EXHIBIT 10.20
CREDIT AGREEMENT
(LINE OF CREDIT)
(FOREIGN EXCHANGE)
(LETTER OF CREDIT SUB-FACILITY)
This Agreement (the "Agreement") is made and entered into as of December
2, 2004, by and between BANK OF THE WEST (the "Bank") and DIAMOND WALNUT
GROWERS, INC. (the "Borrower"), on the terms and conditions that follow:
SECTION
1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be generally
applicable to the singular and plural forms of the terms defined):
1.1.1 "ADVANCE": shall mean an advance to the Borrower under the credit
facility (ies) described in Section 2.
1.1.2 "APPLICABLE MARGIN": shall mean the following interest rate
percentages based upon the Fixed Charge Coverage Ratio then in
effect:
Applicable Margin for
Fixed Charge Coverage Ratio Applicable Margin for LIBOR Reference Rate:
Not less than 2.00 to 1 .65% 0%
Greater than 1.50 to 1 1.00% 0%
but less than 2.00 to 1
Greater than or equal to 1.25% 0%
1.25 to 1 but less than
1.50 to 1
Fixed Charge Coverage Ratio Applicable Margin for Fixed Rate
Not less than 2.00 to 1 .85%
Greater than 1.50 to 1 1.20%
but less than 2.00 to 1.
Greater than or equal to 1.25 1.45%
to 1 but less than 1.50 to 1
1.1.3 "BUSINESS DAY": shall mean a day, other than a Saturday or Sunday,
on which commercial banks are open for business in California.
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1.1.4 "CLOSE-OUT DATE": shall mean the Business Day on which the Bank
closes out and liquidates an FX Transaction.
1.1.5 "CLOSING VALUE": has the meaning given to it in Section 7.5(i)
hereof.
1.1.6 "CLOSING GAIN" AND "CLOSING LOSS": shall mean the amount determined
in accordance with Section 7.5(ii) hereof.
1.1.7 "CREDIT PERCENTAGE": shall mean 15%.
1.1.8 "CURRENT ASSETS": shall mean current assets as determined in
accordance with generally accepted accounting principles, less all
amounts due from affiliates, officers or employees.
1.1.9 "CURRENT LIABILITIES": shall mean current liabilities as determined
in accordance with generally accepted accounting principles,
including any negative cash balance on the Borrower's financial
statement.
1.1.10 "DEBT": shall mean all Indebtedness of the Borrower for borrowed
money which by its terms natures more than one year from the date of
its creation less Subordinated Debt, if any.
1.1.11 "EBITDA": shall mean earnings exclusive of extraordinary gains and
before deductions for interest expense, taxes, depreciation and
amortization expense.
1.1.12 "EFFECTIVE TANGIBLE NET WORTH": shall mean the Borrower's stated
net worth plus Subordinated Debt but less all intangible assets of
the Borrower (i.e., goodwill, trademarks, patents, copyrights,
organization expense, and similar intangible items including, but
not limited to, investments in and all amounts due from affiliates,
officers or employees).
1.1.13 "ENVIRONMENTAL CLAIMS": shall mean all claims, however asserted, by
any governmental authority or other person alleging potential
liability or responsibility for violation of any Environmental Law
or for Discharge or injury to the environment or threat to public
health, personal injury (including sickness, disease or death),
property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise),
cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief,
resulting from or based upon (a) the presence, placement, discharge,
emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, Discharges, emissions or
releases) of any Hazardous Material at, in, or from property,
whether or not owned by the Borrower, or (b) any other circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law.
1.1.14 "ENVIRONMENTAL LAWS": shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and
codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and
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permits of, and agreements with, any governmental authorities, in
each case relating to environmental, health, safety and land use
matters; including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid
Waste Disposal Act, the Federal Resource Conservation and Recovery
Act, the Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act, the California Hazardous Waste Control
Law, the California Solid Waste Management, Resource, Recovery and
Recycling Act, the California Water Code and the California Health
and Safety Code.
1.1.15 "ENVIRONMENTAL PERMITS": shall have the meaning provided in Section
4.11 hereof.
1.1.16 "ERISA": shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context
otherwise requires) any rules or regulations promulgated thereunder.
1.1.17 "EVENT OF DEFAULT": shall have the meaning set forth in Section 6.
1.1.18 "EXPIRATION DATE": shall mean January 15, 2007, or the date of
termination of the Bank's commitment to lend under this Agreement
pursuant to Section 7, whichever shall occur first.
1.1.19 "FIXED CHARGE COVERAGE RATIO": shall mean, at any time, the ratio
of Borrower's EBITDA minus Net Member Distributions to the sum of
interest expense plus Scheduled Principal Payments, each for the
immediately preceding 12 month period.
1.1.20 "FIXED RATE ADVANCE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
1.1.21 "FIXED RATE": shall have the respective meaning as it is defined
for each facility under Section 2, hereof if applicable.
1.1.22 "FOREIGN CURRENCY": shall mean any legally traded currency other
than US dollars and which may be transferred by paperless wire
transfer or cash and in which the Bank regularly trades.
1.1.23 "FOREIGN EXCHANGE FACILITY": shall mean the credit facility
described as such in Section 2.
1.1.24 "FX RISK LIABILITY": shall mean the product of (a) the Credit
Percentage, times (b) the aggregate of the Notional Values of all FX
Transactions outstanding, net of any Offsetting Transactions.
1.1.25 "FX LIMIT": shall mean $5,500,000.00.
1.1.26 "FX TRANSACTION": shall mean any transaction between the Bank and
the Borrower pursuant to which the Bank has agreed to sell to or to
purchase from the
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Borrower a Foreign Currency of an agreed amount at an agreed price
in US dollars or such other agreed upon Foreign Currency,
deliverable and payable on an agreed date.
1.1.27 "HAZARDOUS MATERIALS": shall mean all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum derived
substance or waste.
1.1.28 "INDEBTEDNESS": shall mean, with respect to the Borrower, (i) all
indebtedness for borrowed money or for the deferred purchase price
of property or services in respect of which the Borrower is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which the Borrower otherwise assures a creditor against
loss and (ii) obligations under leases which shall have been or
should be, in accordance with generally accepted accounting
principles, reported as capital leases in respect of which the
Borrower is liable, contingently or otherwise, or in respect of
which the Borrower otherwise assures a creditor against loss.
1.1.29 "INTEREST PERIOD": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.30 "LETTER OF CREDIT FACILITY": shall mean the credit facility
described as such in Section 2.
1.1.31 "LIBOR ADVANCE": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.32 "LIBOR INTEREST PERIOD": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.33 "LIBOR RATE": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.34 "LINE ACCOUNT": shall have the meaning provided in Section 2.5
hereof. 1.1.35 "Line of Credit": shall mean the credit facility
described as such in Section 2.
