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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 30, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 000-19320
Ag Services of America, Inc.
(Exact name of registrant as specified in its charter)
Iowa 42-1264455
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1309 Technology Parkway, Cedar Falls, Iowa 50613
(Address of principal executive offices) (Zip Code)
(319) 277-0261
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[X] Yes [ ] No
5,479,514 common shares were outstanding as of January 10, 2003.
AG SERVICES OF AMERICA, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial statements:
Consolidated condensed balance sheets, November 30, 2002
(unaudited) and February 28, 2002 1
Unaudited consolidated condensed statements of income,
three months and nine months ended November 30, 2002 and 2001 2
Unaudited consolidated condensed statements of cash flows,
nine months ended November 30, 2002 and 2001 3
Unaudited consolidated statement of stockholders' equity,
nine months ended November 30, 2002 4
Notes to consolidated condensed financial statements
(unaudited) 5-10
Item 2. Management's discussion and analysis of
financial condition and results of operations 11-17
Item 3. Quantitative and qualitative disclosures
about market risk 17
Item 4. Controls and procedures 17
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on form 8-K: 18
Certifications 19-22
(a) Exhibits
(10.32) Amendment No. 7 To Master Trust Indenture
and Security Agreement 23-37
(10.33) Amendment No. 8 To Master Trust Indenture
and Security Agreement 38-43
(10.34) Amended and Restated Credit Agreement 44-128
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AG SERVICES OF AMERICA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
November 30, February 28
ASSETS 2002 2002*
(Unaudited)
---------- ----------
CURRENT ASSETS
Cash $2,646 $42
Customer notes receivable, less allowance
for doubtful notes and reserve for
discounts November 30, 2002 $19,141;
February 28, 2002 $10,521 355,052 202,981
Inventory and other assets 546 3,466
Foreclosed assets held for sale 2,514 2,314
Prepaid income taxes - 735
Deferred income taxes, net 7,226 4,030
---------- ----------
Total current assets $367,984 $213,568
---------- ----------
LONG-TERM RECEIVABLES AND OTHER ASSETS
Customer notes receivable, less allowance
for doubtful notes November 30, 2002 $5,425;
February 28, 2002 $4,079; $68,054 $51,166
Loan origination fees, less accumulated
amortization November 30, 2002 $1,707;
February 28, 2002 $513; 100 598
Deferred income taxes, net 2,676 2,335
---------- ----------
$70,830 $54,099
---------- ----------
PROPERTY AND EQUIPMENT
Land and building, less accumulated
depreciation November 30, 2002 $102;
February 28, 2002 None $5,420 $5,316
Equipment, less accumulated depreciation
November 30, 2002 $2,004; February 28, 2002
$1,675 1,460 818
---------- ----------
$6,880 $6,134
---------- ----------
$445,694 $273,801
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable, including current maturities $353,272 $179,736
Outstanding checks in excess of
bank balances - 10,723
Accounts payable 3,747 1,738
Accrued expenses 3,813 2,233
Income taxes payable 3,447 -
----------- ----------
Total current liabilities $364,279 $194,430
----------- ----------
LONG-TERM LIABILITIES
Notes payable, less current maturities $3,746 $7,904
----------- ----------
STOCKHOLDERS' EQUITY
Capital stock $24,477 $24,396
Retained earnings 54,494 48,481
Accumulated other comprehensive income (loss) (1,302) (1,410)
----------- ----------
$77,669 $71,467
----------- ----------
$445,694 $273,801
=========== ==========
*Condensed from Audited Financial Statements.
See Notes to Consolidated Financial Statements.
-1-
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three Months and Nine Months Ended November 30, 2002 and 2001
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended
November 30, November 30,
---------------------- ----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net revenues:
Farm inputs $21,744 $17,656 $366,832 $277,156
Financing income 8,874 7,448 24,277 22,417
---------- ---------- ---------- ----------
$30,618 $25,104 $391,109 $299,573
---------- ---------- ---------- ----------
Cost of revenues:
Farm inputs $19,600 $15,816 $349,948 $264,497
Financing expense 4,419 3,741 12,268 11,648
Provision for doubtful notes 711 484 7,616 5,435
---------- ---------- ---------- ----------
$24,730 $20,041 $369,832 $281,580
---------- ---------- ---------- ----------
Income before operating
expenses and income taxes $5,888 $5,063 $21,277 $17,993
Operating expenses 3,694 3,078 11,508 9,601
---------- ---------- ---------- ----------
Income before income taxes $2,194 $1,985 $9,769 $8,392
Income taxes 840 688 3,756 3,237
---------- ---------- ---------- ----------
Net income $1,354 $1,297 $6,013 $5,155
========== ========== ========== ==========
Earnings per share:
Basic $0.25 $0.24 $1.10 $0.95
========== ========== ========== ==========
Diluted $0.25 $0.24 $1.09 $0.94
========== ========== ========== ==========
Weighted average shares:
Basic 5,479,514 5,458,490 5,476,577 5,398,336
========== ========== ========== ==========
Diluted 5,489,903 5,487,455 5,502,488 5,487,956
========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
-2-
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended November 30, 2002 and 2001
(Dollars in Thousands)
2002 2001
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $6,013 $5,155
Adjustments to reconcile net income to
net cash (used in) operating activities:
Depreciation 507 498
Amortization 1,194 306
Deferred income taxes (3,597) -
(Increase) in customer notes receivable (168,959) (103,674)
Changes in assets and liabilities 10,691 15,675
---------- ----------
Net cash (used in) operating activities ($154,151) ($82,040)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchases) of building and
equipment,net ($1,254) ($2,989)
(Purchases) of foreclosed assets
held for sale, net (200) (1,442)
---------- ----------
Net cash (used in) investing activities ($1,454) ($4,431)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings $366,253 $302,556
Principal payments on borrowings (196,706) (205,324)
(Decrease) in excess of outstanding
checks over bank balances (10,723) (3,934)
(Increase) in loan origination fees (696) (76)
Proceeds from issuance of capital stock,
net 81 685
---------- ----------
Net cash provided by financing
activities $158,209 $93,907
---------- ----------
Increase in cash $2,604 $7,436
CASH
Beginning 42 61
---------- ----------
Ending $2,646 $7,497
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $10,422 $10,371
Income taxes $3,171 $4,342
See Notes to Consolidated Financial Statements
-3-
AG SERVICES OF AMERICA, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended November 30, 2002
(Dollars in thousands)
Capital Stock
--------------------------
Accumulated
Other
Shares Retained Comprehensive Comprehensive
Issued Amount Earnings Income (Loss) Total Income
------------ ------------ ------------ ------------ ------------ ------------
Balance,
February 28, 2002 5,468,864 $24,396 $48,481 ($1,410) $71,467
Comprehensive income:
Net income - - 6,013 - 6,013 $6,013
Other comprehensive
income, net of tax - - - 108 108 108
------------
Total comprehensive income $6,121
============
Issuance of capital stock
upon the exercise
of options 10,550 80 - - 80
Issuance of captial stock
under the stock
purchase plan 100 1 - - 1
------------ ------------ ------------ ------------ ------------
Balance, November 30, 2002 5,479,514 $24,477 $54,494 ($1,302) $77,669
============ ============ ============ ============ ============
See Notes to Consolidated Financial Statements
-4-
AG SERVICES OF AMERICA, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with the instructions of Form 10-Q and Rule 10-01 of
Regulation S-X. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. It is suggested these interim consolidated condensed
financial statements be read in conjunction with the financial statements
and notes thereto included in the Company's Annual Report for the year
ended February 28, 2002 ("Fiscal 2002"). In the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary for a fair presentation of the financial position, results of
operations and cash flows for the interim periods presented have been
made. Operating results for the nine month period ended November 30, 2002
are not necessarily indicative of the results that may be expected for
the year ending February 28, 2003 ("Fiscal 2003").
Principles of Consolidation
The consolidated financial statements include the accounts of Ag Services of
America, Inc. (the Company) and its wholly owned subsidiaries, Ag Acceptance
Corporation and Powerfarm, Inc. All material intercompany balances and
transactions have been eliminated in consolidation.
According to the terms related to the asset backed securitized financing
program as described in Note 3 of the consolidated condensed financial
statements, the Company formed Ag Acceptance Corporation, a wholly owned,
special purpose corporation.
In conjunction with the Company's e-commerce initiative, the Company
created Powerfarm, Inc. a wholly owned subsidiary which operates and
manages the Company's website Powerfarm.com.
Revenue Recognition
The Company has decided that effective the fourth quarter of the current
fiscal year, the Company will present revenues associated with the cash
advances for fuel, irrigation, land rents and other farm inputs and revenues
associated with the input only program on a net reporting basis in contrast
to the current gross reporting basis. The input only program is a
financing program provided by the Company for various suppliers and
manufacturers. The Company has decided to report its revenue in this
manner because it believes this will be a preferable presentation under
current generally accepted accounting principles. This presentation
would have the impact of reducing farm input revenues and cost of farm
input revenues for the nine month periods ended November 30, 2002 and
2001 by approximately $217 million and $162 million, respectively. For
the three months ended November 30, 2002 and 2001 the impact would have
reduced farm input revenues and cost of farm input revenues by
approximately $12 million and $9 million, respectively. This
presentation will have no impact on future or past earnings of the Company.
-5-
Note 2. Financing Agreements
The availability of lines of credit is essential to the Company's operations.
As of January 14, 2003, the Company has not yet arranged for financing for
2003 crop year loans in an amount sufficient to allow the Company to meet
expected demand. The Company's total projected financing needs are
approximately $425 million for the 2003 crop year. Financing is currently
in place for $100 million and the Company continues to pursue other
alternatives for the remaining needs. Additionally, the Company's existing
securitized financing program and $75 million revolving credit facility
(which finance 2002 crop loans and can not be used to fund 2003 crop year
loans) expire in June 2003 and March 31, 2003, respectively. The
Company has a short period of time in which to arrange the required
financing because the timing of loan commitments to its customers takes
place largely in January through April of each year. There can be no
assurance the Company will be successful in securing financing and, if
financing is secured, it may be on terms less favorable than current terms.
The Company is taking action in order to secure financing. As described
in Note 3, the Company has entered into a letter of intent with American
Securities Capital Partners, L.P. (ASCP) whereby ASCP has agreed to inject
up to $70 million in capital in the Company, of which $35 million would
be immediately available. The Company believes this transaction will
assist in arranging for the needed financing. However, the letter of
intent is not binding (see Note 3) and finalization of this transaction
is not assured.
In the event the ASCP transaction does not close and alternative financing
cannot be arranged, the Company may be left with limited options. Failure
to obtain adequate 2003 crop year financing would materially impair the
Company's ability to finance sufficient sales of farm inputs in order to
continue operations under the normal course of business and would have a
material adverse impact upon the Company.
Note 3. Anticipated Equity Infusion
The Company signed a letter of intent during November 2002 with ASCP, a
New York private-equity investment firm, under which ASCP has agreed to
invest up to $70 million in Ag Services in exchange for preferred stock.
The letter of intent contemplates that ASCP will contribute up to
$70 million in three annual installments; the first payment of $35 million
is subject, among other things, to satisfactory completion of due
diligence, Ag Services arranging for long-term financing and shareholder
approval. The second and third payments are conditional upon Ag Services
achieving certain economic thresholds. ASCP will have voting control of
Ag Services after the initial funding.
The parties are presently conducting due diligence, negotiating final terms
and documentation. If the transaction is consummated, current shareholders
will incur dilution. There can be no assurance at this time that this
investment will be consummated. The Company is considering various
alternatives in the event the transaction is not completed.
-6-
Note 4. Pledged Assets and Related Debt
During November 2002, the Company negotiated amendments to its Commercial
Paper credit facility and $75 million revolving line of credit. The
Commercial Paper facility was amended to extend its due date to June 2003.
This facility does not allow for the financing of 2003 Crop Year
receivables. The Company's $75 million revolving line of credit was
amended to extend its due date to March 31, 2003. This facility also does
not allow for the financing of 2003 Crop Year receivables.
The Company has an asset backed securitized financing program through
June 2003, with a maximum available borrowing amount of $262 million.
Under the agreement, as amended, the maximum available borrowing amount
declines at each month end as follows: December 2002, $175 million;
January 2003, $118 million, February 2003, $77 million; March 2003,
$47 million; April 2003, $29 million; and May 2003, $5 million). Under
the terms of the facility, the Company sells or contributes certain notes
receivable to Ag Acceptance Corporation ("Ag Acceptance"), a wholly owned,
special purpose subsidiary of the Company. Ag Acceptance pledges its
interest in these notes receivable to a commercial paper market conduit
entity on $205 million of the facility which incurs interest at variable
rates in the commercial paper market (current effective rates range from
1.36% to 1.62% at November 30, 2002) and the remaining $57 million is a
term note with interest at a variable cost of LIBOR plus 50 basis points
(current effective rate is 2.07% at November 30, 2002). The agreement
contains various restrictive covenants, including, among others,
restrictions on mergers, issuance of stock, declaration or payment of
dividends, transactions with affiliates, and requires the Company to
maintain certain levels of equity and pretax earnings. Advances under
the facility are made subject to portfolio performance, financial covenant
restrictions and borrowing base calculations. At November 30, 2002, the
Company had approximately $257 million outstanding under the asset backed
securitized financing program and had a maximum additional amount available
of approximately $3.5 million, based on borrowing base computations as
provided by the agreement.
As previously described, the Company also has a $75 million revolving
credit facility that matures March 31, 2003. Additional terms of the
agreement allow a variable interest rate based on prime (current effective
rate is 7.25% at November 30, 2002). The agreement also contains various
restrictive covenants, including, among others, restrictions on mergers,
issuance of stock, declaration or payment of dividends and loans to
stockholders, and requires the Company to maintain certain levels of
equity and pretax earnings. Advances under the line of credit agreement
are also subject to portfolio performance, financial covenant
restrictions, and borrowing base calculations. At November 30, 2002
the Company had $75.0 million outstanding under the agreement.
Subsequent to the end of the quarter, the Company negotiated a
$100 million revolving line of credit for the 2003 crop year that expires
in November 2003. The agreement allows a variable interest rate based on
LIBOR or prime and contains restrictions similar to the $75 million facility.
The Company has a credit agreement whereby the Company may borrow up to
$3.9 million, with a declining balance provision, on a revolving line of
credit through April 2022. This credit
-7-
agreement is used to finance the Company's corporate headquarters at a fixed
interest rate of 5.74% through November, 2006. The Company had $3.8 million
outstanding under the credit agreement at November 30, 2002. The agreement
also contains various restrictive financial covenants.
In February 2002, three executive officers of the Company, who are also the
original founders of the Company, loaned an aggregate of $4.4 million to
the Company, due on March 31, 2003. The Company makes monthly interest
payments to these officers at a variable interest rate of 0.5% below the
prime rate (current effective rate is 3.75% at November 30, 2002). These
notes are unsecured.
In June 2002, the Company negotiated a credit facility with a financial
institution whereby the Company has the ability to borrow up to $19.2
million effective through July 2003. Advances and repayments under this
credit agreement are based on and secured by the performance of certain
customer notes receivable of the Company. This agreement accrues interest
based on the variable interest rates of the underlying customer notes
receivables ranging from 0.5% below prime to 2.0% over prime (current
effective rates range from 3.75% to 6.25%). At November 30, 2002 the
Company had $15.1 million outstanding under the agreement.
The Company maintains an interest-rate risk-management strategy that uses
derivative instruments to minimize significant, unanticipated earnings
fluctuations caused by interest-rate volatility. The Company's specific
goal is to lower (where possible) the cost of its borrowed funds.
In July 2000, the Company entered into an interest rate swap agreement with
an original notional amount of $30 million. The current notional amount
of $22.5 million decreases by $7.5 million annually in each July 2003, 2004
and 2005. The swap is utilized to manage interest rate exposures and is
designated as a cash flow hedge. The swap agreement is a variable
receive/fixed pay swap which expires in July 2005 and has the effect
of converting the interest rate paid on the notional amount of the
Company's variable rate debt to a fixed rate of 9.78%. The differential
to be paid or received on the swap agreement is recognized and accrued
over the life of the agreement as other comprehensive income based on
the remaining outstanding notional amount or changes in interest rates.
The difference between the Company's actual variable interest expense
and 9.78% on the notional amount for the next twelve months is
reclassified from other comprehensive income and recognized as interest
expense.
Note 5. Commitments and Contingencies
Commitments:
In the normal course of business, the Company makes various commitments that
are not reflected in the accompanying consolidated condensed financial
statements. These include various commitments to extend credit to
customers. At November 30, 2002 and February 28, 2002 the Company
had approximately $12 million and $153 million, respectively, in
commitments to supply farm inputs. No material losses or liquidity
demands are anticipated as a result of these commitments.
-8-
Contingencies:
The Company is named in lawsuits in the ordinary course of business. Counsel
for the Company has advised the Company, while the outcome of various legal
proceedings is not certain, it is unlikely that these proceedings will
result in any liability which will materially affect the financial position
or operating results of the Company.
If the federal multi-peril crop insurance program currently in existence was
terminated or negatively modified and no comparable private or government
program was established, this would have a material adverse effect on the
Company's future operations. The federal government has from time to time
evaluated the federal multi-peril insurance program and is likely to review
the program in the future, and there can be no assurance of the outcome of
such evaluations.
-9-
Note 6. Earnings Per Share
Basic earnings per share is computed by dividing net income available
to common stockholders by the weighted average number of shares outstanding.
In computing diluted earnings per share, the dilutive effect of stock
options during the periods presented increase the weighted average number
of shares.
Presented below is the computation of earnings per share for the periods
indicated:
Three Months Ended Nine Months Ended
November 30 November 30,
---------------------- ----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Computation of weighted average number
of basic shares:
Basic:
Common shares outstanding at
beginning of the period 5,479,514 5,451,864 5,468,864 5,281,064
Weighted average number of shares
issued during the period 0 6,626 7,713 117,272
---------- ---------- ---------- ----------
Weighted average shares outstanding
(basic) 5,479,514 5,458,490 5,476,577 5,398,336
========== ========== ========== ==========
Net income available to stockholders: $1,353,824 $1,296,761 $6,013,195 $5,155,290
========== ========== ========== ==========
Basic earnings per share: $0.25 $0.24 $1.10 $0.95
========== ========== ========== ==========
Diluted:
Common shares outstanding at
beginning of the period 5,479,514 5,451,864 5,468,864 5,281,064
Weighted average number of shares
issued during the period 0 6,626 7,713 117,272
Weighted average of potential dilutive
shares computed using the treasury
stock method using the average market
price during the period:
Options (1) 10,389 28,965 25,911 89,620
---------- ---------- ---------- ----------
Weighted average shares outstanding
(diluted) 5,489,903 5,487,455 5,502,488 5,487,956
========== ========== ========== ==========
Net income available to stockholders: $1,353,824 $1,296,761 $6,013,195 $5,155,290
========== ========== ========== ==========
Diluted earnings per share: $0.25 $0.24 $1.09 $0.94
========== ========== ========== ==========
(1) Some of the stock options have been excluded because they are
antidilutive.
-10-
AG SERVICES OF AMERICA, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth percentages of net revenues represented by
the selected items in the unaudited condensed statements of income of the
Company for the three and nine months ended November 30, 2002 and 2001.
In the opinion of management, all normal and recurring adjustments necessary
for a fair statement of the results for such periods have been included.
The operating results for any period are not necessarily indicative of
results for any future period.
Percentage Percentage
of Net Revenues of Net Revenues
------------------ ------------------
Three Months Ended Nine Months Ended
November 30, November 30
------------------ ------------------
2002 2001 2002 2001
-------- -------- -------- --------
Net Revenues:
Farm inputs 71.0% 70.3% 93.8% 92.5%
Financing income 29.0% 29.7% 6.2% 7.5%
-------- -------- -------- --------
100.0% 100.0% 100.0% 100.0%
-------- -------- -------- --------
Cost of Revenues:
Farm inputs 64.0% 63.0% 89.5% 88.3%
Financing expense 14.4% 14.9% 3.1% 3.9%
Provision for doubtful notes 2.3% 1.9% 1.9% 1.8%
-------- -------- -------- --------
80.7% 79.8% 94.5% 94.0%
-------- -------- -------- --------
Income before operating expenses
and income taxes 19.3% 20.2% 5.5% 6.0%
Operating expenses 12.1% 12.3% 2.9% 3.2%
-------- -------- -------- --------
Income before income taxes 7.2% 7.9% 2.6% 2.8%
Federal and state income taxes 2.8% 2.7% 1.1% 1.1%
-------- -------- -------- --------
Net income 4.4% 5.2% 1.5% 1.7%
======== ======== ======== ========
-11-
Net Revenues
Net revenues increased $6 million or 22% during the three months ended
November 30, 2002, compared with the three months ended November 30, 2001.
Net revenues increased $92 million or 31% during the nine months ended
November 30, 2002, compared with the nine months ended November 30, 2001.
The increase in net revenues was primarily the result of strong demand
for the Company's AgriFlex Credit(R) Financing Program and an excellent
spring planting season in its primary market area. Financing income as a
percentage of net revenues decreased to 29.0% and 6.2% for the three and
nine months ended November 30, 2002, respectively, from 29.7% and 7.5%
for the same periods of the previous year. The decrease in financing
margin was primarily the result of a decrease in the prime lending rate
by approximately 100 and 200 basis points, over the three and nine months
ended November 30, 2002 as compared to the same period one year ago.
Revenues primarily consist of farm inputs, including seed, fertilizer,
agricultural chemicals, other services (which includes crop insurance
commissions, fees charged to customers and other income) and other farm
inputs including cash advances for land rental, fuel, irrigation, product
application fees and other farm related expenses. Typically, the Company
does not realize any farm input margin on "other farm inputs" revenue.
The Company has decided to prospectively change its revenue recognition
policy effective the fourth quarter of Fiscal 2003 (see Note 1). Farm
input revenue for the three and nine months ended November 30, 2002 and
2001 are summarized below.
Three Months Ended November 30, 2002 November 30, 2001
---------------- ----------------
Farm input revenue (Dollars in thousands)
Input only program $647 3.0% $76 0.4%
Seeds 2,042 9.4% 2,254 12.8%
Chemicals 4,372 20.1% 4,027 22.8%
Fertilizer 1,675 7.7% 1,172 6.6%
Other farm inputs
(cash rents, irrigation,etc.) 11,523 53.0% 8,622 48.8%
Other services (insurance, fees, etc.) 1,485 6.8% 1,505 8.6%
----------------- ----------------
Total farm input revenue $21,744 100.0% $17,656 100.0%
================= ================
Nine Months Ended November 30, 2002 November 30, 2001
---------------- ----------------
Farm input revenue (Dollars in thousands)
Input only program $27,765 7.6% $9,797 3.5%
Seeds $46,955 12.8% $32,302 11.6%
Chemicals $54,425 14.8% $43,167 15.6%
Fertilizer $42,510 11.6% $35,674 12.9%
Other farm inputs
(cash rents, irrigation,etc.) $190,693 52.0% $152,595 55.1%
Other services (insurance, fees, etc.) $4,484 1.2% $3,621 1.3%
----------------- ----------------
Total farm input revenue $366,832 100.0% $277,156 100.0%
================= ================
-12-
Cost of Revenues
The total cost of revenues increased slightly to 80.7% and 94.5% for the
three and nine months ended November 30, 2002, as compared to 79.8% and
94.0% for the three and nine months ended November 30, 2001. The gross
margin on the sale of farm inputs as a percentage of net revenues decreased
slightly to 9.9% for the three months ended November 30, 2002 compared to
10.4% for the three months ended November 30, 2001 and remained constant
at 4.3% for the nine months ended November 30, 2002 and 2001. Gross
margin on financing income decreased to 3.1% and 14.5% of net revenues
for the three and nine months ended November 30, 2002, from 3.6% and 14.8%
for the three and nine months ended November 30, 2001. This decrease in
financing margin was primarily the result of a reduction in the prime
lending rate of 100 and 200 basis points for the three and nine months
ended November 30, 2002 as compared to a year ago. The provision for
doubtful notes increased slightly to 2.3% of net revenues for the three
months ended November 30, 2002 as compared to 1.9% for the three months
ended November 30, 2001 and remained relatively constant at 1.9% and 1.8%
of net revenues, respectively, for the nine months ended November 30, 2002
and 2001.
Operating Expenses
Operating expenses decreased, as a result of management's efforts to control
costs, to 12.1% and 2.9% of net revenues for the three and nine months ended
November 30, 2002, as compared to 12.3% and 3.2% for the three and nine
months ended November 30, 2001. The increase in the dollar amount of
operating expenses is attributed to the Company's growth. Payroll and
payroll related expenses increased to $2.6 and $8.1 million for the three
and nine months ended November 30, 2002 from $2.2 and $6.6 million for the
three and nine months ended November 30, 2001.
Net Income
Net income increased 4.4% to $1.4 million for the three months ended
November 30, 2002 from $1.3 million for the three months ended
November 30, 2001 and increased 16.6% to $6.0 million for the nine months
ended November 30, 2002 from $5.2 million for the nine months ended
November 30, 2001. The increase in net income is primarily attributable to
the increase in volume of the Company's AgriFlex Credit(R) program.
Powerfarm
The Company continues to leverage its business model and use of its credit
products via the Internet through Powerfarm.com. The Powerfarm website
offers growers one of the most comprehensive assortments of credit options
available in the agricultural industry. The site highlights Ag Services
credit programs and allows farmers to apply for credit lines electronically.
In addition, existing customers have the ability to access detailed account
information 24 hours a day through the site.
Inflation
The Company does not believe the Company's net revenues and net income were
significantly impacted by inflation or changing prices in Fiscal 2002 or
the first nine months of Fiscal 2003.
-13-
Seasonality
The Company's revenues and income are directly related to the growing cycle
for crops. Accordingly, quarterly revenues and income vary during each
fiscal year. The following tables show the Company's quarterly net revenues
and net income for Fiscal 2002 and the first three quarters of Fiscal 2003.
This information is derived from unaudited consolidated financial statements,
which include, in the opinion of management, all normal and recurring
adjustments which management consider necessary for a fair statement of
results of those periods. The operating results for any quarter are not
necessarily indicative of the results for any future period.
Fiscal 2003 Quarter Ended
May 31 August 31 November 30 February 28
----------- ----------- ----------- -----------
(Dollars in thousands)
Net revenues $212,007 $148,484 $30,618
Net income $2,157 $2,502 $1,354
Fiscal 2002 Quarter Ended
May 31 August 31 November 30 February 28
----------- ----------- ----------- -----------
(Dollars in thousands)
Net revenues $164,160 $110,310 $25,104 $87,782
Net income $1,834 $2,025 $1,297 $320
Liquidity and Capital Resources
The availability of lines of credit is essential to the Company's operations.
As of January 14, 2003, the Company has not yet arranged for financing for
2003 crop year loans in an amount sufficient to allow the Company to meet
expected demand. The Company's total projected financing needs are
approximately $425 million for the 2003 crop year. Financing is currently
in place for $100 million and the Company continues to pursue other
alternatives for the remaining needs. Additionally, the Company's existing
securitized financing program and $75 million revolving credit facility
(which finance 2002 crop loans and can not be used to fund 2003 crop year
loans) expire in June 2003 and March 31, 2003, respectively. The Company
has a short period of time in which to arrange the required financing
because the time of loan commitments to its customers takes place largely
in January through April of each year. There can be no assurance the
Company will be successful in securing financing and, if financing is
secured, it may be on terms less favorable than current terms.
The Company is taking action in order to secure financing. As described
in Note 3, the Company has entered into a letter of intent with American
Securities Capital Partners, L.P. (ASCP) whereby ASCP has agreed to inject
up to $70 million in capital in the Company, of which $35 million would
be immediately available. ASCP will have voting control of Ag Services
after the initial funding. The Company believes this transaction will
assist in arranging for the needed financing. However, the letter of
intent is not binding (see Note 3) and finalization of this transaction
is not assured.
-14-
In the event the ASCP transaction does not close and alternative financing
cannot be arranged, the Company may be left with limited options. Failure
to obtain adequate 2003 crop year financing would materially impair the
Company's ability to finance sufficient sales of farm inputs in order to
continue operations under the normal course of business and would have a
material adverse impact upon the Company.
The parties are presently conducting due diligence, negotiating final terms
and documentation. If the transaction is consummated, current shareholders
will incur dilution. There can be no assurance at this time that this
investment will be consummated. The Company is considering various
alternatives in the event the transaction is not completed.
At November 30, 2002 the Company had working capital of $3.7 million, a
decrease of $50.1 million over a year ago and a decrease of $15.4 million
since February 28, 2002. The decrease in working capital was due to
the restructuring of the Company's debt as the Company's current
securitized financing program and revolving $75 million credit line
expire June 2003 and March 31, 2003, respectively. As a result of
the expiration of these credit facilities within the next twelve months,
all debts associated with these facilities are classified as current
liabilities on the Company's balance sheet. The Company is presently
considering several financing alternatives. Assuming the new financing
program is in place, working capital is expected to return to a more
normalized, historical amount.
The components of this net decrease, since February 28, 2002, were
(i) $15.4 million decrease resulting from operating activities, consisting
of approximately $6.0 million in net income, $0.5 million in depreciation,
$1.2 million in amortization, and the remainder from a net change in other
working capital items, (ii) capital expenditures of approximately
$1.3 million related to the acquisition of equipment and furniture and
offset by (iii) net proceeds of $0.1 million from the issuance of common
stock upon exercise of options.
During November 2002, the Company negotiated amendments to its Commercial
Paper credit facility and $75 million revolving line of credit. The
Commercial Paper facility was amended to extend its due date to June 2003.
This facility does not allow for the financing of 2003 Crop Year
receivables. The Company's $75 million revolving line of credit was
amended to extend its due date to March 31, 2003. This facility also
does not allow for the financing of 2003 Crop Year receivables.
The Company has an asset backed securitized financing program through
June 2003, with a maximum available borrowing amount of $262 million.
Under the agreement, as amended, the maximum available borrowing amount
declined at each month end as follows: December 2002, $175 million;
January 2003, $118 million, February 2003, $77 million; March 2003,
$47 million; April 2003, $29 million; and May 2003, 5 million). Under
the terms of the facility, the Company sells or contributes certain
notes receivable to Ag Acceptance Corporation ("Ag Acceptance"), a wholly
owned, special purpose subsidiary of the Company. Ag Acceptance pledges
its interest in these notes receivable to a commercial paper market
conduit entity on $205 million of the facility which incurs interest at
variable rates in the commercial paper market (current effective rates
range from 1.36% to 1.62% at November 30, 2002) and the remaining
$57 million is a term note with interest at a variable cost of LIBOR
plus 50 basis points (current effective rate is 2.07% at
November 30, 2002). The agreement contains various restrictive
covenants, including, among others, restrictions on mergers, issuance
of stock, declaration or payment of dividends, transactions with
affiliates, and requires the Company to maintain certain levels of
equity and pretax earnings. Advances under the facility are made
subject to portfolio
-15-
performance, financial covenant restrictions and borrowing base calculations.
