EXHIBIT 10.2
AG CAPITAL COMPANY
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of December 15, 2000
(the "Effective Date"), by and between RDO EQUIPMENT CO., a Delaware corporation
(the "Borrower"), whose address is 0000 Xxxxx Xxxxxxxxxx Xxxxx, X.X. Xxx 0000,
Xxxxx, Xxxxx Xxxxxx 00000-0000, and AG CAPITAL COMPANY, a Delaware corporation
(the "Lender"), whose address is 1500 Radisson Tower, 000 Xxxxx 0xx Xxxxxx,
Xxxxx, Xxxxx Xxxxxx 00000.
RECITALS
A. The Borrower wishes to borrow funds from the Lender and the
Lender wishes to make loans and advances to the Borrower; and
B. The Borrower and the Lender mutually desire to set forth the
terms under which the Lender will extend credit to the
Borrower and make such loans and advances.
NOW, THEREFORE, for and in consideration of the loans and advances to
be made by the Lender to the Borrower hereunder, the mutual covenants, promises
and agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Lender agree as follows:
The following terms when used in this Credit Agreement shall, except
where the context otherwise requires, have the following meanings both in the
singular and plural forms thereof:
1. DEFINITIONS
"Advance" means any advance by the Lender made under either of the
Seasonal Commitments. (The face amount of any letter of credit issued by the
Lender for the account of the Borrower shall be deemed an Advance hereunder).
"Affiliate" means any corporation, association, partnership, joint
venture or other business entity directly or indirectly controlling or
controlled by, or under direct or indirect common control of, the Borrower or
any of its Subsidiaries.
"Assignee" has the meaning set forth in Section 18.14.
"Borrower" means RDO EQUIPMENT CO., a Delaware corporation.
"Bridge Loan I" means, at any date, the aggregate amount of all
Advances made by the Lender pursuant to Section 10 hereof.
"Bridge Note I" means the Note No. 32550, dated October 12, 1998, in
the original principal amount of Five Million Dollars ($5,000,000.00) made by
the Borrower payable to the order of the Lender, together with all extensions,
renewals, modifications, substitutions and changes in form thereof effected by
written agreement between the Borrower and the Lender.
"Business Day" means any day on which the Lender is open for the
transaction of business of the kind contemplated by this Credit Agreement.
"Change of Control" means the occurrence of any of the following
circumstances:
(a) any person or two or more persons acting in concert acquire
beneficial ownership (within the meaning of Rule 13d-3 of the
SEC under the Securities Exchange Act of 1934), directly or
indirectly, of securities of the Borrower (or other securities
convertible into such securities not previously held by them)
representing 25% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of
directors; or
(b) during any period, whether commencing before or after the date
hereof, the membership of the board of directors of the
Borrower changes for any reason (other than by reason of
death, disability, or scheduled retirement) so that the
majority of the board of directors is made up of persons who
were not directors (or analogous managers) at the beginning of
such period.
"Collateral" means all of the assets of the Borrower or any other party
in which the Lender holds a security interest pursuant to any of the Loan
Documents.
"Credit Agreement" means this Credit Agreement, as originally executed
and as may be amended, modified, supplemented, or restated from time to time by
written agreement between the Borrower and the Lender.
"Current Assets" means, as of the date of any determination, the
aggregate amount of all assets of the Borrower that are classified as current
assets, on a consolidated basis, in accordance with GAAP.
"Current Liabilities" means, as of the date of any determination, the
aggregate amount of all liabilities of the Borrower that are classified as
current liabilities, on a consolidated basis, in accordance with GAAP (including
taxes and other proper accruals and the matured portion of any indebtedness).
"Debt" means (i) all items of indebtedness or liability that, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet as at the date of which Debt is
to be determined; (ii) indebtedness secured by any mortgage, pledge, lien or
security interest existing on property owned by the Person whose Debt is being
determined, whether or not the indebtedness secured thereby shall have been
assumed; (iii) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's acceptances
issued for the account of such Person, and (iv) guaranties, endorsements (other
than for purposes of collection in the ordinary course of business) and other
contingent obligations in respect of, or to purchase or otherwise acquire
indebtedness of others.
"Default" means any event which if continued uncured would, with notice
or lapse of time or both, constitute an Event of Default.
"EBITDA" means Consolidated Earnings Before Interest Taxes Depreciation
and Amortization.
"Environmental Law" has the meaning set forth in Section 14.17.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and as may be further amended from time to time, and the rules and
regulations promulgated thereunder by any governmental agency or authority, as
from time to time in effect.
"Event of Default" means any event of default described in Section 17
hereof.
"Fixed Rate" means such rate of interest as may be quoted to Borrower
by Lender at Lender's sole discretion upon request made by Borrower before 11:00
a.m. (central time) at least two Business
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Days prior to the beginning of the calendar month specified by Borrower in such
request for Interest Rate Periods as specified by Borrower in such request.
"Fixed Rate Amount" means the amount of any Loan which accrues interest
at a Fixed Rate, which shall be specified in any request by the Borrower to
Lender for a Fixed Rate, and which must be in increments of $100,000, unless
otherwise agreed to by the Lender.
"GAAP" means the generally accepted accounting principles in the United
States in effect from time to time including, but not limited to, Financial
Accounting Standards Board (FASB) Standards and Interpretations, Accounting
Principles Board (APB) Opinions and Interpretations, Committee on Accounting
Procedure (CAP) Accounting Research Bulletins, and certain other accounting
principles which have substantial authoritative support.
"Government Yield" means as of any date of determination the yield
(converted as necessary to the equivalent semi-annual compound rate) on U.S.
Treasury securities having a maturity date closest to the weighted average
maturity of the relevant Loan (to the scheduled installment dates), as published
in The Wall Street Journal (or, if not so published, as determined by the Lender
by using the average quotes obtained by the Lender from three primary dealers
that market U.S. Treasury securities in the secondary market). "U.S. Treasury
securities" means actively traded U.S. Treasury bonds, bills and notes and, if
more than one issue of U.S. Treasury securities is scheduled to mature at or
about the time of the end of the weighted average maturity of the Loan, then to
the extent possible the U.S. Treasury security issued most recently prior to the
date of determination will be chosen as the basis of the Government Yield.
"Hazardous Substance" has the meaning set forth in Section 14.17
hereof.
"Interest Differential" means as of the date of any full or partial
prepayment on any Loan, the Government Yield with respect to such Loan measured
on the date the rate at which interest on such Loan is accruing immediately
prior to such prepayment is set, minus the Government Yield with respect to such
Loan as of the date of such prepayment.
"Interest Rate Period" means the period specified by the Lender in
response to a request by the Borrower that any Fixed Rate Amount of any Loan
accrue interest at a Fixed Rate. All Interest Rate Periods shall be months, but
in no event shall end later than the Maturity with respect to the Seasonal Loan,
and the final maturity date for each other Loan.
"Issuance Spread" is the amount by which the rate per annum at which
interest accrues on any Loan as of any date such rate is set exceeds the
Government Yield as of such date.
"Lender" means Ag Capital Company, a Delaware corporation, its
successors and assigns.
"Leverage Ratio" means the ratio of the Total Liabilities (including
Debt) divided by Tangible Net Worth of the Borrower, as determined on a
consolidated basis, and in accordance with GAAP.
"LIBOR" for any business day during any calendar month means the quoted
rate of interest per annum determined by the British Banker's Association as the
average of interbank offered rates for dollar deposits in the London market
based on quotations at sixteen (16) major banks (rounded upward, if necessary,
to the nearest 1/100th of 1%).
"Lien" means any lien, security interest, pledge, mortgage, statutory
or tax lien, or other encumbrance of any kind whatsoever (including without
limitation, the lien or retained security title of a conditional vendor),
whether arising under a security instrument or as a matter of law, judicial
process or otherwise or by an agreement of the Borrower to grant any lien or
security interest or to pledge, mortgage or otherwise encumber any of its
assets.
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"Loan" means any of the Seasonal Loan I, Seasonal Loan II, Term Loan I,
Term Loan II, Term Loan III, Term Loan IV, Term Loan V, Term Loan VI, or Bridge
Loan I.
"Loan Documents" means this Credit Agreement and the Subject Notes and
such other documents as the Lender may reasonably require as security for, or
otherwise executed in connection with, any loan hereunder, all as originally
executed and as may be amended, modified or supplemented from time to time by
written agreement between the parties thereto.
"Material Adverse Occurrence" means any occurrence which materially
adversely affects the present or prospective financial condition or operations
of the Borrower, or which impairs, or may impair, in the Lender's reasonable
judgment, the ability of the Borrower to perform its obligations under the Loan
Documents.
"Maturity" with respect to Seasonal Note I and Seasonal Note II means
the earlier of (a) the date on which the respective Seasonal Note becomes due
and payable upon the occurrence of an Event of Default; or (b) the Termination
Date.
