Exhibit 10.5
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Prepared by, and after recording, return
to:
Melanie N. Ferguson
CoBank, ACB
P.O. Box 5110
Denver, CO 80217
Attention: Collateral Department
Phone: 800-542-8072
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Legal Description: See Exhibit A
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REAL ESTATE
MORTGAGE
Made By
SUPERIOR ETHANOL,
L.L.C.
as Mortgagor
in favor of
FARM CREDIT SERVICES OF
AMERICA, FLCA
as Mortgagee
Dated as of March 15,
2007
THIS INSTRUMENT
CONSTITUTES A MORTGAGE COVERING REAL PROPERTY AND FIXTURES AND IS
TO BE CROSS INDEXED IN ALL INDICES IN WHICH ARE RECORDED LIENS,
MORTGAGES, OR OTHER ENCUMBRANCES AGAINST REAL PROPERTY AND
FIXTURES, INCLUDING THE MORTGAGE INDEX AND THE UCC
INDEX.
PURSUANT TO IOWA CODE
SECTION 554B.3 (1997) THIS INSTRUMENT CONSTITUTES A LIEN ON ALL
AFTER ACQUIRED PROPERTY OF THE MORTGAGOR.
NOTICE: THIS
MORTGAGE SECURES CREDIT IN THE AMOUNT OF $100,000,000.00. LOANS AND
ADVANCES UP TO THIS AMOUNT, TOGETHER WITH INTEREST, ARE SENIOR TO
INDEBTEDNESS TO OTHER CREDITORS UNDER SUBSEQUENTLY RECORDED OR
FILED MORTGAGES AND LIENS.
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THIS REAL ESTATE MORTGAGE, dated as of March 15, 2007
is made by SUPERIOR ETHANOL, L.L.C. (hereinafter called the
"Mortgagor"), a limited liability company existing under the laws
of the State of Iowa, in favor of FARM CREDIT SERVICES OF AMERICA,
FLCA (hereinafter called the "Mortgagee"), a federally chartered
instrumentality of the United States.
ARTICLE .
DEFINITIONS
Section 1.01.
Definitions. In addition to the terms defined elsewhere in
this Mortgage, the following terms shall have the meanings
specified in this Section 1.01, unless the context clearly requires
otherwise. The terms defined herein include the plural as
well as the singular. Accounting terms used in this Mortgage
but not otherwise defined herein shall have the meanings they have
under GAAP.
Credit Agreements
shall mean all agreements, instruments
and documents between the Mortgagor and the Mortgagee or executed
by the Mortgagor in favor of the Mortgagee which evidence or relate
to the Obligations, whether now existing or hereafter entered into,
and all amendments, supplements and restatements thereof.
Environmental Law
shall have the meaning specified in
Section 3.13.
Event of Default
shall have the meaning specified in
Section 4.01.
GAAP shall mean generally accepted accounting principles
as established by the American Institute of Certified Public
Accountants.
Hazardous Materials
shall have the meaning specified in
Section 3.13.
Lien shall mean any statutory or common law consensual or
non-consensual mortgage, pledge, grant, security title or interest,
lien, encumbrance or charge of any kind against property,
including, without limitation, any conditional sale or other title
retention transaction, and any lease transaction in the nature of a
security interest.
Maximum Debt Limit
shall mean $100,000,000.00 at any
one time outstanding.
Mortgage shall mean this Real Estate Mortgage, as it may be
amended or supplemented from time to time.
Mortgaged Property
shall have the meaning specified in
Section 2.01.
Mortgagee shall mean FARM CREDIT SERVICES OF AMERICA,
FLCA.
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Obligations shall mean all indebtedness
and other obligations of the Mortgagor to the Mortgagee of every
type and description, whether now existing or hereafter arising,
fixed or contingent, as primary obligor or as guarantor or surety,
acquired directly or by assignment or otherwise, liquidated or
unliquidated, regardless of how they arise or by what agreement or
instrument they may be evidenced, including, without limitation,
indebtedness under all loans, advances and other extensions of
credit made to or for the account of the Mortgagor and all
covenants, agreements and provisions contained in this Mortgage and
in any of the Credit Agreements.
Permitted Encumbrances
shall mean:
(i)
as to the property specifically described
in Exhibit “A” hereto, the restrictions, exceptions,
reservations, conditions, limitations, interests and other matters
which are set forth or referred to in such descriptions;
and
(ii)
as to all Mortgaged Property, any Lien
permitted under the Credit Agreements.
Potential Default
shall mean the occurrence of any event
which with the giving of notice and/or the passage of time and/or
the occurrence of any other condition would ripen into an Event of
Default.
