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LOAN AND SECURITY AGREEMENT
by and among
STATE BANK OF SLATER
, as Agent
THE HOLDERS FROM TIME TO TIME
AS A PARTY HERETO, as Lenders
SHOW ME ETHANOL, LLC, as Borrower
DATED AS OF JUNE 5, 2008
TABLE OF CONTENTS
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Page
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1.
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1
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2.
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LOANS.
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5
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2.1.
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Repayments.
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5
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2.2.
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Notes.
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5
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3.
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INTEREST, FEES AND CHARGES.
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5
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3.1.
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Interest Rate-Revolving Loans.
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5
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3.2.
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Fees And Charges.
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5
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3.3.
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Taxes.
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6
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3.4.
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Maximum Interest.
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7
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4.
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COLLATERAL.
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8
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4.1.
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Grant of Security Interest to Agent.
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8
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4.2.
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Leasehold Deed of Trust.
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9
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4.3.
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Other Security.
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9
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5.
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PRESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN.
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9
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5.1.
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Agent’s Enforcement Rights with Respect to
Accounts.
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10
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5.2.
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Application of Proceeds.
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10
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5.3.
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Information.
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10
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6.
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REPRESENTATIONS AND WARRANTIES.
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10
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6.1.
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Locations.
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11
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6.2.
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Organization, Authority and No Conflict.
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11
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6.3.
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Names and Trade Names.
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11
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6.4.
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Enforceability.
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11
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6.5.
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Solvency.
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12
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7.
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AFFIRMATIVE COVENANTS.
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12
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7.1.
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Maintenance of Records.
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12
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7.2.
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Notices.
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12
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7.3.
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Insurance.
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13
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7.4.
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Collateral.
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14
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7.5.
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Use of Proceeds.
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14
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7.6.
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Taxes.
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14
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7.7.
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Intellectual Property.
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15
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7.8.
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Patriot Act, Bank Secrecy Act and Office of Foreign Assets
Control.
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15
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8.
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DEFAULT.
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15
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8.1.
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Payment.
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15
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8.2.
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Breach of this Agreement and the Other Loan
Documents.
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15
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8.3.
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Breaches of Other Obligations.
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15
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8.4.
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Breach of Representations and Warranties.
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16
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8.5.
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Loss of Collateral.
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16
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8.6.
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Levy, Seizure or Attachment.
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16
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8.7.
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Bankruptcy or Similar Proceedings.
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16
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8.8.
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Appointment of Receiver.
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16
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8.9.
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Judgment.
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17
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8.10.
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Dissolution of Borrower.
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17
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8.11.
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Material Adverse Effect.
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17
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9.
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REMEDIES UPON AN EVENT OF DEFAULT; APPLICATION OF
PROCEEDS.
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17
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9.1.
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Acceleration of Liabilities.
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17
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9.2.
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Other Rights and Remedies.
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17
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9.3.
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Rights and Remedies Cumulative.
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18
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9.4.
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Application of Proceeds.
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18
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10.
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SETTLEMENTS, DISTRIBUTIONS AND APPORTIONMENT OF
PAYMENTS.
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18
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10.1.
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Settlements.
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18
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10.2.
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Return of Payments.
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19
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10.3.
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Sharing of Payments.
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19
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11.
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AGENT.
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19
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11.1.
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Appointment of Agent.
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19
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11.2.
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Nature of Duties of Agent.
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20
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11.3.
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Delegation of Duties.
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21
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11.4.
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Lack of Reliance on Agent.
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21
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11.5.
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Certain Rights of Agent.
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22
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11.6.
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Reliance by Agent.
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22
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11.7.
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Indemnification of Agent.
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23
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11.8.
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Holders of Notes.
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23
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11.9.
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Successor Agent.
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24
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11.10.
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Collateral Matters.
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24
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11.11.
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Actions with Respect to Defaults.
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26
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11.12.
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Restriction on Actions by Lenders.
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26
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11.13.
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Delivery of Information.
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26
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11.14.
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Demand.
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27
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11.15.
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Notice of Default.
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27
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12.
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ASSIGNABILITY.
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27
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13.
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AMENDMENTS, ETC.
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29
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14.
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NONLIABILITY OF AGENT AND LENDERS.
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30
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15.
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INDEMNIFICATION.
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30
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16.
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NOTICE.
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31
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17.
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CHOICE OF GOVERNING LAW; CONSTRUCTION; FORUM
SELECTION.
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32
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18.
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HEADINGS OF SUBDIVISIONS.
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33
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19.
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POWER OF ATTORNEY.
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33
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20.
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CONFIDENTIALITY.
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34
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21.
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COUNTERPARTS.
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34
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22.
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WAIVER OF JURY TRIAL; OTHER WAIVERS.
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34
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23.
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STATUTORY NOTICE.
