HomeMy WebLinkAbout2015-11-8328451
193050
ORDINANCE NO. 2015 — 11 - 8328
AN ORDINANCE OF THE CITY OF PADUCAH, KENTUCKY,
AUTHORIZING AND APPROVING A TERM LOAN WITH A MULTIPLE
ADVANCE DRAW FEATURE FROM THE CITY OF PADUCAH AND
MCCRACKEN COUNTY TO GENOVA PRODUCTIONS, INC., WITH
RESPECT TO A PUBLIC PROJECT; AND AUTHORIZING THE
EXECUTION OF THE LOAN AGREEMENT AND OTHER LOAN
DOCUMENTS RELATED THERETO
WHEREAS, the City of Paducah, Kentucky (the "City") has previously determined, and
hereby further determines, that it is a public purpose to reduce unemployment in the City, to
increase the City's tax base, to foster economic development within the City and to promote the
development of a skilled workforce, all to the benefit of the citizens and residents of the City;
and
WHEREAS, the City and McCracken County (the "County") jointly own an industrial
building located at 5400 Commerce Drive within the boundaries of Paducah, McCracken
County, Kentucky, (the "Project Site") which building was constructed by the City and the
County for the public purpose of economic development; and
WHEREAS, the City and the County have leased the aforesaid building and the Project
Site (collectively, the "Premises") to Genova Productions, Inc., a Michigan corporation
("Genova") by Lease Agreement dated June 30, 2014, for the purposes of locating, equipping,
operating and managing a manufacturing and distribution facility of vinyl building products, and
the hiring and maintaining 125 new full-time employees at the Premises, which will promote the
public purpose of the City and the County (the Project"); and
WHEREAS, ancillary thereto, and in consideration of Genova's commitment to hire and
maintain up to 125 new full-time employees at the Premises, as set forth in that certain
Memorandum of Understanding among the City, the County, G.P.E.D.C., Inc., and Genova with an
effective date of June 29, 2014 (the "MOU"), the City and the County have agreed to extend a
certain term loan of up to One Million One Hundred Thousand and 00/100 Dollars
($1,100,000.00) with a multiple advance draw feature to Genova for the sole purpose of
purchasing trade fixtures, equipment, and fixtures for the Project that enhances its operations on
the Premises and creates additional and new job opportunities to Kentucky residents on the
condition that, among other things, that Genova enters into a loan agreement with the City and
the County and any and all other agreements, documents and instruments of any kind executed or
delivered in connection with, or evidencing, securing, guaranteeing or relating to, this term loan.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF PADUCAH, KENTUCKY, AS FOLLOWS:
Section 1. Recitals and Authorization. The City hereby authorizes and approves
the extension of a term loan of up to One Million One Hundred Thousand and 00/100 Dollars
($1,100,000.00), to be financed jointly and equally with the County, with a multiple advance
draw feature to Genova for the sole purpose of purchasing trade fixtures, equipment, and fixtures
for the Project that enhances its operations on the Premises and creates additional and new job
opportunities to Kentucky residents, subject to the terms and conditions set forth in that certain
Loan Agreement among the City, the County, and Genova (the "Loan Agreement"), in
substantially the same form attached hereto as Exhibit A and made a part hereof. It is further
determined that it is necessary and desirable and in the best interest of the City to enter into the
Loan Agreement for the purposes therein specified, and the execution and delivery of the Loan
Agreement and related loan documents is hereby authorized and approved. The Mayor of the
City is hereby authorized to execute the Loan Agreement, together with the Security Agreement
in substantially the same form attached hereto as Exhibit B and made a part hereof, the
Subordination Agreement in substantially the same form attached hereto as Exhibit C and made a
part hereof, and any and all other agreements, documents and instruments of any kind executed
or delivered in connection with, or evidencing, securing, guaranteeing or relating to, this term
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loan extended to Genova, with such changes in the Loan Agreement, Security Agreement, and
the Subordination Agreement not inconsistent with this Ordinance and not substantially adverse
to the City as may be approved by the official executing the same on behalf of the City or the
City Manager. The approval of such changes, and that such are not substantially adverse to the
City, shall be conclusively evidenced by the execution of the Loan Agreement, Security
Agreement, and the Subordination Agreement by the authorized official.
