EXHIBIT 2
LOAN AGREEMENT
Between
▇▇▇▇▇▇▇▇'▇ NURSERY, INC. THE FROST NATIONAL BANK
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇, INC.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
September 21, 1999
THIS LOAN AGREEMENT (the "Loan Agreement") will serve to set forth the
terms of the financing transactions by and between ▇▇▇▇▇▇▇▇'▇ Nursery, Inc.
("Borrower"), ▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇▇▇") and The Frost National
Bank, a national banking association ("Lender") and will supercede and replace
that certain loan agreement dated April 1, 1999, executed by and between
Borrower and Lender:
1. Credit Facilities. Subject to the terms and conditions set forth in
this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "Loan Documents"), Lender hereby agrees to provide to
Borrower the credit facility or facilities hereinbelow (whether one or more, the
"Credit Facilities"):
(a) Borrowing Base Line of Credit. Subject to the terms and
conditions set forth herein, Lender agrees to lend to Borrower, on a revolving
basis from time to time during the period commencing on the date hereof and
continuing through the maturity date of the promissory note evidencing this
Credit Facility from time to time, such amounts as Borrower may request
hereunder; provided, however, the total principal amount outstanding at any time
shall not exceed the lesser of (i) an amount equal to the Borrowing Base (as
such term is defined hereinbelow), or (ii) $5,000,000.00. (the "Borrowing Base
Line of Credit"). If at any time the aggregate principal amount outstanding
under the Borrowing Base Line of Credit shall exceed an amount equal to the
Borrowing Base, Borrower agrees to immediately repay to Lender such excess
amount, plus all accrued but unpaid interest thereon. Subject to the terms and
conditions hereof, Borrower may borrow, repay and reborrow hereunder. Borrower
agrees that for a period of not less than sixty (60) consecutive days beginning
on June 1 during each calendar year, Borrower shall have repaid the entire
outstanding principal amount of the Borrowing Base Line of Credit, together with
all accrued but unpaid interest thereon. The sums advanced under the Borrowing
Base Line of Credit shall be used for working capital.
As used in this Loan Agreement, the term "Borrowing Base" shall mean
$1,100,000.00 plus seventy percent (70%) of Borrower's Eligible Accounts and
fifty percent (50%) of the Borrower's Eligible Inventory.
As used herein, the term "Eligible Accounts" shall mean at any time, an
amount equal to the aggregate net invoice or ledger amount owing on all trade
accounts receivable of Borrower,
on a consolidated basis with its subsidiaries, for goods sold or leased or
services rendered in the ordinary course of business, in which the Lender has a
perfected, first priority lien, after deducting (without duplication): (i) each
such account that is unpaid ninety (90) days or more after the original invoice
date thereof, (ii) the amount of all discounts, allowances, rebates, credits and
adjustments to such accounts (iii) the amount of all contra accounts, setoffs,
defenses or counterclaims asserted by or available to the account debtors, (iv)
all accounts with respect to which goods are placed on consignment or subject to
a guaranteed sale or other terms by reason of which payment by the account
debtor may be conditional, (v) all accounts with respect to which Borrower
and/or any of its subsidiaries have furnished a payment and/or performance bond
and that portion of any account for or representing retainage, if any, until all
prerequisites to the immediate payment of retainage have been satisfied, (vi)
all accounts owing by account debtors for which there has been instituted a
proceeding in bankruptcy or reorganization under the United States Bankruptcy
Code or other law, whether state or federal, now or hereafter existing for
relief of debtors, (vii) all accounts owing to Borrower by any affiliates of
Borrower and all accounts owing to Borrower's subsidiaries by any affiliates of
such subsidiaries, (viii) all accounts in which the account debtor is the United
States or any department, agency or instrumentality of the United States, except
to the extent an acknowledgment of assignment to Lender of such account in
compliance with the Federal Assignment of Claims Act and other applicable laws
has been received by Lender, (ix) all accounts due Borrower and/or its
subsidiaries by any account debtor whose principal place of business is located
outside the United States of America and its territories, (x) all accounts
subject to any provision prohibiting assignment or requiring notice of or
consent to such assignment, (xi) that portion of all account balances owing by
any single account debtor which exceeds twenty-five percent (25%) of the
aggregate of all accounts otherwise deemed eligible hereunder which are owing to
Borrower or its subsidiaries by all of the account debtors of Borrower or the
respective subsidiary, and (xii) any other accounts deemed unacceptable by
Lender in its sole and absolute discretion; provided, however, if more than
twenty-five percent (25%) of the then balance owing by any single account debtor
does not qualify as an Eligible Account under the foregoing provisions, then the
aggregate amount of all accounts owing by such account debtor shall be excluded
from Eligible Accounts.
