INTERCREDITOR/SUBORDINATION AGREEMENT
THIS
INTERCREDITOR/SUBORDINATION AGREEMENT (the “Agreement”), dated as of June 5,
2008, by and among FCS
Financial, PCA
(“Lender”); the persons loaning funds to Borrower pursuant to the Purchase
Agreement; a list of which is attached hereto as Exhibit A (each a “Subordinate
Creditor” and collectively, “Subordinate Creditors”); and Show
Me Ethanol, LLC
(“Borrower”).
ARTICLE
I
DEFINITIONS
SECTION
1.01. Definitions.
As used
herein, the following terms shall have the meanings specified below:
“Agent”
shall mean State Bank of Xxxxxx or such other agent serving as Agent under
the
Subordinated Loan Documents on behalf of all Subordinate Creditors.
“Collateral”
has the meaning specified in the Senior Loan Documents between Borrower and
Lender.
“Default”
shall mean any Event of Default specified in the Senior Loan Documents or under
the Subordinated Loan Documents, or any other event that, with the giving of
notice or lapse of time or both, would constitute an Event of Default under
the
Senior Loan Documents or the Subordinated Loan Documents.
“Leasehold
Deed 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.
“Lender”
shall mean FCS Financial, PCA, and any other holder from time to time of the
Senior Debt.
“Insolvency
Event” shall have the meaning given to such term in Section 3.02(a) this
Agreement.
“Notes”
shall mean all notes of Borrower payable to Lender evidencing all or part of
the
Senior Debt, and any amendments, modifications, renewals or extensions thereof.
“Promissory
Notes” shall mean the 9% subordinated secured notes issued by Borrower on the
date hereof.
“Purchase
Agreement” shall mean that Purchase Agreement by and among Borrower as
Promissory Note issuer and the individuals listed on Exhibit A hereto, dated
the
date hereof.
“Senior
Debt” shall mean all obligations of Borrower to Lender now or hereafter existing
under the Senior Loan Documents, whether for principal or interest (including
interest accruing after the occurrence of an Insolvency Event), and whether
or
not the same is allowed as a claim, prepayment premium, fees, expenses or
otherwise.
“Senior
Loan Agreements” shall mean that certain Construction and Term Loan Agreement by
and among Borrower, Lender, 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 Lender dated November 6, 2007.
“Senior
Loan Documents” shall mean the Senior Loan Agreements, the Note, the Deed of
Trust, and all other instruments and documents executed and delivered by
Borrower, as amended from time to time, and any renewal and extensions thereof,
with respect to the Senior Debt.
“Subordinate
Loan Agreement” shall mean that certain Loan and Security Agreement by and among
Subordinate Creditors and Borrower, dated the same date as of this
Agreement;
“Subordinate
Loan Documents” shall mean the Subordinate Loan Agreement, Promissory Notes, the
Leasehold Deed of Trust and the Purchase Agreement, and all other instruments
and documents executed and delivered by Borrower, as amended from time to time,
and any renewal and extensions thereof, with respect to the Subordinated
Debt.
“Subordinated
Debt” shall mean all obligations of Borrower to the Subordinate Creditors, due
to loans or other extensions of credit by the Subordinate Creditor to Borrower,
however arising or created, whether now existing or hereafter arising, and
whether represented by promissory notes of Borrower or shown on the books and
records of the Borrower.
ARTICLE
II
REPRESENTATIONS
OF SUBORDINATE CREDITOR
SECTION
2.01. Representations
and Warranties.
Subordinate Creditors hereby represent and warrant to Lender as follows:
(a)
Attached hereto as Exhibit A, and made a part hereof by this reference, is
a
full and complete list of the Subordinate Creditors, each of which as of the
date of this Agreement is a holder of the Borrower’s issued 9% subordinated
secured Promissory Notes. There are no existing agreements or understandings
relating to the Subordinated Debt between Borrower and the Subordinate Creditors
that are not fully and accurately described in the Subordinate Loan
Documents.