ARTICLE .
GRANTING CLAUSES
Section 2.01.
Granting Clauses.
In order to secure the repayment of
the Obligations, whether such Obligations are made pursuant to a
commitment, made at the option of the Mortgagee, made after a
reduction to zero or other balance, or made otherwise, up to the
Maximum Debt Limit, and to declare the terms and conditions upon
which the Obligations are to be secured, the Mortgagor, in
consideration of the premises, does hereby grant, bargain, sell,
alienate, convey, assign, transfer, mortgage, hypothecate, pledge,
set over and confirm unto the Mortgagee, and its respective assigns
the following (all of which are hereinafter collectively called the
"Mortgaged Property"):
All right, title and interest of the
Mortgagor in and to those fee and leasehold estates in real
property described in Exhibit "A" hereto, subject in each case to
those matters set forth in such Exhibit, together with all
buildings, improvements, fixed assets, personalty and fixtures now
or in the future annexed, affixed or attached to said real property
or said buildings, improvements or structures located thereon;
and
All right, title and interest of the
Mortgagor in, to and under any and all grants, privileges, rights
of way, easements and other similar interest now owned, held,
leased, enjoyed or exercised, or which may hereafter be owned,
held, leased, acquired, enjoyed or exercised, by the Mortgagor for
the purposes of, or in connection with the real property described
in Exhibit “A” hereto or, the construction,
acquisition, ownership, use or operation by or on behalf of the
Mortgagor of all buildings and improvements located on the property
encumbered hereby, wherever located.
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TOGETHER WITH all tenements,
hereditaments and appurtenances belonging or otherwise pertaining
to the aforesaid property or any part thereof, with all reversions,
remainders, rents, income, revenues, profits, cash, proceeds,
products and benefits at any time derived, received or had from any
or all of the above-described property of the Mortgagor and all
deposits or other accounts into which the same may be
deposited.
TO HAVE AND TO HOLD the Mortgaged
Property unto the Mortgagee and its respective assigns forever, to
secure the payment and performance of the Obligations, including,
without limitation, the due performance of the covenants,
agreements and provisions herein contained, and for the uses and
purposes and upon the terms, conditions, provisos and agreements
hereinafter expressed and declared.
ARTICLE .
PARTICULAR REPRESENTATIONS, WARRANTIES
AND
COVENANTS OF THE
MORTGAGOR
The Mortgagor represents, warrants and,
except as otherwise permitted by the Mortgagee, covenants with the
Mortgagee as follows:
Section 3.01.
Authority to Execute and Deliver this
Mortgage; All Action Taken; Enforceable Obligations.
The Mortgagor is authorized under
its articles of incorporation and bylaws or other applicable
organizational documents and all applicable laws and by corporate
or organizational action to execute and deliver this Mortgage; and
this Mortgage is, and any amendment, supplement or restatement of
this Mortgage, when executed and delivered will be, the legal,
valid and binding obligations of the Mortgagor which are
enforceable in accordance with their respective terms.
Section 3.02.
Authority to Mortgage Property; No
Liens; Exception for Permitted Encumbrances; Mortgagor to Defend
Title and Remove Liens. The
Mortgagor has good and marketable title to all fee and leasehold
estates in real property and good, right and lawful authority to
mortgage the Mortgaged Property for the purposes herein expressed.
The Mortgaged Property is free and clear of any Lien
affecting the title thereto, except Permitted Encumbrances.
The Mortgagor will, so long as any of the Obligations shall
remain unpaid, maintain and preserve the Lien of this Mortgage
superior to all other Liens, other than Permitted Encumbrances, and
will forever warrant and defend the title to the Mortgaged Property
against any and all claims and demands.
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Section 3.03.
No Encumbrances on Mortgaged
Property. The Mortgagor
will not create, incur, suffer or permit to exist any Lien on any
of the Mortgaged Property, except for Permitted Encumbrances.
Except for claims giving rise to Permitted Encumbrances, the
Mortgagor will promptly pay or discharge any and all obligations
for or on account of which any such Lien might exist.
Section 3.04. Sale or Transfer
of Mortgaged Property. The Mortgagor shall not sell, lease or transfer
any of the Mortgaged Property to any person or entity except as
permitted in the Credit Agreements.
Section 3.05.
Payment of Obligations.
The Mortgagor will duly and punctually
pay all amounts due under the Obligations, at the dates and places
and in the manner provided in all Credit Agreements, and all other
sums becoming due hereunder.
Section 3.06.
