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EXHIBIT 10.1
LOAN AGREEMENT
Between
XXXXXXXX'X NURSERY, INC. THE FROST NATIONAL BANK
0000 Xxxxxxx Xxxxxxx and 000 X. Xxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000 Xxx Xxxxxxx, Xxxxx 00000
XXXXXXXX'X XXXXXXXXX, INC.
0000 Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxx 00000-0000
September 21, 1999
THIS LOAN AGREEMENT (the "Loan Agreement") will serve to set forth the
terms of the financing transactions by and between Xxxxxxxx'x Nursery, Inc.
("Borrower"), Xxxxxxxx'x Xxxxxxxxx, Inc. ("Xxxxxxxxx") and The Frost National
Bank, a national banking association ("Lender") and will supercede and replace
that certain loan agreement dated April 1, 1999, executed by and between
Borrower and Lender:
1. Credit Facilities. Subject to the terms and conditions set forth in this Loan
Agreement and the other agreements, instruments and documents evidencing,
securing, governing, guaranteeing and/or pertaining to the Loans, as hereinafter
defined (collectively, together with the Loan Agreement, referred to hereinafter
as the "Loan Documents"), Lender hereby agrees to provide to Borrower the credit
facility or facilities hereinbelow (whether one or more, the "Credit
Facilities"):
(a) Borrowing Base Line of Credit. Subject to the terms and conditions
set forth herein, Lender agrees to lend to Borrower, on a revolving basis from
time to time during the period commencing on the date hereof and continuing
through the maturity date of the promissory note evidencing this Credit Facility
from time to time, such amounts as Borrower may request hereunder; provided,
however, the total principal amount outstanding at any time shall not exceed the
lesser of (i) an amount equal to the Borrowing Base (as such term is defined
hereinbelow), or (ii) $5,000,000.00. (the "Borrowing Base Line of Credit"). If
at any time the aggregate principal amount outstanding under the Borrowing Base
Line of Credit shall exceed an amount equal to the Borrowing Base, Borrower
agrees to immediately repay to Lender such excess amount, plus all accrued but
unpaid interest thereon. Subject to the terms and conditions hereof, Borrower
may borrow, repay and reborrow hereunder. Borrower agrees that for a period of
not less than sixty (60) consecutive days beginning on June 1 during each
calendar year, Borrower shall have repaid the entire outstanding principal
amount of the Borrowing Base Line of Credit, together with all accrued but
unpaid interest thereon. The sums advanced under the Borrowing Base Line of
Credit shall be used for working capital.
As used in this Loan Agreement, the term "Borrowing Base" shall mean
$1,100,000.00 plus seventy percent (70%) of Borrower's Eligible Accounts and
fifty percent (50%) of the Borrower's Eligible Inventory.
As used herein, the term "Eligible Accounts" shall mean at any time, an
amount equal to the aggregate net invoice or ledger amount owing on all trade
accounts receivable of Borrower, on a
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consolidated basis with its subsidiaries, for goods sold or leased or services
rendered in the ordinary course of business, in which the Lender has a
perfected, first priority lien, after deducting (without duplication): (i) each
such account that is unpaid ninety (90) days or more after the original invoice
date thereof, (ii) the amount of all discounts, allowances, rebates, credits and
adjustments to such accounts (iii) the amount of all contra accounts, setoffs,
defenses or counterclaims asserted by or available to the account debtors, (iv)
all accounts with respect to which goods are placed on consignment or subject to
a guaranteed sale or other terms by reason of which payment by the account
debtor may be conditional, (v) all accounts with respect to which Borrower
and/or any of its subsidiaries have furnished a payment and/or performance bond
and that portion of any account for or representing retainage, if any, until all
prerequisites to the immediate payment of retainage have been satisfied, (vi)
all accounts owing by account debtors for which there has been instituted a
proceeding in bankruptcy or reorganization under the United States Bankruptcy
Code or other law, whether state or federal, now or hereafter existing for
relief of debtors, (vii) all accounts owing to Borrower by any affiliates of
Borrower and all accounts owing to Borrower's subsidiaries by any affiliates of
such subsidiaries, (viii) all accounts in which the account debtor is the United
States or any department, agency or instrumentality of the United States, except
to the extent an acknowledgment of assignment to Lender of such account in
compliance with the Federal Assignment of Claims Act and other applicable laws
has been received by Lender, (ix) all accounts due Borrower and/or its
subsidiaries by any account debtor whose principal place of business is located
outside the United States of America and its territories, (x) all accounts
subject to any provision prohibiting assignment or requiring notice of or
consent to such assignment, (xi) that portion of all account balances owing by
any single account debtor which exceeds twenty-five percent (25%) of the
aggregate of all accounts otherwise deemed eligible hereunder which are owing to
Borrower or its subsidiaries by all of the account debtors of Borrower or the
respective subsidiary, and (xii) any other accounts deemed unacceptable by
Lender in its sole and absolute discretion; provided, however, if more than
twenty-five percent (25%) of the then balance owing by any single account debtor
does not qualify as an Eligible Account under the foregoing provisions, then the
aggregate amount of all accounts owing by such account debtor shall be excluded
from Eligible Accounts.