At November 30, 2002, the Company had approximately $257 million outstanding
under the asset backed securitized financing program and had a maximum
additional amount available of approximately $3.5 million, based on
borrowing base computations as provided by the agreement.
As previously described, the Company also has a $75 million revolving credit
facility that matures March 31, 2003. Additional terms of the agreement
allow a variable interest rate based on prime (current effective rate is
7.25% at November 30, 2002). The agreement also contains various
restrictive covenants, including, among others, restrictions on mergers,
issuance of stock, declaration or payment of dividends and loans to
stockholders, and requires the Company to maintain certain levels of
equity and pretax earnings. Advances under the line of credit agreement
are also subject to portfolio performance, financial covenant restrictions,
and borrowing base calculations. At November 30, 2002 the Company had
$75.0 million outstanding under the agreement.
Subsequent to the end of the quarter, the Company negotiated a $100 million
revolving line of credit for the 2003 crop year that expires in
November 2003. The agreement allows a variable interest rate based on
LIBOR or prime and contains restrictions similar to the $75 million
facility.
The Company has a credit agreement whereby the Company may borrow up to
$3.9 million, with a declining balance provision, on a revolving line of
credit through April 2022. This credit agreement is used to finance the
Company's corporate headquarters at a fixed interest rate of 5.74% through
November, 2006. The Company had $3.8 million outstanding under the credit
agreement at November 30, 2002. The agreement also contains various
restrictive financial covenants.
In February 2002, three executive officers of the Company, who are also the
original founders of the Company, loaned an aggregate of $4.4 million to
the Company, due on March 31, 2003. The Company makes monthly interest
payments to these officers at a variable interest rate of 0.5% below the
prime rate (current effective rate is 3.75% at November 30, 2002).
These notes are unsecured.
In June 2002, the Company negotiated a credit facility with a financial
institution whereby the Company has the ability to borrow up to $19.2
million effective through July 2003. Advances and repayments under this
credit agreement are based on and secured by the performance of certain
customer notes receivable of the Company. This agreement accrues
interest based on the variable interest rates of the underlying customer
notes receivables ranging from 0.5% below prime to 2.0% over prime
(current effective rates range from 3.75% to 6.25%). At November 30, 2002
the Company had $15.1 million outstanding under the agreement.
The Company maintains an interest-rate risk-management strategy that uses
derivative instruments to minimize significant, unanticipated earnings
fluctuations caused by interest-rate volatility. The Company's specific
goal is to lower (where possible) the cost of its borrowed funds.
In July 2000, the Company entered into an interest rate swap agreement
with an original notional amount of $30 million. The current notional
amount of $22.5 million decreases by $7.5 million annually in each
July 2003, 2004 and 2005. The swap is utilized to manage interest rate
exposures and is designated as a cash flow hedge. The swap agreement
is a variable receive/fixed pay swap which expires in July, 2005 and
has the effect of converting the interest rate paid on the notional
amount of the Company's variable rate debt to a fixed rate of 9.78%.
The differential to be paid or received on
-16-
the swap agreement is recognized and accrued over the life of the agreement
as other comprehensive income based on the remaining outstanding notional
amount or changes in interest rates. The difference between the Company's
actual variable interest expense and 9.78% on the notional amount for the
next twelve months is reclassified from other comprehensive income and
recognized as interest expense.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995
Information contained in this report, other than historical information,
should be considered forward looking, which reflect Management's current
views of future events and financial performance that involve a number of
risks and uncertainties. The factors that could cause actual results to
differ materially include, but are not limited to, the following: general
economic conditions within the agriculture industry; competitive factors and
pricing pressures; changes in product mix; changes in the seasonality of
demand patterns; changes in weather conditions; changes in agricultural
regulations; technological problems; the amount and availability under its
asset backed securitization program; unknown risks; and other risks detailed
in the Company's Securities and Exchange Commission filings.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At November 30, 2002 the Company had $355 million outstanding in notes
payable at an average variable interest rate of 2.87%. The Company has
an interest rate swap that effectively converts $22.5 million of this
variable rate debt to a fixed rate instrument. After considering the effect
of this swap, the Company has floating rate debt of $329 million at a
variable interest rate of 2.36%. A 10% increase in the average variable
interest rate would increase interest expense by approximately 24 basis
points. Assuming similar average outstanding borrowings as Fiscal 2002 of
$246 million, this would increase the Company's interest expense by
approximately $0.6 million.
The above sensitivity analysis is to provide information about the
Company's potential market risks as they pertain to an adverse change in
interest rates. The above analysis excludes the positive impact that
increased interest rates would have on financing income as approximately
95% of the Company's notes receivable are variable rate notes.
ITEM 4. CONTROLS AND PROCEDURES
Based on their most recent review, which was completed within 90 days of
the filing of this report, the Company's principal executive officer and
principal financial officer have concluded that the Company's disclosure
of controls and procedures are effective to ensure that information required
to be disclosed by the Company in the reports that it files or submits under
the Securities Exchange Act of 1934, as amended, is accumulated and
communicated to the Company's management, including its principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure and are effective to ensure that
such information is recorded, processed, summarized and reported in the
time periods specified in the rules of the Securities and Exchange
Commission. Since the date of the evaluation described above, there have not
been any significant changes in the Company's internal controls or other
factors that could significantly affect those controls.
-17-
AG SERVICES OF AMERICA, INC.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No exhibits were filed during the period covered by this report.
(b) Reports on Form 8-K
A Form 8-K was filed by the Company on November 27, 2002
disclosing Ag Services' press release regarding the signing
of a letter of intent with American Securities Capital
Partners, L.P. and a planned equity infusion.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AG SERVICES OF AMERICA, INC.
----------------------------
(Registrant)
/s/ John T. Roth
----------------------------
John T. Roth
Vice President Finance and Treasurer
(Principal Financial and Accounting Officer)
Date: January 14, 2003
-18-
CERTIFICATIONS
I, Kevin D. Schipper, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Ag Services of America, Inc.;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Securities Exhange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditor any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls; and
-19-
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 14, 2003 /s/ Kevin D. Schipper
-----------------------
Kevin D. Schipper
Chief Executive Officer
-20-
I, John T. Roth, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
Ag Services of America, Inc.;
2. Based on my knowledge, this quarterly report does not
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the
period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Securities Exhange Act Rules 13a-14 and 15d-14)
for the registrant and we have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
of this quarterly report(the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date.
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and
have identified for the registrant's auditor any material weaknesses
in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's
internal controls; and
-21-
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: January 14, 2003 /s/ John T. Roth
-----------------------
John T. Roth
Vice President Finance and Treasurer
-22-
AMENDMENT NO. 7
TO
MASTER TRUST INDENTURE AND SECURITY AGREEMENT
THIS AMENDMENT NO. 7 TO MASTER TRUST INDENTURE AND SECURITY
AGREEMENT dated as of November 4, 2002 (this "Amendment") is entered into
by and among AG ACCEPTANCE CORPORATION, as Issuer (the "Issuer"),
AG SERVICES OF AMERICA, INC., as Servicer (the "Servicer"),
U.S. BANK, N.A., (d/b/a FIRSTAR BANK, N.A.), as Trustee (the "Trustee"),
and MBIA INSURANCE CORPORATION, as the Insurer (the "Insurer").
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Indenture (as defined
below and amended hereby).
WHEREAS, the Issuer, the Servicer, the Trustee and the Insurer
have entered into that certain Master Trust Indenture and Security
Agreement, dated as of June 23, 1999 (as amended, restated, supplemented
or otherwise modified from time to time, the "Indenture"); and
WHEREAS, the Issuer, the Servicer, the Trustee and the Insurer
have agreed to amend the Indenture as hereinafter set forth;
NOW THEREFORE, in consideration of the premises and other
mutual covenants contained herein, the parties hereto agree as follows:
SECTION 1. Amendments. The Indenture is hereby amended as
follows, such amendment to be effective as of the date set forth in
Section 2 hereof, and subject to the satisfaction of the conditions
precedent set forth in Section 2 hereof:
1.1 Section 1.01 is hereby amended to add the following
defined terms in the proper alphabetical order:
"First Extension Period" means the period commencing on November 5, 2002
through and including the earlier to occur of (i) the date on which an
extension of the Scheduled Wind Down Date shall have occurred pursuant
to Section 12.01(a) or (ii) December 5, 2002.
"Scheduled Aggregate Outstanding Amount" means, with respect to any
Business Day occurring on or after November 30, 2002, the amount set
forth on Schedule 3.
"Second Extension Period" means, if the Scheduled Wind Down Date
shall have been extended pursuant to Section 12.01(a), the period
commencing on the expiration date of the First Extension Period
through and including the earlier to occur of (i) the date on which
the Scheduled Wind Down Date is extended pursuant to Section 12.01(b)
or (ii) January 6, 2003.
-23-
"Target Aggregate Outstanding Amount" means, (i) with respect to
any Business Day occurring prior to November 30, 2002, the Net
Eligible Advance Balance on such date, and (ii) with respect to any
Business Day occurring on or after November 30, 2002, the lesser of
(a) the Scheduled Aggregate Outstanding Amount as of such date or
(b) the Net Eligible Advance Balance as of such date.
"Third Extension Period" means, if the Scheduled Wind Down Date shall
have been extended pursuant to Section 12.01(b), the period
commencing on the expiration date of the Second Extension Period
through and including January 31, 2003.
1.2 Section 1.01 is hereby amended to delete the defined terms
"Cure Funds" and "Set-Aside Period" appearing therein in their entirety.
1.3 The Indenture is hereby amended to delete clause (i)(A) from
the defined term "Defaulted Loan" contained in Section 1.01 of the Indenture
and to substitute the following therefor:
(A) with respect to any Crop Loan, any such Loan with respect to which
any required payment or portion thereof remains unpaid more than
12 months past the original Due Date therefor; provided, however,
that after the commencement of the Third Extension Period, any Crop Loan
which would otherwise be a Remarketing Loan shall not be a Defaulted Loan
for the purpose of determining whether the Advance made in respect of
such Loan is an Eligible Advance if (i) no required payment or portion
thereof remains unpaid more than 15 months past the original Due Date
therefor and (ii) the outstanding Principal Balance of such Loan, when
added to the aggregate outstanding Principal Balances of all other
Remarketing Loans with respect to which any required payment or portion
thereof remains unpaid more than 12 months but less than 15 months past
the original Due Date therefor, does not exceed $25,000,000,
1.4 The Indenture is hereby amended to delete clause (xi) from the
defined term "Eligible Advance" contained in Section 1.01 of the Indenture
and to substitute the following therefor:
(xi) which with respect to any Crop Loan or any Seed Loan, is due in a
single installment of principal and interest and is payable in full by
no later than (I) the applicable Due Date in January, 2003 with respect
to any such Crop Loan, or (II) the applicable Due Date in December, 2002
with respect to any such Seed Loan, and (B) with respect to any
Intermediate Loan, is due in installments of principal and interest to
be made not less than annually each calendar year and is payable in
full by no later than the applicable Due Date in November, 2007 for the
applicable Intermediate Loan; provided, however, that no Advance with
respect to the Loans identified on Schedule 4 shall fail to be an
Eligible Advance solely because its Due Date does not satisfy the
requirements of this clause (xi).
-24-
1.5 The defined term "Net Outstanding Amount" contained in
Section 1.01 is hereby amended to delete the phrase "Cure Funds" appearing
therein and to replace therefor the word "funds".
1.6 The defined term "Scheduled Wind Down Date" contained in
Section 1.01 is hereby deleted in its entirety and the following
definition substituted therefor:
"Scheduled Wind Down Date" means December 5, 2002, or the latest date
established as the Scheduled Wind Down Date pursuant to Section 12.01 hereof.
1.7 The defined term "Series Allocation Percentage" contained
in Section 1.01 is hereby deleted in its entirety and the following
definition substituted therefor:
"Series Allocation Percentage" means, with respect to each Series,
(a) on any Business Day prior to the Wind Down Date:
(i) if such Series is not in the Amortization Period, a fraction
(expressed as a percentage), (x) the numerator of which equals
the Net Outstanding Amount of all Notes of such Series as of such
Business Day and (y) the denominator of which equals the Net
Outstanding Amount of all Series as of such Business Day;
(ii) if such Series is in the Amortization Period, a fraction
(expressed as a percentage) (x) the numerator of which equals
the Net Outstanding Amount of all Notes of such Series, as of
the applicable Amortization Date, and (y) the denominator of
which equals the Net Outstanding Amount of all Series in their
respective Amortization Periods as of the applicable Amortization
Date for each such Series; and
(b) on any Business Day after the Wind Down Date, a fraction (expressed
as a percentage)(i) the numerator of which equals the sum of the Net
Outstanding Amount of all Notes of such Series as of the Wind Down
Date and (ii) the denominator of which equals the Net Outstanding Amount
of all outstanding Series of Notes as of the Wind Down Date.
1.8 Section 2.05 of the Indenture is amended to add the following
clause (v) at the end thereof:
(v) Notwithstanding any contrary provision of this Indenture, the Issuer
shall promptly reconvey to the Originator any Advances acquired pursuant
to the Purchase and Contribution Agreement to the extent that such
Advances do not satisfy the requirements of clause (xi) of the
definition of Eligible Advances.
1.9 Section 2.06 of the Indenture is amended to add the following
clause (r) at the end thereof:
-25-
(r) Until the earlier to occur of (i) the commencement of the Third
Extension Period, and (ii) the date on which the entire Outstanding
Principal Balance of all Outstanding Notes have been reduced to zero
and all other Secured Obligations, costs, fees, expenses and other
amounts owing by the Issuer hereunder and under the other Transaction
Documents have been paid in full, the Issuer shall not, and shall
cause the Originator not to, make commitments, whether orally or in
writing, to any Obligors or prospective Obligors with respect to the
funding of any Loans; provided, however, that nothing in this
clause (r) shall prohibit the Originator from making Advances in
respect of any Loans existing on November 4, 2002.
1.10 Section 3.01(c) of the Indenture is amended to delete the
phrase "funds otherwise available for distribution from the Collection
Account pursuant to clause sixth of Section 4.03(c)" appearing at the end
thereof and to replace therefor the phrase "funds distributed to the Issuer
pursuant to Section 4.03".
1.11 Section 3.02(b) of the Indenture is amended to delete the
reference to "4.03(c)" appearing in the last sentence thereof.
1.12 Section 3.04(b) of the Indenture is amended to delete the
phrase "Section 4.03(c) and" appearing therein.
1.13 Section 4.02(a) of the Indenture is amended to delete the
phrase "upon the occurrence of an Event of Default" each time it appears
in the first paragraph thereof.
1.14 Section 4.03(a) of the Indenture is amended to delete the
phrase "Section 4.03(c) below" appearing in the second sentence thereof
and to replace therefor the phrase "this Section 4.03".
1.15 The Indenture is hereby amended to delete Section 4.03(b)
in its entirety and to substitute the following therefor:
(b) Daily Allocation of Funds in the Collection Account
and Reserve Account Prior to the Wind Down Date. Prior to the Wind Down
Date, the Servicer shall, on each Business Day, if the Servicer receives
any Collections, remit all such Collections to the Collection Account on
the Business Day on which such Collections are received. The Servicer
shall instruct the Trustee in the applicable Servicer's Daily Report to,
and the Trustee shall, allocate all Collections and other funds then on
deposit in the Trust Accounts (other than funds which are required to be
returned pursuant to Section 4.02(a) or are required by the terms of any
Supplement to be dealt with in some other manner) to the following items,
in the following order of priority
First, to the Trustee for payment of the Trustee's Fee;
Second, to the payment of the Servicing Fee to the extent
owed to a Successor Servicer which is not an Affiliate of the
Originator or of the Issuer;
Third, to the payment of accrued and unpaid interest on
all Notes;
-26-
Fourth, to the Insurer for the payment of Insurance
Obligations and any other accrued and unpaid fees, costs, expenses
or other obligations owed to the Insurer under this Indenture, any
Supplement, the Master Insurance Agreement or any Trust Insurance
Policy;
Fifth, to be distributed to the Noteholders to reduce
the Outstanding Principal Balance of all Notes in accordance with
their Series Allocation Percentages until the Outstanding Principal
Balances of such Notes have been reduced to the Target Aggregate
Outstanding Amount with respect to such Business Day;
Sixth, to the payment of any other costs, fees, expenses
or other obligations included in the calculation of the Carrying Cost
Amount;
Seventh, to the extent required by this Indenture or any
Supplement, funds on deposit in the Collection Account shall be
deposited to the Trustee's own account, any Defeasance Account or
any other Series Account for the payment of any fees, costs,
expenses or other obligations (including prepayment premiums, if
applicable) owed to the Trustee and/or the Noteholders which are
not payable from funds in the Collection Account (including
payments to reduce the Outstanding Principal Balance of the
Notes in accordance with their Series Allocation Percentages
during any Amortization Period);
Eighth, to the payment of the Servicing Fee to the extent
owed to the Issuer or any Affiliate of it; and
Ninth, to the Issuer, for working capital purposes, in
an amount determined by the Insurer in its sole and absolute
discretion;
Tenth, to the Issuer for the payment of the Purchase
Price of any Eligible Advances pursuant to the terms of the
Purchase and Contribution Agreement on such day; and
Eleventh, either (i) to the Noteholders to reduce
the Outstanding Principal Balance of all Notes in accordance
with their Series Allocation Percentages until the Outstanding
Principal Balances of such Notes have been reduced to zero or
(ii) from and after the commencement of the Third Extension Period,
to the Issuer.
If, on any day prior to the Wind Down Date, the funds
available for distribution from the Collection Account under any of the
immediately preceding clauses First through the Eleventh above are less
than the amount of costs, fees, expenses or other obligations to be paid
pursuant to any such clause, then, in any such case, such available funds
shall be allocated by the Servicer pro rata for distribution to the
Persons to whom such amounts are owed according to the respective amounts
of such obligations held by such Persons and all obligations in lower
priority categories shall remain unsatisfied until the obligations in the
preceding category have been satisfied.
-27-
Collections and other funds distributed for the benefit
of Noteholders of any Series pursuant to this Section 4.03(b) will be
deposited and distributed as specified in the related Supplement, and
amounts so allocated to any Series will not, except as specified in
the related Supplement, be available to the Noteholders of any other
Series.
1.16 Section 4.03(c) is hereby deleted in its entirety.
1.17 Section 4.03(d)(iii) is hereby amended to delete the phrase
"reduced to zero" appearing at the end of clause Second thereof and to
replace therefor the phrase "(i) reduced to the Target Aggregate Outstanding
Amount with respect to such Business Day or (ii) from and after the
occurrence of an Event of Default, reduced to zero".
1.18 Section 7.03 of the Indenture is amended to delete the phrase
"clause Fourth of Section 4.03(c) or" appearing in the last paragraph thereof.
1.19 Section 9.01 of the Indenture is amended to delete clause (v)
thereof in its entirety and to replace the following therefor:
(v) On any day, principal in the amount of at least $67,500,000
shall fail for any reason to be outstanding under that certain Credit
Agreement dated as of July 31, 2000 among Ag Services of America, Inc.,
the various "Lenders" thereunder and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New York Branch,
as "Agent"; provided, however, that from and after the commencement of
the Third Extension Period, such floor shall be reduced to the lesser
of (i) $67,500,000 or (ii) 50% of the Aggregate Outstanding Amount
(but in no case less than $20,000,000).
1.20 Section 9.01 of the Indenture is further amended to (i) add
"or" to the end of clause (w) of such Section 9.01 and (ii) add the
following clause (x) to such Section 9.01:
(x) The Aggregate Outstanding Amount shall be greater than zero
on July 31, 2003.
1.21 Section 12.01 of the Indenture is deleted in its entirety
and replaced with the following therefor:
SECTION 12.01. Extension of the Scheduled Wind Down Date. (a) If on
or before December 5, 2002, the Insurer shall have received from the
Issuer evidence of a written, irrevocable commitment of a financial
institution to fund new Loans of the Originator, in form and
substance satisfactory to the Insurer and in an amount of no less
than $100,000,000, then, effective on the date of a written notice
from the Insurer to the Issuer confirming that such commitment is
satisfactory to the Insurer, the Scheduled Wind Down Date shall
without further action be extended to January 6, 2003.
(b) If (i) the Scheduled Wind Down Date shall have been extended
pursuant to clause (a) above, and (ii) on or before January 6, 2003,
the Insurer shall have received from the Issuer evidence, of (x) the
execution of definitive documentation, in form and substance
satisfactory to the Insurer, with respect to the credit facility
described in clause (a) above and (y) the availability of funding
pursuant to such credit facility then, effective on the
-28-
date of a written notice from the Insurer to the Issuer confirming
that such credit facility is satisfactory to the Insurer, the
Scheduled Wind Down Date shall without further action be extended
to January 31, 2003.
1.22 The Indenture is hereby amended to add Schedule 3
(Scheduled Aggregate Outstanding Amounts) attached hereto as Schedule 3
to the Indenture.
1.23 The Indenture is hereby amended to add Schedule 4
(Other Identified Loans) attached hereto as Schedule 4 to the Indenture.
SECTION 2. Amendment Effective Date. This Amendment shall
become effective as of the date (the "Amendment Effective Date") on
which each of the following conditions precedent shall have been
satisfied:
(a) each of the Issuer, the Servicer, the Trustee and the
Insurer shall have received a copy of this Amendment duly executed
by each of the parties hereto; and
(b) either (i) the Noteholder's Consents and the Liquidity Banks'
Consent attached to this Amendment shall have been duly executed and
delivered by the Majority Noteholders of each Series of Notes; or
(ii) with respect to each Rating Agency, the Rating Agency Condition
shall have been satisfied with respect thereto.
SECTION 3. Covenants, Representations and Warranties of the
Issuer and the Servicer.
3.1 Upon the effectiveness of this Amendment, (i) each of the
Issuer and the Servicer hereby reaffirms all representations and warranties
made by it in the Indenture as amended hereby (except for those
representations and warranties that relate to a specific date) and agrees
that all such covenants, representations and warranties shall be deemed
to have been remade as of the effective date of this Amendment (except
for those representations and warranties that relate to a specific date)
and (ii) each of the Issuer and the Servicer hereby represents and warrants
that no Asset Deficiency is continuing and no Event of Default or event
or circumstance which, with the giving of notice or the passage of time,
or both, would constitute an Event of Default shall have occurred and
be continuing.
3.2 Each of the Issuer and the Servicer represents and warrants
that this Amendment constitutes a legal, valid and binding obligation of
such party, enforceable against it in accordance with its terms.
3.3 In consideration for the execution of this Amendment by the
Insurer and the Trustee, and the execution by the Noteholders of their
respective consent to this Amendment, each of the Issuer and the Servicer
hereby waives each and every claim, defense, demand, action and suit of
any kind or nature whatsoever against each of the Insurer, Trustee,
Noteholder and each of their respective directors, officers, shareholders,
employees and agents arising on or prior to the date hereof in connection
with the Indenture, any of the other Transaction Documents and the
transactions contemplated thereby.
-29-
SECTION 4. Reference to and Effect on the Indenture and
the Transaction Documents.
4.1 As of the Amendment Effective Date, each reference in the
Indenture to "this Indenture", "hereunder", "hereof", "herein", or words of
like import shall mean and be a reference to the Indenture as amended
hereby, and each reference to the Indenture in any other Transaction
Document, instrument or agreement executed and/or delivered in connection
with the Indenture shall mean and be a reference to the Indenture as
amended hereby.
4.2 Except as specifically amended above and in connection
herewith, the Indenture and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full force
and effect and are hereby ratified and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Trustee
or the Insurer under the Indenture or any other document, instrument or
agreement executed in connection therewith, nor constitute a waiver of any
provision contained therein, except as specifically set forth herein.
SECTION 5. Governing Law. This Amendment will be governed by
and construed in accordance with the internal laws (as opposed to any
conflict of law provisions, except Sections 5-1401 and 5-1402 of the
New York General Obligations Law) and decisions of the State of New York.
SECTION 6. Severability. Each provision of this Amendment shall
be severable from every other provision of this Amendment for the purpose
of determining the legal enforceability of any provision hereof, and the
unenforceability of one or more provisions of this Amendment in one
jurisdiction shall not have the effect of rendering such provision or
provisions unenforceable in any other jurisdiction.
SECTION 7. Execution in Counterparts. This Amendment may be
executed in one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall
be deemed to be an original, but all of which taken together shall
constitute one and the same instrument. Delivery of an executed counterpart
of a signature page to this Amendment by facsimile shall be effective as
delivery of a manually executed counterpart of this Amendment.
SECTION 8. Successors and Assigns. This Amendment shall be
binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns.
SECTION 9. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose.
[remainder of page intentionally left blank]
-30-
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date
first above written.
AG ACCEPTANCE CORPORATION, as the Issuer
By:
----------------------------
Name:
Title:
AG SERVICES OF AMERICA, INC., as Servicer
By:
----------------------------
Name:
Title:
U.S. BANK, N.A. (d/b/a FIRSTAR BANK, N.A.),
as Trustee
By:
----------------------------
Name:
Title:
MBIA INSURANCE CORPORATION, as Insurer
By:
----------------------------
Name:
Title:
-31-
Schedule 3
SCHEDULE AGGREGATE OUTSTANDING AMOUNTS
Scheduled Aggregate
Date Outstanding Amount
- ------------------------------------------------- -----------------------------
From November 30, 2002 through December 30, 2002 $321,802,000
From December 31, 2002 through January 30, 2003 $218,550,000
From January 31, 2003 through February 27, 2003 $153,293,000
From February 28, 2003 through March 29, 2003 $100,475,000
From March 30, 2003 through April 29, 2003 $46,939,000
From April 30, 2003 through May 30, 2003 $33,148,000
From May 31, 2003 through June 29, 2003 $11,487,000
From June 30, 2003 through July 30, 2003 $1,165,000
From and after July 31, 2003 $0
-32-
Schedule 4
OTHER IDENTIFIED LOANS
(attached)
-33-
CONSENT TO
AMENDMENT NO. 7
TO
MASTER TRUST INDENTURE AND SECURITY AGREEMENT
The undersigned, as the Series 1999-1 Noteholder, hereby
consents to the Amendment No. 7 to the Master Trust Indenture and
Security Agreement dated as of November 4, 2002 (the "Amendment") to
which this Consent is attached. The consent granted hereunder shall
apply only to the foregoing Amendment and shall not be deemed to be a
consent to any other amendment for which the consent of the undersigned
is required.
TRIPLE-A ONE FUNDING CORPORATION, as the
Series 1999-1 Noteholder and Majority Noteholder
By: MBIA Insurance Corporation, as Attorney-in-Fact
By:
--------------------------------------------------
Name:
Title:
-34-
CONSENT TO
AMENDMENT NO. 7
TO
MASTER TRUST INDENTURE AND SECURITY AGREEMENT
The undersigned, as the Series 1999-2 Noteholder hereby consents
to the Amendment No. 7 to the Master Trust Indenture and Security Agreement
dated as of November 4, 2002 (the "Amendment") to which this Consent is
attached. The consent granted hereunder shall apply only to the foregoing
Amendment and shall not be deemed to be a consent to any other amendment
for which the consent of the undersigned is required.
COBANK, ACB, as the Series 1999-2 Noteholder
By:
-----------------------------------------
Name:
Title:
-35-
CONSENT
Dated as of November 4, 2002
Each of the undersigned, as a Liquidity Bank party to that certain
Liquidity Agreement dated as of June 23, 1999 (as amended, restated,
supplemented or otherwise modified from time to time, the "Liquidity
Agreement") by and among TRIPLE-A ONE FUNDING CORPORATION (the "Liquidity
Borrower"), the Liquidity Banks party thereto, and COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A. "Rabobank Nederland", New York Branch,
as agent (the "Liquidity Agent"), hereby consents to (i) Amendment No. 7
to the Master Trust Indenture and Security Agreement dated as of
November 4, 2002 and (ii) Amendment No. 4 to the Series 1999-1 Supplement
dated as of November 4, 2002 (collectively, the "Amendments"). The consent
granted hereunder shall apply only to the foregoing Amendments and shall
not be deemed to be a consent to any other amendment for which the consent
of the undersigned is required.
IN WITNESS WHEREOF, the parties hereto have caused this Consent
to be executed by their respective officers thereto duly authorized as of
the date first written above.
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. "RABOBANK NEDERLAND",
NEW YORK BRANCH,
as a Liquidity Bank, as Liquidity Agent
and as Liquidity Collateral Agent
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
-36-
U.S. BANK, N.A. (d/b/a Firstar Bank, N.A.),
as a Liquidity Bank
By:
----------------------------------------
Name:
Title:
WELLS FARGO BANK, N.A., as a Liquidity Bank
By:
----------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as a Liquidity Bank
By:
---------------------------------------
Name:
Title:
NATIONAL AUSTRALIA BANK LIMITED,
as a Liquidity Bank
By:
---------------------------------------
Name:
Title:
By:
---------------------------------------
Name:
Title:
-37-
AMENDMENT NO. 8
TO
MASTER TRUST INDENTURE AND SECURITY AGREEMENT
THIS AMENDMENT NO. 8 TO MASTER TRUST INDENTURE AND SECURITY
AGREEMENT dated as of December 5, 2002 (this "Amendment") is entered into
by and among AG ACCEPTANCE CORPORATION, as Issuer (the "Issuer"),
AG SERVICES OF AMERICA, INC., as Servicer (the "Servicer"),
U.S. BANK, N.A., (d/b/a FIRSTAR BANK, N.A.), as Trustee (the "Trustee"),
and MBIA INSURANCE CORPORATION, as the Insurer (the "Insurer").
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to such terms in the Indenture (as defined below
and amended hereby).