As used herein, the term "Eligible Inventory" shall mean as of any
date, the aggregate value of all inventory of raw materials, work in progress,
and finished goods then owned by Borrower and/or its subsidiaries and held for
sale, lease or other disposition in the ordinary course of its business, in
which Lender has a first priority lien, excluding (i) all bedding plants, (ii)
inventory which is damaged, defective, obsolete or otherwise unsalable in the
ordinary course of Borrower's or its subsidiaries' business, (iii) inventory
which has been returned or rejected, and (iv) inventory subject to any
consignment arrangement between Borrower or its subsidiaries and any other
person or entity. For purposes of this definition, Eligible Inventory shall be
valued at the lower of cost or market value.
(b) Term Loan. Subject to the terms and conditions set forth
herein, Lender agrees to lend to Borrower, jointly and severally with ▇▇▇▇▇▇▇▇▇
and Borrower and ▇▇▇▇▇▇▇▇▇ agree to borrow from Lender, the amount of
$6,500,000.00 (the "Term Loan") in a single advance on the date hereof. The sums
advanced under the Term Loan shall be for the purchase of real property.
All advances under the Credit Facilities shall be collectively called
the "Loans". Lender reserves the right to require Borrower to give Lender not
less than one (1) business day prior notice of each requested advance under the
Credit Facilities, specifying (i) the aggregate amount of such requested
advance, (ii) the requested date of such advance, and (iii) the purpose for such
advance, with such advances to be requested in a form satisfactory to Lender.
2. Commitment Fee/Origination Fee. Borrower agrees to pay Lender a
Commitment Fee equal to one-half percent (1/2%) per annum, payable quarterly in
arrears beginning December 1, 1999, with such Commitment Fee to be calculated on
the average daily unused balance of the Borrowing Base Line of Credit. Borrower
agrees to pay Lender a one percent (1%) Origination Fee on the original
principal amount of the Term Loan, with such Origination Fee payable upon the
execution of the note evidencing the Term Loan.
3. Promissory Notes. The Loans shall be evidenced by one or more
promissory notes or an Application (whether one or more, together with any
renewals, extensions and increases thereof, the "Notes") duly executed by
Borrower and ▇▇▇▇▇▇▇▇▇, as applicable, and payable to the order of Lender, in
form and substance acceptable to Lender. Interest on the Notes shall accrue at
the rate set forth therein. The principal of and interest on the Notes shall be
due and payable in accordance with the terms and conditions set forth in the
Notes and in this Loan Agreement.
4. Collateral. As collateral and security for the indebtedness evidenced
by the Notes and any and all other indebtedness or obligations from time to time
owing by Borrower and/or ▇▇▇▇▇▇▇▇▇ to Lender, Borrower and/or ▇▇▇▇▇▇▇▇▇ shall
▇▇▇▇▇, and hereby grant, or shall cause to be granted, to Lender, its successors
and assigns, a first and prior lien and security interest in and to the property
described hereinbelow, together with any and all PRODUCTS AND PROCEEDS thereof
(the "Collateral"):
(a) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by Borrower), now or
hereafter owned, held, or acquired by Borrower, together with any and all books
of account, customer lists and other records relating in any way to the
foregoing.
(b) All present and hereafter acquired inventory (including
without limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by Borrower wherever
located.
(c) That certain real property described as ▇▇▇ ▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Section Two, An Addition to the City of Arlington,
Tarrant County, Texas, according to the Revised Plat recorded in Cabinet B,
Slide 548, Plat Records, Tarrant County, Texas, together with all improvements,
fixtures, equipment and other appurtenances attached thereto (the "Arlington
Property").
(d) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by ▇▇▇▇▇▇ Plant Farms, Inc.
("▇▇▇▇▇▇")), now or hereafter owned, held, or acquired by ▇▇▇▇▇▇, together with
any and all books of account, customer lists and other records relating in any
way to the foregoing.
(e) All present and hereafter acquired inventory (including
without limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by ▇▇▇▇▇▇ wherever
located.
(f) That certain real property owned by ▇▇▇▇▇▇▇▇▇ located at ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇;
5301 FM. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇; ▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; 1755 FM. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇; and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, together with all
improvements, fixtures, equipment and other appurtenances attached thereto (the
"▇▇▇▇▇▇▇▇▇ Property").
(g) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right to
payment for goods sold or services rendered arising out of the sale or delivery
of personal property or work done or labor performed by ▇▇▇▇▇▇▇▇▇), now or
hereafter owned, held, or acquired by ▇▇▇▇▇▇▇▇▇, together with any and all books
of account, customer lists and other records relating in any way to the
foregoing.
(h) All present and hereafter acquired inventory (including
without limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or to be
furnished under contracts of service, in whole or in part, by ▇▇▇▇▇▇▇▇▇ wherever
located.
