EXHIBIT 10.16
Loan No. PRT0989
LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT is entered into as of January 22,
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ("FCW") and CALAVO
GROWERS, INC., Santa Ana, California (the "Company").
SECTION 1. THE REVOLVING CREDIT FACILITY. On the terms and conditions set
forth in this agreement, FCW agrees to make loans to the Company during the
period set forth below in an aggregate principal amount not to exceed
$12,000,000.00 (the "Commitment"). Within the limits of the Commitment, the
Company may borrow, repay and reborrow.
SECTION 2. SALE OF INTEREST TO COBANK. The Company acknowledges that
concurrent with the execution of this Line of Credit Agreement, FCW is selling a
100% participation interest in the Commitment to CoBank, ACB ("CoBank"). All
funds to be advanced hereunder shall be made by CoBank, all repayments by the
Company hereunder shall be made to CoBank, and all notices to be made to FCW
shall be made to CoBank and to FCW. CoBank shall be solely responsible for the
administration of this Line of Credit Agreement and the enforcement of all
rights and remedies of FCW hereunder, including administration of so called
"borrower rights" provisions of regulations of the Farm Credit Administration
covering interest rate disclosures, restructuring for distressed loans, the
right of first refusal with respect to acquired property, and other matters as
set forth in the applicable regulations.
SECTION 3. PURPOSE. The purpose of the Commitment is to finance the
operating needs of the Company and for the issuance of approved letters of
credit.
SECTION 4. TERM. The term of the Commitment shall be from the date hereof,
up to but not including January 22, 2006, or such later date as FCW may, with
the consent of CoBank, authorize in writing.
SECTION 5. AVAILABILITY. Subject to the provisions of Section 26, loans
will be made available on any day on which FCW and CoBank and the Federal
Reserve Banks are open for business upon the telephonic or written request of
the Company. Requests for loans must be received no later than 12:00 Noon
Company's local time on the date the loan is desired. Loans will be made
available by CoBank by wire transfer of immediately available funds to such
account or accounts as may be authorized by the Company. The Company shall
furnish to CoBank a duly completed and executed copy of a CoBank Delegation and
Wire and Electronic Transfer Authorization Form, and FCW and CoBank shall be
entitled to rely on (and shall incur no liability to the Company in acting on)
any request or direction furnished in accordance with the terms thereof.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 2
SECTION 6. INTEREST AND FEES.
(A) INTEREST. The Company agrees to pay interest on the unpaid balance of
the loans in accordance with one of more of the following interest rate options,
as selected by the Company:
(1) WEEKLY QUOTED VARIABLE RATE. At a rate per annum equal at all
times to the rate of interest established by CoBank on the first Business Day of
each week. The rate established by CoBank shall be effective until the first
Business Day of the next week. Each change in the rate shall be applicable to
all balances subject to this option and information about the then current rate
shall be made available upon telephonic request.
(2) LIBOR. At a fixed rate per annum equal to "LIBOR" (as
hereinafter defined) plus 100 basis points (1%). Under this option: (1) rates
may be fixed for "Interest Periods" (as hereinafter defined) of 1,2,3,6,9 or
12 months as selected by the Company; (2) amounts may be fixed in increments of
$100,000.00 or multiples thereof; (3) the maximum number of fixes in place at
any one time shall be 10; and (4) rates may only be fixed on a "Banking Day" (as
hereinafter defined) on 3 Banking Days' prior written notice. For purposes
hereof: (a) "LIBOR" shall mean the rate (rounded upward to the nearest
sixteenth) and adjusted for reserves required on "Eurocurrency Liabilities" (as
hereinafter defined) for banks subject to "FRB Regulation D" (as herein defined)
or required by any other federal law or regulation) quoted by the British
Bankers Association (the "BBA") at 11:00 a.m. London time 2 Banking Days before
the commencement of the Interest Period for the offering of U.S. dollar deposits
in the London interbank market for the Interest Period designated by the
Company; as published by Bloomberg or another major information vendor listed on
BBA's official website; (b) "Banking Day" shall mean a day on which CoBank is
open for business, dealings in U.S. dollar deposits are being carried out in the
London interbank market, and banks are open for business in New York City and
London, England; (c) "Interest Period" shall mean a period commencing on the
date this option is to take effect and ending on the numerically corresponding
day in the next calendar month or the month that is 2, 3, 6, 9 or 12 months
thereafter, as the case may be; provided, however, that: (i) in the event such
ending day is not a Banking Day, such period shall be extended to the next
Banking Day unless such next Banking Day falls in the next calendar month, in
which case it shall end on the preceding Banking Day; and (ii) if there is no
numerically corresponding day in the month, then such period shall end on the
last Banking Day in the relevant month; (d) "Eurocurrency Liabilities" shall
have meaning as set forth in "FRB Regulation D"; and (e) "FRB Regulation D"
shall mean Regulation D as promulgated by the Board of Governors of the Federal
Reserve System, 12 CFR Part 204, as ▇▇▇▇▇▇.
