Exhibit (4)(a)
SECOND AMENDED LINE OF CREDIT LOAN AGREEMENT
THIS SECOND AMENDED LINE OF CREDIT LOAN AGREEMENT (the "Agreement"),
executed this ------- day of September , 1995, by and between MIDWEST GRAIN
PRODUCTS, INC., a corporation organized under the laws of the state of Kansas
and having its principal place of business in Atchison, Kansas ("Borrower"),
and Commerce Bank, N.A., a national banking association, having its principal
place of business in Kansas City, Missouri ("Bank").
WHEREAS, Borrower desires to establish a line of credit with Bank to
provide working capital and capital expenditures; and
WHEREAS, Bank desires to extend such line of credit upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained in this Agreement, the parties agree as follows:
ARTICLE I
Line of Credit
Section 1.1. GENERAL TERMS. Subject to the terms of this Agreement, Bank will
lend Borrower, from time to time, until the termination hereof, such sums as
Borrower may request, in minimum increments of $100,000, which shall not exceed
in the aggregate principal amount at any one time outstanding the sum of Twenty
Seven Million and no/100 Dollars ($27,000,000.00) (the "Line of Credit Loan").
Bank's obligation to lend hereunder may be terminated by Bank at any time
in Bank's sole discretion, or if no such termination is made, then on October
1, 1997. Each advance under the Line of Credit Loan is at the option of Bank
and Bank has no obligation to make advances. In addition this Agreement shall
be deemed to automatically terminate if the occurrence of an event pursuant to
Section 4.1 causes the Line of Credit Note to become immediately due and
payable. The inclusion of monthly interest payments, events of default and an
alternate maturity date does not alter the discretionary nature of the line of
credit.
Section 1.2. COMMITMENT FEE. Borrower shall pay a fee equal to 1/4% per annum
on the unused portion of the Line of Credit Loan. Such fee shall be paid
quarterly in arrears.
Section 1.3. NOTE. Borrower agrees to execute and deliver to Bank the Line of
Credit Note to evidence the Line of Credit Loan. Each advance made thereunder,
together with each repayment made by Borrower, shall be evidenced by a notation
dated the date of the advance or repayment and recorded by Bank on the schedule
appearing on the reverse side of or attached to the Line of Credit Note. The
aggregate unpaid principal amount of the Line of Credit Note set forth on the
schedule shall be conclusively presumed to reflect the amounts advanced and
repaid, and the outstanding principal balance of the Line of Credit Loan.
Section 1.4. PRINCIPAL PAYMENT. In the event of a default as defined in
Section 4.1 or on October 1, 1997, the principal balance of the Line of Credit
Note together with all accrued interest shall become immediately due and
payable.
Section 1.5. INTEREST. If the outstanding balance is less than $500,000, the
line of credit shall bear interest at a per annum rate equal to the Prime Rate.
If the outstanding balance is $500,000 or greater, the line of credit shall
bear interest at the greater of either (1) the Prime Rate, minus 1%, or (2) the
Federal Funds Rate plus 1.50%.
Interest will be payable monthly, in arrears, and at maturity, whether by
acceleration or otherwise. Interest will be computed on the actual days
outstanding based upon a year consisting of 360 days.
"Prime Rate" means the Prime Rate of interest established from time to time by
Commerce Bank and designated as such for its internal convenience, and no
representation is made that the Prime Rate is the best, the lowest or a favored
rate of interest. The rate of interest, if tied to the Prime Rate, shall
change with and be effective on the date of each change in the Prime Rate.
"Federal Funds Rate" means the effective Federal Funds Rate as quoted by the
Federal Reserve Bank of New York on a daily basis. The Federal Funds Rate is
adjusted daily.
Section 1.6. PURPOSE. Borrower represents the purpose of the Line of Credit
Loan is to provide short term working capital and capital expenditures.
Section 1.7. DISBURSEMENTS. Bank will credit the proceeds of any borrowing
hereunder to Borrower's deposit account maintained with Bank.