"Mortgages" means the mortgages dated January 31, 1996 expressly
securing Term Note III; October 14, 1991, expressly securing Term Note II and
February 24, 1992 expressly securing Term Note I as provided in each such
mortgage, other obligations to Lender.
"Mortgage Secured Notes and Loans" has the meaning set forth in Section
11.8.
"Net Working Capital" means Total Current Assets minus Total Current
Liabilities, as determined on a consolidated basis, and in accordance with GAAP.
"Person" means any natural person, corporation, firm, association,
government, governmental agency or any other entity, whether acting in an
individual fiduciary or other capacity.
"Premises" has the meaning set forth in Section 14.17 hereof.
"Reference Rate" means for any day the rate of interest indicated as
the "prime rate" in the "Money Rates" section of the Wall Street Journal for
such day (or if no such rate is published for such day for the earliest
preceding day for which such rate is published). If such rate ceases to be
published, the Reference Rate" shall mean a comparable rate determined by the
Lender as indicated in a written notice to the Borrower."
"Regulatory Change" means any change after the date hereof in any (or
the adoption after the date hereof of any new) (a) Federal or state law or
foreign law applying to the Lender (or its successors or assigns); or (b)
regulation, interpretation, directive or request (whether or not having the
force of law) applying or in the reasonable opinion of the Lender (or its
successors or assigns) applicable to, the Lender (or its successors or assigns)
of any court or governmental authority charged with the interpretation or
administration of any law referred to in clause (a) of this definition or of any
fiscal, monetary, or other authority having jurisdiction over the Lender (or its
successors or assigns).
"Seasonal Commitment" means the Lender's obligation to extend Advances
to the Borrower under Sections 2 and 3, as the context may require.
"Seasonal Loan I" means, at any date, the aggregate amount of all
Advances made by the Lender to the Borrower pursuant to Section 2 hereof.
"Seasonal Note I" means the Note No. 35040, dated December 15, 2000, in
the original principal amount of Five Million Dollars ($5,000,000.00) made by
the Borrower payable to the order of
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the Lender, together with all extensions, renewals, modifications, substitutions
and changes in form thereof effected by written agreement between the Borrower
and the Lender.
"Seasonal Loan II" means, at any date, the aggregate amount of all
Advances made by the Lender to the Borrower pursuant to Section 3 hereof.
"Seasonal Note II" means the Note No. 35050, dated December 15, 2000,
in the original principal amount of Fifteen Million Dollars ($15,000,000.00)
made by the Borrower payable to the order of the Lender, together with all
extensions, renewals, modifications, substitutions and changes in form thereof
effected by written agreement between the Borrower and the Lender.
"Seasonal Notes" means Seasonal Note I and Seasonal Note II
"Security Agreement" means the Security Agreement, dated October 12,
1998, executed by the Borrower in favor of the Lender, as originally executed
and as may be amended, modified or supplemented from time to time by written
agreement between the Borrower and the Lender, and various other security
agreements previously executed in favor of the Lender by Borrower.
"Subject Note(s)" means the Seasonal Note I, Seasonal Note II, the Term
Note I, Term Note II, Term Note III, Term Note IV, Term Note V, Term Note VI,
Term Note VII and Bridge Note I.
"Subsidiary" means any corporation of which more than fifty percent
(50%) of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether,
at the time, stock of any other class or classes of such corporation shall have
or might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned by the Borrower and/or one or more
Subsidiary or Affiliate.
"Tangible Net Worth" means, at any date, the excess, if any, of the
Borrower's total assets over the Borrower's total liabilities on such date,
excluding from total assets the aggregate amount carried as assets on the books
of the Borrower for goodwill, licenses, patents, trademarks, trade names,
treasury stock, unamortized debt discount and expenses, copyrights, franchises,
organization costs, write-ups in the book value of the assets of the Borrower
resulting from a revaluation thereof, and any other intangible assets, all as
determined in accordance with GAAP.
"Term Loan I" means the loan evidenced by the Term Note I (No. 4560).
"Term Note I" means the Note No. 4560, dated February 24, 1992, in the
original principal amount of One Hundred Fifty-eight Thousand Three Hundred
Sixty-eight and 78/100 Dollars ($158,368.78), made by the Borrower payable to
the order of the Lender, together with all extensions, renewals, modifications,
substitutions and changes in form thereof effected by written agreement between
the Borrower and the Lender.
"Term Loan II" means the loan evidenced by the Term Note II (No. 4910).
"Term Note II" means the Note No. 4910, dated October 14, 1991, in the
original principal amount of Three Hundred Fifty Thousand Dollars ($350,000.00),
made by the Borrower payable to the order of the Lender, together with all
extensions, renewals, modifications, substitutions and changes in form thereof
effected by written agreement between the Borrower and the Lender.
"Term Loan III" means the loan evidenced by the Term Note III (No.
20020).
"Term Note III" means the Note No. 20020, dated January 29, 1996, in
the original principal amount of Eight Hundred Ninety-eight Thousand Two Hundred
Dollars ($898,200.00), made by the
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Borrower payable to the order of the Lender, together with all extensions,
renewals, modifications, substitutions and changes in form thereof effected by
written agreement between the Borrower and the Lender.
"Term Loan IV" means the loan evidenced by the Term Note IV (No.
24900).
"Term Note IV" means the Note No. 24900, dated October 18, 1996, in the
original principal amount of Three Hundred Fifty-five Thousand Dollars
($355,000.00), made by the Borrower payable to the order of the Lender, together
with all extensions, renewals, modifications, substitutions and changes in form
thereof effected by written agreement between the Borrower and the Lender.
"Term Loan V" means the loan evidenced by the Term Note V (No. 27370).
"Term Note V" means the Note No. 27370, dated January 31, 1997, in the
original principal amount of One Million Eight Hundred Fifty-five Thousand Seven
Hundred Three Dollars ($1,855,703.00), made by the Borrower payable to the order
of the Lender, together with all extensions, renewals, modifications,
substitutions and changes in form thereof effected by written agreement between
the Borrower and the Lender.
"Term Loan VI" means the loan evidenced by the Term Note VI (No.
27380).
"Term Note VI" means the Note No. 27380, dated January 31, 1997, in the
original principal amount of Two Million Five Hundred Fifty-nine Thousand
Dollars ($2,559,000.00), made by the Borrower payable to the order of the
Lender, together with all extensions, renewals, modifications, substitutions and
changes in form thereof effected by written agreement between the Borrower and
the Lender.
"Term Notes" means Term Note I (No. 4560), Term Note II (No. 4910),
Term Note III (No. 20020), Term Note IV (No. 24900), Term Note V (No. 27370) and
Term Note VI (No. 27380).
"Termination Date" means the earlier of (a) December 2, 2001; or (b)
the date upon which the obligation of the Lender to make Advances is terminated
pursuant to Section 2.7 or Section 3.7.
2. THE SEASONAL LOAN I
2.1 Commitment for Seasonal Loan I. Subject to the Conditions of
Lending set forth in Section 13 hereof, the Lender agrees to
make Advances under Seasonal Loan I to the Borrower from time
to time from the date of this Credit Agreement through the
Termination Date, provided, however, that the Lender shall not
be obligated to make any Advance, if after giving effect to
such Advance, the aggregate outstanding principal amount of
all Advances would exceed Five Million Dollars
($5,000,000.00). Within the limits set forth above, the
Borrower may borrow amounts under Seasonal Note I.
2.2 The Seasonal Note I. All Advances shall be evidenced by, and
the Borrower shall repay such Advances to the Lender in
accordance with, the terms of Seasonal Note I but in no event
later than the date of maturity; including without limitation
the provision of the Seasonal Note I that the principal amount
payable thereunder at any time shall not exceed the then
unpaid principal amount of all Advances under Seasonal Loan I
made by the Lender.
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2.3 Records of Advances and Payments. The aggregate amount of all
unpaid Advances set forth on the records of the Lender shall
be rebuttable presumptive evidence of the principal amount
owing and unpaid on Seasonal Note I.
2.4 Payments and Interest on Seasonal Note I.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the outstanding
principal amount of Seasonal Note I from the date hereof until
paid in full at a rate per annum equal to LIBOR, plus 450
basis points, determined two (2) business days prior to the
first business day of any calendar week and fixed until the
first business day of the following week.
(b) Interest accrued on Seasonal Note I through Maturity shall be
payable for each month on the first (1st) day of the following
calendar month, commencing January 1, 2001, and at Maturity,
when the entire outstanding principal amount shall be due and
payable. Interest accrued after Maturity shall be payable upon
demand.
2.5. Manner of Borrowing. The Borrower shall give the Lender
written or telephonic notice of each requested Advance under
Seasonal Loan I by not later than 1:00 p.m. (Minneapolis time)
on the date such Advance is to be made. Each Advance under
Seasonal Loan I shall be deposited to an account designated by
the Borrower or as otherwise indicated in the corresponding
request by the Borrower.