(3) QUOTED RATE. At a fixed rate per annum to be quoted by CoBank in
its sole discretion in each instance. Under this option, rates may be fixed on
such balances and for such periods, as may be agreeable to CoBank in its sole
discretion in each instance, provided that: (1) the minimum fixed period shall
be 30 days; (2) amounts may be fixed in increments of $500,000.00 or multiples
thereof; and (3) the maximum number of fixes in place at any one time shall be
10.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 3
The Company shall select the applicable rate option at the time it
requests a loan hereunder and may, subject to the limitations set forth above,
elect to convert balances bearing interest at the variable rate option to one of
the fixed rate options. Upon the expiration of any fixed rate period, interest
shall automatically accrue at the variable rate option provided for above unless
the amount fixed is repaid or fixed for an additional period in accordance with
the terms hereof. Notwithstanding the foregoing, rates may not be fixed in such
a manner as to cause the Company to have to break any fixed rate balance in
order to pay any installment of principal. All elections provided for herein
shall be made telephonically or in writing and must be received by 12:00 Noon
Company's local time. Interest shall be calculated on the actual number of days
each loan is outstanding on the basis of a year consisting of 360 days and shall
be payable monthly in arrears by the 20th day of the following month or on such
other day in such month as CoBank shall require in a written notice to the
Company.
(B) COMMITMENT FEE. In consideration of the Commitment, the Company
agrees to pay to CoBank a commitment fee on the average daily unused portion of
the Commitment at the rate of 0.15% per annum (calculated on a 360 day basis
based on utilization, which is defined as outstanding advances plus issued and
outstanding letters of credit divided by the total available amount of the
Commitment), payable quarterly in arrears by the 20th day following each
quarter. Such fee shall be payable for each quarter (or portion thereof)
occurring during the original or any extended term of the Commitment.
SECTION 7. REPAYMENT AND MATURITY. The unpaid principal balance of the
loans shall mature and be due and payable on January 22, 2006, or such later
date as CoBank may in its sole discretion authorize in writing (the "Maturity
Date").
SECTION 8. PROMISSORY NOTE. The Company's obligation to repay the loans
shall be evidenced by a promissory note in the form attached hereto as Exhibit A
("Note").
SECTION 9. MANNER AND TIME OF PAYMENT. CoBank shall maintain a record of
all loans, the interest accrued thereon, and all payments made with respect
thereto, and such record shall, absent proof of manifest error, be conclusive
evidence of the outstanding principal and interest on the loans. All payments
shall be made by wire transfer of immediately available funds, by check, or by
automated clearing house or other similar cash handling processes as specified
by separate agreement between the Company and CoBank. Wire transfers shall be
made to ABA No. ▇▇▇▇▇▇▇▇▇ for advice to and credit of CoBank (or to such other
account as CoBank may direct by notice). The Company shall give CoBank
telephonic notice no later than 12:00 Noon Company's local time of its intent to
pay by wire and funds received after 3:00 p.m. Company's local time shall be
credited on the next business day. Checks shall be mailed to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (or to such other place as CoBank may direct by
notice). Credit for payment by check will not be given until the later of: (a)
the day on which CoBank receives immediately available funds; or (b) the next
business day after receipt of the check.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 4
SECTION 10. CAPITALIZATION. The participation interest in the Loans held
by CoBank shall be on a patronage basis; provided, however, that pursuant to
Section 27 hereunder, any subparticipation interest sold by CoBank subsequent to
its initial purchase of the 100% participation interest from FCW shall not be on
a patronage basis. The Company will initially purchase a $1,000.00 stock
investment under FCW capitalization plan. The Company understands that in light
of the sale of 100% of the Commitment to CoBank, the Company has a right as set
forth in the Regulations of the Farm Credit Administration (see Section
614.4335) to elect to invest in equities of either FCW or CoBank. Subject to the
provisions of Section 28 below, the Company hereby elects to purchase such
equity in CoBank as CoBank may from time to time require in accordance with its
Bylaws. However, the maximum amount of equity which the Company shall be
obligated to purchase in connection with any loan may not exceed the maximum
amount permitted by the Bylaws as of the date hereof or at the time this loan is
renewed or refinanced under an arrangement where some or all of the loan is
participated in by CoBank.
