EXHIBIT 10.5
FINANCING SERVICES AND CONTRIBUTED CAPITAL AGREEMENT
FINANCING SERVICES AND CONTRIBUTED CAPITAL AGREEMENT ("Agreement")
dated as of the 1st day of April, 0000, xxxxxxx XXXXXXXX XXXXXX COOPERATIVE,
INCORPORATED (the "Cooperative"), a Virginia corporation, and MICHIGAN LIVESTOCK
CREDIT CORPORATION ("MLCC"), a Virginia corporation.
The Cooperative desires to have MLCC extend from time to time
agricultural production loans, building loans, equipment loans, renovation
loans, revolving credit loans, and other loans to and financing for customers of
the Cooperative and other persons pursuant to separate agreements to be entered
into between each such customer and MLCC and to lease dairy cattle and other
livestock from time to time to customers of the Cooperative and other persons,
and to contract with third parties to feed cattle and other livestock. MLCC
desires to have the Cooperative provide it with equity capital, and each of the
parties desires to have its business operations complement the business
operations of the other party. Therefore, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the following meanings (terms defined in the singular to have the
same meaning when used in the plural and vice versa):
"Agreement" means this Financing Services and Contributed Capital
Agreement, as it may be amended, supplemented, or modified from time to time.
"Agricultural Production Loan" means to loan for a term of not more
than one year, the proceeds of which are used to raise crops or livestock.
"Building Loan" means a loan secured by a mortgage lien on hog barns
and other amenities or other buildings with the principal amortized over a
period of 7 to 10 years.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Richmond, Virginia, are authorized or required to
close under applicable law.
"Collateral" means any property which is subject to a security interest
or other lien securing the obligations of the obligor to MLCC.
"Customer of the Cooperative" means a member of the Cooperative or
other person who purchases goods or services from the Cooperative.
"Default" means any of the events specified in Article XIV, whether or
not any requirement for the giving of notice or the lapse of time, or both, has
been satisfied.
"Equipment Loan" means a loan secured by a security interest in farming
equipment with its principal amortized over a period of 3 to 5 years.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA Reportable Event" means any of the events specified in Section
14.01 (j) or (k), provided that any requirement for the giving of notice, the
lapse of time, or both, has been satisfied.
"Event of Default" means any of the events specified in Section 14.01,
provided that any requirement for the giving of notice, the lapse of time, or
both, has been satisfied.
"Headquarters" means the office of MLCC at 0000 Xxxx Xxxxx Xxxxxx, Xxxx
Xxxxxx Xxx 00000, Xxxxxxxx, Xxxxxxxx 00000.
"Leases" means contracts for the lease of dairy cattle or other
livestock for a fixed period of time by MLCC to a Customer of the Cooperative or
other Person.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code of Virginia or comparable law of any jurisdiction to evidence
any of the foregoing).
"Livestock Feeding Agreement" means an agreement pursuant to which MLCC
contracts with third Persons to take possession of and feed livestock in order
that such livestock may be sold at a profit.
"Loan" means an Agricultural Production Loan, a Building Loan, an
Equipment Loan, a Renovation Loan, a Revolving Credit Loan, or any substantially
similar extension of credit now or hereafter made by MLCC to a Customer of the
Cooperative or other Person.
"Local Cooperative" means any corporation which is managed by the
Cooperative under a management agreement or contract.
"Manufacturer" means the original equipment manufacturer of goods
offered for sale by the Cooperative.
"Multi-employer Plan" means a Plan described in Section 4001(a)(3) of
ERISA which covers employees of the Cooperative or to which the Cooperative is
or may be required to make contributions under ERISA.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
"Plan" means any employee welfare plan established or maintained by the
Cooperative or to which the Cooperative has made contributions in the past or
may in the future be required to make contributions under ERISA.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time.
"Renovation Loan" means a loan with the principal amortized over a
period of 5 to 7 years, the proceeds of which are used to renovate farm
equipment or farm buildings and other structures.
"Revolving Credit Loan" means a loan which permits the borrower to
obtain advances from time to time, make payments from time to time, and borrow
again from time to time.
"Subsidiary" means any corporation the majority of the voting shares of
which at the time are owned directly or indirectly by the Cooperative and/or by
one or more Subsidiaries of the Cooperative.
"Termination Date" means that date on which certain obligations of the
parties hereunder may be terminated as provided in Section 15.03.