1.1.35 "LINE OF CREDIT": shall mean the credit facility described as such
in Section 2.
1.1.36 "NET MEMBER DISTRIBUTION": shall mean net patronage proceeds
accrued on the Borrower's financial statement.
1.1.37 "NOTIONAL VALUE": shall mean the US Dollar equivalent of the price
at which the Bank agreed to purchase or sell to the Borrower a
Foreign Currency.
1.1.38 "OBLIGATIONS": shall mean all amounts owing by the Borrower to the
Bank pursuant to this Agreement including, but not limited to, the
unpaid principal amount of any loans or advances.
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1.1.39 "OFFSETTING TRANSACTION": shall mean a FX Transaction to purchase a
Foreign Currency and a FX Transaction to sell the same Foreign
Currency, each with the same Settlement Date and designated as an
Offsetting Transaction at the time of entering into the FX
Transaction.
1.1.40 "ORDINARY COURSE OF BUSINESS": shall mean, with respect to any
transaction involving the Borrower or any of its subsidiaries or
affiliates, the ordinary course of the Borrower's business, as
conducted by the Borrower in accordance with past practice and
undertaken by the Borrower in good faith and not for the purpose of
evading any covenant or restriction in this Agreement or in any
other document, instrument or agreement executed in connection
herewith.
1.1.41 "PERMITTED LIENS": shall mean: (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank; (ii) liens
for taxes, assessments or similar charges not yet due; (iii) liens
of materialmen, mechanics, warehousemen, or carriers or other like
liens arising in the Ordinary Course of Business and securing
obligations which are not yet delinquent; (iv) purchase money liens
or purchase money security interests upon or in any property
acquired or held by the Borrower in the Ordinary Course of Business
to secure Indebtedness outstanding on the date hereof or permitted
to be incurred herein; (v) liens and security interests which, as of
the date hereof, have been disclosed to and approved by the Bank in
writing; and (vi) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount
with respect to the net value of the Borrower's assets.
1.1.42 "PRIME RATE": shall mean an index for a variable interest rate
which is quoted, published or announced by Bank as its prime rate
and as to which loans may be made by Bank at, above or below such
rate.
1.1.43 "SCHEDULED PRINCIPAL PAYMENTS": shall mean scheduled principal
payments in any one year.
1.1.44 "SETTLEMENT DATE": shall mean the Business Day on which the
Borrower has agreed to (a) deliver the required amount of Foreign
Currency, or (b) pay in US dollars the agreed upon purchase price of
the Foreign Currency.
1.1.45 "SUBORDINATED DEBT": shall mean such liabilities of the Borrower
which have been subordinated to those owed to the Bank in a manner
acceptable to the Bank.
1.1.46 "VARIABLE RATE ADVANCE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.47 "VARIABLE RATE": shall have the respective meaning as it is defined
for each facility under Section 2, hereof.
1.1.48 "WORKING CAPITAL": shall mean Current Assets minus Current
Liabilities.
1.2 ACCOUNTING TERMS: All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein shall
mean such financial statements or such
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items prepared or determined in accordance with generally accepted accounting
principles consistently applied and, except where otherwise specified, all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
1.3 OTHER TERMS: Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code as in effect
on July 1, 2001 and from time to time thereafter.
SECTION
2
CREDIT FACILITIES
2.1 THE LINE OF CREDIT
2.1.1 THE LINE OF CREDIT: On terms and conditions as set forth herein, the
Bank agrees to make Advances to the Borrower from time to time from
the date hereof to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed
$32,500,000.00 (the "Line of Credit"). Within the foregoing limits,
the Borrower may borrow, partially or wholly prepay, and reborrow
under this Section 2.1. Proceeds of the Line of Credit shall be used
for general working capital purposes.
2.1.2 MAKING LINE ADVANCES: Each Advance shall be conclusively deemed to
have been made at the request of and for the benefit of the Borrower
(i) when credited to any deposit account of the Borrower maintained
with the Bank or (ii) when paid in accordance with the Borrower's
written instructions. Subject to the requirements of Section 3 and
provided such request is made in a timely manner as provided in
Section 2.1.5 below, Advances shall be made by the Bank under the
Line of Credit.
2.1.3 REPAYMENT: On the Expiration Date, the Borrower hereby promises and
agrees to pay to the Bank in full the aggregate unpaid principal
amount of all Advances then outstanding, together with all accrued
and unpaid interest thereon.
2.1.4 INTEREST ON ADVANCES: Interest shall accrue from the date of each
Advance under the Line of Credit at one of the following rates, as
quoted by the Bank and as elected by the Borrower below:
(i) Variable Rate Advances: A variable rate per annum equivalent
to the Prime Rate (the "Variable Rate"). Interest shall be
adjusted concurrently with any change in the Prime Rate. An
Advance based upon the Variable Rate is hereinafter referred
to as a "Variable Rate Advance".
(ii) Fixed Rate Advances: A fixed rate per annum quoted by the Bank
for 1 to 6 days or for such other period of time that the Bank
may quote and offer (provided that any such period of time
does not extend beyond the Expiration Date) (the "Interest
Period") for Advances in the minimum
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amount of $1,000,000.00. Such interest rate shall be a
percentage approximately equivalent to the Applicable Margin
plus the rate which the Bank determines in its sole and
absolute discretion to be equal to the Bank's cost of
acquiring funds (adjusted for any and all assessments,
surcharges and reserve requirements pertaining to the
borrowing or purchase by the Bank of such funds) in an amount
approximately equal to the amount of the relevant Advance and
for a period of time approximately equal to the relevant
Interest Period (the "Fixed Rate"). Advances based upon the
Fixed Rate are hereinafter referred to as "Fixed Rate
Advances".
(iii) LIBOR Advances: A fixed rate quoted by the Bank for one week,
1, 2, 3, or 6 months or for such other period of time that the
Bank may quote and offer (provided that any such period of
time does not extend beyond the Expiration Date) (the "LIBOR
Interest Period") for Advances in the minimum amount of
$500,000.00. Such interest rate shall be a percentage
approximately equivalent to the Applicable Margin plus the
Bank's LIBOR Rate which is that rate determined by the Bank's
Treasury Desk as being the arithmetic mean (rounded upwards,
if necessary, to the nearest whole multiple of one-sixteenth
of one percent (1/16%)) of the U. S. dollar London Interbank
Offered Rates for such period appearing on page 3750 (or such
other page as may replace page 3750) of the Telerate screen at
or about 11:00 a.m. (London time) on the second Business Day
prior to the first days of such period (adjusted for any and
all assessments, surcharges and reserve requirements) (the
"LIBOR Rate"). An Advance based upon the LIBOR Rate is
hereinafter referred to as a "LIBOR Advance".
