LOAN AGREEMENT
This Loan Agreement, made and entered into this 8th day
of March 1996, by and between Citizens Bank and
Trust Company, of Chillicothe, Missouri, hereinafter "LENDER',
and Pioneer Railcorp, an Iowa Corporation, Alabama Railroad Co.,
an Iowa Corporation, and Mississippi Central Railroad Co., a
Mississippi Corporation, hereinafter collectively "BORROWER" and
respectively "Pioneer" and "Subsidiaries".
RECITALS
The parties recite and declare:
a. BORROWER has requested LENDER to lend to it up to the sum
of Two Million Five Hundred Thousand Dollars
($2,500,000) (the "loan amount") for a line of Credit Loan
(the "Loan").
b. LENDER is willing to lend BORROWER up to the sum of Two
Million Five Hundred Thousand Dollars ($2,500,000)
on the terms and conditions hereinafter set forth.
In consideration of the above recitals, the following
covenants and conditions, and other good and valuable
consideration, the receipt of which is acknowledged, the parties
agree as follows:
SECTION ONE
DEFINITIONS
a. "Borrower" shall mean Pioneer Railcorp, Alabama Railroad
Co., and Mississippi Central Railroad Co.
b. "Collateral documents" means all those documents
securing or perfecting security for the loan.
C. "It" or 'its", when used to identify Borrower, refers to
each of Pioneer Railcorp, Alabama Railroad Co., and Mississippi
Central Railroad Co. and when used to identify Subsidiaries,
refers to each of Alabama Railroad Co., and Mississippi Central
Railroad Co.
d. "Liquidated value" shall mean that value as determined
by a qualified independent analyst approved by Lender but
compensated by Borrower, after deduction of all projected
expenses required to generate sale of assets.
e. "Loan Amount" means the total credit available
hereunder, regardless of whether drawn upon or advanced.
f. "Market Value" shall mean that value as determined by a
qualified independent analyst approved by Lender but compensated
by Borrower, taking into account comparable short line sales.
g. "Permitted liens" means:
1. liens for taxes, assessments and similar charges,
incurred in the ordinary course of business, that are not
yet due and payable;
2. pledges or deposits made in the ordinary course of
business to secure payment of workers compensation, or to
participate in any fund in connection with workers
compensation, unemployment insurance, old-age pensions,
railroad retirement, employee medical insurance, or other
social security programs;
3. liens of mechanics, materialmen, warehousemen,
carriers, or other like liens, securing obligations incurred in
the ordinary course of business, that are not yet due and
payable; and
4. pledges or deposits made in the ordinary course of
business pursuant to the rights of preferred shareholders.
SECTION TWO
THE LOAN
a. Disbursement of the Loan. Advances of the loan within
the credit limit thereof shall be made by LENDER by crediting the
BORROWER'S deposit account with LENDER upon presentation to
LENDER of BORROWER'S written request and instructions, signed by
the authorized officer or officers of BORROWER. It is understood
and agreed, however, that LENDER is not obligated to make
advances at any time when there has been a default hereunder by
BORROWER that has not been cured to the satisfaction of LENDER.
b. The Note. At the time of making the loan, BORROWER will
execute and deliver a note to LENDER, in the form of that
attached as Exhibit "A".
C. Payments of Principal. The principal of any advance on
the Loan of less than Two Hundred Fifty Thousand
Dollars ($250,000) shall be repaid in full upon the termination
of this Loan Agreement. The principal of any advance on the Loan
of Two Hundred Fifty Thousand and NOIIOO Dollars ($250,000.00) or
more shall be amortized, with Interest as hereinafter provided,
over a seven (7) year period and paid monthly with interest,
commencing one (1) month from the date of such advancement.
d. Interest. Each advance shall bear interest at the
initial rate of eleven percent (11%) per annum, adjustable
quarterly to two and one-half percent (2.5%) over the New York
Prime Rate limited, however, to a one percent (1%) annual
increase or decrease, provided, interest shall not be adjusted to
exceed thirteen and one-half percent (13.5%) as a maximum rate nor
to reduce below ten percent (10%) per annum. Interest on any
advance on the Loan of less than Two Hundred Fifty Thousand
Dollars ($250,000) shall be payable upon termination of
this Loan Agreement. Interest on any advance on the Loan of Two
Hundred Fifty Thousand Dollars ($250,000) or more
shall be amortized with principal over a seven (7) year period
and paid monthly with such amortized principal, commencing one
(1) month from the date of such advancement.
e. Term of Loan Agreement. This loan agreement shall
extend for a term of one (1) year from the date of its execution.
f. Fees. Borrower shall pay to Lender a commitment fee
equal to one percent (1%) of the loan amount, payable one-half
percent (1/2%) at the time of loan closing, and payable one-half
percent (1/2%) at the time of the first advance on the loan amount,
which latter one-half percent (1/2%) may be a part of such advance.
