EXHIBIT 10.1
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement (the "Loan Agreement") is entered into
as of the 31st day of July, 2000, between Xxxx Deere Construction Equipment
Company, Deere Credit, Inc., and Xxxx Deere Company, A Division of Deere &
Company (collectively referred to as the "Lender") and RDO Agriculture Equipment
Co. ("RDO Agriculture") and RDO Construction Equipment Co. ("RDO Construction")
(RDO Agriculture and RDO Construction are collectively referred to herein as the
"Borrower"). This Loan Agreement amends and restates in its entirety that
certain Loan Agreement dated January 19, 1999.
RECITALS
A. Borrower has requested that Lender extend a line of credit to it for the
purposes of providing Borrower with working capital and to finance the
acquisition of inventory;
B. Lender is willing to extend Borrower a Line of Credit subject to the terms
and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Loan
Agreement and other good and valuable consideration, the receipt and sufficiency
of which is expressly acknowledged, the parties agree as follows:
1. DEFINITIONS.
When used in this Loan Agreement, the following terms shall have the
meanings specified below:
"Advance" means each sum of money or its equivalent advanced by Lender to
Borrower or to a party designated by Borrower, evidenced by a Note For
Advance, pursuant to this Loan Agreement.
"Advance Account" means the account maintained in Borrower's name on
Lender's books.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Persons. A Person shall be deemed to
control another Person if such Person possesses, directly or indirectly,
the power (i) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii) to direct
or cause the direction of the management and policies of such other Person,
whether through the ownership of voting securities, by contract or
otherwise.
"Borrowing Base Amount" means, at the time in question, an amount equal to
the sum of the Eligible Value of all Eligible Inventory.
"Borrowing Base Certificate" means a certificate in the form attached
hereto as Exhibit A, as amended by Lender from time to time.
"Business Day" shall mean each day of the year other than Saturdays,
Sundays and days on which Deere Credit Services, Inc. is required or
authorized to be closed for business.
"Capitalized Lease Obligations" shall mean, with respect to any person, all
Rental obligations of such person which, under GAAP, are or will be
required to be capitalized on the books of such Person, in each case taken
at the amount thereof accounted for as indebtedness in accordance with such
principles.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as the same may be amended from time to time, 42
U.S.C. ss. 9601 ET SEQ.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the
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Code, as in effect on the effective date of this agreement and any
subsequent provisions of the Code, amendatory thereof, supplemental thereto
or substituted therefor.
"Collateral" shall have the meaning given to it in the Security Agreement.
"Conservative Lending Value" means, with respect to items of Financed
Inventory, the amount of gross proceeds which could be expected from the
sale of assets, held under ordinary sale conditions (without a compulsion
to buy, but with a compulsion to sell) given a reasonable amount of time
(not less than 120 days) in which to find a purchaser, with such sale being
a completed sale of all assets on an "as is, where is" basis, with all
sales made free and clear of all liens and encumbrances. The conservative
lending value shall be determined by Lender in its sole discretion, based
on a collateral valuation conducted by Lender or its designee of a sample
of randomly selected similar items of Borrower's Inventory. The sample
subject to the valuation shall consist of not less than 10% of the total
number of units on the most recent Borrowing Base Certificate submitted by
the Borrower; provided, however, if this results in a sample of less than
200 units, the sample shall be comprised of units of Financed Inventory
with a then-current Borrowing base value of not less than 10% of the entire
Borrowing Base amount. Conservative Lending Value of each type of Financed
Inventory shall be established by an initial valuation and by subsequent
annual collateral valuations, and Eligible Values for all Financed
Inventory will be adjusted immediately, if necessary, based on such
valuations.
"Consolidated", when used with reference to Current Assets, Current
Liabilities, EBIT, Interest Expense, Indebtedness, Liabilities, Net Income,
Net Worth or Tangible Net Worth, shall mean the sum of the Current Assets,
Current Liabilities, EBIT, Interest Expenses, Indebtedness, Liabilities,
Net Incomes, Net Worths or Tangible Net Worths, as the case may be, of the
Borrower and its consolidated Subsidiaries, as consolidated after the
elimination of intercompany items and, in the case of Net Income, Net Worth
and Tangible Net Worth, after appropriate deductions for any minority
interests in any Subsidiaries, and, when used with reference to such
accounts of any other Person, shall mean the sum of such accounts of such
Person and its Consolidated Subsidiaries as so modified.
"Consolidated Subsidiaries" shall mean, as to the Borrower, the
Subsidiaries of the Borrower whose accounts are, in accordance with GAAP,
consolidated with those of the Borrower.
"Dollars" and the sign "$" shall each mean the freely transferable lawful
money of the United States of America.
"EBIT" means, for any period, net income for such period before interest
expense and provision for taxes for such period and without giving effect
(i) to any extraordinary gains or losses and (ii) to any gains or losses
from sales of assets other than from sales or rentals of inventory or
equipment in the ordinary course of business.
"Eligible Agriculture Inventory" means Eligible Inventory that Lender, in
its absolute discretion, determines is typically used for agricultural
purposes.
"Eligible Construction Inventory" means Eligible Inventory that Lender, in
its absolute discretion, determines is typically used for construction,
industrial or commercial purposes.
"Eligible Inventory" means Inventory that the Lender, in its absolute
discretion, determines to meet all of the following requirements:
(a) such Inventory is owned by Borrower and stored at one of its
approved locations, pursuant to any Dealer Agreements with
Lenders or their successor agreement(s), or is subject to a
rental agreement,
(b) such Inventory is subject to the Security Interest, which is
perfected as to such Inventory, and is subject to no other Lien
whatsoever other than a Permitted Lien,
(c) Such Inventory consists of finished goods and not work-in-process
or supplies,
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(d) Such Inventory is in a condition that meets all standards imposed
by any governmental agency, or department or division thereof,
having regulatory authority over such goods, their use or sale,
(e) such Inventory is currently either usable or salable, at prices
approximating at least cost, in the normal course of Borrower's
business and is not slow moving or stale, or obsolete
(f) such Inventory is located within the United States.
(g) such Inventory is in the possession or control of the Borrower
and not any third party (other than pursuant to the terms of a
rental agreement) or if the Inventory is held by a third party
for purposes of repairs, such third party has notice of the
Security Interest, and Borrower has taken steps as Lender may
reasonably require in order to establish and preserve the
priority of the Security Interest against secured creditors of
the third party or the Borrower,
(h) if such Inventory is located in a warehouse or other facility
leased by the Borrower, the lessor has delivered to the Lender a
waiver and consent in form and substance satisfactory to the
Lender, and
(i) such Inventory is not determined by Lender in its absolute
discretion to be ineligible for any other reason.