WHEREAS, the Issuer, the Servicer, the Trustee and the Insurer
have entered into that certain Master Trust Indenture and Security
Agreement, dated as of June 23, 1999 (as amended, restated, supplemented
or otherwise modified from time to time, the "Indenture"); and
WHEREAS, the Issuer, the Servicer, the Trustee and the Insurer
have agreed to amend the Indenture as hereinafter set forth;
NOW THEREFORE, in consideration of the premises and other mutual
covenants contained herein, the parties hereto agree as follows:
SECTION 1. Amendments. The Indenture is hereby amended as
follows, such amendment to be effective as of the date set forth in
Section 2 hereof, and subject to the satisfaction of the conditions
precedent set forth in Section 2 hereof:
1.1 Section 9.01 of the Indenture is amended to (i) add "or" to
the end of clause (x) of such Section 9.01 and (ii) add the following
clause (y) to such Section 9.01:
(y) (i) the Originator shall fail for any reason on or before
December 12, 2002 to provide the Insurer with evidence of the
execution of definitive documentation, in form and substance
satisfactory to the Insurer, with respect to the credit facility
described in Section 12.01(b), or (ii) the obligation of any
financial institution to fund new Loans of the Originator pursuant
to the credit facility described in the foregoing clause (i) shall
fail for any reason to be in full force and effect on any date on
or after December 12, 2002.
1.21 Section 12.01 of the Indenture is deleted in its entirety
and replaced with the following therefor:
SECTION 12.01. Extension of the Scheduled Wind Down Date. (a) If on
or before December 5, 2002, the Insurer shall have received from the
Issuer evidence of a commitment of a financial institution to fund new
Loans of the Originator, in form and substance satisfactory to the
Insurer and in an amount of no less than $100,000,000, then, effective
on the date of a written notice from the Insurer to the Issuer confirming
-38-
confirming that such commitment is satisfactory to the Insurer, the
Scheduled Wind Down Date shall without further action be extended to
December 12, 2002.
(b) If (i) the Scheduled Wind Down Date shall have been extended
pursuant to clause (a) above, and (ii) on or before December 12, 2002,
the Insurer shall have received from the Issuer evidence, of (x) the
execution of definitive documentation, in form and substance
satisfactory to the Insurer, with respect to the credit facility
described in clause (a) above and (y) the availability of funding
pursuant to such credit facility then, effective on the date of a
written notice from the Insurer to the Issuer confirming that such
credit facility is satisfactory to the Insurer, the Scheduled Wind Down
Date shall without further action be extended to January 31, 2003.
SECTION 2. Amendment Effective Date. This Amendment shall become
effective as of the date (the "Amendment Effective Date") on which each of
the following conditions precedent shall have been satisfied:
(a) each of the Issuer, the Servicer, the Trustee and the Insurer
shall have received a copy of this Amendment duly executed by each of
the parties hereto; and
(b) either (i) the Noteholder's Consents attached to this Amendment
shall have been duly executed and delivered by the Majority Noteholders
of each Series of Notes; or (ii) with respect to each Rating Agency, the
Rating Agency Condition shall have been satisfied with respect thereto.
SECTION 3. Covenants, Representations and Warranties of the Issuer
and the Servicer.
3.1 Upon the effectiveness of this Amendment, (i) each of the
Issuer and the Servicer hereby reaffirms all representations and warranties
made by it in the Indenture as amended hereby (except for those
representations and warranties that relate to a specific date) and agrees that
all such covenants, representations and warranties shall be deemed to have
been remade as of the effective date of this Amendment (except for those
representations and warranties that relate to a specific date) and (ii) each
of the Issuer and the Servicer hereby represents and warrants that no Asset
Deficiency is continuing and no Event of Default or event or circumstance
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default shall have occurred and be continuing.
3.2 Each of the Issuer and the Servicer represents and warrants
that this Amendment constitutes a legal, valid and binding obligation of such
party, enforceable against it in accordance with its terms.
3.3 In consideration for the execution of this Amendment by the
Insurer and the Trustee, and the execution by the Noteholders of their
respective consents to this Amendment, each of the Issuer and the Servicer
hereby waives each and every claim, defense, demand, action and suit of any
kind or nature whatsoever against each of the Insurer, Trustee, Noteholder
and each of their respective directors, officers, shareholders, employees
-39-
and agents arising on or prior to the date hereof in connection with the
Indenture, any of the other Transaction Documents and the transactions
contemplated thereby.
SECTION 4. Reference to and Effect on the Indenture and the
Transaction Documents.
4.1 As of the Amendment Effective Date, each reference in the
Indenture to "this Indenture", "hereunder", "hereof", "herein", or words
of like import shall mean and be a reference to the Indenture as amended
hereby, and each reference to the Indenture in any other Transaction
Document, instrument or agreement executed and/or delivered in connection
with the Indenture shall mean and be a reference to the Indenture as
amended hereby.
4.2 Except as specifically amended above and in connection
herewith, the Indenture and all other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in full
force and effect and are hereby ratified and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Trustee
or the Insurer under the Indenture or any other document, instrument or
agreement executed in connection therewith, nor constitute a waiver of any
provision contained therein, except as specifically set forth herein.
SECTION 5. Governing Law. This Amendment will be governed by and
construed in accordance with the internal laws (as opposed to any conflict of
law provisions, except Sections 5-1401 and 5-1402 of the New York General
Obligations Law) and decisions of the State of New York.
SECTION 6. Severability. Each provision of this Amendment shall
be severable from every other provision of this Amendment for the purpose
of determining the legal enforceability of any provision hereof, and the
unenforceability of one or more provisions of this Amendment in one
jurisdiction shall not have the effect of rendering such provision or
provisions unenforceable in any other jurisdiction.
SECTION 7. Execution in Counterparts. This Amendment may be
executed in one or more counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument. Delivery of an executed counterpart
of a signature page to this Amendment by facsimile shall be effective as
delivery of a manually executed counterpart of this Amendment.
SECTION 8. Successors and Assigns. This Amendment shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
SECTION 9. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose.
[remainder of page intentionally left blank]
-40-
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
AG ACCEPTANCE CORPORATION, as the Issuer
By:
-------------------------------------
Name:
Title:
AG SERVICES OF AMERICA, INC., as Servicer
By:
-------------------------------------
Name:
Title:
U.S. BANK, N.A. (d/b/a FIRSTAR BANK, N.A.),
as Trustee
By:
-------------------------------------
Name:
Title:
MBIA INSURANCE CORPORATION, as Insurer
By:
-------------------------------------
Name:
Title:
-41-
CONSENT TO
AMENDMENT NO. 8
TO
MASTER TRUST INDENTURE AND SECURITY AGREEMENT
The undersigned, as the Series 1999-1 Noteholder, hereby consents
to the Amendment No. 8 to the Master Trust Indenture and Security Agreement
dated as of December 5, 2002 (the "Amendment") to which this Consent is
attached. The consent granted hereunder shall apply only to the foregoing
Amendment and shall not be deemed to be a consent to any other amendment for
which the consent of the undersigned is required.
TRIPLE-A ONE FUNDING CORPORATION, as the
Series 1999-1 Noteholder and Majority Noteholder
By: MBIA Insurance Corporation, as Attorney-in-Fact
By:
-----------------------------------------------
Name:
Title:
-42-
CONSENT TO
AMENDMENT NO. 8
TO
MASTER TRUST INDENTURE AND SECURITY AGREEMENT
The undersigned, as the Series 1999-2 Noteholder hereby consents
to the Amendment No. 8 to the Master Trust Indenture and Security Agreement
dated as of December 5, 2002 (the "Amendment") to which this Consent is
attached. The consent granted hereunder shall apply only to the foregoing
Amendment and shall not be deemed to be a consent to any other amendment
for which the consent of the undersigned is required.
COBANK, ACB, as the Series 1999-2 Noteholder
By:
-------------------------------------------
Name:
Title:
-43-
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of December 11, 2002
by and among
AG SERVICES OF AMERICA, INC.,
as Borrower,
VARIOUS LENDERS,
as described herein,
and
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH,
as agent for the Lenders
-44-
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1
Section 1.1 Defined Terms 1
Section 1.2 Accounting Terms and Calculations 25
Section 1.3 Computation of Time Periods 25
Section 1.4 Other Definitional Terms 25
ARTICLE II TERMS OF THE CREDIT FACILITIES 25
Section 2.1 Lending Commitments 25
Section 2.2 Procedure for Loans 26
Section 2.3 Notes 27
Section 2.4 Conversions and Continuations 28
Section 2.5 Interest Rates, Interest Payments and Default Interest 29
Section 2.6 Repayment 29
Section 2.7 Prepayments 29
Section 2.8 Reduction or Termination of Commitments 31
Section 2.9 Fees 33
Section 2.10 Computation 33
Section 2.11 Payments 33
Section 2.12 Use of Loan Proceeds 34
Section 2.13 Interest Rate Not Ascertainable, Etc. 34
Section 2.14 Increased Cost 34
Section 2.15 Illegality 35
Section 2.16 Capital Adequacy 36
Section 2.17 Funding Losses; Eurodollar Rate Advances 36
Section 2.18 Discretion of Lenders as to Manner of Funding 36
Section 2.19 Taxes 37
ARTICLE III CONDITIONS PRECEDENT 38
Section 3.1 Conditions Precedent to the Amendment and Restatement
of the Original Credit Agreement 38
Section 3.2 Conditions Precedent to all Loans 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES 41
Section 4.1 Organization, Standing, Etc. 41
Section 4.2 Authorization and Validity 41
Section 4.3 No Conflict; No Default 42
Section 4.4 Government Consent 42
Section 4.5 Financial Statement and Condition 42
Section 4.6 Litigation 43
Section 4.7 Environmental, Health and Safety Laws 43
-45-
Section 4.8 ERISA 43
Section 4.9 Federal Reserve Regulations 43
Section 4.10 Title to Property; Leases; Liens 43
Section 4.11 Taxes 44
Section 4.12 Trademarks, Patents 44
Section 4.13 Burdensome Restrictions 44
Section 4.14 Force Majeure 44
Section 4.15 Investment Company Act 44
Section 4.16 Public Utility Holding Company Act 44
Section 4.17 Retirement Benefits 45
Section 4.18 Full Disclosure 45
Section 4.19 Subsidiaries 45
ARTICLE V AFFIRMATIVE COVENANTS 45
Section 5.1 Corporate Existence 45
Section 5.2 Insurance 45
Section 5.3 Reporting Requirements 46
Section 5.4 Taxes and Claims 48
Section 5.5 Maintenance of Property 49
Section 5.6 Books and Records; Inspections and Examinations 49
Section 5.7 Environmental Matters; Reporting 49
Section 5.8 Compliance with Laws 50
Section 5.9 ERISA 51
Section 5.10 Interest Coverage Ratio 51
Section 5.11 Post Closing Matter 51
Section 5.12 Designation of Subsidiaries 52
ARTICLE VI NEGATIVE COVENANTS 53
Section 6.1 Indebtedness 53
Section 6.2 Liens 53
Section 6.3 Contingent Obligations 55
Section 6.4 Mergers and Acquisitions 55
Section 6.5 Investments and Subsidiaries 55
Section 6.6 Restricted Payments 56
Section 6.7 Sale of Assets 57
Section 6.8 Sale and Leaseback 57
Section 6.9 Transactions with Affiliates 58
Section 6.10 Subsidiaries and Affiliates 58
Section 6.11 Minimum Net Worth 58
Section 6.12 Interest Coverage Ratio 58
Section 6.13 Total Indebtedness to Consolidated
Tangible Net Worth Ratio 58
Section 6.14 Average Total Indebtedness to Average Consolidated
Tangible Net Worth Ratio 58
Section 6.15 Misstatements or Omissions 59
Section 6.16 Accounting Principles; Fiscal Year; Tax Year 59
-46-
Section 6.17 Plans 59
Section 6.18 Nature of Business 59
Section 6.19 Suspension of Business Operations 59
Section 6.20 Negative Pledges 59
Section 6.21 Amendments to Securitization Documents 59
Section 6.22 Solvency Ratio 59
Section 6.23 Management Group Indebtedness 59
Section 6.24 Obligor Risk Participations 60
Section 6.25 Borrower Loan Commitments 60
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES 60
Section 7.1 Events of Default 60
Section 7.2 Remedies 63
Section 7.3 Offset 63
ARTICLE VIII THE AGENT 63
Section 8.1 Appointment and Authorization 64
Section 8.2 Note Holders 64
Section 8.3 Consultation With Counsel 64
Section 8.4 Loan Documents 64
Section 8.5 Rabobank and Affiliates 64
Section 8.6 Action by Agent 64
Section 8.7 Credit Analysis 65
Section 8.8 Notices of Event of Default, Etc. 65
Section 8.9 Indemnification 65
Section 8.10A Payments and Collections Prior to an Event of Default 66
Section 8.10B Payments and Collections after an Event of Default 66
Section 8.11 Sharing of Payments 69
Section 8.12 Advice to Lenders 69
Section 8.13 Resignation 70
ARTICLE IX MISCELLANEOUS 70
Section 9.1 Modifications 70
Section 9.2 Expenses 71
Section 9.3 Waivers, etc. 71
Section 9.4 Notices 71
Section 9.5 Taxes 72
Section 9.6 Successors and Assigns; Disposition of Loans; Transferees 72
Section 9.7 Governing Law and Construction 73
Section 9.8 Consent to Jurisdiction 73
Section 9.9 Waiver of Jury Trial 73
Section 9.10 Survival of Agreement 73
Section 9.11 Indemnification 74
Section 9.12 Captions 75
Section 9.13 Entire Agreement 75
-47-
Section 9.14 Counterparts 75
Section 9.15 Agreement Effectiveness 75
Section 9.16 Borrower Acknowledgements 75
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
December 11, 2002 (this "Agreement"), is by and among AG SERVICES OF
AMERICA, INC., an Iowa corporation (the "Borrower"), the lenders from
time to time party hereto (individually, a "Lender" and collectively,
the "Lenders") and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH, as agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity,
the "Agent").
BACKGROUND INFORMATION
The parties hereto are parties to a certain Credit Agreement
dated as of July 31, 2000 and amended as of August 17, 2001,
August 31, 2001, May 28, 2002, June 18, 2002 and November 8, 2002
(as so amended, the "Original Credit Agreement").
The parties hereto wish to amend the Original Credit Agreement
to provide for an additional credit facility and to provide for certain
other changes in circumstances and new arrangements among themselves.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto agree that, from and after the Restatement
Date, the Original Credit Agreement shall be amended and restated in its
entirety to read as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement, the terms
below shall have the respective meanings attributed to such terms below and,
all uses of the terms "Advance", "Principal Balance", "Loan", "Obligor Claim",
"Obligor Note", "Primary Lien", "Permitted Encumbrances", "Lien", "Issue",
"Assignment of Payment", "Assignment of Indemnity", "Related Security",
"Debtor Relief Laws", "Intermediate Loan", "Seed Loan", and "Loan Documents"
in the definitions of "Borrowing Base A", "Borrowing Base B", "Eligible
Advances", "Eligible 2003 Advances", "2003 Loan" and "Obligor Risk
Participation" shall be used with the meanings given to such terms in the
Indenture (but giving effect to any modification or interpretation of such
terms contained in the text of the definitions listed above):
"A Lender": A Lender to whom the Borrower has executed and
delivered an A Note or to whom such A Note has been assigned in accordance
with the applicable provisions hereof.
"A Lender Priority Collateral": All Customer Collateral with
respect to 2003 Loans.
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"A Lender Priority Payment": Any payment or portion thereof
that is attributable to or made in respect of (a) an A Loan, (b) an
A Note, or (c) an Eligible 2003 Advance.
"A Loan": As defined in Section 2.1(a).
"A Note": A promissory note of the Borrower payable to an
A Lender in the amount of such A Lender's Facility A Commitment Amount,
in substantially the form of Exhibit 1.1-2 (as such promissory note
may be amended, extended or otherwise modified from time to time and
each promissory note accepted by such A Lender from time to time in
substitution therefor or in renewal thereof).
"Adjusted Eurodollar Rate": With respect to each Interest
Period, the rate (rounded upward, if necessary, to the next one hundredth
of one percent) determined by dividing the Eurodollar Rate for such
Interest Period by 1.00 minus the Eurodollar Reserve Percentage.
"Advance": With respect to a Facility, any portion of the
outstanding Loans with respect to such Facility as to which a particular
interest rate option and, if pertinent, an Interest Period, is applicable.
An Advance with respect to A Loans may be a Eurodollar Rate Advance or a
Base Rate Advance, whereas an Advance with respect to B Loans may only be a
Base Rate Advance.
"Affiliate": When used with reference to any Person, (a) each
Person that, directly or indirectly, controls, is controlled by or is under
common control with, the Person referred to, (b) each Person which
beneficially owns or holds, directly or indirectly, ten percent or more
of any class of voting stock of the Person referred to (or if the Person
referred to is not a corporation, ten percent or more of the equity
interest), (c) each Person, ten percent or more of the voting stock
(or if such Person is not a corporation, ten percent or more of the
equity interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's
officers, directors, joint venturers and partners. The term control
(including the terms "controlled by" and "under common control with")
means the possession, directly, of the power to direct or cause the
direction of the management and policies of the Person in question.
"Ag Acceptance": Ag Acceptance Corporation, a Delaware
corporation.
"Agent": As defined in the preamble.
"Agent Indemnified Liabilities": As defined in Section 8.9.
"Agent Indemnitee": As defined in Section 8.9.
"Aggregate Facility A Commitment Amount": As of any date,
the sum of the Facility A Commitment Amounts of all of the A Lenders.
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"Aggregate Facility B Commitment Amount": As of any date,
the sum of the Facility B Commitment Amounts of all of the B Lenders.
"Applicable Lending Office": For each Lender and for each
type of Advance, the office of such Lender identified as such Lender's
Applicable Lending Office on the signature pages hereof or such other
domestic or foreign office of such Lender (or of an Affiliate of such Lender)
as such Lender may specify from time to time, by notice given pursuant to
Section 9.4, to the Agent and the Borrower as the office by which its
Advances of such type are to be made and maintained.
"Applicable Margin": The margin specified in the table below
relating to the applicable Advance type and Loan type.
Loan Type Eurodollar Advances Base Rate Advances
- ------------- ----------------------------- ----------------------------
A Loan 2.50% through and including 1.25% through and including
March 31, 2003, and 4.00% March 31, 2003, and 3.00%
thereafter thereafter
- ------------- ----------------------------- ----------------------------
B Loan Not Applicable 3.00%
- ------------- ----------------------------- ----------------------------
"Authorized Officer": The Chairman of the Board, the President,
any Vice President or the Treasurer of the Borrower.
"Average Total Indebtedness to Average Consolidated Tangible
Net Worth Ratio": As of any date of determination, the ratio of the
Borrower's average month end total Indebtedness during the preceding full
twelve (12) month period to the Borrower's average month end Consolidated
Tangible Net Worth during such period.
"B Lender": A Lender to whom the Borrower has executed and
delivered a B Note or to whom such B Note has been assigned in accordance
with the applicable provisions hereof; provided, however, that for
purposes of the distributions to be made under Section 8.10B, a "B Lender"
shall be deemed to include any Swap Party which is an affiliate of such
B Lender.
"B Lender Priority Collateral": All Collateral other than
A Lender Priority Collateral.
"B Lender Priority Payment": Any payment or portion thereof that
is attributable to or made in respect of (a) a B Loan, (b) a B Note, or
(c) an Eligible Advance.
"B Loan": As defined in Section 2.1(b).
"B Note": A promissory note of the Borrower issued under the
Original Credit Agreement, dated June 18, 2002 and made payable to a Lender
in the amount of such Lender's Facility B Commitment Amount (as such
promissory note may be amended,
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extended or otherwise modified from time to time and each promissory note
accepted by such Lender from time to time in substitution therefor or in
renewal thereof).
"Base Rate": An annual rate at all times equal to the sum of the
higher (as of the date of determination) of (a) the rate of interest
established by Rabobank in New York as its "base rate" and (b) the Federal
Funds Rate plus one-half of one percent (0.50%). The "base rate" is not
necessarily the most favored rate of Rabobank and Rabobank may lend to its
customers at rates that are at, above or below the "base rate". For
purposes of determining any interest rate hereunder or under any other
Loan Document which is based on the Base Rate, such interest rate shall
change as and when Rabobank changes its "base rate" and/or there is a change
in the Federal Funds Rate, as applicable.
"Base Rate Advance": An Advance with respect to which the interest
rate is determined by reference to the Base Rate.
"Board": The Board of Governors of the Federal Reserve System
or any successor thereto.
"Borrower": As defined in the preamble.
"Borrower Loan Commitment": Any promise or agreement, whether
written or oral, of the Borrower to make loans or similar financial
accommodations to any customer or potential customer of the Borrower.
"Borrower Security Agreement": A Security Agreement dated as of
July 31, 2000 and amended as of each of November 8, 2002 and the date
hereof from the Borrower to the Agent for the benefit of the Secured Parties
(as defined therein), as the same may be further amended, supplemented
or otherwise modified from time to time.
"Borrowing Base A": An amount equal to 77.5% of the sum of:
(a) the aggregate Principal Balance plus accrued interest
of all Eligible 2003 Advances made in respect of 2003
Secured Loans; plus
(b) the aggregate Principal Balance plus accrued interest
of all Eligible 2003 Advances made in respect of 2003
Unsecured Loans (up to a combined limit of $10,000,000);
less
(c) the 2003 Credit Factor Concentration Limit Excess.
"Borrowing Base B": An amount equal to the sum of:
(a) the lesser of:
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(i) 89% of an amount equal to (A) the aggregate Principal
Balance plus accrued interest of the Eligible Advances
(calculated on a pro forma basis as if the terms
"Advance" and "Loan" in the Indenture included both the
loans owned by Ag Acceptance and the loans owned by the
Borrower) less (B) the sum of the Obligor Concentration
Limit Excesses; or
(ii) an amount equal to (without duplication):
(A) the aggregate Principal Balance plus accrued
interest of all Advances owned by Ag Acceptance
or the Borrower for which the related Loan
(after giving effect to all Advances made in
respect of such Loan) has a loan-to-value
ratio of 70% or less (as determined using the
methodology set forth in Exhibit 1.1-4 hereto);
plus (without duplication)
(B) the aggregate Principal Balance plus accrued
interest (up to a combined limit of $5,000,000)
of those Advances owned by Ag Acceptance or
the Borrower for which the related Loan (after
giving effect to all Advances made in respect
of such Loan) has a loan-to-value ratio between
70% and 73% (inclusive, and as determined using
the methodology set forth in Exhibit 1.1-4
hereto) so long as the Obligors of such Advances
are viable farming entities as determined by
the Agent in its sole discretion; plus
(without duplication)
(C) the aggregate Principal Balance plus accrued
interest (up to a combined limit of $5,000,000)
of Advances owned by Ag Acceptance or the
Borrower for which the related Loan (after
giving effect to all Advances made in respect
of such Loan) does not have a loan-to-value
ratio of 70% or less (as determined using the
methodology set forth in Exhibit 1.1-4
hereto) so long as the Obligors of such Advances
are also Obligors of term Advances for which the
related Loan (after giving effect to all Advances
made in respect of such Loan) has a loan-to-value
ratio of 70% or less (as determined using the
methodology set forth in Exhibit 1.1-4 hereto);
plus
(D) Unsecured loans (provided that no such unsecured
loan shall be included if the same shall cause
the aggregate Principal Balance plus accrued
interest of all such loans made to a given
Obligor (as if such Obligor and all of
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such Obligor's Affiliates were one Obligor) to
exceed $100,000) made to seed and chemical
accounts that are current or less than 60 days
past due; less
(E) the sum of the Obligor Concentration Limit
Excesses; plus
(b) 100% of the Borrower's cash and investments of the
type described in subsections (a)-(c) of Section 6.5
(to the extent pledged to the Agent for the benefit
of the Secured Parties and held by one of the Lenders
acting as a collateral agent in a manner and pursuant
to documentation satisfactory to the Agent); provided,
however, that the Borrower may only include such cash
and investments in Borrowing Base B to the extent that
the Borrower is unable to make payments on the B
Loan-related Obligations without causing an Event of
Default to occur under Section 9.01(v) of the
Indenture; plus
(c) 100% of the cash balances and "Eligible Investments"
(as defined in the Indenture) owned by Ag Acceptance,
plus
(d) 65% of the documented invoice value of the Eligible
Inventory, less
(e) the sum of the total liabilities of Ag Acceptance
With respect to clause (ii)(B) above, if the Agent requires a
recalculation of Borrowing Base B because of its determination
that an Obligor is not a viable farming entity, such recalculation
shall not be required to become effective until the end of the
calendar month in which such determination is made.
"Borrowing Base Certificate": A certificate in the form of
Exhibit 1.1-1 hereto.
"Borrowing Base Deficiency": With respect to (a) Facility A,
at any date of determination, the amount, if any, by which the Total
Facility A Outstandings exceed Borrowing Base A, and (b) Facility B,
at any date of determination, the amount, if any, by which the Total
Facility B Outstandings exceed Borrowing Base B.
"Business Day": Any day other than a Saturday or Sunday or
any other day on which national banking associations or state banking
institutions in New York, New York, Chicago, Illinois, or the city in
which the Trustee under the Indenture is located are authorized or
obligated by law, executive order or governmental decree to be closed.
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"Capitalized Lease": A lease of (or other agreement conveying
the right to use) real or personal property with respect to which at least
a portion of the rent or other amounts thereon constitute Capitalized
Lease Obligations.
"Capitalized Lease Obligations": As to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real or personal property which
obligations are required to be classified and accounted for as a capital
lease on a balance sheet of such Person under GAAP (including Statement
of Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board), and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in
accordance with GAAP (including such Statement No. 13).
"Change in Control": Shall occur if (a) less than twelve percent
(12%) of the Borrower's outstanding voting stock is owned or controlled in
the aggregate by Persons in the Management Group, or (b) any Person or group
(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 as
in effect on the Restatement Date), other than one or more members of the
Management Group, directly or indirectly owns or controls more than twelve
percent (12%) of the Borrower's outstanding voting stock.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral": As defined in the Borrower Security Agreement.
"Commitments": The Facility A Commitments and the Facility
B Commitments.
"Consolidated Tangible Net Worth" As of any date of
determination, the consolidated shareholders' equity of the Borrower
and its Restricted Subsidiaries less the aggregate amount of any
intangible assets, including goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names,
receivables from Affiliates, directors, officers or employees, prepaid
expenses, deposits, deferred charges, treasury stock, non-compete
agreements and any other assets designated from time to time by the
Agent in its sole discretion.
"Contingent Obligation": With respect to any Person, as of any
date of determination, without duplication, any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (the "primary obligor")
in any manner, whether directly or otherwise, including, without limitation,
any obligation of such Person: (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any direct or indirect
security therefor, (b) to purchase property, securities or services for
the purpose of assuring the owner of such Indebtedness of the payment of
such Indebtedness, (c) to maintain working capital, equity capital or other
financial statement condition of the primary obligor so as to enable the
primary obligor to pay such Indebtedness or otherwise to protect the owner
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therof against loss in respect thereof, or (d) entered into for the purpose
of assuring in any manner the owner of such Indebtedness of the payment of
such Indebtedness or to protect the owner against loss in respect thereof;
provided, that the term "Contingent Obligation" shall not include
endorsements for collection or deposit, in each case in the ordinary course
of business. The amount of any Contingent Obligation shall be deemed to be
an amount equal to the stated or determinable amount of the Indebtedness in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonable anticipated liability in respect thereof
(assuming such Person is required to perform thereunder).
"Credit and Collection Policy": The Borrower's Credit and Collection
Policy which is attached to the Indenture, as amended in June, 2000 and as
further amended from time to time in accordance with this Agreement and the
Indenture.
"Credit Factor" As defined in the Credit and Collection Policy.
"2003 Credit Factor Concentration Limit Excess" As of any date
of determination, the amount by which the aggregate Principal Balance plus
accrued interest of all Eligible 2003 Advances for which the related 2003
Loan has a Credit Factor greater than 100% but less than 120% exceeds 15%
of the aggregate Principal Balance plus accrued interest of all Eligible
2003 Advances.
"Custodian": Wells Fargo Bank Iowa, N.A., together with its
successors and assigns as "Custodian" under the Custody Agreement.
"Custody Agreement": The Custody Agreement dated as of
July 31, 2000 among the Borrower, the Agent and the Custodian, as the same
may be amended, supplemented or otherwise modified from time to time.
"Customer Collateral": As defined in the Borrower Security
Agreement.
"Dechert": Dechert, Price & Rhoads, counsel to the Borrower
and the Restricted Subsidiaries.
"Default": Any event which, with the giving of notice
(whether such notice is required under Section 7.1, or under some other
provision of this Agreement, or otherwise) or lapse of time, or both,
would constitute an Event of Default.
"EBIT": For any period of determination, the sum of the
Borrower's and its Restricted Subsidiaries' consolidated (a) Net Income,
(b) Interest Expense, and (c) taxes.
"Eligible Advance": As defined in the Indenture, but with the
following modifications:
(a) For purposes of Loans owned by the Borrower, all
references to the "Trustee" and to the "Insurer" throughout
the definition (and related definitions) shall
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be deemed to be references to the Agent, and references to the
"Custodian" shall be deemed to be references to the Custodian
(as defined in this Agreement).
(b) Clauses (iii), (iv), (xi), (xii), (xxi), (xxii) and
(xxiv) through (xxviii) of such definition shall be excluded.
(c) Clause (ii) of such definition shall be deemed to
read in its entirety as follows: "which arose or was acquired
in the ordinary course of business of the Originator, under Loan
Documents comparable to or substantially in the form of
Exhibit C hereto, the performance of which have been completed
by the Originator (or its predecessor-in-interest, as the case
may be) and by all parties other than the Obligor, and all
advances, goods or services in connection therewith have been
delivered to or performed for the Obligor."
(d) Clause (xiv) of such definition shall be deemed to
read in its entirety as follows: "which is, together with the
related Loan Documents and Related Security, fully assignable."
(e) Clause (xviii) of such definition shall be deemed
to read in its entirety as follows: "which (A) in the case of
a Loan originated by the Originator, has not been compromised,
adjusted or similarly modified, except as permitted within the
criteria set forth in the Credit and Collection Policy, (B) is
not subject to any Obligor Claims whatsoever and (C) did not
arise pursuant to Loan Documents giving the Obligor an explicit
right of offset."
(f) Clause (xix) of such definition shall be deemed to
read in its entirety as follows: "which was made under the
existing or comparable Loan Documents, which Loan Documents
have not modified for negative credit reasons, other than
(A) modifications made at the time of the Originator's purchase
of the Obligor Note for Loans not originated by the Originator,
(B) as provided for in the preceding clause (xviii) for Loans
originated by the Originator, or (C) as otherwise agreed to by
the Agent."
