worth, as of the last day of any Fiscal Quarter to be less than the
applicable "Minimum Tangible Net Worth Amount." The Minimum Tangible Net Worth
Amount shall initially be Fifty-Seven Million Five Hundred Thousand Dollars
($57,500,000) and shall be reduced dollar for dollar on by the amount (to the
extent positive) that (i) the aggregate amount of all Restricted Payments made
by MLO after the Closing Date (but only if such Restricted Payments were
permitted by the terms of this Agreement at the time they were made), exceeds
(ii) the cumulative amount of Consolidated Net Income achieved by MLO after the
Closing Date.
(2) CAPITALIZATION RATIO. Borrower shall not permit the ratio
of (i) Consolidated Funded Debt, to (ii) Consolidated Total Capitalization, as
of the last day of any Fiscal Quarter, to exceed twenty percent (20%).
(3) DEBT COVERAGE RATIO. Commencing with the first full Fiscal
Quarter following the Closing Date, Borrower shall not permit the Consolidated
Debt Coverage Ratio for the four Fiscal Quarters immediately preceding each
measurement date, as of the last day of each Fiscal Quarter to be less than two
and one half to one (2.5:1.0).
ARTICLE IX.
INDEMNITY
1.63 INDEMNIFICATION. Borrower shall indemnify and hold Lender and
Lender's affiliates, subsidiaries, officers, directors, employees, attorneys,
and agents (each, an "Indemnified Person"), harmless from and against any and
all suits, actions, proceedings, claims, damages, losses, liabilities and
expenses (including reasonable attorneys' fees and disbursements (including
allocated costs of internal counsel) and other costs of investigations or
defense, including those incurred upon any appeal) which may be instituted or
asserted against or incurred by such Indemnified Person as a result of credit
having been extended under this Agreement and
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the other Loan Documents or in connection with Lender's interest in any
Collateral; provided, that Borrower shall not be liable for any indemnification
to such Indemnified Person to the extent that any such suit, action, proceeding,
claim, damage, loss, liability or expense was the result of any action by such
Indemnified Person or results from such Indemnified Person's gross negligence or
willful misconduct. NEITHER LENDER NOR ANY OTHER INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO BORROWER, ANY OTHER PERSON, ANY SUCCESSOR, ASSIGNEE, OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY, OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED UNDER THE LOAN DOCUMENTS.
ARTICLE X.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
1.64 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(1) FAILURE TO PAY PRINCIPAL. Borrower shall fail to make any
payment of principal owing with respect to the Revolving Loan or any regularly
scheduled payment of principal owing with respect to the Term Loan when due and
payable and such failure shall remain uncured for a period of two (2) Business
Days; provided that the failure to make such payment may only be cured by paying
the amount due together with interest on such amount at the Default Rate.
(2) FAILURE TO PAY INTEREST OR OTHER AMOUNTS OTHER THAN
EXPENSES. Borrower shall fail to make any payment of interest on the Revolving
Loan, the Term Loan, or any other amount (other than expenses payable under any
Loan Document) owing with respect to the Revolving Loan, the Term Loan or any of
the other Obligations when due and payable or declared due and payable and such
failure shall remain uncured for a period of two (2) Business Days; provided
that the failure to make such payment may only be cured by paying the amount due
together with interest on such amount at the Default Rate.
(3) FAILURE TO PAY EXPENSES. Borrower shall fail to make any
payment of any expenses payable under any Loan Document, and such failure shall
have remained uncured for a period of ten (10) days after Borrower has received
notice of such failure from Lender; provided that the failure to make such
payment may only be cured by paying the amount due together with interest on
such amount at the Default Rate.
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(4) BREACH OF COVENANTS OR OTHER PROVISIONS OF THIS AGREEMENT.
Borrower shall fail or neglect to perform, keep, or observe any other provision
of this Agreement or of any of the other Loan Documents, and the same is by its
nature incapable of being cured or shall remain unremedied for a period ending
on the first to occur of twenty (20) days after Borrower shall receive written
notice of any such failure from Lender or thirty (30) days after Borrower shall
become aware thereof. A breach by Borrower of the financial covenants set forth
in Section 8.12 are incapable of being cured.
(5) DEFAULT UNDER OTHER INDEBTEDNESS. A default shall occur
under any other agreement, document, or instrument to which Borrower is a party
or by which Borrower or Borrower's property is bound and such default involves
the failure to make any payment (whether of principal, interest, or otherwise)
due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise, but only after expiration of any cure periods provided by the
underlying agreement, document, or instrument) in respect of any Indebtedness of
Borrower in excess of One Hundred Thousand Dollars ($100,000).
