AMENDED AND RESTATED LOAN AGREEMENT
AMENDED
AND RESTATED LOAN AGREEMENT
BORROWER:
|
VANGUARD
SYNFUELS, LLC
|
DATED
EFFECTIVE: June 28, 2007
|
||
P.
O. Xxx 000
|
||||
Xxxxxxx,
XX 00000
|
TOTAL
AMOUNT OF LOAN:
|
|||
LENDER:
|
First
South Farm Credit, ACA
|
$1,500,000
Term Loan (“Term Loan”)
|
||
P.
O. Xxx 00000
|
$2,000,000
Revolving Line of Credit (“LOC Loan”)
|
|||
Xxxxxxxxxx,
XX 00000
|
Total
$3,500,000
|
WHEREAS,
Vanguard Synfuels, LLC (“Vanguard”) entered into a loan agreement with First
South Farm Credit, ACA (“Lender”) dated January 12, 2006 (the “Original
Agreement”);
WHEREAS,
pursuant to a First Amendment to Loan Agreement executed by Vanguard on
September 20, 2006, and by First South on September 29, 2006 (“First
Amendment”), First South and Vanguard modified the Original Agreement, including
among other things releasing six individual guarantors and accepting a guarantee
of Diametrics Medical, Inc. (“DMED”) as a guarantor, and revising and amending
certain other provisions of the Original Agreement, all as set forth in the
First Amendment;
WHEREAS,
DMED has merged into Biodiesel Development Corporation, which has now changed
its name to Allegro Biodiesel Corporation (“Allegro”);
WHEREAS,
Vanguard is a 100% subsidiary of Allegro and WHEREAS, Vanguard has requested
certain modifications to the Original Agreement, as modified by the First
Amendment, and Lender has agreed to certain amendments and/or modifications,
subject to the terms and conditions set forth herein;
NOW,
THEREFORE, it is hereby agreed as follows:
The
Original Agreement, as modified, by the First Amendment, is hereby completely
amended and restated to read in its entirety as follows:
This
Amended and Restated Loan Agreement (the “Restated Loan Agreement” or “Loan
Agreement”) is entered into between Borrower and Lender in compliance with the
regulations of the Farm Credit Administration applicable to Lender. Lender
extends credit to Borrower up to the Total Amount of Loan on the terms and
conditions set forth in this Loan Agreement and in accordance with the general
lending policies of the Board of Directors of Lender.
I. TOTAL
AMOUNT OF LOAN
Vanguard
(“Borrower”) has requested the loans from Lender as specified above (the “Loan”)
and, subject to the terms and conditions contained herein, Lender has approved
an extension of credit to Borrower up to the total amount listed above. Borrower
agrees to pay to Lender, in addition to the amounts specified in the Loan
Documents hereinafter defined, all costs and expenses of Lender incurred in
connection with the making of the Loan. The costs and expenses to be paid by
Borrower include all attorneys’ fees and other legal fees (including the cost of
paralegals) in connection with the credit review, closing, documentation and
subsequent servicing and enforcement of the Loan, all recording fees, survey
(if
required), examinations of title, title insurance (if required), legal advice
to
Lender regarding Lender’s rights and responsibilities under any of the Loan
Documents, and all costs, fees and expenses related to the protection,
maintenance and preservation of any collateral or lien position and the
enforcement of the Borrower’s obligations. Borrower further agrees to pay at
closing the loan service fee to be specified by Lender.
II. LOAN
DOCUMENTATION
Borrower
has previously executed two promissory notes in connection with the Original
Agreement and agrees to execute a new promissory note for the LOC Loan (the
“LOC
Note”), which LOC Note replaces the previous Revolving Variable Rate Note
executed with respect to the LOC Loan under the original agreement, setting
forth the repayment terms, interest, prepayment and other provisions, and
Borrower has executed all documents necessary to secure the loan, including
a
multiple indebtedness mortgage, assignment of leases and rents, security
agreement, financing statement and other collateral documents sufficient to
create and perfect in favor of Lender the lien purported to be created by the
Loan Documents and any other documents Lender may reasonably require, in a
form
satisfactory to Lender. All instruments and documents, including the
Loan/Membership Application, signed or to be signed by Borrower and by any
guarantor which are related to the Loan are referred to as the “Loan Documents.”
