DEBT SUBORDINATION AGREEMENT
Exhibit 10.25
THIS DEBT SUBORDINATION AGREEMENT (“Agreement”) is made and entered into as of September
28, 2006, among Xxxxx Fargo Bank, National Association, in Lincoln, Nebraska, as trustee (the
“Creditor”) for the owners of the $4,030,000 Community Redevelopment Authority of the Village of
Xxxxxxx, Nebraska, Tax Increment Revenue Bonds, Taxable Series 2006A (Siouxland Ethanol Plant
Project) (the “Series 2006A Bonds”) pursuant to that certain Bond Resolution, dated as of July 20,
2006 (the “Bond Resolution”), and Siouxland Ethanol, LLC (“the Company”), and Farm Credit Services
of America, FLCA (“FCSA”).
WITNESSETH
WHEREAS, the Company is now and may from time to time hereafter be indebted to Creditor;
and
WHEREAS, the Company desires to obtain loans, extensions of credit or other financial
accommodations from FCSA; and
WHEREAS, FCSA is unwilling to provide such financial accommodations to the Company unless
Creditor and the Company enter into this Agreement with FCSA;
NOW, THEREFORE, in consideration of the covenants contained herein, and to induce FCSA to
provide financial accommodations to or for the benefit of the Company, the parties hereto,
intending to be legally bound hereby, do agree as follows:
1. Definitions. In addition to such other terms as are elsewhere defined herein, as
used in this Agreement the following terms shall have the following meanings:
“Junior Debt” means all indebtedness, liabilities, debit balances, covenants and duties at
any time or times owed by the Company to Creditor (but solely in its capacity as trustee), whether
direct or indirect, absolute or contingent, secured or unsecured, due or to become due, now
existing or hereafter arising, under the Subordinated Debt, together with all interest, fees,
charges, expenses and attorney’s fees for which the Company is now or hereafter becomes liable to
pay to Creditor under any agreement or by law.
“Loan Agreement” means: (i) that certain Credit Agreement dated as of May 4, 2006, between
FCSA and the Company; and (ii) all amendments to and
restatements of each of the foregoing.
“Subordinated Debt” means that/those certain obligations to make payments in the Redevelopment
Contract, the Guaranty and the Subordinate Deed of Trust (all as defined in the Bond Resolution) or
of debt service on the Series 2006A Bonds to be issued in the aggregate principal amount not to
exceed $4,030,000. True and correct copies of the Redevelopment Contract, the Guaranty, the
Subordinate Deed of Trust and the Bond Resolution are annexed hereto as Exhibit A. In the event
this Agreement is executed and delivered prior to the execution and delivery of the Subordinated
Debt, unexecuted final versions shall be provided to FCSA, and the Company agrees to provide copies
of the executed documents to FCSA as soon as available and without change from the drafts delivered
to FCSA without the express prior consent of the
FCSA. The Subordinated Debt does not include the Series 2006A Bonds or the obligation of the
Company to pay property taxes.
“Superior Debt” means all loans, advances, liabilities, debit balances, covenants and duties
at any time or times owed by the Company to FCSA, whether direct or indirect, absolute or
contingent, secured or unsecured, due or to become due, now existing or hereafter arising,
including, without limitation, (i) any and all indebtedness, liabilities and obligations now or
hereafter owing by the Company to FCSA under the Loan Agreement, (ii) any indebtedness, liability
or obligation owing by the Company to others which FCSA may have obtained by assignment, pledge,
purchase or otherwise, (iii) any and all loans made or credit extended by FCSA to the Company
during the pendency of any bankruptcy case of the Company and (iv) all interest (including any
interest that accrues on any of the Superior Debt during the pendency of any bankruptcy case of
the Company, whether or not FCSA is authorized by 11 U.S.C. § 506 to collect such interest from
the Company), fees, charges, expenses and attorneys’ fees for which the Company is now or
hereafter becomes liable to pay to FCSA under any agreement or by law.