(i) All equipment, vehicles and fixtures of whatsoever kind and
character now or hereafter possessed, held, acquired, leased or owned by
▇▇▇▇▇▇▇▇▇ and used or usable in ▇▇▇▇▇▇▇▇▇' business, together with all
replacements, accessories, additions, substitutions and accessions to all of the
foregoing.
The term "Collateral" shall also include all records and data relating
to any of the foregoing (including, without limitation, records and data stored
electronically). Borrower agrees to execute such security agreements,
assignments, deeds of trust and other agreements and documents as Lender shall
deem appropriate and otherwise require from time to time to more fully create
and perfect Lender's lien and security interests in the Collateral.
The note representing the Borrowing Base Line of Credit to be executed
by Borrower is given in renewal, modification and increase of that one certain
revolving promissory note in the original principal sum of $2,500,000.00 dated
April 1, 1999, executed by Borrower and payable to the order of Lender ("Prior
Note"). Borrower further agrees that each and every right, title, claim, equity,
lien and security interest securing payment of said Prior Note are hereby
renewed and extended and/or continued in full force and effect to secure payment
of the Borrowing Base Line of Credit, as modified, renewed and increased.
5. Representations and Warranties. Borrower and ▇▇▇▇▇▇▇▇▇ hereby represent
and warrant, and upon each request for an advance under the Credit Facilities
further represent and warrant, to Lender as follows:
(a) Existence. Borrower and ▇▇▇▇▇▇▇▇▇ are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Texas and all other states where they are doing business, and have all requisite
power and authority to execute and deliver the Loan Documents.
(b) Binding Obligations. The execution, delivery, and performance
of this Loan Agreement and all of the other Loan Documents by Borrower and
▇▇▇▇▇▇▇▇▇ have been duly authorized by all necessary action by Borrower and
▇▇▇▇▇▇▇▇▇, and constitute legal, valid and binding obligations of Borrower and
▇▇▇▇▇▇▇▇▇, enforceable in accordance with their respective terms, except as
limited by bankruptcy, insolvency or similar laws of general application
relating
to the enforcement of creditors' rights and except to the extent specific
remedies may generally be limited by equitable principles.
(c) No Consent. The execution, delivery and performance of this
Loan Agreement and the other Loan Documents, and the consummation of the
transactions contemplated hereby and thereby, do not (i) conflict with, result
in a violation of, or constitute a default under (A) any provision of Borrower's
and ▇▇▇▇▇▇▇▇▇' articles or certificate of incorporation or bylaws, if Borrower
is a corporation, or its partnership agreement, if Borrower is a partnership, or
any agreement or other instrument binding upon Borrower or ▇▇▇▇▇▇▇▇▇, or (B) any
law, governmental regulation, court decree or order applicable to either
Borrower or ▇▇▇▇▇▇▇▇▇, or (ii) require the consent, approval or authorization of
any third party.
(d) Financial Condition. Each financial statement of Borrower
and/or ▇▇▇▇▇▇▇▇▇ supplied to the Lender truly discloses and fairly presents
Borrower's and/or ▇▇▇▇▇▇▇▇▇' respective financial condition as of the date of
each such statement. There has been no material adverse change in such financial
condition or results of operations of Borrower and/or ▇▇▇▇▇▇▇▇▇ subsequent to
the date of the most recent financial statement supplied to Lender.
(e) Litigation. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower or ▇▇▇▇▇▇▇▇▇, threatened against or
affecting Borrower or ▇▇▇▇▇▇▇▇▇ or the properties of Borrower or ▇▇▇▇▇▇▇▇▇,
before any court or governmental department, commission or board, which, if
determined adversely to Borrower or ▇▇▇▇▇▇▇▇▇, would have a material adverse
effect on the financial condition, properties, or operations of Borrower or
▇▇▇▇▇▇▇▇▇.
(f) Taxes; Governmental Charges. Borrower and ▇▇▇▇▇▇▇▇▇ have filed
all federal, state and local tax reports and returns required by any law or
regulation to be filed by it and has either duly paid all taxes, duties and
charges indicated due on the basis of such returns and reports, or made adequate
provision for the payment thereof, and the assessment of any material amount of
additional taxes in excess of those paid and reported is not reasonably
expected.
6. Conditions Precedent to Advances. Lender's obligation to make any
advance under this Loan Agreement and the other Loan Documents shall be subject
to the conditions precedent that, as of the date of such advance and after
giving effect thereto (i) all representations and warranties made to Lender in
this Loan Agreement and the other Loan Documents shall be true and correct, as
of and as if made on such date, (ii) no material adverse change in the financial
condition of Borrower since the effective date of the most recent financial
statements furnished to Lender by Borrower shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result from
the requested advance, which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined), (iv) Lender's receipt
of UCC-3 Termination Statements fully executed by the appropriate party,
terminating all financing statements on file for ▇▇▇▇▇▇▇▇▇ Nurseries, Inc.,
Turkey Creek Farms, Inc. and Wholesale Landscape Distributors, Inc., and (v)
Lender's receipt of all Loan Documents appropriately executed by Borrower and
all other proper parties.