(b)
This
Agreement has been duly executed and delivered by the Subordinate Creditors,
and
is the valid and binding obligation of each Subordinate Creditor, enforceable
against it in accordance with its terms.
(c)
Except for Subordinate Creditor’s membership interest in Borrower, the
Subordinate Creditor does not currently hold any notes, evidences of
indebtedness or shares of preferred stock, nor does it claim any right (whether
or not contingent) to payment of money from Borrower, other than the
Subordinated Debt.
(d)
By
execution of the Purchase Agreement, Subordinate Creditors have each approved
and agreed to be bound by the terms of this Agreement and each has authorized
the Agent to execute this Agreement on behalf of the Subordinate Creditors.
2
ARTICLE
III
SUBORDINATION
TO SENIOR DEBT
SECTION
3.01. Subordination.
(a)
General.
Except
as provided herein, Subordinate Creditor agrees and covenants that the
Subordinated Debt is and shall be subordinate in right of payment to the prior
payment in full of the Senior Debt. The Senior Debt shall not be deemed to
have
been paid in full until Lender shall have received indefeasible payment of
the
Senior Debt.
(b)
Permitted
Payments.
Except
as otherwise provided in this Article III, prior to the occurrence of a Default
(of which Agent and Subordinate Creditors have been provided written notice),
the Subordinate Creditor shall only be entitled to receive interest payments
on
the Subordinated Debt in accordance with the terms of the Subordinate Loan
Documents. Additionally, nothing in this Agreement shall be construed to
prohibit Borrower's ability to make pre-payments on the Subordinated Debt from
additional capital contributions made to Borrower after the date hereof;
provided,
however,
Borrower shall not be allowed to make prepayments from working capital or cash
flow without the express written consent of Lender.
SECTION
3.02. Priority
and Payment Over of Proceeds in Certain Events.
(a)
Insolvency
or Dissolution of Borrower.
Upon
any payment or distribution of all or any of the assets or securities of
Borrower of any kind or character, whether in cash, property or securities,
upon
any dissolution, winding up, liquidation, reorganization, arrangement,
adjustment, protection, relief or composition of Borrower or its debts, whether
voluntary or involuntary or in bankruptcy, insolvency, receivership,
arrangement, reorganization, relief or other proceedings, or upon an assignment
for the benefit of creditors or any other marshalling of the assets and
liabilities of Borrower or otherwise (any such event being an “Insolvency
Event”), all Senior Debt shall first be indefeasibly paid in full before the
Subordinate Creditor shall be entitled to receive any payment of the
Subordinated Debt. Upon the occurrence of any Insolvency Event, any payment
or
distribution of assets or securities of Borrower of any kind or character,
whether in cash, property or securities, to which Subordinate Creditor would
be
entitled, except for the provisions of this Article III, shall be made by
Borrower or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other person making such payment or distribution, directly to Lender for
application (in the case of cash) to or as collateral (in the case of non-cash
property or securities) for the payment or prepayment in full, first, of all
Senior Debt after giving effect to any concurrent payment or distribution to
Lender on the Senior Debt.
(b)
Default
under Senior Loan Agreements.
No
direct or indirect payment of the Subordinated Debt shall be made by Borrower
or
received by a Subordinate Creditor if, at the time of such payment, there exists
any Default (of which Subordinate Creditor has been provided notice through
Agent or otherwise prior to any such payment) and such Default shall not have
been cured or waived in writing by Lender or the benefits of this sentence
waived in writing by Lender. Lender shall notify Agent (on behalf of the
Subordinate Creditors) in writing of any default under the Senior Loan
Documents. Notwithstanding the foregoing, Subordinate Creditor (or
the
Agent acting on behalf of Subordinate Creditors) shall be entitled to receive
and retain any payments that Subordinate Creditor (or the Agent acting on behalf
of Subordinate Creditors) has received in payment of the Subordinate Debt
pursuant to the terms of the Agreement or by consent of Lender prior to the
receipt by Agent of the foregoing written notice from Lender.