"Eligible Value" means, with respect to an item of Eligible Inventory, the
following, as determined by Lender in its sole discretion:
(a) The Eligible Value for each item of New Equipment Inventory for
the first Loan Year shall be 95% of the Net Book Value of each
item of New Equipment Inventory. From time to time thereafter,
based upon subsequent collateral valuations, the Eligible Value
of each New Equipment Inventory shall be the lesser of (i) Net
Book Value, or (ii) the Conservative Lending Value of such item
divided by the Net Book Value of such item (determined by the
Lender from the most recent collateral valuations) multiplied by
a factor of 1.092.
(b) The Eligible Value for each item of Used Equipment Inventory for
the first Loan Year shall be 95% of the Net Book Value of each
item of Used Equipment Inventory. From time to time thereafter,
based upon subsequent collateral valuations, the Eligible Value
of each Used Equipment Inventory shall be the lesser of (1) Net
Book Value, or (ii) the Conservative Lending Value of such item
divided by the Net Book Value of such item (determined by the
Lender from the most recent collateral valuations) multiplied by
a factor of 1.092.
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, proceedings
(of which the Borrower or any of its Subsidiaries has notice) relating any
way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, "Claims"), including, without
limitation, (a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in
connection with the alleged injury or threat of injury to health, safety or
the environment due to the presence of Hazardous Materials.
"Environmental Law" shall mean any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guideline, written
and binding policy and rule of common law now or hereafter in effect and in
each case as amended, and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, relating to the
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environment, employee health and safety or Hazardous Materials, including
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act,
33 U.S.C. ss. 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. ss.
2601 ET SEQ.; the Clean Air Act, 42 U.S.C. ss. 7401 ET SEQ.; the Safe
Drinking Water Act, 42 U.S.C. ss. 3803 ET SEQ.; the Oil Pollution Act of
1990, 33 U.S.C. ss. 27001 ET SEQ.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 ET SEQ.; the Hazardous
Material Transportation Act, 49 U.S.C. ss. 1801 ET SEQ.; and the
Occupational Safety and Health Act, 29 U.S.C. ss 651 ET SEQ.; and any state
and local or foreign counterparts or equivalents (to the extent
applicable), in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder. Section references to ERISA are to ERISA and any
subsequent provisions of ERISA, amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in section 3 (9) of
ERISA) which together with the Borrower or a Subsidiary of the Borrower
would be deemed to be a "single employer" (i) within the meaning of Section
414 (b), (c), (m) or (o) of the Code or (ii) as a result of the Borrower or
a Subsidiary of the Borrower being or having a general partner of such
person
"Event of Default" means any event identified in Section 13 hereof.
"Financed Inventory" shall mean each piece of inventory contained in the
most recent schedule of inventory provided in conjunction with the most
recent Borrowing Base Certificate.
"GAAP" shall mean the Generally Accepted Accounting Principles as defined
and promulgated by the Financial Accounting Standards Board.
"Guarantor" shall mean RDO Equipment Co.
"Guaranty" shall mean the Guaranty agreement executed and delivered
contemporaneously herewith.
"Hazardous Materials" shall mean (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon
gas; (b) any chemicals, materials or substances defined as or included in
the definition of "hazardous substances," "hazardous waste," "hazardous
materials," "extremely hazardous substances," "restricted hazardous waste,"
"toxic substances," "toxic pollutants," "contaminants," or "pollutants," or
words of similar import, under any applicable Environmental Law; and (c)
any other chemical, material or substance, the Release of which is
prohibited, limited or regulated by any governmental authority.
"Indebtedness" shall mean, at any time, the principal amount of all debt,
including accruals, deferrals and payables, of the Borrower at such time as
determined.
"Interest Expense" means, for any period, the total consolidated interest
expense for the Borrower and its Subsidiaries for such period (calculated
without regard to any limitations on the payment thereof, plus, without
duplication, that portion of Capitalized Lease Obligations of the Borrower
and its Subsidiaries representing the interest factor for such period.
"Inventory" shall mean all whole-good machinery or equipment held for sale
by the Borrower, specifically excluding parts, unattached attachments and
equipment held by Borrower under lease arrangements.
"Leaseholds" of any Person shall mean the right, title and interest of such
Person a lessee in, to and under leases of land, improvements and/or
fixtures.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), preference, priority
or other security agreement of any kind or
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nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement, any financing or similar statement or
notice filed under the Uniform Commercial Code or any other similar
recording or notice statute, and any lease having substantially the same
effect as any of the foregoing).
"Line of Credit Amount" has the meaning given to it in Section 4.
"Line of Credit Rate" means a rate equal to the lesser of (i) "Citibank
base rate" (the interest rate announced publicly from time to time by
Citibank, N.A. in New York, New York as the base (or "prime") rate it uses
in determining the rate of interest it charges on loans) which was in
effect at the close of business on the 15th day of the preceding month plus
the appropriate additive included in the table immediately following, or
(ii) the maximum rate of interest allowed by applicable law:
LINE UTILIZATION ADDITIVE
---------------- --------
From 0% up to 50% Minus 0.70%
From 50% up to 75% Minus 0.80%
From 75% up to 100% Minus 0.87%
100% Minus 0.90%
"Line of Credit Sublimit" shall mean,
a. For RDO Agriculture, an amount not to exceed Twenty Million and 00/100
Dollars ($20,000,000.00); and,
b. For RDO Construction, an amount not to exceed One Hundred Five Million
and 00/100 Dollars ($105,000,000.00).
"Line Utilization" shall mean that percentage derived from the calculation:
average outstanding balance for the month in question divided by the Line
of Credit Amount, expressed as a percentage.
"Loan Documents" means this Loan Agreement, the Security Agreement, the
Borrowing Base Certificate(s), and all addenda, exhibits, supplements, and
amendments hereto.
"Maximum Borrowing Amount" shall mean an amount equal to the lesser of: (i)
the Line of Credit Amount; or, (ii) the aggregate of the Maximum Borrowing
Sublimit Amount.
"Maximum Borrowing Sublimit Amount" shall mean,
a. For RDO Agriculture, the lessor of: (i) the Line of Credit Sublimit
for such Borrower, or (ii) the Borrowing Base Amount for such Borrower
calculated using only Eligible Agriculture Inventory as indicated on
the most recent Borrowing Base Certificate submitted by Borrower to
Lender; and,
b. For RDO Construction, the lessor of: (i) the Line of Credit Sublimit
for such Borrower, or (ii) the Borrowing Base Amount for such Borrower
calculated using only Eligible Construction Inventory as indicated on
the most recent Borrowing Base Certificate submitted by Borrower to
Lender.
"Maximum Capital and Operating Lease Amount " shall mean Twenty Five
Million and 00/100 Dollars ($25,000,000.00).