ARTICLE II
AGRICULTURAL PRODUCTION LOANS
SECTION 2.01. GENERAL. MLCC may from time to time extend Agricultural
Production Loans to customers of the Cooperative and other Persons. Such
financing shall be extended pursuant to separate agreements to be entered into
between each such Person and MLCC.
SECTION 2.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to extend any Agricultural Production Loan to any person. All
decisions with respect to Agricultural Production Loans shall be made by MLCC in
its sole discretion, subject to such agreements as MLCC may enter into from time
to time with its Agricultural Production Loan borrowers.
ARTICLE III
BUILDING LOANS
SECTION 3.01. GENERAL. MLCC may from time to time extend Building Loans
to Customers of the Cooperative and other Persons. Such loans shall be extended
pursuant to separate agreements to be entered into between each such Person and
MLCC.
SECTION 3.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to extend any Building Loan to any person. All decisions with
respect to Building Loans shall be made by MLCC in its sole discretion, subject
to such agreements as MLCC may enter into from time to time with its Building
Loan borrowers.
ARTICLE IV
EQUIPMENT LOANS
SECTION 4.01. GENERAL. MLCC may from time to time extend Equipment
Loans to Customers of the Cooperative and other Persons. Such financing shall be
extended pursuant to separate agreements to be entered into between each such
Person and MLCC.
SECTION 4.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to extend any Equipment Loan to any Person. All decisions with
respect to Equipment Loans shall be made by MLCC in its sole discretion, subject
to such agreements as MLCC may enter into from time to time with its Equipment
Loan borrowers.
ARTICLE V
REVOLVING CREDIT LOANS
SECTION 5.01. GENERAL. MLCC may from time to time extend Revolving
Credit Loans to Customers of the Cooperative and other Persons. Such financing
shall be extended pursuant to separate agreements to be entered into between
each such Person and MLCC.
SECTION 5.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to extend any Revolving Credit Loan to any Person. all decisions
with respect to Revolving Credit Loans shall be made by MLCC in its sole
discretion, subject to such agreements as MLCC may enter into from time to time
with its Revolving Credit Loan borrowers.
ARTICLE VI
RENOVATION LOANS
SECTION 6.01. GENERAL. MLCC may from time to time extend Renovation
Loans to Customers of the Cooperative and other Persons. Such financing shall be
extended pursuant to separate agreements to be entered into between each such
Person and MLCC.
SECTION 6.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to extend any Renovation Loan to any Person. All decisions with
respect to Renovation Loans shall be made by MLCC in its sole discretion,
subject to such agreements as MLCC may enter into from time to time with its
Renovation Loan borrowers.
ARTICLE VII
LEASING OF DAIRY CATTLE AND OTHER LIVESTOCK
SECTION 7.01. GENERAL. MLCC may from time to time lease dairy cattle or
other livestock to Customers of the Cooperative and other Persons. Such leases
shall be made pursuant to separate lease agreements to be entered into between
each such Person and MLCC.
SECTION 7.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to lease dairy cattle or other livestock to any Person. All
decisions with respect to such leases shall be made by MLCC in its sole
discretion, subject to such agreements as MLCC may from time to time enter into
with the lessees of such dairy cattle or other livestock.
ARTICLE VIII
LIVESTOCK FEEDING PROGRAM
SECTION 8.01. GENERAL. MLCC may from time to time enter into Livestock
Feeding Agreements with Customers of the Cooperative and other Persons. Such
transactions shall be governed by separate agreements to be entered into between
each such Person and MLCC.
SECTION 8.02. TERMS AND CONDITIONS. Nothing contained herein shall
obligate MLCC to enter into any livestock feeding program with any Person. All
decisions with respect to such livestock feeding programs shall be made by MLCC
in its sole discretion, subject to such agreements as MLCC may enter into from
time to time with respect to such livestock feeding programs.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
To induce MLCC to make Loans and extend other credit accommodations to
its Customers and to lease dairy cattle and other livestock to its Customers and
to enter into livestock feeding programs with its Customers, the Cooperative
represents and warrants to MLCC as follows:
SECTION 9.01. SUBSIDIARIES. The Cooperative has the following
Subsidiaries and none others:
Name of Subsidiary Percentage Owned by Cooperative
------------------ -------------------------------
Mountain State Greenhouses, Inc. 100%
SSC Insurance Agency, Inc. 100%
Southern States Holdings, Inc. 100%
Southern States Underwriters, Inc. 100%
Virginia Seed Service, Inc. 100%
Xxxxxx, Inc. 100%
SECTION 9.02. GOOD STANDING. Each of the Cooperative and its
Subsidiaries is a corporation organized and existing in good standing under the
laws of its respective jurisdiction of incorporation and each has the corporate
power to own its property and to carry on its business as now being conducted
and is duly qualified to do business and is in good standing in each
jurisdiction in which the character of the properties owned by it therein or in
which the transaction of its business makes such qualification necessary.