SECTION 11. SECURITY. The Company's obligations under this agreement and
the Note shall be secured by a statutory first lien on all equity which the
Company may now own or hereafter acquire in FCW or CoBank. With the exception of
the security referenced in the preceding sentence, the Company's obligations
under this agreement and the Note shall be unsecured.
SECTION 12. LETTERS OF CREDIT. If agreeable to CoBank in its sole
discretion in each instance, in addition to loans, the Company may utilize up to
$2,500,000.00 of the Commitment to open irrevocable letters of credit for its
account. Each letter of credit will be issued within a reasonable period of time
after receipt of a duly completed and executed copy of CoBank's then current
form of application or, if applicable, in accordance with the terms of any
CoTrade Agreement between the parties, and shall reduce the amount available
under the Commitment by the maximum amount capable of being drawn thereunder.
Any draw under any letter of credit issued hereunder shall be deemed an advance
under the Commitment. Each letter of credit must be in form and content
acceptable to CoBank and must expire no later than the maturity date of the
loan.
SECTION 13. CONDITIONS PRECEDENT. CoBank's obligation to make loans
hereunder is subject to the condition precedent that CoBank receive, in form and
content satisfactory to CoBank, each of the following:
(A) THIS AGREEMENT, ETC. A duly executed copy of this agreement and
all instruments and documents contemplated hereby.
(B) EVIDENCE OF AUTHORITY. Such certified board resolutions,
evidence of incumbency, and other evidence that CoBank may require that this
agreement and the Note have been duly authorized and executed.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 5
(C) FEES AND OTHER CHARGES. All fees and other charges provided for
herein.
(D) EVIDENCE OF INSURANCE. Such evidence as CoBank may require that
the Company is in compliance with Section 15(C) hereof.
(E) EVENT OF DEFAULT. That no "Event of Default" (as defined in
Section 18 hereof) or event which with the giving of notice and/or the passage
of time would become an Event of Default hereunder (a "Potential Default"),
shall have occurred and be continuing.
(F) PARTICIPATION CERTIFICATE. That CoBank and FCW shall have
entered into a Participation Certificate covering the loan hereunder to be dated
as of the date hereof.
SECTION 14. REPRESENTATIONS AND WARRANTIES.
(A) THIS AGREEMENT. The Company represents and warrants to FCW and
CoBank that as of the date of this Agreement:
(1) COMPLIANCE. The Company and, to the extent contemplated
hereunder, each "Subsidiary" (as defined below), is in compliance with all of
the terms of this agreement, and no Event of Default or Potential Default exists
hereunder.
(2) SUBSIDIARIES. The Company has the following Subsidiaries:
Calavo Foods, Inc. (CFI); Maui Fresh International, Inc.; Calavo de Mexico S.A.
de C.V.; and Calavo Foods de Mexico S.A. de C.V. . For purposes hereof, a
"Subsidiary" shall mean a corporation of which shares of stock having ordinary
voting power to elect a majority of the board of directors or other managers of
such corporation are owned, directly or indirectly, by the Company.
(3) CONFLICTING AGREEMENTS, Etc. This agreement and the Note
(collectively, at any time, the "Loan Documents"), do not conflict with, or
require the consent of any party to, any other agreement to which the Company is
a party or by which it or its property may be bound or affected, and do not
conflict with any provision of the Company's bylaws, articles of incorporation,
or other organizational documents.
(4) COMPLIANCE. The Company and, to the extent contemplated
hereunder, each Subsidiary, if any, is in compliance with all of the terms of
the Loan Documents.
(5) BINDING AGREEMENT. The Loan Documents create legal, valid,
and binding obligations of the Company which are enforceable in accordance with
their terms, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, or similar laws affecting creditors' rights generally.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 6
SECTION 15. AFFIRMATIVE COVENANTS. Unless otherwise agreed to in writing
by CoBank, while this agreement is in effect, the Company agrees to and with
respect to Subsections 15(A) through 15(F) hereof, agrees to cause each
Subsidiary, if any, to:
(A) CORPORATE EXISTENCE, LICENSES. ETC. (i) Preserve and keep in
full force and effect its existence and good standing in the jurisdiction of its
incorporation or formation; (ii) qualify and remain qualified to transact
business in all jurisdictions where such qualification is required; and (iii)
obtain and maintain all licenses, certificates, permits, authorizations,
approvals, and the like which are material to the conduct of its business or
required by law, rule, regulation, ordinance, code, order, and the like
(collectively, "Laws").