Interest on any Advance shall be computed on the basis of
365/366 days per year, but charged on the actual number of
days elapsed.
The Borrower hereby promises and agrees to pay interest in
arrears on all Advances on the 6th calendar day of each month.
If interest is not paid as and when it is due, it shall be
added to the principal, become and be treated as a part
thereof, and shall thereafter bear like interest.
2.1.5 NOTICE OF BORROWING: Upon written or telephonic notice which shall
be received by the Bank at or before 2:00 p.m. (California time) on
a Business Day, the Borrower may borrow under the Line of Credit by
requesting:
(i) A Variable Rate Advance or Fixed Rate Advance: A Variable Rate
Advance or Fixed Rate Advance may be made on the day notice is
received by the Bank; provided, however, that if the Bank
shall not have received notice at or before 2:00 p.m. on the
day such Advance is requested to be made, such Variable Rate
Advance or Fixed Rate Advance may, at the Bank's option, be
made on the next Business Day.
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(ii) A LIBOR Advance: Notice of any LIBOR Advance shall be received
by the Bank no later than two Business Days prior to the day
(which shall be a Business Day) on which the Borrower requests
such LIBOR Advance to be made.
2.1.6 NOTICE OF ELECTION TO ADJUST INTEREST RATE: Upon telephonic notice
which shall be received by the Bank at or before 2:00 p.m.
(California time) on a Business Day, the Borrower may elect:
(i) That interest on a Variable Rate Advance shall be adjusted to
accrue at the Fixed Rate; provided, however, that such notice
shall be received by the Bank no later than 2:00 p.m. on the
Business Day on which the Borrower requests that interest be
adjusted to accrue at the Fixed Rate.
(ii) That interest on a Variable Rate Advance shall be adjusted to
accrue at the LIBOR Rate; provided, however, that such notice
shall be received by the Bank no later than two Business Days
prior to the Business Day on which the Borrower requests that
interest be adjusted to accrue at the LIBOR Rate.
(iii) That interest on a Fixed Rate Advance shall continue to accrue
at a newly quoted Fixed Rate or shall be adjusted to commence
to accrue at the Variable Rate; provided, however, that such
notice shall be received by the Bank no later than 2:00 p.m.
on the last day of the Interest Period pertaining to such
Fixed Rate Advance. If the Bank shall not have received notice
(as prescribed herein) of the Borrower's election that
interest on any Fixed Rate Advance shall continue to accrue at
the newly quoted Fixed Rate as the case may be the Borrower
shall be deemed to have elected that interest thereon shall:
be adjusted to accrue at the Variable Rate upon the expiration
of the relevant Interest Period pertaining to such Advance.
(iv) That interest on a Fixed Rate Advance shall accrue at a newly
quoted LIBOR Rate or interest on a LIBOR Advance shall
continue to accrue at a newly quoted Fixed Rate or LIBOR Rate
or shall be adjusted to commence to accrue at the Variable
Rate; provided, however, that such notice shall be received by
the Bank no later than two Business Days prior to the last day
of the relevant Interest Period or LIBOR Interest Period, as
applicable. If the Bank shall not have received notice as
prescribed herein of the Borrower's election that interest on
any Fixed Rate Advance shall accrue interest at a newly quoted
LIBOR Rate or at a newly quoted Fixed Rate pursuant to
subparagraph (iii) hereinabove; or any LIBOR Advance shall
continue to accrue at the newly quoted Fixed Rate or LIBOR
Rate as the case may be, the Borrower shall be deemed to have
elected that interest thereon shall be adjusted to accrue at
the Variable Rate upon the expiration of the relevant Interest
Period or LIBOR Interest Period pertaining to such Advance.
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2.1.7 PREPAYMENT: The Borrower may prepay any Advance in whole or in part,
at any time and without penalty, provided, however, that: (i) any
partial prepayment shall first be applied at the Bank's option, to
accrued and unpaid interest and next to the outstanding principal
balance; and (ii) during any period of time in which interest is
accruing on any Advance on the basis of the LIBOR Rate or Fixed
Rate, no prepayment shall be made except on a day which is the last
day of the LIBOR Interest Period or Interest Period pertaining
thereto. If the whole or any part of any LIBOR Advance or Fixed Rate
Advance is prepaid by reason of acceleration or otherwise, the
Borrower shall, upon the Bank's request, promptly pay to and
indemnify the Bank for all costs, expenses and any loss (including
loss of profit resulting from the re-employment of funds) deemed
sustained by the Bank as a consequence of such prepayment.
The Bank shall be entitled to fund all or any portion of its
Advances in any manner it may determine in its sole discretion, but
all calculations and transactions hereunder shall be conducted as
though the Bank actually funded all Advances through the purchase of
dollar deposits bearing interest at the same rate as U.S. Treasury
securities in the amount of the relevant Advance and in maturities
corresponding to the date of such purchase to the Expiration Date
hereunder.
2.1.8 INDEMNIFICATION FOR LIBOR RATE OR FIXED RATE COSTS: During any
period of time in which interest on any Advance is accruing on the
basis of the LIBOR Rate or Fixed Rate, the Borrower shall, upon the
Bank's request, promptly pay to and reimburse the Bank for all costs
incurred and payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement or any
surcharge, tax or fee imposed upon the Bank or as a result of the
Bank's compliance with any directive or requirement of any
regulatory authority pertaining or relating to funds used by the
Bank in quoting and determining the LIBOR Rate or Fixed Rate.
2.1.9 CONVERSION FROM LIBOR RATE OR FIXED RATE TO VARIABLE RATE: In the
event that the Bank shall at any time determine that the accrual of
interest on the basis of the LIBOR Rate or Fixed Rate (i) has become
infeasible because the Bank is unable to determine the LIBOR Rate or
Fixed Rate due to the unavailability of U.S. Dollar deposits,
contracts or certificates of deposit in an amount approximately
equal to the amount of the relevant Advance and for a period of time
approximately equal to the relevant LIBOR Interest Period or
Interest Period as the case may be or (ii) is or has become unlawful
by reason of the Bank's compliance with any new law, rule,
regulation, guideline or order, or any new interpretation of any
present law, rule, regulation guideline or order, then the Bank
shall promptly give telephonic notice thereof (confirmed in:
writing) to the Borrower, in which event any Advance bearing
interest at either the LIBOR Rate or Fixed Rate as the case may be
shall be deemed to be a Variable Rate Advance and interest shall
thereupon immediately accrue at the Variable Rate and shall continue
at such rate until the Bank determines that the LIBOR Rate or Fixed
Rate is no longer infeasible or unlawful.