(g) Clause (xxiii) of such definition shall be deemed to
read in its entirety as follows: "which is free and clear of any
Lien (other than (A) in the case of Loans owned by the Issuer,
the Primary Lien and Permitted Encumbrances, and (B) in the case
of Loans owned by the Originator, the Security Interest (as
defined in the Borrower Security Agreement) and Permitted Liens)
and in which (1) in the case of Loans owned by the Issuer, the
Issuer has a valid ownership interest (which ownership interest,
to the extent it constitutes a security interest under the UCC,
shall be perfected and of first priority) and the Trustee has
a first priority perfected security interest and (2) in the
case of Loans owned by the Originator, the Agent's Security
Interest (as defined in the Borrower Security Agreement)
is perfected and of the first priority."
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(h) Unsecured loans to seed and chemical accounts shall be
deemed to be Eligible Advances until they become 60 days past due.
Upon any such loan becoming 60 days past due, no portion of such
loan will continue to constitute an Eligible Advance, unless, in
such circumstance, such unsecured loan meets the criteria under
Other Eligible Collateral in Exhibit 1.1-4 hereof.
Notwithstanding the foregoing, no unsecured loan to seed and
chemical accounts which causes the aggregate Principal Balance
plus accrued interest of all such loans made to a given Obligor
(as if such Obligor and all of such Obligor's Affiliates were one
Obligor) to exceed $100,000 shall be considered an Eligible Advance.
(i) Such Advance is not an Advance made in respect of a
Loan in which an Obligor Risk Participation has been sold.
(j) Such Advance has been originated and distributed to
the applicable Obligor prior to March 31, 2003.
(k) Such Advance is not an Advance made in respect of a
2003 Loan.
"Eligible 2003 Advance": At any time, an Advance in respect
of a 2003 Loan where (after giving effect to such Advance and
the 2003 Loan to which such Advance relates):
(a) if such Advance is made in respect of a 2003 Secured
Loan, such 2003 Secured Loan has a Credit Factor of less than
120%;
(b) if such Advance is made in respect of a 2003 Unsecured
Loan, the aggregate Principal Balance plus accrued interest on all
2003 Unsecured Loans made to a given Obligor (as if such Obligor
and all of such Obligor's Affiliates were one Obligor) does not
exceed $100,000;
(c) the aggregate Principal Balance plus accrued interest
on all 2003 Loans made to a given Obligor (as if such Obligor and
all of such Obligor's Affiliates were one Obligor) does not exceed
$2,000,000;
(d) the related 2003 Loan, when aggregated with all other
2003 Loans, does not cause the Borrower Loan Commitments with
respect to 2003 Loans to exceed $125,000,000;
(e) the related 2003 Loan is not an Intermediate Loan;
(f) has not been sold to Ag Acceptance;
(g) the Advance is currently owing under an Obligor Note
which has been duly authorized and which, together with the
related Loan Documents, is in full force and effect and constitutes
the legal, valid and binding obligation of the Obligor of
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such Advance to pay the outstanding principal amount of such
Advance and interest thereon, and the related Loan Documents
are enforceable against such Obligor in accordance with their
respective terms, except as limited by Debtor Relief Laws and
except as such enforceability may be limited by general
provisions of equity;
(h) the Advance arose or was acquired in the ordinary
course of business of the Borrower, under Loan Documents
comparable to or substantially in the form of Exhibit C to
the Indenture, the performance of which have been completed
by the Borrower (or its predecessor-in-interest, as the case
may be) and by all parties other than the Obligor, and all
advances, goods or services in connection therewith shall have
been delivered to or performed for the Obligor;
(i) no payment or other material default exists (whether
matured or otherwise) with respect to the related 2003 Loan;
(j) the Obligor of which is not an Obligor on any 2003
Loan or other Loan for which a payment or other material default
exists (whether matured or otherwise);
(k) the Obligor of which is not a Governmental Body;
(l) which, together with the Loan Documents related
thereto, is an "account", a "general intangible", "chattel paper"
or an "instrument" within the meaning of the UCC of all
jurisdictions which govern the perfection of the Agent's security
interest therein;
(m) the Obligor of which is not an Affiliate of the
Borrower;
(n) with respect to which all material consents, licenses,
approvals or authorization of, or registrations or declarations
with, any Governmental Body required to be obtained, effected or
given in connection with the making of such Advance have been
duly obtained, effected or given and are in full force and effect;
(o) the Obligor of which is organized in and a resident
of the United States;
(p) which is denominated and payable only in United States
Dollars in the United States;
(q) with respect to which the related 2003 Loan is due and
payable in full no later than January 31, 2004;
(r) which, together with the Loan Documents related
thereto, does not contravene, in any material respect any laws,
rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to usury,
truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and
privacy) and with respect to which no party to the Loan
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Documents related thereto is in material violation of any such
law, rule or regulation in any respect;
(s) which is, together with the related Loan Documents
and Related Security, fully assignable;
(t) with respect to which only one current Obligor Note
exists, which Obligor Note has been delivered to the Custodian;
(u) which is secured by a perfected security interest
in the Related Security (including, without limitation, the
related Assignment of Payment, if any, but exclusive of the
Assignment of Indemnity) in favor of the Borrower, which security
interest has the priority required for such security interest in
the related Loan Documents;
(v) which (i) in the case of a 2003 Loan originated by the
Borrower, has not been compromised, adjusted or similarly modified,
except as expressly permitted in writing by the Agent, (ii) is not
subject to any Obligor Claims whatsoever, and (iii) did not arise
pursuant to Loan Documents giving the Obligor an explicit right
of offset.
(w) which was made under existing or comparable Loan
Documents, which Loan Documents have not been modified for negative
credit reasons, other than (i) modifications made at the time of
the Borrower's purchase of the Obligor Note for 2003 Loans not
originated by the Borrower, (ii) as provided for in the preceding
clause (v) for 2003 Loans originated by the Borrower, or (iii) as
otherwise agreed to by the Agent;
(x) which is free and clear of any Lien other than the
Security Interest (as defined in the Borrower Security Agreement)
and Permitted Liens and in which the Agent's Security Interest
(as defined in the Borrower Security Agreement) is perfected and
of first priority; and
(y) Such Advance is not an Advance made in respect of a
2003 Loan in which an Obligor Risk Participation has been sold.
"Eligible Inventory": As of the date determination, that portion
of the Borrower's inventory that meets each of the following requirements:
(a) it is not obsolete and is otherwise in a condition that permits it to
be sold or leased in the ordinary course of the Borrower's business, and
is new and unused; (b) it is owned by the Borrower and is subject to a valid
and fully perfected first priority Lien in the Agent's favor free and clear
of all other Liens other than Permitted Liens; (c) it has not been
contributed to the capital of Ag Acceptance or purchased from the Borrower
by Ag Acceptance pursuant to the Purchase and Contribution Agreement; and
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(d) it has not been determined by the Agent (with advance written notice
to the Borrower) to be unacceptable due to its age, type, category
and/or quantity.
"Environmental Laws": As defined in Section 5.7.
"ERISA": The Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate": Any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a
member and which is treated as a single employer under Section 414 of
the Code.
"Eurodollar Business Day": A Business Day which is also a
day for trading by and between banks in United States dollar deposits
in the interbank eurodollar market.
"Eurodollar Rate": With respect to each Interest Period
applicable to a Eurodollar Rate Advance, the average offered rate for
deposits in United States dollars (rounded upward, if necessary, to
the nearest 1/16 of 1%) for delivery of such deposits on the first day
of such Interest Period, for the number of days in such Interest Period,
which appears on the Reuters Screen LIBO page as of 11:00 a.m., London
time (or such other time as of which such rate appears) two Eurodollar
Business Days prior to the first day of such Interest Period, or the rate
for such deposits determined by the Agent at such time based on such
other published service of general application as shall be selected by
the Agent for such purpose; provided, that in lieu of determining the rate
in the foregoing manner, the Agent may determine the rate based on rates
at which United States dollar deposits are offered to the Agent in the
interbank Eurodollar market at such time for delivery in Immediately
Available Funds on the first day of such Interest Period in an amount
approximately equal to the Advance to which such Interest Period is to
apply (rounded upward, if necessary, to the nearest 1/16 of 1%).
"Reuters Screen LIBO page" means the display designated as page "LIBO"
on the Reuters Monitor Money Rate Screen (or such other page as may
replace the LIBO page on such service for the purpose of displaying
London interbank offered rates of major banks for United States dollar
deposits).
"Eurodollar Rate Advance": An Advance with respect to which
the interest rate is determined by reference to the Adjusted Eurodollar
Rate.
"Eurodollar Reserve Percentage": As of any day, that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
the Board for determining the maximum reserve requirement (including any
marginal, basic, supplemental, special, emergency or other reserves) for
a member bank of the Federal Reserve System, in respect of "Eurocurrency
Liabilities" as such term is defined in Regulation D of the Board (or any
successor category of liabilities under Regulation D). The rate of interest
applicable to any outstanding Eurodollar Rate Advances shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Event of Default": Any event described in Section 7.1.
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"Existing Loan": As defined in Section 2.1(b).
"Facility": Facility A or Facility B, as the context requires
and "Facilities" shall mean both of them.
"Facility A": The credit facility being made available by the
A Lenders to the Borrower pursuant to Section 2.1(a).
"Facility A Commitment": With respect to a Lender, such
Lender's agreement to make A Loans to the Borrower in an aggregate principal
amount outstanding at any time not to exceed such Lender's Facility A
Commitment Amount, upon the terms and subject to the conditions set forth
in this Agreement.
"Facility A Commitment Amount": With respect to a Lender, the
amount set forth as such Lender's Facility A Commitment Amount opposite
such Lender's name on the signature pages hereto, as the same may be reduced
from time to time pursuant to Section 2.8 or Section 9.6; provided, however,
that a Lender's Facility A Commitment Amount shall be reduced to the extent
necessary to ensure that the sum of such Lender's Facility A Commitment
Amount, such Lender's Facility B Commitment Amount and such Lender's
Liquidity Commitment does not exceed the aggregate amounts set forth
for the particular Lenders below:
Rabobank: $145,000,000
U.S. Bank, N.A.: $55,000,000
"Facility A Commitment Fees": As defined in Section 2.9(b).
"Facility A Percentage": With respect to any Lender, the
percentage equivalent of a fraction, the numerator of which is such
Lender's Facility A Commitment Amount and the denominator of which is
the Aggregate Facility A Commitment Amount (or, if there are no remaining
Facility A Commitments, such Lender's share of the Total Facility A
Outstandings).
"Facility A Unused Commitment": With respect to any Lender as
of any date, the amount by which such Lender's Facility A Commitment
Amount exceeds such Lender's Facility A Percentage of the Total Facility
A Outstandings on such date.
"Facility B": The credit facility being made available by the
B Lenders to the Borrower pursuant to Section 2.1(b).
"Facility B Commitment": With respect to a Lender, such
Lender's agreement to make B Loans to the Borrower in an aggregate
principal amount outstanding at any time not to exceed such Lender's
Facility B Commitment Amount, upon the terms and subject to the conditions
set forth in this Agreement.
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"Facility B Commitment Amount": With respect to a Lender, the
amount set forth as such Lender's Facility B Commitment Amount opposite
such Lender's name on the signature pages hereto, as the same may be reduced
from time to time pursuant to Section 2.8 or Section 9.6.
"Facility B Commitment Fees": As defined in Section 2.9(c).
"Facility B Percentage": With respect to any Lender, the
percentage equivalent of a fraction, the numerator of which is such
Lender's Facility B Commitment Amount and the denominator of which is
the Aggregate Facility B Commitment Amount (or if there are no remaining
Facility B Commitments, such Lender's share of the Total Facility B
Outstandings).
"Facility B Unused Commitment": With respect to any Lender
as of any date, the amount by which such Lender's Facility B Commitment
Amount exceeds such Lender's Facility B Percentage of the Total
Facility B Outstandings on such date.
"Federal Funds Rate": At any time, an interest rate per annum
equal to the weighted average of the rates for overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it; it being understood that the Federal
Funds Rate for any day which is not a Business Day shall be the Federal
Funds Rate for the preceding Business Day.
"Fee Letter": As defined in Section 2.9.
"Financial Covenants": The covenants contained in Sections 6.11
through 6.14 and 6.22, 6.24 and 6.25.
"Fiscal Quarter": A fiscal quarter within a Fiscal Year, with
one of the following beginning and end dates: March 1 and May 31, June 1
and August 30, September 1 and November 30 or December 1 and February 28
or 29.
"Fiscal Year": A fiscal year of the Borrower starting on the
first day of March and ending on the last day of February.
"Funded Indebtedness": As of any date of determination, without
duplication, Indebtedness (including Indebtedness hereunder) of the Borrower
and any of its Restricted Subsidiaries which, by its terms, matures more
than one year from the date of any determination thereof and/or which is
renewable or extendible under any revolving or similar agreement, but
excluding current maturities of such Indebtedness.
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"GAAP": Generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of any date of determination.
"Governmental Body": Any foreign, federal, state, municipal,
local or other government, or any department, commission, board, bureau,
agency, public authority, official or instrumentality thereof or any
court or arbitrator.
"Greatest Amount of Eligible Advances" has the meaning assigned
thereto in the Indenture (but calculated on a pro forma basis as if the
terms "Advance", "Loan" and "Pledged Assets" in the Indenture included both
the loans owned by Ag Acceptance and the loans owned by the Borrower).
"Headquarters" means the real property and fixtures comprising
the Borrower's headquarters site located in Cedar Falls, Iowa, commonly
known as 1309 Technology Parkway, Cedar Falls, Iowa 50613.
"Immediately Available Funds": Funds with good value on the
day and in the city in which payment is received.
"Indebtedness": With respect to any Person, as of any date of
determination, without duplication: (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid or accrued,
(d) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person,
(e) all obligations of such Person issued or assumed as the deferred
purchase price of property or services, (f) all obligations of others
secured by any Lien on property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed, (g) all
Capitalized Lease Obligations of such Person, (h) all obligations of
such Person, actual or contingent, as an account party in respect of
letters of credit or bankers' acceptances (so long as such letters of
credit or bankers' acceptances were originated to provide any form of
credit support to any other Person and shall not include letters of credit
or bankers' acceptances incurred in the ordinary course of any Person's
business), (i) all obligations of any partnership or joint venture as
to which such Person is or may become personally liable, and (j) all
Contingent Obligations of such Person.
"Indemnitees": As defined in Section 9.11.
"Indenture": The Master Trust Indenture and Security Agreement,
dated as of June 23, 1999, and amended through December 5, 2002, among
Ag Acceptance, the Borrower, MBIA and U.S. Bank, N.A. (d/b/a Firstar
Bank, N.A.), as Trustee, as the same may be
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further amended, supplemented or otherwise modified from time to time in
accordance with this Agreement.
"Insurance Agreement": The Master Insurance and Reimbursement
Agreement, dated as of June 23, 1999 and amended through November 5, 2002,
among Ag Acceptance, the Borrower, MBIA and U.S. Bank, N.A. (formerly
known as Firstar Bank, N.A.), as Trustee, as the same may be further
amended, supplemented or otherwise modified from time to time in
accordance with this Agreement.
"Interest Coverage Ratio": As of any date of determination,
the ratio of EBIT to Interest Expense, each for the preceding full
twelve (12) month period.
"Interest Expense": For any period of determination, the
consolidated gross "financing expense" of the Borrower and its Restricted
Subsidiaries including, without duplication, (a) interest paid, accrued
or scheduled to be paid in respect of any Indebtedness, (b) all but the
principal component of payments in respect of conditional sale contracts,
Capitalized Leases and other title retention agreements, (c) commissions,
discounts and other fees and charges with respect to letters of credit
and bankers' acceptance financings and (d) net costs under interest rate
protection agreements, in each case determined in accordance with GAAP.
"Interest Period": With respect to each Eurodollar Rate Advance,
the period commencing on the date of such Advance or on the last day of the
immediately preceding Interest Period, if any, applicable to an outstanding
Advance and ending one, two, three, or six months thereafter, as the Borrower
may elect in the applicable notice of borrowing, continuation or conversion;
provided that:
(i) Any Interest Period that would otherwise end on a day
which is not a Eurodollar Business Day shall be extended to the
next succeeding Eurodollar Business Day unless such Eurodollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurodollar Business
Day;
(ii) Any Interest Period that begins on the last Eurodollar
Business Day of a calendar month (or a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Eurodollar Business
Day of a calendar month; and
(iii) No Interest Period applicable to an Advance on any
Loan may be selected if such Interest Period would end after the
then-scheduled Termination Date.
"Investment": The acquisition, purchase, making or holding of
any stock or other security, any loan, advance, contribution to capital,
incurrence of a Contingent Obligation, extension of credit (except for
trade and customer accounts receivable for inventory sold or services
rendered in the ordinary course of business and payable in accordance with
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customary trade terms), any acquisitions of real or personal property
(other than real and personal property acquired in the ordinary course
of business) and any purchase or commitment or option to purchase stock
or other debt or equity securities of or any interest in another Person
or any integral part of any business or the assets comprising such
business or part thereof. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"Lender": As defined in the preamble.
"Liabilities": As such term is defined in Section 9.11.
"Lien": With respect to any Person, any security interest,
mortgage, pledge, lien, assignment, charge, encumbrance, title retention
agreement or analogous instrument or device (including the interest of
each lessor under any Capitalized Lease), in, of or on any assets or
properties of such Person, now owned or hereafter acquired, whether
arising by agreement or operation of law.
"Liquidity Agreement": Has the meaning specified in the
Indenture.
"Liquidity Commitment" and "Liquidity Commitments": Have the
meanings specified in the Liquidity Agreement.
"Loan": Each (or any) A Loan or each (or any) B Loan, as the
context may require.
"2003 Loan" A Loan (as defined in the Indenture) made to an
Obligor to produce a crop during the calendar 2003 growing season evidenced
by an Obligor Note bearing an original due date of December 1, 2003 or
subsequent date.
"2004 Loan" A Loan (as defined in the Indenture) made to an
Obligor to produce a crop during the calendar 2004 growing season.
"Loan Documents": All agreements, instruments and documents
heretofore, herewith or hereafter executed and delivered by the Borrower
or any Subsidiary pursuant to, or in connection with this Agreement,
including, without limitation, this Agreement, the Notes, the Fee Letter
and the Security Documents, together with any subordination agreements,
assignments of rents and leases, powers of attorney, consents, assignments,
contracts, notices, financing statements and any and all other writings
pursuant to or in aid of any of the foregoing.
"Management Group": Any one or more of Henry C. Jungling, Jr.,
Gaylen D. Miller and Kevin D. Schipper.
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"Management Group Indebtedness": means Indebtedness in an
aggregate original principal amount of $4,404,000 incurred by the
Borrower in February, 2002 and owing to one or more members of the
Management Group.
"MBIA": MBIA Insurance Corporation, a New York stock
insurance corporation.
"Multiemployer Plan": A multiemployer plan, as such term
is defined in Section 4001 (a) (3) of ERISA, which is maintained (on
the Restatement Date, within the five years preceding the Restatement
Date, or at any time after the Restatement Date) for employees of the
Borrower or any ERISA Affiliate.
"Net Income": For any period of determination, the after-tax
consolidated net income from the continuing operations of the Borrower
and its Restricted Subsidiaries.
"Non-United States Person": A Person which is not (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized under the laws of the United States, or any
State thereof, or (iii) an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
"Note": Either an A Note or a B Note, or both, as the context
requires.
"Obligations": Each and every debt, liability, and other
obligation of every type and description arising under or in connection
with any of the Transaction Documents (including, without limitation all
unpaid fees under the Fee Letter) which the Borrower may now or at any
time hereafter owe to the Agent, the Custodian, or a Lender, whether
such debt, liability, or other obligation now exists or is hereafter
created or incurred, whether it is direct or indirect, due or to become
due, absolute or contingent, primary or secondary, liquidated or
unliquidated, or sole, joint, several, or joint and several.
"Obligor": As defined in the Indenture.
"Obligor Concentration Limit" At any time, with respect to an
Obligor, 2% of the Greatest Amount of Eligible Advances at such time;
provided, however, that the Obligor Concentration Limit shall be calculated
as if such Obligor and all of such Obligor's Affiliates were one Obligor.
"Obligor Concentration Limit Excess" At any time, with respect to
an Obligor, the amount (if any) by which the aggregate outstanding Principal
Balance of the Eligible Advances to such Obligor (calculated on a pro forma
basis as if the terms "Advance" and "Loan" in the Indenture included both the
loans owned by Ag Acceptance and the loans owned by the Borrower) exceeds
the Obligor Concentration Limit.
"Obligor Risk Participations": participations in Loans (as
defined in the Indenture) (a) not held by Ag Acceptance, (b) not included
in either Borrowing Base A or Borrowing Base B, and (c) for which the
Obligor thereon is not an Obligor on or guarantor of any other Loan
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in either Borrowing Base A or Borrowing Base B, and (d) in which
participations have not been sold by the Borrower to Ag Acceptance or
another Affiliate of the Borrower.
"Operating Cash Flow": For any period of determination, the sum
of the Borrower's and its Restricted Subsidiaries' consolidated (a) Net
Income, (b) Interest Expense, (c) taxes and (d) depreciation and
amortization, each for such period.
"Original Credit Agreement": As defined in Background
Information above.
"Payee": As defined in Section 2.19(a).
"PBGC": The Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto
or to the functions thereof.
"Permitted Funded Indebtedness": As of any date of determination,
Funded Indebtedness, which, when added to all existing Funded Indebtedness,
does not cause the ratio of Funded Indebtedness (as determined at that time)
to Operating Cash Flow (as determined for the then most recently completed
full twelve (12) month period) to exceed 8.00 to 1.00; provided, that,
notwithstanding the foregoing, "Permitted Funded Indebtedness" of
Restricted Subsidiaries other than Ag Acceptance shall at no time exceed
fifteen percent (15%) of the lesser of (a) Consolidated Tangible Net Worth
or (b) Total Assets.
"Permitted Investments": Investments permitted pursuant to
Section 6.5.
"Permitted Liens": As defined in Section 6.2.
"Permitted Short-Term Indebtedness": Short-Term Indebtedness
which, for a period of at least thirty (30) consecutive days in any twelve
(12) month period, has been amortized such that it would constitute
Permitted Funded Indebtedness if it were Funded Indebtedness.
"Person": Any natural person, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association,
trust, unincorporated organization, government or governmental agency or
political subdivision or any other entity, whether acting in an individual,
fiduciary or other capacity.
"PHI": PHI Financial Services, Inc.
"PHI Agreement": The Security Interest Subordination Agreement
dated August 8, 2000 from PHI to the Agent and the Lenders, as the same may
be amended, supplemented or otherwise modified from time to time with the
prior written consent of the Agent.
"Plan": Each employee benefit plan (whether in existence on the
Restatement Date or thereafter instituted), as such term is defined in
Section 3 of ERISA, maintained for the benefit of employees, officers or
directors of the Borrower or of any ERISA Affiliate.
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"Powerfarm": Powerfarm, Inc., a Delaware corporation.
"Prohibited Transaction": The respective meanings assigned
to such term in Section 4975 of the Code and Section 406 of ERISA.
"Purchase and Contribution Agreement": That certain Amended
and Restated Purchase and Contribution Agreement, dated as of
June 23, 1999 and amended through November 5, 2002, by and among the
Borrower and Ag Acceptance, as the same may be further amended,
supplemented or otherwise modified from time to time in accordance
with this Agreement.
"Rabobank": Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York Branch, in its individual capacity.
"Regulatory Change": Any change after the Restatement Date
in federal, state or foreign laws or regulations or the adoption or
making after such date of any interpretations, directives or requests
applying to a class of banks including any Lender under any federal,
state or foreign laws or regulations (whether or not having the force
of law) by any court or governmental or monetary authority charged
with the interpretation or administration thereof.
"Reportable Event": A reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with respect
to a Plan, excluding, however, such events as to which the PBGC by
regulation has waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event,
provided that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any waiver in
accordance with Section 412(d) of the Code.
"Required Lenders": At any time, Lenders whose Total Commitment
Percentages aggregate at least 75% or, if there are no remaining
Commitments at such time, Lenders whose aggregate share of the Total
Outstandings is at least 75%; provided, however, that with respect to
provisions of this Agreement relating exclusively to A Loans, the
required Lenders shall be all of the A Lenders.
"Required Payment": As defined in Section 2.2(b).
"Restatement Date": As defined in Section 9.15.
"Restricted Subsidiary": Any Subsidiary of the Borrower so
designated in accordance with Section 5.12.
"2003 Secured Loan" A 2003 Loan secured by Customer Collateral.
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"Secured Obligations": As defined in the Borrower Security
Agreement or in any other relevant Loan Document, as the context may require.
"Secured Parties": As defined in the Borrower Security Agreement.
"Securitization Documents": The Indenture, the Purchase and
Contribution Agreement, the Insurance Agreement and all other agreements,
instruments, certificates and other documents executed and delivered
pursuant to or in connection therewith.
"Securitization Notes": The "Notes" as defined in the Indenture.
"Securitization Outstanding Amount": At any date, the Outstanding
Principal Amount (as defined in the Indenture) of all Securitization Notes.
"Security Documents": The Borrower Security Agreement, the
Custody Agreement, any Subsidiary Guaranty, any Subsidiary Security Agreement
and any other collateral agreement herewith or hereafter executed and
delivered by the Borrower or any Restricted Subsidiary pursuant to, or in
connection with this Agreement, including without limitation mortgages,
assignments of rents and leases, financing statements, and any and all
other writings pursuant to or in aid of the foregoing.
"Short-Term Indebtedness": As of any date of determination, the
aggregate principal amount of all Indebtedness of the Borrower and its
Restricted Subsidiaries (excluding the Notes) that matures within one year
after such date.
"Solvent": With respect to any Person at any time, a condition
under which:
(a) the fair value and present fair salable value of such Person's
total assets is, on the date of determination, greater than such Person's
total liabilities (including contingent and unliquidated liabilities) at such
time;
(b) the fair value and present fair saleable value of such Person's
assets is greater than the amount that will be required to pay such Person's
probable liability on its existing debts as they become absolute and matured
"debts," for this purpose, includes all legal liabilities, whether matured or
unmatured, liquidated or unliquidated, absolute, fixed, or contingent);
(c) such Person is and shall continue to be able to pay all of its
liabilities as such liabilities mature; and
(d) such Person does not have unreasonably small capital with which
to engage in its current and in its anticipated business.
For purposes of this definition:
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(i) the amount of a Person's contingent or unliquidated liabilities
at any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount that can reasonably be
expected to become an actual or matured liability;
(ii) the "fair value" of an asset shall be the amount which may be
realized within a reasonable time either through collection or sale of such
asset at its regular market value;
(iii) the "regular market value" of an asset shall be the amount
that a capable and diligent business person could obtain for such asset from
an interested buyer who is willing to purchase such asset under ordinary
conditions; and
(iv) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable promptness in an
arms-length transaction in an existing and not theoretical market.
"Subordinated Indebtedness": Indebtedness subject to the terms of
a Subordination Agreement.
"Subordination Agreement": An agreement for the subordination of
Indebtedness satisfactory in form and substance to the Agent and the Required
Lenders.
"Subsidiary": Any corporation or other entity of which securities
or other ownership interests having ordinary voting power for the election of
a majority of the board of directors or other Persons performing similar
functions are owned by the Borrower either directly or through one or more
Subsidiaries.
"Subsidiary Guaranty": A guaranty in substantially the form
attached hereto as Exhibit 5.12A executed and delivered by Powerfarm or by
another Restricted Subsidiary pursuant to Section 3.2(d) and Section 5.12,
with such changes as the Agent may require in light of such Restricted
Subsidiary's actual or projected business, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Subsidiary Security Agreement": A security agreement in
substantially the form attached hereto as Exhibit 5.12B executed and delivered
by Powerfarm or by another Restricted Subsidiary pursuant to Section 3.2(d)
and Section 5.12, with such changes as the Agent may require in light of such
Restricted Subsidiary's actual or projected business or in light of the nature
of the collateral, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Substantial Part of the Assets": At any time, ten percent (10%) or
more of the monthly average Total Assets for the then most recently ended full
twelve (12) month period.
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"Swap Agreement": As defined in the Borrower Security Agreement.
"Swap Party": As defined in the Borrower Security Agreement.
"Taxes": As defined in Section 2.19(a).
"Termination Date": With respect to (i) Facility A, the earliest
of (a) December 11, 2003, (b) the date on which the Facility A Commitments
are terminated pursuant to Section 7.2, or (c) the date on which the
Facility A Commitment Amounts are reduced to zero pursuant to Section 2.8,
and (ii) Facility B, the earliest of (a) March 31, 2003, (b) the date on
which the Facility B Commitments are terminated pursuant to Section 7.2, or
(c) the date on which the Facility B Commitments are reduced to zero pursuant
to Section 2.8.
"Total Assets": At any time, the consolidated total assets (both
tangible and intangible) of the Borrower and its Restricted Subsidiaries.
"Total Commitment Percentage": As of any date of determination
with respect to a Lender, the percentage equivalent of a fraction, the
numerator of which is the sum of such Lender's Facility A Commitment
Amount and Facility B Commitment Amount and the denominator or which is
the sum of the Aggregate Facility A Commitment Amount and the Aggregate
Facility B Commitment Amount.
"Total Facility A Outstandings": As of any of determination, the
aggregate unpaid principal balance of the A Loans outstanding on such date.
"Total Facility B Outstandings": As of any date of determination,
the aggregate unpaid principal balance of the B Loans outstanding on such
date.
"Total Indebtedness to Consolidated Tangible Net Worth Ratio" As
of any date of determination, the ratio of the Borrower's total Indebtedness
to the Borrower's Consolidated Tangible Net Worth, each as of such date.
"Total Outstandings": As of any date of determination, the sum of
Total Facility A Outstandings and Total Facility B Outstandings on such date.
"Transaction Documents": The Loan Documents and the Securitization
Documents.
"Unrestricted Subsidiary": Any Subsidiary of the Borrower so
designated in accordance with Section 5.12.
"2003 Unsecured Loan": A 2003 Loan not secured by Customer
Collateral.
Section 1.2 Accounting Terms and Calculations. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be
made in accordance with GAAP. To the extent
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any change in GAAP affects any computation or determination required to be
made pursuant to this Agreement, such computation or determination shall be
made as if such change in GAAP had not occurred unless the Borrower and
Required Lenders agree in writing on an adjustment to such computation or
determination to account for such change in GAAP.
Section 1.3 Computation of Time Periods. In this Agreement,
in the computation of a period of time from a specified date to a later
specified date, unless otherwise stated the word "from" means "from and
including" and the word "to" or "until" each means "to but excluding".
