EXHIBIT 10-73
AGRICULTURAL LOAN AGREEMENT
Borrower: CITADEL AGRICULTURAL PARTNERS N0. 2
a California general partnership
Lender: CITADEL HOLDING CORPORATION,
a Delaware corporation
THIS AGRICULTURAL LOAN AGREEMENT between CITADEL AGRICULTURAL PARTNERS N0. 2, a
California general partnership ("Borrower"), and CITADEL HOLDING CORPORATION, a
Delaware corporation ("Lender"), is made and executed on the following terms and
conditions. Borrower has applied to Lender for an agricultural loan as
described below. Such loan and any future loans and financial accommodations
from Lender to Borrower are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by Lender at all
times shall be subject to Lender's sole judgment and discretion; and (c) all
such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of DECEMBER 29, 1997, and shall
- ----
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
- -----------
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the California Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Agricultural Loan Agreement, as
this Agricultural Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this
Agricultural Loan Agreement from time to time.
BORROWER. The word "Borrower" means CITADEL AGRICULTURAL PARTNERS N0. 3, a
California general partnership. The word "Borrower" also includes, as
applicable, all subsidiaries and affiliates of Borrower as provided below
in the paragraph titled "Subsidiaries and Affiliates."
BUDGET. The word "Budget" means Borrower's expense and income forecast
operating budgets for the Current Crop Year which Lender may require that
Borrower submit to Lender for review and approval in connection with
Borrower's request for a Loan as described herein from Lender.
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether
real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
Page 1
CURRENT CROP YEAR. The words "Current Crop Year" mean the current crop
production year.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all Borrowers
granting such a Security Interest
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower, or any one or more of them; whether
now or hereafter existing, voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated; whether Borrower may be
liable individually or jointly with others; whether Borrower may be
obligated as a guarantor, surety, or otherwise; whether recovery upon such
Indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such Indebtedness may be or hereafter may become
otherwise unenforceable.
LENDER. The word "Lender" means CITADEL HOLDING CORPORATION, a Delaware
corporation, its successors and assigns.
LOAN. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation the loan described below in the Section titled
"The Loan."
NOTE. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor, including without limitation the Note described below in
the Section titled "The Loan."
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (c) liens of materialmen, mechanics, warehousemen,
or carriers, or other like liens arising in the ordinary course of business
and securing obligations which are not yet delinquent; (d) purchase money
liens or purchase money security interests upon or in any property acquired
or held by Borrower in the ordinary course of business to secure
indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled "Indebtedness and
Liens"; (e) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing;
and (f) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to
the net value of Borrower's assets.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
Page 2
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
APPLICATION FOR AND PURPOSE OF THE LOAN. Borrower has applied to Lender and now
- ---------------------------------------
renews Borrower's application for a Loan in the aggregate principal amount of
ONE MILLION TWO HUNDRED THOUSAND & 00/100 DOLLARS ($1,200,000) for the following
purposes:
FARM PRODUCTION LOAN. A farm production loan for the purpose of financing
Borrower's farm production costs for the Current Crop Year.
RESTRICTION ON DRAWS. Borrower acknowledges that Lender has agreed to extend a
- --------------------
line of credit with a maximum draw down of One Million Two Hundred Thousand
Dollars ($1,200,00) ("Credit Line Limit") in the aggregate to Borrower and two
other separate entities, Citadel Agricultural Partners No. 1 and Citadel
Agricultural Partners No. 3, and that the amounts disbursed to Borrower are
subject to the Credit Line Limit. Accordingly, the amount that Borrower may
draw shall at all times be limited by the amount of the Credit Line Limit then
outstanding, and Lender does not guarantee that Borrower will be able to draw
down any particular minimum amount under this Loan.
THE LOAN. The following terms and conditions apply to the Loan:
- --------
THE LOAN COMMITMENT. On and after December 30, 1997 or such earlier date
as Lender and Borrower may agree, Lender will lend to Borrower the Loan
Amount which will be used for financing Borrower's farm production costs
for the Current Crop Year and which Lender will loan to Borrower from time
to time, but only in accordance with the terms hereof and the Related
Documents.