3
(c)
Demand
for or Acceleration of Payment of Subordinated Debt.
In the
event that the Subordinated Debt is declared due and payable or the maturity
thereof is accelerated for any reason, then and in such event, Lender shall
be
entitled to receive payment in full of all amounts due or to become due on
the
Senior Debt (whether or not a Default or event of default has occurred
thereunder or such Senior Debt is, or has been declared to be, due and payable
prior to the date on which it otherwise would have become due and payable)
before Subordinate Creditor shall be entitled to receive any payment of the
Subordinated Debt. Notwithstanding the foregoing, Subordinate Creditor (or
the
Agent acting on behalf of Subordinate Creditors) shall be entitled to receive
and retain any payments that Subordinate Creditor (or the Agent acting on behalf
of Subordinate Creditors) has received in payment of the Subordinate Debt
pursuant to the terms of the Agreement or by consent of Lender prior to the
receipt by Agent of the foregoing written notice from Lender.
(d)
Certain
Payments Held in Trust.
In the
event that, notwithstanding the foregoing provisions prohibiting such payment
or
distribution, Subordinate Creditor shall have received any payment or
distribution in respect of the Subordinated Debt contrary to such provisions,
then and in such event such payment or distribution shall be received and held
in trust for Lender and shall be paid over or delivered to Lender for
application (in the case of cash) to or as collateral (in the case of non-cash
property or securities) for the payment or prepayment, first, of all Senior
Debt
in full after giving effect to any concurrent payment or distribution to Lender
in respect of the Senior Debt.
SECTION
3.03. Suspension
of Remedies.
Except
as provided in Sections 3.02(a) or (b), and during any period of payment
subordination provided for in Section 3.02(a) or (b), Subordinate Creditor
shall
not (i) ask, demand, or xxx for any payment, distribution or any other remedy
in
respect of the Subordinated Debt, or (ii) commence, or join with any other
creditor (other than Lender) in commencing, any Insolvency Event.
SECTION
3.04. Rights
of Lender Not to be Impaired.
No
right of Lender to enforce subordination as herein provided shall at any time
in
any way be prejudiced or impaired by any act or failure to act in good faith
by
Lender, or by any noncompliance by Borrower, with the terms and provisions
and
covenants herein, regardless of any knowledge thereof Lender may have or
otherwise be charged with. The provisions of this Article III are intended
to be
for the benefit of, and shall be enforceable directly by, Lender.
SECTION
3.05. Cross
Default between Senior Loan Documents and Subordinate Loan
Documents.
Lender
shall provide in the Senior Loan Documents that a default in the Subordinate
Loan Documents will create a default under the Senior Loan Documents.
Subordinate Creditor shall provide in the Subordinate Loan Documents that a
default in the Senior Loan Documents will create a default under the Subordinate
Loan Documents.
4
SECTION
3.06. Further
Assurances.
Subordinate Creditor will take reasonable steps to xxxx its books of account
in
such a manner as shall be effective to give proper notice of the effect of
this
Subordination Agreement, and will, in the case of any Subordinated Debt which
is
evidenced by any instrument, upon Lender’s reasonable request cause such
Subordinated Debt to be evidenced by an appropriate instrument or instruments
endorsed with a legend evidencing this Agreement. Subordinate Creditor will,
at
its reasonable expense and at any time and from time to time, promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that Lender may reasonably request,
in
order to protect any right or interest granted or purported to be granted hereby
or to enable Lender to exercise and enforce its rights and remedies
hereunder.