"Meaningful Progress" means Borrower's progression toward achieving a level
of performance which is consistent with established financial covenants, as
defined in Section 11 of this Agreement, within a reasonable period of time
agreed upon by Lender and Borrower. If Lender and Borrower do not reach
agreement upon Meaningful Progress with respect to a particular financial
covenant, Lender will determine in its sole discretion what will constitute
Meaningful Progress for that particular financial covenant.
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"Net Book Value" means the cost of an asset, net of all discounts, plus
freight and delivery charges and significant repairs that add to the
utility of the asset, less any and all accumulated depreciation, expenses
and writedowns in valuation assessed against the asset.
"Net Income" means, as applied to any Person, the net income (or net loss)
of Such Person for the period in question after giving effect to deduction
of or provision for all operating expenses, all taxes and reserves
(including reserves for deferred taxes) and all other proper deductions,
all determined in accordance with GAAP, provided that there shall be
excluded:
(a) the net income (or net loss) of any Person in which the Person
whose Net Income is being determined or any Subsidiary of such
Person has an ownership interest, except, in the case of net
income, to the extent that any such income has actually been
received by such Person or such Subsidiary in the form of cash
dividends or similar distributions,
(b) any restoration of any contingency reserve, except to the extent
that provision for such reserve was made out of income during
such period,
(c) any net gains or losses on the sale or other disposition, not in
the ordinary course of business, of Investments, Business Units
and other capital assets, provided that there shall also be
excluded any related charges for taxes thereon,
(d) any net gain arising from the collection of the proceeds of any
insurance policy,
(e) any write-up of any asset, and
(f) any other extraordinary item.
"Net Worth" means, with respect to any Person, such Person's total
shareholder's equity (including capital stock, additional paid-in capital
and retained earnings, after deducting treasury stock) which would appear
as such on a balance sheet of such Person prepared in accordance with GAAP.
"New Equipment Inventory" means, at any time, all inventory that (a) is
less than or equal to one year from date of original manufacturer invoice,
(b) has not been sold by Borrower, (c) has a manufacturer's invoice showing
Borrower purchased the item from the manufacturer and (d) is being held by
Borrower for sale or rent to other Persons.
"Note For Advance" means a promissory note or notes evidencing the Advance
substantially in the form of EXHIBIT B, executed by Borrower and payable to
the order of Lender, as the same may be replaced, amended, modified,
supplemented, restated from time to time, together with any renewals
thereof or exchanges or substitutions thereof.
"Obligation(s)" means all obligations and indebtedness of Borrower to
Lender, or any Lender affiliated with Lender, of every kind, nature and
description, direct or indirect, absolute or contingent, joint or several,
due or to become due, now existing or hereafter arising, including, but not
limited to, the Advances and any obligations and indebtedness of Borrower
which Lender has acquired, or may in the future acquire, by way of
purchase, assignment or otherwise.
"Operating Lease(s)" shall mean, with respect to any Person, any lease of
tangible property whereby all Rentals of such Person which, under GAAP, are
or will NOT be accounted for, or shown on the balance sheet, as
indebtedness of such Person in accordance with such principles.
"Orderly Liquidation Value" of any asset shall mean, as determined by a
desk top professional opinion of an appraisal company with qualifications
and standing acceptable to Lender, an expected gross dollar amount to be
realized at an orderly negotiated sale of such asset held within a
reasonable period of time as of the date of such opinion.
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"PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.
"Permitted Liens" shall mean:
(i) Liens created pursuant to the Security Agreement;
(ii) inchoate Liens for taxes, assessments or governmental
charges or levies not yet due or Liens for taxes,
assessments or governmental charges or levies being
contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance
with GAAP;
(iii) Liens in respect of property or assets of the Borrower
imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed
money, such as carrier's, warehousemen's, materialmen's and
mechanics' Liens and other similar Liens arising in the
ordinary course of business, and which do not in the
aggregate materially detract from the value of the
Borrower's property or assets or materially impair the use
thereof in the operation of the business or which are being
contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or
sale of the property or assets subject to any such lien;
(iv) leases and subleases granted to others not materially
interfering with the conduct of the business of the
Borrower;
(v) Liens upon assets of the Borrower subject to capital leases
(as defined by GAAP), PROVIDED that such Liens only serve to
secure the payment of Indebtedness arising under such
capital leases and the Liens encumbering the assets giving
rise to the capital leases do not encumber any other asset
of the Borrower;
(vi) Liens arising from precautionary UCC financing statement
filings regarding operating leases;
(vii) statutory and common law landlords' Liens under leases to
which the Borrower is a party;
(viii) Liens securing the performance of bids, tenders, leases and
contracts in the ordinary course of business and statutory
obligations, surety bonds, performance bonds and other
obligations of like nature incurred in the ordinary course
of business (exclusive of obligations in respect of the
payment for borrowed money), PROVIDED that the aggregate
amount of any cash and the fair market value of any property
subject to such Liens do not exceed one million dollars
($1,000,000.00).
(ix) Liens arising out of the existence of judgments or awards in
respect of which the Borrower shall in good faith be
prosecuting an appeal or proceedings for review in respect
of which there shall have been secured a substituting stay
of execution pending such appeal or proceedings, PROVIDED
that the aggregate amount of any cash and the fair market
value of any property subject to such Liens do not exceed
one million dollars ($1,000,000.00).
(x) Liens granted by Borrower in favor of Bank of America
Leasing and Capital, LLC on any Collateral, PROVIDED the
Liens are subject to the Intercreditor Agreements between
Lender and these parties. Liens associated with Deutsche
Financial and Ag Capital, as creditors, unless these liens
interfere with Deere's security interest in the Collateral.
(xi) Liens to secure Indebtedness arising from perfected purchase
money security interests for which the secured party has not
received payment in full, PROVIDED the Liens acquired do not
encumber any other assets of Borrower.
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"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust or other
enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any pension plan as defined in Section 3 (2) of ERISA,
which is maintained or contributed to by (or to which there is an
obligation to contribute of) the Borrower or a Subsidiary of the Borrower
or an ERISA Affiliate, and each such plan for the five year period
immediately following the latest date on which the Borrower, or a
Subsidiary of the Borrower or an ERISA affiliate maintained, contributed to
or had an obligation to contribute to such plan.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the same
may be amended from time to time, 42 U.S.C. ss. 6901 ET SEQ.
"Real Property" of any Person shall mean all the right, title and interest
of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Release" shall mean the disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring
or migrating, into or upon any land or water or air, or otherwise entering
into the environment.
"Rental(s)" means, as of the date of determination thereof, all fixed
payments (including as such all payments which the lessee is obligated to
make to the lessor on termination of the lease or surrender of the
property) payable by the Borrower, as lessee or sub-lessee under a lease of
real or personal property, but shall be exclusive of any amounts required
to be paid by the Borrower (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall
be computed solely on the basis of the minimum rents, if any, required to
be paid by the lessee regardless of sales volume or gross revenues.