No loan or advance shall be made when the aggregate of loans and commitments
outstanding and attributed to Borrower exceeds the lending limit then applicable
to Lender for any one borrower. Borrower agrees to execute all Loan Documents
as
completed by Lender in order to obtain the Loan; however, Borrower reserves
the
right to reject any Loan Document and to terminate its obligations prior to
the
earlier of disbursement of any Loan funds or closing. In the event Borrower
elects to terminate its obligations and not close in accordance with this Loan
Agreement, for any reason, Borrower nevertheless shall remain liable for fees
and expenses incurred by Lender which are reimbursable by Borrower under
paragraph I above. No funds shall be disbursed to Borrower until all Loan
Documents are signed and, with regard to those documents which shall be filed
for record, until such documents are filed for record; Lender has reasonable
assurance that its lien position is as represented, and Borrower is in strict
compliance with the terms and conditions of this Loan Agreement and the Loan
Documents. Borrower and Allegro will furnish new consents/resolutions expressly
authorizing the transaction and documents contemplated herein, all in form
and
substance approved by Lender. All new Loan Documents must be executed at the
time of execution of this Restated Loan Agreement, and the original executed
guaranty, note, and consents/resolutions, along with the original of this
Restated Loan Agreement shall be delivered
to
Lender within two (2) business days thereafter.
1
III. REPRESENTATIONS
AND COVENANTS
At
the
time of execution of the Original Agreement, and at the time of execution of
this Restated Loan Agreement, and continuing for so long as any indebtedness
of
Borrower to Lender is outstanding, Borrower covenants, warrants and represents
as of the applicable dates of said agreements that:
A. The
execution, delivery and performance by Borrower of this Loan Agreement, the
Loan
Documents and the borrowings evidenced by the term loan note and the original
and the new revolving line of credit note (singularly “Note,” collectively
“Notes”), are within Borrower’s power and Borrower has been authorized by all
necessary parties and has taken all requisite action for due authorization,
execution, delivery and performance. The Loan Documents are fully enforceable
against Borrower in accordance with their respective terms.
B. Borrower
is either an individual or a valid legal entity with legal capacity to execute,
deliver and perform this Loan Agreement, the Loan Documents and the borrowings
evidenced by the Note. Borrower will maintain its legal existence, in good
standing, until the loan is paid in full.
C. Borrower
has received all requisite governmental authority that is necessary or required
with respect to this Loan Agreement, the granting of liens on the collateral
as
specified in the Loan Documents and the operation of the business or businesses
of Borrower and Borrower’s agricultural enterprise.
D. Borrower
is in full compliance in all material respects with all environmental laws
and
regulations. Borrower agrees not to use any loan proceeds for a purpose that
will contribute to erosion of highly erodible land or to the conversion of
wetlands to produce an agricultural commodity, as further explained in 7 CFR
Part 1940, Subpart G, Exhibit M, and will further comply in all respects with
all applicable laws (whether statutory, common or otherwise), rules,
regulations, orders, permits, licenses, ordinances, judgments and decrees of
all
governmental authorities (whether federal, state, local or otherwise),
including, without limitation, all laws regarding public health or welfare,
environmental protection, water and air pollution, composition of product,
underground storage tanks, toxic substances, hazardous wastes, hazardous
substances, hazardous materials, waste or used oil, asbestos, occupational
health and safety, nuisances and trespass. Borrower indemnifies and agrees
to
hold Lender harmless from and against any claim, loss, cause of action or other
expense (including attorneys’ and paralegals’ fees and other cost of defense) in
any manner related to or arising from a breach of any portion of this Loan
Agreement by Borrower, including the covenants and representations contained
herein.