SECTION
3.07. Miscellaneous.
(a)
All
rights and interests of Lender under this Article III, and all agreements and
obligations of the Subordinate Creditor under this Article III, shall remain
in
full force and effect irrespective of:
(i)
any
lack of validity or enforceability of any Senior Loan Document, and Note or
any
other agreement or instrument relating thereto or to any other Senior
Debt;
(ii)
any
change in the time, manner or place of payment of, or in any other term of,
all
or any of the Senior Debt, or any other amendment or waiver of or any consent
to
departure from any Senior Loan Document any Note or any other agreement or
instrument relating thereto or to the Senior Debt;
(iii)
any
exchange, release or non-perfection of any collateral, or any release or
amendment or waiver of or consent to departure from any guaranty, for all or
any
of the Senior Debt; or
(iv)
any
other circumstance that might otherwise constitute a defense available to,
or a
discharge of, Borrower or a subordinated creditor.
(b)
The
provisions of this Article III shall continue to be effective or be reinstated,
as the case may be, if at any time any payment of any of the Senior Debt is
rescinded or must otherwise be returned by Lender, as the case may be, upon
the
insolvency, bankruptcy or reorganization of Borrower or otherwise, all as though
such payment had not been made.
(c)
Except for any notice of default issued by Lender concerning the Senior Loan
Documents and those other notices to be provided under Section 3.01(b) and
Section 3.02(b) and (c) above, the Subordinate Creditor hereby waives
promptness, diligence, notice of acceptance and any other notice with respect
to
any of the Senior Debt and this Article III and any requirement that Lender
protect, secure, perfect or insure any security interest or lien or any property
subject thereto or exhaust any right or take any action against Borrower or
any
other person or entity or any Collateral.
(d)
No
failure on the part of Lender to exercise, and no delay in exercising, any
right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any
other right. The remedies herein provided are cumulative and not exclusive
of
any remedies provided by law.
5
(e)
The
provisions of this Article III constitute a continuing agreement and shall
(i)
remain in full force and effect until the Senior Debt shall have been
indefeasibly paid in full, (ii) be binding upon Subordinate Creditor and his
heirs, personal representatives, successors and assigns, and (iii) inure to
the
benefit of and be enforceable by Lender and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), Lender
may assign or otherwise transfer any Note or portion thereof held by it, or
grant any participation in any of its rights or obligations under the Loan
Documents, to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof granted to Lender
herein or otherwise.
ARTICLE
IV
COVENANTS
SECTION
4.01. Covenants
of Subordinate Creditor.
Subordinate Creditor covenants and agrees with Lender that, unless Lender shall
otherwise agree in writing, prior to the termination of the Senior Loan
Documents and payment in full of the Senior Debt:
(a)
Subordinate Creditor will not cancel or otherwise discharge any of the
Subordinated Debt (except upon payment as permitted by Article
III).
(b)
Subordinate Creditor will not sell, assign, pledge, encumber or otherwise
dispose of any of the Subordinated Debt held by him unless such sale,
assignment, pledge, encumbrance or disposition is made expressly subject to
this
Agreement.
(c)
Subordinate Creditor will not permit the terms of any of the Subordinated Debt
held by it to be amended or modified in such a manner as to have any adverse
effect upon the rights or interests of Lender hereunder.
(d)
Except for the Subordinate Loan Documents, Subordinate Creditor will not secure
the payment of any Subordinated Debt or any other obligation of Borrower to
Subordinate Creditor, or obtain a lien, security interest or other charge or
encumbrance of any nature whatsoever against Borrower's property, whether now
owned or hereafter acquired.
ARTICLE
V
MISCELLANEOUS
SECTION
5.01. Amendments,
etc.
No
amendment of any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed by Lender and Subordinate
Creditor.