Preservation of Franchises and
Compliance with Laws. The
Mortgagor will take or cause to be taken all such action as may
from time to time be necessary to obtain, preserve and renew all
franchises, rights of way, easements, permits, and licenses now or
hereafter granted or upon it conferred necessary to the operations
of the Mortgagor, and will comply in all material respects with all
laws, ordinances, regulations, and requirements applicable to it or
the Mortgaged Property.
Section 3.07.
Maintenance of Mortgaged
Property. The Mortgagor will
at all times maintain and preserve the Mortgaged Property and each
and every material part and parcel thereof in good repair, working
order and condition, ordinary wear and tear excepted, and in
material compliance with all applicable laws, ordinances,
regulations, and requirements, and will from time to time make all
needed and proper repairs, renewals, and replacements, and useful
and proper alterations, additions, betterments and improvements,
and will, subject to contingencies beyond its reasonable control,
at all times keep its plant and properties in continuous operating
condition and use all reasonable diligence to furnish the consumers
served by it through the Mortgaged Property, or any part thereof,
with adequate services furnished by the Mortgagor.
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Section 3.08.
Insurance; Restoration of Damaged
Mortgaged Property. The
Mortgagor will maintain insurance as required by the Credit
Agreements. In the event of damage to or the destruction or
loss of any portion of the Mortgaged Property, unless the Mortgagee
shall otherwise agree, the Mortgagor shall replace or restore such
damaged, destroyed or lost portion so that the Mortgaged Property
shall be in substantially the same condition as it was in prior to
such damage, destruction or loss. Provided no Potential
Default or Event of Default then exists, the Mortgagee shall
provide to the Mortgagor any insurance proceeds received by the
Mortgagee upon such reasonable terms and conditions as the
Mortgagee may require to ensure that such proceeds are used for the
foregoing purpose and that such required replacement or restoration
will be completed. The Mortgagor shall replace the lost
portion of the Mortgaged Property or shall commence such
restoration promptly after such damage, destruction or loss shall
have occurred and shall complete such replacement or restoration as
expeditiously as practicable, and shall pay or cause to be paid,
out of the proceeds of such insurance or otherwise, all costs
and expenses in connection therewith so that such replacement or
restoration shall be so completed that the portion of the Mortgaged
Property so replaced or restored shall be free and clear of all
Liens, except for Permitted Encumbrances. At the request of
the Mortgagee, the Mortgagor shall exercise such rights and
remedies which it may have under any insurance policy or fidelity
bond and which may be designated by the Mortgagee, and the
Mortgagor hereby irrevocably appoints the Mortgagee as its agent to
exercise such rights and remedies under any insurance policy or
bond as the Mortgagee may choose, and the Mortgagor shall pay all
reasonable costs and expenses incurred by the Mortgagee in
connection with such exercise.
Section 3.09.
Mortgagee Right to Expend Money to
Protect Mortgaged Property. From time to time, the Mortgagee may, in its sole
discretion, but shall not be obligated to, advance funds on behalf
of the Mortgagor, in order to ensure compliance with any covenant
or agreement of the Mortgagor made in or pursuant to this Mortgage
or any of the Credit Agreements, to preserve or protect any right
or interest of the Mortgagee in the Mortgaged Property or under or
pursuant to this Mortgage or any of the Credit Agreements,
including, without limitation, the payment of any insurance
premiums or taxes and the satisfaction or discharge of any judgment
or any Lien upon the Mortgaged Property or other property or assets
of the Mortgagor (other than Permitted Encumbrances); provided,
however, that the making of any such advance by the Mortgagee shall
not constitute a waiver by the Mortgagee of any Event of Default
with respect to which such advance is made nor excuse the Mortgagor
from any performance required hereunder. The Mortgagor shall
pay to the Mortgagee upon demand all such advances made by the
Mortgagee with interest thereon at a rate equal at all times to 4%
per annum above the Mortgagee's Agent Base Rate.
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Section 3.10.
Further Assurances.
Upon the request of the Mortgagee,
the Mortgagor shall promptly do all acts and things, including the
execution, acknowledgment and delivery of such amendments thereto
and other instruments and documents as the Mortgagee may request,
to enable the Mortgagee to perfect and maintain the Lien of this
Mortgage and/or the Mortgagee’s rights and remedies
hereunder. The Mortgagor shall notify the Mortgagee promptly
upon the acquisition of any fee or leasehold estate in real
property and, to the extent required under the Credit Agreement,
shall execute and record such amendments or supplements to this
Mortgage or other documents or instruments as are necessary or
appropriate to subject such real property to the Lien of this
Mortgage and shall deliver such executed and recorded amendments or
supplements or other documents or instruments to the Mortgagee.