SECTION THREE
CONDITIONS PRECEDENT
The obligation of LENDER to make the loan or to make
advances thereunder is subject to the following conditions
precedent:
a. Documents required for closing. Except as otherwise
hereinafter specifically provided, BORROWER shall have delivered
to LENDER, prior to disbursement (except for item vii below) of
the initial advance on the loan (the closing), the following:
i. The note (Exhibit "A" attached), signed in proper
form by the authorized officer of officers of BORROWER;
ii. A Pledge Agreement and Assignment in the form as
that attached hereto as Exhibit "B", together with
certificates representing the shares pledged and assigned,
together with a limited stock power in the form of that
attached hereto as Exhibit "C";
iii. A certified (as of the date of closing) copy of
resolutions of the respective boards of directors of
BORROWER authorizing the execution, delivery, and
performance of this Agreement, the note, the collateral
documents, and each other document to be delivered pursuant
hereto;
iv. Certified copies (as of date of closing) of
BORROWER'S respective By-Laws;
v. A Certificate (as of date of closing) of BORROWER'S
respective corporate secretaries as to incumbency and
signatures of the officers of BORROWER signing this
Agreement, the Note, the collateral documents, and each
other document to be delivered pursuant hereto;
vi. Copies, certified as of the most recent date
practicable, by the Secretaries of State of the States of
incorporation, of BORROWER'S certificates of incorporation,
together with a certificate (as of the date of closing) of
BORROWER'S corporate secretaries to the effect that such
certificates of incorporation have not been amended since
the dates of certification;
vii. Certificates, dated not more than 90 days
following the closing, of the Secretaries of State of the
States of incorporation, and of each state in which BORROWER
is qualified as a foreign corporation, as to the good
standing of BORROWER; and
viii. A written opinion of BORROWER'S counsel, as of
the date of closing and addressed to LENDER, in form
satisfactory to LENDER, to the effect that:
(A) Pioneer and Subsidiaries are corporations
organized, existing, and in good standing under the
laws of their respective states of Incorporation
(naming such states) and are qualified to transact
business and are in good standing in those states where
the nature of businesses or property owned by BORROWER
requires qualification and, to the knowledge of such
counsel, are not required to be qualified as foreign
corporations in any other jurisdiction;
(B) BORROWER has the power to execute and deliver
this Agreement, to borrow money hereunder, to grant the
collateral required hereunder, to execute and deliver
the note and the collateral documents, and to perform
such obligations;
(C) All corporate action by BORROWER, all consents
and approvals of any persons, necessary to the validity
of this Agreement, the note, the collateral documents,
and each other document to be delivered, has been duly
obtained, and this Agreement, the note, the collateral
documents, and such other documents do not conflict
with any provisions of the charter or by-laws of
BORROWER, of any applicable laws or any other agreement
binding BORROWER or its property of which such counsel
has knowledge;
(D) This Agreement, the note, the collateral
documents, and all other agreements to be delivered
hereunder have been executed by, and each is valid and
binding obligations of, BORROWER enforceable in
accordance with its terms;
(E) The pledged stock constituting all of the
issued and outstanding capital common stock of
Subsidiaries, and all pledged stock is fully paid and
non-assessable; and
(F) Such counsel is without any knowledge of any
matters contrary to the representations and warranties
contained in Section Five, Paragraph a;
ix. A certificate, as of the date of the closing,
signed by the presidents or a vice presidents of Pioneer
and Subsidiaries, to the effect that:
(A) The representations and warranties set forth
within Section Five, Paragraph a, are true as of the
date of the closing; and
(B) No event of default, and no event that with
the giving of notice or passage of time, or both, would
become such an event of default, has occurred as of
such date;
b. Certain events. At the time of the closing:
i. No event of default shall have occurred and be
continuing, and no event shall have occurred and be
continuing that, with the giving of notice or passage of
time, or both, would be an event of default;
ii. No material adverse change shall have occurred in
the financial condition of BORROWER since the date of this
Agreement or the closing, as applicable; and
iii. All of the collateral documents shall have
remained in full force and effect.
c. Legal Matters. At the time of the closing, all
incidental legal matters shall be satisfactory to ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & ▇▇▇, L.L.C., counsel to LENDER.