THE LOAN DOCUMENTS. The Loan will be evidenced by a promissory note in the
form of an exhibit attached to and made a part of this Agreement, or if no
exhibit is attached hereto, then in form and substance satisfactory to
Lender (the "Note"), together with such Related Documents as Lender may
require for the Loan, all in form and substance satisfactory to Lender.
LOAN DISBURSEMENTS. Loan disbursements will be made at times and in amounts
as provided in a draw down request provided by Borrower and acceptable to
Lender upon Borrower's completing and delivering to Lender for each
disbursement a disbursement request on Lender's form. Lender in its sole
discretion and upon Borrower's request may make loan disbursements at times
and in amounts and for purposes different than such schedule. In no event,
however, will Lender be required to make any Loan disbursements after July
1, 1998 (the "Expiration Date").
DISBURSEMENTS OF PROCEEDS. Any Loan disbursement made under this Agreement
shall be conclusively presumed to have been made to and for the benefit of
Borrower whenever the proceeds of such disbursement are either (a)
disbursed in accordance with the terms of this Agreement, (b) disbursed in
accordance with instructions from Borrower or any of Borrower's authorized
employees or agents, or (c) deposited into any demand, savings, or other
account maintained by Borrower with Lender.
Page 3
EXPIRATION DATE. Unless earlier terminated in accordance with the terms of
this Agreement, Lender's commitment to make disbursements to Borrower
under this Agreement shall automatically expire on the "Expiration Date"
and Lender shall be under no further obligation to disbursement any Loan
funds thereafter.
NO RENEWAL OR FUTURE LOAN OBLIGATION. Lender has not committed, and is not
committing at this time, to finance Borrower's next year's farm loan
requirements. Any such future loan or loans may be made solely at the
option of Lender and on such terms and conditions as Lender may then
require. Borrower understands that no prior course of dealing, no usage of
trade, no oral statements or comments by Lender or it's employees or other
agents will be deemed to be a commitment by Lender to lend money to
Borrower or to any other person, unless the same is reduced to writing and
signed by an authorized representative of Lender.
SALE OF COLLATERAL AND APPLICATION OF PROCEEDS. The following terms and
- ----------------------------------------------
conditions relate to any Collateral for the Loan and the application of proceeds
of Collateral:
SALE OF COLLATERAL. Borrower may sell or otherwise dispose of Collateral
only if (a) the proceeds of the sale are listed as income on the Budget,
(b) Borrower delivers the proceeds to Lender, and (c) Borrower complies
with the other terms of this Agreement. If either the proceeds of the
Collateral are not listed as an income item in the Budget or Borrower wants
to use proceeds for other than delivery to Lender, Borrower may not sell
the Collateral without Lender's prior written consent.
BUYERS, CONSIGNEES, AND OTHER TRANSFEREES. The following provisions relate
to any sale, consignment or transfer of crops, or other farm products
included as all or a part of the Collateral:
(a) To induce Lender to extend the Loan, Borrower represents and
warrants to Lender that it will sell, consign or transfer the
Collateral only to those persons whose names and addresses have been
set forth on sales schedules delivered to Lender. Each schedule shall
be in such form as Lender may require, including identification of
each type of Collateral. Borrower also shall notify Lender of the
name and address of each additional person to whom or through whom the
Collateral may be sold, consigned or transferred. All such schedules
and notifications shall be in writing and shall be delivered to Lender
not less than seven (7) days prior to any such sale, consignment or
transfer of the Collateral.