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35
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LOAN AND SECURITY AGREEMENT
THIS
LOAN AND SECURITY AGREEMENT (as amended, modified or
supplemented from time to time, this “
Agreement ”)
made this fifth day of June, 2008 (the “
Closing Date ”)
by and among the State Bank of Slater as agent (“
Agent ”)
and all lenders from time to time a party hereto (“
Lenders ”),
and
Show Me Ethanol, LLC ,
having its principal place of business at 26530 Highway 24 East,
Carrollton, MO 64633 (“
Borrower ”).
W I T N E S S E T H :
WHEREAS,
Borrower has requested Loans from the Lenders, and the parties
wish to provide for the terms and conditions upon which such
Loans shall be made.
NOW,
THEREFORE, in consideration of any Loan (including any Loan by
renewal or extension) hereafter made to Borrower by Lenders,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Borrower, the
parties agree as follows:
“
Account ”
shall have the meaning ascribed to such term in the
UCC.
“
Account Debtor ”
shall have the meaning ascribed to such term in the
UCC.
“
Agent ”
shall mean the State Bank of Slater in its capacity as agent on
behalf of Lenders pursuant to the terms hereof and any replacement
or successor agent hereunder.
“
Assignment and Acceptance ”
shall have the meaning in
Section 12 hereof.
“
Business Day ”
shall mean any day other than a Saturday, a Sunday or any day on
which banks in Kansas City, Missouri are required or permitted to
close.
“
Chattel Paper ”
shall have the meaning ascribed to such term in the
UCC.
“
Collateral ”
shall mean all of the property of Borrower described herein,
together with all other real or personal property of Borrower or
any other Person now or hereafter pledged to Agent, for the benefit
of Agent and Lenders, to secure, either directly or indirectly,
repayment of any of the Liabilities.
“
Deposit Accounts ”
shall have the meaning ascribed to such term in the
UCC.
“
Documents ”
shall have the meaning ascribed to such term in the
UCC.
“
Environmental Laws ”
shall mean all federal, state, district, local and foreign laws,
rules, regulations, ordinances, and consent decrees relating to
health, safety, hazardous substances, pollution and environmental
matters, as now or at any time hereafter in effect, applicable to
Borrower’s business or facilities owned or operated by
Borrower, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contamination,
chemicals, or hazardous, toxic or dangerous substances, materials
or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface or
subsurface strata) or otherwise relating to the generation,
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous
Materials.
“
Equipment ”
shall have the meaning ascribed to such term in the
UCC.
“Escrow Agreement” shall
mean the escrow agreement entered into the date hereof by and among
the Lenders, the Borrower and the State Bank of Slater, acting as
Escrow Agreement.
“
Event of Default ”
shall have the meaning specified in
Section 8 hereof.
“
Federal Funds Rate ”
shall mean, for any day, a fluctuating interest rate equal, for
each day during such period, to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for
such day (or if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or
if such rate is not published for any day which is a Business Day,
the average of the quotations for such day on such transactions
received by Agent from three (3) Federal funds brokers or
recognized standing selected by Agent, Agent’s determination
shall be conclusive absent manifest error.
“
Fixtures ”
shall have the meaning ascribed to such term in the
UCC.
“
General Intangibles ”
shall have the meaning ascribed to such term in the
UCC.
“
Goods ”
shall have the meaning ascribed to such term in the
UCC.
“
Hazardous Materials ”
shall mean any hazardous, toxic or dangerous substance, materials
and wastes, including, without limitation, hydrocarbons (including
naturally occurring or man-made petroleum and hydrocarbons),
flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, biological substances, polychlorinated
biphenyls, pesticides, herbicides and any other kind and/or type of
pollutants or contaminants (including, without limitation,
materials which include hazardous constituents), sewage, sludge,
industrial slag, solvents and/or any other similar substances,
materials, or wastes and including any other substances, materials
or wastes that are or become regulated under any Environmental Law
(including, without limitation any that are or become classified as
hazardous or toxic under any Environmental Law).
“
Indemnified Party ”
shall have the meaning specified in
Section 15 hereof.
“
Instruments ”
shall have the meaning ascribed to such term in the
UCC.
“
Inventory ”
shall have the meaning ascribed to such term in the
UCC.
“
Investment Property ”
shall have the meaning ascribed to such term in the
UCC.
“Leasehold Dead of Trust” shall
mean that Missouri Leasehold Deed of Trust, Assignment of Rents and
Security Agreement by and among the trustee named therein and
Borrower as grantor, dated the date hereof.
“
Lenders ”
shall have the meaning set forth in the preamble
hereto.