As used herein, the term "Eligible Inventory" shall mean as of any
date, the aggregate value of all inventory of raw materials, work in progress,
and finished goods then owned by Borrower and/or its subsidiaries and held for
sale, lease or other disposition in the ordinary course of its business, in
which Lender has a first priority lien, excluding (i) all bedding plants, (ii)
inventory which is damaged, defective, obsolete or otherwise unsalable in the
ordinary course of Borrower's or its subsidiaries' business, (iii) inventory
which has been returned or rejected, and (iv) inventory subject to any
consignment arrangement between Borrower or its subsidiaries and any other
person or entity. For purposes of this definition, Eligible Inventory shall be
valued at the lower of cost or market value.
(b) Term Loan. Subject to the terms and conditions set forth herein,
Lender agrees to lend to Borrower, jointly and severally with Xxxxxxxxx and
Borrower and Xxxxxxxxx agree to borrow from Lender, the amount of $6,500,000.00
(the "Term Loan") in a single advance on the date hereof. The sums advanced
under the Term Loan shall be for the purchase of real property.
All advances under the Credit Facilities shall be collectively called
the "Loans". Lender reserves the right to require Borrower to give Lender not
less than one (1) business day prior notice of each requested advance under the
Credit Facilities, specifying (i) the aggregate amount of such requested
advance, (ii) the requested date of such advance, and (iii) the purpose for such
advance, with such advances to be requested in a form satisfactory to Lender.
2. Commitment Fee/Origination Fee. Borrower agrees to pay Lender a Commitment
Fee equal to one-half percent (1/2%) per annum, payable quarterly in arrears
beginning December 1, 1999, with such Commitment Fee to be calculated on the
average daily unused balance of the Borrowing Base Line of
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Credit. Borrower agrees to pay Lender a one percent (1%) Origination Fee on the
original principal amount of the Term Loan, with such Origination Fee payable
upon the execution of the note evidencing the Term Loan.
3. Promissory Notes. The Loans shall be evidenced by one or more promissory
notes or an Application (whether one or more, together with any renewals,
extensions and increases thereof, the "Notes") duly executed by Borrower and
Xxxxxxxxx, as applicable, and payable to the order of Lender, in form and
substance acceptable to Lender. Interest on the Notes shall accrue at the rate
set forth therein. The principal of and interest on the Notes shall be due and
payable in accordance with the terms and conditions set forth in the Notes and
in this Loan Agreement.
4. Collateral. As collateral and security for the indebtedness evidenced by the
Notes and any and all other indebtedness or obligations from time to time owing
by Borrower and/or Xxxxxxxxx to Lender, Borrower and/or Xxxxxxxxx shall xxxxx,
and hereby grant, or shall cause to be granted, to Lender, its successors and
assigns, a first and prior lien and security interest in and to the property
described hereinbelow, together with any and all PRODUCTS AND PROCEEDS thereof
(the "Collateral"):
(a) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by Borrower), now or
hereafter owned, held, or acquired by Borrower, together with any and all books
of account, customer lists and other records relating in any way to the
foregoing.
(b) All present and hereafter acquired inventory (including without
limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by Borrower wherever
located.
(c) That certain real property described as Xxx 0, Xxxxx 0, Xxxxxxx
Xxxxx Xxxxxxxxx, Section Two, An Addition to the City of Arlington, Tarrant
County, Texas, according to the Revised Plat recorded in Cabinet B, Slide 548,
Plat Records, Tarrant County, Texas, together with all improvements, fixtures,
equipment and other appurtenances attached thereto (the "Arlington Property").
(d) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by Xxxxxx Plant Farms, Inc.
("Xxxxxx")), now or hereafter owned, held, or acquired by Xxxxxx, together with
any and all books of account, customer lists and other records relating in any
way to the foregoing.
(e) All present and hereafter acquired inventory (including without
limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by Xxxxxx wherever
located.
(f) That certain real property owned by Xxxxxxxxx located at 00000 Xxx
Xxxxxxxx Xxxx, Xxxxxxx, Xxxxx 00000; 00000 Xxxxx Xxxx, Xxxxxx, Xxxxx 00000; 5301
FM. 0000 Xxxx Xxxxxx, Xxxxx 00000; 0000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxx, Xxxxx
00000; 0000 X. Xxxx, Xxxxxxx, Xxxxx 00000; 1755 FM. 0000 Xxxx Xxxxxxx, Xxxxx
00000; and 0000 Xxxxxxx Xxxx, Xxxxx Xxxx, Xxxxx 00000, together with all
improvements, fixtures, equipment and other appurtenances attached thereto (the
"Xxxxxxxxx Property").