(b) Borrower acknowledges that if the Collateral is sold, consigned,
or transferred to any person not listed on a schedule delivered to
Lender as provided above, and if Lender has not received an accounting
(including the proceeds) of such sale, consignment or transfer within
ten (10) days of the sale, consignment or transfer, then UNDER FEDERAL
LAW, GRANTOR SHALL BE SUBJECT TO A FINE WHICH IS THE GREATER OF $5,000
OR 15% OF THE VALUE OR BENEFIT RECEIVED FROM THE SALE, CONSIGNMENT OF
TRANSFER TO AN UNLISTED BUYER, CONSIGNEE OR TRANSFEREE.
DELIVERY OF PROCEEDS AND PAYMENTS. Borrower will immediately deliver or
otherwise make available to Lender all proceeds of any sale, consignment or
other transfer of the Collateral and in a form jointly payable to Borrower
and Lender. All chattel paper, contracts, warehouse receipts, documents of
title, or other evidences of ownership or obligations, whether issued by a
co-op, grain elevator, or other warehouse or marketing entity, and all
accounts receivable and other non-cash proceeds shall be endorsed, assigned
and delivered immediately to Lender as security for the Loan. All the
proceeds of any such disposition of the Collateral, when and if received by
Lender, may at Lender's option be applied to the Loan. In addition, Lender
may at any time collect the proceeds of any or all such accounts or other
non-cash proceeds of any sale without notice to Borrower.
APPLICATION OF PROCEEDS AND PAYMENTS. Lender, in its sole discretion, may
apply proceeds and payments of Collateral and any other payments Borrower
may make on the Loan to either (a) accrued unpaid
Page 4
interest owing on the Note, (b) outstanding principal on the Note, or (c)
any other amounts owing by Borrower to Lender in connection with the Loan.
CONDITIONS PRECEDENT TO EACH DISBURSEMENT. Lender's obligation to make the
- -----------------------------------------
initial Loan disbursement and each subsequent Loan disbursement under this
Agreement shall be subject to the fulfillment to Lenders satisfaction of all of
the conditions set forth in this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan, unless Lender waives the
requirement therefor: (a) the Note, (b) Security Agreements granting to
Lender security interests in the Collateral, (c) Financing Statements
perfecting Lender's Security Interests; (d) evidence of insurance as
required below; (e) effective Financing Statements as required by any
applicable state central filing system giving notice of Lender's security
interests to prospective purchasers of Borrower's farm products; (f) if
requested by Lender, a subordination agreement in form acceptable to Lender
from the holder of any senior encumbrance; and (g) any other documents
required under this Agreement or by Lender or its counsel, including
without limitation any guaranties described below.
BUDGET AND SCHEDULE OF ESTIMATED DISBURSEMENTS. Lender shall have approved
the Budget, if required by Lender, and a schedule of the estimated amount
and time of each Loan disbursements.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender such authorizations and other documents
and instruments as Lender or its counsel, in their sole discretion, may
require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
charges, and other expenses that are then due and payable as specified in
this Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any disbursement
a condition that would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
- ------------------------------
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a general partnership which is duly organized,
validly existing, and in good standing under the laws of the State of
California and is a validly existing and in good standing in all states in
which Borrower is doing business. Borrower has the full power and
authority to own its properties and to transact the businesses in which it
is presently engaged or presently proposes to engage.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower, do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of its partnership agreement or any agreement or other
instrument binding upon Borrower or (b) any law, governmental regulation,
court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial
Page 5
statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any Security Agreement or Financing Statements relating to such
properties.
HAZARDOUS SUBSTANCES. The terms "hazardous waste,' "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and
Safety Code, Section 25100, et seq., or other applicable state or federal
laws, rules, or regulations adopted pursuant to any of the foregoing.
Except as disclosed to and acknowledged by Lender in writing, Borrower
represents and warrants that: (a) During the period of Borrower's ownership
of the properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste
or substance by any person on, under, about or from any of the properties.
(b) Except as disclosed in writing to Lender, Borrower has no knowledge of,
or reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance on, under, about or from the properties
by any prior owners or occupants of any of the properties, or (ii) any
actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant, contractor,
agent or other authorized user of any of the properties shall use,
generate, manufacture, store, treat, dispose of, or release any hazardous
waste or substance on, under, about or from any of the properties; and any
such activity shall be conducted in compliance with all applicable federal,
state, and local laws, regulations, and ordinances, including without
limitation those laws, regulations and ordinances described above.