(6) BREACH OF REPRESENTATION OR WARRANTY. Any material
representation or warranty herein or in any Loan Document or in any written
statement pursuant thereto or hereto, report, financial statement, or
certificate made or delivered to Lender by Borrower shall be untrue or
incorrect, as of the date when made or deemed made (including those made or
deemed made pursuant to Section 4.2) and the same is by its nature incapable of
being cured or shall remain unremedied for a period ending on the first to occur
of twenty (20) days after Borrower shall receive written notice of any such
failure from Lender or thirty (30) days after Borrower shall become aware
thereof.
(7) LOSS OF ASSETS. (i) Any of the assets of Borrower shall be
attached, seized, levied upon, or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian, or assignee for
the benefit of creditors of Borrower and shall remain unstayed or undismissed
for thirty (30) consecutive days, (ii) any Person other than Borrower shall
apply for the appointment of a receiver, trustee or custodian for any of
Borrower's assets and such application shall remain unstayed or undismissed for
thirty (30) consecutive days, or (iii) Borrower shall have concealed, removed,
or permitted to be concealed or removed, any part of its property, with intent
to hinder, delay, or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other similar law.
(8) INVOLUNTARY INSOLVENCY ACTIONS. A case or proceeding shall
have been commenced against Borrower in a court having competent jurisdiction
seeking a decree or order (i) under the Bankruptcy Code, or any other applicable
federal, state, or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or of any substantial part of its properties, or (iii)
ordering the winding-up or liquidation of the affairs of Borrower and such case
or
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proceeding shall remain undismissed or unstayed for thirty (30) consecutive days
or such court shall enter a decree or order granting the relief sought in such
case or proceeding.
(9) VOLUNTARY INSOLVENCY ACTIONS. Borrower shall (i) file a
petition seeking relief under the Bankruptcy Code, or any other applicable
federal, state or foreign bankruptcy or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, or sequestrator (or similar official) of Borrower or of any
substantial part of its properties, (iii) fail generally to pay its debts as
such debts become due, or (iv) take any corporate action in furtherance of any
such action.
(10) JUDGMENTS. Final judgment or judgments for the payment of
money in excess of Fifty Thousand Dollars ($50,000) in the aggregate shall be
rendered against Borrower and the same shall not be (i) fully covered by
insurance, or (ii) vacated, stayed, bonded, paid, or discharged for a period of
thirty (30) days.
(11) MATERIAL ADVERSE EFFECT. There shall occur any event or
circumstance that constitutes a Material Adverse Effect.
1.65 ACCELERATION; REMEDIES.
(1) AUTOMATIC ACCELERATION; EXERCISE OF REMEDIES. If an Event
of Default shall occur and be continuing: (i) all Obligations and any
indebtedness of Borrower under any of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Lender's option and without notice be
accelerated and become immediately due and payable without presentment, demand,
protest, or notice of dishonor, all of which are hereby expressly waived by
Borrower; and (ii) the obligation, if any, of Lender to make further Revolving
Advances shall immediately cease and terminate. Lender shall have all rights,
powers, and remedies available under each of the Loan Documents, including the
right to resort to any or all Collateral for any Obligations and to exercise any
or all of the rights of a beneficiary or secured party with respect to the
Collateral pursuant to applicable law. All rights, powers and remedies of Lender
in connection with each of the Loan Documents (x) may be exercised at any time
and from time to time after the occurrence and during the continuation of an
Event of Default, (y) are cumulative and not exclusive, and (z) shall be in
addition to any other rights, powers or remedies provided by law or equity.
Without limiting the foregoing, Lender may, as provided in the Farm Credit Act
of 1971, as amended, retire and cancel all or any portion of Borrower's stock or
other equities in Lender and apply the proceeds thereof to the Obligations. In
addition, Lender may hold, set off, sell, and/or apply against Borrower's
indebtedness any and all cash, accounts, securities, instruments, documents, or
other property in Lender's possession or under its control.
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(2) PAYMENTS TO THIRD PARTIES. At its sole discretion and
without any obligation to do so, Lender may pay any amount to any Person as
Lender deems reasonably necessary to preserve the value of, avoid loss of or
damage to, or prevent foreclosure, sale, or forfeiture of any of the Collateral,
including bidding at or redeeming from any sale of Collateral. Any amounts paid
or expended by Lender in connection herewith shall constitute Obligations which
shall be payable on demand and which shall bear interest at the Default Rate
from the date paid by Lender.