2.6. Payments. Any other provision of this Credit Agreement to the
contrary notwithstanding, the Borrower shall make all payments
of interest on and principal of Seasonal Note I to the Lender
at its office shown on the first page hereof (or to such other
locations as may from time to time be specified by the
Lender).
2.7. Termination. The obligation of the Lender to make Advances
under Seasonal Loan I shall terminate:
(a) Upon receipt by the Lender of three (3) days' written notice
of termination from the Borrower given at any time when no
amount is outstanding under Seasonal Note I;
(b) Immediately and without further action upon the occurrence of
an Event of Default of the nature referred to in Subsection
17.1(d) or
(c) Immediately when any Event of Default (other than one of the
nature specified in Subsection 17.1(d) shall have occurred and
be continuing and either (i) the Lender shall have demanded
payment of Seasonal Note I or (ii) the Lender shall elect to
terminate such obligation by giving notice to Borrower.
3. THE SEASONAL LOAN II
3.1 Commitment for Seasonal Loan II. Subject to the Conditions of
Lending set forth in Section 13 hereof, the Lender agrees to
make Advances under Seasonal Loan II to the Borrower from time
to time from the date of this Credit Agreement through the
Termination Date, provided, however, that the Lender shall not
be obligated to make any Advance, if after giving effect to
such Advance, the aggregate outstanding principal amount of
all Advances would exceed Fifteen Million Dollars
($15,000,000.00). Within the limits set forth above, the
Borrower may borrow amounts under Seasonal Note II.
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3.2 The Seasonal Note II. All Advances shall be evidenced by, and
the Borrower shall repay such Advances to the Lender in
accordance with, the terms of Seasonal Note II but in no event
later than the date of maturity; including without limitation
the provision of Seasonal Note II that the principal amount
payable thereunder at any time shall not exceed the then
unpaid principal amount of all Advances under Seasonal Loan II
made by the Lender.
3.3 Records of Advances and Payments. The aggregate amount of all
unpaid Advances set forth on the records of the Lender shall
be rebuttable presumptive evidence of the principal amount
owing and unpaid on Seasonal Note II.
3.4 Payments and Interest on Seasonal Note II.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the outstanding
principal amount of Seasonal Note II from the date hereof
until paid in full at a rate per annum equal to LIBOR, plus
450 basis points, determined two (2) business days prior to
the first business day of any calendar week and fixed until
the first business day of the following calendar week.
(b) After the date hereof, interest accrued on Seasonal Note II
through Maturity shall be payable for each calendar month on
the fifteenth (15th) day of the following calendar month,
commencing January 1, 2001, and at Maturity, when the entire
outstanding principal amount shall be due and payable.
Interest accrued after Maturity shall be payable upon demand.
3.5 Manner of Borrowing. The Borrower shall give the Lender
written or telephonic notice of each requested Advance under
Seasonal Loan II by not later than 1:00 p.m. (Minneapolis
time) on the date such Advance is to be made. Each Advance
under Seasonal Loan II shall be deposited to an account
designated by the Borrower or as otherwise indicated in the
corresponding request by the Borrower.
3.6 Payments. Any other provision of this Credit Agreement to the
contrary notwithstanding, the Borrower shall make all payments
of interest on and principal of Seasonal Note II to the Lender
at its office shown on the first page hereof (or to such other
locations as may from time to time be specified by the
Lender).
3.7 Termination. The obligation of the Lender to make Advances
under Seasonal Loan II shall terminate:
(a) Upon receipt by the Lender of three (3) days' written notice
of termination from the Borrower given at any time when no
amount is outstanding under Seasonal Note II;
(b) Immediately and without further action upon the occurrence of
an Event of Default of the nature referred to in Subsection
17.1(d) or
(c) Immediately when any Event of Default (other than one of the
nature specified in Subsection 17.1(d) shall have occurred and
be continuing and either (i) the Lender shall have demanded
payment of Seasonal Note II or (ii) the Lender shall elect to
terminate such obligation by giving notice to Borrower.
4. THE TERM LOAN I
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4.1 Term Loan I. The Lender has previously made Term Loan I to the
Borrower, of which the principal amount of $20,970.42 is
currently outstanding.
4.2 Term Note I. To evidence the Term Loan I made by the Lender to
the Borrower, the Borrower has executed and delivered to the
Lender the Term Note I. The Borrower agrees to pay to the
Lender amounts outstanding under the Term Note I in
installments, with all outstanding principal and accrued
interest due and payable February 15, 2001.
4.3 Payments and Interest on the Term Note I.
(a) The Borrower agrees to pay interest on the unpaid principal
balance of the Term Note I outstanding from time to time at a
fixed rate of 9.90%.
(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Term Note I through the end of
each calendar month hereafter shall be payable on the first
(1st) day following the end of each calendar month in equal
monthly payments of $2,045 and continuing on the first (1st)
day of each calendar month thereafter until February 15, 2001,
when the entire amount of principal and interest shall be due
and payable in full.
5. TERM LOAN II
5.1 Term Loan II. The Lender has previously made the Term Loan II
to the Borrower, of which the principal amount of $45,916.79
is currently outstanding.
5.2 Term Note II. To evidence the Term Loan II made by the Lender
to the Borrower, the Borrower has executed and delivered to
the Lender the Term Note II. The Borrower agrees to pay to the
Lender amounts outstanding under the Term Note II in
installments, with all outstanding principal and accrued
interest due and payable October 1, 2001.
5.3 Payments and Interest on the Term Note II.
(a) The Borrower agrees to pay interest on the unpaid principal
balance of the Term Note II outstanding from time to time at a
fixed rate of 9.70%.
(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Term Note II through the end of
each calendar month hereafter shall be payable on the first
(1st) day following the end of each calendar month in equal
monthly payments of $4,567.33 and continuing on the first
(1st) day of each calendar month thereafter until October 1,
2001, when the entire amount of principal and interest shall
be due and payable in full.
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6. TERM LOAN III
6.1 Term Loan III. The Lender has previously made the Term Loan
III to the Borrower, of which the principal amount of
$746,424.67 is currently outstanding.
6.2 Term Note III. To evidence the Term Loan III made by the
Lender to the Borrower, the Borrower has executed and
delivered to the Lender the Term Note III. The Borrower agrees
to pay to the Lender amounts outstanding under the Term Note
III in installments, with all outstanding principal and
accrued interest due and payable February 1, 2006.
6.3 Payments and Interest on the Term Note III.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the unpaid principal
balance of the Term Note III from the date hereof until paid
in full at a rate per annum equal to one-month LIBOR plus 450
basis points, determined two (2) business days prior to the
first business day of each calendar week and fixed until the
first business day of the following week.
(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Term Note III through the end of
each calendar month hereafter shall be payable on the first
(1st) day following the end of each calendar month in equal
monthly payments of $8,370.00 and continuing on the first
(1st) day of each calendar month thereafter until February 1,
2006, when the entire amount of principal and interest shall
be due and payable in full. Lender shall have the right to
adjust the amount of such payments to maintain the original 15
year amortization to the extent required by changes in the
rate interest accrues on Term Note III.
7. TERM LOAN IV
7.1 Term Loan IV. The Lender has previously made the Term Loan IV
to the Borrower, of which the principal amount of $115,000.00
is currently outstanding.
7.2 Term Note IV. To evidence the Term Loan IV made by the Lender
to the Borrower, the Borrower has executed and delivered to
the Lender the Term Note IV. The Borrower agrees to pay to the
Lender amounts outstanding under the Term Note IV in
installments as set forth in said note, with all outstanding
principal and accrued interest due and payable December 1,
2002.
7.3 Payments and Interest on the Term Note IV.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the unpaid principal
balance of the Term Note IV from the date hereof until paid in
full at a rate per annum equal to one-month LIBOR plus 450
basis points, determined two (2) business days prior to the
first business day of each calendar week and fixed until the
first business day of the following week.
(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Term Note IV through the end of
each calendar month hereafter shall be payable on the first
(1st) day following the end of each calendar quarter in equal
quarterly payments of
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$15,000.00 of principal, plus interest accrued through such
period, and continuing on the first (1st) day following each
November, February, May and August thereafter until December
1, 2002, when the entire amount of principal and interest
shall be due and payable in full.
8. TERM LOAN V
8.1. Term Loan V. The Lender has previously made the Term Loan V to
the Borrower, of which the principal amount of $1,353,543.40
is currently outstanding.
8.2. Term Note V. To evidence the Term Loan V made by the Lender to
the Borrower, the Borrower has executed and delivered to the
Lender the Term Note V. The Borrower agrees to pay to the
Lender amounts outstanding under the Term Note V in
installments as set forth in said note, with all outstanding
principal and accrued interest due and payable February 1,
2002.
8.3 Payments and Interest on the Term Loan V.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the unpaid principal
balance of the Term Note V from the date hereof until paid in
full at a rate per annum equal to one-month LIBOR plus 450
basis points, determined two (2) business days prior to the
first business day of each calendar week and fixed until the
first business day of the following week.