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2.1.10 COMMITMENT FEE: The Borrower agrees to pay to the Bank a commitment
fee on the unused portion of the Line of Credit of 15% per annum,
payable quarterly in arrears, commencing on March 31, 2005 and
computed on a year of 365/366 days for actual days elapsed.
2.2 LETTER OF CREDIT SUB-FACILITY
2.2.1 Letter of Credit Sub-Facility: The Bank agrees to issue commercial
letters of credit (each a "Letter of Credit") on behalf of the
Borrower of up to $25,000,000.00. At no time, however, shall the
total principal amount of all Advances outstanding under the Line of
Credit, together with the total face amount of all Letters of Credit
outstanding, less any partial draws paid by the Bank, exceed the
Line of Credit.
(i) Upon the Bank's request, the Borrower shall promptly pay to
the Bank issuance fees and such other fees, commissions, costs
and any out-of-pocket expenses charged or incurred by the Bank
with respect to any Letter of Credit.
(ii) The commitment by the Bank to issue Letters of Credit shall,
unless earlier terminated in accordance with the terms of the
Agreement, automatically terminate on the Expiration Date of
the Line of Credit and no Letter of Credit shall expire on a
date which is more than 90 days after the Expiration Date.
(iii) Each Letter of Credit shall be in form and substance
satisfactory to the Bank and in favor of beneficiaries
satisfactory to the Bank, provided that the Bank may refuse to
issue a Letter of Credit due to the nature of the transaction
or its terms or in connection with any transaction where the
Bank, due to the beneficiary or the nationality or residence
of the beneficiary, would be prohibited by any applicable law,
regulation or order from issuing such Letter of Credit.
(iv) Prior to the issuance of each Letter of Credit, but in no
event later than 10:00 am. (California time) on the day such
Letter of Credit is to be issued (which shall be a Business
Day), the Borrower shall deliver to the Bank a duly executed
form of the Bank's standard form of application for issuance
of a Letter of Credit with proper insertions.
(v) The Borrower shall, upon the Bank's request, promptly pay to
and reimburse the Bank for all costs incurred and payments
made by the Bank by reason of any future assessment, reserve,
deposit or similar requirement or any surcharge, tax or fee
imposed upon the Bank or as a result of the Bank's compliance
with any directive or requirement of any regulatory authority
pertaining or relating to any Letter of Credit.
In the event that the Borrower fails to pay any drawing under any Letter
of Credit or the balances in the depository account or accounts maintained
by the Borrower with Bank are insufficient to pay such drawing, without
limiting the rights of Bank hereunder or
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waiving any Event of Default caused thereby, Bank may, and Borrower hereby
authorizes Bank to create an Advance bearing interest at the rate or rates
provided in Section 8.2 hereof to pay such drawing.
2.3 LETTER OF CREDIT FACILITY
2.3.1 LETTER OF CREDIT FACILITY: The Bank agrees to issue standby letters
of credit (each a "SB Letter of Credit") on behalf of the Borrower
of up to $2,000,000.00.
(i) Upon the Bank's request, the Borrower shall promptly pay to
the Bank issuance fees and such other fees, commissions, costs
and any out-of-pocket expenses charged or incurred by the Bank
with respect to any SB Letter of Credit.
(ii) The commitment by the Bank to issue SB Letters of Credit
shall, unless earlier terminated in accordance with the terms
of the Agreement, automatically terminate on the Expiration
Date of the Line of Credit and no SB Letter of Credit shall
expire on a date which is more than 90 days after the
Expiration Date.
(iii) Each SB Letter of Credit shall be in form and substance
satisfactory to the Bank and in favor of beneficiaries
satisfactory to the Bank, provided that the Bank may refuse to
issue a SB Letter of Credit due to the nature of the
transaction or its terms or in connection with any transaction
where the Bank, due to the beneficiary or the nationality or
residence of the beneficiary, would be prohibited by any
applicable law, regulation or order from issuing such SB
Letter of Credit.
(iv) Prior to the issuance of each SB Letter of Credit, but in no
event later than 10:00 a.m. (California time) on the day such
SB Letter of Credit is to be issued (which shall be a Business
Day), the Borrower shall deliver to the Bank a duly executed
form of the Bank's standard form of application for issuance
of a SB Letter of Credit with proper insertions.
(v) The Borrower shall, upon the Bank's request, promptly pay to
and reimburse the Bank for all costs incurred and payments
made by the Bank by reason of any future assessment, reserve,
deposit or similar requirement or any surcharge, tax or fee
imposed upon the Bank or as a result of the Bank's compliance
with any directive or requirement of any regulatory authority
pertaining or relating to any SB Letter of Credit.
In the event that the Borrower fails to pay any drawing under any SB
Letter of Credit or the balances in the depository account or accounts
maintained by the Borrower with Bank are insufficient to pay such drawing,
without limiting the rights of Bank hereunder or waiving any Event of
Default caused thereby, Bank may, and Borrower hereby authorizes Bank to
create an Advance bearing interest at the rate or rates provided in
Section 8.2 hereof to pay such drawing.
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2.4 FOREIGN EXCHANGE FACILITY
2.4.1 FOREIGN EXCHANGE FACILITY: The Bank agrees to enter into FX
Transactions with the Borrower, at the Borrower's request therefor
made prior to the Expiration Date, provided however, that at no time
shall the aggregate FX Risk Liability of the Borrower exceed the FX
Limit. Each FX Transaction shall be used to hedge the Borrower's
foreign exchange exposure.
(i) REQUESTS. Each request for a FX Transaction shall be made by
telephone to the Bank's Treasury Department ("Request"), shall
specify the Foreign Currency to be purchased or sold, the
amount of such Foreign Currency and the Settlement Date. Each
Request shall be communicated to the Bank no later than 3:00
p.m. California time on the Business Day on which the FX
Transaction is requested.
(ii) TENOR. No FX Transaction shall have a Settlement Date which is
more than 18 months after the date of entry into such FX
Transaction, and provided further, no FX Transaction shall
expire on a date which is more than 18 months after the
Expiration Date.
(iii) AVAILABILITY. Bank may refuse to enter into a FX Transaction
with the Borrower where the Bank, at its sole discretion,
determines that (1) the requested Foreign Currency is
unavailable, or (2) the Bank is not then dealing in the
requested Foreign Currency, or (3) the Bank would be
prohibited by any applicable law, rule, regulation or order
from purchasing such Foreign Currency.