SECTION 9.03. CORPORATE AUTHORITY. The Cooperative has full power and
authority to enter into this Agreement, and to incur the obligations provided
for herein, all of which have been duly authorized by all proper and necessary
corporate action. No consent or approval of stockholders or of any public
authority is required as a condition to the validity of this Agreement.
SECTION 9.04. BINDING AGREEMENTS. This Agreement constitutes the valid
and legally binding obligation of the Cooperative enforceable against the
Cooperative in accordance with its terms.
SECTION 9.05. LITIGATION. There are no proceedings pending or, so far
as the officers of the Cooperative know, threatened before any court or
administrative agency that, in the opinion of the officers of the Cooperative,
will materially adversely affect the financial condition or operations of the
Cooperative or any of its Subsidiaries.
SECTION 9.06. NO CONFLICTING AGREEMENTS. There is no charter, bylaw or
preference stock provision of the Cooperative or any of its Subsidiaries and no
provision of any existing mortgage, indenture, contract or agreement binding on
the Cooperative or any of its Subsidiaries or affecting their respective
properties that would conflict with or in any way prevent the execution,
delivery or carrying out of the terms of this Agreement.
SECTION 9.07. BALANCE SHEET. The consolidated balance sheet of the
Cooperative and its Subsidiaries as of June 30, 1997, and the related statements
of income and retained earnings and changes in cash flow for the period then
ended certified by Coopers & Xxxxxxx L.L.P., and the unaudited consolidated
balance sheet of the Cooperative and its Subsidiaries as of January 31, 1998,
and the related statement of income for the period then ended, heretofore
delivered to MLCC, are complete and correct and fairly present the financial
condition of the Cooperative and its Subsidiaries and the results of their
operations as of the dates and for the periods referred to therein and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the period involved. There are no liabilities,
direct or indirect, fixed or contingent of the Cooperative or any of its
Subsidiaries as of the dates of such balance sheets that are not reflected
therein or in the notes thereto. There has been no material adverse change in
the financial condition or operations of the Cooperative since the dates of
those balance sheets, and there has been no other material adverse change in the
Cooperative.
SECTION 9.08. LICENSES. The Cooperative has all licenses necessary or
desirable for it to conduct its businesses as presently being conducted and such
businesses are in compliance with all applicable laws in all material respects.
SECTION 9.09. EMPLOYEE BENEFIT PENSION PLANS. No fact, including but
not limited to, any Reportable Event as defined in Section 4043 of ERISA, exists
in connection with any employee benefit pension plan of the Cooperative covered
by said Act, which might constitute grounds for the termination of any such plan
by the PBGC or for the appointment of any trustee to administer any such plan by
the appropriate United States District Court.
ARTICLE X
CONDITIONS
The Cooperative will not request that MLCC make a Loan or otherwise
extend credit to any Person, lease dairy cattle or other livestock to any
Person, or enter into any livestock feeding program with any Person unless:
SECTION 10.01. LEGAL MATTERS. It shall have satisfied any legal
concerns reported to the Cooperative by MLCC or its counsel with respect to
making of any Loans, the leasing of any livestock or the entering into of any
livestock feeding program.
SECTION 10.02. EVIDENCE OF CORPORATE ACTION. MLCC shall have received
certified copies of papers evidencing all corporate action taken by the
Cooperative to authorize this Agreement and such other papers as MLCC may
reasonably require.
SECTION 10.03. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties set forth in Article IX hereof shall be true and
correct as of the date of such offer, except to the extent they relate solely to
an earlier date.
SECTION 10.04. ABSENCE OF DEFAULTS. No Event of Default as defined in
Section 14.01 shall have occurred and be continuing and no event shall have
occurred or condition exist which with the giving of notice or lapse of time or
both would constitute such an Event of Default.