. In the event the Mortgagor fails to take any action
required under this Section 3.10, the Mortgagee may take any such
action and make, execute and record any such instruments and
documents for and in the name of the Mortgagor, and the Mortgagor
hereby irrevocably appoints the Mortgagee as its attorney-in-fact
to take such actions, which appointment is coupled with an interest
and irrevocable.
Section 3.11.
Condemnation, Etc.
In the event that the Mortgaged
Property or any part thereof shall be taken under the power of
eminent domain or like power, then, unless the Mortgagee otherwise
consents, all proceeds and avails thereof shall be applied by the
Mortgagor to the prepayment of the Obligations (such prepayments to
be applied in such order and manner as the Mortgagee may, in its
sole discretion, elect).
Section 3.12.
Conflict with Mortgage
Terms. The provisions of
this Mortgage and the Credit Agreements shall be cumulative and not
mutually exclusive, notwithstanding any inconsistencies.
Section 3.13.
Environmental Representations,
Warranties and Covenants. The Mortgagor makes the following
representations, warranties and covenants, all of which are subject
to any exceptions that the Mortgagor may have previously disclosed
in writing to the Mortgagee, and which, to the extent that they
deal with representations of fact, are based on the
Mortgagor’s present knowledge, arrived at after reasonable
inquiry.
(A)
Use of the Mortgaged
Property.
(1)
The Mortgagor shall: (a) use,
handle, transport or store Hazardous Materials as defined under any
Environmental Law (both as hereinafter defined); and (b) store or
treat non-hazardous wastes: (i) in a good and prudent manner
in the ordinary course of business; and (ii) in compliance with all
applicable Environmental Laws.
(2)
The Mortgagor shall not conduct or allow
to be conducted, in violation of any Environmental Law, any
business, operations or activity on the Mortgaged Property, or,
except in strict compliance with applicable law, employ or use the
Mortgaged Property to generate, use, handle, manufacture, treat,
store, process, transport or dispose of any Hazardous Materials, or
any other substance which is prohibited, controlled or regulated
under applicable law. The Mortgagor shall not use the
Mortgaged Property in a way that poses a threat or nuisance to
public safety, health or the environment, or cause or allow to be
caused a known or suspected release of Hazardous Materials, on,
under, or from the Mortgaged Property.
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(3)
The Mortgagor shall not do or permit any
act or thing, business or operation that poses an unreasonable risk
of harm, or impairs or may impair the value of the Mortgaged
Property or any part thereof.
(B)
Condition of the Mortgaged
Property.
(1)
The Mortgagor shall take all appropriate
response actions, including any removal and remedial actions, in
the event of a release, emission, discharge or disposal of
Hazardous Materials in, on, under, or about the Mortgaged Property,
so as to remain in compliance with all Environmental
Laws.
(2)
All underground tanks, wells, septic
tanks, ponds, pits, or any other storage tanks (whether currently
in use or abandoned) on the Mortgaged Property, if any, are, as of
the date hereof, maintained in compliance with all applicable
Environmental Laws.
(C)
Notice of Environmental Problems or
Litigation. Neither the
Mortgagor nor any of its tenants have given, nor were they required
to give, nor have they received, any notice, letter, citation,
order, warning, complaint, inquiry, claim or demand that: (1)
the Mortgagor and/or any tenants have violated, or are about to
violate, any Environmental Law, judgment or order; (2) there has
been a release, or there is a threat of release, of Hazardous
Materials from the Mortgaged Property; (3) the Mortgagor and/or its
tenants may be or are liable, in whole or in part, for the costs of
cleaning up, remediating, removing or responding to a release or a
threatened release of Hazardous Materials; or (4) the Mortgaged
Property is subject to a lien in favor of any governmental entity
for any liability, costs or damages, under any Environmental Law
arising from, or costs incurred by such governmental entity in
response to, a release or a threatened release of a Hazardous
Material. The Mortgagor further represents and warrants that
no conditions currently exist or are currently reasonably
foreseeable that would subject the Mortgagor to any such
investigation, litigation, administrative enforcement or to any
damages, penalties, injunctive relief, or cleanup costs under any
Environmental Law. Upon receipt of any such notice, the
Mortgagor and its tenants shall immediately provide a copy to the
Mortgagee.
(D)
Right of Inspection.