(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Term Note V through the end of
each quarterly period ending immediately prior to the
following described payment dates hereafter shall be payable
on the first (1st) day following the end of each such
quarterly period in quarterly payments of $30,925.00 of
principal, plus interest accrued through such period, and
continuing on the first (1st) day of each November, February,
May and August thereafter until February 1, 2002, when the
entire amount of principal and interest shall be due and
payable in full.
9. TERM LOAN VI
9.1. Term Loan VI. The Lender has previously made the Term Loan VI
to the Borrower, of which the principal amount of $608,074.19
is currently outstanding.
9.2. Term Note VI. To evidence the Term Loan VI made by the Lender
to the Borrower, the Borrower has executed and delivered to
the Lender the Term Note VI. The Borrower agrees to pay to the
Lender amounts outstanding under the Term Note VI in
installments as set forth in said note, with all outstanding
principal and accrued interest due and payable February 1,
2002.
9.3. Payments and Interest on the Term Loan VI.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the unpaid principal
balance of the Term Note VI from the date hereof until paid in
full at a rate per annum equal to one-month LIBOR plus 450
basis points, determined two (2) business days prior to the
first business day of each calendar week and fixed until the
first business day of the following week.
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(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Term Note V through the end of
each quarterly period ending immediately prior to the
following described payment dates hereafter shall be payable
on the first (1st) day following the end of each such
quarterly period in quarterly payments of $127,950.00 of
principal, plus interest accrued through such period, and
continuing on the first (1st) day of each November, February,
May and August thereafter until February 1, 2002, when the
entire amount of principal and interest shall be due and
payable in full.
10. BRIDGE LOAN I
10.1. Bridge Loan I. The Lender has made the Bridge Loan I to the
Borrower, in the face amount of $5,000,000.00
10.2. Bridge Note I. To evidence the Bridge Loan I made by the
Lender to the Borrower hereunder, the Borrower has executed
and delivered to the Lender the Bridge Note I. The Borrower
agrees to pay to the Lender amounts outstanding under the
Bridge Note I in installments as set forth in said note, with
all outstanding principal and accrued interest due and payable
August 1, 2002.
10.3. Payments and Interest on the Bridge Note I.
(a) Except to the extent any part thereof is a Fixed Rate Amount,
the Borrower agrees to pay interest on the unpaid principal
balance of the Bridge Note I from the date hereof until paid
in full at a rate per annum equal to one-month LIBOR plus 450
basis points, determined two (2) business days prior to the
first business day of each calendar week and fixed until the
first business day of the following week.
(b) After the date hereof, the principal and accrued interest on
the amount outstanding under Bridge Note I through the end of
each quarterly period ending immediately prior to the
following described payment dates hereafter shall be payable
on the first (1st) day following the end of each such
quarterly period in quarterly payments of $250,000.00 of
principal, plus interest accrued through such period, and
continuing on the first (1st) day of each November, February,
May and August thereafter until August 1, 2002, when the
entire amount of principal and interest shall be due and
payable in full.
11. GENERAL PROVISIONS
11.1 Computation of Interest.
(a) All computations of interest on the outstanding principal
amount of each Subject Note shall be computed on the basis of
a year comprised of 360 days to the extent such interest is
computed based on LIBOR, 360 days to the extent such interest
is computed based on the Reference Rate, but charged for the
actual number of days elapsed, and such number of days as is
indicated in the confirmation described in Section 12.2 with
respect to any Fixed Rate Amount. Each change in the interest
rate payable on each Subject Note due to a change in the
Reference Rate shall take place simultaneously with the
corresponding change in the Reference Rate. Whenever any
payment to be made by or to the Lender or other holder(s) of
any Subject Note shall otherwise be due on a day which is not
a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be
included in computing the fees or interest payable on such
next succeeding Business Day.
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(b) No provision of this Credit Agreement or any Subject Note
shall require the payment or permit the collection of interest
in excess of the rate permitted by applicable law.
11.2 Default Rate; Late Payment. Notwithstanding anything to the
contrary herein, upon the occurrence and during the
continuation of an Event of Default, the Borrower shall pay
interest on the outstanding principal amount of each of the
Subject Notes at a rate per annum equal to the greater of (i)
two percent (2%) in excess of the rate applicable to the
unpaid principal amount of each such Subject Note immediately
before the occurrence of such Event of Default or (ii) two
percent (2%) in excess of the Reference Rate in effect from
time to time. In addition, the Borrower shall be obligated to
pay $25.00 with respect to any installment on any Subject Note
paid after the date it is due, to compensate Lender for the
administrative expenses associated with such past-due
payments, subject to the maximum allowable late payment under
North Dakota law.
11.3 Security. The indebtedness, liabilities and other obligations
of the Borrower to the Lender under each Subject Note and this
Credit Agreement are secured by, inter alia, security
interests granted pursuant to all security interests, liens
and mortgages heretofore or hereafter granted by the Borrower
to the Lender as security for the obligations to the Lender;
notwithstanding anything to the contrary herein.
11.4 Voluntary Prepayments. The Borrower may prepay the principal
of any of the Subject Notes, in whole or in part, only so long
as (i) any such prepayment is in a minimum amount of $100,000
or a multiple thereof; (ii) any such prepayment shall be
accompanied by the interest accrued on the amount prepaid to
the date of the prepayment; (iii) any such prepayment shall be
accompanied by the prepayment premium specified in, and
computed in accordance with, the provisions of Section 11.6
set forth below and (iv) all amounts prepaid shall be applied
in accordance with the terms of such Subject Note.
11.5 Manner of Payments. Any other provision of this Credit
Agreement to the contrary notwithstanding, the Borrower shall
make all payments of interest on and principal of the Subject
Notes to the Lender at its office shown on the first page
hereof.
11.6 Funding Losses; Prepayment Premiums.
(a) The Borrower hereby agrees that upon demand by the Lender
(which demand shall be accompanied by a statement setting
forth the basis for the calculations of the amount being
claimed and the Lender's calculation of the amount of such
demand) the Borrower will indemnify the Lender against any
loss or expense which the Lender may have sustained or
incurred (including, without limitation, any net loss or
expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Bank to fund or
maintain such loans) or which the Lender may be deemed to have
sustained or incurred, as reasonably determined by the Lender,
(i) as a consequence of any failure by the Borrower to make
any payment when due of any amount due hereunder in connection
with any such loans, (ii) due to any failure of the Borrower
to borrow or convert any such Loans accruing interest based on
LIBOR or Fixed Rate Amounts on a date specified therefor in a
notice thereof or (iii) due to any payment or prepayment of
any such loans on a date other than the last day of the
applicable Interest Rate Period (if a Fixed Rate Amount).
(b) If at the time of any prepayment of any Subject Note
hereunder, the Interest Differential is greater than zero, the
Borrower shall pay to the Lender a prepayment premium equal
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to the present value, (discounted from the previously
scheduled payment dates for interest on such Fixed Rate Amount
at a rate equal to the Government Yield with respect to such
Fixed Rate Amount on the date of prepayment plus the Issuance
Spread) of the product of (a) the Interest Differential times
(b) the amount prepaid, times (c) a fraction, the numerator of
which is the number of days scheduled to fall between the
interest payment dates on the Loan and the denominator of
which is 365. If the portion prepaid covers several
installments, the Lender may, at its option, either calculate
such payment for each installment or calculate such payment
based on the weighted average maturity of the portion prepaid.
11.7. Increased Costs. If any Regulatory Change or other change in
any existing law, rule or regulation or in the interpretation
or administration thereof by any governmental authority,
central bank or comparable agency shall subject the Lender or
one or more of its sources of financing to increased costs,
the Borrower shall pay to the Lender within fifteen (15) days
of demand therefor, Borrower's pro rata share (based on the
amount of all loans outstanding from the Lender) of any such
amount required to compensate the Lender or such other Persons
for such costs.
11.8. Collateral Allocation. To the extent the Lender receives
proceeds of any Collateral after the exercise of remedies
provided for in Section 13.2: (a) proceeds of accounts and
inventory shall be applied first to any obligations of the
Borrower relating to or arising under the Seasonal Notes and
Loans I and II, pro rata in accordance with the principal
amount outstanding thereunder and then to all the other
obligations to the Lender under the Loan Documents; (b)
proceeds of the Mortgage shall be applied first to any
obligations of the Borrower relating to or arising under the
Real Estate Loan, and then to all other obligations to the
Lender under the Loan Documents; and (c) proceeds of all other
Collateral shall be applied first to all the obligations of
the Borrower to the Lender under the Loan Documents, other
than those relating to or arising under the Seasonal Notes and
Loans I and II or the Real Estate Note and Loan, and then to
all other obligations to the Lender under the Loan Documents,
pro rata in accordance with the respective principal amounts
thereof.