SECTION FOUR
COLLATERAL SECURITY
a. Composition of the collateral. The property in which a
security interest is granted pursuant to the provisions of
Paragraphs b and c of this Section is collectively called the
"collateral". The collateral, together with all of BORROWERIS
other property of any kind held by LENDER, shall stand as one
general, continuing, collateral security for all obligations of
BORROWER as herein evidenced and contained and may be retained by
LENDER until all such obligations have been satisfied in full.
b. Rights in property held by LENDER. As security for the
prompt satisfaction of all obligations, BORROWER assigns,
transfers, and sets over to LENDER all of its right, title, and
interest in and to, and grants LENDER a lien on and a security
interest in, all amounts that may be owing from time to time by
LENDER to BORROWER in any capacity, including, but not limited
to, any balance or share belonging to BORROWER, or any deposit or
other account with LENDER, which lien and security interest shall
be independent of any right of setoff that LENDER may have.
C. Rights in property held by BORROWER. As further
security for the prompt satisfaction of all obligations arising
under this Agreement, BORROWER pledges and assigns to LENDER all
outstanding capital common stock of Subsidiaries, consisting of
300,000 shares of capital common stock of Alabama Railroad Co. and
1,100,000 shares of capital common stock of Mississippi Central
Railroad Co.
d. Rights in property later acquired by BORROWER. As
additional security, BORROWER shall grant LENDER a valid first
lien and security interest, free of other encumbrances, in any
property acquired wholly or in part with loan proceeds. BORROWER
shall notify LENDER at least fifteen (15) days in advance of any
such intended acquisition. In the instance loan proceeds are
used to acquire a short line or other railroad, BORROWER shall
acquire the controlling interest therein and may not use loan
proceeds to purchase a minority interest.
e. Priority of liens. The above-stated liens shall be
first and prior liens except for permitted liens with respect to
property acquired by BORROWER with loan proceeds.
f. Financing statements.
i. BORROWER will:
(A) Join with LENDER in executing such financing
statements (including amendments and continuation
statements) in form satisfactory to LENDER, as LENDER
may from time to time specify;
(B) Pay to reimburse LENDER for all costs and
taxes of filing or recording the statements in such
public offices as LENDER may designate; and
(C) Take such other steps as LENDER may direct,
including the noting of LENDER'S lien on the collateral
and on any certificates of title therefor, to perfect
LENDER'S interest in the collateral.
ii. In addition to the foregoing, and not in
limitation thereof:
(A) A carbon, photographic, or other reproduction
of this Agreement shall be sufficient as a financing
statement and may be filed in any appropriate office in
lieu thereof; and
(B) To the extent lawful, BORROWER appoints LENDER
as its limited attorney-in-fact (without requiring
LENDER to act as such) to execute any financing
statement in the name of BORROWER, and to perform all
other acts that LENDER deems appropriate to preserve
and continue its security interest in, and to protect
and preserve, the collateral.
SECTION FIVE
REPRESENTATIONS AND WARRANTIES
a. original. To induce LENDER to enter into this
Agreement, BORROWER represents and warrants to LENDER as follows:
i. Pioneer and Subsidiaries are corporations duly
organized, validly existing, and in good standing under the
laws of the states of their incorporation; BORROWER has the
lawful power to own its properties and to engage in the
businesses it conducts, and is qualified and in good
standing as foreign corporations in the jurisdictions
wherein the nature of the businesses transacted by it or
property owned by it makes such qualification necessary;
ii. BORROWER is not in default with respect to any of
its existing indebtedness, and the making and performance of
this Agreement, the note, and the collateral documents will
not immediately or with the passage of time, or the giving
of notice, or both;
(A) Violate the charter or by-law provisions of
BORROWER, or violate any laws or result in a default
under any contract, agreement, or agreement to which
BORROWER is a party or by which BORROWER or its
property is bound; or
(B) Result in the creation or imposition of any
security interest in, or lien or encumbrance on, any of
the assets of BORROWER, except in favor of LENDER;
iii. BORROWER has the power and authority to enter
into and perform this Agreement, the note, and the
collateral documents, and to incur such obligations, and has
taken all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement, the
note, and the collateral documents;
iv. This Agreement and the collateral documents are,
and the note when delivered will be, valid, binding, and
enforceable in accordance with their respective terms;
V. Except as disclosed in Exhibit _, there is no
pending order, notice, claim, litigation, proceeding, or
investigation against or affecting BORROWER, whether or not
covered by insurance, that would materially and adversely
affect the businesses or prospects of BORROWER if adversely
determined;
vi. BORROWER has good marketable title to all
collateral offered up to LENDER as security for the loan;
vii. The financial statements, including any schedules