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(g) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by Xxxxxxxxx), now or
hereafter owned, held, or acquired by Xxxxxxxxx, together with any and all books
of account, customer lists and other records relating in any way to the
foregoing.
(h) All present and hereafter acquired inventory (including without
limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by Xxxxxxxxx wherever
located.
(i) All equipment, vehicles and fixtures of whatsoever kind and
character now or hereafter possessed, held, acquired, leased or owned by
Xxxxxxxxx and used or usable in Xxxxxxxxx' business, together with all
replacements, accessories, additions, substitutions and accessions to all of the
foregoing.
The term "Collateral" shall also include all records and data relating
to any of the foregoing (including, without limitation, records and data stored
electronically). Borrower agrees to execute such security agreements,
assignments, deeds of trust and other agreements and documents as Lender shall
deem appropriate and otherwise require from time to time to more fully create
and perfect Lender's lien and security interests in the Collateral.
The note representing the Borrowing Base Line of Credit to be executed
by Borrower is given in renewal, modification and increase of that one certain
revolving promissory note in the original principal sum of $2,500,000.00 dated
April 1, 1999, executed by Borrower and payable to the order of Lender ("Prior
Note"). Borrower further agrees that each and every right, title, claim, equity,
lien and security interest securing payment of said Prior Note are hereby
renewed and extended and/or continued in full force and effect to secure payment
of the Borrowing Base Line of Credit, as modified, renewed and increased.
5. Representations and Warranties. Borrower and Xxxxxxxxx hereby represent and
warrant, and upon each request for an advance under the Credit Facilities
further represent and warrant, to Lender as follows:
(a) Existence. Borrower and Xxxxxxxxx are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Texas and all other states where they are doing business, and have all requisite
power and authority to execute and deliver the Loan Documents.
(b) Binding Obligations. The execution, delivery, and performance of
this Loan Agreement and all of the other Loan Documents by Borrower and
Xxxxxxxxx have been duly authorized by all necessary action by Borrower and
Xxxxxxxxx, and constitute legal, valid and binding obligations of Borrower and
Xxxxxxxxx, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general application
relating to the enforcement of creditors' rights and except to the extent
specific remedies may generally be limited by equitable principles.
(c) No Consent. The execution, delivery and performance of this Loan
Agreement and the other Loan Documents, and the consummation of the transactions
contemplated hereby and thereby, do not (i) conflict with, result in a violation
of, or constitute a default under (A) any provision of Borrower's and Xxxxxxxxx'
articles or certificate of incorporation or bylaws, if Borrower is a
corporation, or its partnership agreement, if Borrower is a partnership, or any
agreement or other instrument binding upon Borrower or Xxxxxxxxx, or (B) any
law, governmental regulation, court decree or order applicable to either
Borrower or Xxxxxxxxx, or (ii) require the consent, approval or authorization of
any third party.
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(d) Financial Condition. Each financial statement of Borrower and/or
Xxxxxxxxx supplied to the Lender truly discloses and fairly presents Borrower's
and/or Xxxxxxxxx' respective financial condition as of the date of each such
statement. There has been no material adverse change in such financial condition
or results of operations of Borrower and/or Xxxxxxxxx subsequent to the date of
the most recent financial statement supplied to Lender.
(e) Litigation. There are no actions, suits or proceedings, pending or,
to the knowledge of Borrower or Xxxxxxxxx, threatened against or affecting
Borrower or Xxxxxxxxx or the properties of Borrower or Xxxxxxxxx, before any
court or governmental department, commission or board, which, if determined
adversely to Borrower or Xxxxxxxxx, would have a material adverse effect on the
financial condition, properties, or operations of Borrower or Xxxxxxxxx.
(f) Taxes; Governmental Charges. Borrower and Xxxxxxxxx have filed all
federal, state and local tax reports and returns required by any law or
regulation to be filed by it and has either duly paid all taxes, duties and
charges indicated due on the basis of such returns and reports, or made adequate
provision for the payment thereof, and the assessment of any material amount of
additional taxes in excess of those paid and reported is not reasonably
expected.