(iv) PAYMENT. Payment is due on the Settlement Date of the relevant
FX Transaction. The Bank is hereby authorized by the Borrower
to charge the full settlement price of any FX Transaction
against the depository account or accounts maintained by the
Borrower with the Bank on the Settlement Date. In the event
that the Borrower fails to pay the settlement price of any FX
Transaction on the Settlement Date or the balances in the
depository account or accounts maintained with Bank are
insufficient to pay the settlement price, without limiting the
rights of Bank hereunder or waiving any Event of Default
caused thereby, Bank may, and Borrower hereby authorizes Bank
to, create an Advance bearing interest at the Variable Rate to
pay the settlement price on the Settlement Date.
(v) INCREASED COSTS. Borrower shall promptly pay to and reimburse
the Bank for all costs incurred and payments made by the Bank
by reason of any assessment, reserve, deposit, capital
maintenance or similar requirement or any surcharge, tax or
fee imposed upon the Bank or as a result of the Bank's
compliance with any directive or requirement of any regulatory
authority pertaining or relating to any FX Transaction.
(vi) IMPOSSIBILITY OF PERFORMANCE. In the event that the Borrower
or the Bank cannot perform under a FX Transaction due to force
majeure or an
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act of State or it becomes unlawful or impossible to perform,
all in the good faith judgement of the Borrower or the Bank,
then upon notice to the other party, the Borrower or the Bank
may require the close-out and liquidation of the affected FX
Transaction in accordance with the provisions of this
Agreement.
2.5 LINE ACCOUNT: The Bank shall maintain on its books a record of
account in which the Bank shall make entries for each Advance and
such other debits and credits as shall be appropriate in connection
with the credit facilities granted hereunder (the "Line Account).
The Bank shall provide the Borrower with a statement of the
Borrower's Line Account, which statement shall be considered to be
correct and conclusively binding on the Borrower unless the Borrower
notifies the Bank to the contrary within 30 days after the
Borrower's receipt of any such statement which it deems to be
incorrect.
2.6 AUTHORIZATION TO CHARGE ACCOUNT(s): The Borrower hereby authorizes
the Bank to charge, from time to time, against any or all of the
Borrower's deposit accounts with the Bank any amount so due under
this Agreement, including, but not limited to, account maintained
with the Bank's Sacramento ABC Office.
2.7 PAYMENTS: If any payment required to be made by the Borrower
hereunder becomes due and payable on a day other than a Business
Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the then
applicable rate during such extension. All payments required to be
made hereunder shall be made to the office of the Bank designated
for the receipt of notices herein or such other office as Bank shall
from time to time designate.
2.8 LATE PAYMENT: In addition to any other rights the Bank may have
hereunder, if any payment of principal or interest or any portion
thereof, under this Agreement is not paid within 5 days of when due,
a late payment charge equal to five percent (5%) of such past due
payment may be assessed and shall be immediately payable.
SECTION
3
CONDITIONS PRECEDENT
3.1 CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT: The
obligation of the Bank to make the initial Advance or the first
extension of credit to or on account of the Borrower hereunder is
subject to the conditions precedent that the Bank shall have
received before the date of such initial Advance or such first
extension of credit all of the following, in form and substance
satisfactory to the Bank:
(i) AUTHORITY TO BORROW. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any
document, instrument or agreement required hereunder have been
duly authorized.
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(ii) FEES. Payment of all of the Bank's out-of-pocket expenses in
connection with the preparation and negotiation of this
Agreement.
(iii) MISCELLANEOUS. Such other evidence as the Bank may request to
establish the consummation of the transaction contemplated
hereunder and compliance with the conditions of this
Agreement.
3.2 CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT: The obligation of
the Bank to make each Advance or each other extension of credit, as
the case may be, to or on account of the Borrower (including the
initial Advance or the first extension of credit) shall be subject
to the further conditions precedent that, on the date of each
Advance or each extension of credit and after the making of such
Advance or extension of credit:
(i) REPORTING REQUIREMENTS. The Bank shall have received the
documents set forth in Section 5.1.
(ii) SUBSEQUENT APPROVALS. The Bank shall have received such
supplemental approvals, opinions or documents as the Bank may
reasonably request.
(iii) REPRESENTATIONS AND WARRANTIES. The representations contained
in Section 4 and in any other document, instrument or
certificate delivered to the Bank hereunder are true, correct
and complete.
(iv) EVENT OF DEFAULT. No event has occurred and is continuing
which constitutes, or with the lapse of time or giving of
notice or both, would constitute an Event of Default.
The Borrower's acceptance of the proceeds of any loan, Advance or
extension of credit, or the Borrower's applying for any Letter of Credit,
or the Borrower's execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the
Borrower's representation and warranty that all of the above statements
are true and correct.
SECTION
4
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to the
Bank, which representations and warranties are continuing:
4.1 STATUS: The Borrower's correct legal name is as stated in this
Agreement and the Borrower is a nonprofit cooperative marketing
association duly organized and validly existing under the laws of
the state of California and with its chief executive office in the
state of California and is properly licensed and is qualified to do
business and in good standing in, and, where necessary to maintain
the
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Borrower's rights and privileges, has complied with the fictitious
name statute of every jurisdiction in which the Borrower is doing
business.
4.2 AUTHORITY: The execution, delivery and performance by the Borrower
of this Agreement and any instrument, document or agreement required
hereunder have been duly authorized and do not and will not: (i)
violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in
effect having application to the Borrower; (ii) result in a breach
of or constitute a default under any material indenture or loan or
credit agreement or other material agreement, lease or instrument to
which the Borrower is a party or by which it or its properties may
be bound or affected; or (iii) require any consent or approval of
its members or violate any provision of its articles of
incorporation or by-laws.
4.3 LEGAL EFFECT: This Agreement constitutes, and any instrument,
document or agreement required hereunder when delivered hereunder
will constitute, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their
respective terms.
4.4 FICTITIOUS TRADE STYLES: All fictitious trade styles used by the
Borrower in connection with its business operations and each state
in which each such fictitious trade style is used are listed below.
The Borrower shall notify the Bank not less than 30 days prior to
effecting any change in the matters described below or prior to
using any other fictitious trade style at any future date,
indicating the trade style and state(s) of its use.
TRADE STYLE STATE OF USE
Diamond of California All
4.5 FINANCIAL STATEMENTS: All financial statements, information and
other data which may have been or which may hereafter be submitted
by the Borrower to the Bank are true, accurate and correct and have
been or will be prepared in accordance with generally accepted
accounting principles consistently applied and accurately represent
the financial condition or, as applicable, the other information
disclosed therein. Since the most recent submission of such
financial information or data to the Bank, the Borrower represents
and warrants that no material adverse change in the Borrower's
financial condition or operations has occurred which has not been
fully disclosed to the Bank in writing.