and notes pertaining thereto, have been prepared in
accordance with generally accepted accounting principles
consistently applied, and fully and fairly present the
financial condition of BORROWER at the dates thereof and the
results of operations for the periods covered thereby, and
there have been no material adverse changes in the
consolidated financial condition or businesses of BORROWER
to the date hereof;
viii. As of closing, BORROWER has no material
indebtedness of any nature, including, but not limited to,
liabilities for taxes and of any interest or penalties
relating thereto, except to the extent reflected (in a
footnote or otherwise) and, reserved against in the December 31,
1995, financial statements, or any material indebtedness of
any nature not fully reflected and reserved against in the
December 31,1996, financial statements;
ix. Except as otherwise permitted in this Agreement,
BORROWER has filed all federal, state, and local tax returns
and other reports required by law to be filed prior to the
effective date hereof and that are material to the conduct
of its businesses; has paid or caused to be paid all taxes,
assessments, and other governmental charges that are due and
payable prior to the effective date thereof; and has made
adequate provision for the payment of such taxes,
assessments, or other charges accruing but not yet payable;
and BORROWER has no knowledge of any deficiency or
additional assessment in a materially important amount in
connection with any taxes, assessments, or charges, not
provided for on its books;
X. Except as otherwise disclosed in Exhibit _, or
except to the extent that the failure to comply would not
materially interfere with the conduct of the businesses of
BORROWER, BORROWER has complied with all applicable laws
with respect to:
(A) The conduct of its businesses; and
(B) The use, maintenance, and operation of the
real and personal properties owned or leased in the
conduct of its businesses;
xi. No representation or warranty by BORROWER contained
herein or in any certificate or other document furnished by
BORROWER pursuant hereto contains any untrue statement of
material fact or omits to state a material fact necessary to
make such representations or warranty not misleading in
light of the circumstances under which it was made;
xii. Each consent, approval or authorization of, or
filing, registration, or qualification with, any person
required to be obtained or effected by BORROWER in
connection with the execution and delivery of this
Agreement, the note, and the collateral documents, or the
undertaking or performance of such obligations, has been
obtained or effected.
SECTION SIX
BORROWER'S COVENANTS
BORROWER covenants and agrees with LENDER that, so long as
any of its obligations arising under this Agreement remain
unsatisfied, BORROWER will comply with the following covenants:
a. Affirmative covenants.
i. BORROWER will use the proceeds of the loan only for
purposes promotive of its current businesses, specifically
for the acquisition of assets or entities consistent with
short line rail operations.
ii. BORROWER shall promptly furnish LENDER with true
and complete copies of all filings made by BORROWER with the
Securities and Exchange Commission, including particularly,
but not limited to, copies of all 10 Q filings and all 10 K
filings, the latter to include: (I) A consolidated statement
of shareholders' equity and a consolidated statement of
changes in financial position of BORROWER for such fiscal
year; (II) consolidated and consolidating income statements
of BORROWER for such fiscal year; and (III) consolidated and
consolidating balance sheets of BORROWER as of the end of
such fiscal year-all in reasonable detail, including all
supporting schedules and comments-the consolidated statement
and balance sheet to be audited by independent certified
public accountant selected by BORROWER and acceptable to
LENDER (which acceptance shall not be unreasonably
withheld), and certified by such accountants to have been
prepared in accordance with generally accepted accounting
principles consistently applied by BORROWER, except for any
inconsistencies explained in such certificate. In addition,
BORROWER will obtain from such independent certified public
accountants and deliver to LENDER, within ninety (90) days
after the close of each fiscal year, the accountants'
written statement that, in making the examination necessary
to their certification, they have obtained no knowledge of
any event of default by BORROWER, or disclosing all events
of default of which they have obtained knowledge; provided,
however, that in making their examination such accountants
shall not be required to go beyond the bounds of generally
accepted auditing procedures for the purpose of certifying
financial statements; LENDER shall have the right, from time
to time, to discuss BORROWER'S affairs directly with
BORROWER'S independent certified public accountants after
written notice to BORROWER and opportunity of BORROWER to be
present at any such discussion.
iii. BORROWER will maintain its inventory, equipment,
real estate, and other properties in good condition and
repair (normal wear and tear excepted); will pay and
discharge or will cause to be paid and discharged when due,
the cost of repairs to or maintenance of the same; and will
pay or cause to be paid all rental or mortgage payments due
on such real estate.