6. Conditions Precedent to Advances. Lender's obligation to make any advance
under this Loan Agreement and the other Loan Documents shall be subject to the
conditions precedent that, as of the date of such advance and after giving
effect thereto (i) all representations and warranties made to Lender in this
Loan Agreement and the other Loan Documents shall be true and correct, as of and
as if made on such date, (ii) no material adverse change in the financial
condition of Borrower since the effective date of the most recent financial
statements furnished to Lender by Borrower shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result from
the requested advance, which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined), (iv) Lender's receipt
of UCC-3 Termination Statements fully executed by the appropriate party,
terminating all financing statements on file for Xxxxxxxxx Nurseries, Inc.,
Turkey Creek Farms, Inc. and Wholesale Landscape Distributors, Inc., and (v)
Lender's receipt of all Loan Documents appropriately executed by Borrower and
all other proper parties.
7. Affirmative Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower and Xxxxxxxxx under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower and Xxxxxxxxx agree and covenant that
they will, unless Lender shall otherwise consent in writing:
(a) Accounts and Records. Maintain their respective books and records
in accordance with generally accepted accounting principles.
(b) Right of Inspection. Permit Lender to visit their respective
properties and installations and to examine, audit and make and take away copies
or reproductions of Borrower's or Xxxxxxxxx' books and records, at all
reasonable times.
(c) Right to Additional Information. Furnish Lender with such
additional information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower's or Xxxxxxxxx' financial
condition and business operations as Lender may request from time to time.
(d) Compliance with Laws. Conduct their respective businesses in an
orderly and efficient manner consistent with good business practices, and
perform and comply with all statutes, rules, regulations and/or ordinances
imposed by any governmental unit upon Borrower and/or Xxxxxxxxx and
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their businesses, operations and properties (including without limitation, all
applicable environmental statutes, rules, regulations and ordinances).
(e) Taxes. Pay and discharge when due all of their indebtedness and
obligations, including without limitation, all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower,
Xxxxxxxxx or their properties, income, or profits, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower's or Xxxxxxxxx' properties, income, or
profits; provided, however, Borrower and Xxxxxxxxx will not be required to pay
and discharge any such assessment, tax, charge, xxxx, xxxx or claim so long as
(i) the legality of the same shall be contested in good faith by appropriate
judicial, administrative or other legal proceedings, and (ii) Borrower or
Xxxxxxxxx, as the case may be, shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, xxxx, xxxx or
claim in accordance with generally accepted accounting principles, consistently
applied.
(f) Insurance. Except as may be more specifically required in the other
Loan Documents, maintain insurance against such risks and in such amounts as is
customarily maintained by similar business operations in the same vicinity, with
such companies and in such amounts satisfactory to Lender.
(g) Notice of Indebtedness. Promptly inform Lender of the creation,
incurrence or assumption by Borrower or Xxxxxxxxx of any actual or contingent
liabilities not permitted under this Loan Agreement.
(h) Notice of Litigation. Promptly after the commencement thereof,
notify Lender of all material actions, suits and proceedings before any court or
any governmental department, commission or board affecting Borrower or Xxxxxxxxx
or any of their respective properties.
(i) Notice of Material Adverse Change. Promptly inform Lender of (i)
any and all material adverse changes in Borrower's or Xxxxxxxxx' financial
condition, and (ii) all claims made against Borrower or Xxxxxxxxx which could
materially affect the financial condition of Borrower or Xxxxxxxxx.
(j) Additional Documentation. Execute and deliver, or cause to be
executed and delivered, any and all other agreements, instruments or documents
which Lender may reasonably request in order to give effect to the transactions
contemplated under this Loan Agreement and the other Loan Documents, including,
without limitation, any documents required to perfect Lender's lien on the
vehicles owned by Xxxxxxxxx and serving as part of the Collateral.
8. Negative Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Lender has no further commitment to
lend hereunder, Borrower and Xxxxxxxxx will not, without the prior written
consent of Lender:
(a) Nature of Business. Make any material change in the nature of their
respective businesses as carried on as of the date hereof.
(b) Liquidations, Mergers, Consolidations. Liquidate, merge or
consolidate with or into any other entity.
(c) Sale of Assets. Sell, transfer or otherwise dispose of any of their
respective assets or properties, other than in the ordinary course of business.