SECTION
5.02. Waiver.
Any
waiver of a right provided under this Agreement or a breach of this Agreement
must be express and written. The waiver by either of the Lender or Subordinate
Creditor of any breach of any provision hereof by the other Party shall not
be
construed
to be a waiver of any succeeding breach of such provision or a waiver of the
provision itself. Selection by Lender or Subordinate Creditor of a specific
remedy does not constitute, and shall not be interpreted to constitute, a waiver
of any other remedy of such party, and failure to select a specific remedy
does
not constitute, and shall not be interpreted to constitute, a waiver of such
remedy. Lender’s or Subordinate Creditor’s failure at any time to enforce any of
the terms, provisions or conditions of this Agreement shall not constitute
or be
construed as a waiver of the same and any single or partial exercise by such
party of any right under this Agreement shall not preclude any further or other
exercise of the same or any other right.
6
SECTION
5.03 Expenses.
In the
event of any action by either the Lender or the Subordinate Creditor to enforce
any provision of this Agreement, or on account of any default under or breach
of
this Agreement, the prevailing party, as determined by a court of competent
jurisdiction, in such action will be entitled to recover, in addition to all
other relief, from the other party all legal fees incurred by the prevailing
party, in connection with such action (including, but not limited to, any appeal
thereof).
SECTION
5.04. Addresses
for Notices.
All
notices and other communications provided for under this Agreement shall be
in
writing and mailed, faxed, or delivered at the addresses set forth below, or
at
such other address as such party may specify by written notice to the other
parties hereto:
|
If
to the Borrower:
|
|
|
000
Xxxx Xxxx
|
|
|
Xxxx
Xxxxxx Xxx 000
|
|
|
Xxxxxxxx,
Xxxxxxxx 00000
|
|
|
Attention:
Xxxx Xxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
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|
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With
a copy to:
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Xxxxx
Xxxx LLP
|
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3500
One Kansas City Place
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|
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0000
Xxxx Xxxxxx
|
|
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Xxxxxx
Xxxx, XX 00000
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|
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Attention:
Xxxxxx Alt
|
|
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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|
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If
to Subordinate Creditors:
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State
Bank of Slater
|
|
(through
Agent)
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000
Xxxx Xxxxx Xxxxxx
|
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Xxxxxx,
XX 00000
|
|
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Telephone:
000-000-0000
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|
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Facsimile:000-000-0000
|
|
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Attention:
Xxxxxxx “Bud” Xxxxxxx
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7
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FCS
Financial, PCA
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|
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Capital
Markets Group
|
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Xxxxx
Xxxx Xxxxx Xxxxx, Xxxxx 000
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Xx.
Xxxxx, XX 00000
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|
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Telephone:
000-000-0000
|
|
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Facsimile:
000-000-0000
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|
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Attention:
Xxx Xxxxx
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|
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With
a copy to:
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Husch
Xxxxxxxxx Xxxxxxx LLP
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0000
X. Xxxxxxxx Xx., Xxxxx 0-000
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|
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Xxxxxxxxxxx,
XX 00000
|
|
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Attention:
Xxxx X. Xxxxxx
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Subordinated
Creditors hereby acknowledge and agree that any notice sent to Agent serves
as
notice to each and every Subordinate Creditor.
SECTION
5.05. Governing
Law.
This
Agreement shall be governed by, and construed in accordance with, federal law,
and to the extent applicable, the internal laws of the State of
Missouri.
SECTION
5.06. Execution
/ Acknowledgement of Agent.
This
Agreement shall be deemed executed and accepted by each Subordinate Creditor
by
its execution of the Purchase Agreement containing this document as an
Exhibit thereto
and shall be executed on behalf of the Subordinate Creditors by execution by
the
Agent. Senior Lender, Borrower and each Subordinate Creditor acknowledge and
agree that Agent is executing this Agreement on behalf of Subordinate Creditors,
solely as the agent for Subordinate Creators and not in its individual capacity.
Senior Lender, Borrower and Subordinate Creditors acknowledge and agree that
Agent may act as agent for the Subordinate Creditors in connection with
collection and enforcement of the Subordinate Debt, the signing of instruments
on behalf of Subordinate Creditors, the filing and acting on Subordinate
Creditors behalf in connection with litigation and bankruptcy matters, and
otherwise, all in accordance with the Subordinate Loan Documents.