7. Affirmative Covenants. Until (i) the Notes and all other obligations
and liabilities of Borrower and ▇▇▇▇▇▇▇▇▇ under this Loan Agreement and the
other Loan Documents are fully paid and satisfied, and (ii) the Lender has no
further commitment to lend hereunder, Borrower and ▇▇▇▇▇▇▇▇▇ agree and covenant
that they will, unless Lender shall otherwise consent in writing:
(a) Accounts and Records. Maintain their respective books and
records in accordance with generally accepted accounting principles.
(b) Right of Inspection. Permit Lender to visit their respective
properties and installations and to examine, audit and make and take away copies
or reproductions of Borrower's or ▇▇▇▇▇▇▇▇▇' books and records, at all
reasonable times.
(c) Right to Additional Information. Furnish Lender with such
additional information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Borrower's or ▇▇▇▇▇▇▇▇▇' financial
condition and business operations as Lender may request from time to time.
(d) Compliance with Laws. Conduct their respective businesses in
an orderly and efficient manner consistent with good business practices, and
perform and comply with all statutes, rules, regulations and/or ordinances
imposed by any governmental unit upon Borrower and/or ▇▇▇▇▇▇▇▇▇ and their
businesses, operations and properties (including without limitation, all
applicable environmental statutes, rules, regulations and ordinances).
(e) Taxes. Pay and discharge when due all of their indebtedness
and obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature, imposed upon
Borrower, ▇▇▇▇▇▇▇▇▇ or their properties, income, or profits, prior to the date
on which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's or ▇▇▇▇▇▇▇▇▇' properties, income,
or profits; provided, however, Borrower and ▇▇▇▇▇▇▇▇▇ will not be required to
pay and discharge any such assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim so long
as (i) the legality of the same shall be contested in good faith by appropriate
judicial, administrative or other legal proceedings, and (ii) Borrower or
▇▇▇▇▇▇▇▇▇, as the case may be, shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or
claim in accordance with generally accepted accounting principles, consistently
applied.
(f) Insurance. Except as may be more specifically required in the
other Loan Documents, maintain insurance against such risks and in such amounts
as is customarily maintained by similar business operations in the same
vicinity, with such companies and in such amounts satisfactory to Lender.
(g) Notice of Indebtedness. Promptly inform Lender of the
creation, incurrence or assumption by Borrower or ▇▇▇▇▇▇▇▇▇ of any actual or
contingent liabilities not permitted under this Loan Agreement.
(h) Notice of Litigation. Promptly after the commencement thereof,
notify Lender of all material actions, suits and proceedings before any court or
any governmental department, commission or board affecting Borrower or ▇▇▇▇▇▇▇▇▇
or any of their respective properties.
(i) Notice of Material Adverse Change. Promptly inform Lender of
(i) any and all material adverse changes in Borrower's or ▇▇▇▇▇▇▇▇▇' financial
condition, and (ii) all claims made against Borrower or ▇▇▇▇▇▇▇▇▇ which could
materially affect the financial condition of Borrower or ▇▇▇▇▇▇▇▇▇.
(j) Additional Documentation. Execute and deliver, or cause to be
executed and delivered, any and all other agreements, instruments or documents
which Lender may reasonably request in order to give effect to the transactions
contemplated under this Loan Agreement and the other Loan Documents, including,
without limitation, any documents required to perfect Lender's lien on the
vehicles owned by ▇▇▇▇▇▇▇▇▇ and serving as part of the Collateral.
8. Negative Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Lender has no further commitment to
lend hereunder, Borrower and ▇▇▇▇▇▇▇▇▇ will not, without the prior written
consent of Lender:
(a) Nature of Business. Make any material change in the nature of
their respective businesses as carried on as of the date hereof.
(b) Liquidations, Mergers, Consolidations. Liquidate, merge or
consolidate with or into any other entity.
(c) Sale of Assets. Sell, transfer or otherwise dispose of any of
their respective assets or properties, other than in the ordinary course of
business.