11.9. Loan Agreement Reference. Any reference in any Subject Note,
any Security Agreement, Mortgage, Deed of Trust or Guaranty,
or any other document given, made or executed by the Borrower
in connection with any obligation of the Borrower, subject to
this Credit Agreement (a "Subject Document") to any Loan
Agreement, Credit Agreement or similar agreement shall be
deemed a reference to that Credit Agreement, as it may from
time to time be amended, modified or restated. Any conflict
between the terms of any Subject Document, and the terms of
this Credit Agreement shall be resolved in favor of the terms
of this Credit Agreement.
12. FIXED RATE AMOUNTS
12.1. Availability. Any Fixed Rate Amount of any Loan may bear
interest at a Fixed Rate. A Loan may accrue a different Fixed
Rate on different Fixed Rate Amounts simultaneously. A Fixed
Rate shall be effective to the extent the Lender responds to
any request therefor by the Borrower prior to the date such
Fixed Rate is to first accrue.
12.2. Confirmation. The Lender shall confirm any Fixed Rate to the
Borrower in writing which shall reference and confirm:
(a) The applicable Subject Note number;
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(b) The applicable Fixed Rate Amount;
(c) The applicable Fixed Rate;
(d) The applicable date such Fixed Rate becomes effective;
(e) The number of days which will comprise the year over which
such Fixed Rate is to be computed; and
(f) The date upon which such Fixed Rate expires.
12.3. Rate After Interest Rate Period. Interest on any Fixed Rate
Amount shall accrue at the rate otherwise provided for
hereunder commencing the date following the last day of the
corresponding Interest Rate Period, which may, if the Borrower
has appropriately requested and the Lender has quoted, be a
new Fixed Rate.
13. CONDITIONS OF LENDING
13.1. Conditions Precedent. This Credit Agreement and the Lender's
obligations hereunder are subject to receipt, on or prior to
the date hereof, by the Lender of the following, each to be in
form and substance satisfactory to the Lender, unless the
Lender waives receipt of any of the following in writing:
(a) This Credit Agreement and the Subject Notes each appropriately
completed and duly executed by the Borrower;
(b) A Certificate of Good Standing for the Borrower issued by the
Secretary of State in all states where the Borrower is
qualified to do business;
(c) A copy of the Borrower's Bylaws, together with all amendments,
certified by the Secretary of the Borrower to be a true and
correct copy thereof;
(d) A copy of the Articles of Incorporation of the Borrower,
together with all amendments, certified by the Secretary of
State of the state of the Borrower's incorporation to be a
true and correct copy thereof;
(e) A certified copy of the resolutions of the Board of Directors
of the Borrower authorizing or ratifying the transactions
contemplated hereby, and the execution, delivery and
performance of the Loan Documents, and designating the
officers authorized to execute the Loan Documents to which the
Borrower is a party and to perform the obligations of the
Borrower thereunder;
(f) A certificate of the Secretary of the Borrower certifying the
names of the officers authorized to execute the Loan
Documents, together with a sample of the true signature of
each such officer;
(g) A favorable opinion of counsel for the Borrower, satisfactory
to the Lender, as to the matters set forth in Subsections
14.1, 14.2, 14.3, 14.5, 14.7 and 14.9 , and other matters as
requested by the Lender, satisfactory to the Lender and its
counsel;
(h) The Security Agreement and Mortgages duly executed by the
Borrower.
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(i) Policies or certificates of insurance evidencing insurance
coverage required under this Credit Agreement and any other of
the Loan Documents; and
(j) Such other documents, information and actions as the Lender
may reasonably request.
13.2. Conditions Precedent to all Loans and Advances. The obligation
of the Lender to make any Loan, Advance hereunder, including
the initial Loans or Advance, is subject to the satisfaction
of each of the following, unless waived in writing by the
Lender:
(a) The representations and warranties set forth in Section 14 are
true and correct in all material respects on the date hereof
and on the date of any Loan or Advance (as if made on the date
of such Loan or Advance, except to the extent that such
representations and warranties expressly relate solely to an
earlier date).
(b) No Default or Event of Default shall have occurred and be
continuing.
(c) No litigation, arbitration or governmental investigation or
proceeding shall be pending, or, to the knowledge of the
Borrower, threatened, against the Borrower or affecting the
business or operations of the Borrower which was not
previously disclosed to the Lender and which, if determined
adversely to the Borrower, would have a material adverse
effect on the operation or financial condition of the
Borrower.
(d) No Default or Event of Default shall result from the making of
any such Loan or Advance.
(e) No Material Adverse Occurrence shall have occurred and be
continuing, which was not previously disclosed to the lender.
(f) Each request for a Loan or Advance and each acceptance of the
proceeds of such request by the Borrower shall constitute a
representation and warranty by the Borrower that on the date
of acceptance of such proceeds (both immediately before and
after giving effect to such acceptance) the statements made in
Section 14 are true and correct with the same effect as if
then made, except to the extent such statements expressly
relate solely to an earlier date.
14. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
14.1 Organization, etc. The Borrower is a corporation validly organized,
existing and in good standing under the laws of the State of Delaware,
has full power and authority to own its property and conduct its
business substantially as presently conducted by it and is duly
qualified and licensed to do business and is in good standing as a
foreign corporation in each other jurisdiction where the nature of its
business makes such qualification or licensing necessary. The Borrower
has full power and authority to enter into and perform its obligations
under the Loan Documents and to obtain the Loans and Advances
hereunder.
14.2 Due Authorization. The execution, delivery and performance by the
Borrower of the Loan Documents have been duly authorized by all
necessary corporate action, do not require any approval or consent of,
or any registration, qualification or filing with, any governmental
agency or authority or any approval or consent of any other Person
(including, without limitation, any
16
stockholder, do not and will not conflict with, result in any violation
of or constitute any default under, any provision of the Borrower's
Articles of Incorporation or Bylaws, any agreement binding on or
applicable to the Borrower or any of its property, or any law or
governmental regulation or court decree or order, binding upon or
applicable to the Borrower or of any of its property and will not
result in the creation or imposition of any Lien on any of its property
pursuant to the provisions of any agreement binding on or applicable to
the Borrower or any of its property except pursuant to the Loan
Documents.
14.3 Validity of the Loan Documents. The Loan Documents to which the
Borrower is a party are the legal, valid and binding obligations of the
Borrower and are enforceable in accordance with their terms, subject
only to bankruptcy, insolvency, reorganization, moratorium or similar
laws, rulings or decisions at the time in effect affecting the
enforceability of rights of creditors generally and to general
equitable principles which may limit the right to obtain equitable
remedies.
14.4 Financial Information. The financial statements of the Borrower
furnished to the Lender have been and will be prepared in accordance
with GAAP consistently applied by the Borrower and present fairly the
financial condition of the Borrower as of the dates thereof and for the
periods covered thereby. The Borrower is not aware of any contingent
liabilities or obligations which would, upon becoming non-contingent
liabilities or obligations, be a Material Adverse Occurrence. Since the
date of the most recent such statements, neither the condition
(financial or otherwise), the business nor the properties of the
Borrower have been materially and adversely affected in any way.
14.5 Litigation, Other Proceedings. Except as previously disclosed to and
approved of in writing by the Lender, there is no action, suit or
proceeding at law or equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to the knowledge of the Borrower,
threatened, against the Borrower or any of its property, which is
reasonably likely to result in a Material Adverse Occurrence; and the
Borrower is not in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, where such default would be a Material Adverse
Occurrence.
14.6 Title to Assets. Except for Liens permitted by Section 16.2, the
Borrower has good and marketable title to all of its assets, real and
personal.
14.7 Lien Priority. The Liens created by the Security Agreement are attached
and perfected Liens on the Collateral.
14.8 Guarantees and Indebtedness. Except as disclosed on financial
statements of the Borrower furnished to the Lender, the Borrower is not
a party to any material contract of guaranty or suretyship and none of
its assets is subject to any contract of that nature and the Borrower
is not indebted to any other party, except the Lender.
14.9 Margin Stock. No part of any Loan or Advance hereunder shall be used at
any time by the Borrower to purchase or carry margin stock (within the
meaning of Regulation G, T, U or X promulgated by the Board of
Governors of the Federal Reserve System) or to extend credit to others
for the purpose of purchasing or carrying any margin stock. The
Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purposes of
purchasing or carrying any such margin stock. No part of the proceeds
of any Loan or Advance hereunder will be used by the Borrower for any
purpose which violates, or which is
17
inconsistent with, any regulations promulgated by the Board of
Governors of the Federal Reserve System.
14.10 Taxes. The Borrower has filed all federal, state and other income tax
returns which are required to be filed through the date of this Credit
Agreement and has paid all taxes as shown on said returns, and all
taxes due or payable without returns and all assessments received to
the extent such taxes and assessments have become due. All tax
liabilities of the Borrower are adequately provided for on its books,
including interest and penalties. No income tax liability of a material
nature has been asserted by taxing authorities for taxes in excess of
those already paid. The Borrower has made all required withholding
deposits.