[Signature
page follows]
8
IN
WITNESS WHEREOF, the Subordinate Creditor, Lender and Borrower have caused
this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
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FCS
FINANCIAL, PCA
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||||
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By:
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||||
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Name:
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||||
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Title:
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||||
“Lender”
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STATE
BANK OF XXXXXX
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||||
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By:
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||||
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Name:
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||||
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Title:
|
||||
On
behalf
of the “Subordinate Creditors”
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By:
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||||
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Name:
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||||
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Title:
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||||
“Borrower”
9
EXHIBIT
“A”
LIST
OF SUBORDINATED CREDITORS UPON CLOSING
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Xxxxxx
Farms, Inc.
|
$
|
20,000
|
||
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Xxxx
Living Trust
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$
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40,000
|
||
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Xxxxxx
and Xxxxxxx Xxxx
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$
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30,000
|
||
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Xxxxxxx
and Xxxxxxx Xxxxxx
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$
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20,000
|
||
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Xxx
and Xxxxxx Xxxxxxxxxx
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$
|
20,000
|
||
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Central
Missouri BioFuels, LLC
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$
|
75,000
|
||
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Xxxxxx
X. Xxxxx
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$
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30,000
|
||
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Xxxxx
and Xxxxx Xxxxxx
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$
|
50,000
|
||
|
Xxxxx
X. Xxxxxx
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$
|
100,000
|
||
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Xxxxx
X. and Xxxxxxx X. Xxxxxxx
|
$
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30,000
|
||
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Xxxx
X. and Xxxx X. Xxxxx
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$
|
40,000
|
||
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Xxxxxx
Xxxxxxxxx
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$
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50,000
|
||
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Xxxxx
and Xxxxxx Xxxxxxxxx
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$
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50,000
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||
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Xxxxxxx
X. Xxxxxxxxx Trust
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$
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40,000
|
||
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Farmers
Grain Terminal, LLC
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$
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500,000
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||
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Xxxxxx
X. Xxxxxxxx Trust
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$
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250,000
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||
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Xxxx
Enterprises, Inc.
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$
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25,000
|
||
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Xxxx
Family Investments, LP
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$
|
25,000
|
||
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Xxxxx
X. Xxxx
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$
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20,000
|
||
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Xxxxx
and Xxxx Xxxxxx Xxxxx, LP
|
$
|
50,000
|
||
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Xxxxxxx
X. Xxxxxx
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$
|
20,000
|
||
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Jefferson
City Oil Co.
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$
|
300,000
|
||
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Xxxx
Xxxxx
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$
|
20,000
|
||
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JW
and Xxxxxxxx Xxxxxxx
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$
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50,000
|
||
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Xxxx
Xxxxxxx Revocable Trust
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$
|
40,000
|
||
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Xxxxx
Farms Inc.
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$
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30,000
|
||
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Xxxxxxx
and Xxxxxxx Xxxxx
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$
|
25,000
|
||
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Xxxx
X. Xxxxxx
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$
|
20,000
|
||
|
Xxxxxx
X. XxXxxxxxx
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$
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125,000
|
||
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Xxxxxx
Xxxxx Farms, Inc.
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$
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30,000
|
||
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Xxxxxx
Xxxx
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$
|
20,000
|
||
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Xxxxxx
Xxxxx
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$
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25,000
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||
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Xxx
Xxxxxxx County Grain Growers, Inc.
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$
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1,000,000
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||
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Xxx
Xxxx and Loan Company
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$
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100,000
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||
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Xxxxx
Brothers, LLC
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$
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150,000
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||
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Xxxx
and Xxxxxxx Xxxxxxxx
|
$
|
25,000
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||
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Xxxx
and Xxxxx Xxxxx
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$
|
25,000
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||
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Xxxxxxx
Xxxx
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$
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20,000
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||
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Xxxxx
Xxxxxxx Revocable Trust
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$
|
100,000
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