(d) Liens. Create or incur any lien or encumbrance on any of their
respective assets, other than (i) liens and security interests securing
indebtedness owing to Lender, (ii) liens for taxes, assessments or similar
charges that are (1) not yet due or (2) being contested in good faith by
appropriate proceedings and for which Borrower or ▇▇▇▇▇▇▇▇▇, as the case may be,
have established adequate reserves, and (iii) liens and security interests
existing as of the date hereof which have been disclosed to Lender, (iv)
purchase money liens on equipment and/or vehicles not currently owned by
Borrower or ▇▇▇▇▇▇▇▇▇ and which are necessary to the normal operation of
Borrower's and ▇▇▇▇▇▇▇▇▇' business, (v) pledges or deposits made to secure
payment of workers compensation (or to participate in any fund in connection
with workers compensation), unemployment insurance, pensions or social security
programs, (vi) liens imposed by mandatory provision of law such as for
materialmen's, mechanics, warehouseman's and other like liens arising in the
ordinary course of business, securing indebtedness whose payment is not yet due,
(vii) good faith deposits not greater than $15,000 in connection with tenders,
leases, real estate bids or contracts (other than contracts involving the
borrowing of money), (viii) good faith pledges or deposits not greater than
$15,000 to secure (a) public or statutory obligations, (b) surety, stay, appeal
or customs bonds, or in lieu of any of the foregoing, and (c) payment of taxes,
assessments, customs duties or other similar charges, (ix) encumbrances
consisting of zoning restrictions, easements or other restrictions on the use of
real property not serving as collateral for the Notes, provided that such
encumbrances do not impair the intended use of such property, and none of which
would be violated by existing or proposed structures or land use.
(e) Indebtedness. Create, incur or assume any indebtedness for
borrowed money or issue or assume any other note, debenture, bond or other
evidences of indebtedness, or guarantee any such indebtedness or such evidences
of indebtedness of others, other than (i) borrowings from Lender, (ii)
borrowings outstanding on the date hereof and disclosed to Lender, (iii)
indebtedness to trade creditors incurred in the ordinary course of business, and
(iv) for purchase money on equipment and/or vehicles, which are necessary to the
normal operation of Borrower's or ▇▇▇▇▇▇▇▇▇' business.
(f) Change in Management. Permit a substantial change in the
senior management of Borrower or ▇▇▇▇▇▇▇▇▇. A substantial change in senior
management shall mean the death, resignation, removal or retirement of any two
(2) of the following individuals from Borrower's or ▇▇▇▇▇▇▇▇▇' business: ▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, or ▇▇▇▇ ▇▇▇▇▇▇.
(g) Loans. Make any loans to any person or entity.
(h) Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate (as hereinafter defined) of
Borrower or ▇▇▇▇▇▇▇▇▇, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or ▇▇▇▇▇▇▇▇▇' business and upon fair and
reasonable terms no less favorable to Borrower or ▇▇▇▇▇▇▇▇▇ than would be
obtained in a comparable arm's-length transaction with a person or entity not an
Affiliate of Borrower or ▇▇▇▇▇▇▇▇▇. As used herein, the term "Affiliate" means
any individual or entity directly or indirectly controlling, controlled by, or
under common control with, another individual or entity.
(i) Dividends. Borrower and ▇▇▇▇▇▇▇▇▇ agree not to declare or pay
any dividends on any shares of their respective capital stock, make any other
distributions with respect to any payment on account of the purchase,
redemption, or other acquisition or retirement of any shares of their respective
capital stock, or make any other distribution, sale, transfer or lease of any of
Borrower's or ▇▇▇▇▇▇▇▇▇' assets other than in the ordinary course of business,
unless any such amounts are directly utilized for the payment of principal or
interest on indebtedness and obligations owing from time to time by Borrower or
▇▇▇▇▇▇▇▇▇ to Lender.
9. Financial Covenants. Until (i) the Notes and all other obligations and
liabilities of Borrower and ▇▇▇▇▇▇▇▇▇ under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower, on a consolidated basis with its
subsidiaries, will maintain the following financial covenants:
(a) Tangible Net Worth. Borrower will maintain, at all times, its
Tangible Net Worth at not less than $9,000,000.00.
(b) Debt to Worth Ratio. Borrower will maintain, at all times, a
ratio of (a) total liabilities (excluding any Subordinated Debt), to (b)
Tangible Net Worth of not greater than 2.50 to 1.0.
(c) Debt Service Coverage Ratio. Borrower will maintain, as of the
last day of each fiscal year, a ratio of (a) net income after taxes plus
depreciation, amortization and other non-cash expenses for the 12 month period
ending with such fiscal year, less any Distributions during such 12 month
period, to (b) current maturities of long-term debt and long-term leases for
such 12 month period, of not less than 1.25 to 1.0.
As used herein, the term "Tangible Net Worth" means, as of any date,
Borrower's total assets excluding all intangible assets, less total liabilities
excluding any Subordinated Debt. As used herein, the term "Subordinated Debt"
means any indebtedness owing by Borrower which has been subordinated by written
agreement to all indebtedness now or hereafter owing by Borrower to Lender, such
agreement to be in form and substance acceptable to Lender. As used herein,
"Distributions" shall mean all dividends and other distributions made by
Borrower to its shareholders or partners, as the case may be, other than salary,
bonuses and other compensation for services. Unless otherwise specified, all
accounting and financial terms and covenants set forth above are to be
determined according to generally accepted accounting principles, consistently
applied.