(3) APPOINTMENT OF RECEIVER. After the occurrence of an Event
of Default, Lender may (but shall not be obligated to) seek to obtain the
appointment of a receiver who shall be vested with any and all such powers and
rights as Lender may request of the court, including the right (i) to sell the
Collateral at one or more private or public sales, (ii) to undertake
cultivation, harvest, purchasing, processing, sales, collections, or other work
in connection with any Collateral (or any portion thereof) in accordance with
this Agreement and the other Loan Documents (or any other plan of cultivation,
harvest, processing, preservation or maintenance approved by Lender and the
receiver or the court), and (iii) to exercise any or all such rights, powers or
privileges as Borrower or Lender might exercise on its own behalf.
1.66 DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED AFTER AN EVENT OF
DEFAULT. Any amounts received by Lender on account of the Obligations after an
Event of Default, whether from voluntary payment by Borrower, from a foreclosure
sale, or from some other source shall be distributed against such portions of
the Obligations and in such order as Lender, in its sole discretion, shall
determine. Borrower irrevocably waives the right to direct the application of
any and all payments at any time or times hereafter received by Lender from or
on behalf of Borrower, and Borrower irrevocably agrees that Lender shall have
the continuing exclusive right to apply any and all such payments against the
then due and payable Obligations of Borrower as Lender may deem advisable.
1.67 WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement, Borrower waives (i) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Lender
on which Borrower may in any way be liable and hereby ratifies and confirms
whatever Lender may do in this regard, (ii) all rights to notice and a hearing
prior to Lender's taking possession or control of, or to Lender's replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing Lender to exercise any of its remedies,
and (iii) the benefit of all valuation, appraisal, and exemption laws.
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ARTICLE XI.
MISCELLANEOUS
1.68 SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of Borrower and
Lender and their respective successors and assigns, except as otherwise provided
herein or therein. Borrower may not assign, transfer, hypothecate, or otherwise
convey its rights, benefits, obligations, or duties hereunder or thereunder
without the prior express written consent of Lender. Any purported assignment,
transfer, hypothecation, or other conveyance by Borrower without the prior
express written consent of all of Lender shall be void. Lender may sell, assign,
transfer, grant a participation in, or otherwise dispose of all or any portion
of its interest in this Agreement at any time without consent of Borrower. In
connection therewith, Lender shall be entitled to provide to any assignee or
participant or prospective assignee or participant such information pertaining
to Borrower as Lender may deem appropriate or such assignee or participant or
prospective assignee or participant may request; provided, that such assignee or
participant or prospective assignee or participant shall agree (a) to treat in
confidence such information, and (b) not to make use of such information for
purposes of transactions other than contemplated by such assignment or
participation.
1.69 COMPLETE AGREEMENT; MODIFICATION OF AGREEMENT; CONSENTS AND
WAIVERS. The Loan Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and may not be modified,
altered, or amended except by an agreement in writing executed by Borrower and
Lender. No amendment or waiver of any provision of this Agreement or any Loan
Document, nor consent to any departure by Borrower therefrom, shall in any event
be effective unless the same shall be in writing and executed by Lender.
1.70 FEES AND EXPENSES. Borrower shall reimburse Lender for all
reasonable fees, costs, and expenses incurred in connection with: (a) the
preparation and negotiation of the Loan Documents (including the reasonable fees
and expenses of internal counsel, and appraisers and consultants, retained in
connection with the Loan Documents and the transactions contemplated thereby and
advice in connection therewith); (b) any amendment, modification, or waiver of,
or consent with respect to, any of the Loan Documents; (c) any advice in
connection with the administration of the Revolving Loan, the Term Loan, this
Agreement, any Loan Document, or the Collateral; (d) any litigation, contest,
dispute, suit, proceeding, or action (whether instituted by Lender, Borrower or
any other Person) in any way relating to the Collateral, any of the Loan
Documents or any other agreements to be executed or delivered in connection
therewith or herewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against Borrower or any other Person that may be obligated
to Lender by virtue of this Agreement, or the other Loan Documents, under the
Bankruptcy Code, or any other applicable federal, state or foreign bankruptcy or
other similar law (including the seeking of relief from the automatic stay or
proposal of opposition to a plan of reorganization); (e) any attempt to enforce
any rights of Lender against Borrower or any other Person that may be obligated
to Lender by virtue of any of
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the Loan Documents; or (f) any attempt to (i) monitor the Revolving Loan or Term
Loan, (ii) evaluate, observe, assess Borrower or its affairs, and (iii) verify,
protect, evaluate, assess, appraise, collect, sell, liquidate or otherwise
dispose of the Collateral, including and field inspections; then, in any such
event, the reasonable attorneys' and other professional and service providers'
fees (including internally-allocated costs of in-house counsel) arising from
such services, including those of any appellate proceedings, and all expenses,
costs, charges, and other fees incurred by such counsel and others in any way or
respect arising in connection with or relating to any of the events or actions
described in this Section 11.3, shall be payable, on demand, by Borrower to
Lender and shall be additional Obligations secured under this Agreement and the
other Loan Documents by all of the Collateral.