“
Liabilities ”
shall mean any and all obligations, liabilities and indebtedness of
Borrower to Agent and each Lender or to any parent, affiliate or
subsidiary of Agent and each Lender of any and every kind and
nature, howsoever created, arising or evidenced and howsoever
owned, held or acquired, whether now or hereafter existing, whether
now due or to become due, whether primary, secondary, direct,
indirect, absolute, contingent or otherwise (including, without
limitation, obligations of performance), whether several, joint or
joint and several, arising under the Loan Documents including,
without limitation, principal, interests, fees, costs, expenses,
Hedging Obligations and indemnification obligations (and including
the payment of interest and other amounts which would accrue and
become due during a proceeding under the United States Bankruptcy
Code or any similar statute, whether or not such amounts are
allowed or allowable in whole or in part in such
proceeding).
“
Loan Documents ”
shall mean this Agreement, the Leasehold Deed of Trust, the Notes,
all Purchase Agreements, the Escrow Agreement and all other
agreements, instruments and documents, including, without
limitation, guaranties, mortgages, trust deeds, pledges, powers of
attorney, consents, assignments, contracts, notices, security
agreements, leases, financing statements, bank account agreements,
banking and related services or cash management agreements and all
other writings heretofore, now or from time to time hereafter
executed by or on behalf of Borrower or any other Person and
delivered to Agent and/or any Lender or to any parent, Affiliate or
subsidiary of Agent and/or any Lender in connection with the
transactions contemplated hereby, as each of the same may be
amended, modified or supplemented from time to time.
“
Loans ”
shall mean all loans and advances made by Lenders to or on behalf
of Borrower hereunder.
“
Material Adverse Effect ”
shall mean (i) a material adverse change in, or a material adverse
effect on the business, property, assets, operations or prospects
of Borrower as determined by Agent or Requisite Lenders in their
sole discretion, determined in good faith, (ii) a material
impairment of the ability of Borrower to perform any of its
obligations under the Loan Documents as determined by Agent or
Requisite Lenders in their sole discretion, determined in good
faith, (iii) a material adverse effect upon the Collateral or its
value as determined by Agent or Requisite Lenders in their sole
discretion, determined in good faith, or (iv) a material impairment
of the enforceability or priority of Agent’s liens upon the
Collateral or the legality, validity, binding effect or
enforceability of the Loan Documents as determined by Agent or
Requisite Lenders in their sole discretion, determined in good
faith.
“
Maturity Date ”
shall mean the first business day two years after the Closing
Date.
“
Non-U.S. Participant ”
shall have the meaning specified in
subsection 3.3(b)
.
“Notes” shall
mean the 9% subordinated secured notes issued by Borrower on the
date hereof.
“
Other Agreements ”
shall mean the Loan Documents.
“
Person ”
shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity, party
or foreign or United States government (whether federal, state,
county, city, municipal or otherwise), including, without
limitation, any instrumentality, division, agency, body or
department thereof.
“
Pro Rata Share ”
shall mean at any time, with respect to any Lender, a fraction
(expressed as a percentage in no more than nine (9) decimal places)
that represents the amount owed to a specific Lender on a Note over
amounts owed to all Lenders on the Note(s).
“
Proceeds ”
shall have the meaning ascribed to such term in the
UCC.
“Purchase Agreement” shall
mean that purchase agreement by and among Borrower as issuer of the
Notes and the investors thereto, executed on the date
hereof.
“
Register ”
shall have the meaning set forth in
subsection 12(d) hereof.
“
Requisite Lenders ”
shall mean, at any time, Lenders having Pro Rata Shares with
respect to all Loans aggregating at least one hundred percent
(100%) at such time there are three (3) or fewer Lenders, and
sixty-six and two-thirds percent (66 2/3%) at such time there are
four (4) or more Lenders.
“
Senior Loan Agreements ”
shall mean that certain Construction and Term Loan Agreement by and
among Borrower, FCS Financial, PCA, as administrative agent, and
the banks named therein, dated as of March 1, 2007 and that certain
Revolving Credit Agreement by and between Borrower and FCS
Financial, PCA, dated November 6, 2007.
“
Senior Loan Documents ”
shall mean the Senior Loan Agreements, the promissory note
evidencing the loan made by the Senior Loan Agreements, a deed of
trust in support of the loan made under the Senior Loan Agreement,
and all other instruments and documents executed and delivered by
Borrower, as amended from time to time, and any renewal and
extensions thereof.
“
Subordination Agreement ”
shall mean that Intercreditor/Subordination Agreement by and among
FCS Financial, PCA, the Borrower and the Lenders dated the date
hereof.
“
Subsidiary ”
shall mean any corporation of which more than fifty percent (50%)
of the outstanding capital stock having ordinary voting power to
elect a majority of the board of directors of such corporation
(irrespective of whether at the time stock of any other class of
such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or
indirectly, owned by Borrower, or any partnership, joint venture or
limited liability company of which more than fifty percent (50%) of
the outstanding equity interests are at the time, directly or
indirectly, owned by Borrower or any partnership of which Borrower
is a general partner.