14.11 Accuracy of Information. All factual information furnished by or on
behalf of the Borrower to the Lender for purposes of or in connection
with this Credit Agreement or any transaction contemplated by this
Credit Agreement is, and all other such factual information furnished
by or on behalf of the Borrower to the Lender in the future, will be
true and accurate in every material respect on the date as of which
such information is dated or certified. No such information contains
any material misstatement of fact or omits any material fact or any
fact necessary to prevent such information from being misleading.
14.12 Material Agreements. The Borrower is not a party to any agreement or
instrument or subject to any restriction that materially and adversely
affects its business, property or assets, operations or condition
(financial or otherwise).
14.13 Defaults. The Borrower is not in default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions
contained in any: (a) agreement to which such entity is a party, which
default might have a material adverse effect on the business,
properties or assets, operations, or condition (financial or otherwise)
of the Borrower; or (b) instrument evidencing any indebtedness or under
any agreement relating to such indebtedness.
14.14 ERISA. (a) No Reportable Event has occurred and is continuing with
respect to any Plan; (b) the Pension Benefit Guaranty Corporation or
any successor entity has not instituted proceedings to terminate any
Plan; and (c) each Plan of the Borrower has been maintained and funded
in all material respects in accordance with its terms and with ERISA.
All undefined capitalized terms used in this Section shall have the
meanings ascribed to them in ERISA.
14.15 Financial Status. The Borrower is not insolvent (as such term is
defined in Section 101(32) of the United States Bankruptcy Code of
1978, as amended or Minnesota Statutes Section 513.42, as amended, or
other relevant state statutes, as amended) and will not be rendered
insolvent (as such term is defined in Section 101(32) of the United
States Bankruptcy Code of 1978, as amended or Minnesota Statutes
Section 513.42, as amended, or other relevant state statutes, as
amended) by execution of this Credit Agreement or any other of the Loan
Documents, or consummation of the transactions contemplated thereby.
14.16 Survival of Representations. All representations and warranties
contained in this Section 14 shall survive the delivery of the Notes
and the making of the Loans and Advances evidenced thereby and any
investigation at any time made by or on behalf of Lender shall not
diminish its rights to rely thereon.
14.17 Environmental Matters.
(a) Definitions. As used in this Credit Agreement, the following
terms shall have the following meanings:
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(i) "Environmental Law" means any federal, state, local
or other governmental statute, regulation, law or
ordinance dealing with the protection of human health
and the environment.
(ii) "Hazardous Substances" means pollutants,
contaminants, hazardous substances, hazardous wastes,
petroleum and fractions thereof, and all other
chemicals, wastes, substances and materials listed
in, regulated by or identified in any Environmental
Law.
(iii) "Premises" means all premises where the Borrower
conducts its business and has any rights of
possession including without limitation the premises
legally described in the Mortgage.
(b) To the Borrower's best knowledge, there are not present in, on
or under the Premises any Hazardous Substances in such form or
quantity as to create any material liability or obligation for
either the Borrower or the Lender under common law of any
jurisdiction or under any Environmental Law, and no Hazardous
Substances have ever been stored, buried, spilled, leaked,
discharged, emitted or released in, on or under the Premises
in such a way as to create any such liability.
(c) There are not and there never have been any requests, claims,
notices, investigations, demands, administrative proceedings,
hearings or litigation, relating in any way to the Premises or
the Borrower, alleging liability under, violation of, or
noncompliance with any Environmental Law or any license,
permit or other authorization issued pursuant thereto. To the
Borrower's best knowledge, no such matter is threatened or
impending.
(d) To the Borrower's best knowledge, the Premises are not and
never have been listed on the National Priorities List, the
Comprehensive Environmental Response, Compensation and
Liability Information System or any similar federal, state or
local list, schedule, log, inventory or database.
14.18 Subsidiaries. The Borrower has the Subsidiaries listed on the financial
statements previously delivered to the Lender.
15. AFFIRMATIVE COVENANTS
As long as there remains any amount outstanding under the Subject Notes
or the Lender has any obligation to make Advances under the Seasonal Commitment,
the Borrower shall, unless waived in writing by the Lender:
15.1. Financial Statements and Reports. Furnish to the Lender, at the
times set forth below, the following financial statements, reports and
information:
(a) As soon as available, but in any event within one hundred
twenty-five (125) days after each fiscal year end, audited
financial statements of the Borrower, and all corporations and
subsidiaries, directly or indirectly controlled by the
Borrower, including without limitation a balance sheet, and
the related statements of income, retained earnings and cash
flows, prepared on a consolidated basis, certified by
certified public accountants satisfactory to the Lender to
have been prepared in accordance with GAAP consistently
applied;
(b) As soon as available, but in any event within forty-five (45)
days after the last day of each quarterly fiscal period
unaudited financial statements of the Borrower consisting of a
balance sheet and the related statements of income, retained
earnings and cash flows
19
prepared on a consolidated basis dated as of the last Business
Day of such quarterly fiscal period in form and detail as
reasonably required by the Lender certified by the chief
financial officer of the Borrower to have been prepared from
the records of the Borrower on the basis of accounting
principles consistently applied by the Borrower;
(c) As soon as available, but in any event within ninety (90) days
following each fiscal year-end, an operating budget and cash
flow forecast for the fiscal year immediately following such
fiscal year-end.
(d) Promptly upon obtaining knowledge thereof, notice of the
occurrence of any Default or Event of Default and of the
violation by the Borrower of any law, rule or regulation, the
non-compliance with which could be reasonably expected to be a
Material Adverse Occurrence;
(e) To the extent applicable, promptly after the sending or filing
thereof, copies of all regular and periodic financial reports
which the Borrower shall file with the U.S. Securities and
Exchange Commission, or any national securities exchange;
(f) Such other information concerning the business, operations and
condition (financial or otherwise) of the Borrower as the
Lender may reasonably request.
15.2. Maintenance of Corporate Existence. Maintain and preserve its
corporate existence.
15.3. Taxes. Pay and discharge as the same shall become due and
payable, all taxes, assessments and other governmental charges
and levies against or on any of its property, as well as
claims of any kind which, if unpaid, might become a Lien upon
any of its properties, unless such tax, levy, charge
assessment or Lien is being contested in good faith by the
Borrower and is supported by an adequate book reserve. The
Borrower shall make all required withholding deposits.
15.4. Notices. As soon as practicable, give notice to the Lender of:
(a) The commencement of any litigation relating to the Borrower
which might reasonably result in a Material Adverse Occurrence
or relating to the transactions contemplated by this Credit
Agreement;
(b) The commencement of any material arbitration or governmental
proceeding or investigation not previously disclosed to the
Lender which has been instituted or, to the knowledge of the
Borrower, is threatened against the Borrower or its property
which might reasonably result in a Material Adverse
Occurrence;
(c) Any Reportable Event or "prohibited transaction" or the
imposition of a Withdrawal Liability, within the meaning of
ERISA, in connection with any Plan and, when known, any action
taken by the Internal Revenue Service, Department of Labor or
Pension Benefit Guaranty Corporation with respect thereto, and
any adverse development which occurs in any litigation,
arbitration or governmental investigation or proceeding
previously disclosed to the Lender which if determined
adversely to the Borrower would constitute a Material Adverse
Occurrence; and
(d) Any Default or Event of Default under this Credit Agreement.
15.5. Compliance with Laws. Carry on its business activities in
substantial compliance with all applicable federal or state
laws and all applicable rules, regulations and orders of all
20
governmental bodies and offices having power to regulate or
supervise its business activities. The Borrower shall maintain
all material rights, liens, franchises, permits, certificates
of compliance or grants of authority required in the conduct
of its business. Without limiting the foregoing undertakings,
the Borrower specifically agrees that it will comply with all
applicable Environmental Laws and obtain and comply with all
permits, licenses and similar approvals required by any
Environmental laws, and will not generate, use, transport,
treat, store or dispose of any Hazardous Substances in such a
manner as to create any liability or obligation under the
common law of any jurisdiction or any Environmental Law.
15.6. Books and Records. Keep books and records reflecting all of
its business affairs and transactions in accordance with GAAP
consistently applied and permit the Lender, and its
representatives, at reasonable times and intervals, to visit
all of its offices, discuss its financial matters with
officers of the Borrower and its independent public
accountants (and by this provision the Borrower authorizes its
independent public accountants to participate in such
discussions) and examine any of its books and other corporate
records.
15.7. Insurance. Procure and maintain insurance with financially
sound and reputable insurers, insurance with respect to the
Collateral and its other property against damage and loss by
theft, fire, collision (in the case of motor vehicles) and
such other risks as are required by the Lender in an amount
equal to the fair market value thereof and, in any event, in
an amount sufficient to avoid the application of any
coinsurance provisions and naming the Lender loss payee. The
Borrower shall also procure and maintain other such insurance
including workers compensation insurance, liability and
business interruption insurance, and other insurance as the
Lender may require and/or that may be required under any of
the Loan Documents, all in such amounts as may be required by
the Lender. Policies of all such insurance shall contain an
agreement by the insurer to provide the Lender thirty (30)
days prior written notice of cancellation and an agreement
that the Lender's interest shall not be impaired or
invalidated by any act or neglect of the Borrower nor by the
occupation of properties owned or leased by the Borrower or
other properties wherein the Collateral is located for
purposes more hazardous than those permitted by such policies.