1.71 ACCESS. Borrower shall provide access to Lender, exercisable as
frequently as Lender reasonably determines to be appropriate, upon reasonable
advance notice (unless an Event of Default shall have occurred and be
continuing, in which event no notice shall be required and Lender shall have
access at any and all times), during normal business hours (or at such other
times as may reasonably be requested by Lender), to inspect the properties and
facilities of Borrower and to inspect, audit, and make extracts from all of
Borrower's records, files, and books of account and Borrower shall make such
items available to Lender.
1.72 NO WAIVER BY LENDER. Lender's failure, at any time or times, to
require strict performance by Borrower of any provision of this Agreement and
any of the other Loan Documents shall not waive, affect, or diminish any right
of Lender thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Lender of an Event of Default by Borrower under the Loan
Documents shall not suspend, waive, or affect any other Event of Default by
Borrower under this Agreement and any of the other Loan Documents whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants, and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Default or Event of Default by Borrower under this Agreement
and no defaults by Borrower under any of the other Loan Documents shall be
deemed to have been suspended or waived by Lender, unless such suspension or
waiver is by an instrument in writing signed by an officer of Lender, and
directed to Borrower specifying such suspension or waiver.
1.73 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
1.74 PARTIES. This Agreement and the other Loan Documents shall be
binding upon, and inure to the benefit of, the successors of Borrower, each
Lender and the assigns, transferees and endorsees of each Lender..
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1.75 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. BORROWER HEREBY CONSENTS
AND AGREES THAT THE SUPERIOR COURTS OF SAN FRANCISCO COUNTY, CALIFORNIA, OR, AT
LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
CALIFORNIA, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT OR
TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING FOR SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN SECTION 11.9 OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.
1.76 NOTICES. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval,
declaration, or other communication shall or may be given or delivered to or
served upon any of the parties by another, or whenever any of the parties
desires to give or deliver or serve upon another any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing, shall be addressed to
the addresses set forth below, or such other or additional address as the
parties may notify each other of in writing, and shall be deemed to have been
sent, delivered, or given and received upon the earlier of: (a) if by facsimile,
upon transmission if transmission occurs between 8:00 a.m. and 5:00 p.m. on any
Business Day; (b) if by Federal Express or other overnight or one-day mail or
delivery service, on the next Business
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Day following deposit with such delivery service; (c) if by personal delivery,
upon completion of delivery; or (d) if by mail, three (3) Business Days after
deposit in the U.S. Mail, first class, postage prepaid :
(1) If to Lender, at:
Pacific Coast Farm Credit Services
0000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Account Officer - ML Macadamia Orchards
Facsimile: (000) 000-0000
Pacific Coast Farm Credit Services
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Account Officer - ML Macadamia Orchards
Facsimile: (000) 000-0000
(2) If to Borrower, at:
ML Macadamia Orchards, L.P.
ML Resources, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: _____________
Facsimile: _____________
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration, or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.
1.77 SURVIVAL. The representations and warranties of Borrower in this
Agreement shall survive the execution, delivery and acceptance hereof by the
parties hereto and the closing of the transactions described herein or related
hereto.
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1.78 SECTION TITLES. The Section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
1.79 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
1.80 PERFORMANCE ALWAYS DUE ON BUSINESS DAY. To the extent that any
date under this Agreement is not a Business Day, then the payment or performance
due on such day shall be due on the next Business Day.
1.81 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
1.82 TIME OF THE ESSENCE. Time is of the essence in every provision of
this Agreement.
1.83 NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered
into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other Person shall be a
third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other Loan Document.
112
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
ML MACADAMIA ORCHARDS, L.P., a Delaware
limited partnership
By: ML RESOURCES, INC., a Hawaii
corporation, its managing general partner
By: s/s Xxxxxxx X. Xxxxxxxx
-----------------------
Name:Xxxxxxx X. Xxxxxxxx
-------------------
Title:Senior Vice President
---------------------
ML RESOURCES, INC., a Hawaii corporation, as
Borrower
By: s/s Xxxxxxx X. Xxxxxxxx
-----------------------
Name:Xxxxxxx X. Xxxxxxxx
-------------------
Title:Senior Vice President
---------------------
PACIFIC COAST FARM CREDIT SERVICES, PCA
By:______________________________
Name:____________________________
Title:___________________________