2
E. Borrower
certifies that Borrower has relied on its own knowledge and expertise as to
all
farming and other business operation decisions and has not relied on any advice
or recommendation of Lender or any of its employees.
F. Borrower
may not assign this Loan Agreement or transfer any of its rights hereunder.
Borrower acknowledges that any attempted transfer or assignment will be void
and
that no third party may rely on this Loan Agreement for any purpose. Lender
may,
however, subject to regulations applicable to Lender, sell, assign or grant
participations in this Loan.
G. Borrower
is not in default under any document, instrument or commitment to which Borrower
is a party or to which the Borrower or any of his property is subject. Further,
Borrower is not in default under any loan with Lender.
H. There
is
no action, suit, proceeding, inquiry or investigation by or before any court,
governmental agency, public board, or body pending or, to the knowledge of
the
Borrower, threatened against the Borrower or any principal, owner or partner
of
Borrower or guarantor of the Loan which (a) affects or seeks to prohibit,
restrain or enjoin Borrower’s ownership of any property, or the due execution,
delivery or performance of the Loan Documents, or the operation of any farming
or agribusiness activity of the Borrower; (b) affects or questions the validity
or enforceability of this Loan Agreement or any of the Loan Documents; or (c)
affects or questions the power or authority of the Borrower or any guarantor
to
perform its obligations under this Loan Agreement and the Loan
Documents.
I. All
representations, certificates, financial statements, documents, instruments
and
other matters submitted to the Lender are accurate and correct as of the date
reflected therein and shall continue to be accurate and correct without material
adverse change, alteration or circumstance during the term of this Loan.
The
representations, warranties and covenants contained in this article shall
survive the termination and payment of the Loan.
IV. EVENTS
OF DEFAULT
The
following shall constitute “Events of Default”:
A. Borrower
shall fail to timely make all payments due to Lender, or Borrower shall fail
to
constantly maintain all insurance, as provided in the Loan Documents, and
provide evidence of such to Lender.
B. Except
as
to the obligations under Paragraph IV A. (above), Borrower or any guarantor,
as
applicable, shall fail to comply with any of the representations, covenants,
duties or obligations of Borrower or guarantor, as the case may be, in this
Loan
Agreement or in any of the Loan Documents.
C. If
at any
time any representation or warranty made by the Borrower herein or in any other
document given by Borrower to Lender or otherwise relied upon by Lender shall
be
or become materially incorrect.
D. If
Borrower shall fail to execute or provide any of the Loan Documents or maintain
the lien status purported to be created by the Loan Documents.
E. Except
as
to the obligations under Paragraph IV. A. above, if Borrower shall fail to
provide any of the required documentation, certificates or evidence required
by
this Loan Agreement in a form substantially in accordance with the requirements
of this Loan Agreement.
F. If
any
Borrower or guarantor of Borrower shall (a) die; (b) apply for or consent to
the
appointment of a receiver, trustee or liquidator; (c) admit in writing its
inability to pay or is unable to pay its debts as they mature or otherwise
not
pay its debts as such debts are due; (d) make a general assignment for the
benefit of creditors; (e) be adjudicated a bankrupt; (f) file a petition or
answer seeking reorganization or an arrangement with creditors; (g) take
advantage of any insolvency law; or (h) take any action for the purpose of
effecting any of the foregoing.
G. If
any
order, judgment or decree shall be entered against Borrower or any guarantor
without the application, approval or consent of Borrower and/or any guarantor
of
Borrower by any court of competent jurisdiction appointing a receiver, trustee
or liquidator of the Borrower and/or any guarantor of Borrower or of all or
any
substantial part of the assets of Borrower and/or any guarantor of Borrower,
and
such order, judgment or decree shall continue unstayed and in effect for a
period of thirty (30) consecutive days.
3
H. If
Borrower fails to comply with any requirement of any governmental authority
within thirty (30) days after notice in writing of such requirement shall have
been given to Borrower.