Section 1.4 Other Definitional Terms. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to Sections, Exhibits,
schedules and like references are to this Agreement unless otherwise
expressly provided. The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation". Unless the context
in which used herein otherwise clearly requires, "or" has the inclusive
meaning represented by the phrase "and/or". Defined terms include in the
singular number the plural and in the plural number the singular. Reference
to any agreement (including this Agreement and the Schedules and Exhibits
and the other Loan Documents), document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to
time in accordance with the terms thereof (and, if applicable, in accordance
with the terms hereof and the other Loan Documents), except where otherwise
explicitly provided, and reference to any promissory note includes any
promissory note which is an extension or renewal thereof or a substitute or
replacement therefor. Reference to any law, rule, regulation, order, decree,
requirement, policy, guideline, directive or interpretation means as amended,
modified, codified, replaced or reenacted, in whole or in part, and in
effect on the determination date, including rules and regulations
promulgated thereunder.
ARTICLE II
TERMS OF THE CREDIT FACILITIES
Section 2.1 Lending Commitments. On the terms and subject to the
conditions set forth in this Agreement:
(a) A Loans. Each Lender with a Facility A Commitment Amount set
forth opposite its signature hereto agrees, severally and for itself alone,
to make revolving loans (each, an "A Loan" and, collectively, the "A Loans")
to the Borrower from time to time on any Business Day from the Restatement
Date to the Termination Date applicable to Facility A, during which period
the Borrower may borrow, repay and reborrow in accordance with the
provisions hereof, provided, however, that no A Loan will be made in any
amount which, after giving effect thereto, would cause (i) the Total
Facility A Outstandings to exceed the Aggregate Facility A Commitment
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Amount, (ii) such Lender's share of the Total Facility A Outstandings to
exceed such Lender's Facility A Percentage, or (iii) the Total Facility A
Outstandings to exceed Borrowing Base A. A Loans hereunder shall be made
by the several Lenders ratably in accordance with their respective Facility
A Percentages. A Loans may be obtained and maintained, at the election of
the Borrower, but subject to the limitations hereof, as Base Rate Advances
or Eurodollar Rate Advances.
(b) B Loans. Each Lender with a Facility B Commitment Amount set
forth opposite its signature hereto agrees, severally and for itself alone,
to make revolving loans (each such loan and each Existing Loan herein being
a "B Loan" and, collectively, the "B Loans") to the Borrower from time to
time on any Business Day from the Restatement Date to the Termination Date
applicable to Facility B, during which period the Borrower may borrow, repay
and reborrow in accordance with the provisions hereof, provided, however,
that no B Loan will be made in any amount which, after giving effect thereto,
would cause (i) the Total Facility B Outstandings to exceed the Aggregate
Facility B Commitment Amount, (ii) such Lender's share of the Total Facility
B Outstandings to exceed such Lender's Facility B Percentage, or (iii) the
Total Facility B Outstandings to exceed Borrowing Base B. B Loans hereunder
shall be made by the several Lenders ratably in accordance with their
respective Facility B Percentages. Notwithstanding anything in this
Agreement or any other Loan Document to the contrary, each disbursement of
B Loans shall be made exclusively by Rabobank to the extent that, after
giving effect to such disbursement, the Total Facility B Outstandings would
exceed $45,000,000. The Borrower acknowledges that as of the Restatement
Date the Total Facility B Outstandings are $75,000,000. Each Revolving
Loan (as defined in the Original Credit Agreement) constituting a portion
of the Total Facility B Outstandings (each an "Existing Loan") shall on and
as of the Restatement Date constitute a B Loan for all purposes of this
Agreement. B Loans may be obtained and maintained solely as Base Rate
Advances.
Section 2.2 Procedure for Loans.
(a) Procedure for Disbursements. Any request by the Borrower for
Loans hereunder shall be in writing or by telephone and must be given by the
Borrower so as to be received by the Agent not later than 10:00 a.m.
(New York time) three Eurodollar Business Days prior to the requested Loan
date (if the Loans are requested as Eurodollar Rate Advances) or on the
requested Loan date (if the Loans are requested as Base Rate Advances).
Each request for Loans hereunder shall be irrevocable and shall be deemed a
representation by the Borrower that on the requested Loan date and, after
giving effect to the requested Loans, the applicable conditions specified in
Article III have been and will be satisfied. Each request for Loans
hereunder shall specify (i) the requested Loan date, (ii) the aggregate
amount of any A Loans to be made on such date, (iii) the aggregate amount
of B Loans to be made on such date, which Loans (whether A Loans or B Loans)
shall be in a minimum amount of either $1,000,000 or, if more, an integral
multiple of $50,000 in excess thereof (if such Loans are to be funded as
Eurodollar Rate Advances) or
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$250,000 or integral multiples thereof (if such Loans are to be funded as
Base Rate Advances), (iii) whether such Loans are to be funded as Base Rate
Advances or Eurodollar Rate Advances (and B Loans may only be funded as
Base Rate Advances) and (iv) in the case of Eurodollar Rate Advances, the
duration of the initial Interest Period applicable thereto. The Agent may
rely on any telephone request for Loans hereunder by the Borrower which it
believes in good faith to be genuine; and the Borrower hereby waives the
right to dispute the Agent's record of the terms of such telephone request.
Promptly upon receipt of such notice (but in no event later than 11:00 a.m.,
New York City time, with respect to Base Rate Advances, and the close of
business, with respect to Eurodollar Rate Advances, in each case on the
Business Day of receipt of such notice), the Agent shall advise each Lender
of the proposed Advances. At or before 1:30 p.m., New York City time, on
the date of the requested Loans, each Lender shall provide the Agent at the
Agent's principal office in New York City with Immediately Available Funds
covering such Lender's Facility A Percentage and/or Facility B Percentage
(as the case may be) of the requested Loans. Subject to satisfaction of
the conditions precedent set forth in Article III, the Agent shall transfer
to the Borrower all funds received from the Lenders in respect of the
relevant Loans prior to 2:30 p.m., New York City time, on the date that
the Borrower requested that such Loans be disbursed.
(b) Distributions by the Agent. Unless the Agent shall have been
notified by a Lender or the Borrower prior to the date on which such Lender
or the Borrower is scheduled to make payment to the Agent of (in the case of
a Lender) the proceeds of a Loan to be made by it hereunder or (in the case
of the Borrower) a payment to the Agent for the account of one or more of
the Lenders hereunder (such payment by a Lender or by the Borrower (as the
case may be) being herein called a "Required Payment"), which notice shall
be effective upon receipt, that it does not intend to make the Required
Payment to the Agent, the Agent may assume that the Required Payment has
been made and may, in reliance upon such assumption, (but shall not be
required to) make the amount thereof available to the intended recipient(s)
on such date and, if such Lender or the Borrower (as the case may be) has
not in fact made the Required Payment to the Agent, the recipient(s) of
such payment shall, on demand, repay to the Agent the amount so made
available together with interest thereon for each day during the period
commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate (i) equal to the
Federal Funds Rate for such day, in the case of a Lender, or (ii) equal
to the applicable rate of interest as provided in this Agreement, in the
case of the Borrower.
Section 2.3 Notes. Each Lender's A Loans shall be evidenced by
a single A Note payable to the order of such Lender in a principal amount
equal to such Lender's Facility A Commitment Amount. Each Lender's B Loans
shall be evidenced by the B Note currently outstanding in favor of such
Lender under the Original Credit Agreement. Upon receipt of each A Lender's
A Notes from the Borrower, the Agent shall mail such Notes to such Lender.
Each Lender shall enter in its ledgers and records the amounts of its
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respective Loans and the various Advances made, converted or continued and
the payments made thereon, and each Lender is authorized by the Borrower to
enter on a schedule attached to its A Note or B Note, as appropriate, a
record of such A Loans and B Loans, Advances and payments; provided,
however, that the failure by any Lender to make any such entry or any error
in making such entry shall not limit or otherwise affect the obligation of
the Borrower hereunder and on the Notes, and, in all events, the principal
amounts owing by the Borrower in respect of the A Notes shall be the
aggregate amount of all A Loans made by the Lenders less all payments of
principal thereof made by the Borrower, and the principal amounts owing
by the Borrower in respect of the B Notes shall be the aggregate amount of
all B Loans made by the Lenders less all payments of principal thereof made
by the Borrower.
Section 2.4 Conversions and Continuations. On the terms and
subject to the conditions set forth in this Agreement, the Borrower shall
have the option at any time and from time to time to convert all or any
portion of the A Loan Advances into Base Rate Advances or Eurodollar Rate
Advances, or to continue an A Loan Advance constituting a Eurodollar Rate
Advance as such; provided, however, that a Eurodollar Rate Advance may be
converted or continued only on the last day of the Interest Period
applicable thereto and no Advance may be converted to or continued as a
Eurodollar Rate Advance if a Default or Event of Default has occurred and
is continuing on the proposed date of continuation or conversion. A Loan
Advances may be converted to, or continued as, Eurodollar Rate Advances
only in a minimum aggregate amount of $1,000,000 and integral multiples of
$50,000 in excess thereof. The Borrower shall give the Agent written or
telephonic notice of any continuation or conversion of any A Loan Advances
and such notice must be given so as to be received by the Agent not later
than 10:00 a.m. (New York time) three Eurodollar Business Days prior to
the requested date of conversion or continuation in the case of the
continuation of, or conversion to, Eurodollar Rate Advances and on the
date of the requested conversion to Base Rate Advances. Each such notice
shall specify (a) the amount to be continued or converted, (b) the date
for the continuation or conversion (which must be (i) the last day of the
preceding Interest Period for any continuation or conversion of Eurodollar
Rate Advances, (ii) a Eurodollar Business Day in the case of continuations
as or conversions to Eurodollar Rate Advances and (iii) a Business Day in
the case of conversions to Base Rate Advances), and (c) in the case of
conversions to or continuations as Eurodollar Rate Advances, the Interest
Period applicable thereto. Any notice given by the Borrower under this
Section shall be irrevocable. If the Borrower shall fail to notify the
Agent of the continuation of any Eurodollar Rate Advances within the time
required by this Section, such Advances shall, on the last day of the
Interest Period applicable thereto, automatically be converted into Base
Rate Advances of the same principal amount. All conversions and
continuations of A Loan Advances must be made uniformly and ratably among
the relevant Lenders. B Loans may be obtained and maintained solely as
Base Rate Advances and may not be converted into Eurodollar Rate Advances.
Section 2.5 Interest Rates, Interest Payments and Default
Interest. Interest shall accrue and be payable on the Loans as follows:
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(a) Subject to subsection (c) below, the unpaid principal amount
of each Eurodollar Rate Advance shall bear interest during each Interest
Period applicable thereto at a rate per annum equal to the sum of (i) the
Adjusted Eurodollar Rate for such Interest Period plus (ii) the Applicable
Margin.
(b) Subject to subsection (c) below, the unpaid principal amount
of each Base Rate Advance shall bear interest at a varying rate per annum
equal to the sum of (i) the Base Rate plus (ii) the Applicable Margin.
(c) From and after the occurrence of an Event of Default and
continuing thereafter until such Event of Default shall be remedied to the
written satisfaction of the Agent and the Required Lenders, the outstanding
principal balance of each Loan shall bear interest, until paid in full, at
a rate of interest two percent (2%) per annum higher than (i) in the case of
a Eurodollar Rate Advance, the rate that otherwise would have applied to
such Eurodollar Rate Advance until the end of the then current Interest
Period for such Eurodollar Rate Advance, and (ii) in the case of a Base Rate
Advance, and a Eurodollar Rate Advance after the end of its current Interest
Period, at a rate equal to the sum of (i) the Base Rate and (ii) three
percent (3.00%) per annum. In addition, any and all fees, indemnification
obligations, and other obligations (including, to the extent permitted by
applicable law, unpaid interest obligations) not paid when due shall bear
interest, until paid in full, at an annual rate equal to the sum of (i) the
Base Rate and (ii) three percent (3.00%) per annum.
(d) Interest shall be payable (i) with respect to each Eurodollar
Rate Advance having an Interest Period of three months or less, on the last
day of such Interest Period; (ii) with respect to any Eurodollar Rate
Advance having an Interest Period greater than three months, on the last
day of such Interest Period and on each day that would have been the last
day of such Interest Period had successive Interest Periods of three months
duration been applicable to such Advance; (iii) with respect to any Base
Rate Advance, on the last day of each month; (iv) with respect to all
Advances, upon any permitted prepayment (on the principal amount prepaid);
and (v) on the applicable Termination Date; provided that interest under
Section 2.5(c) shall be payable on demand.
Section 2.6 Repayment. The unpaid principal balance of each
Note, together with all accrued and unpaid interest thereon, shall be due
and payable on the Termination Date applicable thereto unless earlier
repaid in accordance with Sections 2.7 or 2.8 hereof.
Section 2.7 Prepayments.
(a) Mandatory Prepayments
(i) Borrowing Base Deficiency. If at any time a Borrowing Base
Deficiency exists, the Borrower shall immediately pay on the principal of
the Loans to which such Borrowing Base Deficiency relates an amount equal
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to such Borrowing Base Deficiency in the manner set forth in this Section
2.7(a). Unless a Default or Event of Default shall have occurred and be
continuing at the time of any Borrowing Base Deficiency, the Borrower shall
have the right to cure, and shall cure, such Borrowing Base Deficiency by
repaying Loans (with Base Rate Advances being repaid first and then
Eurodollar Rate Advances being repaid in order starting with the Eurodollar
Rate Advances having the shortest time to the end of their Interest Periods)
and/or by causing Ag Acceptance to repay advances made to it pursuant to the
Securitization Notes. Amounts paid on the A Loans under this Section
2.7(a)(i) shall be for the account of each Lender in proportion to its share
of the Total Facility A Outstandings and amounts paid on the B Loans under
this Section 2.7(a)(i) shall be for the account of each Lender in proportion
to its share of the Total Facility B Outstandings. Any such prepayments
shall be applied first to Base Rate Advances and then (in the case of A
Loan prepayments) to Eurodollar Rate Advances starting with the Eurodollar
Rate Advances having the shortest time to the end of their Interest Periods.
(ii) Sale of 2003 Loan Obligor Risk Participations. The Borrower
will make a mandatory prepayment of A Loans in an amount equal to each
purchase price payment received in respect of Obligor Loan Participations
sold in respect of Customer Loan (as defined in the Borrower Security
Agreement) outstandings or commitments relating to 2003 Loans which have at
any time been included in Borrowing Base A. Such mandatory prepayments
shall be made not later than one Business Day after receipt of each such
purchase price payment. Amounts paid on the A Loans under this Section
2.7(a)(ii) shall be for the account of each Lender in proportion to its
share of the Total Facility A Outstandings. Any such prepayments shall
be applied first to Base Rate Advances and then to Eurodollar Rate Advances
starting with the Eurodollar Rate Advances having the shortest time to
the end of their Interest Periods. Any prepayment of A Loans pursuant to
this Section 2.7(a)(ii) is strictly independent of any reduction of the
Facility B Commitment Amounts.
(b) Optional Prepayments. The Borrower may prepay the Loans
from time to time in a minimum aggregate amount of $250,000 for each such
prepayment. Subject to the foregoing, the Borrower may prepay Base Rate
Advances, in whole or in part, at any time, without premium or penalty.
However, except upon (i) an acceleration following an Event of Default,
(ii) upon termination of the Commitments in whole, (iii) with respect to
Eurodollar Rate Advances made under Facility A, upon termination of all
Facility A Commitments in whole, or (iv) as otherwise agreed from time
to time by all of the relevant Lenders or Lenders, as the case may be,
the Borrower may prepay Eurodollar Rate Advances only on the last day of
the Interest Period applicable thereto. All prepayments must be
accompanied by (i) accrued and unpaid interest on the amount prepaid and
(ii) any amounts payable in connection with such prepayment under Section
2.17. Amounts paid (unless following an
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acceleration or, with respect to the relevant Facility, upon termination
of the Commitments relating thereto in whole) or prepaid on Loans under
this Section 2.7(b) may be reborrowed upon the terms and subject to the
conditions and limitations of this Agreement. Amounts paid or prepaid on
the A Loans under this Section 2.7(b) shall be for the account of each
Lender in proportion to its share of the Total Facility A Outstandings.
Amounts paid or prepaid on the B Loans under this Section 2.7(b) shall be
for the account of each Lender in proportion to its share of the Total
Facility B Outstandings.
Section 2.8 Reduction or Termination of Commitments.
(i) Facility A Commitment Amounts. The Borrower may, at any
time, upon not less than five Business Days prior written notice to the
Agent, reduce the Facility A Commitment Amounts, ratably, with any such
reduction in a minimum aggregate amount for all the Lenders of $100,000,
or, if more, in an integral multiple of $100,000; provided, however, that
the Borrower may not at any time reduce the Aggregate Facility A Commitment
Amount below the Total Facility A Outstandings. The Borrower may, upon
not less than thirty Business Days prior written notice to the Agent,
terminate the Facility A Commitments in their entirety. Upon termination
of the Facility A Commitments pursuant to this Section 2.8, the Borrower
shall pay to the Agent for the account of the Lenders the full amount of
all outstanding Advances of A Loans, all accrued and unpaid interest
thereon, all unpaid Facility A Commitment Fees accrued to the date of such
termination, any indemnities payable with respect to Advances pursuant to
Sections 2.14, 2.15, 2.16, and 2.17 and all other unpaid Obligations of the
Borrower hereunder in respect of A Loans.
(ii) Facility B Commitment Amounts. The Borrower may, at any time,
upon not less than five Business Days prior written notice to the Agent,
reduce the Facility B Commitment Amounts, ratably, with any such reduction
in a minimum aggregate amount for all the Lenders of $100,000, or, if more,
in an integral multiple of $100,000; provided, however, that the Borrower
may not at any time reduce the Aggregate Facility B Commitment Amount below
the Total Facility B Outstandings. The Borrower may, upon not less than
thirty Business Days prior written notice to the Agent, terminate the
Facility B Commitments in their entirety. Upon termination of the
Facility B Commitments pursuant to this Section 2.8, the Borrower shall
pay to the Agent for the account of the Lenders the full amount of all
outstanding Advances of B Loans, all accrued and unpaid interest thereon,
all unpaid Facility B Commitment Fees accrued to the date of such
termination, any indemnities payable with respect to Advances pursuant to
Sections 2.14, 2.15, 2.16, and 2.17 and all other unpaid Obligations of
the Borrower hereunder in respect of B Loans.
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Section 2.9 Fees.
(a) Fees. The Borrower shall pay the Agent any fees set forth
in the fee letter (the "Fee Letter") separately agreed to between the
Borrower and the Agent as and when the same are due and payable under the
terms of the Fee Letter.
(b) Facility A Commitment Fees. The Borrower shall pay to the
Agent for the account of each A Lender, for the period commencing on the
Restatement Date and continuing through the Termination Date applicable to
Facility A, a non-use fee (the "Facility A Commitment Fee") computed at a
rate per annum equal to 0.50% on such Lender's average daily Facility A
Unused Commitment during each Fiscal Quarter. Facility A Commitment Fees
shall be payable in arrears on the last day of each Fiscal Quarter and on
the Termination Date applicable to Facility A.
(c) Facility B Commitment Fees. The Borrower shall pay to the
Agent for the account of each B Lender, for the period commencing on the
Restatement Date and continuing through the Termination Date applicable
to Facility B, a non-use fee (the "Facility B Commitment Fee") computed
at a rate per annum equal to 0.50% on such Lender's average daily Facility
B Unused Commitment during each Fiscal Quarter. Facility B Commitment
Fees shall be payable in arrears on the last day of each Fiscal Quarter
and on the Termination Date applicable to Facility B.
Section 2.10 Computation. Facility A Commitment Fees, Facility
B Commitment Fees and interest on the Loans shall be computed on the basis
of actual days elapsed in a year of 360 days.
Section 2.11 Payments. Payments and prepayments of principal of,
and interest on, the Notes and all fees, expenses and other obligations
under this Agreement payable to the Agent or the Lenders shall be made
without setoff or counterclaim in Immediately Available Funds not later than
1:00 p.m. (New York time) on the dates called for under this Agreement.
Section 2.12 Use of Loan Proceeds. The proceeds of the Loans
shall be used to supplement and eventually replace the credit facilities
provided under the Securitization Documents and for the Borrower's general
corporate purposes, in each case, in a manner not in conflict with any of
the Borrower's covenants in this Agreement.
Section 2.13 Interest Rate Not Ascertainable, Etc. If, on or
prior to the date for determining the Adjusted Eurodollar Rate in respect
of the Interest Period for any Eurodollar Rate Advance, the Agent
reasonably determines that, or the Required Lenders reasonably determine
and advise the Agent (which determination in either case shall be
conclusive and binding) that:
(a) deposits in dollars (in the applicable amount) are not being
offered in the London interbank dollar market for such Interest Period, or
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(b) the Adjusted Eurodollar Rate will not adequately and fairly
reflect the cost to the Lenders of funding or maintaining Eurodollar Rate
Advances for such Interest Period, or
(c) by reason of circumstances affecting the London interbank
dollar market adequate and reasonable means do not exist for ascertaining
the applicable Eurodollar Rate,
the Agent shall promptly give written or telephonic notice of such
determination to the Borrower and to the Lenders, whereupon the obligation
of all Lenders to make or continue, or to convert any Advances to,
Eurodollar Rate Advances shall be suspended until the Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such
suspension no longer exist. While any such suspension continues, all
further Advances by each Lender shall be made as Base Rate Advances. No
such suspension shall affect the interest rate then in effect during the
applicable Interest Period for any Eurodollar Rate Advance outstanding at
the time such suspension is imposed.
Section 2.14 Increased Cost. If any Regulatory Change:
(a) shall subject any Lender (or its Applicable Lending Office)
to any tax, duty or other charge with respect to its Eurodollar Rate
Advances, its Notes or its obligation to make Eurodollar Rate Advances or
shall change the basis of taxation of payment to any Lender (or its
Applicable Lending Office) of the principal of or interest on its Eurodollar
Rate Advances or any other amounts due under this Agreement in respect of
its Eurodollar Rate Advances or its obligation to make Eurodollar Rate
Advances (except for changes in the rate of tax on the overall net income
of such Lender or its Applicable Lending Office imposed by the jurisdiction
in which such Lender's principal office or Applicable Lending Office is
located); or
(b) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board, but excluding with respect to any
Eurodollar Rate Advance any such requirement to the extent included in
calculating the applicable Adjusted Eurodollar Rate) against assets of,
deposits with or for the account of, or credit extended by, any Lender's
Applicable Lending Office or shall impose on any Lender (or its Applicable
Lending Office) or the interbank Eurodollar market any other condition
affecting its Eurodollar Rate Advances, its Notes or its obligation to
make Eurodollar Rate Advances;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making or maintaining any Eurodollar
Rate Advance, or to reduce the amount of any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or under
its Notes, then, within 30 days after demand by such Lender (with a copy to
the Agent), the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or reduction.
Each Lender
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will promptly notify the Borrower and the Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender
to compensation pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Lender, be otherwise disadvantageous to such Lender. If any Lender fails to
give such notice within 90 days after it obtains knowledge of such an event,
such Lender shall, with respect to compensation payable pursuant to this
Section, only be entitled to payment under this Section for costs incurred
from and after the date 90 days prior to the date that such Lender does
give such notice. A certificate of any Lender claiming compensation under
this Section, setting forth the additional amount or amounts to be paid to
it hereunder and stating in reasonable detail the basis for the charge and
the method of computation, shall be conclusive in the absence of error.
In determining such amount, any Lender may use any reasonable averaging and
attribution methods. Except as set forth in this Section 2.14, failure on
the part of any Lender to demand compensation for any increased costs or
reduction in amounts received or receivable with respect to any Interest
Period shall not constitute a waiver of such Lender's rights to demand
compensation for any increased costs or reduction in amounts received or
receivable in any subsequent Interest Period.
Section 2.15 Illegality. If any Regulatory Change shall make
it unlawful or impossible for any Lender to make, maintain or fund any
Eurodollar Rate Advances, such Lender shall notify the Borrower and the
Agent, whereupon the obligation of such Lender to make or continue, or
to convert any Advances to, Eurodollar Rate Advances shall be suspended
until such Lender notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist. Before
giving any such notice, such Lender shall designate a different Applicable
Lending Office if such designation will avoid the need for giving such
notice and will not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender. If such Lender determines that it may
not lawfully continue to maintain any Eurodollar Rate Advances to the
end of the applicable Interest Periods, all of the affected Advances
shall be automatically converted to Base Rate Advances as of the date
of such Lender's notice, and upon such conversion the Borrower shall
indemnify such Lender in accordance with Section 2.17.
Section 2.16 Capital Adequacy. In the event that any
Regulatory Change reduces or shall have the effect of reducing the rate
of return on any Lender's capital or the capital of its parent corporation
(by an amount such Lender deems material) as a consequence of its
Commitments and/or its Loans to a level below that which such Lender or
its parent corporation could have achieved but for such Regulatory Change
(taking into account such Lender's policies and the policies of its parent
corporation with respect to capital adequacy), then the Borrower shall,
within 30 days after written notice (together with a certificate setting
forth in reasonable detail the basis for its determination) and demand
from such Lender (with a copy to the Agent), pay to such Lender additional
amounts sufficient to compensate such Lender or its parent corporation for
such reduction. If any Lender fails to give such notice within 90 days
after it obtains knowledge of such an event, such Lender shall, with
respect to compensation payable pursuant to this Section, only be entitled
to payment under this Section for diminished returns as a result of such
reduction for the period from and after the
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date 90 days prior to the date that such Lender does give such notice. Any
determination by such Lender under this Section and any certificate as to
the amount of such reduction given to the Borrower by such Lender shall be
final, conclusive and binding for all purposes, absent error.
Section 2.17 Funding Losses; Eurodollar Rate Advances. The
Borrower shall compensate each Lender, upon its written request, for all
losses, expenses and liabilities (including any interest paid by such Lender
to lenders of funds borrowed by it to make or carry Eurodollar Rate Advances
to the extent not recovered by such Lender in connection with the
re-employment of such funds and including loss of anticipated profits) which
such Lender may sustain: (i) if for any reason, other than a default by
such Lender, a funding of a Eurodollar Rate Advance does not occur on the
date specified therefor in the Borrower's request or notice as to such
Advance under Section 2.2 or 2.4, or (ii) if, for whatever reason (including,
but not limited to, acceleration of the maturity of Advances following an
Event of Default), any repayment of a Eurodollar Rate Advance, or a
conversion pursuant to Section 2.4, occurs on any day other than the last
day of the Interest Period applicable thereto. A Lender's request for
compensation shall set forth the basis for the amount requested and shall
be final, conclusive and binding, absent error.
Section 2.18 Discretion of Lenders as to Manner of Funding. Each
Lender shall be entitled to fund and maintain its funding of Eurodollar Rate
Advances in any manner it may elect, it being understood, however, that for
the purposes of this Agreement all determinations hereunder (including, but
not limited to, determinations under Section 2.17) shall be made as if such
Lender had actually funded and maintained each Eurodollar Rate Advance
during the Interest Period for such Advance through the purchase of deposits
having a maturity corresponding to the last day of the Interest Period and
bearing an interest rate equal to the Eurodollar Rate for such Interest
Period.
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Section 2.19 Taxes.
(a) All payments made by the Borrower and each Restricted
Subsidiary to the Agent or any Lender (herein, a "Payee") in respect of
any Obligation shall be made without any setoff or other counterclaim, and
shall be free and clear of and without deduction for or on account of any
present or future taxes now or hereafter imposed by any governmental or
other authority, except to the extent that any such deduction or withholding
is compelled by law. As used herein, the term "Taxes" shall include all
income, excise, and other taxes of whatever nature (other than taxes
generally assessed on the overall net income of a Payee by the government
or other authority of the country, state, or political subdivision in which
such Payee is incorporated or in which the Applicable Lending Office
through which such Payee is acting is located) as well as all levies,
imposts, duties, charges, or fees of whatever nature. If the Borrower or
any Restricted Subsidiary is compelled by law to make any deductions or
withholdings on account of any Taxes (including any foreign withholding)
it will:
(i) pay to the relevant authorities the full amount required to
be so withheld or deducted;
(ii) pay such additional amounts (including, without limitation,
any penalties, interest, or expenses) as may be necessary in order that
the net amount received by the Payee after such deductions or withholdings
(including any required deduction or withholding on such additional amounts)
shall equal the amount the Payee would have received had no such deductions
or withholdings been made; and
(iii) promptly forward to the Agent (for delivery to the
appropriate Payee) an official receipt or other documentation satisfactory
to the Agent evidencing such payment to such authorities.
Moreover, if any Taxes are directly asserted against a Payee with respect
to any payment made in respect of any Obligation, such Payee may pay such
Taxes, and the Borrower and any relevant Restricted Subsidiary promptly
shall pay such additional amount (including, without limitation, any
penalties, interest or expenses) as may be necessary in order that the
net amount received by such Payee after the payment of such Taxes (including
any taxes on such additional amount) shall equal the amount such Payee would
have received had no such Taxes been asserted (except to the extent that
such Taxes result from the breach, by such Payee, of its agreement contained
in clause (b) below or would not be asserted if such Payee's representation
and warranty contained in clause (b) below were true). For purposes of this
Section 2.19, a distribution hereunder by the Agent or any Lender to or for
the account of any Payee for the payment of Taxes shall be deemed to be a
payment by the Borrower or the applicable Restricted Subsidiary of such
Taxes.