ARTICLE XI
AFFIRMATIVE COVENANTS
The Cooperative covenants and agrees with MLCC that so long as the
Cooperative may request that MLCC make a Loan or otherwise extend credit to any
Person, lease dairy cattle or other livestock to any Person, or enter into any
livestock feeding program and until payment in full of all Loans, the payment of
all obligations under Leases and livestock feeding programs and performance of
all other obligations of the Cooperative hereunder, the Cooperative will:
SECTION 11.01. FINANCIAL STATEMENTS. Furnish to MLCC (i) as soon as
available, but in no event more than forty-five (45) days after the end of each
quarterly period in each of its fiscal years, a consolidated balance sheet of
the Cooperative and its Subsidiaries as of the close of such quarter and a
profit and loss statement to the close of such quarter, certified by the chief
financial officer of the Cooperative and accompanied by a certificate of that
officer stating whether any event has occurred that constitutes an Event of
Default hereunder or that would constitute such an Event of Default with the
giving of notice or the lapse of time, or both, and, if so, stating the facts
with respect thereto; (ii) as soon as available, but in no event more than
ninety (90) days after the close of each of the Cooperative's fiscal years, a
copy of the annual audit report of the Cooperative in reasonable detail,
substantially similar to the financial statements referred to in Section 9.07
above, prepared in accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding year and certified by
Coopers & Xxxxxxx L.L.P. or other independent certified public accountants of
recognized national standing, which report shall include a consolidated balance
sheet of the Cooperative and its Subsidiaries as of the end of such fiscal year,
a statement of income and retained earnings for such fiscal year and changes in
cash flow for such fiscal year, accompanied by a certificate of said accountants
stating whether any event existed as of the end of such fiscal year that
constituted an Event of Default hereunder or that would constitute such an Event
of Default with the giving of notice or the lapse of time, or both, and, if so,
stating the facts with respect thereto; (iii) promptly upon their becoming
available, copies of all financial statements, reports, notices, and proxy
statements sent by the Cooperative to patrons or stockholders and of all
regular, periodic and special reports or any registration statement filed by the
Cooperative or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental authority succeeding to
any or all of the functions of the Securities and Exchange Commission; and (iv)
such additional information, reports, or statements, including interim financial
statements, as MLCC may from time to time reasonably request.
SECTION 11.02. TAXES. Pay and discharge all taxes, assessments, and
governmental charges upon it, its income, and its properties prior to the date
on which penalties are attached thereto, unless and to the extent only that such
taxes, assessments, and governmental charges shall be contested by it in good
faith and by appropriate proceedings, and the Cooperative shall have set aside
on its books adequate reserves with respect to any such tax, assessment or
charge so contested.
SECTION 11.03. BUSINESS PLAN. Furnish to MLCC as soon as available, but
in any event within 120 days after the Cooperative's new fiscal year, a copy of
the Cooperative's new fiscal year business plan which will contain, but not be
limited to, projected balance sheets, profit and loss statements, changes in
cash flow each prepared in accordance with generally accepted accounting
principles consistently applied, estimated usage of indebtedness, and
assumptions utilized in preparing the business plan.
SECTION 11.04. PAYMENT OF OBLIGATIONS. Pay and discharge at or before
their maturity all its indebtedness and other obligations and liabilities,
except when the same may be contested in good faith and by appropriate
proceedings, and the Cooperative shall have set aside on its books adequate
reserves with respect to any such obligation or liability.
SECTION 11.05. INSURANCE. Maintain adequate insurance with responsible
companies satisfactory to MLCC in such amounts and against such risks as is
customarily carried by owners of similar businesses and property.
SECTION 11.06. CORPORATE EXISTENCE, LICENSES, PERMITS, ETC. Maintain
its corporate existence in good standing and maintain all permits and licenses
necessary or desirable for the conduct of its business.
SECTION 11.07. PROPERTIES. Maintain, preserve, and protect all
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and keep the same in good repair,
working order, and condition, and from time to time make or cause to be made all
necessary and proper repairs, renewals, replacements, betterments, and
improvements thereto so that the business carried on in connection therewith may
be properly and advantageously conducted at all times, and permit MLCC and its
agents to enter upon and inspect such properties.
