EXHIBIT 10.5
ID NO. 496
AG CAPITAL COMPANY
LOAN AGREEMENT
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THIS AGREEMENT, made and entered into by and between Ag Capital Company, a
Delaware corporation whose address is ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, hereinafter called "AGCAPCO;" and, Minnesota Valley Irrigation,
Inc., also known as Wisconsin Vegetable Storage Systems, Inc., a Minnesota
corporation, whose address is ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, hereinafter called "BORROWER";
WITNESSETH THAT, AGCAPCO agrees to make the following New Loan to BORROWER,
subject to all the security, terms and conditions of this Loan Agreement:
LOAN
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$2,500,000 -- Seasonal Loan, Note No. 24300
PURPOSE: The proceeds of the loan made hereunder shall be used to assist in
financing BORROWER's irrigation/ventilation equipment sales and related
services and for no other purpose.
INTEREST: All outstanding loan balances hereunder shall bear a variable rate
of interest as follows:
Seasonal Loan, Note No. 24300: Prime
"Prime" shall be the highest Prime rate reported in the WALL STREET
JOURNAL, Midwest Edition, as it adjusts daily. If such rate is not
published in the WALL STREET JOURNAL, Midwest Edition, or the
publication ceases to be published, then AGCAPCO will set the interest
rate by using a comparable index or reference rate.
Interest on all loans shall be payable on the 1st day of each calendar
month.
NOTES AND SECURITY: Advances made hereunder, and any sums henceforth lent to
BORROWER by AGCAPCO, shall be evidenced by a promissory note or notes
acceptable to AGCAPCO, and shall be secured by existing security, including
but not limited to the following:
A first security interest in current assets only, including inventory,
receivables, accounts, contract rights, chattel paper, documents,
instruments, general intangibles, and all proceeds of the above, now
owned or hereafter acquired.
All property under lien to AGCAPCO as security for loans hereunder, or as
security for loans hereafter made, shall be security to the extent thereof
for all loans made by AGCAPCO to BORROWER.
LIMITATION ON ADVANCES: The total principal amount of the seasonal loan
outstanding under this or any loan agreement between AGCAPCO and BORROWER
shall not exceed $2,500,000, the principal amount shown in the above heading.
AUGUST 26, 1996 1 LOAN AGREEMENT
Advances on the Seasonal Loan, Note No. 24300, shall be limited as follows:
1. 80% of acceptable accounts receivable ("acceptable" shall be defined
as accounts less than 90 days old); and,
2. 80% of new and used wholegood and parts inventory in Minnesota and
Wisconsin, net of any unpaid account payable on such inventories;
based on a Borrowing Base Certificate to be submitted in such form and
frequency as required by AGCAPCO, but not less than monthly.
CONDITIONS: While this loan agreement is in effect, BORROWER agrees to comply
with the following conditions:
a. ORGANIZATION: BORROWER warrants that it is duly organized, existing and
in good standing, and will maintain its status as a business
corporation, under the laws of the state of Minnesota.
b. INSURANCE: BORROWER will obtain normal business and casualty insurance,
as required by AGCAPCO, with financially sound insurers, in amounts
sufficient to protect AGCAPCO, with a loss payable clause in favor of
AGCAPCO.
c. FINANCIAL INFORMATION: BORROWER will furnish AGCAPCO with acceptable
annual financial statements within 45 days of fiscal year-end, annual
tax returns, monthly financial statements, and such other information as
AGCAPCO may request relative to BORROWER's business, and permit such
examination of its books and records as AGCAPCO may specify. BORROWER
also agrees that parties preparing such financial information are
authorized to release to AGCAPCO such financial information as AGCAPCO
may request.
d. BUDGET: BORROWER will provide an operating budget and cash flow forecast
to AGCAPCO within the first 90 days of each fiscal year.
e. APPLICATION OF PAYMENTS: AGCAPCO, at its discretion, may apply payments
to the reduction of any of the indebtedness outstanding between AGCAPCO
and BORROWER.