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(b) Each Lender which is a Non-United States Person agrees (to the
extent it is permitted to do so under the laws and any applicable double
taxation treaties of the United States, the jurisdiction of its organization
and the jurisdictions in which its Applicable Lending Offices are located)
to execute and deliver to the Agent for delivery to the Agent, the Borrower
and each Restricted Subsidiary (other than Ag Acceptance), before the first
scheduled payment date in each year, either (i) a United States Internal
Revenue Service Form W-8 BEN or (ii) a United States Internal Revenue Service
Form W-8 ECI, or any successor forms, as appropriate, properly completed and
claiming complete or partial, as the case may be, exemption from withholding
and deduction of the United States Federal Taxes. Each Lender which is a
Non-United States Person represents and warrants to the Borrower, each
Restricted Subsidiary (other than Ag Acceptance) and the Agent that, as of
the date of this Agreement (or the date of the assignment agreement pursuant
to which such Person became a Lender, as the case may be), (i) its Applicable
Lending Offices are entitled to receive payments of Obligations without
deduction or withholding for or on account of any United States Federal
Taxes and (ii) it is permitted to take the actions described in the
preceding sentence under the laws and any applicable double taxation
treaties of the jurisdictions specified in the preceding sentence. Each
Lender which is a Non-United States Person further agrees that, to the
extent any form claiming complete or partial exemption from withholding and
deduction of United States Federal Taxes delivered under this clause (b) is
found to be incomplete or incorrect in any material respect, such Lender
shall (to the extent it is permitted to do so under the laws and any double
taxation treaties of the United States, the jurisdiction of its
incorporation and the jurisdictions in which its Applicable Lending
Offices are located) execute and deliver to the Agent a complete and
correct replacement form.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to the Amendment and
Restatement of the Original Credit Agreement. The amendment and restatement
of the Original Credit Agreement and the obligations of the several Lenders
to fund their respective Advances on or after the Restatement Date are
subject to the following conditions precedent:
(a) Documents. The Agent shall have received the following in
form and substance satisfactory to the Lenders, in sufficient counterparts
for each Lender (except for the Notes, for which only one original shall
be delivered):
(i) An A Note issued to the order of each A Lender in the amount
of such Lender's Facility A Commitment Amount, executed by an Authorized
Officer and dated the Restatement Date;
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(ii) This Agreement and the Fee Letter, duly executed by the
parties hereto;
(iii) An amendment to the Borrower Security Agreement, duly
executed by the Borrower, in form and substance satisfactory to the
Lenders;
(iv) A letter acknowledgement and consent from Powerfarm in favor
of the Agent and the Lenders acknowledging receipt of this Agreement, the
A Notes, the amendment referenced in (iii) above and the Fee Letter and
consenting to the Borrower's execution and delivery of the same;
(v) A certificate indicating that the execution, delivery and
performance of this Agreement and the Loan Documents have been duly
authorized by all necessary company action, certified as of the Restatement
Date by the Secretary or an Assistant Secretary of the Borrower;
(vi) An incumbency certificate showing the names and bearing the
signatures of the officers of the Borrower authorized to execute this
Agreement and the other Loan Documents and the signatures of the officers
of the Borrower authorized to request Loans and conversions and
continuations of Advances hereunder, certified as of the Restatement Date
by the Secretary or an Assistant Secretary of the Borrower;
(vii) Such corporate and other organizational documents and
certificates as the Agent may request with respect to the due organization,
good standing, power and authority of the Borrower;
(viii) A certificate dated the Restatement Date of an Authorized
Officer of the Borrower certifying as to the matters set forth in Sections
3.2(a) and 3.2(b) below and certifying that the Securitization Documents
are in full force and effect, without modification or amendment other than
as specifically referenced in the definitions set forth in this Agreement,
and embody the entire agreement and understanding between the parties
thereto with respect to the matters therein;
(ix) Directions from the Borrower to the Agent as to disbursement
of the initial A Loan proceeds, including any necessary wire transfer
instructions;
(x) The initial Borrowing Base Certificate required under
Section 5.3;
(xi) Opinions of Dechert and of Linda Kobliska, Esquire, General
Counsel to the Borrower, addressed to the Agent and the Lenders and dated
the Restatement Date;
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(b) Compliance. The Borrower shall have performed and complied
with all agreements, terms and conditions contained in the Loan Documents
required to be performed or complied with prior to or simultaneously with
the Restatement Date.
(c) Security Documents. All Security Documents to which the
Borrower is a party (or financing statements with respect thereto) shall
have been appropriately filed or recorded to the satisfaction of the Agent
or, at the Agent's option, delivered to it in form suitable for filing or
recording; any pledged collateral shall have been duly delivered to the
Agent; and the priority and perfection of the Liens created by such
Security Documents shall have been established to the satisfaction of the
Agent and its counsel.
(d) Consent of MBIA. MBIA shall have delivered a letter
satisfactory in form and substance to the Agent and the Lenders
acknowledging that the execution and delivery of this Agreement by the
Borrower, the Agent and the Lenders will be sufficient to prevent the
Scheduled Wind Down Date (as defined in the Indenture) from occurring
prior to January 31, 2003.
(e) Other Matters. All corporate and legal proceedings relating
to the Borrower and any Restricted Subsidiary and all instruments and
agreements in connection with the transactions contemplated by this
Agreement shall be satisfactory in scope, form and substance to the Agent,
the Lenders and the Agent's special counsel, and the Agent shall have
received all information and copies of all documents, including records of
corporate proceedings, as any Lender or such special counsel may reasonably
have requested in connection therewith, such documents where appropriate to
be certified by proper corporate or governmental authorities.
(f) Fees and Expenses. The Agent shall have received for itself
and for the account of the applicable Lenders (i) all fees described in the
Fee Letter which are due and payable on or prior to the Restatement Date,
(ii) all accrued but unpaid Commitment Fees under the Original Credit
Agreement, and (iii) all other amounts due and payable by the Borrower on
or prior to the Restatement Date, including the reasonable fees and expenses
of counsel to the Agent payable pursuant to Section 9.2 to the extent then
invoiced.
Section 3.2 Conditions Precedent to all Loans. The obligation of
the Lenders to make any Loans hereunder shall be subject to the fulfillment
of the following conditions:
(a) Representations and Warranties. The representations and
warranties contained in Article IV and in the other Loan Documents shall
be true and correct on and as of the Restatement Date and on the date of
each Loan, with the same force and effect as if made on such date except
to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties will be
true and correct in all material respects as of such earlier date.
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(b) No Default. No Default or Event of Default shall have
occurred and be continuing on the Restatement Date or on the date of any
Loan or will exist after giving effect to the Loans made on such date.
(c) Notices and Requests. The Agent shall have received the
Borrower's request for such Loans as required under Section 2.2.
(d) Subsidiary Guaranties and Security Agreements. Except as
to Ag Acceptance, the Agent shall have received a Subsidiary Guaranty and
a Subsidiary Security Agreement for any Subsidiary designated as a
Restricted Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and to
make Loans hereunder, the Borrower represents and warrants to the Agent and
the Lenders that:
Section 4.1 Organization, Standing, Etc. The Borrower and each
Restricted Subsidiary is a corporation duly organized and validly existing
and in good standing under the laws of the State of its incorporation and
has all requisite corporate power and authority to carry on its business as
now conducted, to enter into the Transaction Documents to which it is a
party and to issue the Notes (in the case of the Borrower) and to perform
its obligations under the Transaction Documents to which it is a party.
The Borrower and each Restricted Subsidiary hold all certificates of
authority, licenses and permits necessary to carry on its business as
presently conducted in each jurisdiction in which it is carrying on such
business, except where the failure to hold such certificates, licenses or
permits would not have a material adverse effect on the business,
operations, property, assets or condition, financial or otherwise, of the
Borrower or such Restricted Subsidiary.
Section 4.2 Authorization and Validity. The execution, delivery
and performance of the Transaction Documents to which it is a party have
been duly authorized by all necessary corporate or other organizational
action on the part of the Borrower and each Restricted Subsidiary (and by
the Borrower, in the case of actions by Restricted Subsidiaries) and such
Transaction Documents constitute (or when executed will constitute) the
legal, valid and binding obligations of such Person, enforceable against
such Person in accordance with their respective terms, subject to
limitations as to enforceability which might result from bankruptcy,
insolvency, moratorium and other similar laws affecting creditors' rights
generally or from the application of general principles of equity.
Section 4.3 No Conflict; No Default. The execution, delivery
and performance of the Transaction Documents to which it is a party by
the Borrower and each Restricted Subsidiary will not (a) violate any
provision of any law, statute, rule or regulation or any order, writ,
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judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability
to the Borrower or any of its Subsidiaries, except where such violations
(considered singly and in the aggregate) would not have a material adverse
effect on the business, operations, properties, assets or condition
(financial or otherwise) of the Borrower or any of its Restricted
Subsidiaries, (b) violate or contravene any provision of such Person's
organizational documents, or (c) result in a breach of or constitute a
default under any indenture, loan or credit agreement or any other agreement,
lease or instrument to which the Borrower or any of its Subsidiaries is a
party or by which any of them or any of their respective properties may be
bound or result in the creation of any Lien thereunder, except where such
breaches or defaults (considered singly and in the aggregate) would not
have a material adverse effect on the business, operations, properties,
assets or condition (financial or otherwise) of the Borrower or any of its
Restricted Subsidiaries. Neither the Borrower nor any of its Subsidiaries
is in default under or in violation of any such law, statute, rule or
regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, loan or credit agreement or other agreement,
lease or instrument in any case in which the consequences of such default
or violation could have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of
the Borrower or any of its Restricted Subsidiaries.
Section 4.4 Government Consent. No order, consent, approval,
license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority is required on the part of the Borrower or any Restricted
Subsidiary to authorize, or is required in connection with the execution,
delivery and performance of, or the legality, validity, binding effect or
enforceability of, the Transaction Documents, except for the filing of
financing statements required by the Security Documents and except where
failure to obtain any such order, consent, approval, license, authorization,
validation, filing, recording, registration, or exemption (considered singly
and in the aggregate) would not have a material adverse effect on the
business, operations, properties, assets or condition (financial or
otherwise) of the Borrower or any of its Restricted Subsidiaries.
Section 4.5 Financial Statement and Condition. The Borrower has
heretofore furnished to the Agent and the Lenders an audited consolidated
financial statement of the Borrower and its Subsidiaries for the Fiscal
Year ended February 28, 2002, and that statement fairly presents the
consolidated financial condition of the Borrower and its Subsidiaries on
the date thereof and the results of operations and cash flows for the
period then ended and was prepared in accordance with GAAP. Since the
date of such financial statement, there have been no occurrences which,
individually or in the aggregate, have had or are reasonably likely to have
a material adverse effect on the business, operations, property or condition
(financial or otherwise) of the Borrower or any of its Restricted
Subsidiaries, or on the ability of the Borrower or Ag Acceptance to
perform its respective obligations under the Transaction Documents.
On the date hereof, and on the date of each Loan, the Borrower shall be
Solvent.
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Section 4.6 Litigation. There are no actions, suits or
proceedings pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower, any of its Subsidiaries or any of
their respective properties before any court or arbitrator, or any
governmental department, board, agency or other instrumentality, foreign
or domestic, which, if determined adversely to the Borrower or such
Subsidiary, would have a material adverse effect on the business,
operations, property or condition (financial or otherwise) of the
Borrower or such Subsidiary or on the ability of the Borrower or such
Subsidiary to perform its obligations under the Transaction Documents.
Section 4.7 Environmental, Health and Safety Laws. The
Borrower has disclosed to the Lenders all reports and investigations
commissioned by or in the possession or control of the Borrower or any
of its Subsidiaries and relating to health, safety, pollution, hazardous
materials or other environmental matters. To the Borrower's knowledge,
there does not exist in connection with the business of the Borrower or
any of its Subsidiaries any violation of any applicable federal, state
or local law, rule or regulation or order of any government, governmental
department, board, agency or other instrumentality relating to
environmental, pollution, health or safety matters which will or
threatens to impose a material liability on the Borrower or any of its
Restricted Subsidiaries or which would be reasonably likely to require a
material expenditure by the Borrower or any of its Restricted Subsidiaries
to cure.
Section 4.8 ERISA. Each Plan is in substantial compliance with
all applicable requirements of ERISA and the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and
the Code setting forth those requirements. No Reportable Event has occurred
and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no
event or condition which would reasonably be expected to result in the
institution of proceedings to terminate any Plan under Section 4042 of ERISA.
With respect to each Plan subject to Title IV of ERISA, as of the most recent
valuation date for such Plan, the present value (determined on the basis of
reasonable assumptions employed by the independent actuary for such Plan) of
such Plan's projected benefit obligations did not exceed the fair market
value of such Plan's assets.
Section 4.9 Federal Reserve Regulations. No part of the proceeds
of any Loan will be used to purchase or carry any margin stock (within the
meaning of Regulation U or X of the Board), or to extend credit to others
for the purpose of purchasing or carrying any margin stock, or in any manner
that will conflict with or contravene any of Regulations U and X of the
Board.
Section 4.10 Title to Property; Leases; Liens. The Borrower
and its Restricted Subsidiaries have (a) good and marketable title to their
respective real properties and (b) good and sufficient title to, or a valid,
subsisting and enforceable leasehold interest in, their other material
properties. None of such properties is subject to a Lien, except as
allowed under Section 6.2.
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Section 4.11 Taxes. The Borrower and its Subsidiaries have filed
all federal, state and local tax returns required to be filed and have paid
or made provision for the payment of all taxes due and payable pursuant to
such returns and pursuant to any assessments made against any one or more
of them or any of their respective properties and all other taxes, fees and
other charges imposed against any one or more of them or any of their
respective properties by any governmental authority (other than taxes, fees
or charges the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower or the
relevant Subsidiary). No tax Liens have been filed and no material claims
are being asserted with respect to any such taxes, fees or charges. The
charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes and other governmental charges are adequate
and the Borrower knows of no proposed material tax assessment against it or
any of its Subsidiaries or any basis therefor.
Section 4.12 Trademarks, Patents. The Borrower and each of its
Restricted Subsidiaries possesses or has the right to use all of the patents,
trademarks, trade names, service marks and copyrights, and applications
therefor, and all technology, know-how, processes, methods and designs
used in or necessary for the conduct of its respective business, without
known conflict with the rights of others.
Section 4.13 Burdensome Restrictions. Neither the Borrower nor
any of its Subsidiaries is a party to or otherwise bound by any indenture,
loan or credit agreement or any lease or other agreement or instrument or
subject to any corporate restriction which would reasonably foreseeably
have a material adverse effect on the business, properties, assets,
operations or condition (financial or otherwise) of the Borrower or any
Restricted Subsidiary or on the ability of the Borrower or any Restricted
Subsidiary to carry out its respective obligations under any Transaction
Document.
Section 4.14 Force Majeure. Since the date of the financial
statement referenced in Section 4.5, the business, properties and other
assets of the Borrower and its Subsidiaries have not been materially
and adversely affected in any way as the result of any fire or other
casualty, strike, lockout, or other labor trouble, embargo, sabotage,
confiscation, condemnation, riot, civil disturbance, activity of armed
forces or act of God.
Section 4.15 Investment Company Act. Neither the Borrower nor
any of its Subsidiaries is an "investment company" or a company "controlled"
by an investment company within the meaning of the Investment Company Act
of 1940, as amended.
Section 4.16 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company" or a
"subsidiary company" of a holding company or an "affiliate" of a holding
company or of a subsidiary company of a holding company within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
Section 4.17 Retirement Benefits. Except as required under
Section 4980B of the Code, Section 601 of ERISA or applicable state law,
neither the Borrower nor any of its
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Subsidiaries is obligated to provide post-retirement medical or insurance
benefits with respect to employees or former employees.
Section 4.18 Full Disclosure. Subject to the following
sentence, neither the financial statement referenced in Section 4.5 nor any
other certificate, written statement, Exhibit or report furnished by or on
behalf of the Borrower or any of its Subsidiaries in connection with or
pursuant to this Agreement contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
contained therein not misleading. Certificates or statements furnished by
or on behalf of the Borrower to the Agent or the Lenders consisting of
projections or forecasts of future results or events have been prepared
in good faith and based on good faith estimates and assumptions of the
Borrower's management, and the Borrower has no reason to believe that such
projections or forecasts are not reasonable.
Section 4.19 Subsidiaries. As of the date of this Agreement,
the Borrower has no equity interest of any kind in any Person other than
Ag Acceptance and Powerfarm.
ARTICLE V
AFFIRMATIVE COVENANTS
From the date hereof, until payment in full of all Obligations and
the termination of all Commitments, unless the Required Lenders otherwise
consent in writing, the Borrower covenants and agrees that it will (and will
cause each of its Restricted Subsidiaries to):
Section 5.1 Corporate Existence. Do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights, and franchises, and to comply with all laws applicable thereto;
conduct and operate its business substantially as it exists on the date
hereof; and from time to time make, or cause to be made, all needful and
proper repairs, renewals and replacements, betterments and improvements so
that the business carried on by it may be properly and advantageously
conducted at all times.
Section 5.2 Insurance. Maintain insurance with responsible
companies, satisfactory to the Required Lenders, in such amounts and against
such risks as is reasonably customary in the case of reputable firms engaged
in the same or similar business and similarly situated, with the Agent named
as an additional named insured (except in the case of insurance carried by
Ag Acceptance); supply the Lenders with evidence of such insurance as any
Lender may reasonably request; and cause each insurance policy that insures
any Collateral against casualty losses to be endorsed or otherwise amended
to include a lender's loss payable endorsement in form and substance
reasonably satisfactory to the Lenders and to name each Lender or the Agent
as an additional named insured.
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Section 5.3 Reporting Requirements. Deliver, or cause to be
delivered, to each Lender each of the following, which shall be in form
and detail reasonably acceptable to the Required Lenders:
(a) as soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, consolidated annual financial statements
of the Borrower and its Subsidiaries with the "unqualified opinion" (as
that term is used and generally understood in the accounting profession)
of independent certified public accountants selected by the Borrower and
reasonably acceptable to the Agent and the Required Lenders, which annual
financial statements shall include the balance sheets of the Borrower as at
the end of such Fiscal Year and the related statements of income, retained
earnings and cash flows of the Borrower for the Fiscal Year then ended, all
in reasonable detail and prepared in accordance with GAAP, together with a
certificate of an Authorized Officer in substantially the form of Exhibit
5.3 stating (i) that such financial statements have been prepared in
accordance with GAAP, (ii) whether or not such Authorized Officer has
knowledge of the occurrence of any Default or Event of Default hereunder
not theretofore reported and remedied and, if so, stating in reasonable
detail the facts with respect thereto, and (iii) all relevant facts in
reasonable detail to evidence, and the computations to determine, whether
or not the Borrower is in compliance with the requirements set forth in
the Financial Covenants;
(b) as soon as available and in any event within forty-five (45)
days after the end of each Fiscal Quarter, an unaudited, consolidated,
internal balance sheet and statement of income, cash flow and retained
earnings of the Borrower and its Subsidiaries as at the end of and for
such Fiscal Quarter and for the Fiscal Year-to-date period then ended, in
reasonable detail and the figures for the corresponding date and periods in
the previous year, all prepared in accordance with GAAP (but without
footnotes and subject to year-end audit adjustments); and accompanied by
a certificate of an Authorized Officer in substantially the form of Exhibit
5.3 stating (i) that such financial statements have been prepared in
accordance with GAAP, without footnotes and subject to year-end audit
adjustments, (ii) whether or not such Authorized Officer has knowledge of
the occurrence of any Default or Event of Default hereunder not theretofore
reported and remedied and, if so, stating in reasonable detail the facts
with respect thereto, and (iii) all relevant facts in reasonable detail
to evidence, and the computations to determine, whether or not the Borrower
is in compliance with the requirements set forth in the Financial Covenants;
(c) as soon as available and in any event within three (3)
Business Days after the end of each month, a Borrowing Base Certificate
in form and substance satisfactory to the Agent;
(d) as soon as available and in any event contemporaneously with
delivery to MBIA, copies of all reports, documents, certificates and other
written information required to be furnished to MBIA by the Borrower or Ag
Acceptance under any Securitization Document (and the Agent and the Lenders
shall be entitled to rely on
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such reports, documents, certificates and other written information and the
representations and certifications made therein to the same extent that
MBIA may rely thereon);
(e) as promptly as practicable (but in any event not later than
five (5) business days) after an officer of the Borrower obtains knowledge
of the occurrence of a Default or Event of Default, notice of such occurrence,
together with a detailed statement by an Authorized Officer setting forth the
steps being taken by the Borrower to cure the effect of such Default or Event
of Default;
(f) promptly after the commencement thereof, notice in writing of
all litigation and of all proceedings before any Governmental Body affecting
the Borrower or any of its Subsidiaries (or any material developments in any
previously disclosed litigation or other proceedings) which, if determined
adversely to the Borrower or the relevant Subsidiary, could reasonably be
expected to have a material adverse effect on the business, properties,
assets, operations or condition (financial or otherwise) of the Borrower or
any of its Restricted Subsidiaries or on the ability of the Borrower or any
Restricted Subsidiary to carry out its respective obligations under any
Transaction Document;
(g) promptly upon obtaining knowledge thereof, notice of the
violation by the Borrower or any of its Subsidiaries of any law, rule, or
regulation, the non-compliance with which could reasonably be expected to
have a material adverse effect on the business, properties, assets,
operations or condition (financial or otherwise) of the Borrower or any
of its Restricted Subsidiaries or on the ability of the Borrower or any
Restricted Subsidiary to carry out its respective obligations under any
Transaction Document;
(h) promptly upon obtaining knowledge thereof, notice of the
occurrence of any other circumstance which has or probably will have a
material adverse effect on the business, properties, assets, operations
or condition (financial or otherwise) of the Borrower or any of its
Restricted Subsidiaries or on the ability of the Borrower or any Restricted
Subsidiary to carry out its respective obligations under any Transaction
Document;
(i) promptly upon becoming aware of the occurrence, with respect
to any Plan, of any Reportable Event or any Prohibited Transaction, a
notice specifying the nature thereof and what action the Borrower proposes
to take with respect thereto, and, when received, copies of any notice
from PBGC of intention to terminate or have a trustee appointed for any Plan;
(j) promptly upon obtaining knowledge thereof, notice of the
occurrence of a reportable event, within the meaning of Section 4043 of
ERISA (other than such an event described in Department of Labor Regulation
Section 2615.13 or 2615.20), with respect to any Plan, or the institution
of any steps by the Borrower or any ERISA
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Affiliate to terminate any Plan, or the failure to make a required
contribution to any Plan if such failure is sufficient to give rise to a
Lien under Section 302(f) of ERISA, or the taking of any action with respect
to a Plan which could reasonably be expected to result in the requirement
that the Borrower or any ERISA Affiliate furnish a bond or other security
to the PBGC or such Plan, or the occurrence of any event with respect to any
Plan which could reasonably be expected to result in the incurrence by the
Borrower or any such ERISA Affiliate of any liability, fine or penalty;
(k) within ten Business Days after all obligations of Ag Acceptance
under the Securitization Documents have been satisfied and paid in full, the
Borrower shall deliver to the Agent (i) evidence of the release of all Liens
arising under the Securitization Documents and (ii) a Subsidiary Guaranty and
a Subsidiary Security Agreement executed and delivered by Ag Acceptance.
Furthermore, within 30 days after all obligations of Ag Acceptance under the
Securitization Documents have been satisfied and paid in full, the Borrower
shall deliver to the Agent evidence that Ag Acceptance has been merged into
the Borrower, with the Borrower as the surviving corporation; and
(l) from time to time, with reasonable promptness, such other
information regarding the operations, business affairs and financial
condition of the Borrower and/or its Subsidiaries as the Agent or any
Lender may reasonably request, including collection reports, deposit
records, financial and other information regarding customers.
Section 5.4 Taxes and Claims. Duly pay and discharge, or cause
to be paid and discharged, all taxes, assessments and other governmental
charges imposed upon it or upon its properties or any part thereof, or
upon the income or profits therefrom, as well as all claims for labor,
materials or supplies which if unpaid might by law become a Lien or charge
upon any property of the Borrower or any of its Restricted Subsidiaries,
provided that neither the Borrower nor any Restricted Subsidiary shall be
required to (a) pay any tax, assessment or other charge, or (b) discharge
or remove any such Lien, encumbrance or charge so long as the Borrower or
such Restricted Subsidiary shall contest, in good faith, the existence,
amount or validity thereof, or the extent of its liability therefor by
appropriate proceeding which shall operate during the pendency thereof
to prevent (i) the collection of, or other realization upon the tax,
assessment, charge, Lien or encumbrance so contested, (ii) the sale,
forfeiture or loss of any property of the Borrower or any of its Restricted
Subsidiaries, and (iii) any interference with the use or occupancy of any
property of the Borrower or any of its Restricted Subsidiaries and provided
that the Borrower or the relevant Restricted Subsidiary shall have maintained
adequate reserves therefor in accordance with GAAP.
Section 5.5 Maintenance of Property. Maintain its inventory,
equipment and other properties in good condition and repair (normal wear
and tear excepted) and pay and discharge or cause to be paid and discharged
when due, all costs and repairs or maintenance of the same and cause to be
paid all rental or mortgage payments due on such real estate; provided,
that nothing in this Section 5.5 shall prevent the Borrower or any
Restricted
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Subsidiary from discontinuing the operation and maintenance of any of its
properties if such discontinuances are, in such Person's reasonable judgment,
desirable in the conduct of its business and do not in the aggregate
materially and adversely affect such Person's business.
Section 5.6 Books and Records; Inspections and Examinations.
Keep accurate books of record and account for itself in accordance with
GAAP and, upon request of the Agent or any Lender (but subject to the
frequency limitations below), will give any representative of the Agent or
any Lender access during normal business hours to, and permit such
representative to examine, copy or make extracts from, any and all such
books, records and documents in its possession, to conduct audits of the
Borrower's loan portfolio, Borrowing Base A, Borrowing Base B (including
property owned by Ag Acceptance) and Collateral, to inspect any of its
properties and to discuss its financial condition with its principal
officers, all at such times and as often as it may reasonably request;
provided, that, so long as no Default or Event of Default has occurred
and is continuing, such visits shall occur no more frequently than twice
per year and any interested Lender shall be required to conduct its visits
in conjunction with the Agent's semi-annual visits. The Agent shall
provide notice to the Borrower of its scheduled visits and the Borrower
shall use its best efforts to inform all Lenders of such visits; provided,
that, the Borrower's failure to do so shall not constitute an Event of
Default hereunder. Without limiting the foregoing, the Borrower acknowledges
that the Agent intends to conduct, at the Borrower's cost, field audits
of the Borrower, its Subsidiaries and the components of Borrowing Base A
and Borrowing Base B on an approximately semi-annual basis. The Borrower
agrees to permit and cooperate with (and to cause its Subsidiaries to
permit and cooperate with) each such audit.
Section 5.7 Environmental Matters; Reporting. Observe and comply
in all material respects with all laws, rules, regulations, orders and
decisions of any government, government agency or tribunal relating to
health, safety, pollution, hazardous materials or other environmental
matters (collectively, "Environmental Laws"); provided, however, that
failure so to comply shall not be a breach of this covenant if such
failure does not have, or is not reasonably expected to have, a materially
adverse effect on the properties, business, prospects or condition
(financial or otherwise) of the Borrower or any of its Restricted
Subsidiaries and the Borrower or the relevant Restricted Subsidiary
is acting in good faith and with reasonable dispatch to cure such
noncompliance.
Neither the Borrower nor any of its Restricted Subsidiaries
shall permit any Hazardous Materials to be handled, buried, stored,
returned, refined, transported, processed, manufactured, generated,
produced, spilled, allowed to seep, leak, escape or leach, or to be pumped,
poured, emitted, emptied, discharged, injected, dumped, transferred or
otherwise disposed of or dealt with on, under, to or from any of its
properties at any time (except for those Hazardous Materials used by the
Borrower or the relevant Restricted Subsidiary in the ordinary course of
its business and in compliance with all Environmental Laws). For purposes
of this Section, "Hazardous Materials" means and includes any elements,
wastes, materials, substances or compounds identified or regulated as
"hazardous substances," "hazardous wastes," "hazardous materials,"
"pollutants" or "toxic substances" pursuant to any Environmental Laws.
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The Borrower and/or the relevant Restricted Subsidiary will give
the Agent prompt written notice of any violation as to any environmental
matter by the Borrower or any Restricted Subsidiary and of the commencement
of any judicial or administrative proceeding relating to health, safety or
environmental matters (a) in which an adverse determination or result could
result in the revocation of or have a material adverse effect on any
operating permits, air emission permits, water discharge permits, hazardous
waste permits or other permits held by the Borrower or such Restricted
Subsidiary which are material to the operations of the Borrower or any
Restricted Subsidiary, or (b) which will or threatens to impose a material
liability on the Borrower or any Restricted Subsidiary to any Person or
which will require a material expenditure by the Borrower or any Restricted
Subsidiary to cure any alleged problem or violation. Furthermore, the
Borrower and/or the relevant Restricted Subsidiary will give the Agent
prompt written notice of any discovery by the Borrower or such Restricted
Subsidiary of any occurrence or condition on or under any of its properties
or on or under any real property adjoining or in the vicinity of any of
its properties which will or threatens to impose a liability on the Borrower,
any Restricted Subsidiary, the Agent or any Lender to any Person or which
will require a material expenditure by the Borrower or any Restricted
Subsidiary to cure any alleged problem or violation or which could result
in the revocation of or have a material adverse effect on any operating
permits, air emission permits, water discharge permits, hazardous waste
permits or other permits held by the Borrower or any Restricted Subsidiary
which are material to the operations of the Borrower or any Restricted
Subsidiary. The Borrower and/or the relevant Restricted Subsidiary will
give the Agent prompt written notice of any change in the Environmental
Laws applicable to the Borrower, such Restricted Subsidiary or its
respective properties or operations during the term of this Agreement
which could reasonably be expected to result in a material adverse effect
on the Borrower, any Restricted Subsidiary or its respective properties
or operation.
The Borrower and/or the relevant Restricted Subsidiary also
shall provide the Agent with a true, complete and correct copy of any
and all reports commissioned by or in the possession or control of the
Borrower or such Restricted Subsidiary and relating to health, safety,
pollution, hazardous materials or other environmental matters at the
properties.
Section 5.8 Compliance with Laws. Comply in all material
respects (such that any non-compliance, considered singly and in the
aggregate, would not have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise)
of the Borrower or any of its Restricted Subsidiaries) with the
requirements of applicable laws, rules, regulations and orders of any
Governmental Body, provided, that, neither the Borrower nor any
Restricted Subsidiary shall be required to comply with any statute,
law, rule, regulation, ordinance or order of any Governmental Body so
long as the Borrower or the relevant Restricted Subsidiary shall contest,
in good faith, the existence, amount or validity thereof, the amount of
damages caused thereby or the extent of its liability therefor by
appropriate proceedings which shall operate during pendency thereof to
prevent (a) the collection of, or other realization upon any tax,
assessment, charge, Lien or encumbrance so conducted, (b) the sale,
forfeiture or loss of any property of the Borrower or any of its
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Restricted Subsidiaries, and (c) any interference with the use or occupancy
of any property of the Borrower or any of its Restricted Subsidiaries and
provided that the Borrower or the relevant Restricted Subsidiary shall have
maintained adequate reserves therefor in accordance with GAAP.
Section 5.9 ERISA. Maintain each Plan in compliance with all
material applicable requirements of ERISA and of the Code and with all
applicable rulings and regulations issued under the provisions of ERISA and
of the Code and will not and not permit any of the ERISA Affiliates to (a)
engage in any transaction in connection with which the Borrower or any of the
ERISA Affiliates would be subject to either a civil penalty assessed pursuant
to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in
either case in an amount exceeding $50,000, (b) fail to make full payment
when due of all amounts which, under the provisions of any Plan, the Borrower
or any ERISA Affiliate is required to pay as contributions thereto, or permit
to exist any accumulated funding deficiency (as such term is defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
with respect to any Plan in an aggregate amount exceeding $50,000 or (c)
fail to make any payments in an aggregate amount exceeding $50,000 to any
Multiemployer Plan that the Borrower or any of the ERISA Affiliates may be
required to make under any agreement relating to such Multiemployer Plan or
any law pertaining thereto.