I. If
any
Borrower or any guarantor of Borrower’s obligations hereunder defaults in timely
and fully performing any obligations imposed under this Loan Agreement or any
of
the Loan Documents.
J. If
a
default or event of default should occur under any loan between (i) Borrower
and/or any guarantor and (ii) Lender. This cross-default provision shall not
affect an ownership interest in residential real property occupied by any
Borrower as a principal dwelling and any deed of trust or mortgage secured
by
such residential real property shall stand on its own terms.
As
to any
defaults, failures or breaches (collectively “defaults”) under the provisions of
paragraph IV B. through IV J., those defaults will not become Events of Default
unless Borrower fails to cure, and/or fails to cause the cure of, any such
defaults within fifteen (15) days of Lender providing written notice of such
defaults.
If
any
Event of Default occurs hereunder, a default or event of default shall be deemed
to have occurred under the Loan Document. No further disbursement of the
proceeds of the Loan will be made and Lender may exercise all default rights
and
remedies set forth in this Loan Agreement and in the Loan
Documents.
V. SPECIAL
CONDITIONS
In
the
event of any conflict between the terms of this Loan Agreement and any of the
other Loan Documents, the terms of such other Loan Documents shall control.
Borrower and Lender agree that this Loan Agreement shall be governed by the
laws
of the jurisdiction listed in the address of Lender as shown on the first page
of this Loan Agreement. The Loan is further subject to the following terms,
covenants and special conditions.
Conditions
Precedent:
The
following shall be conditions precedent to any obligation of Lender to make
the
Loan to Borrower, including the restructuring and extension of the LOC
Loan:
1.
|
Lender
shall have a first priority perfected lien and security interest
in all
Collateral at the time of Closing. In addition, Allegro Biodiesel
Corporation shall execute and deliver to Lender an unconditional,
unlimited, in solido guarantee in form and substance prepared by
Lender.
|
2.
|
Execution
and delivery of all Loan Documents, including the LOC Note, and the
same
shall be in full force and effect.
|
3.
|
Borrower
shall have obtained and furnished to Lender environmental audit(s)
covering all Collateral, the results of which shall be satisfactory
to
Lender in its sole discretion. Lender shall also have received, to
its
satisfaction, evidence of Borrower's compliance with all applicable
environmental laws, regulations, policies, orders, and permitting
and
licensing requirements to which Borrower, its operations and the
Collateral may be subject. Borrower shall provide Lender an Environmental
Hazards Assessment (Form ENV-1) covering the Real
Property.
|
4.
|
Lender
shall be provided mortgagee title insurance covering the Real Property
in
the amount of the Loan containing no exceptions from coverage except
those
which are acceptable to Lender and issued by a title insurance company
acceptable to Lender.
|
5.
|
Lender
shall be provided such information and documentation relating to
the Real
Property and its acquisition as Lender, in its discretion, may
require.
|
6.
|
Lender
shall receive an opinion of legal counsel for Borrower certifying
the good
standing of Borrower and its authority and capacity to enter into
the
transaction contemplated herein, and such other matters as Lender
may
require, all in form and content satisfactory to
Lender.
|
7.
|
A
FEMA Standard Flood Hazard Determination is to be completed. If real
estate is determined to be in a flood zone, Borrower will provide
evidence
of flood insurance.
|
8.
|
Furnish
a certified resolution of Allegro authorizing its agent to enter
into and
execute the guaranty, said resolution shall be in form and substance
approved by Lender.
|
4
9.
|
Furnish
certified evidence of authority for agent of Borrower to enter into
and
execute this Loan Agreement and the new note for the LOC Loan, all
in form
and substance approved by Lender.