f. NEGATIVE PLEDGE: BORROWER will not mortgage, pledge, assign grant
security interests, or otherwise encumber any assets, excluding any
encumbrances granted prior to the date of this agreement, to any other
party, nor will it guarantee the obligations of any other party, without
the prior written consent of AGCAPCO.
g. MAINTENANCE OF COLLATERAL: BORROWER will maintain all collateral pledged
to AGCAPCO in good, saleable condition, and free of all liens and
encumbrances, excluding liens and encumbrances granted prior to the date
of this agreement, and in compliance with all applicable laws,
regulations, and orders, and apply payments from sales of collateral to
outstanding loan balances.
AUGUST 26, 1996 2 LOAN AGREEMENT
h. DISPOSAL OF ASSETS: BORROWER will not sell, lease, transfer, or dispose
of any material part of its assets without written consent of AGCAPCO,
other than in the ordinary course of business.
i. PAYMENT OF TAXES, OTHER OBLIGATIONS: BORROWER will pay all federal,
state and local taxes, license fees or similar charges, and all accounts
payable or other obligations, as they become due.
j. WORKING CAPITAL: BORROWER will attain net working capital according to
Generally Accepted Accounting Principles (GAAP) of $800,000 at all
times. ("Net working capital" shall be defined as current assets less
current liabilities.)
k. BORROWING BASE CERTIFICATE: BORROWER shall submit to AGCAPCO, at least
monthly, an inventory collateral report in such form as acceptable to
AGCAPCO.
REPAYMENT: Without limiting the right of AGCAPCO to demand payment in full or
in part in the event of a default hereunder, the indebtedness arising from
the loan hereunder shall be repaid as follows:
Seasonal Loan, Note No. 24300, of not to exceed $2,500,000, shall mature
and the outstanding principal balance shall be repaid by September 1, 1997.
LATE FEE PENALTY: Payments received by AGCAPCO 15 calendar days after the
scheduled due date shall be subject to a late payment penalty equal to 1% of
the past due amount but not less than $25.00 per late payment, subject to the
maximum amount allowable by North Dakota Law.
EXPIRATION: The unadvanced portion of any commitment hereunder shall be
canceled as indicated below; provided, however, AGCAPCO may, at its option,
and without notice, extend the expiration date on the loan specified in the
agreement and the maturity date of the seasonal loan without the consent of
BORROWER.
Seasonal Loan, Note No. 24300: September 1, 1997
REINSTATEMENT: In order to facilitate repayments and reborrowings under this
loan agreement, AGCAPCO is hereby authorized to reinstate all sums repaid on
the seasonal loan through the expiration date specified in this agreement,
provided, however, that the total principal amount outstanding hereunder shall
not exceed the face amount of the seasonal loan; and provided, further, that
the right of BORROWER to such reinstatement may be denied and canceled at any
time at AGCAPCO's sole discretion.
DEFAULT PROVISION: If BORROWER shall fail to pay when due any amount on any
of the loans hereunder, or on any other indebtedness of BORROWER secured
hereby, or shall fail to observe or perform any of the provisions or
representations of this agreement, or of any notes, security agreements, or
mortgages entered into in connection with this loan agreement, or upon
commencement of any bankruptcy or insolvency proceedings involving BORROWER,
or should AGCAPCO in good ▇▇▇▇▇ ▇▇▇▇ itself insecure, BORROWER shall be in
default hereunder. When BORROWER are in default, interest shall continue at
the normal rate and AGCAPCO may declare by written notice to BORROWER that
all such loans and other indebtedness are immediately due
AUGUST 26, 1996 3 LOAN AGREEMENT
and payable, and AGCAPCO may terminate its commitments and any reinstatement
rights hereunder, proceed to enforce payment under any guarantees and to
exercise any or all of the rights afforded to AGCAPCO by law or agreement.