Section 1.8. CONDITION OF LOANS. Any advance under the Line of Credit Note is
subject to the condition precedent that no event of default described in
Section 4.1 shall have occurred, and that the Line of Credit has not been
terminated. Each request for a borrowing under the Line of Credit Note shall
be deemed to constitute a representation by Borrower at the time of the request
that no event of default as defined in Section 4.1 exists or is imminent and
that the representations and warranties of Borrower contained in this Agreement
are true in all material respects on or as of the date of borrowing.
ARTICLE II
Warranties and Representations
Section 2.1. GOOD STANDING. The Borrower is a corporation duly organized and
in good standing, under the laws of the state of Kansas, and has the power to
own its property and to carry on its business and is in good standing in each
jurisdiction in which the character of the properties owned by it or in which
the transaction of its business makes such qualifications necessary.
Section 2.2. AUTHORITY. The Borrower has full power and authority to enter
into this Agreement, to make the borrowing hereunder, and to execute and
deliver the Line of Credit Note, all of which has been duly authorized by all
proper and necessary corporate action. No consent or approval of stockholders
is required as a condition to the validity of this Agreement or the Line of
Credit Loan.
Section 2.3. BINDING AGREEMENT. This Agreement constitutes, and the Line of
Credit Note when issued and delivered pursuant hereto, for value received, will
constitute, the valid and legally binding obligations of the Borrower in
accordance with all stated terms.
Section 2.4. LITIGATION. There are no proceedings pending, or, so far as the
officers of the Borrower know threatened, which will materially adversely
affect the financial condition or operations of the Borrower or any subsidiary.
Section 2.5. NO CONFLICTING AGREEMENTS. There are no charter, bylaw, or
preference stock provisions of the Borrower and no provision of any existing
mortgage, indenture, contract or agreement binding on the Borrower or affecting
its property, which would conflict with or in any way prevent the execution,
delivery, or carrying out of the terms of this Agreement and of the Line of
Credit Note.
Section 2.6. TAXES. The Borrower has filed all Federal, State and other tax
and similar returns and has paid or provided for the payment of all taxes and
assessments due thereunder including, without limitation, all withholding, FICA
and franchise taxes.
Section 2.7. FINANCIAL STATEMENTS. There have been no material changes in the
Borrower's financial statements dated June 30, 1995.
ARTICLE III
Covenants
So long as this Agreement remains in effect or as long as there is any
principal or interest due on the Line of Credit Note, Borrower agrees as
follows:
Section 3.1. Comply with all Company Covenants as defined and contained in
Section 5 of the Note Agreement dated as of August 1, 1993, between Borrower
and the Principal Mutual Life Insurance Company (the "Principal Agreement")
including, but not limited to, the following:
(a) CURRENT RATIO. Maintain a Current Ratio of not less than 1.50 to
1.00.
(b) CONSOLIDATED TANGIBLE NET WORTH. Maintain Consolidated Tangible Net
Worth at an amount not less than THE GREATER OF (i) $70,000,000 and (ii) the
sum of $70,000,000 plus 50% of Consolidated Net Income for the period from and
after March 31, 1993 to the date of determination thereof (considered as a
single accounting period).
(c) FUNDED DEBT. Not permit Consolidated Funded Debt to exceed 60% of
total capitalization.
(d) DEBT/WORTH. Maintain a ratio of Debt to Tangible Net Worth of not
more than 2.50 to 1.00.
(e) FIXED CHARGES COVERAGE RATIO. Maintain a ratio of Net Income
Available for Fixed Charges to Fixed Charges of not less than 1.50 to 1.00.
The Company Covenants as of the date of this Agreement shall survive any
modification or termination of the Principal Agreement.
Section 3.2 Promptly pay all taxes, assessments and other government charges
(unless such payments are being contested in good faith).
Section 3.3 Maintain insurance on all its properties in such amounts and
against such hazards as is customary in Borrower's industry.
Section 3.4 Maintain its books and records and account for financial
transactions in accordance with generally accepted accounting principals.
Section 3.5 Borrower shall furnish Commerce Bank with the following
information:
(a) Its annual audited financial statement within 90 days of its fiscal
year-end, in a form and prepared by a certified public accounting firm
acceptable to Commerce Bank;
(b) Its quarterly financial statements within 45 days after the end of
each quarter; and
(c) Such other information as Commerce Bank may reasonably request from
time to time.