(B) COMPLIANCE WITH LAWS. Comply in all material respects with all
applicable Laws, including, without limitation, all Laws relating to
environmental protection. In addition, the Company agrees to cause all persons
occupying or present on any of its properties, and to cause each Subsidiary, if
any, to cause all persons occupying or present on any of its properties, to
comply in all material respects with all environmental protection Laws.
(C) INSURANCE. Maintain insurance with insurance companies or
associations acceptable to CoBank in such amounts and covering such risks as are
usually carried by companies engaged in the same or similar business and
similarly situated, and make such increases in the type or amount of coverage as
CoBank may request. At CoBank's request, all policies (or such other proof of
compliance with this Subsection as may be satisfactory to CoBank) shall be
delivered to CoBank.
(D) PROPERTY MAINTENANCE. Maintain all of its property that is
necessary to or useful in the proper conduct of its business in good working
condition, ordinary wear and tear excepted.
(E) BOOKS AND RECORDS. Keep adequate records and books of account in
which complete entries will be made in accordance with generally accepted
accounting principles ("GAAP") consistently applied.
(F) INSPECTION. Permit CoBank or its agents, upon reasonable notice
and during normal business hours or at such other times as the parties may
agree, to examine its properties, books, and records, and to discuss its
affairs, finances, and accounts, with its respective officers, directors,
employees, and independent certified public accountants.
(G) REPORTS AND NOTICES. Furnish to CoBank:
(1) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in no
event more than 90 days after the end of each fiscal year of the Company
occurring during the term hereof, annual consolidated and consolidating
financial statements of the Company and its consolidated Subsidiaries, if any,
prepared in accordance with GAAP consistently applied. Such financial statements
shall: (a) be audited by independent certified public accountants selected by
the
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 7
Company and acceptable to CoBank; (b) be accompanied by a report of such
accountants containing an opinion thereon acceptable to CoBank; (c) be prepared
in reasonable detail and in comparative form; and (d) include a balance sheet, a
statement of income, a statement of retained earnings, a statement of cash
flows, and all notes and schedules relating thereto.
(2) INTERIM FINANCIAL STATEMENTS. As soon as available, but in
no event more than 30 days after the end of each fiscal quarter, a consolidated
balance sheet of the Company and its consolidated Subsidiaries, if any, as of
the end of such quarter, a consolidated statement of income for the Company and
its consolidated Subsidiaries, if any, for such period and for the period year
to date, and such other interim statements as CoBank may specifically request,
all prepared in reasonable detail and in comparative form in accordance with
GAAP consistently applied and certified by an authorized officer or employee of
the Company acceptable to CoBank.
(3) NOTICE OF DEFAULT. Promptly after becoming aware thereof,
notice of the occurrence of an Event of Default or a Potential Default.
(4) NOTICE OF NON-ENVIRONMENTAL LITIGATION. Promptly after the
commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting the Company or
any Subsidiary which, if determined adversely to the Company or any such
Subsidiary, could have a material adverse effect on the financial condition,
properties, profits, or operations of the Company or any such Subsidiary.
(5) NOTICE OF ENVIRONMENTAL LITIGATION, ETC. Promptly after
receipt thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or any other communication alleging a condition that may require
the Company or any Subsidiary to undertake or to contribute to a cleanup or
other response under environmental Laws, or which seek penalties, damages,
injunctive relief, or criminal sanctions related to alleged violations of such
Laws, or which claim personal injury or property damage to any person as a
result of environmental factors or conditions.
(6) BYLAWS AND ARTICLES. Promptly after any change in the
Company's bylaws or articles of incorporation (or like documents), copies of all
such changes, certified by the Company's Secretary.
(7) OTHER INFORMATION. Such other information regarding the
condition or operations, financial or otherwise, of the Company or any
Subsidiary as CoBank may from time to time reasonably request, including but not
limited to copies of all pleadings, notices, and communications referred to in
Subsections 15(G)(4) and (5) above.