Upon demand, BORROWER shall pay to AGCAPCO all attorney's fees and costs
incurred by AGCAPCO in protecting or enforcing its rights under this
agreement or collateral securing this loan, including reasonable attorney's
fees incurred by AGCAPCO in a bankruptcy or receivership proceeding or in
enforcing any judgment against BORROWER.
SAVINGS CLAUSE: It is expressly agreed between the parties to this agreement
that if any covenant, condition or restriction contained in this agreement,
or any portion thereof is deemed invalid or void, such invalidity or voidness
shall in no way affect any other covenant, term, condition or restriction in
this agreement.
GOVERNING LAW: The terms and conditions of this agreement shall be governed
as to validity, interpretation, effect and in all respects by the laws and
decisions of the State of Minnesota.
ACCEPTANCE: This loan agreement is the full agreement between the parties. It
may not be modified except in writing, and shall not become effective unless
BORROWER shall, within 30 days from date, signify its acceptance of the terms
and conditions hereof by signing and returning a copy of this agreement to
AGCAPCO.
FURTHER ASSURANCES: Whenever reasonably requested by AGCAPCO, BORROWERS shall
promptly execute and deliver all other instruments, documents or assurances,
and promptly do all other things as may be necessary and reasonably required
in order to fully vest in AGCAPCO all rights, interests, powers, benefits or
privileges and advantages conferred or intended to be conferred by this
agreement and the notes, security agreements, and mortgages entered into in
connection with this agreement.
APPROVED by Ag Capital Company this 26th day of August, 1996.
AGCAPCO: Ag Capital Company
By
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Manager
AGREED AND ACCEPTED
BORROWER: Minnesota Valley Irrigation, Inc.
also known as Wisconsin Vegetable Storage Systems, Inc.
By
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▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
Date: August ___, 1996
AUGUST 26, 1996 4 LOAN AGREEMENT
ID ▇▇. ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇
$2,500,000 MINNESOTA VALLEY IRRIGATION, INC.
ALSO KNOWN AS WISCONSIN VEGETABLE STORAGE SYSTEMS, INC.
A MINNESOTA CORPORATION
WADENA, MINNESOTA
AUGUST 26, 1996
FOR VALUE RECEIVED, the undersigned promises to pay to the order of Ag
Capital Company, a Delaware corporation (the "Lender"), at its office in
Fargo, North Dakota, or at such other place as any present or future holder
of this Note may designate from time to time, the principal sum of (i)
$2,500,000, or (ii) the aggregate unpaid principal amount of all advances of
credit made by the Lender to the undersigned pursuant to this Note as shown
in the records of any present or future holder of this Note, whichever is
less, plus interest thereon from the date of each advance in whole or in part
included in such amount until this Note is fully paid. Interest will be
computed on the basis of the actual number of days elapsed and a 365-day
year, at a variable rate of Prime ("Prime" shall be the highest Prime rate
reported in the WALL STREET JOURNAL, Midwest Edition, as it adjusts daily. If
such rate is not published in the WALL STREET JOURNAL, Midwest Edition, or
the publication ceases to be published, then AGCAPCO will set the interest
rate by using a comparable index or reference rate.) as such Prime Rate is
defined in that certain Loan Agreement dated August 26, 1996 by and between
the undersigned and the Lender (hereinafter, the "Loan Agreement"), or at
such other rate as may be determined pursuant to the terms of such Loan
Agreement. Interest is payable on the first day of each calendar month and at
maturity. Principal payments are due and payable in the amounts and at the
times specified in the Loan Agreement. Payments received fifteen (15) or more
calendar days after the scheduled repayment date are subject to a late
payment penalty equal to 1% of the past due amount but not less than $25.00
per late payment, subject to the maximum amount allowable by Minnesota law.
This Note matures and the outstanding principal balance and all unpaid
interest on this Note is due and payable by September 1, 1997.
Advances of the principal amount shall be made as set forth in the Loan
Agreement.