"Reportable Event" shall mean an event described in Section 4043 (c) of
ERISA with respect to a Plan that is subject to Title IV of ERISA other
than those events as to which the 30-day notice period is waived under
subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Security Agreement" shall mean the Amended and Restated Security Agreement
between Borrower and Lender executed and delivered contemporaneously
herewith, along with any future amendments and modifications thereto.
"Subsidiary" shall mean, as to any Person, (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at a time owned by such
Person and/or one or more Subsidiaries of such Person and (ii) any
partnership, limited liability company, association, joint venture or other
entity in which such Person and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time.
"Tangible Net Worth" means, as applied to the Borrower, the excess of the
Borrower's consolidated total assets over Borrower's total Consolidated
Liabilities at the time in question, after excluding from the definition of
assets the amount of all intangible items reflected therein, including,
without limitation, (a) any write-up in the book value of an asset
resulting from a revaluation thereof subsequent to the date of
determination, (b) treasury stock, (c) receivables from Affiliates, (d)
unamortized debt discounts and expenses, and (e) patents, trademarks, trade
names, goodwill,
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deferred charges, organizational expenses and all similar items which
should properly be treated as intangibles in accordance with GAAP.
"Termination Date" means October 31, 2000, or if this Loan Agreement is
renewed, the annual anniversary date as described in Section 3.
"UCC" shall mean the Uniform Commercial Code as from time to time in effect
in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by
which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year, determined in
accordance with actuarial assumptions at such time consistent with
Statement of Financial Accounting Standards No. 87, exceeds the sum of (i)
the market value of the assets allocable thereto and (ii) $100,000.
"Used Equipment Inventory" means all Inventory not considered New
Equipment.
2. ADVANCES.
Assuming no Event of Default has occurred and is continuing, Lender shall,
until the Termination Date, make Advances to Borrower, up to an amount
which when combined with all other outstanding Advances does not exceed the
Maximum Borrowing Amount. Each Advance made under this Line of Credit shall
be for an amount that shall not be less than Fifteen Thousand and 00/100
dollars ($15,000.00). Request for Advances shall be made to the Lender by
means of a document substantially in the form attached hereto as Exhibit B.
3. TERM.
This Loan Agreement shall remain in effect for an initial term to October
31, 2000. This Loan Agreement may; however, be renewed for additional
one-year terms upon Lender's approval of the application of Borrower at
least ninety (90) days before the expiration of the then current term. At
the first anniversary date and upon any subsequent renewal, Lender, in its
sole discretion, may change the Line of Credit Rate and/or the Line of
Credit Amount. Upon termination, the entire outstanding balance, including
principal, interest and other charges, shall be due and payable in full on
the Termination Date. If renewed, the Termination Date shall be on the
anniversary of each October 31.
4. LINE OF CREDIT AMOUNT.
The initial Line of Credit Amount shall be One Hundred and Five Million
Dollars ($105,000,000.00). The Line of Credit Amount may be amended by
Lender from time to time, at Lender's sole discretion. If at any time the
aggregate Advances outstanding under each individual Line of Credit
Sublimit exceeds the total sum of the Maximum Borrowing Sublimit Amount,
Borrower will, within five (5) days after Lender's request therefor, either
(a) provide additional Collateral acceptable to Lender, or (b) make
payments to Lender, in either case in an amount not less than such excess
so that the amount of the aggregate Advances does not exceed the total sum
of the Maximum Borrowing Sublimit Amount.
Furthermore, if the aggregate Advances outstanding under all Line of Credit
Sublimits exceed the Maximum Borrowing Amount, Borrower will, within
fifteen (15) days after Lender's request therefore, make payments to Lender
in an amount no less than such excess so that the aggregate Advances
outstanding does not exceed the Maximum Borrowing Amount.
5. CAPITAL AND OPERATING LEASE OBLIGATIONS.
Lender agrees to make Capital or Operating Leases to Guarantor, Borrower,
or any Subsidiary of Guarantor or Borrower, as may from time to time be
requested, in such aggregate amounts of no less than Twenty Five Thousand
Dollars ($25,000.00), but not exceeding at any one time outstanding an
30
amount equal to the Maximum Capital and Operating Lease Amount. Borrower
agrees that the aggregate amount outstanding for such Capital or Operating
Leases will reduce the amount available for Advance under Section 4 of this
Agreement. For purposes of this Section 5, the aggregate amount of such
obligations, at any time, shall be the sum of the remaining aggregate lease
payments plus the aggregate stated purchase options, if any.
6. BORROWING BASE CERTIFICATES.
Borrower shall provide to Lender a current Borrowing Base Certificate (a)
with respect to each month end within twenty (20) days after each such
month end and (b) at any time requested by Lender. Borrower acknowledges
that Lender may condition making any Advance upon receipt and review of a
current Borrowing Base Certificate.
Borrower shall also provide to Lender a current schedule of inventory in a
form acceptable to Lender (a) with respect to each month end within twenty
(20) days after each such month end and (b) at any time requested by
Lender.
In addition, Borrower shall provide to Lender a monthly schedule of assets
pledged to any other lender from which the Borrower has received a line of
credit governed by a borrowing base formula in a form acceptable to the
Lender (a) with respect to each month end within twenty (20) days after
each such month end and (b) at any time requested by Lender.
7. COLLATERAL AUDIT & EVALUATION.
Borrower agrees, that until all Advances have been paid in full or this
Loan Agreement has been terminated pursuant to Section 3, to pay the actual
cost, subject to a mutually agreeable cap, for an annual evaluation to
determine the Conservative Lending Value of the Eligible Inventory and
Eligible New and Used Inventory (collectively referred to as "Inventory"
for purposes of this Section). Lender will xxxx Borrower the amount and
provide Borrower a copy of the appraisal invoice, which will be due upon
receipt. Upon the occurrence of or during the continuation of an Event of
Default, or if Lender determines that there are changing market conditions,
Lender may elect to have Inventory appraised as often as may deemed
necessary by Lender. If Lender elects to have the Inventory appraised more
frequently than annually, the cost of the additional appraisals will be
paid solely by Lender, except during the continuation of an Event of
Default, then 75% of the costs shall be borne by Borrower.
Borrower also agrees, that until all Advances have been paid in full or
this Loan Agreement has been terminated pursuant to Section 3, it will
permit the Lender, or its designated representatives and agents, to conduct
periodic audits and examinations of (a) all Collateral, including, but not
limited to, its nature, composition, condition, location, and value, and
(b) Borrower's books and records including, but not limited to, general
ledgers, accounts receivable invoices and agings, accounts payable invoices
and agings, and other records as deemed necessary to effectively monitor
the Collateral and the quality and accuracy of Borrower's books and
records. Borrower further agrees to pay the actual cost of any collateral
verifications and one audit or examination per calendar year, limited to a
maximum of $20,000 per annum; unless the Borrower is in default as
described in Section 13, then there shall be no annual limitation of
Borrower's expense. Lender will provide Borrower a copy of the billing
invoice, which will be due upon receipt. If Lender elects to have the
Collateral and books and records examined more frequently than annually,
the cost of the examination will be paid solely by Lender unless an Event
of Default has occurred and has not been cured.