(8) FINANCIAL CERTIFICATE. Together with each set of
financial statements furnished to CoBank pursuant to Section 15(G)(1), and each
quarterly statement submitted
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 8
pursuant to Section 15(G)(2) for a period corresponding to a period for which
one or more of the financial covenants set forth in Section 17 hereof are
required to be tested, a certificate of an officer or employee of the Company
acceptable to CoBank setting forth calculations showing compliance with each of
the financial covenants that require compliance at the end of the period for
which the statements are being furnished.
(H) CERTAIN ORGANIZATIONAL CHANGES. Provide CoBank with prior notice
(and as early as practicable) of any merger, consolidation reorganization under
a different provision of law, acquisition of all or a material part of the
assets of another organization change of name, adoption of any trade name, or
creation of any Subsidiary, affiliate or material joint venture(s). For purposes
of this covenant, joint venture transaction(s), which alone or in the aggregate
exceed $1,000,000, are considered material.
SECTION 16. NEGATIVE COVENANTS. Unless otherwise agreed to in writing by
CoBank, which agreement will not be unreasonably withheld, while this agreement
is in effect, the Company will not:
(A) BORROWINGS. Create, incur, assume, or allow to exist,
directly or indirectly, any indebtedness or liability for borrowed money
(including trade or bankers' acceptances), letters of credit, or the deferred
purchase price of property or services (including capitalized leases), except
for: (i) debt to CoBank; (ii) accounts payable to trade creditors incurred in
the ordinary course of business; and (iii) current operating liabilities (other
than for borrowed money) incurred in the ordinary course of business; (iv) debt
of the Company to Bank of America in an amount not to exceed $12,000,000.00 and
all extensions, renewals, and refinancings thereof; (v) (vi) letters of credit
issued by any bank for the account of the Company in an aggregate face amount
not to exceed $5,000,000.00 at any one time outstanding; and (vii) capitalized
leases existing on the date hereof existing from time to time.
(B) LIENS. Create, incur, assume, or allow to exist any
mortgage, deed of trust, pledge, lien (including the lien of an attachment,
judgment, or execution), security interest, or other encumbrance of any kind
upon any of its property, real or personal (collectively, "Liens"). The
foregoing restrictions shall not apply to: (i) Liens in favor of FCW or CoBank;
(ii) Liens for taxes, assessments, or governmental charges that are not past
due; (iii) Liens and deposits under workers' compensation, unemployment
insurance, and social security Laws; (iv) Liens and deposits to secure the
performance of bids, tenders, contracts (other than contracts for the payment of
money), and like obligations arising in the ordinary course of business as
conducted on the date hereof; (v) Liens imposed by Law in favor of mechanics,
materialmen, warehousemen, and like persons that secure obligations that are not
past due; and (vi) easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment of the property or assets encumbered thereby in
the normal course of its business or materially impair the value of the property
subject theretor.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 9
(C) [INTENTIONALLY OMITTED]
(D) TRANSFER OF ASSETS. Sell, transfer, lease, or otherwise dispose
of any of its assets, except in the ordinary course of business.
(E) LOANS. Lend or advance money, credit, or property to any person
or entity, except for: (i) loans made to U.S. growers under Calavo's grower
development loan program not to exceed $4,000,000.00 outstanding at any one
time; (ii) existing advances and loans to Sierra Pacific; (iii) loans to Mexican
growers not to exceed $1,500,000.00 outstanding at any one time; (iv) Chilean
pre-season grower advances made under existing program not to exceed a gross
amount of $4,000,000.00 outstanding at any one time; and (v) trade credit
extended in the ordinary course of business.
(F) CONTINGENT LIABILITIES. Assume, guarantee, become liable as a
surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a
maintenance agreement, an asset or stock purchase agreement, or any other
agreement designed to ensure any creditor against loss), for or on account of
the obligation of any person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of the Company's business.
(G) CHANGE IN BUSINESS. Engage in any business activities or
operations substantially different from or unrelated to the Company's present
business activities or operations.
SECTION 17. FINANCIAL COVENANTS. Unless otherwise agreed to in writing,
while this agreement is in effect:
(A) CURRENT RATIO. The Company and its consolidated Subsidiaries, if
any, will have at all times and tested at the end of each fiscal quarter of the
Company, a ratio of consolidated current assets to consolidated current
liabilities (both as determined in accordance with GAAP, adjusted on a specific
unit cost basis, consistently applied) of not less than 1.35 to 1.