10. Reporting Requirements. Until (i) the Notes and all other obligations
and liabilities of Borrower and ▇▇▇▇▇▇▇▇▇ under this Loan Agreement and the
other Loan Documents are fully paid and satisfied, and (ii) the Lender has no
further commitment to lend hereunder, Borrower will, unless Lender shall
otherwise consent in writing, furnish the following items to Lender, prepared on
a consolidated basis with its subsidiaries:
(a) Interim Financial Statements. As soon as available, and in any
event within thirty (30) days after the end of each month of each fiscal year of
Borrower, a balance sheet and income statement of Borrower as of the end of such
month, all in form and substance and in reasonable detail satisfactory to Lender
and duly certified (subject to year-end review adjustments) by the President
and/or Chief Financial Officer of Borrower (i) as being true and correct in all
material aspects to the best of his or her knowledge and (ii) as having been
prepared in accordance with generally accepted accounting principles,
consistently applied.
(b) Annual Financial Statements. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of Borrower, a
balance sheet and income statement of Borrower as of the end of such fiscal
year, in each case audited by independent public accountants of recognized
standing acceptable to Lender.
(c) Compliance Certificate. A certificate signed by the President
and/or Chief Financial Officer of Borrower, within thirty (30) days after the
end of each month of each fiscal year, stating that Borrower is in full
compliance with all of its obligations under this Loan Agreement and all other
Loan Documents and is not in default of any term or provisions hereof or
thereof, and demonstrating compliance with all financial ratios and covenants
set forth in this Loan Agreement.
(d) Borrowing Base Report. A borrowing base report signed by the
President and/or Chief Financial Officer of Borrower, within thirty (30) days
after the end of each month of each fiscal year in which indebtedness is
outstanding under the Borrowing Base Line of Credit, in form and detail
satisfactory to Lender.
(e) SEC Filings. Copies of any and all filings made by Borrower
with the Securities and Exchange Commission within thirty (30) days after
filing.
(f) Accounts Aging. An accounts receivable aging report within
thirty (30) days after the end of each month of each fiscal year in which
indebtedness is outstanding under the Borrowing Base Line of Credit, in form and
detail satisfactory to Lender.
11. Events of Default. Each of the following shall constitute an "Event of
Default" under this Loan Agreement:
(a) The failure, refusal or neglect of Borrower and/or ▇▇▇▇▇▇▇▇▇
to pay when due any part of the principal of, or interest on, the Notes or any
other indebtedness or obligations owing to Lender by Borrower or ▇▇▇▇▇▇▇▇▇ from
time to time and such failure, refusal or neglect to make such payment continues
for a period of ten (10) days after written notice to Borrower and ▇▇▇▇▇▇▇▇▇ is
given in accordance with the Loan Documents.
(b) The failure of Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party (as
defined below) to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other Loan
Documents and the failure of Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party to cure
such default within thirty (30) days after written notice from Lender specifying
such default.
(c) The occurrence of an event of default under any of the other
Loan Documents or under any other agreement now existing or hereafter arising
between Lender and Borrower or ▇▇▇▇▇▇▇▇▇ after the giving of any required notice
and expiration of any applicable cure period.
(d) Any representation contained herein or in any of the other
Loan Documents made by Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party is false or
misleading in any material respect when made.
(e) The occurrence of any event which permits the acceleration of
the maturity of any indebtedness owing by Borrower or ▇▇▇▇▇▇▇▇▇ to any third
party under any agreement or understanding.
(f) If Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party: (i) becomes
insolvent, or makes a transfer in fraud of creditors, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its debts as
they become due; (ii) generally is not paying its debts as such debts become
due; (iii) has a receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of the assets of such party, either in a
proceeding brought by such party or in a proceeding brought against such party
and such appointment is not discharged or such possession is not terminated
within sixty (60) days after the effective date thereof or such party consents
to or acquiesces in such appointment or possession; (iv) files a petition for
relief under the United States Bankruptcy Code or any other present or future
federal or state insolvency, bankruptcy or similar laws (all of the foregoing
hereinafter collectively called "Applicable Bankruptcy Law") or an involuntary
petition for relief is filed against such party under any Applicable Bankruptcy
Law and such involuntary petition is not dismissed within sixty (60) days after
the filing thereof, or an order for relief naming such party is entered under
any Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is requested
or consented to by such party; (v) fails to have discharged within a period of
thirty (30) days any attachment, sequestration or similar writ levied upon any
property of such party; or (vi) fails to pay within thirty (30) days any final
money judgment against such party.
(g) If Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party is an entity,
the liquidation, dissolution, merger or consolidation of any such entity or, if
Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party is an individual, the death or legal
incapacity of any such individual.