Borrower agrees that the Borrower will not create, incur, assume or suffer
to exist any Lien upon or with respect to any Collateral of the Borrower,
whether now owned or hereafter acquired, or permit the filing of any
financing statement under the UCC or any other similar notice of Lien under
any similar recording or notice statute; except for Permitted Liens.
31
8. CONDITION PRECEDENT TO ALL LOANS.
Lender shall not be obligated to make any Advance under this Loan Agreement
if, at the time of the making of the proposed Advance, (a) an Event of
Default has occurred and is continuing, or (b) the aggregate principal
amount of Advances outstanding exceeds, or to be outstanding after giving
effect to the proposed Advance would exceed, the Maximum Borrowing Sublimt
Amount or the Maximum Borrowing Amount, (c) Borrower's appointment as a
Xxxx Deere Authorized Industrial/Construction/Agricultural Dealer has been
canceled, or (d) there has been a material, adverse change in Borrower's
financial condition.
9. ADVANCE ACCOUNT; MONTHLY STATEMENTS.
All Advances shall be charged, and payments received by Lender with respect
to such Advances shall either (a) be credited, to an account maintained in
Borrower's name on Lender's books (the "Advance Account") or (b) be
remitted to the seller of equipment from whom Borrower is acquiring New
Equipment. Lender shall on a monthly basis render to Borrower Advance
Account information, which may be effected by means of posting such
information to Lender's data base. Such information shall be deemed to be
correct, accepted by and binding upon Borrower unless Lender shall receive
a written notice of exceptions from Borrower within thirty (30) days after
such information has been rendered to Borrower. Upon Lender's request,
Borrower agrees to execute and deliver to Lender such promissory notes of
Borrower as Lender shall request to evidence the Advances, but unless and
until any such request is made by Lender, the Advance Account and the
monthly statements thereof rendered by Lender to Borrower shall constitute
the primary evidence of the Advances. Borrower may request Advances, and
provide information related to Advances, through its computer terminal, but
Lender shall be entitled to assume that any such request or information has
been (a) authorized by Borrower and (b) communicated by an authorized
representative of Borrower.
10. INTEREST.
All Advances shall bear interest payable monthly, at a rate per annum equal
to the Line of Credit Rate. Interest shall be calculated by applying a
daily rate, which is the Line of Credit Rate divided by 360, to the actual
ending daily balance of Borrower's account for each day of the billing
cycle.
11. FINANCIAL COVENANTS.
Except as otherwise indicated herein, any financial terms used in
connection with financial covenants herein are used in accordance with
generally acceptable accounting principles. Terms used in this Loan
Agreement that are not described in Section 1 of this Loan Agreement are
defined in the manual captioned "Comparative Management Review" published
by Deere & Company annually.
For purposes of this Section 11, the financial requirements contained
herein will be based on the consolidated financial information of the
Guarantor as defined herein.
The following financial requirements will be maintained as of the end of
each quarter beginning with the first full quarter following execution of
this Agreement:
(i) the ratio of Consolidated Total Liabilities minus Subordinated
Indebtedness to the sum of Tangible Net Worth plus Subordinated
Indebtedness to be less than or equal to 4.5 to 1;
(ii) the ratio of the Consolidated EBIT on a rolling four-quarter basis to
Consolidated Interest Expense at the end of any fiscal quarter for the
four-quarter period ending on such quarter-end to be greater than or
equal to 1.5 to 1 through January 31, 2001, 1.75 to 1 through January
31, 2002, and 2.0 to 1 thereafter.
Further, the following financial requirement(s) will be maintained as of
the end of each fiscal year:
(i) the Tangible Net Worth plus Subordinated Indebtedness at any time must
be greater than $50 million plus one half of the positive Consolidated
Net Income for the fiscal year ending January 31, 2000, and for each
subsequent fiscal year, to be greater than the minimum
32
Tangible Net Worth plus Subordinated Indebtedness required for the
previous fiscal year-end plus 50% of the positive Consolidated Net
Income for the most recent fiscal year then ended.
Additionally, Borrower agrees to provide Lender with a covenant compliance
certificate concurrently with the submission of the required financial
statements each quarter detailing each financial covenant, the level of
performance required by the financial covenant, and the actual level of
performance achieved relating to the financial covenants. Borrower agrees
that the Covenant Compliance Certificate shall be certified as true and
accurate by a financial officer of Borrower and/or Guarantor.
12. FINANCIAL REPORTS.
Borrower agrees that, until the Advances have been paid in full, it will
furnish Lender: (a) within one hundred twenty five (125) days after the end
of each fiscal year of Borrower, a balance sheet of Borrower as of the end
of, and an income statement and a cash flow statement covering, such fiscal
year, all prepared in accordance with generally accepted principles and
practices of accounting consistently applied, all of which shall have been
audited and certified by independent certified public accountants selected
by Borrower and satisfactory to Lender; (b) within one hundred twenty five
(125) days after the end of each fiscal year of Borrower, an annual
business plan or operating budget including proforma balance sheet and
income statement for the next fiscal year; (c) within fifty (50) days after
the end of each calendar quarter of Borrower, a balance sheet of Borrower
as of the end of, and an income statement covering, such quarter, all
prepared in accordance with generally accepted principles and practices of
accounting consistently applied (Form 10-Q, as submitted to the Securities
and Exchange Commission, shall be acceptable); and (d) such further
information regarding the business affairs and financial condition of
Borrower as Lender may reasonably require.
13. EVENTS OF DEFAULT.
The following events shall each constitute a default under this Loan
Agreement, if such event shall continue for a period of ten (10) Business
Days (two (2) Business Days for default on payment of principal or
interest) after written notice thereof has been given to Borrower by
Lender: (a) any breach or failure of Borrower to observe or perform any of
its Obligations or undertakings hereunder; (b) any misrepresentation by
Borrower to Lender in connection with the business and financial condition
or organizational structure of Borrower or any misrepresentation relating
to the Collateral; (c) dissolution of Borrower or death or dissolution of
any guarantor of, or surety for, Borrower's obligations hereunder; (d) the
termination by any Guarantor or surety of a guaranty or suretyship with
respect to Borrower; (e) Borrower or any guarantor or surety (i) makes an
assignment for the benefit of creditors; or (ii) files or has filed against
it a petition in bankruptcy or for the appointment of a receiver and such
petition or appointment is not dismissed within sixty (60) days of filing;
(f) any material reduction in the value of the Collateral or any act of
Borrower which imperils the prospect of full performance or satisfaction of
Borrower's obligations hereunder; (g) Borrower has concealed, removed,
transferred or permitted to be concealed, removed or transferred, any part
of its assets, so as to hinder, delay or defraud any of its creditors or in
such manner as would be fraudulent under any bankruptcy, insolvency,
fraudulent conveyance or similar law; (h) any breach or failure of Borrower
to observe or perform any of the promises or covenants in this Agreement,
including making Meaningful Progress toward achieving compliance with the
requirements described in Section 11; (i) Borrower has voluntarily or
involuntarily given up or lost its status as an Authorized Xxxx Deere
Construction or Agricultural Equipment Dealer; (j) any default by Borrower
under its Xxxx Deere Construction Dealer Agreement; or (k) any default by
Borrower under the Xxxx Deere Construction Dealer Finance Agreement it has
entered into with Xxxx Deere Construction Equipment which is not cured
within any applicable cure period.