“
Supermajority Lenders ”
shall mean, at any time, Lenders having Pro Rata Shares with
respect to all Loans aggregating at least seventy-five percent
(75%).
“
Supporting Obligations ”
shall have the meaning ascribed to such term in the
UCC.
“
UCC ”
shall mean the Uniform Commercial Code as in effect in Missouri
from time to time.
2.1.
Repayments
.
The
Liabilities shall be paid in accordance with the provisions of
the Notes and any and all outstanding and unpaid Liabilities
(including, but not limited to, unpaid principal and all
accrued and unpaid interest) shall be repaid in full on the
Maturity Date.
Borrower
hereby authorizes Agent, in its sole discretion, to charge any
of Borrower’s accounts to make any payments of
principal, interest, fees, costs or expenses required to be
made under this Agreement or the other Loan
Documents.
2.2.
Notes .
The
Loans shall be evidenced by the Notes.
3.
INTEREST, FEES AND CHARGES
.
3.1.
Interest Rate-Revolving Loans
.
(a)
Subject
to the terms and conditions set forth below, the Loans shall
bear interest at nine percent (9%) per annum.
3.2.
Fees And Charges
.
(a)
Agent’s Fees :
Borrower shall pay to Agent the fees of $25,000.00 plus all
attorneys’ fees incurred by Agent in connection with the
negotiation, documentation and consummation of this Agreement, the
other Loan Documents and the transactions contemplated under this
Agreement. $10,000.00 of the foregoing $25,000.00 fee is fully
earned by Agent upon Agent’s execution of this Agreement and
the remaining $15,000.00 portion of the foregoing $25,000.00 fee
(the “Refundable Portion”) is subject to refund to
Borrower in accordance with the provisions of
Section 11.9 .
(b)
Costs and Expenses :
Borrower shall reimburse Agent for all costs and expenses,
including, without limitation, legal expenses and attorneys’
fees incurred by Agent in connection with the
(i) documentation and consummation of this transaction and any
other transactions among Borrower, Agent and Lenders, including,
without limitation, Uniform Commercial Code and other public record
filings, overnight courier or other express or messenger delivery,
appraisal costs, surveys, title insurance and environmental audit
or review costs; (ii) collection, protection or enforcement of
any rights in or to the Collateral; (iii) collection of any
Liabilities; and (iv) administration and enforcement of any of
Agent’s and/or any Lender’s rights under this Agreement
or any of the other Loan Documents (including, without limitation,
any costs and expenses of any third party provider engaged by Agent
for such purposes). All such costs, expenses and charges owed to
Agent or a Lender, shall constitute Liabilities hereunder, shall be
payable by Borrower to Agent on demand, and until paid, shall bear
interest at the highest rate then applicable to Loans
hereunder.
3.3.
Taxes
.
(a)
All
payments made by Borrower hereunder or under any other Loan
Document shall be made without setoff, counterclaim, or other
defense. To the extent permitted by applicable law, all
payments hereunder or under the Loan Documents (including any
payment of principal, interest, or fees) to, or for the
benefit, of any person shall be made by Borrower free and
clear of and without deduction or withholding for, or account
of, any Taxes now or hereinafter imposed by any taxing
authority.
(b)
(i)
To the extent permitted by applicable law, each Lender that is
not a United States Person within the meaning of the Internal
Revenue Code of 1986, as amended (the “
Code ”)
section 7701(a)(30) (a “
Non-U.S. Participant ”)
shall deliver to Borrower and Agent on or prior to the Closing Date
(or in the case of a Lender that is an Assignee, on the date of
such assignment to such Lender) two accurate and complete original
signed copies of IRS Form W-8BEN, W-8ECI, or W-8IMY (or any
successor or other applicable form prescribed by the IRS)
certifying to such Lender’s entitlement to a complete
exemption from, or a reduced rate in, United States withholding tax
on interest payments to be made hereunder or any Loan. If a Lender
that is a Non-U.S. Participant is claiming a complete exemption
from withholding on interest pursuant to Sections 8711(h) or 881(c)
of the Code, the Lender shall deliver (along with two accurate and
complete original signed copies of IRS Form W-8BEN) a certificate
in form and substance reasonably acceptable to Agent (any such
certificate, a “
Withholding Certificate ”).
In addition, each Lender that is a Non-U.S. participant agrees that
from time to time after the Closing Date, (or in the case of a
Lender that is an assignee, after the date of the assignment to
such Lender), when a lapse in time (or change in circumstances
occurs) renders the prior certificates hereunder obsolete or
inaccurate in any material respect, such Lender shall, to the
extent permitted under applicable law, deliver to Borrower and
Agent two new and accurate and complete original signed copies of
an IRS Form W-8BEN, W-8ECI, or W-8IMY (or any successor other
applicable forms prescribed by the Internal Revenue Service
(“
IRS ”)),
and if applicable, a new Withholding Certificate, to confirm or
establish the entitlement of such Lender or Agent to an exemption
from, or reduction in, United States withholding tax on interest
payments to be made hereunder or any Loan.
