July 11, 2007
Alico, Inc.
P.O. Box 338
LaBelle, FL 33975
Attn: Patrick W. Murphy
Re: Financial Covenant Waiver and Amendment of Loan Agreement
Dear Pat:
Reference is made to the Amended and Restated Loan Agreement between Farm Credit of Southwest
Florida, ACA (the Association) and Alico, Inc. (Alico) dated as of May 26, 2006 (the Loan
Agreement) and the revolving line of credit provided for therein (the RLOC).
In connection with the disclosures given by Alico to the Association under the Loan Agreement, the
Association has been made aware of Alicos pending dispute with the Internal Revenue Service (the
IRS). You have now advised us that, as a result of ongoing negotiations with the IRS, Alico has
established reserves in a range between $61,000,000 and $85,000,000 (the Adjustment), following
discussions among Alicos management, directors, tax counsel and advisors in contemplation of
settlement with the IRS and the State of Florida. The impact of the Adjustment will cause a breach
of the following financial covenants under the Loan Agreement:
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Debt Ratio (Section 4.3(a)); |
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ii. |
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Current Ratio (section 4.3(b)); and |
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iii. |
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Net Worth (Section 4.3(d)). |
You have requested that the Association waive compliance with the foregoing financial covenants for
the financial reporting period ending May 31, 2007, and that the Loan Agreement be amended in
contemplation of the ongoing financial effects of the Adjustment.
Upon our receipt of a copy of this letter acknowledged by Alico, the Association agrees as follows:
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(a) |
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Alicos compliance with the Debt Ratio, Current Ratio and Net Worth covenants for the
fiscal reporting period ended May 31, 2007 is hereby waived; and |
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(b) |
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The Association and Alico shall enter into an amendment to the Loan Agreement promptly
following our receipt of such information sufficient to reset the financial covenants as
may be determined by the Association in its sole discretion. |
330 North Brevard Avenue | Arcadia, Florida 34266 | Phone (800) 494-0500 | Fax (863) 494-6460
In consideration of the Associations agreement to provide waivers set forth herein and to amend
the Loan Agreement as contemplated, Alico shall pay a waiver/amendment fee to the Association in
the amount of $43,750. By your acknowledgment as indicated below, the Association is hereby
authorized to advance to itself such fee under the RLOC.
We trust that you find these actions responsive to the needs of Alico.
Sincerely,
Bryan L. Byrd
Executive Vice President / COO
Acknowledged and agreed to by:
Alico, Inc.
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By:
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Its:
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SVP & CFO |