|
Additional
Covenants:
·
|
Existing
and future indebtedness (“Obligations”) to Borrower by its member
(currently Allegro) will be subordinate to First South’s debt, with no
payments allowed on these Obligations, without the prior written
consent
of First South;
|
·
|
Borrower
may make inter-company advances and distributions to Allegro as long
as
Vanguard and guarantor are not in default under this Loan Agreement
and/or
any other Loan Documents, and that after said advances and/or
distributions, Vanguard continues to be in compliance with all Financial
Covenants contained herein;
|
·
|
The
interest paid on the obligations to Allegro (and/or any future member(s)
of Borrower) and/or any affiliates will not be greater than the rate
of
interest paid by Borrower on Lender’s debt;
|
·
|
Provide
written notice, providing details of transaction, prior to pledging
assets
to or borrowing money from another lender, and obtain the written
consent
of Lender to such proposed transaction;
|
·
|
Provide
evidence of insurance, with Lender named as mortgagee/loss payee
on the
appropriate policies.
|
·
|
Borrower
shall pay to Lender an unused revolving line of credit fee, which
fee
shall be payable in arrears on the first day of each fiscal quarter
of
Borrower, in an amount equal to 0.0625% per fiscal quarter times
the
difference of (i) $2,000,000, minus (ii) the average for the applicable
fiscal quarter of the daily closing balances of the outstanding principal
amount of the advances under the Revolving Variable Rate Note (the
note
for the LOC loan) that were outstanding during the immediately preceding
fiscal quarter.
|
Reporting
Requirements:
So long
as Borrower is indebted to Lender, Borrower shall submit to the lender the
following:
1.
|
Annually,
within one hundred twenty (120) days following the end of Borrower’s
fiscal year (12/31), a balance sheet, income statement, statement
of
changes in capital position, statement of cash flows, and accompanying
notes, prepared in accordance with generally accepted accounting
principles, accompanied by an audit opinion acceptable to
Lender.
|
2.
|
Quarterly,
within 45 days of the end of each quarterly period, an interim balance
sheet and income statement of
Borrower.
|
Financial
Covenants:
· |
Achieve
by FYE 12/31/07 and maintain thereafter a minimum working capital
position
of $500,000;
|
· |
Achieve
by FYE 12/31/06 and maintain thereafter an excess of total assets
over
total liabilities of not less than $1,500,000;
|
· |
Maintain
the Cash Flow Coverage Ratio of no less than 1.25:1, beginning as
of FYE
12/31/08, to be measured at each fiscal year end. Cash Flow coverage
Ratio
is defined as the ratio of (i) net profit after taxes plus depreciation,
minus capital expenditures, minus salary distributions to key employees,
and minus distributions to owners on their equity investment (ii)
to the
current portion of long-term debt.
|
Modifications
to Revolving Line of Credit and the existing $2,000,000 Revolving Variable
Rate
Note:
Borrower
agrees that it will continue to make quarterly payments of accrued interest
on
October 1, 2007, and on each successive quarterly payment due date until July
1,
2009, and on said date, the LOC Loan shall mature, if not previously matured
by
acceleration, and all sums due in principal, interest, costs and fees shall
be
due and payable in full. Borrower will execute a new Revolving Variable Rate
Note (the “New Note”) in the form of Exhibit “A.”
5
Other
Covenants:
(1) Vanguard
shall furnish and/or cause Allegro to furnish quarterly internal, consolidated
and consolidating financial statements of Allegro and Vanguard, certified by
the
chief financial officer (CFO) of Allegro and of Vanguard, on or before 45 days
after each calendar quarter, which would show the separate financial status
for
each entity as well as the consolidated status. Said financial statements would
include a balance sheet, a statement of contingent liabilities and statement
of
income and expense for the prior quarter and year to date. Vanguard shall
furnish or cause Allegro to furnish directly to First South any reports, etc.
filed by Allegro with the SEC and furnish or cause Allegro to furnish directly
to First South any and all notices, reports sent to shareholders of Allegro,
each of said notices, reports, etc. to be furnished contemporaneously with
the
filing of such matters and/or sending such notices. Vanguard shall furnish,
or
cause Allegro to furnish Allegro’s annual audited financial statements within
120 days of each fiscal year end;
(2) Vanguard
agrees and shall cause Allegro to agree that First South directly or through
its
agents, may inspect the business, assets, books and records concerning Allegro
and/or Vanguard upon furnishing two business days prior written notice to
Allegro and/or Vanguard, as applicable, and Vanguard shall furnish, or cause
Allegro to furnish, as applicable, an officer to cooperate and work with First
South and/or its agent(s) reviewing any such books and records and/or the
business and/or assets of Vanguard and/or Allegro. All such reviews will be
conducted during normal business hours.