The Mortgagor hereby grants, and
will cause any tenants to grant, to the Mortgagee, its agents,
attorneys, employees, consultants, contractors, successors and
assigns, an irrevocable license and authorization, upon reasonable
notice, to enter upon and inspect the Mortgaged Property and
facilities thereon, and perform such tests, including without
limitation, subsurface testing, soils and groundwater testing, and
other tests which may physically invade the Mortgaged Property, as
the Mortgagee, in its sole discretion, determines are necessary to
protect its security interest; provided, however, that under no
circumstances shall the Mortgagee be obligated to perform such
inspections or tests.
(E)
Indemnity. The Mortgagor agrees to indemnify and hold the
Mortgagee, its directors, employees, agents, and its successors and
assigns, harmless from and against any and all claims, losses,
damages, liabilities, fines, penalties, charges, judgments,
administrative orders, remedial action requirements, enforcement
actions of any kind, and all costs and expenses incurred in
connection therewith (including without limitation attorney’s
fees and expenses) arising directly or indirectly, in whole or in
part, out of any failure of the Mortgagor to comply with the
environmental representations, warranties, and covenants contained
herein.
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(F)
Continuation of Representations,
Warranties, Covenants and Indemnities. The Mortgagor’s representations,
warranties, covenants, and indemnities contained herein shall
survive the occurrence of any event whatsoever, including, without
limitation, the satisfaction of the Obligations secured hereby, the
reconveyance or foreclosure of this Mortgage, the acceptance by the
Mortgagee of a deed in lieu of foreclosure, or any transfer or
abandonment of the Mortgaged Property.
(G)
Corrective Action.
In the event the Mortgagor is in
breach of any of its representations, warranties or agreements as
set forth above, then, without limiting the Mortgagee’s other
rights hereunder, the Mortgagor, at its sole expense, shall take
all actions required, including, without limitation, environmental
cleanup of the Mortgaged Property, to comply with the
representations, warranties, and covenants contained herein and
with all applicable legal requirements and, in any event, shall
take all actions deemed necessary under all applicable
Environmental Laws.
(H)
Hazardous Materials
Defined. The term
“Hazardous Materials” shall mean dangerous, toxic, or
hazardous pollutants, contaminants, chemicals, wastes, materials or
substances, as defined in or governed by the provisions of any
Environmental Law.
(I)
Environmental Law Defined.
The term “Environmental
Law” shall mean any federal, state or local laws, statute,
ordinance, rule, regulation, administration order, or permit now in
effect or hereinafter enacted, pertaining to the public health,
safety, industrial hygiene, or the environmental conditions on,
under or about the Mortgaged Property.
ARTICLE .
EVENTS OF DEFAULT AND
REMEDIES OF THE
MORTGAGEE
Section 4.01.
Events of Default.
Each of the following shall be an "Event
of Default":
(A)
default shall be made in the payment of
any amount due under any Obligation;
(B)
default shall be made in the due
observance or performance of any of the covenants, conditions
or agreements on the part of the Mortgagor, and, if such default
shall be under Sections 3.06, 3.07, or 3.08 hereof, such default
shall continue for a period of thirty (30) days after written
notice specifying such default and requiring the same to be
remedied shall have been given to the Mortgagor by the
Mortgagee;
(C)
any representation or warranty made by
the Mortgagor herein, or in any certificate, instrument or document
delivered hereunder, shall prove to be false or misleading in any
material respect on or as of the date made;
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(D)
an “Event of Default” shall
have occurred under any Credit Agreement or, in the event any
Credit Agreement does not contain specified “Events of
Default,” the Mortgagor shall breach or be in default of any
Credit Agreement; and
(E)
an event of damage, destruction or loss
or a taking under the power of eminent domain or like power (or
transfer in lieu of such taking) shall have had, in the judgment of
the Mortgagee, a material adverse effect on the ability of the
Mortgagor to pay or perform the Obligations.
Section 4.02.
Acceleration of Maturity.
If an Event of Default shall
have occurred and be continuing, the Mortgagee may declare the
Obligations to be due and payable immediately by a notice in
writing to the Mortgagor, and upon such declaration, all
Obligations shall become due and payable immediately, anything
contained herein or in the Credit Agreements to the contrary
notwithstanding.
Section 4.03.
Remedies of the Mortgagee.
If one or more Events of Default
shall occur and be continuing, the Mortgagee (personally or by
attorney), in its discretion, may:
(A)
take immediate possession of the
Mortgaged Property, collect and receive all credits, outstanding
accounts and bills receivable of the Mortgagor and all rents,
income, revenues, profits and proceeds pertaining to or arising
from the Mortgaged Property, or any part thereof, whether then past
due or accruing thereafter, and issue binding receipts therefor;
and manage, control and operate the Mortgaged Property as fully as
the Mortgagor might do if in possession thereof, including, without
limitation, the making
