[caad 234]I LOAN AGREEMENT
THIS AGREEMENT is made and entered into by and between CROWN
ASPHALT CORPORATION, a Utah Corporation (hereinafter called "BORROWER") and
MCNIC PIPELINE & PROCESSING COMPANY, a Michigan corporation (hereinafter called
"LENDER").
WHEREAS the Borrower has requested the Lender to make
available to the Borrower a term loan of $2,991,868.66. Lender is willing to
extend such credit upon the terms and conditions of this Agreement. All terms
not defined in this Agreement shall have the same meaning as set forth in the
Operating Agreement for Crown Asphalt Ridge, L.L.C. ("CAR") made and executed by
Borrower and Lender and dated as of August 1, 1997 (the "OPERATING AGREEMENT").
NOW, THEREFORE, for and in consideration of the foregoing and
the mutual covenants hereinafter contained, the Lender and Borrower agree as
follows:
1. THE LOAN. Upon and subject to the terms and conditions of this
Agreement, the Lender will make a loan (the "LOAN") to the Borrower in the
amount of $2,991,868.66, which loan shall bear interest at the Prime Rate, as
published in the money rates section of the Wall Street Journal, plus 1% per
annum, adjusted monthly and paid by the Borrower pursuant to the terms of a
Promissory Note (the "NOTE") dated of even date herewith from the Borrower to
the Lender, which Note, by this reference, is incorporated herein and made a
part hereof. For purposes of this Agreement, including all other agreements
executed in connection herewith or which refer to this Agreement, the term
"Indebtedness" shall mean the principal balance of the Loan, together with
interest, late fees, costs, attorney's fees and all other sums assessable and
due under the terms of this Agreement, including the Note.
2. COLLATERAL. The repayment of the Loan and all extensions and
renewals thereof, and the performance of all obligations of Borrower hereunder,
including the obligations under the Promissory Note, shall be secured by, and
Borrower hereby grants to Lender a security interest in and to, that portion of
Borrower's Sharing Ratio (as defined in the Operating Agreement) in CAR directly
attributable to the Contribution (as defined below) made with the Loan proceeds
(the "Collateral").
3. EVENTS OF DEFAULT. Time shall be considered of the essence
concerning this Agreement, including the Note and all of their provisions, and
the occurrence of any one or more of the following shall constitute an "EVENT OF
DEFAULT":
a) If any payment due or to be made under the terms of this
Agreement, or the Note is not paid within 10 days of the date
such payment is due;
b) There shall exist a default for a period of more than 30 days in
the performance or observance of any other obligation, covenant,
or liability contained in this Agreement or the Note;
c) Any action is taken by any governmental entity which materially
and adversely affects the Borrower's business.
d) Any warranty or representation made or furnished to Lender by or
on behalf of Borrower proves to have been false in any material
respect when made or furnished.
e) Bankruptcy, insolvency, reorganization or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
other law for the relief of
debtors shall be instituted by or against Borrower (except for an
involuntary petition against Borrower, which shall not constitute
an Event of Default if such petition is vacated or dismissed
within 30 days after filing thereof), or any order, judgment or
decree shall be entered against Borrower decreeing its
dissolution.
f) Dissolution or liquidation of the existence of Borrower.
4. REMEDIES. Upon an Event of Default, Lender may, at its option,
exercise any one or more of the following remedies:
a) Accelerate the remaining balance of the indebtedness due under
this Agreement, including the Note, and demand immediate payment
of the same, together with all accrued interest, late charges,
and other amounts recoverable by Lender under this Agreement.
b) Exercise any and every right and remedy allowed at law or in
equity.
5. BORROWER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. In order to
induce Lender to make the Loan, Borrower represents and warrants to Lender, and
covenants and agrees with Lender for so long as any obligation or indebtedness
owed to Lender hereunder remains unpaid, as follows:
a) ENTITY EXISTENCE AND STANDING OF BORROWER. Borrower is and shall
remain a corporation duly formed, validly existing, and in good
standing under the law of the State of Utah, with all requisite
authority to conduct its business in any other state in which it
conducts business. The Borrower shall not be dissolved as
provided under the terms of the Utah statutes governing the
creation and existence of corporations.
b) COMPLIANCE WITH LAWS. The Borrower will promptly comply with all
laws, rules, regulations, ordinances, codes, decrees, and orders
applicable to the operation of its business.
c) FINANCIAL STATEMENTS. Any financial statements and other
financial information provided to Lender in connection with this
loan, or hereinafter provided to Lender is and will be true and
accurate in all material respects and fairly represent the
financial condition of the party providing such financial
information, all in accordance with generally accepted accounting
principles applied on a consistent basis.
d) LEGAL PROCEEDINGS. Except for the current arbitration and other
actions relating to CAR, there is and shall be no pending or
threatened action or proceeding affecting Borrower which may have
any material adverse effect upon the financial condition or
operation of Borrower.
e) TAXES. Borrower has filed and paid, and will continue to file and
pay (or provide evidence to Lender of an extension), all state
and federal taxes owed by or assessed against Borrower to the
extent the same are currently due and payable, including, without
limitation, all state sales taxes as well as all income, excise
and employment related taxes.
f) USE OF PROCEEDS. The proceeds of the Loan shall be used by
Borrower solely to make the Contribution.