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(d) Liens. Create or incur any lien or encumbrance on any of their
respective assets, other than (i) liens and security interests securing
indebtedness owing to Lender, (ii) liens for taxes, assessments or similar
charges that are (1) not yet due or (2) being contested in good faith by
appropriate proceedings and for which Borrower or Xxxxxxxxx, as the case may be,
have established adequate reserves, and (iii) liens and security interests
existing as of the date hereof which have been disclosed to Lender, (iv)
purchase money liens on equipment and/or vehicles not currently owned by
Borrower or Xxxxxxxxx and which are necessary to the normal operation of
Borrower's and Xxxxxxxxx' business, (v) pledges or deposits made to secure
payment of workers compensation (or to participate in any fund in connection
with workers compensation), unemployment insurance, pensions or social security
programs, (vi) liens imposed by mandatory provision of law such as for
materialmen's, mechanics, warehouseman's and other like liens arising in the
ordinary course of business, securing indebtedness whose payment is not yet due,
(vii) good faith deposits not greater than $15,000 in connection with tenders,
leases, real estate bids or contracts (other than contracts involving the
borrowing of money), (viii) good faith pledges or deposits not greater than
$15,000 to secure (a) public or statutory obligations, (b) surety, stay, appeal
or customs bonds, or in lieu of any of the foregoing, and (c) payment of taxes,
assessments, customs duties or other similar charges, (ix) encumbrances
consisting of zoning restrictions, easements or other restrictions on the use of
real property not serving as collateral for the Notes, provided that such
encumbrances do not impair the intended use of such property, and none of which
would be violated by existing or proposed structures or land use.
(e) Indebtedness. Create, incur or assume any indebtedness for borrowed
money or issue or assume any other note, debenture, bond or other evidences of
indebtedness, or guarantee any such indebtedness or such evidences of
indebtedness of others, other than (i) borrowings from Lender, (ii) borrowings
outstanding on the date hereof and disclosed to Lender, (iii) indebtedness to
trade creditors incurred in the ordinary course of business, and (iv) for
purchase money on equipment and/or vehicles, which are necessary to the normal
operation of Borrower's or Xxxxxxxxx' business.
(f) Change in Management. Permit a substantial change in the senior
management of Borrower or Xxxxxxxxx. A substantial change in senior management
shall mean the death, resignation, removal or retirement of any two (2) of the
following individuals from Borrower's or Xxxxxxxxx' business: Xxxxx X. Xxxxxx,
Xxx Xxxxxxxx, Xxxx Xxxxx, or Xxxx Xxxxxx.
(g) Loans. Make any loans to any person or entity.
(h) Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (as hereinafter defined) of
Borrower or Xxxxxxxxx, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or Xxxxxxxxx' business and upon fair and
reasonable terms no less favorable to Borrower or Xxxxxxxxx than would be
obtained in a comparable arm's-length transaction with a person or entity not an
Affiliate of Borrower or Xxxxxxxxx. As used herein, the term "Affiliate" means
any individual or entity directly or indirectly controlling, controlled by, or
under common control with, another individual or entity.
(i) Dividends. Borrower and Xxxxxxxxx agree not to declare or pay any
dividends on any shares of their respective capital stock, make any other
distributions with respect to any payment on account of the purchase,
redemption, or other acquisition or retirement of any shares of their respective
capital stock, or make any other distribution, sale, transfer or lease of any of
Borrower's or Xxxxxxxxx' assets other than in the ordinary course of business,
unless any such amounts are directly utilized for the payment of principal or
interest on indebtedness and obligations owing from time to time by Borrower or
Xxxxxxxxx to Lender.
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9. Financial Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower and Xxxxxxxxx under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower, on a consolidated basis with its
subsidiaries, will maintain the following financial covenants:
(a) Tangible Net Worth. Borrower will maintain, at all times, its
Tangible Net Worth at not less than $9,000,000.00.
(b) Debt to Worth Ratio. Borrower will maintain, at all times, a ratio
of (a) total liabilities (excluding any Subordinated Debt), to (b) Tangible Net
Worth of not greater than 2.50 to 1.0.
(c) Debt Service Coverage Ratio. Borrower will maintain, as of the last
day of each fiscal year, a ratio of (a) net income after taxes plus
depreciation, amortization and other non-cash expenses for the 12 month period
ending with such fiscal year, less any Distributions during such 12 month
period, to (b) current maturities of long-term debt and long-term leases for
such 12 month period, of not less than 1.25 to 1.0.
As used herein, the term "Tangible Net Worth" means, as of any date,
Borrower's total assets excluding all intangible assets, less total liabilities
excluding any Subordinated Debt. As used herein, the term "Subordinated Debt"
means any indebtedness owing by Borrower which has been subordinated by written
agreement to all indebtedness now or hereafter owing by Borrower to Lender, such
agreement to be in form and substance acceptable to Lender. As used herein,
"Distributions" shall mean all dividends and other distributions made by
Borrower to its shareholders or partners, as the case may be, other than salary,
bonuses and other compensation for services. Unless otherwise specified, all
accounting and financial terms and covenants set forth above are to be
determined according to generally accepted accounting principles, consistently
applied.