(h) The entry of any judgment against Borrower, ▇▇▇▇▇▇▇▇▇ or any
Obligated Party or the issuance or entry of any attachment or other lien against
any of the property of Borrower, ▇▇▇▇▇▇▇▇▇ or any Obligated Party for an amount
in excess of $100,000.00, if undischarged, unbonded or undismissed within thirty
(30) days after such entry.
Nothing contained in this Loan Agreement shall be construed to limit
the events of default enumerated in any of the other Loan Documents and all such
events of default shall be cumulative. The term "Obligated Party", as used
herein, shall mean any party other than Borrower who secures, guarantees and/or
is otherwise obligated to pay all or any portion of the indebtedness evidenced
by the Notes.
12. Remedies. Upon the occurrence of any one or more of the foregoing
Events of Default, (a) the entire unpaid balance of principal of the Notes,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Lender by Borrower and/or ▇▇▇▇▇▇▇▇▇ at such time shall, at
the option of Lender, become immediately due and payable without further notice,
demand, presentation, notice of dishonor, notice of intent to accelerate, notice
of acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Borrower and ▇▇▇▇▇▇▇▇▇, and (b) Lender may, at its option,
cease further advances under any of the Notes. All rights and remedies of Lender
set forth in this Loan Agreement and in any of the
other Loan Documents may also be exercised by Lender, at its option to be
exercised in its sole discretion, upon the occurrence of an Event of Default.
13. Rights Cumulative. All rights of Lender under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Lender under
any and all other agreements between Borrower and Lender or ▇▇▇▇▇▇▇▇▇ and Lender
(including, but not limited to, the other Loan Documents), and not in
substitution or diminution of any rights now or hereafter held by Lender under
the terms of any other agreement.
14. Partial Release of Collateral.
(a) Provided (i) no Event of Default has occurred and is
continuing, or no event has occurred which with notice or lapse of time, or
both, would constitute an Event of Default, and (ii) the indebtedness and other
obligations owing under Borrower's Borrowing Base Line of Credit have been fully
paid and satisfied and Lender has no further commitment to lend thereunder, upon
Borrower's written request, Lender agrees to release its lien on the inventory,
accounts, chattel paper, general intangibles, equipment, vehicles, fixtures,
crops, farm equipment and farm products pledged to Lender by Borrower, ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇, as well as its lien on the Arlington Property. In the event
Lender becomes obligated to release its lien on such property, Lender agrees, as
promptly as commercially reasonable, to execute and deliver UCC-3 Termination
Statements terminating all liens on file with respect to such collateral and a
Release of Deed of Trust lien with respect to the Arlington Property. Borrower
shall pay any and all expenses it incurs arising in connection with the release
of such property and any and all reasonable expenses incurred by Lender in
connection with same.
(b) Provided no Event of Default has occurred and is continuing,
or no event has occurred which with notice or lapse of time, or both, would
constitute an Event of Default, Lender agrees to release its lien on the
▇▇▇▇▇▇▇▇▇ Property, or any portion thereof, for which Borrower or ▇▇▇▇▇▇▇▇▇
requests a release in writing (the "Release Property"), upon receipt of eighty
percent (80%) of the greater of (i) the sales price of such Release Property, as
evidenced by a settlement statement provided by a title company and certified as
being true and correct, or (ii) such Release Property's appraised value as
determined, at the option of Lender, by the Lender's most recent appraisal for
such Release Property, or a new appraisal of such property obtained by Lender at
Borrower's expense; provided, however, for Lender to be obligated to release its
lien on a portion of the ▇▇▇▇▇▇▇▇▇ Property which does not constitute one or
more entire parcels of the six (6) parcels constituting the ▇▇▇▇▇▇▇▇▇ Property,
Borrower or ▇▇▇▇▇▇▇▇▇ must request the partial release in writing and shall
provide to Lender a current survey of the acreage to be released, a metes and
bounds description of the acreage to be released and a plat drawing showing the
relationship of the acreage requested to be released to the remaining acreage,
which shall be acceptable to Lender in its sole discretion. In the event Lender
becomes obligated to release all or a portion of its lien hereunder, Lender
agrees, as promptly as commercially reasonable, to execute and deliver a Release
of its Deed of Trust lien or a Partial Release of its Deed of Trust Lien, as the
case may be, on the Release Property. Borrower shall pay any and all expenses it
incurs arising in connection with the release of such property and any and all
reasonable expenses incurred by Lender in connection with same.
15. Waiver and Agreement. Neither the failure nor any delay on the part of
Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower or ▇▇▇▇▇▇▇▇▇ therefrom shall be effective
unless the same shall be in writing and signed by Lender, and then shall be
effective only in the specific instance and for the purpose for which given and
to the extent specified in such writing. No modification or amendment to this
Loan Agreement or to any of the other Loan Documents shall be valid or effective
unless the same is signed by the party against whom it is sought to be enforced.