SECTION 11.08. EMPLOYEE BENEFIT PENSION PLANS. Promptly during each
year, pay contributions that in the judgment of the chief executive and chief
financial officers of the Cooperative after reasonable inquiry are believed
adequate to meet at least the minimum funding standards set forth in Sections
302 through 305 of ERISA, with respect to each employee benefit plan of the
Cooperative, if any, covered by that Act; file each annual report required to be
filed pursuant to Section 103 of ERISA in connection with each such plan for
each year; and notify MLCC within ten (10) days of the occurrence of a
Reportable Event (as defined in Section 4043 of ERISA) that might constitute
grounds for termination of any such plan by PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
plan, provided that nothing contained herein shall prohibit the Cooperative from
terminating any such plan if it has theretofore complied with the provisions of
this Section.
SECTION 11.09. COMPLIANCE WITH LAWS. Not knowingly be in violation of
any laws, ordinances, governmental rules and regulations (collectively "Laws")
to which it is subject and will not knowingly fail to obtain any licenses,
permits, franchises or other governmental authorizations necessary to the
ownership of its property or to the conduct of its business, which violation or
failure to obtain might materially adversely affect the business, profit,
operations, or condition (financial or otherwise) of the Cooperative, provided,
however, that the Cooperative shall be deemed to have complied with this
provision so long as it is contesting in good faith and by the appropriate
proceedings the violation of any such law and has set aside on its books
adequate reserves in respect thereof, if so required, in accordance with
generally accepted accounting principles. Without limiting the foregoing, the
Cooperative agrees to comply, and to cause all persons occupying, leasing or
renting any properties of the Cooperative to comply with all laws relating to
environmental protection.
ARTICLE XII
NEGATIVE COVENANTS
The Cooperative covenants and agrees with MLCC that so long as the
Cooperative may request that MLCC make a Loan or otherwise extend credit to any
Person, lease dairy cattle or other livestock to any Person, or enter into any
livestock feeding program and until payment in full of all Loans, the payment of
all obligations under Leases and livestock feeding programs and performance of
all other obligations of the Cooperative hereunder, without the written consent
of MLCC, the Cooperative will not:
SECTION 12.01. MORTGAGES AND PLEDGES. Create, incur, assume, or suffer
to exist any mortgage, pledge, lien, or other encumbrance of any kind upon, or
any security interest in, any of its property or assets, whether now owned or
hereafter acquired, except (i) liens for taxes not yet delinquent or being
contested in good faith and by appropriate proceedings; (ii) liens in connection
with workers' compensation, unemployment insurance, or other social security
obligations; (iii) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
or appeal bonds, and other obligations of like nature arising in the ordinary
course of business; (iv) mechanic's, xxxxxxx'x, materialman's, landlord's,
carrier's, or other like liens arising in the ordinary course of business with
respect to obligations that are not due or that are being contested in good
faith; (v) those mortgages, pledges, liens, and encumbrances reflected in the
financial statements referred to in Section 9.07 above; (vi) mortgages, pledges,
liens, and encumbrances in favor of MLCC; (vii) zoning restrictions, easements,
licenses, restrictions on the use of real property or minor irregularities in
the title thereto, which do not, in the opinion of the Cooperative, materially
impair the use of such property in the operation of the business of the
Cooperative or the value of such property for the purposes of such business; and
(viii) any mortgage, encumbrance or other lien upon, or security interest in,
any property hereafter acquired by the Cooperative created contemporaneously
with such acquisition to secure or provide for the payment or financing of any
part of the purchase price thereof, or the assumption of any mortgage,
encumbrance or lien upon, or security interest in, any such property hereafter
acquired existing at the time of such acquisition, or the acquisition of any
such property subject to any mortgage, encumbrance or other lien or security
interest without the assumption thereof, provided that each such mortgage,
encumbrance, lien or security interest shall attach only to the property so
acquired and fixed improvements thereon. Nothing contained in this Section 12.01
shall prohibit the Cooperative from entering into any lease required to be
capitalized by generally accepted accounting principles in accordance with the
Financial Accounting Standards Board Statement No. 13 (Accounting for Leases) in
effect on the date of this Agreement, provided such lease is not otherwise
prohibited by the terms of this Agreement.