iv. BORROWER will maintain, or cause to be maintained,
public liability insurance and fire and extended coverage
insurance on all buildings owned by it exceeding $10,000.00
in value. BORROWER will furnish to LENDER such evidence of
insurance as LENDER may require.
v. BORROWER will pay or cause to be paid when due all
taxes, assessments, and charges or levies imposed on it or
on any of its property or that it is required to withhold
and pay over, except when contested in good faith by
appropriate proceedings, with adequate reserves therefor
having been set aside on their books. But BORROWER shall
pay or cause to be paid all such taxes, assessments,
charges, or levies promptly when foreclosure on any lien
that has attached (or security therefor) appears imminent.
vi. BORROWER will maintain and provide evidence to
Lender's satisfaction, at least annually, of:
(A) Market values of Subsidiaries of at least one
hundred fifty percent (150%) of loan amount; and
(B) Liquidation values of Subsidiaries of at least
one hundred ten percent (110%) of loan amount.
vii. BORROWER, within a reasonable time after written
request therefor, will make available for inspection by
authorized representatives of LENDER, any of its books and
records, and will furnish LENDER any information regarding
its business affairs and financial condition.
viii. BORROWER will collect is accounts and sell its
inventory only in the ordinary course of business.
ix. BORROWER will keep accurate and complete records
of its accounts, inventory, and equipment, consistent with
sound business practices.
x. BORROWER will give immediate notice to the LENDER of
any extraordinary event involving it that might materially
and adversely affect is operations, financial condition,
property, or businesses.
xi. Within thirty (30) days after LENDER'S request
therefor, BORROWER will furnish LENDER with copies of
federal income tax returns filed by BORROWER.
xii. BORROWER will pay when due (or within applicable
grace periods) all indebtedness due third persons, except
when the amount is being contested in good faith by
appropriate proceedings and with adequate reserves therefor
being set aside on the books of BORROWER. If BORROWER
defaults in the payment of any principal (or installment
thereof) of, or interest on, any such indebtedness, LENDER
shall have the right, in its discretion, to pay such
interest or principal for the account of BORROWER and be
reimbursed by BORROWER on demand.
xiii. BORROWER will notify LENDER immediately if it
becomes aware of the occurrence of any event of default or
of any fact, condition, or event that, with the giving of
notice or passage of time, or both, could become an event of
default, or of the failure of BORROWER to observe any of its
undertakings under this Agreement.
xiv. BORROWER will notify LENDER thirty (30) days in
advance of any change in the location of any of its places
of business or of the establishment of any new, or the
discontinuance of any existing, place of business.
xv. BORROWER will:
(A) Fund all its defined benefit pension plans, if
any, in accordance with no less than the minimum
funding standards required under ERISA;
(B) Furnish LENDER, upon request, promptly after
the filing of the same, with copies of all reports or
other statements filed with the United States
Department of Labor or the Internal Revenue Service
with respect to all employee benefit plans; and
(C) Promptly advise LENDER of any reportable event
or prohibited transaction, as defined in ERISA, with
respect to any employee benefit plan.
b. Negative covenants.
i. BORROWER will not change its name, enter into any
merger, consolidation, reorganization or recapitalization,
or reclassify its capital stock without prior written
approval of LENDER, which approval shall not be unreasonably
withheld.
ii. BORROWER will not sell, transfer, lease, or
otherwise dispose of all, or (except in the ordinary course
of business) any material part of, its assets.
iii. SUBSIDIARIES will not mortgage, pledge, grant, or
promote to exist a security interest in or lien on any of
its assets of any kind, now owned or hereafter acquired,
except for permitted liens and except for the security
interest to LENDER herein provided for.
iv. SUBSIDIARIES will not become liable, directly or
indirectly, as guarantor or otherwise, for any obligation of any
other person or entity, except for the endorsement of commercial
paper for deposit or collection in the ordinary course of business.
v. SUBSIDIARIES will not, except upon prior written approval
of LENDER, incur, create, assume, or permit to exist any additional
indebtedness except:
(A) The loan;
(B) Trade indebtedness incurred in the ordinary course
of business; and
(C) Indebtedness secured by permitted liens.