(B) INTEREST COVERAGE RATIO. The Company and its consolidated
Subsidiaries will have at all times and tested at the end of each fiscal quarter
of the Company, a "Interest Coverage Ratio" (as defined below) for that year of
not less than 5.0:1. For purposes hereof, the term "Debt Service Coverage Ratio"
shall mean EBITDA divided by interest expense, both determined in accordance
with GAAP on a moving four-quarter basis.
(C) TOTAL LEVERAGE RATIO. The Company and its consolidated
Subsidiaries will have at all times and tested at the end of each fiscal quarter
of the Company, a ratio of Funded Debt to EBITDA of not more than 3.5 to 1. For
purposes hereof, the term "Funded Debt" shall mean the total outstanding balance
of all borrowed monies, including letter of credit liability, from all
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 10
lending sources. EBITDA shall be determined in accordance with GAAP and computed
on a moving four-quarter basis.
SECTION 18. EVENTS OF DEFAULT. Each of the following shall constitute an
"Event of Default" under this agreement:
(A) PAYMENT DEFAULT. The Company should fail to make any payment to
CoBank when due.
(B) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made or deemed made by the Company herein or in the Note, application,
agreement, certificate, or other document related to or furnished in connection
with this agreement or the Note, shall prove to have been false or misleading in
any material respect on or as of the date made or deemed made.
(C) CERTAIN AFFIRMATIVE COVENANTS. The Company or, to the extent
required hereunder, any Subsidiary should fail to perform or comply with
Sections 15(A) through 15(G)(2), and 15(G)(6) and such failure continues for 15
days after written notice thereof shall have been delivered by CoBank to the
Company.
(D) OTHER COVENANTS AND AGREEMENTS. The Company or, to the extent
required hereunder, any Subsidiary should fail to perform or comply with any
other covenant or agreement contained herein or in any other Loan Document or
shall use the proceeds of any loan for an unauthorized purpose.
(E) CROSS-DEFAULT. The Company should, after any applicable grace
period, breach or be in default under the terms of any other agreement between
the Company and CoBank.
(F) OTHER INDEBTEDNESS. The Company or any Subsidiary should fail to
pay when due any indebtedness to any other person or entity for borrowed money
or any long-term obligation for the deferred purchase price of property
(including any capitalized lease), or any other event occurs which, under any
agreement or instrument relating to such indebtedness or obligation, has the
effect of accelerating or permitting the acceleration of such indebtedness or
obligation, whether or not such indebtedness or obligation is actually
accelerated or the right to accelerate is conditioned on the giving of notice,
the passage of time, or otherwise.
(G) JUDGMENTS. A judgment, decree, or order for the payment of money
shall be rendered against the Company or any Subsidiary and either: (i)
enforcement proceedings shall have been commenced; (ii) a Lien prohibited under
Section 10(B) hereof shall have been obtained; or (iii) such judgment, decree,
or order shall continue unsatisfied and in effect for a period of 20 consecutive
days without being vacated, discharged, satisfied, or stayed pending appeal.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 11
(H) INSOLVENCY, ETC. The Company or any Subsidiary shall: (i) become
insolvent or shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they come due; or (ii) suspend its
business operations or a material part thereof or make an assignment for the
benefit of creditors; or (iii) apply for, consent to, or acquiesce in the
appointment of a trustee, receiver, or other custodian for it or any of its
property or, in the absence of such application, consent, or acquiescence, a
trustee, receiver, or other custodian is so appointed; or (iv) commence or have
commenced against it any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation Law of any
jurisdiction.
(I) MATERIAL ADVERSE CHANGE. Any material adverse change occurs, as
reasonably determined by CoBank, in the Company's financial condition, results
of operation, or ability to perform its obligations hereunder or under any
instrument or document contemplated hereby.
SECTION 19. REMEDIES. Upon the occurrence and during the continuance of an
Event of Default or any Potential Default, CoBank shall have no obligation to
continue to extend credit to the Company and may discontinue doing so at any
time without prior notice. For all purposes hereof, the term "Potential Default"
means the occurrence of any event which, with the passage of time or the giving
of notice or both would become an Event of Default. In addition, upon the
occurrence and during the continuance of any Event of Default, CoBank may, upon
notice to the Company, terminate any commitment and declare the entire unpaid
principal balance of the loans, all accrued interest thereon, and all other
amounts payable under this agreement, all Supplements, and the other Loan
Documents to be immediately due and payable. Upon such a declaration, the unpaid
principal balance of the loans and all such other amounts shall become
immediately due and payable, without protest, presentment, demand, or further
notice of any kind, all of which are hereby expressly waived by the Company. In
addition, upon such an acceleration:
(A) ENFORCEMENT. CoBank may proceed to protect, exercise, and
enforce such rights and remedies as may be provided by this agreement, any other
Loan Document or under Law. Each and every one of such rights and remedies shall
be cumulative and may be exercised from time to time, and no failure on the part
of CoBank to exercise, and no delay in exercising, any right or remedy shall
operate as a waiver thereof, and no single or partial exercise of any right or
remedy shall preclude any other or future exercise thereof, or the exercise of
any other right. Without limiting the foregoing, CoBank may hold and/or set off
and apply against the Company's obligations to CoBank any cash collateral held
by CoBank, or any balances held by CoBank for the Company's account (whether or
not such balances are men due).