SECTION 12.02. MERGER, ACQUISITION OR SALE OF ASSETS. (1) Enter into
any merger or consolidation with, or acquire all or substantially all of the
assets of, any person, firm, joint venture, or corporation, unless the
Cooperative is the surviving corporation and upon the consummation of its merger
the net worth of the surviving corporation is not less than the net worth of the
Cooperative prior to the merger and there shall exist no Event of Default as
defined in Section 14.01, provided, however, that in the case of any merger of a
Local Cooperative, as defined in Article I - Section 1.01, the Cooperative's
Chief Financial Officer shall certify to MLCC that the Cooperative has Net Worth
in an amount not less than 95% of the Net Worth of the Cooperative immediately
prior to such merger and no event shall have occurred or condition exist which
with the giving of notice or lapse of time, or both, would constitute such an
Event of Default, or (2) sell, lease, or otherwise dispose of all or
substantially all of its assets except in the ordinary course of its business.
ARTICLE XIII
CONTRIBUTED CAPITAL PLAN
SECTION 13.01. DEFINITIONS. As used in this Article the following
terms shall have the following definitions:
"Contributed Capital Rate" means the ratio of debt to tangible net
worth which institutional lenders extending credit to MLCC require it to
maintain from time to time, whether such ratio is stated as an affirmative or
negative covenant, and in the event MLCC is required to maintain different
ratios on different dates, "Contributed Capital Rate" means the ratio which is
in effect on the applicable TAPOS Determination Date.
"Determination Period" or "Determination Periods" means the calendar
month, the six calendar month period and the twelve calendar month period
immediately preceding the TAPOS Determination Date.
"Minimum Class X Investment" means the number of shares of MLCC Class X
Preferred Stock determined by MLCC as follows:
MI = (HT/(PV x R)) - RE
where
MI = Minimum Class X Investment (stated at the par value).
HT = The highest TAPOS during any of the three Determination
Periods.
PV = The par value of one share of the MLCC Class X Preferred
Stock.
R = The Contributed Capital Rate, expressed as a decimal.
RE = The balance of MLCC's retained earnings as of the
TAPOS Determination Date divided by the par value of
Class X Preferred Stock.
If the Minimum Class X Investment computed using this formula is a
fraction, it will be rounded upward to the next whole number of shares.
"TAPOS" means calculated total program outstanding as determined by
MLCC for each of the three Determination Periods according to the following
formula:
TAPOS = AL + L + LFP + NBC - TD - SAP
where
AL = Average amount of Loans outstanding during such
Determination Period.
L = Average Leases outstanding during such Determination
Period.
LFP = Average cost to MLCC of livestock owned by MLCC
which is subject to a Livestock Feeding Agreement.
NBC = Average investment (stated at par value) which MLCC
was required to maintain in CoBANK ACB during such
Determination Period.
TD = Average term debt which is excluded in the
determination of the Contributed Capital Rate during
such Determination Period.
SAP = Average outstanding Preferred Stock of MLCC of all
classes during such Determination Period (stated at the
par value).
In the computation for a Determination Period of one month, the amounts
of AL, LFP, L, NBC, TD and SAP as of the last Business Day of such calendar
month shall be used as the average for such month. In computations for other
Determination Periods, the average for each such amount shall be computed using
the outstanding amounts as of the last Business Day of each month in such
Determination Period.
"TAPOS Determination Date" means the date during each calendar month on
which the month-end calculation is made to determine the amount due.
SECTION 13.02. PURCHASE OF STOCK. Upon the request of MLCC on or after
the date of this Agreement, the Cooperative will purchase MLCC Class X Preferred
Stock with such par value as will cause it to have a Minimum Class X Investment
in MLCC Class X Preferred Stock and on each TAPOS Determination Date thereafter
it will acquire such additional MLCC Class X Preferred Stock if any as may be
necessary for it to maintain a Minimum Class X Investment.
SECTION 13.03. REDEMPTION OF CLASS X PREFERRED STOCK. MLCC covenants
and agrees that if on any TAPOS Determination Date the amount of MLCC Class X
Preferred Stock held by the Cooperative exceeds the Minimum Class X Investment
computed as of such date, it will, subject to the provisions of Section 13.04,
upon written demand by the Cooperative redeem for cash at its par value those
shares held by the Cooperative which are in excess of the Minimum Class X
Investment determined as of such date.