16. Benefits. This Loan Agreement shall be binding upon and inure to the
benefit of Lender, Borrower and ▇▇▇▇▇▇▇▇▇, and their respective successors and
assigns, provided, however, that neither Borrower nor ▇▇▇▇▇▇▇▇▇ may, without the
prior written consent of Lender, assign any rights, powers, duties or
obligations under this Loan Agreement or any of the other Loan Documents.
17. Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the first page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal
delivery, in the case of expedited delivery service, as of the date of first
attempted delivery at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under the care and custody
of the United States Postal Service. Any party shall have the right to change
its address for notice hereunder to any other location within the continental
United States by notice to the other party of such new address at least thirty
(30) days prior to the effective date of such new address.
18. Construction. This Loan Agreement and the other Loan Documents have
been executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Lender's
address set forth on the first page hereof is located.
19 Invalid Provisions. If any provision of this Loan Agreement or any of
the other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
20. Expenses. Borrower shall pay all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) in connection with
(i) the preparation of any of the Loan Documents, (ii) any action required in
the course of administration of the indebtedness and obligations evidenced by
the Loan Documents, and (iii) any action in the enforcement of Lender's rights
upon the occurrence of Event of Default.
21. Participation of the Loans. Borrower and ▇▇▇▇▇▇▇▇▇ agree that Lender
may, at its option, sell interests in the Loans and its rights under this Loan
Agreement to a financial institution or institutions and, in connection with
each such sale, Lender may disclose any financial and other information
available to Lender concerning Borrower and ▇▇▇▇▇▇▇▇▇ to each prospective
purchaser.
22. Conflicts. In the event any term or provision hereof is inconsistent
with or conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Loan Agreement shall be controlling.
23. Counterparts. This Loan Agreement may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
24. Facsimile Documents and Signatures. For purposes of negotiating and
finalizing this Loan Agreement, if this document or any document executed in
connection with it is transmitted by facsimile machine ("fax"), it shall be
treated for all purposes as an original document. Additionally, the signature of
any party on this document transmitted by way of a facsimile machine shall be
considered for all purposes as an original signature. Any such faxed document
shall be considered to have the same binding legal effect as an original
document. At the request of any party, any faxed document shall be re-executed
by each signatory party in an original form.
25. Acknowledgment of Indebtedness Owing under Prior Note. As further
consideration for Lender's agreement to renew and increase the Prior Note,
Borrower hereby acknowledges and agrees that the principal sum of $0.00 is due
and owing on the Prior Note as of the date hereof, and that there are no offsets
or defenses to the indebtedness evidenced by the Prior Note, or any part
thereof, or any claim or counterclaim against Lender arising therefrom.
26. Release. In further consideration for the agreement of Lender to renew
and increase the Prior Note, all as herein provided, the Borrower, for itself
and its successors and assigns (collectively, the "Releasing Parties"), hereby
releases and forever discharges Lender and its directors, officers and
employees, as well as all of their successors and assigns (the "Released
Parties") from any and all claims, demands, liabilities, causes of action or
other damages now or hereafter held or claimed by the Releasing Parties, whether
known or unknown, arising out of or in anyway related to any and all
transactions pertaining to the Prior Note (including, without limitation, all
matters referred to in this Loan Agreement) occurring prior to the date of
execution hereof, including, but not limited to, any loss, cost or damage in
connection with any alleged breach of fiduciary duty, breach of any duty of fair
dealing, breach of confidence, breach of funding commitment, undue influence,
duress, economic coercion, conflict of interest, negligence, bad faith,
malpractice, usury, violations of the Racketeer Influenced and Corrupt
Organizations Act, intentional or negligent infliction of mental distress,
tortious interference with contractual relations, breach of contract, deceptive
trade practice, slander or conspiracy. The Borrower hereby acknowledges and
agrees that the release herein contained is supported by sufficient and adequate
consideration received by the parties executing this Loan Agreement.
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
NOTICE TO COMPLY WITH STATE LAW
For the purpose of this Notice, the term "WRITTEN AGREEMENT" shall
include the document set forth above, together with each and every other
document relating to and/or securing the same loan transaction, regardless of
the date of execution.
THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
BORROWER: LENDER:
▇▇▇▇▇▇▇▇'▇ NURSERY, INC., THE FROST NATIONAL BANK,
A TEXAS CORPORATION A NATIONAL BANKING ASSOCIATION
BY:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ BY:/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, PRESIDENT ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, MARKET PRESIDENT
BY:/S/ ▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇▇▇▇, VICE PRESIDENT
▇▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇, INC.,
A TEXAS CORPORATION
BY:/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, PRESIDENT