(ii)
Each
Lender that is a Non-U.S. Participant (other than any such
Lender which is taxed as a corporation for U.S. federal income
tax purposes) shall provide two properly completed and duly
executed copies of IRS Form W-9 (or any successor or other
applicable form) to Borrower and the Agent certifying that
such Lender is exempt from United States backup withholding
tax. To the extent that a form provided pursuant to
this
Section is
rendered obsolete or inaccurate in any material respects as result
of change in circumstances with respect to the status of a Lender,
such Lender shall, to the extent permitted by applicable law,
deliver to the Borrower and the Agent revised forms necessary to
confirm or establish the entitlement to such Lender’s or
Agent’s exemption from United States backup withholding
tax.
(iii)
Borrower
shall not be required to pay additional amounts to a Lender,
or indemnify any Lender, under this Section to the extent that
such obligations would not have arisen but for the failure of
such Lender to comply with the terms hereof.
(iv)
Each
Lender agrees to indemnify Agent and hold Agent harmless for
the full amount of any and all present or future Taxes and
related liabilities (including penalties, interest, additions
to tax and expenses, and any taxes imposed by any jurisdiction
on amounts payable to Agent under this
Section which
are imposed on or with respect to principal, interest or fees
payable to such Lender hereunder and which are not paid pursuant to
this
Section ,
whether or not such Taxes or related liabilities were correctly or
legally asserted. This indemnification shall be made within 30 days
from the date the Agent makes written demand
therefore.
3.4.
Maximum Interest
.
It
is the intent of the parties that the rate of interest and
other charges to Borrower under this Agreement and the other
Loan Documents shall be lawful; therefore, if for any reason
the interest or other charges payable under this Agreement are
found by a court of competent jurisdiction, in a final
determination, to exceed the limit which Agent or any Lender
may lawfully charge Borrower, then the obligation to pay
interest and other charges shall automatically be reduced to
such limit and, if any amount in excess of such limit shall
have been paid, then such amount shall be refunded to
Borrower.
4.
COLLATERAL .
4.1.
Grant of Security Interest to Agent
.
As
security for the payment of all Loans made by Lenders to
Borrower hereunder, and for the payment or other satisfaction
of all other Liabilities, Borrower hereby assigns to Agent,
for the benefit of Lenders, and grants to Agent, for the
benefit of Lenders, a continuing security interest in the
following property of Borrower, whether now or hereafter
owned, existing, acquired or arising and wherever now or
hereafter located:
(a)
all
Accounts and all Goods whose sale, lease or other disposition
by Borrower has given rise to Accounts and have been returned
to, or repossessed or stopped in transit by,
Borrower;
(b)
all
Chattel Paper, Instruments, Documents and General Intangibles
(including, without limitation, all patents, patent
applications, trademarks, trademark applications, trade names,
trade secrets, goodwill, copyrights, copyright applications,
registrations, licenses, software, franchises, customer lists,
tax refund claims, claims against carriers and shippers,
guarantee claims, contract rights, payment intangibles,
security interests, security deposits and rights to
indemnification);
(c)
all
Inventory;
(d)
all
Goods (other than Inventory), including, without limitation,
Equipment, vehicles and Fixtures;
(e)
all
Investment Property;
(f)
all
Deposit Accounts, bank accounts, deposits and
cash;
(g)
Commercial
Tort Claims;
(h)
All
Supporting Obligations;
(i)
any
other property of Borrower now or hereafter in the possession,
custody or control of Agent or any Lender or any agent or any
parent, affiliate or subsidiary of Agent or any Lender or any
participant with any Lender in the Loans, for any purpose
(whether for safekeeping, deposit, collection, custody,
pledge, transmission or otherwise); and
(j)
all
additions and accessions to, substitutions for, and
replacements, products and Proceeds of the foregoing property,
including, without limitation, proceeds of all insurance
policies insuring the foregoing property, and all of
Borrower’s books and records relating to any of the
foregoing and to Borrower’s business.
4.2.
Leasehold Deed of Trust.
In
addition to the foregoing Collateral, the Loans shall be
secured by a Leasehold Deed of Trust, as attached to the
Purchase Agreement, to be executed, delivered at the time of
entry into this Agreement and filed of record by Borrower as
soon as reasonably practicable thereafter.
4.3.
Other Security
.