The Borrower shall provide evidence of such insurance and the
policies of insurance or copies thereof to the Lender upon
request.
15.8. Maintain Property. Maintain and keep its assets, property and
equipment in good repair, working order and condition and from
time to time make or cause to be made all needed renewals,
replacements and repairs.
15.9. Conduct of Business. Continue to engage primarily in the
business being conducted on the date of this Credit Agreement.
15.10. Net Working Capital. Maintain at all times net working capital
of at least $45,000,000.00.
15.11. Leverage Ratio. Maintain at all times a consolidated leverage
ratio not to exceed 4.00 : 1.00.
15.12. Further Assurances. The Borrower agrees upon reasonable
request by the Lender to execute and deliver such further
instruments, deeds and assurances, including financing
statements under the Uniform Commercial Code of Minnesota
and/or any other relevant states, and to do such further acts
as may be necessary or proper to carry out more
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effectively the purposes of this Credit Agreement and the Loan
Documents and, without limiting the foregoing, to make subject
to the liens and security interests of the Security Agreement
and any other of the Loan Documents any property agreed to be
subjected, or intended to be subject, or covered by the
granting clauses of the Security Agreement or such other of
the Loan Documents.
15.13. ERISA Compliance. Comply in all material respects at all times
with all applicable provisions of ERISA and the regulations
and published interpretations thereunder.
16. NEGATIVE COVENANTS
As long as there remains any amount outstanding under the Subject Notes
or the Lender has any obligation to make Advances under the Seasonal Commitment,
the Borrower shall not, unless waived in writing by the Lender:
16.1. Consolidation; Merger; Sale of Assets; Acquisitions.
Consolidate with or merge into or with any other entity; or
sell (other than sales of inventory in the ordinary course of
business), transfer, lease or otherwise dispose of all or a
substantial part of its assets; or acquire a substantial
interest in another Person either through the purchase of all
or substantially all of the assets of that Person or the
purchase of a controlling equity interest in that Person;
provided that the foregoing shall not prohibit any transaction
immediately after which;
(a) The Borrower is a surviving entity;
(b) Borrower's Tangible Net Worth is not less than the amount
thereof immediately prior thereto; and
(c) The aggregate price paid by the Borrower in all such
transactions in any consecutive twelve (12) month period is
not greater than $100,000,000;
16.2 Liens. Create, incur, assume or suffer to exist any Lien or
any of its property, real or personal, except (a) Liens in
favor of the Lender; (b) Liens disclosed to and approved of in
writing by the Lender; (c) Liens for current taxes and
assessments which are not yet due and payable; and (d)
purchase money security interests to secure the indebtedness
permitted under Section 16.3 below.
16.3 Additional Indebtedness. Create, incur, assume or suffer to
exist any indebtedness except: (a) indebtedness in favor of
the Lender; (b) current liabilities incurred in the ordinary
course of business; (c) indebtedness existing on the date of
this Credit Agreement and disclosed to and approved of in
writing by the Lender; and (d) purchase money indebtedness
incurred in connection with the acquisition of fixed assets
not to exceed $1,000,000 in the aggregate during any fiscal
year of the Borrower.
16.4 Guaranties. Assume, guarantee, endorse or otherwise become
liable in connection with the indebtedness of any other person
or entity except endorsements of negotiable instruments for
deposit or collection in the ordinary course of business.
16.5 Dividends. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock
now or hereafter outstanding, return any capital to its
stockholders as such, at any time any Default or Event of
Default has occurred and is continuing.
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16.6 Change in Ownership or Business. Permit a material change in
(a) the ownership or management of the Borrower as in effect
on the date of this Credit Agreement, or (b) the line of
business presently engaged in by the Borrower.
16.7 Investments; Subsidiaries. The Borrower will not purchase or
hold beneficially any stock or other securities or evidences
of indebtedness of, make or permit to exist any loans or
advances to, or create or acquire any Subsidiary or make any
investment or acquire any interest whatsoever in, any other
Person, except:
(a) Investments in direct obligations of the United States of
America or any agency or instrumentality thereof whose
obligations constitute the full faith and credit obligations
of the United States of America having a maturity of one (1)
year or less, commercial paper issued by a U.S. corporation
rated "A-1" or "A-2" by Standard & Poor's Ratings Services or
"P-1" or "P-2" by Xxxxx'x Investors Service, investments in
money market mutual funds whose underlying assets are
exclusively investments which would otherwise be permitted
investments under this Section 16.7(a), or repurchase
agreements, certificates of deposit or bankers' acceptances
having a maturity of one (1) year or less issued by members of
the Federal Reserve System having deposits in excess of
$500,000,000 (which certificates of deposit or bankers'
acceptances are fully insured by the Federal Deposit Insurance
Corporation);
(b) Travel advances or loans to officers and employees of the
Borrower (not including contracts made in the ordinary course
of business with any such officers or employees) not exceeding
at any one time an aggregate of $25,000;
(c) Advances in the form of progress payments, prepaid rent or
security deposits;
(d) Existing investments as described in the Borrower's financial
statements;
(e) Investments constituting transactions made in the ordinary
course of business of the Borrower;
(f) Investments in wholly-owned subsidiaries of the Borrower
existing as of the date hereof;
(g) Transitions and investments permitted under Section 16.1; and
(h) Investments not otherwise permitted in this Section 16.7 not
to exceed $1,000,000 in the aggregate (on a book value basis)
at any time outstanding.
17. EVENTS OF DEFAULT AND REMEDIES
17.1 Events of Default. The term "Event of Default" shall mean any
of the following events:
(a) The Borrower shall default in the payment when due, or if
payable on demand, upon demand, of any principal or interest
on any of the Subject Notes; or
(b) The Borrower shall default (other than a default in payment
under subsection (a) above) in the due performance and
observance of any of the covenants contained in any of the
Loan Documents and such default shall continue unremedied for
a period of thirty (30) days after notice from the Lender to
the Borrower thereof; or
(c) An event has occurred which would, at such time or with the
passage of time, constitute an "event of default" (however
legally styled) under any other loan obligation, lease, bond,
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debenture, security agreement, note, or instrument or
agreement evidencing Debt and any applicable grace period
specified in such agreement or evidence of Debt has expired;
or
(d) The Borrower shall become insolvent or generally fail to pay
or admit in writing its inability to pay its debts as they
become due; or the Borrower shall apply for, consent to, or
acquiesce in the appointment of a trustee, receiver or other
custodian for itself or any of its property, or make a general
assignment for the benefit of its creditors; or trustee,
receiver or other custodian shall otherwise be appointed for
the Borrower or any of its assets; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding
under any bankruptcy or insolvency law, or any dissolution or
liquidation proceeding shall be commenced by or against the
Borrower; or the Borrower shall take any action to authorize,
or in furtherance of, any of the foregoing; or
(e) Any representation or warranty set forth in this Credit
Agreement or any other Loan Document shall be untrue in any
material respect on the date as of which the facts set forth
are stated or certified; or
(f) The occurrence of any Material Adverse Occurrence; or
(g) A Reportable Event (as defined under ERISA) shall have
occurred; or
(h) The rendering against the Borrower of a final judgment, decree
or order for the payment of money in excess of $500,000
(unless the payment of such judgment in the amount of such
excess is insured), and the continuance of such judgment,
decree or order unsatisfied for any 30 consecutive day period
without a stay of execution.
(i) The occurrence of a Change of Control; or
(j) The Lender shall in good xxxxx xxxx itself insecure.
17.2. Remedies; Cumulative. If an Event of Default described in Section
17.1(d) shall occur, the full unpaid balance of each of the Subject
Notes (outstanding balance plus accrued interest) and all other
obligations of the Borrower to the Lender shall automatically be due
and payable without declaration, notice, presentment, protest or demand
of any kind (all of which are hereby expressly waived) and the
obligation of the Lender to make additional Advances shall
automatically terminate. If any other Event of Default shall occur and
be continuing, the Lender may terminate its obligation to make
additional Advances and may declare the outstanding balance of the each
of the Subject Notes and all other obligations of the Borrower to the
Lender to be due and payable without further notice, presentment,
protest or demand of any kind (all of which are hereby expressly
waived), whereupon the full unpaid amount of each of the Subject Notes
and all other obligations of the Borrower to the Lender shall become
immediately due and payable. Upon any Event of Default, the Lender
shall be entitled to exercise any and all rights and remedies available
under any of the Loan Documents or otherwise available at law or in
equity to collect the Subject Notes and all other obligations of the
Borrower to the Lender, to realize upon or otherwise pursue any and all
Collateral and other security (including without limitation any and all
guarantees) for the Loans under this Credit Agreement and to, without
notice to the Borrower, and without further action, apply any and all
monies owing by Lender to the Borrower to the payment of the Subject
Notes, and all other obligations of the Borrower hereunder, in such
order as the Lender elects (subject to Section 11.8).