10. Reporting Requirements. Until (i) the Notes and all other obligations and
liabilities of Borrower and Xxxxxxxxx under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will, unless Lender shall otherwise
consent in writing, furnish the following items to Lender, prepared on a
consolidated basis with its subsidiaries:
(a) Interim Financial Statements. As soon as available, and in any
event within thirty (30) days after the end of each month of each fiscal year of
Borrower, a balance sheet and income statement of Borrower as of the end of such
month, all in form and substance and in reasonable detail satisfactory to Lender
and duly certified (subject to year-end review adjustments) by the President
and/or Chief Financial Officer of Borrower (i) as being true and correct in all
material aspects to the best of his or her knowledge and (ii) as having been
prepared in accordance with generally accepted accounting principles,
consistently applied.
(b) Annual Financial Statements. As soon as available and in any event
within ninety (90) days after the end of each fiscal year of Borrower, a balance
sheet and income statement of Borrower as of the end of such fiscal year, in
each case audited by independent public accountants of recognized standing
acceptable to Lender.
(c) Compliance Certificate. A certificate signed by the President
and/or Chief Financial Officer of Borrower, within thirty (30) days after the
end of each month of each fiscal year, stating that Borrower is in full
compliance with all of its obligations under this Loan Agreement and all other
Loan Documents and is not in default of any term or provisions hereof or
thereof, and demonstrating compliance with all financial ratios and covenants
set forth in this Loan Agreement.
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(d) Borrowing Base Report. A borrowing base report signed by the
President and/or Chief Financial Officer of Borrower, within thirty (30) days
after the end of each month of each fiscal year in which indebtedness is
outstanding under the Borrowing Base Line of Credit, in form and detail
satisfactory to Lender.
(e) SEC Filings. Copies of any and all filings made by Borrower with
the Securities and Exchange Commission within thirty (30) days after filing.
(f) Accounts Aging. An accounts receivable aging report within thirty
(30) days after the end of each month of each fiscal year in which indebtedness
is outstanding under the Borrowing Base Line of Credit, in form and detail
satisfactory to Lender.
11. Events of Default. Each of the following shall constitute an "Event of
Default" under this Loan Agreement:
(a) The failure, refusal or neglect of Borrower and/or Xxxxxxxxx to pay
when due any part of the principal of, or interest on, the Notes or any other
indebtedness or obligations owing to Lender by Borrower or Xxxxxxxxx from time
to time and such failure, refusal or neglect to make such payment continues for
a period of ten (10) days after written notice to Borrower and Xxxxxxxxx is
given in accordance with the Loan Documents.
(b) The failure of Borrower, Xxxxxxxxx or any Obligated Party (as
defined below) to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other Loan
Documents and the failure of Borrower, Xxxxxxxxx or any Obligated Party to cure
such default within thirty (30) days after written notice from Lender specifying
such default.
(c) The occurrence of an event of default under any of the other Loan
Documents or under any other agreement now existing or hereafter arising between
Lender and Borrower or Xxxxxxxxx after the giving of any required notice and
expiration of any applicable cure period.
(d) Any representation contained herein or in any of the other Loan
Documents made by Borrower, Xxxxxxxxx or any Obligated Party is false or
misleading in any material respect when made.
(e) The occurrence of any event which permits the acceleration of the
maturity of any indebtedness owing by Borrower or Xxxxxxxxx to any third party
under any agreement or understanding.
(f) If Borrower, Xxxxxxxxx or any Obligated Party: (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its debts as
they become due; (ii) generally is not paying its debts as such debts become
due; (iii) has a receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of the assets of such party, either in a
proceeding brought by such party or in a proceeding brought against such party
and such appointment is not discharged or such possession is not terminated
within sixty (60) days after the effective date thereof or such party consents
to or acquiesces in such appointment or possession; (iv) files a petition for
relief under the United States Bankruptcy Code or any other present or future
federal or state insolvency, bankruptcy or similar laws (all of the foregoing
hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary
petition for relief is filed against such party under any Applicable Bankruptcy
Law and such involuntary petition is not dismissed within sixty (60) days after
the filing thereof, or an order for relief naming such party is entered under
any Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is requested
or consented to by such party; (v) fails to have
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discharged within a period of thirty (30) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to pay within
thirty (30) days any final money judgment against such party.
(g) If Borrower, Xxxxxxxxx or any Obligated Party is an entity, the
liquidation, dissolution, merger or consolidation of any such entity or, if
Borrower, Xxxxxxxxx or any Obligated Party is an individual, the death or legal
incapacity of any such individual.
(h) The entry of any judgment against Borrower, Xxxxxxxxx or any
Obligated Party or the issuance or entry of any attachment or other lien against
any of the property of Borrower, Xxxxxxxxx or any Obligated Party for an amount
in excess of $100,000.00, if undischarged, unbonded or undismissed within thirty
(30) days after such entry.