4.6 LITIGATION: Except as have been disclosed to the Bank in writing,
there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the
Borrower or the Borrowers properties before any court or
administrative agency which, if determined adversely to the
Borrower, would have a material adverse effect on the Borrower's
financial condition or operations.
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4.7 TITLE TO ASSETS: The Borrower has good and marketable title to all
of its assets and the same are not subject to any security interest,
encumbrance, lien or claim of any third person except for Permitted
Liens.
4.8 ERISA: If the Borrower has a pension, profit sharing or retirement
plan subject to ERISA, such plan has been and will continue to be
funded in accordance with its terms and otherwise complies with and
continues to comply with the requirements of ERISA.
4.9 TAXES: The Borrower has filed all tax returns required to be filed
and paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes which are currently payable without
penalty or interest or those which are being duly contested in good
faith.
4.10 MARGIN STOCK. The proceeds of any loan or advance hereunder will not
be used to purchase or carry margin stock as such term is defined
under Regulation U of the Board of -Governors of the Federal Reserve
System.
4.11 ENVIRONMENTAL COMPLIANCE. The operations of the Borrower comply, and
during the term of this Agreement will at all times comply, in all
respects with all Environmental Laws; the Borrower has obtained all
licenses, permits, authorizations and registrations required under
any Environmental Law ("Environmental Permits") and necessary for
its ordinary course operations, all such Environmental Permits are
in good standing, and the Borrower is in compliance with all
material terms and conditions of such Environmental Permits; neither
the Borrower nor any of its present property or operations is
subject to any outstanding written order from or agreement with any
governmental authority nor subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material; there are no Hazardous
Materials or other conditions or circumstances existing, or arising
from operations prior to the date of this Agreement, with respect to
any property of the Borrower that would reasonably be expected to
give rise to Environmental Claims; provided, however, that with
respect to property leased from an unrelated third party, the
foregoing representation is made to the best knowledge of the
Borrower. In addition, (i) the Borrower does not have any
underground storage tanks that are not properly registered or
permitted under applicable Environmental Laws, or that are leaking
or disposing of Hazardous Materials off-site, and (ii) the Borrower
has notified all of their employees of the existence, if any, of any
health hazard arising from the conditions of their employment and
have met all notification requirements under Title III of CERCLA and
all other Environmental Laws.
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SECTION
5
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as the Borrower is indebted to the Bank under this Agreement,
the Borrower will, unless the Bank shall otherwise consent in writing:
5.1 REPORTING AND CERTIFICATION REQUIREMENTS: Deliver or cause to be
delivered to the Bank in form and detail satisfactory to the Bank:
(i) Not later than 150 days after the end of each of the
Borrower's fiscal years, a copy of the annual audited
financial report of the Borrower for such year, prepared by a
firm of certified public accountants acceptable to Bank and
accompanied by an unqualified opinion of such firm.
(ii) Not later than 45 days after the end of each fiscal quarter, a
copy of the Borrower's financial statement as of the end of
such fiscal quarter, compiled by a firm of certified public
accountants acceptable to Bank.
(iii) Promptly upon the Bank's request, such other information
pertaining to the Borrower, the Collateral or any guarantor
hereunder as the Bank may reasonably request.
5.2 FINANCIAL CONDITION: The Borrower promises and agrees, during the
term of this Agreement and until payment in full of all of the
Borrowers Obligations, the Borrower will maintain at all times:
(i) A minimum Effective Tangible Net Worth of at least
$35,000,000.00.
(ii) A ratio of Debt to Effective Tangible Net Worth of not more
than .70 to 1 through July 31, 2005 and .65 to 1.00
thereafter.
(iii) A minimum Working Capital of not less than $40,000,000.00.
(iv) A Fixed Charge Coverage Ratio of not less than 1.25 to 1,
measured at each fiscal year-end, provided however that this
ratio shall be used solely to determine the Applicable Margin.
5.3 PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS: Maintain
and preserve its existence and all rights and privileges now
enjoyed; and conduct its business and operations in accordance with
all applicable laws, rules and regulations.
5.4 MERGE OR CONSOLIDATE: Not liquidate or dissolve, merge or
consolidate with or into, or acquire any other business
organization.
-17-
5.5 MAINTENANCE OF INSURANCE: Maintain insurance in such amounts and
covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general
areas in which the Borrower operates and maintain such other
insurance and coverages as may be required by the Bank. All such
insurance shall be in form and amount and with companies
satisfactory to the Bank.
5.6 PAYMENT OF OBLIGATIONS AND TAXES: Make timely payment of all
assessments and taxes and all of its liabilities and obligations
including, but not limited to, trade payables, unless the same are
being contested in good faith by appropriate proceedings with the
appropriate court or regulatory agency. For purposes hereof, the
Borrower's issuance of a check, draft or similar instrument without
delivery to the intended payee shall not constitute payment.
5.7 INSPECTION RIGHTS AND ACCOUNTING RECORDS: The Borrower will maintain
adequate books and records in accordance with generally accepted
accounting principles consistently applied and in a manner otherwise
acceptable to Bank, and, at any reasonable time and from time to
time, permit the Bank or any representative thereof to examine and
make copies of the records and visit the properties of the Borrower
and discuss the business and operations of the Borrower with any
employee or representative thereof. If the Borrower shall maintain
any records (including, but not limited to, computer generated
records or computer programs for the generation of such records) in
the possession of a third party, the Borrower hereby agrees to
notify such third party to permit the Bank free access to such
records at all reasonable times and to provide the Bank with copies
of any records which it may request, all at the Borrower's expense,
the amount of which shall be payable immediately upon demand.
5.8 PAYMENT OF DIVIDENDS: Not declare or pay any dividends on any class
of stock now or hereafter outstanding except dividends payable
solely in the Borrower's capital stock.
5.9 REDEMPTION OR REPURCHASE OF STOCK: Not redeem or repurchase any
class of the Borrower's stock now or hereafter outstanding.
5.10 ADDITIONAL INDEBTEDNESS: Not, without prior notification to the
Bank, after the date hereof, create, incur or assume, directly or
indirectly, any additional indebtedness other than (i) indebtedness
owed or to be owed to the Bank or (ii) Indebtedness to trade
creditors incurred in the Ordinary Course of Business or (iii)
indebtedness owed or to be owed to COBANK, ACB.
5.11 LOANS: Not make any loans or advances or extend credit to any third
person, including, but not limited to, directors, officers,
shareholders, partners, employees, affiliated entities and
subsidiaries of the Borrower, except for credit extended in the
Ordinary Course of Business as presently conducted.
5.12 LIENS AND ENCUMBRANCES: Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust, or other
lien (including, but not
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limited to, a lien of attachment, judgment or execution) affecting
any of the Borrower's properties, or execute or allow to be filed
any financing statement or continuation thereof affecting any of
such properties, except for Permitted Liens or as otherwise provided
in this Agreement.