14. REMEDIES.
Upon the occurrence of an Event of Default, Lender shall have, in addition
to any and all rights it has under any applicable law or equity (including
but not limited to the Uniform Commercial Code), the following rights.
33
* to terminate this Loan Agreement immediately and to declare any and
all indebtedness or liabilities of Borrower to Lender immediately due
and payable without notice or demand.
* to take immediate and exclusive possession of all Collateral or any
part thereof, wherever it may be found, and also may enter any of the
premises of Borrower, with or without process of law, without force,
wherever the Collateral may be or supposed to be and take possession
of, and remove, sell, and dispose of, the Collateral, or any part
thereof, at public auction or private sale. Lender reserves the right
to bid and become the purchaser at any such sale. Borrower hereby
specifically waives any right to judicial proceedings prior to
Lender's exercise of this right of "self-help" repossession.
* to require Borrower to assemble the Collateral and make it available
to Lender, at Borrower's expense, at a convenient place designated by
Lender.
* to require Borrower to pay all costs incurred by Lender in the
collection of any indebtedness or liabilities owed Lender by Borrower
and the enforcement of any obligations of Borrower to Lender,
including the costs of repossession, reasonable attorney's fees and
other legal expenses.
34
15. NOTICE.
Any notification shall be deemed reasonably and properly given if mailed at
least ten (10) days before such disposition, postage prepaid, addressed to
Borrower.
16. WAIVER OF DEFAULTS.
Lender may, in its sole discretion, waive any Event of Default or, at
Borrower's expense, cure any default. Any such waiver in a particular
instance or of a particular Event of Default shall not be a waiver of other
defaults or the same kind of default at another time.
17. POWER OF ATTORNEY.
Borrower hereby designates, constitutes and appoints Lender as
attorney-in-fact of Borrower irrevocably and with power of substitution,
with authority, after any event of default has occurred, to endorse the
name of Borrower on any notes, acceptances, checks, drafts, money orders or
other evidences of payment or proceeds of the Collateral that may come into
Lender's possession and to do all acts and things necessary and advisable,
in the sole discretion of Lender to carry out and enforce this Agreement.
All acts of said attorney or designee are hereby ratified and approved and
said attorney or designee shall not be liable for any acts of commission or
omission nor for any error of judgment or mistake of fact or law. This
power of attorney, being coupled with an interest, is irrevocable while any
indebtedness to Lender (or any Lender affiliated with Lender) remains
unpaid.
18. TERMINATION.
Upon termination of this Loan Agreement pursuant to Section 3, the
Advances, and all other indebtedness owed to Lender pursuant to any
financing arrangement with Lender, will be due and payable on the
Termination Date unless Borrower elects to pay such amounts in accordance
with the following terms. All indebtedness shall be paid off completely six
(6) months after the Termination Date, and shall be paid off in six (6)
monthly installments. Each installment shall be in an amount which shall be
the sum of one-sixth of the principal balance outstanding on the
Termination Date plus all accrued interest and other fees to the date of
the installment. Provided, that the proportion the total outstanding
balance of indebtedness bears to the Borrowing Base Amount shall never be
greater than the proportion the total outstanding balance of indebtedness
bore to the Borrowing Base Amount on the Termination Date. The total
principal balance shall bear interest until completely paid at a rate equal
to the Line of Credit Rate. This Section 18 shall not apply to Termination
following the occurrence of an Event of Default as described in Section 13.
19. CHANGE IN OWNERSHIP.
Borrower agrees to notify Lender in writing within fifteen (15) days of any
change in ownership which would require approval of such change as
described in the Xxxx Deere Industrial Dealer Agreement, the Xxxx Deere
Agriculture Dealer Agreement or its successor agreement(s).
20. COMPLIANCE WITH ERISA.
Each Plan (and each related trust, insurance contract or fund) is in
compliance with its terms and with all applicable laws, including without
limitation ERISA and the Code, except for any such instances of
noncompliance as could not, individually or in aggregate, reasonably be
expected to have an adverse effect on the business, operations, properties,
assets, liabilities, condition (financial or otherwise) or prospects of the
Borrower and its Subsidiaries taken as a whole; each Plan (and each related
trust, if any) which is intended to be qualified under Section 401 (a) of
the Code has received a determination letter from the Internal Revenue
Service to the effect that it meets the requirements of Section 401 (a) and
501 (a) of the Code; no Reportable Event has occurred and is continuing; no
Plan which is a multiemployer plan (as defined in Section 4001 (a) (3) of
ERISA) is insolvent or in reorganization; no plan has an Unfunded Current
Liability; no Plan which is subject to Section 412 of the Code or Section
302 of ERISA has an accumulated funding deficiency, within the meaning of
such Sections of the
35
Code or ERISA, or has applied for or received a waiver of an accumulated
funding deficiency or an extension of any amortization period, within the
meaning of Section 412 of the Code or Section 303 or 304 of ERISA; except
as could not reasonably be expected to result in any material liability to
the Borrower or any of its Subsidiaries, all contributions required to be
made with respect to a Plan have been timely made; neither the Borrower nor
any Subsidiary of the Borrower nor any ERISA Affiliate has incurred any
material liability (including any indirect, contingent or secondary
liability) to or on account of a Plan pursuant to Xxxxxxx 000, 000 (x), 000
(x), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of XXXXX xx Xxxxxxx
000 (x) (29), 4971 or 4975 of the Code or, to the knowledge of any
executive officer of the Borrower, expects to incur any such material
liability under any of the foregoing sections with respect to any Plan; no
condition exists which presents a material risk to the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate of incurring a material
liability to or on account of a Plan pursuant to the foregoing provisions
of ERISA and the Code; no proceedings have been instituted to terminate or
appoint a trustee to administer any Plan which is subject to Title IV of
ERISA; no material action, suit, proceeding, hearing, audit or
investigation with respect to the administration, operation or the
investment of assets of any Plan (other than routine claims for benefits)
is pending or, to the knowledge of any executive officer of the Borrower,
expected or threatened; using actuarial assumptions or computation methods
consistent with Part 1 of Subtitle E of Title IV of ERISA, the aggregate
liabilities of the Borrower and its Subsidiaries and its ERISA Affiliates
to all Plans which are multiemployer plans (as defined in Section 4001 (a)
(3) of ERISA) in the event of a complete withdrawal therefrom, as of the
close of the most recent fiscal year of each such Plan ended prior to the
date of the most recent Advance, would not exceed an amount that is
material to the Borrower and its Subsidiaries taken as a whole; no material
lien imposed under the Code or ERISA on the assets of the Borrower or any
Subsidiary of the Borrower or any ERISA Affiliate exists or, to the
knowledge of any executive officer of the Borrower, is likely to arise on
account of any Plan; and the Borrower and its Subsidiaries may cease
contributions to or terminate any employee benefit plan maintained by any
of them without incurring material liability.