Nothing contained in this Loan Agreement shall be construed to limit
the events of default enumerated in any of the other Loan Documents and all such
events of default shall be cumulative. The term "Obligated Party", as used
herein, shall mean any party other than Borrower who secures, guarantees and/or
is otherwise obligated to pay all or any portion of the indebtedness evidenced
by the Notes.
12. Remedies. Upon the occurrence of any one or more of the foregoing Events of
Default, (a) the entire unpaid balance of principal of the Notes, together with
all accrued but unpaid interest thereon, and all other indebtedness owing to
Lender by Borrower and/or Xxxxxxxxx at such time shall, at the option of Lender,
become immediately due and payable without further notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
protest or notice of protest of any kind, all of which are expressly waived by
Borrower and Xxxxxxxxx, and (b) Lender may, at its option, cease further
advances under any of the Notes. All rights and remedies of Lender set forth in
this Loan Agreement and in any of the other Loan Documents may also be exercised
by Lender, at its option to be exercised in its sole discretion, upon the
occurrence of an Event of Default.
13. Rights Cumulative. All rights of Lender under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Lender under
any and all other agreements between Borrower and Lender or Xxxxxxxxx and Lender
(including, but not limited to, the other Loan Documents), and not in
substitution or diminution of any rights now or hereafter held by Lender under
the terms of any other agreement.
14. Partial Release of Collateral.
(a) Provided (i) no Event of Default has occurred and is continuing, or
no event has occurred which with notice or lapse of time, or both, would
constitute an Event of Default, and (ii) the indebtedness and other obligations
owing under Borrower's Borrowing Base Line of Credit have been fully paid and
satisfied and Lender has no further commitment to lend thereunder, upon
Borrower's written request, Lender agrees to release its lien on the inventory,
accounts, chattel paper, general intangibles, equipment, vehicles, fixtures,
crops, farm equipment and farm products pledged to Lender by Borrower, Xxxxxx
and Xxxxxxxxx, as well as its lien on the Arlington Property. In the event
Lender becomes obligated to release its lien on such property, Lender agrees, as
promptly as commercially reasonable, to execute and deliver UCC-3 Termination
Statements terminating all liens on file with respect to such collateral and a
Release of Deed of Trust lien with respect to the Arlington Property. Borrower
shall pay any and all expenses it incurs arising in connection with the release
of such property and any and all reasonable expenses incurred by Lender in
connection with same.
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(b) Provided no Event of Default has occurred and is continuing, or no
event has occurred which with notice or lapse of time, or both, would constitute
an Event of Default, Lender agrees to release its lien on the Xxxxxxxxx
Property, or any portion thereof, for which Borrower or Xxxxxxxxx requests a
release in writing (the "Release Property"), upon receipt of eighty percent
(80%) of the greater of (i) the sales price of such Release Property, as
evidenced by a settlement statement provided by a title company and certified as
being true and correct, or (ii) such Release Property's appraised value as
determined, at the option of Lender, by the Lender's most recent appraisal for
such Release Property, or a new appraisal of such property obtained by Lender at
Borrower's expense; provided, however, for Lender to be obligated to release its
lien on a portion of the Xxxxxxxxx Property which does not constitute one or
more entire parcels of the six (6) parcels constituting the Xxxxxxxxx Property,
Borrower or Xxxxxxxxx must request the partial release in writing and shall
provide to Lender a current survey of the acreage to be released, a metes and
bounds description of the acreage to be released and a plat drawing showing the
relationship of the acreage requested to be released to the remaining acreage,
which shall be acceptable to Lender in its sole discretion. In the event Lender
becomes obligated to release all or a portion of its lien hereunder, Lender
agrees, as promptly as commercially reasonable, to execute and deliver a Release
of its Deed of Trust lien or a Partial Release of its Deed of Trust Lien, as the
case may be, on the Release Property. Borrower shall pay any and all expenses it
incurs arising in connection with the release of such property and any and all
reasonable expenses incurred by Lender in connection with same.
15. Waiver and Agreement. Neither the failure nor any delay on the part of
Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower or Xxxxxxxxx therefrom shall be effective
unless the same shall be in writing and signed by Lender, and then shall be
effective only in the specific instance and for the purpose for which given and
to the extent specified in such writing. No modification or amendment to this
Loan Agreement or to any of the other Loan Documents shall be valid or effective
unless the same is signed by the party against whom it is sought to be enforced.
16. Benefits. This Loan Agreement shall be binding upon and inure to the benefit
of Lender, Borrower and Xxxxxxxxx, and their respective successors and assigns,
provided, however, that neither Borrower nor Xxxxxxxxx may, without the prior
written consent of Lender, assign any rights, powers, duties or obligations
under this Loan Agreement or any of the other Loan Documents.