SECTION 13.04. CUMULATIVE OBLIGATIONS. The obligation of the
Cooperative hereunder to purchase MLCC Class X Preferred Stock shall be in
addition to any other undertaking the Cooperative may have entered into or may
hereafter enter into to purchase such stock as a result of Loans or Leases or
livestock feeding programs provided by MLCC to any Customer of the Cooperative
or any lease financing by MLCC for the Cooperative, and the obligations of the
Cooperative to purchase MLCC Class X Preferred Stock under, or as a condition
to, each such financing arrangement shall be cumulative.
ARTICLE XIV
EVENTS OF DEFAULT
SECTION 14.01. Each of the following shall constitute an "Event of
Default" hereunder:
(a) Default shall be made in the payment of any amount payable
hereunder, when and as the same becomes due and payable, whether at the stated
maturity thereof or by acceleration or otherwise; or
(b) Default shall be made in the due observance or performance
of any other term, covenant, or agreement contained in this Agreement; or
(c) Any representation or warranty made by the Cooperative
herein or any statement or representation made in any certificate, report, or
opinion delivered pursuant hereto shall prove to have been incorrect in any
material respect when made; or
(d) The Cooperative or any Subsidiary of the Cooperative shall
become insolvent or unable to meet its obligations as they mature, make an
assignment for the benefit of creditors, consent to the appointment of a trustee
or a receiver, or admit in writing its inability to pay its debts as they
mature; or
(e) A trustee or receiver shall be appointed for the
Cooperative or any Subsidiary of the Cooperative or for a substantial part of
its properties without the consent of the Cooperative or such Subsidiary and not
be discharged within thirty (30) days; or
(f) Bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceedings shall be instituted by or against the Cooperative or any
Subsidiary of the Cooperative, and, if instituted against it, be consented to by
the Cooperative or such Subsidiary or remain undismissed for a period of thirty
(30) days; or
(g) Any default shall be made with respect to any obligation
for the payment of borrowed money of the Cooperative or any Subsidiary of the
Cooperative when due or the performance of any other obligation incurred in
connection with any indebtedness for borrowed money of the Cooperative or any
Subsidiary of the Cooperative, if the effect of such default is to accelerate
the maturity of such indebtedness; or
(h) Any final judgment for the payment of money in excess of
ONE MILLION DOLLARS ($1,000,000.00) which in the opinion of MLCC is not
adequately insured or indemnified against shall be rendered against the
Cooperative or any Subsidiary of the Cooperative and the same shall remain
undischarged for a period of thirty (30) days during which time execution shall
not be effectively stayed; or
(i) Any substantial part of the properties of the Cooperative
or any Subsidiary of the Cooperative shall be sequestered or attached and shall
not have been returned to the possession of the Cooperative or such Subsidiary
or released from such attachment within thirty (30) days; or
(j) The occurrence of a Reportable Event as defined in Section
4043 of ERISA which might constitute grounds for termination of any employee
benefit plan of the Cooperative or any Subsidiary of the Cooperative covered by
ERISA by PBGC or grounds for the appointment by the appropriate United States
District Court of a trustee to administer any such plan; or
(k) Complete or partial withdrawal under Section 4201 or 4204
of ERISA from a Multi-employer Plan by any other party which is or may be
required under the provisions of ERISA to make a contribution to such Plan,
except as a result of the merger of such party with the Cooperative.
Upon the occurrence and continuation of any Event of Default, MLCC may,
by notice to the Cooperative terminate any obligation it may have to review any
application tendered to it for any Loan or other extension of credit, any Lease
or any livestock feeding program
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. INDEMNIFICATION.
(a) The Cooperative shall indemnify MLCC, its officers,
directors, agents and employees and hold them and each of them harmless from and
against all loss, cost, damage, and expense, including reasonable attorney fees,
at any time incurred:
(1) because of any liability of the Cooperative,
Manufacturer, or any other Person (other than MLCC) related to any merchandise
which is the subject of any sale or to any service performed or goods furnished
by the Cooperative, Manufacturer, or any other Person or entity in connection
with any sale which, in either case, was financed directly or indirectly by
MLCC, including, but not limited to, services performed under any warranty or
other agreement obligating the Cooperative, Manufacturer, or other Person or
entity to perform such services or furnish goods; or
(2) because of any liability of the Cooperative
for any action at any time taken or omitted to be taken by the Cooperative.
(b) The Cooperative covenants and agrees to indemnify MLCC,
its officers, directors, employees, and agents and hold them and each of them
harmless from and against all loss, cost, damage, and expense, including
reasonable attorneys' fees, at any time incurred by them or any of them because
of any violation of state or Federal law or regulation by the Cooperative or
other illegal or actionable conduct resulting from acts or omissions by the
Cooperative or its agents in connection with the sale of merchandise, providing
of services or extension of credit.