Agent,
in its sole discretion, without waiving or releasing any
obligation, liability or duty of Borrower under this Agreement
or the other Loan Documents or any Event of Default, may at
any time or times hereafter, but shall not be obligated to,
pay, acquire or accept an assignment of any security interest,
lien, encumbrance or claim asserted by any Person in, upon or
against the Collateral. All sums paid by Agent in respect
thereof and all costs, fees and expenses including, without
limitation, reasonable attorney fees, all court costs and all
other charges relating thereto incurred by Agent shall
constitute Liabilities, payable by Borrower to Agent on demand
and, until paid, shall bear interest at the highest rate then
applicable to Loans hereunder.
5.
RESERVATION OF COLLATERAL AND PERFECTION OF SECURITY INTERESTS
THEREIN
.
Borrower
shall, at Agent’s request, at any time and from time to
time, authenticate, execute and deliver to Agent such
financing statements, documents and other agreements and
instruments (and pay the cost of filing or recording the same
in all public offices deemed necessary or desirable by Agent)
and do such other acts and things or cause third parties to do
such other acts and things as Agent may deem necessary or
desirable in its sole discretion in order to establish and
maintain a valid, attached and perfected security interest in
the Collateral in favor of Agent to secure payment of the
Liabilities, and in order to facilitate the collection of the
Collateral. Borrower irrevocably hereby makes, constitutes and
appoints Agent (and all Persons designated by Agent for that
purpose) as Borrower’s true and lawful attorney and
agent-in-fact to execute and file such financing statements,
documents and other agreements and instruments and do such
other acts and things as may be necessary to preserve and
perfect Agent’s security interest in the Collateral.
Borrower further ratifies and confirms the prior filing by
Agent of any and all financing statements which identify
Borrower as debtor, Agent as secured party and any or all
Collateral as collateral. Borrower shall deliver to Agent any
and all evidence of ownership of any of the Equipment
including, without limitation, certificates of title and
applications of title and shall take all actions and execute
all documents required to cause the security interest of Agent
hereunder to be noted upon any such certificates of title.
Borrower shall indicate on its records concerning the
Collateral a notation, in form satisfactory to Agent, of the
security interest of Agent hereunder. Notwithstanding the
foregoing, Borrower shall not be obligated to record the Agent
on certificates of title for rolling stock or motor
vehicles.
5.1.
Agent’s Enforcement Rights with Respect to
Accounts.
Agent
may, at any time and from time to time after the occurrence
and during the continuance of an Event of Default, whether
before or after notification to any Account Debtor and whether
before or after the maturity of any of the Liabilities,
(i) enforce collection of any of each Borrower’s
Accounts or other amounts owed to such Borrower by suit or
otherwise; (ii) exercise all of Borrower’s rights
and remedies with respect to proceedings brought to collect
any Accounts or other amounts owed to Borrower;
(iii) surrender, release or exchange all or any part of
any Accounts or other amounts owed to Borrower, or compromise
or extend or renew for any period (whether or not longer than
the original period) any indebtedness thereunder;
(iv) sell or assign any Account of Borrower or other
amount owed to Borrower upon such terms, for such amount and
at such time or times as Agent deems advisable;
(v) prepare, file and sign Borrower’s name on any
proof of claim in bankruptcy or other similar document against
any Account Debtor or other Person obligated to Borrower; and
(vi) do all other acts and things which are necessary, in
Agent’s sole discretion, to fulfill Borrower’s
obligations under this Agreement and the other Loan Documents
and to allow Agent to collect the Accounts or other amounts
owed to Borrower. In addition to any other provision hereof,
Agent may at any time, after the occurrence and during the
continuance of an Event of Default, at Borrower’s
expense, notify any parties obligated on any of the Accounts
to make payment directly to Agent of any amounts due or to
become due thereunder.
5.2.
Application of Proceeds .
For
purposes of determining the amount of Loans available for
borrowing purposes, checks and cash or other immediately
available funds from collections of items of payment and
Proceeds of any Collateral shall be applied in whole or in
part against the Liabilities, in such order as Agent shall
determine in its sole discretion, on the day of receipt,
subject to actual collection.
5.3.
Information
.
Promptly
following request therefore by Agent, Borrower shall deliver
to Agent such business or financial data, reports, appraisals
and projections as Agent may reasonably request.
6.
REPRESENTATIONS AND WARRANTIES
.
Borrower
hereby represents and warrants to Agent and each Lender, which
representations and warranties (whether appearing in
this
Section or
elsewhere) shall be true at the time of Borrower’s execution
hereof and the closing of the transactions described herein or
related hereto, shall remain true until the repayment in full and
satisfaction of all the Liabilities and termination of this
Agreement, provided, that representations and warranties made as of
a particular date shall be true and correct as of such
date.
6.1.
Locations.
The
offices where Borrower keeps its books, records and accounts
(or copies thereof) concerning the Collateral,
Borrower’s principal place of business and all of
Borrower’s other places of business, locations of
Collateral and post office boxes and locations of bank
accounts are as set forth in
Exhibit A .