Section 2. Severability. If any section, paragraph or provision of this Ordinance shall be
held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such
section, paragraph or provision shall not affect any of the remaining provisions of this
Ordinance. ;
Section 3. Compliance With Open Meetings Laws. The City Commission hereby finds
and determines that all formal actions relative to the adoption of this Ordinance were taken in an
open meeting of this City Commission, and that all deliberations of this City Commission and of
its committees, if any, which resulted in formal action, were in meetings open to the public, in
full compliance with applicable legal requirements.
Section 4. Conflicts. All ordinances, resolutions, orders or parts thereof in conflict with
the provisions of this Ordinance are, to the extent of such conflict, hereby repealed and the
provisions of this Ordinance shall prevail and be given effect.
Section 5. Effective Date. This Ordinance shall be read on two separate days and will
become effective upon summary publication pursuant to KRS Chapter 424.
ATTEST:
City Clerk
Introduced by the Board of Commissioners, November 17, 2015
Adopted by the Board of Commissioners, November 24, 2015
Recorded by City Clerk, November 24, 2015
Published by The Paducah Sun, November 26, 2015
\ord\agree-term loan & subordination-genova
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EXHIBIT A TO THE ORDINANCE
LOAN AGREEMENT
See attachment
.. -- --,. --, -, --- 1 1-1 .1.1---l- 11,
LOAN AGREEMENT
Principal Amount: $1,100,000.00
Date: , 2015
THIS LOAN AGREEMENT made and executed this day of ,
2015, by and among MCCRACKEN COUNTY, KENTUCKY ("County"), with a principal
mailing address of 300 South 7th Street, Paducah, Kentucky 42003; and CITY OF PADUCAH,
KENTUCKY ("City"), with a principal mailing address of Post Office Box 2267, Paducah,
Kentucky 42002-2267 (County and City shall collectively be referred to as the "Lessor"), and
GENOVA PRODUCTS, INC., a Michigan corporation, with a principal mailing address of Post
Office Box 309, Davison, Michigan 48423 (the "Lessee")
WITNESSETH:
WHEREAS, capitalized terms used and not otherwise defined in this preamble shall have
the respective meanings ascribed thereto in Section 1 of this Agreement set forth below; and
WHEREAS, the Lessor has a compelling public interest in fostering economic
development and promoting the development of a skilled workforce, all to the benefit of the
citizens and residents of the city of Paducah and the county of McCracken, Kentucky; and
WHEREAS, the Lessor owns the Building and has determined that it is in the best
interest of citizens of the City of Paducah and McCracken County that Lessor rent the Building
and the Project Site (collectively, the "Premises") to Lessee for the purposes of locating,
equipping, operating and managing a manufacturing and distribution facility of vinyl building
products, and the hiring and maintaining 125 new full-time employees at the Premises, all as
more particularly set forth in the MOU, which will promote the public purpose of the Lessor; and
WHEREAS, Lessor and Lessee have entered into a written lease agreement dated
June 30, 2014 wherein Lessor has leased Lessee the Premises for the operation and management
of the Project; and
WHEREAS, ancillary thereto, and in consideration of Lessee's commitment to hire and
maintain up to 125 new full-time employees at the Premises, Lessor has agreed to extend certain
credit to Lessee for the sole purpose of purchasing trade fixtures, equipment, and fixtures for the
Project that enhances its operations on the Premises and creates additional and new job
opportunities to Kentucky residents on the condition that, among other things, Lessee enters into
this Agreement, and, subject to the terms and conditions of this Agreement, Lessor has agreed to
extend to Lessee a multiple advance draw loan of up to One Million One Hundred Thousand and
00/100 Dollars ($1,100,000.00).
NOW, THEREFORE, in consideration of the foregoing premises, and for other good
and valuable consideration, which is hereby acknowledged by all parties hereto, the parties do
covenant and agree as follows:
1. Definitions. Each of the following terms as used in this Agreement shall have the
meaning that is ascribed to that term:
"Advance" means each loan of money or credit made or extended to or for the
benefit of Lessee by Lessor pursuant to this Agreement.
"Agreement" shall mean this Loan Agreement.