2. Subordination. Subject to the provisions of paragraph 5 hereof, Creditor hereby
postpones and subordinates all of the Junior Debt to the full and final payment and discharge of
all of the Superior Debt. Without limiting the generality of the foregoing, in the event of any
distribution, division or application, partial or complete, voluntary or involuntary, by operation
of law or otherwise, of all or any part of the assets of the Company or the proceeds thereof to
creditors of the Company or upon any indebtedness of the Company, by reason of the liquidation,
dissolution or other winding up of the Company or the Company’s business, or in the event of any
sale, receivership, insolvency or bankruptcy proceeding, or assignment for the benefit of
creditors, or any proceeding by or against the Company for any relief under any bankruptcy or
insolvency law or laws relating to the relief of the Company, readjustment of indebtedness,
reorganization, compositions or extensions, then and in any such event any payment or distribution
of any kind or character, either in cash, securities or other property, which shall be payable or
deliverable upon or with respect to any of the Junior Debt shall be paid or delivered directly to
the FCSA for application to the Superior Debt (whether or not the same is then due) until all of
the Superior Debt has been fully paid and discharged. The Subordinated Debt shall at all times bear
a conspicuous legend that the Junior Debt evidenced thereby is subordinated to the Superior Debt
pursuant to this Agreement. The Company’s and Creditor’s books shall be marked to evidence the
subordination of all of the Junior Debt to FCSA. FCSA is authorized to examine such books from time
to time and to make any notations required by this Agreement. The provisions of this paragraph 2
shall remain effective and binding upon Creditor, to the full extent of the Superior Debt, even of
any of the Superior Debt is avoided, equitably subordinated or nullified in any bankruptcy case of
the Company.
3. Warranties and Representations of the Company and Creditor. The
Company and Creditor each hereby represents and warrants that: (a) it has not relied nor will
it rely on any representation or information of any nature made by or received from FCSA or the
FCSA relative to the Company in deciding to execute this Agreement; (b) Creditor is or will be the
lawful owner of the Subordinated Debt as trustee for the bondholders; (c) Creditor has not
heretofore assigned or transferred any of the Junior Debt, any interest therein or any collateral
or security pertaining thereto other than to the bondholders; and (d) Creditor has not heretofore
given any subordination in respect of the Junior Debt.
2
4. Negative Covenants. For so long as this Agreement is in effect: (a) the
Company shall not, directly or indirectly, make any payment (other than a payment permitted by
paragraph 5 hereof) on account of or to satisfy all or any part of the Junior Debt; (b) Creditor
shall not demand, collect or accept from the Company or any other person any payment (other than a
payment permitted by paragraph 5 hereof) or collateral on account of the Junior Debt or any part
thereof other than amounts on deposit under the Bond Resolution, or accelerate the maturity of the
Junior Debt or realize upon or enforce any collateral securing the Junior Debt other than amounts
on deposit under the Bond Resolution; (c) Creditor shall not exchange, set off or otherwise
discharge any part of the Junior Debt; (d) Creditor shall not hereafter give any subordination in
respect of the Junior Debt or transfer or assign any of the Junior Debt to any person other than
FCSA unless the transferee or assignee thereof first agrees in writing with FCSA to be bound by the
terms of this Agreement; provided, however, this shall not apply to transfers of bonds secured by,
and payable from, the Junior Debt; (e) the Company shall not hereafter issue any instrument,
security or other writing evidencing any part of the Junior Debt, and Creditor will not receive any
such writing, except for the bonds or upon the prior written approval of the FCSA or at the request
of and in the manner requested by the FCSA; (f) the Company and Creditor shall not amend, alter or
modify any provision of the Subordinated Debt without the prior written consent of the FCSA; (g)
Creditor shall not commence or join with any other creditors of the Company in commencing any
bankruptcy, reorganization, receivership or insolvency proceeding against the Company; and (h)
neither the Company nor Creditor otherwise shall take or permit any action prejudicial to or
inconsistent with FCSA’s priority position over Creditor that is
created by this Agreement.