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LOAN AGREEMENT
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g) OTHER LIENS. Except as provided in the Operating Agreement, there
are no other liens, security interests or pledges against the
Collateral.
h) NO DISPOSITION OF ASSETS. The Borrower shall not sell, assign,
dispose of, grant a security interest in or otherwise assign the
Collateral.
6. GOVERNING LAW. The terms and obligations of this Agreement shall be
governed by the laws of the State of Utah, and Borrower hereby consents to
personal jurisdiction in Salt Lake County, Utah in the event of any litigation
by Lender under this Agreement.
7. LENDER'S CONSENT. Whenever the Lender's consent is required for any
action by the Borrower, the Lender agrees that it will respond to the Borrower's
request with reasonable promptness, and will not unreasonably withhold consent
to any reasonable requests of the Borrower.
8. INSPECTIONS AND AUDITS. Borrower agrees that Lender may inspect the
Borrower's business operations and/or audit the books of Borrower or its
successors, at any time after 48 hours prior notice to Borrower as Lender deems
necessary during normal business hours.
9. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal, or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
10. FURTHER ASSURANCES. Borrower shall take such further action as may
be reasonably requested by Lender to effect the purpose of this Agreement,
including, without limitation, the execution and delivery of any other documents
as may be necessary to effect the intent of this Agreement.
11. BINDING EFFECT. The promises of the parties in this Agreement shall
bind the respective heirs, administrators, personal representatives, successors,
and assigns.
12. NOTICES. Any notice to be given under this Agreement shall be
deemed given when placed in the United States Mail, postage prepaid with return
receipt, addressed as follows:
Borrower: 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Lender: 000 Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Either party may change its address by providing notice of such change
to the other party.
13. ATTORNEY'S FEES AND OTHER COSTS. In the event of a default or
breach of this Agreement, or the Note by either party, the defaulting party
agrees to pay and be responsible for all reasonable attorney's fees and/or costs
of collection or enforcement incurred by the non-defaulting party as a result of
such default, including, without limitation, any attorneys fees incurred in the
giving of any notice as a result of any such breach or default or taking
possession of and foreclosing against the Collateral. The non-defaulting party
shall be entitled to recover its attorney's fees and costs whether or not it
actually files litigation against the defaulting party.
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LOAN AGREEMENT
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14. APPLICATION OF PAYMENTS. All sums paid by Borrower to Lender or
collected by Lender for application to the liabilities and obligations of
Borrower under this Agreement will be first applied to any costs, expenses, and
fees, including attorney's fees, which may be owing under the terms of this
Agreement, and then to any interest or late fees which may be due and owing
pursuant to the terms of this Agreement, and then to reduce the principal
balance owing.
15. LATE PAYMENTS. It is specifically agreed that late payments
accepted by Lender will not operate to change or modify any of the due dates or
other payments due from Borrower to Lender. The Borrower shall be entitled to
recover such late fees as are provided for in the Note.
16. NO ASSIGNMENT. This Agreement is not assignable by Borrower.
17. STIPULATIONS. Borrower and Lender agree that the proceeds of this
Loan will be used to satisfy the Secondary Capital Contributions required, as of
the date hereof, of Borrower under Section 3.3 of the Operating Agreement (the
"Operating Agreement") for Crown Asphalt Ridge, L.L.C. ("CAR") dated as of
August 1, 1997. Upon transfer of the loan proceeds to, or payment of such
proceeds on behalf of, CAR (the "CONTRIBUTION"), Borrower shall have a 25%
Sharing Ratio and MCNIC shall have a 75% Sharing Ratio in CAR. Of course,
additional capital contributions may be required in the future as otherwise
provided under the Operating Agreement.
Effective as of July 20, 1999.
BORROWER: LENDER:
Crown Asphalt Corporation, a Utah MCNIC Pipeline & Processing Company, a
corporation Michigan corporation
By: By:
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Xxx Xxxxxx, President
Title:
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LOAN AGREEMENT
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