"Approved Equipment Costs" shall mean and include the acquisition costs of
Lessee's trade fixtures, equipment, and fixtures that are installed on the Premises and are
determined by Lessor, in its reasonable discretion as enhancing Lessee's operations on the
Premises and create additional and new job opportunities to Kentucky residents, and shall not
include accrued interest or penalty payments resulting from the aforesaid acquisitions.
Project Site.
"Building" shall mean that certain existing industrial building located on the
"Change of Control" means that:
(a) Permitted Holders fail to own and control, directly or indirectly, 50.1% of
the equity interests of Lessee entitled (without regard to the occurrence of any contingency) to vote
for the election of members of the board of directors of Lessee;
(b) any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as in effect from time to time (the "Exchange Act")), other
than Permitted Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 20%, or more, of the equity interests of Lessee entitled
(without regard to the occurrence of any contingency) to vote for the election of members of the
board of directors of Lessee; or
(c) a majority of the members of the board of directors of Lessee do not
constitute Continuing Directors.
"City" shall mean the City of Paducah, Kentucky, a municipal corporation and
political subdivision of the Commonwealth of Kentucky.
"Closing" means the time and place of actual execution and delivery of this
Agreement, except as waived by Lessor, the other documents, instruments, and things required
by Section 5 hereof.
"Closing Date" means the date of this Agreement.
"Collateral" has the meaning given such term in the Security Agreement.
"County" shall mean the County of McCracken, Kentucky, a county and political
subdivision of the Commonwealth of Kentucky.
"Default" means the occurrence of an event described in Section 6 hereof
regardless of whether there shall have occurred any passage of time or giving of notice that
would be necessary in order to constitute such event as an Event of Default.
"Event of Default" means the occurrence of an event described in Section 6
hereof provided that there shall have occurred any passage of time or giving of notice that would
be necessary in order to constitute such event as an Event of Default under Section 6.
"FTEs" shall mean full-time employees hired by Lessee (i) with an average hourly
compensation of $13.11 per hour, (ii) which receive health insurance benefits with a minimum of
50% Lessee contribution, (iii) which are subject to the City's license fees as defined under Article
IV of the Paducah Code of Ordinance, Sections 106-183 and 106-184, (iv) who satisfy the
Kentucky residency criteria under the provisions of the Kentucky Economic Development Finance
Authority Direct Loan Program (KRS 154.32-010 (18)(a), and (v) who are required to work a
minimum of forty (40) hours per week. FTEs shall not include "temporary workers" or "leased
employees" as defined under Kentucky law.
"Lease " shall mean that certain Lease Agreement dated as of June 30, 2014, by and
between the Lessor and the Lessee, as amended or supplemented from time to time in accordance
with the terms hereof.
"Lessee " shall mean Genova Products, Inc., a Michigan corporation.
"Lessor" shall mean collectively the City and the County, or their joint designee.
"Loan" means the Multiple Advance Draw Loan and other extensions of credit, if
any, being made by Lessor to Lessee pursuant to this Agreement.
"Loan Documents" means this Agreement, and the Security Agreement, and any
and all other agreements, documents and instruments of any kind executed or delivered in
connection with, or evidencing, securing, guaranteeing or relating to, the Loan, whether
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heretofore, simultaneously herewith or hereafter delivered, together with any and all extensions,
revisions, modifications or amendments at any time made to any of the foregoing.
"Material Adverse Change" means the occurrence of an event which has a
material adverse effect on (a) the Lessee's business or financial condition; (b) the rights and
remedies of Lessor against Lessee under this Agreement, (c) the ability of the Lessee to perform
its obligations under this Agreement, the Lease'or the Security Documents, or (d) the priority of
the Lessor's security interest against the Collateral.
"MOU" shall mean that certain Memorandum of Understanding among the Lessor
1 and the Lessee relating to the Project, executed by the respective parties thereto with an effective
date of June 29, 2014, as amended or supplemented by this Agreement, and which amended and
modified MOU is hereby incorporated as a part of this Agreement.
"Multiple Advance Draw Loan" means the loan which Lessor has agreed to
advance to Lessee in accordance with the terms of Section 2 of this Agreement in the principal
aggregate amount of One Million One Hundred Thousand Dollars ($1,100,000.00), and includes
any amendment to or modification of this Agreement and any promissory note given in extension
or renewal of, or in substitution for, this Agreement.