5. Permitted Payments. If and for so long as no Material Potential Default or Event
of Default (as those terms are defined in the Loan Agreement) exists at the time, or would result
from the making of such payment, but only upon written notice of such event from the FCSA, the
Company may pay to Creditor, and Creditor may accept and retain, any regularly scheduled
installments of principal of, and interest on, the Junior Debt due and owing to Creditor by the
Company under the Subordinated Debt in accordance with its present tenor, but without prepayment
(whether mandatory or optional other than regularly scheduled annual prepayments of principal) and
without payment upon acceleration.
6. Turnover of Prohibited Transfers. If any payment, distribution or security or the
proceeds thereof are received by Creditor on account of or with respect to any of the Junior Debt
other than as permitted in paragraph 5 hereof, Creditor shall forthwith deliver same to the FCSA in
the form received (except for the addition of any endorsement or assignment necessary to effect a
transfer of all rights therein to FCSA) for application to the Superior Debt or, at the FCSA’s
option, Creditor shall pay to the FCSA the amount thereof on demand. FCSA is irrevocably
authorized to supply any required endorsement or assignment which may have been omitted. Until so
delivered any such payment, distribution or security shall by held by Creditor in trust for FCSA
and shall not be commingled with other funds or property of Creditor.
7. Waivers. The Company and Creditor each hereby waives any defense based on the
adequacy of a remedy at law which might be asserted as a bar to the remedy of specific performance
of this Agreement in any action brought therefor by FCSA. To the fullest extent permitted by law,
the Company and Creditor each hereby waives: presentment, demand, protest, notice or protest,
notice of default or dishonor, notice of payment or nonpayment and any and all
3
other notices and demands of any kind in connection with all instruments (whether negotiable or
non-negotiable) evidencing all or any portion of the Superior Debt or the Junior Debt to which the
Company or Creditor may be a party; the right to require FCSA to marshal any security, or to
enforce any security interest or lien FCSA may now or hereafter have in any collateral securing the Superior Debt or to pursue any claim it may have against any guarantor of the Superior Debt,
as a condition to FCSA’s entitlement to receive any payment on account of the Junior Debt; notice
of the acceptance of this Agreement by FCSA, notice of any loans made, extensions granted or other
action taken in reliance hereon; and all other demands and notices of every kind in connection
with this Agreement, the Superior Debt or the Junior Debt. Creditor assents to any release,
renewal, extension, compromise or postponement of the time of payment to the Superior Debt, to any
substitution, exchange or release of collateral therefor and to the addition or release of any
person primarily or secondarily liable thereon. In addition, the Company and Creditor hereby waive
any claim or defense that may be available to a guarantor or surety.
8. Subrogation. Provided that the Superior Debt has been indefeasibly finally paid
and discharged and no claim of a preferential transfer or the like can be made with respect
hereto, Creditor shall be subrogated to the rights of FCSA to receive payments or distributions
of cash, property or securities payable or distributable on account of the Superior Debt, to the
extent of all payments and distributions paid over to or for the benefit of FCSA pursuant to this
Agreement. In no event, however, shall Creditor have any rights or claims against FCSA for any
alleged impairment of Creditor’s subrogation rights, Creditor acknowledging that any actions
taken by FCSA with respect to the Superior Debt or the Collateral are authorized and consented to
by Creditor.
9. Statement of Account. The Company and Creditor each agrees to render to the FCSA
from time to time upon the FCSA’s request therefor a statement of the Company’s account with
Creditor and to afford the FCSA access to the books and records of Creditor and the Company in
order that the FCSA may make a full examination of the state of accounts of the Company with
Creditor.
10. Validity of Junior Debt. The provisions of this Agreement subordinating the
Junior Debt are solely for the purpose of defining the relative rights of FCSA and Creditor and
shall not impair, as between Creditor and the Company, the obligation of the Company, which is
unconditional and absolute, to pay the Junior Debt in accordance with its terms except as payment
thereof may be postponed in accordance with this Agreement.