5.13 TRANSFER ASSETS: Not, after the date hereof, sell, contract for
sale, convey, transfer, assign, lease or sublet, any of its assets
except in the Ordinary Course of Business and, then, only for full,
fair and reasonable consideration.
5.14 CHANGE IN NATURE OF BUSINESS: Not make any material change in its
financial structure or the nature of its business as existing or
conducted as of the date hereof.
5.15 MAINTENANCE OF JURISDICTION: Borrower shall maintain the
jurisdiction of its organization and chief executive office, or if
applicable, principal residence, as set forth herein and not change
such jurisdiction name or form of organization without 30 days prior
written notice to Bank.
5.16 COMPENSATION OF EMPLOYEES: Compensate its employees for services
rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any. applicable federal or state law or regulation.
5.17 PAYMENTS TO MEMBERS: Not make, directly or indirectly, any payment
(in cash or kind) to any of its grower members unless, after giving
effect thereto, the Borrower, in the exercise of sound business
judgment, reasonably believes that the Borrower will be able to make
timely payment of all principal, interest or other obligation under
the terms of this Agreement.
5.18 NOTICE: Give the Bank prompt written notice of any and all (i)
Events of Default; (ii) litigation, arbitration or administrative
proceedings to which the Borrower is a party and in which the claim
or liability exceeds $1,000,000.00; (iii) other matters which have
resulted in, or might result in a material adverse change in the
financial condition or business operations of the Borrower.
5.19 ENVIRONMENTAL COMPLIANCE: The Borrower shall conduct its operations
and keep and maintain all of its property in compliance with all
Environmental Laws and, upon the written request of the Bank, the
Borrower shall submit to the Bank, at the Borrower's sole cost and
expense, at reasonable intervals, a report providing the status of
any environmental, health or safety compliance, hazard or liability.
SECTION
6
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an event of
default (an "Event of Default") under this Agreement:
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6.1 NON-PAYMENT: Any Borrower shall fail to pay the principal amount of
any Obligations when due or interest on the Obligations within 5
days of when due.
6.2 PERFORMANCE UNDER THIS AGREEMENT: The Borrowers shall fail in any
material respect to perform or observe any term, covenant or
agreement contained in this Agreement or in any document, instrument
or agreement relating to this Agreement or any other document or
agreement executed by the Borrowers with or in favor of Bank and any
such failure shall continue unremedied for more than 30 days after
the occurrence thereof.
6.3 REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS: Any
representation or warranty made by the Borrower under or in
connection with this Agreement or any financial statement given by
the Borrower or any guarantor shall prove to have been incorrect in
any material respect when made or given or when deemed to have been
made or given.
6.4 OTHER AGREEMENTS: If there is a default under any agreement to which
Borrower is a party with Bank or with a third party or parties
resulting in a right by the Bank or by such third party or parties,
whether or not exercised, to accelerate the maturity of any
Indebtedness.
6.5 INSOLVENCY: The Borrower or any guarantor shall: (i) become
insolvent or be unable to pay its debts as they mature; (ii) make an
assignment for the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its properties and assets; (iii)
file a voluntary petition in bankruptcy or seeking reorganization or
to effect a plan or other arrangement with creditors; (iv) file an
answer admitting the material allegations of an involuntary petition
relating to bankruptcy or reorganization or join in any such
petition; (v) become or be adjudicated a bankrupt; (vi) apply for or
consent to the appointment of, or consent that an order be made,
appointing any receiver, custodian or trustee, for itself or any of
its properties, assets or businesses; or (vii) in an involuntary
proceeding, any receiver, custodian or trustee shall have been
appointed for all or substantial part of the Borrower's or
guarantor's properties, assets or businesses and shall not be
discharged within 30 days after the date of such appointment.
6.6 EXECUTION: Any writ of execution or attachment or any judgment lien
shall be issued against any property of the Borrower and shall not
be discharged or bonded against or released within 30 days after the
issuance or attachment of such writ or lien.
6.7 SUSPENSION: The Borrower shall voluntarily suspend the transaction
of business or allow to be suspended, terminated, revoked or expired
any permit, license or approval of any governmental body necessary
to conduct the Borrower's business as now conducted.
6.8 MATERIAL ADVERSE CHANGE: If there occurs a material adverse change
in the Borrower's business or financial condition, or if there is a
material impairment of
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the prospect of repayment of any portion of the Obligations, or if a
Borrower who is a natural person shall die.
6.9 CHANGE IN OWNERSHIP: There shall occur a sale, transfer, disposition
or encumbrance (whether voluntary or involuntary), or an agreement
shall be entered into to do so, with respect to more than 10% of the
issued and outstanding capital stock of the Borrower.
SECTION
7
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:
7.1 ACCELERATION: Declare any or all of the Borrower's indebtedness
owing to the Bank, whether under this Agreement or any other
document, instrument or agreement, immediately due and payable,
whether or not otherwise due and payable.
7.2 CEASE EXTENDING CREDIT: Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or
under any other agreement now existing or hereafter entered into
between the Borrower and the Bank.
7.3 TERMINATION: Terminate this Agreement as to any future obligation of
the Bank without affecting the Borrower's obligations to the Bank or
the Bank's rights and remedies under this Agreement or under any
other document, instrument or agreement.
7.4 LETTERS OF CREDIT: Require the Borrower to pay immediately to the
Bank, for application against drawings under any outstanding Letters
of Credit, the outstanding principal amount of any such Letters of
Credit which have not expired. Any portion of the amount so paid to
the Bank which is not applied to satisfy draws under any such
Letters of Credit or any other obligations of the Borrower to the
Bank shall be repaid to the Borrower without interest.
7.5 CLOSE-OUT AND LIQUIDATION: Close-out and liquidate each outstanding
FX Transaction so that each FX Transaction is canceled in accordance
with the following:
(i) CLOSING VALUE. The Bank shall calculate value of such canceled
FX Transaction by converting (1) in the case of a FX
Transaction whose Settlement Date is the same as or later than
the Close-Out Date, the amount of Foreign Currency into US
dollars at a rate of exchange at which the Bank can buy or
sell US dollars with or against the Foreign Currency for
delivery on the Settlement Date of the relevant FX
Transaction; or (2)
-21-
in the case of a FX Transaction whose Settlement Date precedes
the Close-Out Date, the amount of the Foreign Currency
adjusted by adding interest with respect thereto at the
Variable Rate from the Settlement Date to the Close-Out Date,
into US Dollars at a rate of exchange at which the Bank can
buy or sell US dollars with or against the Foreign Currency
for delivery on the Close-Out Date.