(B) APPLICATION OF FUNDS. CoBank may apply all payments received by
it to the Company's obligations to CoBank in such order and manner as CoBank may
elect in its sole discretion.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 12
In addition to the rights and remedies set forth above: (i) if the Company
fails to make any payment to CoBank when due, then at CoBank's option in each
instance, such payment shall bear interest from the date due to the date paid at
4% per annum in excess of the rate(s) of interest that would otherwise be in
effect on that loan; and (ii) after the maturity of any loan (whether as a
result of acceleration or otherwise), the unpaid principal balance of such loan
(including without limitation, principal, interest, fees and expenses) shall
automatically bear interest at 4% per annum in excess of the rate(s) of interest
that would otherwise be in effect on that loan. All interest provided for herein
shall be payable on demand and shall be calculated on the basis of a year
consisting of 360 days.
SECTION 20. BROKEN FUNDING SURCHARGE. Notwithstanding any provision
contained in any Supplement giving the Company the right to repay any loan prior
to the date it would otherwise be due and payable, the Company agrees to provide
three Business Days' prior written notice for any prepayment of a fixed rate
balance and that in the event it repays any fixed rate balance prior to its
scheduled due date or prior to the last day of the fixed rate period applicable
thereto (whether such payment is made voluntarily, as a result of an
acceleration, or otherwise), the Company will pay to CoBank a surcharge in an
amount equal to the greater of: (i) an amount which would result in CoBank being
made whole (on a present value basis) for the actual or imputed funding losses
incurred by CoBank as a result thereof; or (ii) $300.00. Notwithstanding the
foregoing, in the event any fixed rate balance is repaid as a result of the
Company refinancing the loan with another lender or by other means, then in lieu
of the foregoing, the Company shall pay to CoBank a surcharge in an amount
sufficient (on a present value basis) to enable CoBank to maintain the yield it
would have earned during the fixed rate period on the amount repaid. Such
surcharges will be calculated in accordance with methodology established by
CoBank (a copy of which will be made available to the Company upon request).
SECTION 21. COMPLETE AGREEMENT, AMENDMENTS. This agreement, the Note, and
all other instruments and documents contemplated hereby and thereby, are
intended by the parties to be a complete and final expression of their
agreement. No amendment, modification, or waiver of any provision hereof or
thereof, and no consent to any departure by the Company herefrom or therefrom,
shall be effective unless approved by CoBank and contained in a writing signed
by or on behalf of CoBank, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
SECTION 22. APPLICABLE LAW. Except to the extent governed by applicable
federal law, this agreement and the Note shall be governed by and construed in
accordance with the laws of the State of Colorado, without reference to choice
of law doctrine.
SECTION 23. NOTICES. All notices hereunder shall be in writing and shall
be deemed to be duly given upon delivery if personally delivered or sent by
telegram or facsimile transmission, or 3 days after mailing if sent by express,
certified or registered mail, to the parties at the following addresses (or such
other address for a party as shall be specified by like notice):
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 13
If to FCW, as follows: If to the Company, as follows:
Farm Credit West, PCA Calavo Growers, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇ Attn: Vice President-Finance
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Fax No: (▇▇▇)▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to CoBank, as follows:
For general correspondence purposes:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
For direct delivery purposes, when desired:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Credit Information Services
Fax No.: (▇▇▇)-▇▇▇-▇▇▇▇
SECTION 24. TAXES AND EXPENSES. To the extent allowed by law, the Company
agrees to pay all reasonable out-of-pocket costs and expenses (including the
fees and expenses of counsel retained by CoBank) incurred by CoBank and any
participants from CoBank in connection with the origination, administration,
collection, and enforcement of this agreement and the other Loan Documents,
including, without limitation, all costs and expenses incurred in perfecting,
maintaining, determining the priority of, and releasing any security for the
Company's obligations to CoBank, and any stamp, intangible, transfer, or like
tax payable in connection with this agreement or any other Loan Document.