Borrower authorizes Lender and its agents to enter upon the properties to
make such inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower's expense and for
Lender's purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any
other person. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for indemnify or contribution in
the event Borrower becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses which
Lender may directly or indirectly sustain or suffer resulting from a breach
of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
occurring prior to Borrower's ownership or interest in the properties,
whether or not the same was or should have been known to Borrower. The
provisions of this section of the Agreement, including the obligation to
indemnify, shall survive any termination of this Agreement.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Page 6
BINDING EFFECT. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business,
or Borrower's Chief Executive Office, if Borrower has more than one place
of business, is located at 24780 East South Avenue, Orange Cove, California
93648. Unless Borrower has designated otherwise in writing this location
is also the office where Borrower keeps its records concerning the
Collateral.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material fact necessary to make such
information not misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon the
above representations and warranties in extending Loan disbursements to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force and
effect until such time as Borrower's Indebtedness shall be paid in full, or
until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
REPAYMENT. Repay the Note in accordance with its terms and the terms of
this Agreement.
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis
("GAAP"), and permit Lender to examine and audit Borrower's books and
records at all reasonable times.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business
operations as Lender may request from time to time.
INSURANCE. Maintain fire and other risk insurance, hail, federal crop
insurance, public liability insurance, and such other insurance as Lender
may require with respect to Borrower's properties and operations, in form,
amounts, coverages and with insurance companies reasonably acceptable to
Lender. Borrower, upon request of Lender, will deliver to Lender from time
to time the policies or certificates of insurance in form satisfactory to
Lender including stipulations that coverages will not expire or be canceled
or diminished without at least thirty (30) days' prior written notice to
Lender. Each insurance policy also shall include an endorsement providing
that coverage in favor of Lender will not be impaired in any way by any
act, omission or default of Borrower or any other person. In connection
with all policies covering assets in which Lender holds or is offered a
security interest for the Loans, Borrower shall provide Lender with such
loss payable or other endorsements as Lender may require.
Page 7
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitations the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy.
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
LOAN PROCEEDS. Use all Loan proceeds solely for the following specific
purposes: Crop production.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its 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 properties,
income, or profits. Provided however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, levy, lien or claim so long
as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim in accordance with GAAP. Borrower, upon demand
of Lender, will furnish to Lender evidence of payment of the assessments,
taxes, charges, levies, liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written statement
of any assessments, taxes, charges, levies, liens and claims against
Borrower's properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; and conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, businesses and operations.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with all environmental protection federal, state and local laws,
statutes, regulations and ordinances; shall not cause or permit to exist,
as a result of an intentional or unintentional action or omission on its
part or on the part of any third party, on property owned and/or occupied
by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal, state or local governmental authorities; and shall furnish to
Lender promptly and in any event within thirty (30) days after receipt
thereof a copy of any notice, summons, lien, citation, directive, letter or
other communication from any governmental agency or instrumentality
concerning any intentional or unintentional action or omission on
Borrower's part in
Page 8
connection with any environmental activity whether or not there is damage
to the environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
- ------------------
Agreement is in effect, Borrower shall now, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases; (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets; or (c) sell with recourse any of
Borrower's accounts, except to Lender.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged;
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business; or (c)
make any distributions to any of its partners, provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from any such distributions,
Borrower may pay cash distributions to its partners from time to time in
amounts necessary to enable the partners to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as partners in Borrower.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money
or assets; (b) purchase, create or acquire any interest in any other
enterprise or entity; or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
OTHER BORROWINGS. Borrow from any person or entity other than Lender,
whether such borrowing is secured or unsecured.