(D) Equipment leases as defined in sub-paragraph ix
below.
vi. SUBSIDIARIES will not declare or pay any dividends, or
make any other payment or distribution on account of its capital
stock other than preferred stock, excepting dividends of normal
operating profits.
vii. BORROWER will not form any subsidiary or make any
investment in, or make any loan in the nature of an investment to,
another person or entity, of a value in excess of $50,000, except
for those in the ordinary course of business:
(A) for the purposes of this Loan Agreement, or
(B) to entities wholly owned and controlled by BORROWER.
viii. BORROWER will not make any loan or advance to any
officer, shareholder, director, or employee of BORROWER,
except temporary advances in the ordinary course of
business, without prior written approval of LENDER, nor
increase salaries or bonuses to executive and management
personnel to more than 120% of current levels except
pursuant to current agreements or contracts as disclosed to
LENDER.
ix. SUBSIDIARIES will not increase any of its lease
obligations except for new leases on terms equivalent to or
superior than those commonly found in the market, which new
leases shall be so certified to Lender by BORROWERS chief
financial officer(s). As used in this paragraph, the term
"lease" means a lease reflected on the consolidated balance
sheet of Subsidiaries or a lease that should be so reflected
under generally accepted accounting principles.
x. SUBSIDIARIES will not purchase, or otherwise invest
in or hold, securities, nonoperating real estate, or other
nonoperating assets, except:
(A) Direct obligations of the United States of
America;
(B) The present investment in any such asset; and
(C) Operating assets that hereafter become
nonoperating assets.
Subsidiaries may, however, the foregoing notwithstanding,
purchase, invest in, or hold, nonoperating real estate or
interests therein purchased or acquired for reasonable
prospective inclusion in operations provided that not more
than $50,000 is expended for such purchase or acquisition
annually unless prior written approval for a greater
expenditure is obtained from LENDER.
xi. Subsidiaries will not issue, redeem, purchase, or
retire any of its capital stock or grant or issue any
warrant, right, or option pertaining thereto, or other
security convertible into any of the foregoing, excepting
the existing rights of preferred shareholders of the
Mississippi Central Railroad Co.
xii. BORROWER will not prepay any subordinated
indebtedness, indebtedness for borrowed money, or
indebtedness secured by any of its assets (except the Loan
and except indebtedness incurred in the ordinary course of
business) or enter into or modify any agreement as a result
of which the terms of payment of any of the foregoing
indebtedness are waived or modified.
xiii. SUBSIDIARIES will not enter into any sale-
leaseback transaction.
xiv. SUBSIDIARIES will not acquire any stock in, or all
or substantially all of the asset of, any other person or
entity, except as authorized herein.
xv. BORROWER will not furnish LENDER with any
certificate or other document that will contain any untrue
statement of material fact or that will omit to state a
material fact necessary to make it not misleading in light
of the circumstances under which it was furnished.
xvi. BORROWER will not directly or indirectly apply any
part of the proceeds of the loan to the purchasing or
carrying of any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal
Reserve System, or any regulations, interpretations, or
rulings thereunder.
xvii. BORROWER will not, except, upon prior written
approval of LENDER, make any substantial change in its
management or in its principal purpose of businesses.
xviii. BORROWER will not use loan proceeds or any
advancement on the loan, in whole or in part, for payment of
normal operating expenditures of current businesses.
SECTION SEVEN
DEFAULT
a. Events of default. The occurrence of any one or more of
the following events shall constitute an event of default under
this Agreement.
i. BORROWER shall fail to pay when due any installment
of principal or interest, or any fee or charge payable
hereunder, and such failure shall continue for a period of
thirty (30) days.
ii. BORROWER shall fail to observe or perform any other
obligation to be observed or performed by it hereunder or
under any of the collateral documents, and this failure
shall continue for thirty (30) days after: (A) Notice of the
failure from the LENDER; or (B) the LENDER is notified of
the failure or should have been so notified pursuant to the
provisions of Paragraph a (xiv) of Section Six, whichever is
earlier.
iii. BORROWER shall fail to pay any indebtedness due to
any third persons, and this failure shall continue beyond
any applicable grace period, unless such indebtedness is
material in nature and is contested in good faith, or
BORROWER shall suffer to exist any other event of default
under the Agreement binding BORROWER.
iv. BORROWER shall fail to pay when due any sum owing
to LENDER, or fail to observe or perform in favor of LENDER,
under any other loan agreement, note or contractual
undertaking with LENDER, allowing agreed upon grace periods.
v. Any financial statement, representation, warranty,
or certificate made or furnished by BORROWER to LENDER in
connection with this Agreement, or as inducement to LENDER
to enter into this Agreement, or in any separate statement
or document to be delivered hereunder to LENDER, shall be
materially false, incorrect, or incomplete when made,
providing, no such false, incorrect or incomplete statement,
representation, warranty or certificate shall constitute a
default if such statement, representation, warranty or
certificate was, when given and thereafter, when relied upon
by LENDER, truthful to the best knowledge and belief of
BORROWER.