SECTION 25. EFFECTIVENESS AND SEVERABILITY. This agreement shall continue
in effect until: (i) all indebtedness and obligations of the Company under this
agreement, the Note, and all other Loan Documents shall have been paid or
satisfied; and (ii) CoBank has no commitment to extend credit to or for the
account of the Company hereunder. Any provision of this agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
thereof.
SECTION 26. SUCCESSORS AND ASSIGNS. This agreement, the Note, and the
other Loan Documents shall be binding upon and inure to the benefit of the
Company and CoBank and their respective successors and assigns, except that the
Company may not assign or transfer its rights or obligations under this
agreement, the Note or any other Loan Document without the prior written consent
of CoBank.
LINE OF CREDIT AGREEMENT NO. PRT0989 Page 14
SECTION 27. PARTICIPATIONS, ETC. From time to time, CoBank may sell to one
or more banks, financial institutions or other lenders a subparticipation in one
or more of the loans or other extensions of credit made pursuant to this
agreement. However, no such subparticipation shall relieve FCW or CoBank of any
commitment made to the Company hereunder. In connection with the foregoing,
CoBank may disclose information concerning the Company and its Subsidiaries to
any subparticipant or prospective subparticipant, provided that such
subparticipant or prospective subparticipant agrees to keep such information
confidential. CoBank agrees that all participation interests held by CoBank and
that are retained for its own account and are not included in a sale of
subparticipation interest shall be entitled to patronage distributions in
accordance with the bylaws of CoBank and its practices and procedures related to
patronage distribution. Accordingly, all interests in the Loans that are
included in a sale of subparticipation interests shall not be entitled to
patronage distributions. A sale of subparticipation interest may include certain
voting rights of the subparticipants regarding the loans hereunder (including
without limitation the administration, servicing and enforcement thereof).
CoBank agrees to give written notification to the Company of any sale of
subparticipation interests.
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
by their duly authorized officers as of the date shown above.
FARM CREDIT WEST, PCA CALAVO GROWERS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------- -----------------------------------
Title: Sr. Vice President Title: Chief Financial Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Title: Treasurer
EXHIBIT A
PROMISSORY NOTE
$12,000,000.00
January 22, 2004
FOR VALUE RECEIVED, on the Maturity Date as set forth in that
certain Line of Credit Agreement dated January 22, 2004 or in any amendments
thereto (the "Loan Agreement") the undersigned promises to pay to the order of
Farm Credit West, PCA (the "Payee"), or order, at the place and in the manner
set forth in the Loan Agreement, the principal amount of TWELVE MILLION DOLLARS
($12,000,000.00). The undersigned promises to pay interest on the principal
amount hereof remaining unpaid from time to time from the date hereon until the
date of payment in full, payable as provided in the Loan Agreement.
This note is given for advances to be made by Payee to the
undersigned from time to time in accordance with the terms and conditions of the
Loan Agreement, all the terms and conditions of which are incorporated herein by
reference. Advances, accrued interest, and payments shall be posted by the Payee
upon an appropriate accounting record, shall be prima facie evidence as to all
such amounts and shall be binding on the undersigned absent manifest error. The
total of such advances may exceed the face amount of this note but the unpaid
principal balance shall not at any time exceed such face amount. Any amount of
principal hereof which is not paid when due, whether at stated maturity, by
acceleration or otherwise, shall bear interest from the date when due until said
principal is paid in full, payable on demand, at a rate per annum set forth in
the Loan Agreement.
The makers or endorsers hereof hereby waive presentment for payment,
demand, protest, and notice of dishonor and nonpayment of this note, and all
defenses on the ground of delay or of any extension of time for the payment
hereof which may be hereafter given by the holder or holders hereof to them or
either of them or to anyone who has assumed the payment of this note, and it is
specifically agreed that the obligations of said makers or endorsers shall not
be in anyway affected or altered to the prejudice of the holder or holders
hereof by reason of the assumption of payment of the same by any other person or
entity.
The undersigned hereby promises to pay all costs and expenses of any
rightful holder hereof incurred in collecting the undersigned's obligations
hereunder or in enforcing or attempting to enforce any of such holder's rights
hereunder, including reasonable attorneys' fees and disbursements, whether or
not an action is filed in connection therewith.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF COLORADO.
CALAVO GROWERS,INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Treasurer