ARTICLE IV
Defaults
Section 4.1. EVENTS OF DEFAULT. The entire unpaid balance of the Line of
Credit Note shall become immediately due and payable without demand,
presentment, notice or protest of any kind (all of which are expressly waived),
upon the happening of any of the following events of default:
(a) Nonpayment of any interest or any principal payment owing under the
Line of Credit Note whether at maturity or otherwise; or
(b) If any certificate, statement, representation, warranty or audit
furnished by or on behalf of the Borrower in connection with this Agreement,
including those contained herein, or as an inducement by Borrower to enter
into, modify, extend, or renew this Agreement shall prove to be false in any
material respect, or if Borrower shall have omitted the listing of a
substantial contingent or unliquidated liability or claim against Borrower or,
if on the date of execution of this Agreement there shall have been any
materially adverse change in any of the facts disclosed by any such
certificate, statement, representation, warranty or audit, which change shall
not have been disclosed by Borrower to Bank at or prior to the time of
execution; or
(c) If Borrower shall default in the due performance or observance of any
covenant undertaken by it under this Agreement; or
(d) Default in the performance of the obligations of Borrower pursuant to
any other note or agreement binding on Borrower including, but not limited to
the Principal Agreement; or
(e) Borrower shall be adjudicated a bankrupt, or make a general
assignment for the benefit of its creditors, or there are instituted by or
against Borrower any type of bankruptcy proceedings or any proceeding for the
liquidation or the termination of Borrower's affairs, or the appointment of a
receiver or trustee for Borrower or for any of Borrower's assets, or a properly
filed petition for Borrower's reorganization under the Bankruptcy Code or
otherwise is approved, or Borrower files a petition for arrangement under
Chapter 11 of the Bankruptcy Code or any similar statute.
(f) Any judgment or judgments, writ or writs, or warrant or warrants of
attachment, or any similar process or processes shall be entered or filed
against the Borrower or any Subsidiary or against any of their respective
property or assets and remain unstayed and undischarged for a period of 60 days
from the date of its entry.
Section 4.2. REMEDIES. If any event of default occurs, Bank may resort to any
remedy existing at law or in equity for the collection of the Line of Credit
Note and enforcement of the covenants and provisions of this Agreement. Bank's
resort to any remedy shall not prevent the concurrent or subsequent employment
of any other remedy.
Section 4.3. WAIVER. Any waiver of an event of default by Bank shall not
extend to or affect any subsequent default. No failure or delay by Bank in
exercising any right hereunder shall operate as a waiver nor shall any single
or partial exercise of any right preclude any other right hereunder.
ARTICLE V
Miscellaneous
Section 5.1. AMENDMENTS. This Agreement may be amended or modified in whole
or in part at anytime, if in writing and signed by the parties. Bank may
further consent in writing, or give written waiver to any covenant or event
which might otherwise create a default.
Section 5.2. DELAY, WAIVER. No omission or delay on the part of Bank in
exercising any right, power, or privilege hereunder shall impair or operate as
a waiver thereof; nor shall any single or partial exercise or any right, power,
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. No waiver by Bank will be
valid unless in writing and signed by Bank and then only to the extent
specified therein. The rights and remedies herein expressly specified are
cumulative and not exclusive of any rights or remedies which Bank would
otherwise have.
Section 5.3. BANK. Whenever in this Agreement reference is made to the Bank,
such term shall be deemed for the purpose of benefits, powers, and privileges
hereunder to include any firm, person, or corporation who may be the holder
from time to time of the Note issued hereunder or a participation therein.
Section 5.4. GOVERNING LAW. This Agreement and the Line of Credit Note shall
be construed and interpreted in accordance with the laws of the State of
Missouri.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
BORROWER:
MIDWEST GRAIN PRODUCTS, INC.
By: /s/ Ladd M. Seaberg
Title: President & C.E.O.
By: /s/ Robert G. Booe
Title: V.P. C.F.O.
BANK:
COMMERCE BANK, N.A.
By: /s/ Frederick J. Marston
Title: Vice President