vi. BORROWER shall admit its inability to pay its debts
as they mature, or shall make an assignment for the benefit
of its or any of its creditors.
vii. Proceedings in bankruptcy, or for reorganization
of BORROWER, or for the readjustment of any of its
respective debts, under the Bankruptcy Code, as amended, or
any part thereof, or under any other laws, whether state or
federal, for the relief of debtors, now or hereafter
existing, shall be commenced against BORROWER and shall not
be discharged within sixty (60) days of their commencement,
or any such proceeding shall be commenced by BORROWER.
viii. A receiver or trustee shall be appointed for
BORROWER or for any substantial part of its respective
assets, or any proceedings shall be instituted for the
dissolution or the full or partial liquidation of BORROWER,
and the receiver or trustee shall not be discharged within
sixth (60) days of his or her appointment, or the
proceedings shall not be discharged within sixty (60) days
of their commencement, or BORROWER shall discontinue
business or materially change the nature of its businesses.
ix. BORROWER shall suffer a final judgment or final
judgments for payment of money aggregating in excess of
Twenty-Five Thousand Dollars ($25,000) and shall
not discharge the same within a period of ninety (90) days,
unless, pending further proceedings, execution has not been
commenced or, if commenced, has been effectively stayed.
x. A judgment creditor of BORROWER shall obtain
possession of any of the collateral by any means, including,
but without limitation, levy, distraint, replevin, or self-
help, providing such action represents a material part of
collateral.
xi. Any obliges of subordinated indebtedness shall fail
to comply with the subordination provisions of the
instruments evidencing the subordinated indebtedness.
b. Acceleration. Immediately, and without notice, on the
occurrence of an event of default specified in Paragraphs a(v)
through a (viii) of this Section, or at the option of LENDER if
LENDER shall reasonably deem itself insecure, or on the
occurrence of any other event of default, but only on written
notice, all obligations, whether hereunder or otherwise, shall
immediately become due and payable without further action of any
kind.
C. Remedies. After any acceleration, as provided in
Paragraph b of this Section, LENDER shall have, in addition to
the rights and remedies given to it by this Agreement, the note,
and the collateral documents, all those rights and remedies
allowed by all applicable laws, including, but not limited to,
the Uniform Commercial Code as enacted in any jurisdiction in
which any collateral may be located. Without limiting the
generality of the foregoing, LENDER, immediately and without
demand of performance and without other notice-except as
specifically required by this Agreement or the collateral
documents-or any demand whatsoever to BORROWER, all of which are
hereby expressly made, and, without advertisement, may sell at
public or private sale, or otherwise realize on, in Chillicothe,
Missouri, or elsewhere, the whole, or from time to time, any part
of the collateral, or any interest that BORROWER may have
therein. After deducting from the proceeds of sale or other
disposition of the collateral all expenses, including all
reasonable expenses for legal services, LENDER shall apply such
proceeds towards the satisfaction of the obligations. Any
remainder of the proceeds after satisfaction in full of the
obligations shall be distributed as required by applicable laws.
Notice of any sale or other disposition shall be given to
BORROWER at least fifteen (15) days before the time of any
intended public sale or of the time after which any intended
private sale or other disposition of the collateral is to be
made, which BORROWER hereby agrees shall be reasonable notice of
such sale or other disposition. BORROWER agrees to assemble, or
cause to be assembled, at its own expense the collateral at such
place or places as LENDER shall designate. At any such sale or
other disposition, LENDER, to the extent permissible under
applicable laws, may purchase the whole or any part of the
collateral, free from any right of redemption on the part of
BORROWER, which right is hereby waived and released. Without
limiting the generality of any of the rights and remedies
conferred on LENDER under this paragraph, LENDER, to the full
extent permitted by applicable laws, may:
i. Enter on the premises of BORROWER, exclude
therefrom BORROWER or any affiliate, and take immediate
possession of the collateral, either personally or by means
of a receiver appointed by a court of competent
jurisdiction;
ii. At LENDER'S option, use, operate, manage, and
control the collateral in any manner;
iii. Collect and receive all rents, income, revenue,
earnings, issues, and profits) and
iv. Maintain, repair, renovate, alter, or remove the
collateral as LENDER may determine in its discretion.
SECTION EIGHT
CONSTRUCTION OF AGREEMENT
The provisions of this Agreement shall be in addition to
those of any guaranty, pledge, security agreement, note, or other
evidence of liability held by LENDER, all of which shall be
construed as complementary to each other. Nothing herein
contained shall prevent LENDER from enforcing any or all other
notes, guaranty, pledge, or security agreements in accordance
with their respective terms.