Section 5.10 Post Closing Matters. Deliver or cause to be
delivered (a) no later than March 31, 2003, documents in form and
substance satisfactory to the Agent and the Lenders granting the Agent,
for the benefit of the Lenders, a second mortgage lien on the
Headquarters, (b) no later than January 31, 2003, policies or evidences
of insurance with respect to each of the businesses and real properties
of the Borrower and its Restricted Subsidiaries in such amounts and with
such carriers as shall be reasonably acceptable to the Agent, and
(c) no later than January 31, 2003, an acknowledgement of PHI (in
form and substance satisfactory to the Agent) consenting to the
Credit Agreement and the financial accommodations hereunder for all
purposes of the PHI Agreement and confirming the continuing
subordination of all obligations of the Borrower owing to PHI to
the Obligations.
Section 5.11 Incorporation by Reference. All representations,
warranties and covenants made by the Borrower and Ag Acceptance in the
Indenture, the Purchase and Contribution Agreement and the Insurance
Agreement (including the application of any grace periods set forth
therein with respect to such covenants) respecting the Acquired Advances
and Related Security (as each term is defined in the Indenture) are
hereby incorporated into this Agreement by reference and shall apply to
this Agreement as if originally set forth herein and made on the date
hereof, with all references to "this Agreement" or "this Indenture"
(as the case may be), "herein," "hereby" and "hereunder" being deemed
to be references to this Agreement, all references to "Loans" and
"Advances" (and derivative terms) being references both to loans
owned by the Borrower and to loans owned by Ag Acceptance, and all
references to "MBIA" being deemed to be references to the Agent acting
under this Agreement. The foregoing incorporation by reference shall
continue to be effective notwithstanding any termination, amendment or
modification of the Indenture, the Purchase and Contribution Agreement
or the Insurance Agreement.
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Specifically, amendments and modifications to the Indenture and the
Insurance Agreement shall not apply to the representations, warranties,
covenants and events of default incorporated by reference into this
Agreement unless the Required Lenders agree to such application in writing.
In the event of any conflict between any incorporated representation,
warranty or covenant and any provision of this Agreement or any Security
Document, the provisions of this Agreement or such Security Document
will govern.
Section 5.12 Designation of Subsidiaries. Designate each of
its Subsidiaries from time to time in existence as a Restricted Subsidiary
or as an Unrestricted Subsidiary by resolution of its Board of Directors
together with written notice to the Agent and the Lenders at or before the
time at which such Person is incorporated or otherwise organized (it being
agreed that Ag Acceptance and Powerfarm are hereby designated as
Restricted Subsidiaries as of the date of this Agreement) or at the time
of a subsequent decision by the Borrower to change such Person's
designation, and shall comply with the following additional requirements:
(a) if such Person is to be designated a Restricted Subsidiary,
such Person shall execute and deliver to the Agent a Subsidiary Guaranty
and a Subsidiary Security Agreement (accompanied by certificates,
resolutions, financing statements, opinions and other relevant documents
comparable to those originally delivered by the Borrower pursuant to
Section 3.1(a)) at or before the time of such designation (provided,
however, that the requirements of this subsection (a) shall not apply
to Ag Acceptance); and
(b) if such Person is to be designated an Unrestricted
Subsidiary, the Borrower shall execute and deliver to the Agent and
the Lenders a certificate, signed by an Authorized Officer and constituting
a Loan Document, representing, warranting and covenanting that (i)
neither the Borrower nor any Restricted Subsidiary shall (or shall be
obligated to) provide any credit support for or Contingent Obligation in
respect of, or otherwise be directly or indirectly liable for any
Indebtedness or other liabilities of such Person (except to the extent
permitted under Section 6.5(g)), (ii) no Default or Event of Default
shall have occurred and be continuing following such designation, (iii)
no default with respect to any Indebtedness or other liabilities of such
Person would permit (upon notice, lapse of time or otherwise) any holder
of any Indebtedness of the Borrower or any Restricted Subsidiary to
declare a default on such other Indebtedness or to cause the payment
thereof to be accelerated or payable prior to its stated maturity and
(iv) neither the Borrower nor any Restricted Subsidiary has any obligation
to subscribe for additional shares of capital stock or any other equity
interest in such Subsidiary, or to maintain or preserve such Subsidiary's
financial condition or to cause such Subsidiary to achieve certain levels
of operating results.
After the relevant Person's initial designation as a Restricted Subsidiary
or an Unrestricted Subsidiary, the Borrower may change such designation
(but no more than twice) by compliance with the foregoing subsections so
long as no Default or Event of Default shall
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have occurred and be continuing either immediately before or immediately
after such change.
ARTICLE VI
NEGATIVE COVENANTS
From the date hereof, until payment in full of the Obligations
and the termination of all Commitments, the Borrower covenants and agrees
that (absent the advance written consent of the Required Lenders) it will
not (and will cause its Restricted Subsidiaries not to):
Section 6.1 Indebtedness. Incur, permit to remain outstanding,
assume or in any way become committed for any Indebtedness other than (a)
Indebtedness incurred hereunder, (b) Permitted Short-Term Indebtedness and
(c) Permitted Funded Indebtedness.
Section 6.2 Liens. Create, incur, assume or suffer to exist
any Lien, or enter into, or make any commitment to enter into, any
arrangement for the acquisition of any property through conditional sale,
lease-purchase or other title retention agreements, with respect to any
property now owned or hereafter acquired by it, except:
(a) Liens granted to the Agent under the Security Documents to
secure the Obligations;
(b) Deposits or pledges to secure payment of workers' compensation,
unemployment insurance, old age pensions or other social security
obligations, in the ordinary course of business;
(c) Liens for taxes, fees, assessments and governmental charges
not delinquent or to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of Section
5.4;
(d) Liens of carriers, warehousemen, mechanics and materialmen,
and other like Liens arising in the ordinary course of business, for sums
not due or to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 5.4;
(e) Liens incurred or deposits or pledges made or given in the
ordinary course of business in connection with, or to secure payment of,
indemnity, performance or other similar bonds;
(f) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit
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accounts or other funds maintained with a creditor depository institution;
provided that (i) such deposit account is not a dedicated cash collateral
account and is not subject to restriction against access by the Borrower
or the relevant Restricted Subsidiary in excess of those set forth by
regulations promulgated by the Board, and (ii) such deposit account is
not intended by the Borrower or the relevant Restricted Subsidiary to
provide collateral to the depository institution;
(g) Encumbrances in the nature of zoning restrictions, easements
and rights or restrictions of record on the use of real property and
landlord's Liens under leases on the premises rented, which do not
materially detract from the value of such property or impair the use
thereof in the business of the Borrower or the relevant Restricted
Subsidiary;
(h) The interest of any lessor under any Capitalized Lease
entered into after the Restatement Date or purchase money Liens on
property acquired after the Restatement Date; provided, that, (i) the
Indebtedness secured thereby is otherwise permitted by this Agreement
and (ii) such Liens are limited to the property acquired and do not
secure Indebtedness other than the related Capitalized Lease Obligations
or the purchase price of such property and that the Indebtedness secured
by such Liens does not exceed $1,000,000 in the aggregate at any time
outstanding;
(i) A first mortgage Lien (pursuant to documentation in form
and substance satisfactory to the Agent) on the Headquarters securing
Indebtedness not to exceed $5,000,000;
(j) Liens arising from UCC financing statements regarding
operating leases not in violation of this Agreement;
(k) Liens subject to the PHI Agreement and Liens arising or
permitted under the Securitization Documents;
(l) a Lien (pursuant to documentation in form and substance
satisfactory to the Agent) on the Headquarters (and a Lien on the
additional property described in the financing statement filed against
the Borrower with the Iowa Secretary of State on May 24, 2001) to secure
the Borrower's obligations under the Community Economic Betterment Account
("CEBA") Loan Agreement dated February 22, 2001 between the Borrower and
the Iowa Department of Economic Development, as any of the foregoing may
be amended, supplemented or otherwise modified with the advance written
consent of the Required Lenders;
(m) the Liens arising out of the Mortgages dated January 10, 2001
between the Borrower and the City of Cedar Falls, Iowa relating to Lots 4,
5, 6, 7 and 8, and a parcel along Waterway Avenue, in the Cedar Falls
Technology Park Phase II, securing the Borrower's obligations under the
Real Estate Development and Assessment Agreement dated October 23, 2000
and amended January 8, 2001
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between the Borrower and the City of Cedar Falls, Iowa, as any of the
foregoing may be amended, supplemented or otherwise modified with the
advance written consent of the Required Lenders; and
(n) a second-priority Lien to secure the Management Group
Indebtedness; provided, however, that such Lien shall be permitted
only after and if each member of the Management Group shall have executed
and delivered a Subordination Agreement covering such Management Group
Indebtedness to the Agent for the benefit of the Lenders.
The Liens listed in this Section 6.2, subsections (a) through (n) herein
being "Permitted Liens".
Section 6.3 Contingent Obligations. Be or become liable on
any Contingent Obligation except to the extent such Contingent Obligation
is incurred with respect to Indebtedness otherwise permitted under this
Agreement.
Section 6.4 Mergers and Acquisitions. Consolidate with or merge
into, or with any other corporation or Person, or acquire (in a transaction
analogous in purpose or effect to a consolidation or merger) all or
substantially all of the assets of any other Person; provided that, so
long as no Default or Event of Default has occurred and is continuing
either immediately before or immediately after the relevant action, (a)
any Restricted Subsidiary (other than Ag Acceptance) may consolidate with
or merge into another Restricted Subsidiary and (b) the Borrower may engage
in such a merger or consolidation if (i) the Borrower is the surviving
corporation or the surviving corporation expressly assumes all Obligations
of the Borrower under this Agreement pursuant to documentation in form and
substance satisfactory to the Agent and (ii) after the merger or
consolidation is given effect, the surviving corporation would be able to
issue at least one dollar of additional Funded Indebtedness which is also
Permitted Funded Indebtedness and will be and remain engaged in
substantially the same lines of business in which the Borrower and its
Subsidiaries are engaged as of the date of this Agreement.
Section 6.5 Investments and Subsidiaries. Purchase or hold
beneficially any stock or other securities or evidences of indebtedness
of, or make any Investment in, any other Person, except:
(a) obligations of the United States of America or any agency or
instrumentality thereof whose obligations constitute full faith and credit
obligations of the United States of America having a maturity of one year
or less;
(b) commercial paper issued by U.S. issuers rated "A-1" or "A-2"
by Standard & Poor's Ratings Group or "P-1" or "P-2" by Moody's Investors
Service, Inc. having a maturity of 270 days or less;
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(c) certificates of deposit or bankers' acceptances having a
maturity of one year or less issued by members of the Federal Reserve
System having deposits in excess of $100,000,000 (which certificates of
deposit or bankers' acceptances are fully insured by the Federal Deposit
Insurance Corporation);
(d) (i) investments in or advances to Restricted Subsidiaries,
or corporations which, after such investments would become a Restricted
Subsidiary, (ii) investments in or advances to the Borrower by a Restricted
Subsidiary, and (iii) investments in or advances to one Restricted
Subsidiary by another Restricted Subsidiary, provided, that, such Persons
are and will remain engaged in substantially the same lines of business
in which the Borrower and its Subsidiaries are engaged as of the date of
this Agreement;
(e) travel or other advances to employees for expenses incurred
in the ordinary course of business;
(f) acquire or hold notes receivable acquired in transactions
with customers and suppliers in the ordinary course of business;
(g) Contingent Obligations incurred in respect of Indebtedness
of Unrestricted Subsidiaries so long as (i) such Contingent Obligations
are otherwise permitted under Section 6.1 and Section 5.12 and (ii) no
Default or Event of Default shall have occurred and be continuing at the
time of their creation; and
(h) securities or evidences of indebtedness received in connection
with the bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business so long as such
securities or evidences of indebtedness are deposited with the Custodian
in accordance with the Custody Agreement;
provided, however, that all investments of the type described in the
foregoing clauses (a), (b) and (c) owned by the Borrower or any Restricted
Subsidiary other than Ag Acceptance shall be held solely in securities
accounts in which the Agent has obtained a perfected, first-priority Lien
by control (as such term is used in the Uniform Commercial Code). The
Borrower represents and warrants to the Agent and the Lenders that no
investments of the type described in the preceding proviso are owned by
the Borrower or by Powerfarm as of the date of this Agreement.
Section 6.6 Restricted Payments. (a) Declare or pay any
dividends (other than dividends payable solely in the stock of the Borrower)
on any class of stock, (b) make any payment on account of the purchase,
redemption or other retirement of any shares of such stock or make any
distribution in respect thereon, (c) make any payment of principal or
interest or otherwise redeem or retire any Subordinated Indebtedness
other than in accordance with a Subordination Agreement, or (d) make
any Investment other than
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Permitted Investments; provided, however, that the foregoing shall not
prohibit a Restricted Subsidiary from declaring or paying a dividend or
otherwise making a distribution made, in each case, solely to the Borrower.
Section 6.7 Sale of Assets. Sell, exchange, lease, assign,
transfer or otherwise dispose of, or permit any Restricted Subsidiary to
sell, exchange, lease, assign, transfer or otherwise dispose of a Substantial
Part of the Assets of the Borrower or any Restricted Subsidiary to any
Person, except:
(a) assets disposed of in the ordinary course of business;
(b) sales of loans and related security pursuant to the
Securitization Documents; provided, however, that such "loans" shall,
on and after November 4, 2002, be limited to Advances made to Obligors
(as each such term is defined in the Indenture) in respect of Crop Loans
that are due in single installments of principal and interest and that
are payable in full by no later than the applicable Due Date (as defined
in the Indenture) with respect to such Crop Loans; and
(c) sales of Obligor Risk Participations in compliance with
Section 6.24 so long as no Default or Event of Default shall have occurred
and be continuing either immediately before or immediately after such sales
and so long as both (i) the Total Facility A Outstandings do not exceed
Borrowing Base A and (ii) the Total Facility B Outstandings do not exceed
Borrowing Base B, after giving effect to such sales;
provided, however, that the Borrower or its Restricted Subsidiaries may
sell a Substantial Part of the Assets so long as all proceeds received
therefrom are (i) reinvested in the Borrower or in one of its Restricted
Subsidiaries or (ii) are applied to the Secured Obligations in the order
set forth in Sections 8.10A and 8.10B, as applicable, such application or
reinvestment of such sale proceeds to be made as soon as practicable after
receipt of any such proceeds and, in any event, the Borrower shall cause
such proceeds to be so applied not later than five (5) days after the
Borrower's or the applicable Restricted Subsidiary's, as applicable, receipt
thereof.
Section 6.8 Sale and Leaseback. Sell assets and lease the same
assets from the purchaser thereof unless: (a) (i) such lease, including any
renewals thereof, does not exceed three years in term, (ii) the net proceeds
of such sale are (1) applied to the retirement of the Secured Obligations
in the order set forth in Sections 8.10A and 8.10B, as applicable, or (2)
used to purchase other assets having a fair market value at least equal to
such net proceeds, and (iii) such assets, immediately prior to such sale,
could have been subjected to a lien to secure Indebtedness in a principal
amount equal to the net proceeds of such sale without violation of Section
6.2; or (b) such sale is between the Borrower and a Restricted Subsidiary,
or between Restricted Subsidiaries.
Section 6.9 Transactions with Affiliates. Enter into or permit
to remain in effect or outstanding any transaction, including, without
limitation, the purchase, sale, lease or
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exchange of property, the rendering of any service, or the making of any
loan or advance to any Affiliate, except to the extent contemplated or
required under the Securitization Documents and except in the ordinary
course of business and pursuant to the reasonable requirements of the
business of the Borrower or such Restricted Subsidiary and the Affiliate
and upon terms found by the Borrower's or such Restricted Subsidiary's
Board of Directors to be fair and reasonable and no less favorable to the
Borrower or such Restricted Subsidiary than it would have obtained in a
comparable arm's-length transaction with a Person which is not an Affiliate.
Section 6.10 Subsidiaries and Affiliates. Form, acquire,
organize, establish or incorporate any Subsidiary unless such Person
is designated as a Restricted Subsidiary or an Unrestricted Subsidiary
in accordance with Section 5.12.
Section 6.11 Minimum Net Worth. Fail to maintain, as of the
end of any Fiscal Quarter, Consolidated Tangible Net Worth of at least
the sum of (a) $70,000,000 plus (b) 75% of the cumulative Net Income
for all of the Fiscal Quarters ending after February 28, 2003, disregarding
any Fiscal Quarter in which the Borrower and its Restricted Subsidiaries
suffered a consolidated net loss.
Section 6.12 Interest Coverage Ratio. Fail to achieve, as of the
end of any Fiscal Quarter, an Interest Coverage Ratio for the four-Fiscal
Quarter period then ended of at least 1.25 to 1.00.
Section 6.13 Total Indebtedness to Consolidated Tangible Net
Worth Ratio. Fail to achieve, as of the end of any Fiscal Quarter, a
Total Indebtedness to Consolidated Tangible Net Worth Ratio for the
four-Fiscal Quarter period then ended of less than or equal to (a) 4.50 to
1.00 for each Fiscal Quarter ending during the period from the Restatement
Date through and including February 28, 2003, (b) 3.00 to 1.00 for each
Fiscal Quarter ending during the period from March 1, 2003 though and
including May 31, 2003, and (c) 2.00 to 1.00 for each Fiscal Quarter ending
during any period commencing after May 31, 2003.
Section 6.14 Average Total Indebtedness to Average Consolidated
Tangible Net Worth. Fail to achieve, as of the end of any Fiscal Quarter,
an Average Total Indebtedness to Average Consolidated Tangible Net Worth
Ratio for the four-Fiscal Quarter period then ended of less than or equal
to (a) 4.75 to 1.00 for each Fiscal Quarter ending during the period from
the Restatement Date through and including February 28, 2003, (b) 4.50 to
1.00 for each Fiscal Quarter ending during the period from March 1, 2003
through and including May 31, 2003, (c) 4.00 to 1.00 for each Fiscal
Quarter ending during the period from June 1, 2003 through and including
August 31, 2003, (d) 3.00 to 1.00 for each Fiscal Quarter ending during
the period from September 1, 2003 through and including November 30, 2003,
and (e) 2.00 to 1.00 for each Fiscal Quarter ending during any period
commencing after November 30, 2003.
Section 6.15 Misstatements or Omissions. Furnish the Agent or
any Lender any certificates or document that will contain any untrue
statement of material fact or that will
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omit to state any material fact necessary to make it not misleading in
light of the circumstances under which it was made.
Section 6.16 Accounting Principles; Fiscal Year; Tax Year.
Make any significant change in accounting treatment or reporting practices
or change its Fiscal Year, any Fiscal Quarter or its tax year.
Section 6.17 Plans. Permit any event to occur or condition
to exist which would permit any Plan to terminate under any circumstances
which would cause the Lien provided for in Section 4068 of ERISA to
attach to any assets of the Borrower or any Restricted Subsidiary; and
the Borrower will not permit, as of the most recent valuation date for
any Plan subject to Title IV of ERISA, the present value (determined on
the basis of reasonable assumptions employed by the independent actuary
for such Plan) of such Plan's projected benefit obligations to exceed
the fair market value of such Plan's assets.
Section 6.18 Nature of Business. Change the nature of the
business in which it is presently engaged.
Section 6.19 Suspension of Business Operations. Liquidate,
dissolve or suspend its business operations.
Section 6.20 Negative Pledges. Enter into any agreement, bond,
note or other instrument with or for the benefit of any Person other than
the Agent and the Lenders and other than the Securitization Documents which
would (i) prohibit it from granting, or otherwise limit its ability to grant,
to the Agent or the Lenders any Lien on any of its assets or properties,
(ii) require it to grant a Lien to any other Person if it grants any Lien
to the Agent or the Lenders or (iii) restrict or limit its ability to amend,
restate, supplement or otherwise modify any of the Loan Documents.
Section 6.21 Amendments to Securitization Documents. Permit or
suffer to exist any amendment, supplement or other modification of any of
the Securitization Documents.
Section 6.22 Solvency Ratio. Fail to maintain, as of the end of
any Fiscal Year (commencing with the Fiscal Year ending February 28, 2003),
a ratio (expressed as a percentage) of (a) consolidated shareholders'
equity of the Borrower and its Restricted Subsidiaries to (b) Total Assets,
of at least 30%.
Section 6.23 Management Group Indebtedness. The Borrower will
not make any payment or other distribution on or in respect of the Management
Group Indebtedness in contravention of the Subordination Agreement applicable
thereto and, until such Subordination Agreement has been executed and
delivered shall make no payment of any kind in respect of such Management
Group Indebtedness without the prior written consent of the Agent.
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Section 6.24 Obligor Risk Participations. Sell Obligor Risk
Participations (a) relating to Loans other than 2003 Loans if the Borrower
shall not have received the prior written consent of the Required Lenders
and MBIA Insurance Corporation, and (b) relating to 2003 Loans if (i) such
Obligor Risk Participations are not sold on a non-recourse basis, (ii)
after giving effect to the sale of such Obligor Risk Participation(s) the
Financial Covenants specified in Sections 6.13 and 6.14 would be violated
on a proforma basis, or (iii) on and after March 31, 2003 such Obligor
Risk Participations relate to Customer Loan outstandings or commitments
in excess of $25,000,000 in the aggregate.
Section 6.25 Borrower Loan Commitments. Make Borrower Loan
Commitments (a) with respect to 2003 Loans in excess of $125,000,000,
(b) with respect to 2003 Unsecured Loans in excess of $20,000,000, (c)
for any Intermediate Loans (as defined in the Indenture), or (d) for
any 2004 Loans.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default. The occurrence of any one
or more of the following events shall constitute an Event of Default:
(a) The Borrower or any Restricted Subsidiary shall fail to
make when due, whether by acceleration or otherwise, any payment of
principal of or interest on any Note or any other Obligation or Secured
Obligation (as defined in any relevant Security Document) required to
be made to the Agent or any Secured Party pursuant to any Loan Document,
provided, that, in the case of any payment not constituting principal
of any Note, an Event of Default will occur if the same is not paid
within five days following the due date thereof.
(b) Any representation or warranty made by or on behalf of
the Borrower or any Restricted Subsidiary in this Agreement or any
other Loan Document or by or on behalf of the Borrower in any
certificate, statement, report or document herewith or hereafter
furnished to any Lender or the Agent pursuant to this Agreement or any
other Loan Document shall prove to have been false or misleading in
any material respect on the date as of which the facts set forth are
stated or certified.
(c) The Borrower shall fail to comply with Section 5.3(k),
Section 5.10 or any other Section of Article V (other than the balance
of Section 5.3, Section 5.5 and Section 5.6), any Section of Article VI
or any Section or provision of any Security Document (other than a
Section or provision of the type described in subsection (d) below;
provided, that the additional grace period described in (d) below
shall not apply to failures to comply with Section 5.10).
(d) The Borrower or any Restricted Subsidiary shall fail to
comply with any agreement, covenant, condition, provision or term
contained in any Loan
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Document that already specifies a number of days notice or grace period
for compliance (for example, Section 5.3(a)), and such failure to comply
shall continue for ten (10) calendar days after whichever of the following
dates is the earliest: (i) the date the Borrower or the relevant
Restricted Subsidiary gives notice of such failure to the Lenders, (ii)
the date the Borrower or the relevant Restricted Subsidiary knew or should
have known of such failure, or (iii) the date the Agent or any Lender
gives notice of such failure to the Borrower or the relevant Restricted
Subsidiary.
(e) The Borrower or any Restricted Subsidiary shall fail to
comply with any other agreement, covenant, condition, provision or term
contained in any Loan Document (other than those otherwise set forth in
this Section 7.1) and such failure to comply shall continue for thirty
(30) calendar days after whichever of the following dates is the earliest:
(i) the date the Borrower or the relevant Restricted Subsidiary gives
notice of such failure to the Lenders, (ii) the date the Borrower or the
relevant Restricted Subsidiary knew or should have known of such failure,
or (iii) the date the Agent or any Lender gives notice of such failure to
the Borrower or the relevant Restricted Subsidiary.
(f) The Borrower or any Restricted Subsidiary shall become
insolvent or shall generally not pay its debts as they mature or shall
apply for, shall consent to, or shall acquiesce in the appointment of a
custodian, trustee or receiver of the Borrower or any Restricted
Subsidiary or for a substantial part of the property thereof or, in the
absence of such application, consent or acquiescence, a custodian,
trustee or receiver shall be appointed for the Borrower or any
Restricted Subsidiary or for a substantial part of the property
thereof and shall not be discharged within 60 days, or the Borrower
or any Restricted Subsidiary shall make an assignment for the benefit
of creditors.
(g) Any bankruptcy, reorganization, debt arrangement or other
proceedings under any bankruptcy or insolvency law shall be instituted
by or against the Borrower or any Restricted Subsidiary, and, if
instituted against any such Person, shall have been consented to or
acquiesced in by such Person, or shall remain undismissed for 60 days,
or an order for relief shall have been entered against such Person.
(h) Any dissolution or liquidation proceeding shall be
instituted by or against the Borrower or any Restricted Subsidiary,
and, if instituted against any such Person, shall be consented to or
acquiesced in by such Person or shall remain for 60 days undismissed.
(i) One or more judgments for the payment of money in excess
of $1,000,000 (on a cumulative basis for the Borrower and the Restricted
Subsidiaries taken together) shall be rendered against the Borrower or
any Restricted Subsidiary and such judgment(s) remain(s) unpaid or
undischarged for more than 60 days from the date of entry thereof or
upon expiration of any period during which execution of such judgment(s)
shall be stayed during an appeal from such judgment(s), excluding
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any judgment(s) with respect to which the amount is fully insured
(excluding applicable deductibles) and with respect to which the insurer
has acknowledged in writing its liability for the full amount thereof.
(j) The maturity of any material Indebtedness of the Borrower
or any Restricted Subsidiary (other than Indebtedness under this Agreement)
shall be accelerated, or the Borrower or any Restricted Subsidiary shall
fail to pay any such material Indebtedness when due (after the lapse of
any applicable grace period) or, in the case of such Indebtedness payable
on demand, when demanded (after the lapse of any applicable grace period),
or any event shall occur or condition shall exist and shall continue for
more than the period of grace, if any, applicable thereto and shall have
the effect of causing, or permitting the holder of any such Indebtedness
or any trustee or other Person acting on behalf of such holder to cause,
such material Indebtedness to become due prior to its stated maturity or
to realize upon any collateral given as security therefor. For purposes
of this Section, Indebtedness of the Borrower or any Restricted Subsidiary
shall be deemed "material" if it exceeds $5,000,000 as to any item of
Indebtedness or in the aggregate for all items of Indebtedness (on a
cumulative basis for the Borrower and the Restricted Subsidiaries taken
together) with respect to which any of the events described in this
Section 7.1(j) has occurred.
(k) Any execution or attachment shall be issued whereby any
material property of the Borrower or any Restricted Subsidiary shall be
taken or attempted to be taken and the same shall not have been vacated
or stayed within 30 days after the issuance thereof.
(l) Any Security Document shall, at any time, cease to be in
full force and effect or shall be judicially declared null and void, or
the validity or enforceability thereof shall be contested by the Borrower
or the relevant Restricted Subsidiary, or the Agent or the Lenders shall
cease to have a valid and perfected security interest having the priority
contemplated thereunder in all of the collateral described therein, other
than by action or inaction of the Agent or the Lenders if (i) the
aggregate value of the collateral affected by any of the foregoing exceeds
$50,000 and (ii) any of the foregoing shall remain unremedied for ten days
or more after receipt of notice thereof by the Borrower or the relevant
Restricted Subsidiary from the Agent.
(m) Any Change in Control shall occur.
(n) An "Event of Default" or an "Additional Event of Default"
shall occur under the Indenture or any event of default (however styled)
shall occur under any other Securitization Document.
(o) The aggregate Principal Balance of all Advances to a
particular Obligor shall at any time exceeds 2.75% of the Greatest Amount
of Eligible Advances, and such excess shall continue for more than 30
calendar days.
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Section 7.2 Remedies. If (a) any Event of Default described in
Sections 7.1(f), (g) or (h) shall occur, the Commitments shall automatically
terminate and the Notes and all other Obligations shall automatically become
immediately due and payable; and (b) any other Event of Default shall occur
and be continuing, then, upon the Agent's receipt of a request in writing
from the Required Lenders, the Agent shall take any of the following actions
so requested: (i) declare the Commitments terminated, whereupon the
Commitments shall terminate and (ii) declare the outstanding unpaid
principal balance of the Notes, the accrued and unpaid interest thereon
and all other Obligations to be forthwith due and payable, whereupon the
Notes, all accrued and unpaid interest thereon and all such Obligations
shall immediately become due and payable, in each case without presentment,
demand, protest or other notice of any kind, all of which are hereby
expressly waived, anything in this Agreement or in the Notes to the contrary
notwithstanding. Upon the occurrence of any of the events described in the
preceding sentence, the Agent may and, when so requested by the Required
Lenders, the Agent shall, exercise all rights and remedies under any of the
Loan Documents, and enforce all rights and remedies under any applicable
law.
Section 7.3 Offset. In addition to the remedies set forth in
Section 7.2, upon the occurrence of any Event of Default and thereafter
while the same shall be continuing, the Borrower hereby irrevocably
authorizes each Lender to set off any Obligations owed to such Lender
against all deposits and credits of the Borrower with, and any and all
claims of the Borrower against, such Lender. Such right shall exist
whether or not such Lender shall have made any demand hereunder or under
any other Loan Document, whether or not the Obligations, or any part
thereof, or deposits and credits held for the account of the Borrower is
or are matured or unmatured, and regardless of the existence or adequacy
of any collateral, guaranty or any other security, right or remedy
available to such Lender or the Lenders. Each Lender agrees that,
as promptly as is reasonably possible after the exercise of any such
setoff right, it shall notify the Borrower of its exercise of such
setoff right; provided, however, that the failure of such Lender to
provide such notice shall not affect the validity of the exercise of
such setoff rights. Nothing in this Agreement shall be deemed a waiver
or prohibition of or restriction on any Lender to all rights of
banker's Lien, setoff and counterclaim available pursuant to law.
ARTICLE VIII
THE AGENT
For the purposes of this Article VIII, the term "Loan Document"
shall be deemed to include all Rate Swap Agreements. The following
provisions shall govern the relationship of the Agent with the Lenders
and the Swap Parties:
Section 8.1 Appointment and Authorization. Each Lender and
each Swap Party appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such respective powers under the
Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto. Neither the Agent
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nor any of its directors, officers or employees shall be liable for any
action taken or omitted to be taken by it under or in connection with the
Loan Documents, except for its own gross negligence or willful misconduct.