18. MISCELLANEOUS
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18.1 Waivers, Amendments. The provisions of the Loan Documents may
from time to time be amended, modified, or waived, if such
amendment, modification or waiver is in writing and signed by
the Lender. No failure or delay on the part of the Lender or
the holder(s) of the Subject Notes in exercising any power or
right under any of the Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice
to or demand on the Borrower in any case shall entitle it to
any notice or demand in similar or other circumstances.
18.2 Notices. All communications and notices provided under this
Credit Agreement shall be in writing and addressed or
delivered to the Borrower or the Lender at their respective
addresses shown on the first page hereof, or to any party at
such other address as may be designated by such party in a
written notice to the other parties. Such notices shall be
delivered by any of the following means: (i) mailing through
the United States Postal Service, postage prepaid, by
registered or certified mail, return receipt requested; (ii)
delivery by reputable overnight delivery service including
without limitation, and by way of example only: Federal
Express, DHL, Airborne Express and Express Mail; or (iii)
delivery by reputable private personal delivery service.
Notices delivered in accordance with (i) above shall be deemed
delivered the second Business Day after deposit in the mail;
notices delivered in accordance with (ii) above shall be
deemed delivered the first Business Day after delivery to the
delivery service; and notices delivered in accordance with
(iii) above shall be deemed delivered the same Business Day as
that specified by the notifying party to the delivery service.
18.3 Costs and Expenses. The Borrower agrees to pay all expenses
for the preparation of this Credit Agreement, including
exhibits, and any amendments to this Credit Agreement as may
from time to time hereafter be required, and the reasonable
attorneys fees and legal expenses of counsel for the Lender,
from time to time incurred in connection with the preparation
and execution of this Credit Agreement and any document
relevant to this Credit Agreement, any amendments hereto or
thereto, and the consideration of legal questions relevant
hereto and thereto. The Borrower agrees to reimburse Lender
upon demand for, all out-of-pocket expenses (including
reasonable attorneys fees and legal expenses) in connection
with the Lender's enforcement of the obligations of the
Borrower hereunder or under the Note or any other of the Loan
Documents, whether or not suit is commenced including, without
limitation, attorneys fees, and legal expenses in connection
with any appeal of a lower court's order or judgment. The
obligations of the Borrower under this Section 18.3 shall
survive any termination of this Credit Agreement.
18.4 Interest Limitation. All agreements between the Borrower and
the Lender are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced or
secured thereby or otherwise, shall the rate of interest
charged or agreed to be paid to the Lender for the use,
forbearance, loaning or detention of such indebtedness exceed
the maximum permissible interest rate under applicable law
("Maximum Rate"). If for any reason or in any circumstance
whatsoever fulfillment of any provision of this Credit
Agreement and/or the Subject Notes, any document securing or
executed in connection herewith or therewith, or any other
agreement between the Borrower and the Lender, at any time
shall require or permit the interest rate applied thereunder
to exceed the Maximum Rate, then the interest rate shall
automatically be reduced to the Maximum Rate, and if the
Lender should ever receive interest at a rate that would
exceed the Maximum Rate, the amount of interest received which
would be in excess of the amount receivable after
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applying the Maximum Rate to the balance of the outstanding
obligation shall be applied to the reduction of the principal
balance of the outstanding obligation for which the amount was
paid and not to the payment of interest thereunder. This
provision shall control every other provision of any and all
agreements between the Borrower and the Lender and shall also
be binding upon and applicable to any subsequent holder of any
of the Subject Notes.
18.5 Severability. Any provision of this Credit Agreement or any
other of the Loan Documents executed pursuant hereto which is
prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
portion or unenforceability without invalidating the remaining
provisions of this Credit Agreement or such Loan Document or
affecting the validity or enforceability of such provisions in
any other jurisdiction.
18.6 Cross-References. References in this Credit Agreement or in
any other of the Loan Documents executed pursuant hereto to
any Section are, unless otherwise specified, to such Section
of this Credit Agreement or such Loan Document, as the case
may be.
18.7 Headings. The various headings of this Credit Agreement or of
any other of the Loan Documents executed pursuant hereto are
inserted for convenience only and shall not affect the meaning
or interpretation of this Credit Agreement or such Loan
Document or any provisions hereof or thereof.
18.8 Governing Law; Venue; Waiver of Jury Trial. Each of the Loan
Documents shall be deemed to be a contract made under and
governed by the laws of the State of North Dakota (without
regard to the laws of conflict of any jurisdiction) as to all
matters, including without limitation, matters of validity,
interpretation, construction, effect, performance and
remedies. The Borrower hereby consents to the personal
jurisdiction of the state and federal courts located in the
State of North Dakota in connection with any controversy
related to this Credit Agreement and any other of the Loan
Documents, waives any argument that venue in such forums is
not convenient and agrees that any litigation instigated by
the Borrower against the Lender in connection herewith or
therewith shall be venued in the federal or state court that
has jurisdiction over matters arising in Fargo, North Dakota.
THE BORROWER AND LENDER IRREVOCABLY WAIVE ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENT OR ANY INSTRUMENT OR
DOCUMENT DELIVERED THEREUNDER.
18.9 Successors and Assigns. This Credit Agreement shall be binding
upon and shall inure to the benefit of the parities hereto and
their respective successors and assigns, except that Borrower
may not assign or transfer its rights hereunder without the
prior written consent of Lender.
18.10 Recitals Incorporated. The recitals to this Credit Agreement
are incorporated into and constitute an integral part of this
Credit Agreement.
18.11 Multiple Counterparts. This Credit Agreement may be executed
in one or more counterparts and by the different parties on
separate counterparts, each of which shall be deemed to be an
original and all of which shall constitute one and the same
instrument.
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18.12 Indemnity. In addition to the payment of expenses pursuant to
Section 18.3, the Borrower agrees to indemnify, defend and
hold harmless the Lender, and any of its participants,
assignees, parent corporations, subsidiary corporations,
affiliated corporations and successor corporations, and all
present and future officers, directors, employees, attorneys
and agents of the foregoing (the "Indemnitees"), from and
against any of the following (collectively, "Indemnified
Liabilities"):
(a) any and all transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of the Loan Documents or the making of
the Advances or the Loans;
(b) any claims, loss or damage to which any Indemnitee may be
subjected if any representation or warranty contained in this
Agreement proves to be incorrect in any respect or as a result
of any violation of the covenant contained in this Agreement;
and
(c) any and all other liabilities, losses, damages, penalties,
judgments, suits, claims, costs and expenses of any kind or
nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel) in connection
with the foregoing and any other investigative, administrative
or judicial proceedings, whether or not such Indemnitee shall
be designated a party thereto, which may be imposed on,
incurred by or asserted against any such Indemnitee, in any
manner related to or arising out of or in connection with the
making of the Advances or the Loans and the Loan Documents or
the use or intended use of the proceeds of the Advances or the
Loans.
If any investigative, judicial or administrative proceeding arising
from any of the foregoing is brought against any Indemnitee, upon such
Indemnitee's request, the Borrower, or counsel designated by the
Borrower and satisfactory to the Indemnitee, will resist and defend
such action, suit or proceeding to the extent and in the manner
directed by the Indemnitee, at the Borrower's sole costs and expense.
Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable
because it violates any law or public policy, the Borrower shall
nevertheless make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The Borrower's obligation under this
Section 18.12 shall survive the termination of this Credit Agreement
and the discharge of the Borrower's other obligations hereunder.
18.13 Complete Agreement. This Credit Agreement together with the
Loan Documents, comprises the complete and integrated
agreement of the parties on the subject matter hereof and
supersedes all prior agreements, written or oral, on the
subject matter hereof.
18.14 Assignments; Participants; Waiver of Claims. The Lender may
sell, assign or grant a participation in the Subject Notes, in
whole or in part and may disclose information relating to the
Borrower or otherwise relevant to this Agreement, to such
Persons and their financing sources ("Assignees"). No Assignee
shall be deemed a partner or agent of the Lender. The Borrower
irrevocably agrees that any claims it may have or may assert
against the Lender for breach of contract (or related tort
claims) shall be personal to the Lender and shall not be
asserted by way of direct claim or offset against any Assignee
or against any Loan sold or assigned to any Assignee ( and the
Borrower hereby irrevocably waives any right it otherwise may
have, now or hereafter, to assert any such claim). The
Borrower acknowledges that the Assignees shall rely on the
foregoing waiver and agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
RDO EQUIPMENT CO.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------
Its: Chief Financial Officer
----------------------------
By:
----------------------------
Its:
----------------------------
AG CAPITAL COMPANY,
a Delaware Corporation
By: /s/Xxx Xxxxx
-----------------------------
Xxx Xxxxx
Its President and General Manager
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