SECTION 15.02. COOPERATION.
(a) General. Each of the parties hereto covenants and agrees
with the other party that it will cooperate generally with the other in
identifying and soliciting good customers, will make appropriate business
referrals to the other and will generally conduct its business in a manner which
may enhance the business of the other.
(b) Sharing of Information. Each party covenants and agrees
that upon request of the other party it will share with such other party
financial and other information it has on its customers and other Persons,
provided that nothing contained herein shall obligate either party to share any
information if so doing would violate any applicable law, any agreement to which
it is a party, or any actual or implied understanding it may have with any
Person about the confidentiality of such information.
(c) Forwarding of Payments. If either party receives any
payment which is, or includes any amount which is, properly payable to the other
party, it will promptly remit to the other party such amount as is payable to
the other party
(d) Review by MLCC. MLCC covenants and agrees that it will
promptly review and respond to any reasonable request for credit, the lease of
livestock or any of its other business service being generally offered by it
which it receives from any Person known by it to be a Customer of the
Cooperative.
SECTION 15.03. TERMINATION. This Agreement may be terminated by either
party hereto by giving the other party ninety days (90) prior written notice of
such termination prior to any anniversary date of this Agreement. No such
termination shall affect any rights of the parties accruing up to the date of
final payment of all Loans to customers of the Cooperative which MLCC has
previously funded, or Leases or livestock feeding programs which MLCC has
previously entered into, or relieve the Cooperative from ownership requirements
for MLCC Class X Preferred Stock as required in Section 13.02.
SECTION 15.04. SUCCESSORS. The covenants, representations, and
agreements herein set forth shall be binding upon the parties hereto and their
successors and assigns.
SECTION 15.05. AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement shall in any event be
effective unless the same shall be in writing and signed by MLCC, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 15.06. NOTICES, ETC. All notices and other communications
provided for under this Agreement shall be in writing and mailed, faxed,
telegraphed or delivered, if to the Cooperative at its address at:
SOUTHERN STATES COOPERATIVE, INCORPORATED
0000 XXXX XXXXX XXXXXX (ZIP 23230)
POST XXXXXX XXX 00000
XXXXXXXX, XXXXXXXX 00000
ATTENTION: XX. X. X. XXXXXXX
and if to MLCC, at its address at
MICHIGAN LIVESTOCK CREDIT CORPORATION
0000 XXXX XXXXX XXXXXX (ZIP 23230)
XXXX XXXXXX XXX 00000
XXXXXXXX, XXXXXXXX 00000
ATTENTION: XX. XXXX X. XXXXXX
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other party complying as to delivery with the terms
of this Section 15.06. All such notices and communications shall, when mailed,
be effective when deposited addressed as aforesaid.
SECTION 15.07. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 15.08. HEADINGS. Article and Section headings in this Agreement
are included in such Agreement for the convenience of reference only and shall
not constitute a part of the Agreement for any other purpose.
SECTION 15.09. GOVERNING LAW. This Agreement has been entered into,
and shall be governed in all respects by, the laws of the Commonwealth of
Virginia.
SECTION 15.10. SURVIVAL. All warranties, representations and covenants
made by the Cooperative herein, or in any agreement referred to herein or on any
certificate, document or other instrument delivered by it or on its behalf under
this Agreement, shall be considered to have been relied upon by MLCC and shall
survive the making of Loans by MLCC and the entering into by MLCC of any leases
or livestock feeding programs regardless of any investigation made by MLCC or on
its behalf. All statements in any such certificate or other instrument shall
constitute warranties and representations by the Cooperative hereunder. Except
as otherwise expressly provided herein, all covenants made by the Cooperative
hereunder or under any other agreement or instrument shall be deemed continuing
until payment in full of all Loans, the payment of all obligations under Leases
and livestock feeding programs and performance and satisfaction in full of all
other obligations and liabilities of the Cooperative hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
SOUTHERN STATES COOPERATIVE,
INCORPORATED
ATTEST: By:_______________________________
______________________ Title:____________________________
MICHIGAN LIVESTOCK CREDIT CORPORATION
ATTEST: By:______________________________
_____________________ Title:___________________________