The Collateral, including, without limitation, the Equipment
(except any part thereof which Borrower shall have advised Agent in
writing consists of Collateral normally used in more than one
state) is kept, or, in the case of vehicles, based, only at the
addresses set forth on
Exhibit A .
6.2.
Organization, Authority and No Conflict
.
Borrower
is a duly organized, validly existing and in good standing in
its state of organization and duly qualified and in good
standing in all states where the nature and extent of the
business transacted by it or the ownership of its assets makes
such qualification necessary or if Borrower is not so
qualified, Borrower may cure any such failure without losing
any of its rights, incurring any liens or material penalties,
or otherwise affecting Agent’s rights. Borrower’s
state of organization, form of organization and organizational
identification number is set forth on
Schedule 6.2 hereto.
Borrower has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the
other Loan Documents and perform its obligations hereunder and
thereunder. Borrower’s execution, delivery and performance of
this Agreement and the other Loan Documents does not conflict with
the provisions of the organizational documents of Borrower, any
statute, regulation, ordinance or rule of law, or any agreement,
contract or other document which may now or hereafter be binding on
Borrower, except for conflicts with agreements, contracts or other
documents which would not have a Material Adverse Effect, and
Borrower’s execution, delivery and performance of this
Agreement and the other Loan Documents shall not result in the
imposition of any lien or other encumbrance upon any of
Borrower’s property under any existing indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or
instrument by which Borrower or any of its property may be bound or
affected.
6.3.
Names and Trade Names
.
Borrower’s
name has always been as set forth on the first page of this
Agreement and Borrower uses no trade names, assumed names,
fictitious names or division names in the operation of its
business.
6.4.
Enforceability
.
This
Agreement and the other Loan Documents to which Borrower is a
party are the legal, valid and binding obligations of such
Borrower and are enforceable against Borrower in accordance
with their respective terms.
6.5.
Solvency .
Borrower
is, after giving effect to the transactions contemplated
hereby, solvent, able to pay its debts as they become due, has
capital sufficient to carry on its business, now owns property
having a value both at fair valuation and at present fair
saleable value greater than the amount required to pay its
debts, and will not be rendered insolvent by the execution and
delivery of this Agreement or any of the other Loan Documents
or by completion of the transactions contemplated hereunder or
thereunder.
7.
AFFIRMATIVE COVENANTS
.
Until
payment and satisfaction in full of all Liabilities and
termination of this Agreement, unless Borrower obtains
Requisite Lenders’ prior written consent waiving or
modifying any of such Borrower’s covenants hereunder in
any specific instance, Borrower covenants and agrees as
follows:
7.1.
Maintenance of Records
.
Borrower
shall at all times keep accurate and complete books, records
and accounts with respect to all of Borrower’s business
activities, in accordance with sound accounting practices and
generally accepted accounting principles consistently applied,
and shall keep such books, records and accounts, and any
copies thereof, only at the addresses indicated for such
purpose on
Exhibit A .
7.2.
Notices
.
Borrower
shall:
(a)
Locations .
Promptly (but in no event less than ten (10) days prior to the
occurrence thereof) notify Agent of the proposed opening of any new
place of business or new location of Collateral, the closing of any
existing place of business or location of Collateral, any change in
the location of Borrower’s books, records and accounts (or
copies thereof), or, if any of the Collateral consists of Goods of
a type normally used in more than one state, the use of any such
Goods in any state other than a state in which Borrower has
previously advised Agent that such Goods will be used.
(b)
Names and Trade Names .
Notify Agent within ten (10) days of the change of its name or the
use of any trade name, assumed name, fictitious name or division
name not previously disclosed to Agent in writing.
(c)
Default; Material Adverse Effect .
Promptly advise Agent of the occurrence of or any event which has a
Material Adverse Effect on Borrower, the occurrence of any Event of
Default hereunder or the occurrence of any event which, if uncured,
will become an Event of Default after notice or lapse of time (or
both).
7.3.
Insurance.