17. Notices. All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given
by (i) personal delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at the address
set forth on the first page hereof and shall be deemed to have been received
either, in the case of personal delivery, as of the time of personal delivery,
in the case of expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in the case of
mail, upon deposit in a depository receptacle under the care and custody of the
United States Postal Service. Any party shall have the right to change its
address for notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least thirty (30)
days prior to the effective date of such new address.
18. Construction. This Loan Agreement and the other Loan Documents have been
executed and delivered in the State of Texas, shall be governed by and construed
in accordance with the laws of the
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State of Texas, and shall be performable by the parties hereto in the county in
Texas where the Lender's address set forth on the first page hereof is located.
19 Invalid Provisions. If any provision of this Loan Agreement or any of the
other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
20. Expenses. Borrower shall pay all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees) in connection with (i) the
preparation of any of the Loan Documents, (ii) any action required in the course
of administration of the indebtedness and obligations evidenced by the Loan
Documents, and (iii) any action in the enforcement of Lender's rights upon the
occurrence of Event of Default.
21. Participation of the Loans. Borrower and Xxxxxxxxx agree that Lender may, at
its option, sell interests in the Loans and its rights under this Loan Agreement
to a financial institution or institutions and, in connection with each such
sale, Lender may disclose any financial and other information available to
Lender concerning Borrower and Xxxxxxxxx to each prospective purchaser.
22. Conflicts. In the event any term or provision hereof is inconsistent with or
conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Loan Agreement shall be controlling.
23. Counterparts. This Loan Agreement may be separately executed in any number
of counterparts, each of which shall be an original, but all of which, taken
together, shall be deemed to constitute one and the same instrument.
24. Facsimile Documents and Signatures. For purposes of negotiating and
finalizing this Loan Agreement, if this document or any document executed in
connection with it is transmitted by facsimile machine ("fax"), it shall be
treated for all purposes as an original document. Additionally, the signature of
any party on this document transmitted by way of a facsimile machine shall be
considered for all purposes as an original signature. Any such faxed document
shall be considered to have the same binding legal effect as an original
document. At the request of any party, any faxed document shall be re-executed
by each signatory party in an original form.
25. Acknowledgment of Indebtedness Owing under Prior Note. As further
consideration for Lender's agreement to renew and increase the Prior Note,
Borrower hereby acknowledges and agrees that the principal sum of $0.00 is due
and owing on the Prior Note as of the date hereof, and that there are no offsets
or defenses to the indebtedness evidenced by the Prior Note, or any part
thereof, or any claim or counterclaim against Lender arising therefrom.
26. Release. In further consideration for the agreement of Lender to renew and
increase the Prior Note, all as herein provided, the Borrower, for itself and
its successors and assigns (collectively, the "Releasing Parties"), hereby
releases and forever discharges Lender and its directors, officers and
employees, as well as all of their successors and assigns (the "Released
Parties") from any and all claims, demands, liabilities, causes of action or
other damages now or hereafter held or claimed by the Releasing Parties, whether
known or unknown, arising out of or in anyway related to any and all
transactions pertaining to the Prior Note (including, without limitation, all
matters referred to in this Loan Agreement) occurring prior to the date of
execution hereof, including, but not limited to, any loss, cost or damage in
connection with any alleged breach of fiduciary duty, breach of any duty of fair
dealing,
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breach of confidence, breach of funding commitment, undue influence, duress,
economic coercion, conflict of interest, negligence, bad faith, malpractice,
usury, violations of the Racketeer Influenced and Corrupt Organizations Act,
intentional or negligent infliction of mental distress, tortious interference
with contractual relations, breach of contract, deceptive trade practice,
slander or conspiracy. The Borrower hereby acknowledges and agrees that the
release herein contained is supported by sufficient and adequate consideration
received by the parties executing this Loan Agreement.
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
NOTICE TO COMPLY WITH STATE LAW
For the purpose of this Notice, the term "WRITTEN AGREEMENT" shall
include the document set forth above, together with each and every other
document relating to and/or securing the same loan transaction, regardless of
the date of execution.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
BORROWER: LENDER:
XXXXXXXX'X NURSERY, INC., THE FROST NATIONAL BANK,
A TEXAS CORPORATION A NATIONAL BANKING ASSOCIATION
BY: /s/ XXXXX X. XXXXXX BY: /s/ XXXXXXX XXXXXX
------------------------- -------------------------
XXXXX X. XXXXXX, PRESIDENT XXXXXXX XXXXXX, MARKET PRESIDENT
BY: /s/ XXX XXXXXXXX
-------------------------
XXX XXXXXXXX, VICE PRESIDENT
XXXXXXXXX:
XXXXXXXX'X XXXXXXXXX, INC.,
A TEXAS CORPORATION
BY: /s/ XXXXX X. XXXXXX
-------------------------
XXXXX X. XXXXXX, PRESIDENT