The Agent shall act as an independent contractor in performing its
obligations as Agent hereunder and nothing herein contained shall be
deemed to create any fiduciary relationship among or between the Agent,
the Borrower, any of the Borrower's Subsidiaries, the Lenders or the
Swap Parties.
Section 8.2 Note Holders. The Agent may treat the payee of any
Note as the holder thereof until written notice of transfer shall have been
filed with it, signed by such payee and in form satisfactory to the Agent.
Section 8.3 Consultation With Counsel. The Agent may consult
with legal counsel selected by it and shall not be liable for any action
taken or suffered in good faith by it in accordance with the advice of such
counsel.
Section 8.4 Loan Documents. The Agent shall not be under a duty
to examine or pass upon the validity, effectiveness, genuineness or value of
any of the Loan Documents or any other instrument or document furnished
pursuant thereto, and the Agent shall be entitled to assume that the same
are valid, effective and genuine and what they purport to be.
Section 8.5 Rabobank and Affiliates. With respect to its
Commitments and the Loans made by it, and any Rate Swap Agreements entered
into by it, Rabobank shall have the same rights and powers under the Loan
Documents as any other Lender or Swap Party and may exercise the same as
though it were not the Agent consistent with the terms thereof, and Rabobank
and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower and its Affiliates as if
it were not the Agent.
Section 8.6 Action by Agent. Except as may otherwise be
expressly stated in this Agreement, the Agent shall be entitled to use
its discretion with respect to exercising or refraining from exercising
any rights which may be vested in it by, or with respect to taking or
refraining from taking any action or actions which it may be able to take
under or in respect of, the Loan Documents. The Agent shall be required
to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all holders of
Secured Obligations; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal liability
or which is contrary to the Loan Documents or applicable law. The Agent
shall incur no liability under or in respect of any of the Loan Documents
by acting upon any notice, consent, certificate, warranty or other paper
or instrument believed by it to be genuine or authentic or to be signed
by the proper party or parties and to be consistent with the terms of
this Agreement.
Section 8.7 Credit Analysis. Each Lender and each Swap Party
has made, and shall continue to make, its own independent investigation
or evaluation of the operations, business, property and condition,
financial and otherwise, of the Borrower in connection with
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entering into this Agreement and the other Loan Documents and has made
its own appraisal of the creditworthiness of the Borrower and its
Subsidiaries. Except as explicitly provided herein, the Agent has no
duty or responsibility, either initially or on a continuing basis, to
provide any Lender or any Swap Party with any credit or other information
with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on
or before the first Event of Default or at any time thereafter.
Section 8.8 Notices of Event of Default, Etc. In the event
that the Agent shall have acquired actual knowledge of any Event of
Default or Default, the Agent shall promptly give notice thereof to the
Lenders.
Section 8.9 Indemnification. Each Lender agrees to defend,
protect, indemnify and hold harmless the Agent, its Affiliates and their
respective directors, officers, employees, attorneys and agents (to the
extent not reimbursed by the Borrower) (each of the foregoing being an
"Agent Indemnitee" and all of the foregoing being collectively the
"Agent Indemnitees") from and against any and all claims, actions,
damages, liabilities, judgments, costs and expenses, including all
reasonable fees and disbursements of counsel which may be incurred in
the investigation or defense of any matter (collectively "Agent Indemnified
Liabilities") imposed upon, incurred by or asserted against any Agent
Indemnitee, whether direct, indirect or consequential and whether based
on any federal, state, local or foreign laws or regulations (including
without limitation securities laws, Environmental Laws, commercial laws
and regulations), under common law or on equitable cause, or on contract
or otherwise:
(a) by reason of, relating to or in connection with the
execution, delivery, performance or enforcement of any Loan Document,
any commitments relating thereto, or any transaction contemplated by
any Loan Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under, or transaction financed by, the Loan Documents or
the exercise of any rights or remedies thereunder, including the
acquisition of any collateral by the Agent by way of foreclosure of the
Lien thereon, deed or bill of sale in lieu of such foreclosure or
otherwise;
provided, however, that no Lender shall be liable to any Agent Indemnitee
for any portion of such Agent Indemnified Liabilities resulting from such
Agent Indemnitee's gross negligence or willful misconduct. In the event
this indemnity is unenforceable as a matter of law as to a particular
matter or consequence referred to herein, it shall be enforceable to the
full extent permitted by law. Furthermore, if and to the extent that any
of the foregoing agreements described in this Section 8.9 may be
unenforceable for any reason, each Lender hereby agrees to make the
maximum contribution to the payment and satisfaction of each of the Agent
Indemnified Liabilities that is permissible under applicable law.
This indemnification applies, without limitation, to any act, omission,
event or circumstance existing or occurring on or prior to the later of
the latest Termination Date or the date of
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payment in full of the Obligations. The indemnification provisions set
forth above shall be in addition to any liability any Lender may otherwise
have. Without prejudice to the survival of any other obligation of the
Lenders to the Agent hereunder the indemnities and obligations of the
Lenders contained in this Section shall survive the payment in full of
the other obligations. No payment by any Lender under this Section shall
relieve the Borrower or any Restricted Subsidiary of any of its
obligations under any Loan Document.
Section 8.10A Payments and Collections Prior to an Event of
Default.
a) Subject to Section 8.10B, all funds received by the Agent
in respect of any payments made by or on behalf of the Borrower on the
A Notes or the Facility A Commitment Fees shall be distributed forthwith
by the Agent among the A Lenders, in like currency and funds as received,
ratably according to each A Lender's Facility A Percentage.
b) Subject to subsection (c) below and Section 8.10B, all
funds received by the Agent in respect of any payments made by or on
behalf of the Borrower on the B Notes or on the Facility B Commitment
Fees shall be distributed forthwith by the Agent among the B Lenders,
in like currency and funds as received, ratably according to each B
Lender's Facility B Percentage.
(c) Notwithstanding subsection (b) above, all payments of
principal made by the Borrower in respect of the B Loans shall be made
to the Agent solely for the account of Rabobank until the Total Facility
B Outstandings have been reduced to $45,000,000, after which point
principal payments allocable to Facility B shall be applied as otherwise
provided by the other terms of this Agreement and the other Loan
Documents.
(d) Subject to Section 8.10B, all funds received by the Agent
in respect of any payments made by or on behalf of the Borrower in respect
of its obligations under a Swap Agreement shall be distributed to the
applicable Swap Party.
Section 8.10B Payments and Collections after an Event of Default.
After any Event of Default has occurred, all funds received by the Agent,
whether as payments by the Borrower or as realization on collateral or on
any guaranties, shall (except as may otherwise be required by law) be
distributed by the Agent as follows:
(a) A Lender Priority Collateral and A Lender Priority Payments.
Any A Lender Priority Payment and the proceeds of any collection or sale of
A Lender Priority Collateral shall be applied:
(i) First, to pay the Agent or any A Lender who has incurred
any unreimbursed cost of collection with respect to any A Loan, any A Note,
any A Lender Priority Payment, any A Lender Priority Collateral or otherwise
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relating to Facility A, the cost thereof, to be distributed ratably to the
Agent and each such A Lender in the proportion that the costs incurred by
the Agent or such A Lender, as applicable, bear to the total of all such
costs incurred by the Agent and all A Lenders.
(ii) Second, to pay the Agent or any A Lender to whom the
Borrower owes any indemnity obligation or other expense reimbursement
obligation (other than those described in the immediately preceding
subsection (a)(i)) with respect to any A Loan, any A Note, any A Lender
Priority Payment, any A Lender Priority Collateral or otherwise relating
to Facility A, the amount thereof, to be distributed ratably to the Agent
and each such Facility A Lender in the proportion that such indemnity
obligations or other expense reimbursement obligations owing to the Agent
or such A Lender, as applicable, bear to the total of all such indemnity
obligations and other expense reimbursement obligations owing to the Agent
and all A Lenders;
(iii) Third, to pay (1) to the Facility A Lenders, accrued
Facility A Commitment Fees then due and payable by the Borrower in respect
of the Facility A Commitments in accordance with their Facility A
Percentages, and (2) to the Agent, that portion of the accrued fees
payable to the Agent determined by multiplying the aggregate amount of
all accrued fees payable to the Agent by a fraction, determined as of
the most recently occurring Termination Date (whether applicable to
Facility A or Facility B or both), the numerator of which equals the
principal amount of all Obligations owed to the A Lenders in respect of
Facility A on such date and the denominator of which equals the principal
amount of all Obligations owed to all Lenders on such date;
(iv) Fourth, to pay accrued interest that is payable on the A
Loans to the A Lenders in accordance with their Facility A Percentages;
(v) Fifth, to pay the principal of the A Loans to the A Lenders
in accordance with their Facility A Percentages;
(vi) Sixth, to the Persons and in the priorities specified in
Section 8.10B(b); and
(vii) Seventh, to the Borrower or as otherwise may be directed
by court order or by other applicable law.
To the extent that available funds are sufficient to pay only part of the
amount due to all Persons within any of the foregoing clauses, such funds
shall be allocated to all such Persons pro rata in accordance with the
respective amounts owed. Upon any sale of the A Lender Priority Collateral
by the Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt by the Agent or of the officer
making the sale shall be a
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sufficient discharge to the purchaser or purchasers of the A Lender
Priority Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money
paid over to the Agent or such officer or be answerable in any way for
the misapplication thereof.
(b) B Lender Priority Collateral. Any B Lender Priority
Payment and the proceeds of any collection or sale of B Lender Priority
Collateral shall be applied:
(i) First, to pay the Agent or any B Lender who has incurred any
unreimbursed cost of collection with respect to any B Loan, any B Note,
any B Lender Priority Payment, any B Lender Priority Collateral or
otherwise relating to Facility B, or relating to any Swap Agreement, the
cost thereof, to be distributed ratably to the Agent and each such B
Lender in the proportion that the costs incurred by the Agent or such B
Lender, as applicable, bear to the total of all such costs incurred by
the Agent and all B Lenders.
(ii) Second, to pay the Agent or any B Lender to whom the
Borrower owes any indemnity obligation or other expense reimbursement
obligation (other than those described in the immediately preceding
subsection (b)(i)) with respect to any B Loan, any B Note, any B Lender
Priority Payment, any B Lender Priority Collateral or otherwise relating
to Facility B, or relating to any Swap Agreement, the amount thereof, to
be distributed ratably to the Agent and each such Facility B Lender in
the proportion that such indemnity obligations or other expense
reimbursement obligations owing to the Agent or such B Lender, as
applicable, bear to the total of all such indemnity obligations and
other expense reimbursement obligations owing to the Agent and all B
Lenders;
(iii) Third, (1) to the Facility B Lenders, accrued Facility
B Commitment Fees then due and payable by the Borrower in respect of the
Facility B Commitments in accordance with their Facility B Percentages,
and (2) to pay to the Agent that portion of the accrued fees payable to
the Agent determined by multiplying the aggregate accrued fees payable
to the Agent by a fraction, determined as of the most recently occurring
Termination Date (whether applicable to Facility A, Facility B or both),
the numerator of which equals the principal amount of all Obligations
owed to the B Lenders in respect of Facility B on such date and the
denominator of which equals the principal amount of all Obligations owed
to all Lenders on such date;
(iv) Fourth, to pay (1) accrued interest that is payable on
the B Loans to the B Lenders in accordance with their Facility B
Percentages, and (2) any obligation (other than an early termination
payment obligation) owing to a Swap Party that is due and payable to
such Swap Party pursuant to any Swap Agreement;
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(v) Fifth, to pay (1) any principal amount that would otherwise
be owing under Section 8.10A(c) if no Event of Default had occurred, and
(2) after the foregoing has been so paid, (y) the principal of the B Loans
to the B Lenders in accordance with their Facility B Percentages, and (z)
any obligation that is due and payable to a Swap Party as a result of an
early termination of a Swap Agreement;
(vi) Sixth, to the Persons and in the priorities specified in
Section 8.10B(a); and
(vii) Seventh, to the Borrower or as otherwise may be directed
by court order or by other applicable law.
To the extent that available funds are sufficient to pay only part of the
amount due to all Persons within any of the foregoing clauses, such funds
shall be allocated to all such Persons pro rata in accordance with the
respective amounts owed. Upon any sale of the B Lender Priority Collateral
by the Agent (including pursuant to a power of sale granted by statute or
under a judicial proceeding), the receipt by the Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser or
purchasers of the B Lender Priority Collateral so sold and such purchaser
or purchasers shall not be obligated to see to the application of any part
of the purchase money paid over to the Agent or such officer or be
answerable in any way for the misapplication thereof.
Section 8.11 Sharing of Payments. If any Lender or any Swap
Party shall receive and retain any payment, voluntary or involuntary,
whether by setoff, application of deposit balance or security, or otherwise,
in respect of the Secured Obligations in excess of such Lender's or such
Swap Party's share thereof as determined under the Loan Documents
(including without limitation Section 8.10A and B of this Agreement),
then such Lender or Swap Party shall purchase from the other Secured
Parties for cash and at face value and without recourse, such participation
in the Secured Obligations held by such other Secured Parties as shall
be necessary to cause such excess payment to be shared ratably in accordance
with the applicable provisions of the Loan Documents (including without
limitation Section 8.10A and B of this Agreement) as aforesaid with such
other Secured Parties; provided, that if such excess payment or part
thereof is thereafter recovered from such purchasing Lender or Swap Party,
the related purchases from the other Secured Parties shall be rescinded
ratably and the purchase price restored as to the portion of such excess
payment so recovered, but without interest. Subject to the participation
purchase obligation above, each Lender and each Swap Party agrees to
exercise any and all rights of setoff, counterclaim or banker's lien first
fully against any Secured Obligations held by such Lender or Swap Party,
and only then to any other Indebtedness of the Borrower to such Lender or
Swap Party.
Section 8.12 Advice to Lenders. The Agent shall forward to
the Lenders copies of all semi-annual field audit reports and all notices,
financial reports and other communications received by it as Agent
pursuant to Section 5.3 or comparable reporting requirements in the other
Loan Documents from the Borrower or any of its Subsidiaries, excluding,
however,
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notices, reports and communications which by the terms hereof are to be
furnished by the Borrower or any of its Subsidiaries directly to each
Lender.
Section 8.13 Resignation. If at any time Rabobank shall
deem it advisable, in its sole discretion, it may submit to each of the
Lenders, the Swap Parties and the Borrower a written notification of its
resignation as Agent under this Agreement and the other Loan Documents,
such resignation to be effective upon the appointment of a successor Agent,
but in no event later than 30 days from the date of such notice. Upon
submission of such notice, the Required Lenders may appoint a successor
Agent; provided, however, that so long as no Default or Event of Default
has occurred and is continuing, such appointment shall be with the consent
of the Borrower, which consent shall not be unreasonably withheld.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Modifications. Notwithstanding any provisions to
the contrary herein, any term of this Agreement may be amended with the
written consent of the Borrower; provided that no amendment, modification
or waiver of any provision of this Agreement or any other Loan Document
or consent to any departure therefrom by the Borrower or other party thereto
shall in any event be effective unless the same shall be in writing and
signed by the Required Lenders, and then such amendment, modification,
waiver or consent shall be effective only in the specific instance and for
the purpose for which given. The Agent may enter into amendments or
modifications of, and grant consents and waivers to departure from the
provisions of, those Loan Documents to which the Lenders are not
signatories without the Lenders joining therein, provided the Agent has
first obtained the separate prior written consent to such amendment,
modification, consent or waiver from the Required Lenders.
Notwithstanding the forgoing, no such amendment, modification, waiver
or consent shall:
(a) With respect to any A Note, reduce the rate or extend the
time of payment of interest thereon, or reduce the amount of the principal
thereof, or otherwise modify any of the provisions of any such A Note with
respect to the payment or repayment thereof, without the consent of all A
Lenders; or
(b) With respect to any B Note, reduce the rate or extend the
time of payment of interest thereon, or reduce the amount of the principal
thereof, or otherwise modify any of the provisions of any such B Note with
respect to the payment or repayment thereof, without the consent of all B
Lenders; or
(c) Increase the amount or extend the time of any Facility A
Commitment of any A Lender, without the consent of all A Lenders; or
(d) Increase the amount or extend the time of any Facility B
Commitment of any B Lender, without the consent of all B Lenders; or
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(e) Reduce the rate or extend the time of payment of any fee
payable to an A Lender, without the consent of all A Lenders; or
(f) Reduce the rate or extent the time of payment of any fee
payable to a B Lender, without the consent of all B Lenders; or
(g) Except as may otherwise be expressly provided in any of
the other Loan Documents, release or subordinate any material portion of
collateral securing, or any guaranties for, all or any part of the
Obligations without the consent of all the Lenders; or
(h) Amend the definition of Required Lenders or otherwise
reduce the percentage of the Lenders required to approve or effectuate any
such amendment, modification, waiver, or consent, without the consent of
all the Lenders; or
(i) Amend any of the foregoing Sections 9.1(a) through (h) or
this Section 9.1(i) without the consent of all the Lenders; or
(j) Amend any provision of this Agreement relating to the Agent
in its capacity as Agent without the consent of the Agent.
Section 9.2 Expenses. Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to reimburse
the Agent upon demand for all reasonable out-of-pocket expenses paid or
incurred by the Agent (including filing and recording costs and fees and
expenses of Faegre & Benson LLP, special counsel to the Agent) in
connection with the negotiation, preparation, approval, review, execution,
delivery, amendment or modification of this Agreement and the other Loan
Documents and any commitment letters relating thereto. The Borrower
shall also reimburse the Agent and each Lender upon demand for all
reasonable out-of-pocket expenses (including expenses of legal counsel)
paid or incurred (i) by the Agent in connection with each field audit
referenced in Section 5.6 and (ii) by the Agent or any Lender in
connection with the collection and enforcement of this Agreement and any
other Loan Document. The obligations of the Borrower under this Section
shall survive any termination of this Agreement.
Section 9.3 Waivers, etc. No failure on the part of the Agent
or the holder of a Note to exercise and no delay in exercising any power
or right hereunder or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any power
or right preclude any other or further exercise thereof or the exercise
of any other power or right. The remedies herein and in the other
Loan Documents provided are cumulative and not exclusive of any
remedies provided by law.
Section 9.4 Notices. Except when telephonic notice is
expressly authorized by this Agreement, any notice or other communication
to any party in connection with this Agreement shall be in writing and
shall be sent by manual delivery, telegram, facsimile transmission
(with machine or oral confirmation of delivery), overnight courier or
United
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States mail (postage prepaid) addressed to such party at the address
specified on the signature page hereof, or at such other address as such
party shall have specified to the other party hereto in writing. All
periods of notice shall be measured from the date of delivery thereof if
manually delivered, from the date of sending thereof if sent by telegram
or facsimile transmission (with machine or oral confirmation of delivery),
from the first Business Day after the date of sending if sent by
overnight courier, or from four days after the date of mailing if mailed;
provided, however, that any notice to the Agent or any Lender under
Article II hereof shall be deemed to have been given only when received
by the Agent or such Lender.
Section 9.5 Taxes. The Borrower agrees to pay, and save the
Agent and the Lenders harmless from all liability for, any stamp or other
taxes (except income taxes) which may be payable with respect to the
execution or delivery of this Agreement or the issuance of the Notes,
which obligation of the Borrower shall survive the termination of this
Agreement.
Section 9.6 Successors and Assigns; Disposition of Loans;
Transferees. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign its rights or delegate its
obligations hereunder or under any other Loan Document without the prior
written consent of all the Lenders. Each Lender may at any time sell,
assign, transfer, grant participations in, or otherwise dispose of any
portion of its Commitments, the Loans and/or Advances (each such interest
so disposed of being herein called a "Transferred Interest") to other
Persons ("Transferees"); provided, however, that a Lender may dispose
of a Transferred Interest only to another Lender or to another Person
specifically approved by the Agent (which approval shall not be
unreasonably withheld) and only upon payment to the Agent by the parties
to such disposition of a processing and recording fee in the amount of
$3,500 for each party. Any attempt to dispose of a Transferred
Interest in contravention of the preceding sentence shall be deemed to
be void ab initio. The Borrower agrees that each Transferee shall be
entitled to the benefits of Sections 2.14, 2.15, 2.16, 2.17 and 9.2
with respect to its Transferred Interest and that each Transferee may
exercise any and all rights of banker's Lien, setoff and counterclaim
as if such Transferee were a direct lender to the Borrower. If any
Lender makes any assignment to a Transferee, then upon notice to the
Borrower (and receipt of the approval of the Agent as described above)
such Transferee, to the extent of such assignment (unless otherwise
provided therein), shall become a "Lender" hereunder and shall have all
the rights and obligations of such Lender hereunder and such Lender
shall be released from its duties and obligations under this Agreement
to the extent of such assignment. Any assignment shall be made pursuant
to an assignment agreement substantially in the form of Exhibit 9.6.
Notwithstanding the sale by any Lender of any participation hereunder,
(a) no participant shall be deemed to be or have the rights and
obligations of a Lender hereunder except that any participant shall
have a right of setoff under Section 7.3 as if it were such Lender and
the amount of its participation were owing directly to such participant
by the Borrower and (b) such Lender shall not in connection with selling
any such participation condition such Lender's rights in connection with
consenting to amendments or granting waivers concerning any matter under
any Loan Document upon obtaining the consent of such participant other
than on matters relating to (i) any reduction in
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the amount of any principal of, or the amount of or rate of interest on,
any Note or Advance in which such participation is sold, (ii) any
postponement of the date fixed for any payment of principal of or interest
on any Note or Advance in which such participation is sold, or (iii)
the release or subordination of any material portion of any collateral
other than pursuant to the terms of any Security Document.
Section 9.7 Governing Law and Construction. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW). Whenever possible, each
provision of this Agreement and the other Loan Documents and any other
statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto shall be interpreted in such manner as to be
effective and valid under such applicable law, but, if any provision of
this Agreement, the other Loan Documents or any other statement,
instrument or transaction contemplated hereby or thereby or relating
hereto or thereto shall be held to be prohibited or invalid under such
applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, the other Loan
Documents or any other statement, instrument or transaction contemplated
hereby or thereby or relating hereto or thereto.
Section 9.8 Consent to Jurisdiction. AT THE OPTION OF THE AGENT,
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE ENFORCED IN ANY FEDERAL
COURT OR NEW YORK STATE COURT SITTING IN NEW YORK COUNTY, NEW YORK; AND THE
BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES
ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE
BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY
TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP
CREATED BY THIS AGREEMENT, THE AGENT AT ITS OPTION SHALL BE ENTITLED TO HAVE
THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED,
OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE
SUCH CASE DISMISSED WITHOUT PREJUDICE.
Section 9.9 Waiver of Jury Trial. EACH OF THE BORROWER , THE
AGENT AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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Section 9.10 Survival of Agreement. All representations,
warranties, covenants and agreement made by the Borrower herein or in the
other Loan Documents and in the certificates or other instruments prepared
or delivered in connection with or pursuant to this Agreement or any other
Loan Document shall be deemed to have been relied upon by the Lenders and
shall survive the making of the Loans by the Lenders and the Borrower's
execution and delivery of the Loan Documents, regardless of any
investigation made by or on behalf of the Lenders, and shall continue in
full force and effect as long as any Obligation is outstanding and unpaid
and any of the Commitments have not been terminated; provided, however,
that the obligations of the Borrower under Sections 9.2, 9.5 and 9.11
shall survive payment in full of the Obligations and the termination of
the Commitments.
Section 9.11 Indemnification. The Borrower hereby agrees to
defend, protect, indemnify and hold harmless the Agent and the Lenders
and their respective Affiliates and the directors, officers, employees,
attorneys and agents of the Agent and the Lenders and their respective
Affiliates (each of the foregoing being an "Indemnitee" and all of the
foregoing being collectively the "Indemnitees") from and against any and
all claims, actions, damages, liabilities, judgments, costs and expenses,
including all reasonable fees and disbursements of counsel which may be
incurred in the investigation or defense of any matter (collectively
"Liabilities") imposed upon, incurred by or asserted against any
Indemnitee, whether direct, indirect or consequential and whether based
on any federal, state, local or foreign laws or regulations (including
without limitation securities laws, Environmental Laws, commercial laws
and regulations), under common law or on equitable cause, or on contract
or otherwise:
(a) by reason of, relating to or in connection with the execution,
delivery, performance or enforcement of any Loan Document, any commitments
relating thereto, or any transaction contemplated by any Loan Document; or
(b) by reason of, relating to or in connection with any credit
extended or used under, or transaction financed by, the Loan Documents or
any act done or omitted by any Person, or the exercise of any rights or
remedies thereunder, including the acquisition of any collateral by the
Lenders by way of foreclosure of the Lien thereon, deed or bill of sale
in lieu of such foreclosure or otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee
for any portion of such Liabilities resulting from such Indemnitee's gross
negligence or willful misconduct. In the event this indemnity is
unenforceable as a matter of law as to a particular matter or consequence
referred to herein, it shall be enforceable to the full extent permitted by
law. Furthermore, if and to the extent that any of the foregoing
agreements described in this Section 9.11 may be unenforceable for any
reason, the Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of each of the Liabilities that is permissible
under applicable law.
This indemnification applies, without limitation, to any act, omission,
event or circumstance existing or occurring on or prior to the later of
the latest Termination Date or the date of
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payment in full of the Obligations, including specifically Obligations
arising under clause (b) of this Section. The indemnification provisions
set forth above shall be in addition to any liability the Borrower may
otherwise have. Without prejudice to the survival of any other obligation
of the Borrower hereunder the indemnities and obligations of the Borrower
contained in this Section shall survive the payment in full of the other
Obligations.
Section 9.12 Captions. The captions or headings herein and any
table of contents hereto are for convenience only and in no way define,
limit or describe the scope or intent of any provision of this Agreement.
Section 9.13 Entire Agreement. This Agreement and the other
Loan Documents embody the entire agreement and understanding between the
Borrower, the Agent and the Lenders with respect to the subject matter
hereof and thereof. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof. Nothing contained
in this Agreement or in any other Loan Document, expressed or implied,
is intended to confer upon any Persons other than the parties hereto any
rights, remedies, obligations or liabilities hereunder or thereunder.
Section 9.14 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
but all of which, taken together, shall constitute but one and the same
instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 9.15 Agreement Effectiveness. This Agreement will become
effective on the date (the "Restatement Date") when (i) counterparts hereof
executed on behalf of the Borrower, the Agent and each Lender have been
received by the Agent, (ii) all conditions to the amendment and restatement
of the Original Credit Agreement set forth in Article III have been
satisfied, and (iii) notice thereof has been given by the Agent to the
various parties hereto. The Agent agrees to give such notice in accordance
with Section 9.15 promptly upon the satisfaction of all of the requirements
set forth in the previous sentence.
Section 9.16 Borrower Acknowledgements. The Borrower hereby
acknowledges (a) receipt of a copy of each Loan Document and each other
document and agreement executed in connection with this Agreement or the
Obligations under any Loan Document, (b) that it has been advised by counsel
in the negotiation, execution and delivery of this Agreement and the other
Loan Documents, (c) that neither the Agent nor any Lender has any fiduciary
relationship to the Borrower, the relationship being solely that of debtor
and creditor, (d) that no joint venture exists between the Borrower and the
Agent or any Lender, and (e) that neither the Agent nor any Lender
undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon its
own judgment with respect to its business, and any review, inspection or
supervision of, or information supplied to, the Borrower by the Agent or
any Lender is for the protection of the Lenders and neither the Borrower
nor any third party is entitled to rely thereon.
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[Signature Page Follows]
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IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD
BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE.
NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT
MAY BE LEGALLY ENFORCED. YOU MAY CHANGE THE TERMS OF THIS AGREEMENT
ONLY BY ANOTHER WRITTEN AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
AG SERVICES OF AMERICA, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Address for Borrower:
1309 Technology Parkway
Cedar Falls, IA 50613
Attn: Henry C. Jungling
Telecopier No. (319) 277-0277
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Facility A Commitment Amount: COOPERATIEVE CENTRALE
$70,000,000 RAIFFEISEN-BOERENLEENBANK B.A.,
Facility B Commitment Amount: "RABOBANK NEDERLAND", NEW
$50,000,000 YORK BRANCH,
individually and as Agent
By:
----------------------------
Title:
----------------------------
By:
----------------------------
Title:
----------------------------
Address of Applicable Lending
Office for Base Rate Loans:
245 Park Avenue
New York, New York 10167
Address for notices:
c/o Rabo Support Services, Inc.
10 Exchange Place
Jersey City, New Jersey 07302
Attn: Corporate Services
Telecopier No. (201) 499-5326
with a copy to:
Rabobank International
300 South Wacker Drive
Suite 3500
Chicago, Illinois 60606-6610
Attention: Thomas Levasseur
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Facility A Commitment Amount: U.S. BANK NATIONAL ASSOCIATION
$30,000,000
Facility B Commitment Amount:
$20,000,000
By:
----------------------------
Title: Vice President
Address of Applicable Lending
Office for Eurodollar Loans:
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attn: Sharon Miller
Telecopier No.: (612) 303-4507
Address of Applicable Lending
Office for Base Rate Loans:
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attn: Sharon Miller
Telecopier No.: (612) 303-4507
Address for notices:
800 Nicollet Mall
Minneapolis, Minnesota 55402
Attn: Steven A. Tornio
Telecopier No.: (612) 303-4660
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Facility A Commitment Amount: BANK OF AMERICA, NATIONAL
$0 ASSOCIATION
Facility B Commitment Amount:
$5,000,000
By:
----------------------------
Title:
----------------------------
Address of Applicable Lending
Office for Eurodollar Loans:
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Fred Johnson (IL-1-231-11-37)
Telecopier No.: (312) 974-1199
Address of Applicable Lending
Office for Base Rate Loans:
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Fred Johnson
(IL-1-231-11-37)
Telecopier No.: (312) 974-1199
Address for notices:
231 South LaSalle Street
Chicago, Illinois 60697
Attn: Michael J. Hammond
Telecopier No.: (312) 987-0234
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List of Exhibits:
Exhibit 1.1-1 Borrowing Base Certificate
Exhibit 1.1-2 A Note
Exhibit 1.1-3 B Note
Exhibit 1.1-4 Loan to Value and Borrowing Base Methodology
Exhibit 5.3 Compliance Certificate
Exhibit 5.12A Subsidiary Guaranty
Exhibit 5.12B Subsidiary Security Agreement
Exhibit 9.6 Assignment Agreement
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