SECTION NINE
FURTHER ASSISTANCE
From time to time, BORROWER shall execute and deliver to
LENDER such additional documents and will provide such additional
information as LENDER may reasonably require to carry out the
terms of this Agreement and be informed of BORROWER'S status and
affairs.
SECTION TEN
ENFORCEMENT AND WAIVER BY LENDER
LENDER shall have the right at all times to enforce the
provisions of this Agreement and the collateral documents in
strict accordance with their terms, notwithstanding any conduct
or custom on the part of LENDER in refraining from so doing at
any time or times. The failure of LENDER at any time or times to
enforce its rights under such provisions, strictly in accordance
with the same, shall not be construed as having created a custom
in any way or manner contrary to specific provisions of this
Agreement or as having in any way or manner modified or waived
the same. All rights and remedies of LENDER are cumulative and
concurrent, and the exercise of one right or remedy shall not be
deemed a waiver or release of any other right or remedy.
SECTION ELEVEN
EXPENSES OF LENDER
BORROWER, on demand, will reimburse LENDER for all expenses,
including the reasonable fees and expenses of legal counsel for
LENDER, incurred by LENDER in connection with the preparation,
administration, amendment, modification, or enforcement of this
Agreement and the collateral documents, and the collection or
attempted collection of the note.
SECTION TWELVE
NOTICE
Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if
delivered in person, or, if sent, by certified mail, postage
prepaid, return receipt requested, or telegraph, as follows,
unless such address is changed by written notice.
a. If to BORROWER: ATTN: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇., ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
b. If to LENDER: ATTN: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
SECTION THIRTEEN
WAIVER AND RELEASE BY BORROWER
To the maximum extent permitted by applicable laws,
BORROWER:
a. Waives (i) protest of all commercial paper at any time
held by the LENDER on which the BORROWER is in any way liable;
and (ii) notice of acceleration and of intention to accelerate,
and notice and opportunity to be heard, after acceleration,
exercised by LENDER of the remedies of self-help, set off, or of
other summary procedures committed by any applicable laws or by
any agreement with BORROWER, and, except when required hereby or
by any applicable laws, notice of any other action taken by
LENDER; and
b. Releases LENDER and its officers, attorneys, agents, and
employees from all claims for loss or damage caused by any act or
omission on the part of any of them, except wilful misconduct.
SECTION FOURTEEN
GOVERNING LAW
It is agreed that this Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State
of Missouri.
SECTION FIFTEEN
BINDING EFFECT
This Agreement shall inure to the benefit of, and shall be
binding on, the respective successors and permitted assigns of
the parties.
SECTION SIXTEEN
ASSIGNMENT
BORROWER has no right to assign any of its rights or
obligations under this Agreement without the prior, express, and
written consent of LENDER, which consent shall not be withheld
unreasonably. LENDER shall not market the Loan on an individual
basis.
SECTION SEVENTEEN
ENTIRE AGREEMENT
This Agreement shall constitute the entire Agreement between
the parties and any prior understanding or representation of any
kind preceding the date of this Agreement shall not be binding on
either party except to the extent incorporated in this Agreement.
SECTION EIGHTEEN
MODIFICATION OF AGREEMENT
Any modification of this Agreement or additional obligation
assumed by either party in connection with this Agreement shall
be binding only if evidenced in writing signed by each party or
an authorized representative of each party.
SECTION NINETEEN
ATTORNEYS FEES
In the event any action is filed in relation to this
Agreement, the unsuccessful party in the action shall pay to the
successful party, in addition to all sums that either party may
be called on to pay, a reasonable sum for the successful party's
attorney fees.
SECTION TWENTY
PARAGRAPH HEADINGS
The titles to the paragraphs of this Agreement are solely
for the convenience of the parties and shall not be used to
explain, modify, simplify, or aid in the interpretation of the
provisions of this Agreement.
SECTION TWENTY-ONE
SEVERABILITY
In any provision of this Agreement shall be held invalid
under any applicable laws, such invalidity shall not affect any
other provision of this Agreement that can be given effect
without the invalid provision, and, to this end, the provisions
of this Agreement are severable.
SECTION TWENTY-TWO
COUNTERPARTS
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute but one and the same
instrument.
SECTION TWENTY-THREE
SEAL
This Agreement is intended to take effect as an instrument
under seal.
IN WITNESS WHEREOF, each party has caused this Agreement to
be executed by an authorized representative on the date indicated
above.
Citizens Bank and Trust Company
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, V.P.
Pioneer Railcorp
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, CEO
Alabama Railroad Co.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Mississippi Central Railroad Co.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