Amounts may be advanced and readvanced under this Note at the Lender's
sole discretion, provided the principal balance outstanding shall not exceed
the amount first above written. Nothing contained in this Note or any other
agreement or writing shall limit or impair the right of the holder hereof to
demand payment of this Note at any time if there is a default under the Loan
Agreement or any other agreement between the undersigned and the Lender. In
the event there is a default by the undersigned in the terms and conditions
of any agreement with the Lender, the Lender shall be entitled to exercise
all remedies allowable by law and to accelerate all amounts then due and
owing under this Note.
The undersigned and each endorser, guarantor and surety of this Note
jointly and severally (i) agree to pay this Note; (ii) guarantee payment of
this Note; (iii) waive demand, presentment, protest, notice of dishonor and
notice of nonpayment of this Note; (iv) consent to any extension or renewal
of this Note without notice; (v) consent to the release of any of them by any
present or future holder of this Note with or without consideration or
notice; (vi) exonerate any present or future holder of this Note from any
duty or obligation to make demand on anyone for payment of any security or
delivery of any guaranty for this Note or to give notice to anyone of
nonpayment thereof or to collect or sell the same; (vii) consent to the
extension, renewal, exchange, subordination, surrender or release of any
security for this Note by any
AUGUST 26, 1996 1 SEASONAL NOTE NO. 24300
present or future holder of this Note with or without consideration or
notice; (viii) agree that no act, omission or thing, except full payment of
this Note, which but for this provision could act as a release or impairment
of their liability, shall in any way release, impair, or affect the liability
of any of them; (ix) agree to pay on demand all costs and expenses of all
present and future holders of this Note in connection with this Note and any
security and guaranties for this Note, including without limitation
reasonable attorneys' fees, plus interest on such amounts at the rate set
forth in this Note; and (x) consent to the personal jurisdiction of the state
and federal courts located in the State of Minnesota in connection with any
controversy related in any way to this Note or any security or guaranty of
this Note, waive any argument that venue in such forums is not convenient, and
agree that any litigation initiated by any of them against the Lender or any
other present or future holder of this Note relating in any way to this Note
or any security or guaranty for this Note shall be venued in either the
District Court of Minnesota, or the United States District Court, District of
Minnesota. Interest on any amount under this Note shall continue to accrue,
at the option of any present or future holder of this Note, until such holder
receives final payment of such amount in collected funds in form and
substance acceptable to such holder.
No waiver of any right or remedy under this Note shall be valid unless
in writing executed by the holder of this Note, and any such waiver shall be
effective only in the specific instance and for the specific purpose given.
All rights and remedies of all present and future holders of this Note shall
be cumulative and may be exercised singly, concurrently or successively. The
undersigned, if more than one, shall be jointly and severally liable under
this Note, and the term "undersigned," wherever used in this Note, shall mean
the undersigned or any one or more of them. This Note shall be governed by
and construed in accordance with the laws of the State of Minnesota.
It is not Lender's or Borrower's intention or desire to breach any
applicable usury or maximum finance charge or interest rate law. Therefore,
if any interest rate, penalty, fee or cost provided for herein shall exceed
that which is allowed pursuant to any applicable statute or law, said amount
shall be deemed by the parties hereto to be modified so as to conform to and
equal the maximum amount allowed by said statute or law and any over payment
shall be applied against principal as of the date of such payment.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE
UNDERSIGNED HAS READ ALL OF THIS NOTE AND UNDERSTANDS ALL OF THE PROVISIONS
OF THIS NOTE. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY ANY PRESENT OR
FUTURE HOLDER OF THIS NOTE WITH THE EXPRESS PROVISIONS OF THIS NOTE SHALL
CONSTITUTE GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
Minnesota Valley Irrigation, Inc.
also known as Wisconsin Vegetable Storage Systems, Inc.
▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By By
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
AUGUST 26, 1996 2 SEASONAL NOTE NO. 24300