CESSATION OF DISBURSEMENTS . Lender shall have no obligation to make Loan
- ---------------------------
disbursements or to disburse Loan proceeds under this Agreement or under any
other agreement if: (a) Borrower or any Guarantor is in default under the terms
of this Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (b) Borrower or any Guarantor becomes
insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged
a bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; or (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
- -----------------
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
on the Loans.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Page 9
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
Security Agreement to create a valid and perfected Security Interest) at
any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any creditor
of any Grantor against any collateral securing the Indebtedness, or by any
governmental agency.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
or more of the ownership of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
- -----------------------------
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan disbursements or disbursements), and, at Lender's
option, all Indebtedness immediately will become due and payable, all without
notice of any kind to Borrower, except that in the case of an Event of Default
of the type described in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional. In addition, Lender shall have all the
rights and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender's rights and remedies shall be cumulative and may be exercised singularly
or concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to take
action to perform an obligation of Borrower or of any Grantor shall not affect
Lender's right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
- ------------------------
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Page 10
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted
by Lender In the State of California. If there is a lawsuit Borrower
agrees upon Lender's request to submit to the jurisdiction of the courts of
Los Angeles County, the State of California. This Agreement shall be
governed by and construed in accordance with the laws of the State of
California.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
FURTHER ASSURANCES. From and after the date of this Agreement, Lender and
Borrower shall do such things, perform such acts, and make, execute,
acknowledge and deliver such documents as may be reasonably necessary or
proper and usual to carry out the purpose of this Agreement in accordance
with its terms.
JURY TRIAL WAIVER. In the event that any controversy or claim between or
among the parties arising from or relating to this Agreement, the Related
Documents, the Loan, or any Indebtedness shall become the subject of a
judicial action, each party hereby waives its respective right to trial by
jury of the controversy or claim.
MULTIPLE PARTIES. All obligations of Borrower under this Agreement shall
be joint and several, and all references to Borrower shall mean each and
every Borrower. This means that each of the persons signing below on
behalf of Borrower (except in the capacity as an officer of a corporation)
is responsible for all obligations of Borrower under this Agreement.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or the Related Documents or in connection with
the Loans made pursuant to this Agreement. Lender may pay someone else to
help collect the Loans and to enforce this Agreement or the Related
Documents, and Borrower will also pay Lender all costs or expenses
associated therewith. This includes, subject to any limits under applicable
law, Lender's attorneys' fees and Lender's legal expenses, whether or not
there is a lawsuit, including attorneys' fees for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any post-judgment collection services. Borrower also will pay
any court costs, in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage
prepaid, addressed to the party to whom the notice is to be given at the
address shown above. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
For notice purposes, Borrower will keep Lender informed at all times of
Borrower's current addresses.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the
Page 11
foregoing, however, under no circumstances shall this Agreement be
construed to require Lender to make any Loan or other financial
accommodation to any subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements herein contained by
or on behalf of Borrower shall bind its successors and assigns and shall
inure to the benefit of Lender, its successors and assigns. Borrower shall
not, however, have the right to assign its rights under this Agreement or
any interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender, of the Related Documents, regardless of any investigation made
by Lender or on Lender's behalf.
LIMITATIONS AND TIME. Borrower's right to plead the statute of limitations
as a defense to any and all of the obligations contained herein or secured
hereby is waived to the full extent permitted by law. Time and exactitude
of each of the terms, obligations, covenants and conditions are hereby
declared to be the essence hereof.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that provision
or any other provision of this Agreement. No prior waiver by Lender, nor
any course of dealing between Lender and Borrower, or between Lender and
any Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is required,
and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGRICULTURAL LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
DECEMBER 29, 1997.
BORROWER: LENDER:
CITADEL AGRICULTURAL PARTNERS N0. 2, CITADEL HOLDING CORPORATION,
a California general partnership a Delaware corporation
By: CITADEL AGRICULTURE, INC.,
a California corporation, General
Partner
By:
______________________________
Steve Wesson, Title: President
By: /s/ S. Craig Tompkins
___________________________________
S. Craig Tompkins, President
Page 12