21. ENVIRONMENTAL MATTERS.
Borrower shall notify Lender promptly after any officer of the Borrower or
its Subsidiaries obtains knowledge thereof, notice of one or more of the
following environmental matters, unless such environmental matters could
not, individually or when aggregated with all other such environmental
matters, be reasonably expected to materially and adversely affect the
business, operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of the Borrower and its Subsidiaries taken as a
whole:
(i) any pending or threatened Environmental Claim against the
Borrower or any of its Subsidiaries or any Real Property
owned, leased or operated by the Borrower or any of its
Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned, leased or operated by the Borrower or any of
its Subsidiaries that (a) results in noncompliance by the
Borrower or any of its Subsidiaries with any applicable
Environmental Law or (b) could be expected to form the basis
of an Environmental Claim against the Borrower or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property owned,
leased or operated by the Borrower or any of its
Subsidiaries that could be expected to cause Real Property
to be subject to any restrictions on ownership, lease,
occupancy, use or transferability by the Borrower or any of
its Subsidiaries of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response to
the actual or alleged presence of any Hazardous Material on
any Real Property owned, leased or operated by the Borrower
or any of its Subsidiaries as required by any Environmental
Law or any governmental or other administrative agency;
PROVIDED, that in any event the Borrower shall deliver to
Lender all notices received by the Borrower or any of its
Subsidiaries from any government or governmental agency
under, or pursuant to, CERCLA which identify the Borrower or
any of its Subsidiaries as potentially
36
responsible parties for remediation costs or which otherwise notify
the Borrower or any of its Subsidiaries of potential liability under
CERCLA.
22. MODIFICATIONS.
No modification or change in this Loan Agreement or any related note,
instrument or agreement shall bind Lender, unless such changes or
modifications shall be in writing signed by Lender. No oral agreements
shall be binding on either party.
23. SEVERABILITY.
Any provisions hereof contrary to, prohibited by or invalid under
applicable laws or regulations shall be inapplicable and deemed omitted
herefrom, but shall not invalidate the remaining provisions hereof.
24. GOVERNING LAW.
This Loan Agreement shall be governed by, and construed in accordance with,
the laws of the State of IOWA, where this Loan Agreement is entered into
and accepted.
25. PARTIES.
This Loan Agreement shall be binding on and inure to the benefit of
Borrower and Lender and their respective successors and assigns, except
that Borrower may not assign or transfer any of its rights under this Loan
Agreement without the prior written consent of Lender.
26. ARBITRATION.
Except as specified below, all actions, disputes, claims and controversies
under common law, statutory law or in equity of any type or nature
whatsoever (including, without limitation, all torts, contract actions,
whether regarding express or implied terms, such as implied covenants of
good faith, fair dealing, and the commercial reasonableness of any
Collateral disposition, or any other contract claim, all claims of
deceptive trade practices or lender liability, and all claims questioning
the reasonableness or lawfulness of any act), whether arising before or
after the date of this Agreement, and whether directly or indirectly
relating to: (a) this Agreement or any amendments and addenda hereto, or
the breach, invalidity or termination hereof; (b) any previous or
subsequent agreement between Lender and Borrower; or (c) any other
relationship, transaction or dealing between Lender and Borrower
(collectively, the "Disputes"), will be subject to and resolved by binding
arbitration.
26.1 Any dispute arising out of or relating to this agreement or the
breach, termination or validity thereof, shall be determined by
arbitration in the Division of the Federal Judicial District having
jurisdiction over Des Moines, Iowa in accordance with the provisions
of Section 26 and the Commercial Arbitration Rules ("Rules") of the
American Arbitration Association ("AAA") in effect on the date of
this Agreement by a single arbitrator. If the Dispute involves more
than $1 million dollars, three arbitrators shall be selected to hear
the dispute. The arbitrator or panel of arbitrators shall base their
award on this Agreement and applicable law and judicial precedent and
shall accompany their award with a written explanation of the reasons
for their award. The arbitration shall be governed by the substantive
laws of the State of Iowa applicable to contracts made and to be
performed therein and by the arbitration laws of the United States
(Title 9, US Code), and judgment upon the award rendered by the
arbitrator (s) may be entered in any court having jurisdiction
thereof.
26.2 Every person nominated or recommended to serve as an arbitrator
hereunder shall be a lawyer with excellent academic and professional
credentials and be a partner in (or of counsel to) a highly respected
law firm who has had experience as an arbitrator and at least twenty
(20) years experience as a practicing attorney specializing in
corporate, commercial and financial matters, with expertise in
interpreting contracts in the field of law involved in the subject
controversy.
37
26.3 The arbitrator shall be selected in as provided in this Section 26
and otherwise in accordance with the AAA's Commercial Arbitration
Rules in effect on the date of this Agreement, except that each party
shall be entitled to strike on a peremptory basis any or all of the
names of potential arbitrators on the list submitted to the parties
by the AAA as being qualified in accordance with the criteria set
forth in paragraph 26.2 hereof. If the parties cannot agree on a
mutually acceptable arbitrator from the list submitted by the AAA,
the Regional Vice-President of the AAA, under the supervision of the
AAA's national department of case administration, shall submit to
both parties a second list containing the names of three lawyers
meeting the foregoing qualifications, each of whom shall be a member
of the AAA's Commercial Finance Disputes Arbitration Panel, and each
party shall be entitled to strike one of such names on a peremptory
basis, indicating its order of preference with respect to the
remaining names, and the selection of the arbitrator shall be made by
such Regional Vice-President from among such name(s) which have not
been so stricken by either party in accordance with their designated
order of mutual preference.