11. Indulgences Not Waivers. Neither the failure nor any delay on the part of FCSA
to exercise any right, remedy, power or privilege hereunder shall operate as a waiver thereof or
give rise to an estoppel, nor be construed as an agreement to modify the terms of this Agreement,
nor shall any single or partial exercise of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to
any other occurrence. No waiver by a party hereunder shall be effective unless it is in writing
and signed by the party making such waiver, and then only to the extent specifically stated in
such writing.
12. Duration. This Agreement shall become effective when executed by the Company
and Creditor and accepted by FCSA, and, when so accepted, shall constitute a
4
continuing agreement of subordination, and shall remain in effect until all of the Superior Debt
has been paid and all instruments and agreements at any time evidencing or securing the whole or
any part of the Superior Debt have been terminated. FCSA may, without notice to Creditor, extend
or continue credit and make other financial accommodations to or for the account of the Company in
reliance upon this Agreement.
13. Default and Enforcement. If any representation or warranty in this Agreement or in
any instrument evidencing or securing the Superior Debt proves to have been materially false when
made, or, in the event of a breach by either the Company or Creditor in the performance of any of
the terms of this Agreement or any instrument or agreement evidencing or securing the Superior
Debt, all of the Superior Debt shall, at the option of FCSA, become immediately due and payable
without presentment, demand, protest, or notice of any kind, notwithstanding any time or credit
otherwise allowed. At any time Creditor fails to comply with any provision of this Agreement that
is applicable to Creditor, FCSA may demand specific performance of this Agreement, whether or not
the Company has complied with this Agreement, and may exercise any other remedy available at law or
equity. Without limiting the generality of the foregoing, if Creditor, in violation of this
Agreement, shall institute or participate in any action suit or proceeding against the Company, the
Company may interpose this Agreement as a defense and FCSA is irrevocably authorized to intervene
and interpose such defense in the Company’s name. If Creditor attempts to enforce or realize upon
any collateral securing the Junior Debt in violation of this Agreement, the Company or FCSA (in the
Company’s or FCSA’s name) may by virtue of this Agreement
restrain such realization or enforcement.
14. Notices. All notices, requests, demands, and other communications required or
permitted under this Agreement or by law shall be in writing and shall be deemed to have been duly
given, made and received when delivered against receipt, or when received by facsimile at the
office of the noticed party or on the day after deposit in the United States mails, postage
prepaid, addressed as set forth below:
(a) |
If to FCSA: | |||
| 0000 X. 000xx Xxxxxx | ||||
| Xxxxx, XX 00000 | ||||
| Attention: | Xxxxx Xxxxx, Vice President | |||
| Fax No.: | ||||
(b) |
If to Creditor: | Xxxxx Fargo Bank, National Association, as trustee | ||
| Corporate Trust Department | ||||
| 1248 ‘O’ Street | ||||
| Lincoln, Nebraska 68508 | ||||
| Attention: | Xxxx Xxxxx | |||
| Fax No.: | 000.000.0000 |
5
(c) |
If to Company: | Siouxland Ethanol, LLC | ||
| 000 Xxxx Xxx Xxxxxx | ||||
| Xxxxxxx, XX 00000 | ||||
| Attention: | Chairman | |||
| Fax No.: | 000.000.0000 |
Any addressee may alter the address to which communications are to be sent by
giving notice of such change of address in conformity with the provisions of this paragraph
for the giving of notice.
15. FCSA’s
Duties Limited. The rights granted to FCSA in this Agreement are
solely for its protection and nothing herein contained imposes on FCSA any duties with respect
to any property either of the Company or of Creditor heretofore or hereafter received by FCSA
beyond reasonable care in the custody and preservation of such property while in FCSA’s
possession. FCSA has no duty to preserve rights against prior parties on any instrument or
chattel paper received from the Company or Creditor as collateral security for the Superior
Debt or any portion thereof.