Borrower
shall:
(a)
Keep
the Collateral properly housed and insured for the full
insurable value thereof against loss or damage by fire, theft,
explosion, sprinklers, collision (in the case of motor
vehicles) and such other risks as are customarily insured
against by Persons engaged in businesses similar to that of
Borrower, and shall maintain business interruption insurance
policies. Original (or certified) copies of such policies of
insurance have been or shall be, within ninety (90) days of
the date hereof, delivered to Agent, together with evidence of
payment of all premiums therefore, and shall contain an
endorsement, in form and substance acceptable to Agent,
showing loss under such insurance policies payable to Agent,
for the benefit of Agent and Lenders. Such endorsement, or an
independent instrument furnished to Agent, shall provide that
the insurance company shall give Agent at least thirty (30)
days written notice before any such policy of insurance is
altered or canceled and that no act, whether willful or
negligent, or default of Borrower or any other Person shall
affect the right of Agent to recover under such policy of
insurance in case of loss or damage. In addition, Borrower
shall cause to be executed and delivered to Agent an
assignment of proceeds of its business interruption insurance
policies. Borrower hereby directs all insurers under all
policies of insurance to pay all proceeds payable thereunder
directly to Agent. Borrower irrevocably makes, constitutes and
appoints Agent (and all officers, employees or agents
designated by Agent) as Borrower’s true and lawful
attorney (and agent-in-fact) for the purpose of making,
settling and adjusting claims under such policies of
insurance, endorsing the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such
policies of insurance and making all determinations and
decisions with respect to such policies of insurance, provided
however, that if no Event of Default shall have occurred and
is continuing, Borrower may make, settle and adjust claims
involving less than $50,000.00 in the aggregate without
Agent’s consent.
(b)
Maintain,
at its expense, such public liability and third party property
damage insurance as is customary for Persons engaged in
businesses similar to that of Borrower with such companies and
in such amounts, with such deductibles and under policies in
such form as shall be satisfactory to Agent and original (or
certified) copies of such policies have been or shall be,
within ninety (90) days after the date hereof, delivered to
Agent, together with evidence of payment of all premiums
therefore; each such policy shall contain an endorsement
showing Agent on behalf of Lenders as additional insured
thereunder and providing that the insurance company shall give
Agent at least thirty (30) days written notice before any such
policy shall be altered or canceled.
If
Borrower at any time or times hereafter shall fail to obtain
or maintain any of the policies of insurance required above or
to pay any premium relating thereto, then Agent, without
waiving or releasing any obligation or default by Borrower
hereunder, may (but shall be under no obligation to) obtain
and maintain such policies of insurance and pay such premiums
and take such other actions with respect thereto as Agent
deems advisable upon notice to Borrower. Such insurance, if
obtained by Agent, may, but need not, protect Borrower’s
interests or pay any claim made by or against Borrower with
respect to the Collateral. Such insurance may be more
expensive than the cost of insurance Borrower may be able to
obtain on its own and may be cancelled only upon Borrower
providing evidence that it has obtained the insurance as
required above. All sums disbursed by Agent in connection with
any such actions, including, without limitation, court costs,
expenses, other charges relating thereto and reasonable
attorneys’ fees, shall constitute Loans hereunder, shall
be payable on demand by Borrower to Agent and, until paid,
shall bear interest at the highest rate then applicable to
Loans hereunder. At or prior to closing of this Agreement,
Borrower shall deliver to Agent, certificates (in form and
substance acceptable to Agent), or such other evidence as may
be satisfactory to Agent, evidencing the fact that the
insurance required by this
Section is
in existence.
7.4.
Collateral
.
Borrower
shall keep the Collateral in good condition, repair and order
and shall make all necessary repairs to the Equipment and
replacements thereof so that the operating efficiency and the
value thereof shall at all times be preserved and maintained
in all material respects. Borrower shall permit Agent and
Lenders to examine any of the Collateral at any time and
wherever the Collateral may be located and, Borrower shall,
immediately upon request therefore by Agent, deliver to Agent
any and all evidence of ownership of any of the Equipment
including, without limitation, certificates of title and
applications of title. Borrower shall, at the request of
Agent, indicate on its records concerning the Collateral a
notation, in form satisfactory to Agent, of the security
interest of Agent hereunder.
7.5.
Use of Proceeds
.
All
Loans and other proceeds obtained by Borrower from Lenders
pursuant to this Agreement shall be used solely for business
purposes of Borrower.
7.6.
Taxes
.
Borrower
shall file all required tax returns and pay all of its taxes
when due, subject to any extensions granted by the applicable
taxing authority, including, without limitation, taxes imposed
by federal, state or municipal agencies, and shall cause any
liens for taxes to be promptly released; provided, that
Borrower shall have the right to contest the payment of such
taxes in good faith by appropriate proceedings so long as
(a) the amount so contested is shown on Borrower’s
financial statements; (b) the contesting of any such
payment does not give rise to a lien for taxes;
(c) Borrower keeps on deposit with Agent (such deposit to
be held without interest) or a reserve is maintained against
Borrower’s availability to borrow money pursuant to the
Notes referenced in
Section 2.2 ,
in either case an amount of money which, in the sole judgment of
Agent, is sufficient to pay such taxes and any interest or
penalties that may accrue thereon; and (d) if Borrower fails
to prosecute such contest with reasonable diligence, Agent may
apply the money so deposited in payment of such taxes. If Borrower
fails to pay any such taxes and in the absence of any such contest
by Borrower, Agent may (but shall be under no obligation to)
advance and pay any sums required to pay any such taxes and/or to
secure the release of any lie
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