26.4 Each party will, upon the written request of the other party, provide
the other with copies of documents relevant to the issues raised by
any claim or counterclaim. Other discovery may be ordered by the
arbitrator. Any dispute regarding discovery, including disputes as to
the need therefor or the relevance or scope thereof, shall be
determined by the arbitrator, which determination shall be
conclusive. All expenses and fees of the arbitrator and expenses for
hearing facilities, stenographers and other expenses of the
arbitration shall be borne equally by both parties unless the
arbitrator in the award assesses such expenses against one of the
parties other than equally. Each party shall bear its own counsel fee
and the expenses of its witnesses except to the extent otherwise
provided in the Agreement. Any attorney who serves as an arbitrator
shall be required to agree to do so for a fee based on his or her
current hourly rate for handling commercial matters. The arbitration
proceedings conducted pursuant hereto shall be confidential. Neither
party shall disclose any information about the evidence adduced by
the other in the arbitration proceedings or about documents produced
by the other in connection with the proceeding except in the course
of a judicial, regulatory or arbitration proceeding or as may be
requested by governmental authority. Before making any disclosure
permitted by the preceding sentence, the party intending to make such
disclosure shall give the other party reasonable written notice of
the intended disclosure and afford the other party opportunity to
protect its interests. The arbitrator(s) expert witnesses and
stenographic reporters shall sign appropriate nondisclosure
agreements in order to effectuate this agreement of the parties as to
confidentiality. The arbitrator(s) shall set forth their findings of
fact and conclusions of law and shall render an award based thereon.
Upon application to the court for an order confirming, modifying or
vacating the award, the court shall have the power to review (a)
whether the findings of fact rendered by the arbitrator(s) are
supported by substantial evidence and (b) whether, as a matter of law
based on such findings of fact, the award should be affirmed,
modified or vacated. Upon such determination, judgment shall be
entered in favor of either party consistent herewith.
26.5 Nothing herein will be construed to prevent Lender's or Borrower's
use of bankruptcy, receivership, injunction, repossession, replevin,
claim and delivery, sequestration, seizure, attachment, foreclosure,
or any other prejudgment or provisional action or remedy relating to
any Collateral for any current or future debt owed by either party to
the other. Any such action or remedy will not waive Lender's or
Borrower's right to compel arbitration of any Dispute. If either
Lender or Borrower brings any other action for judicial relief with
respect to any Dispute, the party bringing such action will be liable
for and immediately pay all of the other party's costs and expenses
(including attorney's fees) incurred to stay or dismiss such action
and remove or refer such Dispute to arbitration.
This Loan Agreement has been executed as of the date first above written.
38
LENDER: BORROWER:
Xxxx Deere Construction Equipment RDO Agriculture Equipment Co.
Company
By: /s/ Xxxxx X. Israel By: /s/ Xxxxxx X. Xxxxx
--------------------------------- ---------------------------------
Its: Sr. Vice President Its: CFO/Treasurer
--------------------------------- ---------------------------------
Deere Credit Services, Inc.
Xxxx Deere Company, a Division of RDO Construction Equipment Co.
Deere & Company
By: /s/ Xxxxx X. Israel By: /s/ Xxxxxx X. Xxxxx
--------------------------------- ---------------------------------
Its: Sr. Vice President Its: CFO/Treasurer
--------------------------------- ---------------------------------
Deere Credit, Inc.
By: /s/ Xxxxx X. Israel
---------------------------------
Its: Sr. Vice President
---------------------------------
39
Exhibit A
Borrowing Base Certificate for RDO Equipment Co.
Financial Statement Date (As of ____________)
CALCULATION OF THE BORROWING BASE
Advance Category Borrowing
Borrowing Base Net Book Value Rate Sublimit Base Amount
------------------------------------------------------------------------------------------------------------
EQUIPMENT INVENTORY
New Deere Construction Equipment 95%
New Other Construction Equipment 95%
Used Deere Construction Equipment 95%
Used Other Construction Equipment 95%
-------------
TOTAL ELIGIBLE CONSTRUCTION EQUIPMENT $105,000,000
-------------
New Deere Agricultural Equipment 95%
New Other Agricultural Equipment 95%
Used Deere Agricultural Equipment 95%
Used Other Agricultural Equipment 95%
-------------
TOTAL ELIGIBLE AGRICULTURAL EQUIPMENT $20,000,000
-------------
--------------
TOTAL BORROWING BASE AMOUNT
--------------
************************************************************************************************************
CALCULATION OF THE UNUSED LINE OF CREDIT
1. Credit Line Commitment $105,000,000.00
2. Total Borrowing Base Amount
3. Outstanding Balance (as of )
4. Outstanding Leases to Borrower and Subsidiaries
----------------
4. Unused Line of Credit (smaller of 1 or 2, less 3 and 4)
------------------------------------------------------------------------------------------------------------
Borrower furnishes this Certificate to Lender in accordance with Borrower's
obligations under Section 6 of the Amended and Restated Loan Agreement dated
___________. Borrower certifies that (a) the equipment included in the Inventory
is unencumbered by any Liens except for Permitted Liens, (b) the computation of
the Borrowing Base set forth above complies with all applicable provisions of
the Loan Agreement, (c) the information has been prepared from the books and
records of Borrower in accordance with generally accepted accounting principles,
consistently applied. This Certificate fully and fairly represents the status of
Borrower's Inventory as of ________________ (the "Certificate Date").
By: Date:
----------------------------------- ---------------------------
Title:
-----------------------------------
40
EXHIBIT B
NOTE FOR ADVANCE
Date of Advance:
--------------------
Amount of Advance:
--------------------
This Advance was made pursuant to, and shall be repaid according to, the terms
of the Amended and Restated Loan Agreement between RDO Agriculture Equipment Co.
("RDO Agriculture") and RDO Construction Equipment Co. ("RDO Construction") (RDO
Agriculture and RDO Construction are collectively referred to herein as the
"Borrower") and Xxxx Deere Construction Equipment Company, Deere Credit, Inc.,
and Xxxx Deere Company, a Division of Deere & Company (collectively referred to
as the "Lender"). Borrower promises to repay this Advance to the order of Lender
according to the terms of that agreement.
Please select one of the following payment methods.
[ ] The amount requested to be paid by Electronic Settlement (ESETT).
[ ] The amount requested to be paid by ACH transfer.
[ ] The amount request to be paid by Wire Transfer.
[ ] The amount request to be paid by Other (specify) _________________________.
Advance Requested on Behalf of RDO Equipment Co.
By:
----------------------------------
Its:
----------------------------------
********************************************************************************
FOR OFFICE USE ONLY
********************************************************************************
Authorization for Wire or Telepayment
TO: RDO Equipment Co.
[ ] Amount of Advance requested above is approved.
Please pay by:
[ ] ACH Transfer. DEALER IS SET UP FOR ACH.
Wire Transfer. Wire Instructions: Bank Name: ______________________
Address: ______________________
ABA Routing: ______________________
Account #: ______________________
Account to Debit:
Approval
---------------------------------
Division Manager
41