16. Authority. The Company and Creditor represent and warrant that they have
authority to enter into this Agreement and that the person signing for the Company is
authorized and directed to do so.
17. Entire
Agreement. This Agreement constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings, inducements or conditions, whether express
or implied, oral or written. Neither this Agreement nor any portion or provision hereof may be
changed, waived or amended orally or in any manner other than by an agreement in writing
signed by FCSA, the Company and Creditor.
18. Additional
Documentation. The Company and Creditor shall execute and
deliver to the FCSA such further instruments and shall take such further action as the FCSA
may at any time or times reasonably request in order to carry out the provisions and intent of
this Agreement.
19. Successors
and Assigns. This Agreement shall inure to the benefit of FCSA,
its successors and assigns, and shall be binding upon both the Company and Creditor and their
respective heirs, executors, successors and assigns. Any person or entity whose loans or
advances to the Company hereafter are used to refinance and pay indefeasibly in full the
Superior Debt shall be deemed for all purposes hereof to be the successor to FCSA, and from
and after the date of any such refinancing in satisfaction in full of the Superior Debt such
person or entity shall be deemed a party hereto in the place and stead of FCSA as if such
person or entity had been the original signatory hereto, and all loans, advances, liabilities,
debit balances, covenants and duties at any time or times owed by the Company to such
successor to FCSA, whether direct or indirect, absolute or contingent, secured or unsecured,
due or to become due, then existing or thereafter arising, including any renewals, extensions,
modifications, or
6
replacements of any of the foregoing, shall be deemed for all purposes hereunder to constitute and
be Superior Debt.
20. Defects
Waived. This Agreement is effective notwithstanding any defect in the
validity or enforceability of any instrument or document at any time evidencing or securing the
whole or any part of the Superior Debt.
21. Governing Law. The validity, construction and enforcement of this Agreement shall
be governed by the internal laws of the State of Nebraska.
22. Severability. The provisions of this Agreement are independent of and separable
from each other. If any provision hereof shall for any reason be held invalid or unenforceable, it
is the intent of the parties that such invalidity or unenforceability shall not affect the validity
or enforceability of any other provision hereof, and that this Agreement shall be construed as if
such invalid or unenforceable provision had never been contained
herein.
23. Execution
and Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. In proving this Agreement in any
judicial proceeding, it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom such enforcement is
sought.
24. Consent
to the Subordinated Debt. For the purposes of Sections 7.7, 7.8 and 7.9
of the Loan Agreement and any supplement to the Loan Agreement, FCSA hereby consents and agrees in
writing to the incurrence of debt by the Company, and the security therefor, represented by the
Subordinated Debt, This Agreement is the agreement for subordinating debt, and it conforms to the
requirements set out in Section 7.10 of the Loan Agreement.
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed, sealed
and delivered as of the date shown above.
| ATTEST: | Siouxland Ethanol, LLC | |||
/s/
Xxxxxxx Xxxxxxx
|
By: | /s/ Xxx Xxxxx | ||
Secretary |
||||
| Title: | President | |||
[CORPORATE SEAL] |
||||
(Signature Page to Debt Subordination Agreement)
S-1
Debt Subordination Agreement
| ATTEST: | Xxxxx Fargo Bank, National
Association, as trustee |
|||
/s/ Xxxxxxx X. Xxxxxx XX
|
By: | /s/ Xxxx X. Xxxxx | ||
Vice President |
||||
| Title: | Vice President | |||
[CORPORATE SEAL] |
||||
??? |
||||
(Signature Page to Debt Subordination Agreement)
S-2
Debt Subordination Agreement
Farm Credit Services of America, FLCA
By:
|
/s/ Xxxxx Xxxxx
|
|||
Title:
|
Vice President |
(Signature Page to Debt Subordination Agreement)
S-3
