Exhibit 2.3
Fireman's Fund Insurance Company
March 5, 1997
Mr. Lawrence Martinez
Crop Growers Corporation
Executive Centre II
10895 Lowell, Suite 300
Overland Park, Kansas 66210
Re: Letter of Intent re Revolving Credit Working Capital Facility
Dear Larry:
This letter sets forth the key terms discussed in our recent conversations with
Crop Growers Corporation ("Crop Growers") regarding the proposed $15 million
revolving credit working capital facility ("Revolving Credit Facility") to be
provided to Crop Growers by Fireman's Fund Insurance Company ("Fireman's Fund").
The Revolving Credit Facility will be available in the event Crop Growers, after
using its reasonable best efforts, is unable to obtain a working capital
facility from a commercial bank or banks on reasonable terms not involving any
guarantee or similar support by Fireman's Fund, by March 31, 1997.
An express condition precedent to Fireman's Fund providing the Revolving Credit
Facility to Crop Growers shall be in the execution of an Acquisition Agreement
("Acquisition Agreement") between Fireman's Fund and Crop Growers for Fireman's
Fund's acquisition of all of the shares of Crop Growers and the absence of any
default or termination by Crop Growers thereunder. This Letter of Intent shall
be attached to and/or incorporated into the terms and conditions of the
Acquisition Agreement as an express condition of the Acquisition Agreement.
Further, the terms and conditions of the proposed Revolving Credit Facility
shall include those specified on the attached "Crop Growers Executive Summary"
of "Terms and Conditions--Working Capital Financing" and to be incorporated into
a revolving credit agreement.
If you agree to the terms set forth herein, please signify your agreement by
countersigning a copy of this Letter of Intent and returning it to me.
Very truly yours,
Harold N. Marsh III
Senior Vice President & Treasurer
Attachment
Agreed & Accepted
CROP GROWERS CORPORATION
/s/Lawrence T. Martinez
By: Lawrence T. Martinez
Its: Chief Executive Officer
Fireman's Fund Insurance Company
March 5, 1997
Mr. Lawrence Martinez
Crop Growers Corporation
Executive Centre II
10895 Lowell, Suite 300
Overland Park, Kansas 66210
Re: Letter of Intent re Revolving Credit Working Capital Facility
Dear Larry:
This letter sets forth the key terms discussed in our recent conversations with
Crop Growers Corporation ("Crop Growers") regarding the proposed $15 million
revolving credit working capital facility ("Revolving Credit Facility") to be
provided to Crop Growers by Fireman's Fund Insurance Company ("Fireman's Fund").
The Revolving Credit Facility will be available in the event Crop Growers, after
using its reasonable best efforts, is unable to obtain a working capital
facility from a commercial bank or banks on reasonable terms not involving any
guarantee or similar support by Fireman's Fund, by March 31, 1997.
An express condition precedent to Fireman's Fund providing the Revolving Credit
Facility to Crop Growers shall be in the execution of an Acquisition Agreement
("Acquisition Agreement") between Fireman's Fund and Crop Growers for Fireman's
Fund's acquisition of all of the shares of Crop Growers and the absence of any
default or termination by Crop Growers thereunder. This Letter of Intent shall
be attached to and/or incorporated into the terms and conditions of the
Acquisition Agreement as an express condition of the Acquisition Agreement.
Further, the terms and conditions of the proposed Revolving Credit Facility
shall include those specified on the attached "Crop Growers Executive Summary"
of "Terms and Conditions--Working Capital Financing" and to be incorporated into
a revolving credit agreement.
If you agree to the terms set forth herein, please signify your agreement by
countersigning a copy of this Letter of Intent and returning it to me.
Very truly yours,
/s/Harold N. Marsh III
Harold N. Marsh III
Senior Vice President & Treasurer
Attachment
Agreed & Accepted
CROP GROWERS CORPORATION
By:
Its:
CROP GROWERS
Executive Summary
TERMS AND CONDITIONS - WORKING CAPITAL FINANCING
TERMS AND CONDITIONS
Borrower: Crop Growers Corporation ("CGRO") and its
majority-owned agency subsidiaries
Guarantor: None
Type of Financing: Revolving Line of Credit
Amount: up to $15 million (maximum)
Use of Proceeds: Provide working capital financing
Collateral: Pledge of all assets, including security interest in
expiration rights and records, of CGRO and each of
its agency subsidiaries
Borrowing Base: To be determined (based on MPCI expense
reimbursement and underwriting gain receivable by
CGRO at time of advance)
Term: One year facility
Interest Rate: Bank of America Base Rate
Fees: None
Source of Repayment: Collection of MPCI expense reimbursement
(commissions) and underwriting gain under MPCI and
other farm and crop insurance programs
Repayment Schedule: Interest payments monthly/arrears/due 1st of month
Interest calculation - actual days/360 basis
Annual cleanup by October 1 (30 days)
Prepayment Provisions: Prepayment allowed without penalty (mandatory if
Borrower accepts an Acquisition Proposal other than
the Acquisition)
Conditions Precedent: Completion of customary loan documentation
Financial Covenants: In addition to the financial reporting covenants
currently in the MGA, CGRO will not, during the term
of FFIC's financing:
--pay dividends or retire, redeem any of its
stock (except for Series A Preferred Stock)
--incur any indebtedness, with specified
exceptions
--make any acquisitions or expenditures for
fixed assets (in excess of $500,000)
--make any capital contributions to any
affiliate
--create, incur, assume liens with specified
exceptions, without FFIC consent
--sell assets, with specified exceptions,
without FFIC consent
Maintenance of financial ratios and minimum tangible
net worth to be determined
Default Rate: Customary terms and practices
Reporting requirements: SEC Forms 10-K and 10-Q within 5 days of filing due
date Monthly borrowing base certificate
Subject To: Legal and documentation review