(3) Vanguard
will cause Allegro to execute an unconditional, unlimited, in solido, continuing
guaranty agreement of all of the indebtedness and obligations (present or
future) of Vanguard to Lender, prepared by Lender.
(4) It
is
further agreed that in addition to any other events of default as contained
in
this Restated Loan Agreement, if there is a default by Vanguard, complying
with
the terms and conditions of this Restated Loan Agreement, or causing Allegro
to
fully and timely comply with the terms and conditions of this Restated Loan
Agreement, this shall constitute an additional event of default.
(5) Vanguard
further agrees that if, and when, Allegro changes its state of organization
and/or amends its registered corporate name, Vanguard shall furnish or cause
Allegro to promptly [within three (3) business days thereof], furnish copies
of
Allegro’s revised organizational documents as filed with the Secretary of State
of the state of its then organization, and if Allegro’s name is amended under
the amended name, Allegro shall ratify and confirm under its amended name
Allegro’s obligation under the then existing continuing guaranty agreement
previously executed by Allegro.
(6)
In
addition, the Borrower warrants that it is currently indebted to Lender in
the
principal sum of $1,350,000 on the Term Loan, plus accrued interest, at the
rate
of 9.5% per annum and is currently indebted in the principal sum of
$1,667,378.93 on the LOC Loan, plus accrued interest, at the rate set forth
in
the new Revolving Variable Rate Note. Borrower further acknowledges and warrants
that said sums are legally due and owing and Borrower has no defenses to the
validity and enforcement of said indebtedness. Borrower further warrants and
covenants that it has no claims, demands or counter claims against Lender,
and
Borrower hereby expressly waives and renounces any claims and/or causes of
action, if any, that it has against Lender, (i) which have accrued and/or (ii)
which have arisen from facts and/or actions, which occurred prior to and/or
through the date of execution of this Restated Loan Agreement. In addition,
Borrower acknowledges and warrants that Lender has fully funded the Term Loan,
and that Borrower may not borrow any additional monies under the Term Loan.
(7)
At
the
time of execution of this Loan Agreement, Vanguard shall pay Lender (i) a loan
renewal fee in the amount of $5,000, and (ii) pay Lender the sum of $4,500
being
the amount of Lender’s attorney’s fees and costs.
(8) No
novation. It is expressly agreed that this Restated Loan Amendment does not
constitute a novation of Vanguard’s existing indebtedness and/or obligations
and/or of any collateral and security for said indebtedness and obligations,
and
does not constitute a novation of the existing promissory notes or of any
existing Loan Document.
6
(9) This
agreement may be executed in multiple originals and fax and/or electronic
signatures shall be deemed effective as originals.
Witness
the signature of Borrower(s) and Lender:
VANGUARD
SYNFUELS, LLC
|
FIRST
SOUTH FARM CREDIT, ACA
|
|
BY:
/s/ Xxxxxxx X. Xxxxxx
|
BY:
/s/ Xxxxxxx X. Xxxxx
|
|
Xxxxxxx
X. Xxxxxx, President, Duly Authorized
|
Xxxxxxx
X. Xxxxx, Division Vice President
|
7
AGREED TO AND APPROVED BY
THE
SOLE MEMBER OF BORROWER:
|
|||
ALLEGRO
BIODIESEL CORPORATION
|
|||
By: /s/ W. Xxxxx Xxxxx, III | |||
W. Xxxxx Xxxxx, III CEO |
|||
(Print
Name) Title Duly Authorized
|
8