(ii) CLOSING GAIN OR LOSS. (1) For a FX Transaction for which the
Bank agreed to purchase a Foreign Currency, the amount by
which the Closing Value exceeds the Notional Value shall be a
Closing Loss and the amount by which the Closing Value is less
than the Notional Value shall be a Closing Gain; and (2) For a
FX Transaction for which the Bank agreed to sell a Foreign
Currency, the amount by which the Closing Value exceeds the
Notional Value shall be a Closing Gain and the amount by which
the Closing Value is less than the Notional Value shall be a
Closing Loss.
(iii) NET PRESENT VALUE. The Closing Gain or Closing Loss for each
Settlement Date falling after the Close-out Date will be
discounted by the Bank to it net present value.
(iv) PAYMENT. To the extent that the net amount of the aggregate
Closing Gains exceeds the Closing Losses, such amount shall be
payable by the Bank to the Borrower. To the extent that the
aggregate net amount of the Closing Losses exceeds the Closing
Gains, such amount shall be payable by the Borrower to the
Bank.
7.6 NON-EXCLUSIVITY OF REMEDIES: Exercise one or more of the Bank's
rights set forth herein or seek such other rights or pursue such
other remedies as may be provided by law, in equity or in any other
agreement now existing or hereafter entered into between the
Borrower and the Bank, or otherwise.
SECTION
8
MISCELLANEOUS
8.1 AMOUNTS PAYABLE ON DEMAND: If the Borrower shall fail to pay on
demand any amount so payable under this Agreement, the Bank may, at
its option and without any obligation to do so and without waiving
any default occasioned by the Borrower having so failed to pay such
amount, create an Advance under this Agreement in an amount equal to
the amount so payable, which Advance shall thereafter bear interest
as provided hereunder.
8.2 DEFAULT INTEREST RATE: If an Event of Default, or an event which,
with notice or passage of time could become an Event of Default, has
occurred or is continuing, the Borrower shall pay to the Bank
interest on any indebtedness or amount payable under this Agreement
at a rate which is 3% in excess of the rate or rates then in effect
under this Agreement.
-22-
8.3 RELIANCE AND FURTHER ASSURANCES: Each warranty, representation,
covenant, obligation and agreement contained in this Agreement shall
be conclusively presumed to have been relied upon by the Bank
regardless of any investigation made or information possessed by the
Bank and shall be cumulative and in addition to any other
warranties, representations, covenants and agreements which the
Borrower now or hereafter shall give, or cause to be given, to the
Bank. Borrower agrees to execute all documents and instruments and
to perform such acts as the Bank may reasonably deem necessary to
confirm and secure to the Bank all rights and remedies conferred
upon the Bank by this agreement and all other documents related
thereto.
8.4 ATTORNEYS' FEES: Borrower shall pay to the Bank all costs and
expenses, including but not limited to reasonable attorneys fees,
incurred by Bank in connection with the administration, enforcement,
including any bankruptcy, appeal or the enforcement of any judgment
or any refinancing or restructuring of this Agreement or any
document, instrument or agreement executed with respect to,
evidencing or securing the indebtedness hereunder.
8.5 NOTICES: All notices, payments, requests, information and demands
which either party hereto may desire, or may be required to give or
make to the other party hereto, shall be given or made to such party
by hand delivery or through deposit in the United States mail,
postage prepaid, or by facsimile delivery, or to such other address
as may be specified from time to time in writing by either party to
the other.
To the Borrower: To the Bank:
DIAMOND WALNUT GROWERS, INC. BANK OF THE WEST
1050 South Diamond Street Sacramento Office (ABC)
Xxxxxxxx, XX 00000 601 "J" Street
Attn: Xxxxxxx X. Xxxxxxx Xxxxxxxxxx, XX 00000
FAX (000) 000-0000 Attn: Xxxxx Xxxxxx
FAX: (000) 000-0000
8.6 WAIVER. Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement
mentioned herein shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder or under any other
document, instrument or agreement mentioned herein preclude other or
further exercise thereof or the exercise of any other right; nor
shall any waiver of any right or default hereunder, or under any
other document, instrument or agreement mentioned herein, constitute
a waiver of any other right or default or constitute a waiver of any
other default of the same or any other term or provision.
8.7 CONFLICTING PROVISIONS: To the extent the provisions contained in
this Agreement are inconsistent with those contained in any other
document, instrument or agreement executed pursuant hereto, the
terms and provisions contained herein shall control. Otherwise, such
provisions shall be considered cumulative.
-23-
8.8 BINDING EFFECT; ASSIGNMENT: This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower shall
not have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Bank. The Bank may
sell, assign or grant participation in all or any portion of its
rights and benefits hereunder. The Borrower agrees that, in
connection with any such sale, grant or assignment, the Bank may
deliver to the prospective buyer, participant or assignee financial
statements and other relevant information relating to the Borrower
and any guarantor.
8.9 JURISDICTION: This Agreement, any notes issued hereunder, the rights
of the parties hereunder to and concerning the Collateral, and any
documents, instruments or agreements mentioned or referred to herein
shall be governed by and construed according to the laws of the
State of California without regard to conflict of law principles, to
the jurisdiction of whose courts the parties hereby submit.
8.10 WAIVER OF JURY TRIAL: THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER
AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
8.11 TELEPHONE RECORDING: The Borrower agrees that the Bank may
electronically record all telephone conversations between the
Borrower and the Bank with respect to any FX Transaction and that
any such recording may be submitted in evidence in any arbitration
or other legal proceeding. Such recording shall be deemed to be
conclusive evidence as to the terms of any FX Transaction in the
event of a dispute.
8.12 COUNTERPARTS: This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be
deemed to constitute one and the same instrument.
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8.13 HEADINGS: The headings herein set forth are solely for the purpose
of identification and have no legal significance.
8.14 ENTIRE AGREEMENT AND AMENDMENTS: This Agreement and all documents,
instruments and agreements mentioned herein constitute the entire
and complete understanding of the parties with respect to the
transactions contemplated hereunder. All previous conversations,
memoranda and writings between the parties pertaining to the
transactions contemplated hereunder not incorporated or referenced
in this Agreement or in such documents, instruments and agreements
are superseded hereby. This Agreement may be amended only by an
instrument in writing signed by the Borrower and the Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first hereinabove written.
BANK: BORROWER:
BANK OF THE WEST DIAMOND WALNUT GROWERS, INC.
BY: /s/ Xxxxx Xxxxxx BY: /s/ Xxxxxxx X. Xxxxxxx
________________________ ________________________
NAME: Xxxxx Xxxxxx, Vice President NAME: Xxxxxxx X. Xxxxxxx,
Vice President and
Controller
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