"Multiple Advance Draw Loan Amount" shall initially mean $0. On the date, if
ever, that the total number of FTEs hired and retained by Lessee is eighteen (18) or more, the
"Multiple Advance Draw Loan Amount" shall automatically increase to Nine Hundred Thousand
Dollars ($900,000.00). On the date, if ever, that the total number of FTEs hired and retained by
Lessee is fifty (50) or more, the "Multiple Advance Draw Loan Amount" shall automatically
increase to One Million One Hundred Thousand Dollars ($1,100,000.00).
"Obligations" means all unpaid principal of and accrued and unpaid interest
(including interest that accrues after the commencement of an insolvency proceeding with
respect to Lessee, regardless of whether allowed or allowable in whole or in part as a claim in
such insolvency proceeding) on the Loan, all accrued and unpaid fees and all expenses
(including fees and expenses that accrue after the commencement of an insolvency proceeding
with respect to Lessee, regardless of whether allowed or allowable in whole or in part as a claim
in such insolvency proceeding), reimbursements, indemnities and other obligations of the
Lessee to Lessor arising under the Loan Documents, and all other Indebtedness, obligations and
liabilities of any kind owing by Lessee to Lessor whether now existing or hereafter arising,
whether evidenced by a note or other writing, whether allowed in any insolvency proceeding
with respect to Lessee (regardless of whether allowed or allowable in whole or in part as a claim
in such insolvency proceeding), whether arising from an extension of credit, loan, guaranty,
indemnification or otherwise, and whether direct or indirect, absolute or contingent, due or to
become due, primary or secondary, or joint or several.
"Permitted Holder" means (a) each of Robert Williams, Jeanne Williams, Lori
Long, Keri DeBoer, Gregory Maletic, and Michael Maletic and (b) any trust or other estate -
planning vehicle established for the benefit of any such individual and in respect of which such
individual serves as trustee or in a similar capacity.
"Person" means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association, corporation, institution,
public benefit corporation, firm, joint stock company, estate, entity or governmental agency.
"Premises" shall mean, collectively, the Building and the Project Site.
"Project" shall mean the locating, equipping, operating and managing of a
manufacturing and distribution facility of vinyl building products on the Premises by Lessee, all
as more particularly set forth in this Agreement and the MOU.
"Project Site " shall mean the site on which the Building is located and Lessee is to
equip, operate and manage the Project, which site is generally located at 5400 Commerce Drive,
Paducah, McCracken County, Kentucky, and is more particularly described in Exhibit A attached
hereto.
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"Security Agreement" shall mean the Security Agreement dated as of even date
herewith by Lessee in favor of Lessor, as it may be amended, restated, replaced or supplemented
from time to time.
"Subsidiary" means any corporation, partnership or limited liability company or
joint venture in which (i) any general partnership interest or (ii) more than fifty percent (50%) of
the stock, limited liability company interest or joint venture of which by the terms thereof
ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the
time as of which any determination is being made, is owned by Borrower, either directly or
through an affiliate.
2. The Multiple Advance Draw Loan.
Subject to the terms and conditions herein set out, the Lessor agrees and commits, from
time to time, to make loan advances to Lessee, in amounts which shall not exceed the aggregate
principal amount of the Multiple Advance Draw Loan Amount for the purpose of funding
Lessee's Approved Equipment Costs. Lessee acknowledges and agrees that the Multiple
Advance Draw Loan is a term loan and not a revolving line of credit. Funds advanced under this
Loan shall not be redrawn or re -borrowed by Lessee.
2.1 Conditions to Each Loan Advance. Lessee shall have the right to
request and obtain Advances of the Loan to pay the Approved Equipment Costs as those costs
are incurred, subject to the following conditions:
(a) At the time of each Advance, Lessor shall be satisfied that:
(i) Lessee has substantially complied with all of its obligations
or duties under this Agreement, the Lease, and the Security Agreement;
(ii) Lessee has hired and retained not less than eighteen (18)
FTEs, if the Loan Amount is Nine Hundred Thousand Dollars ($900,000.00), or not less than
fifty (50) FTEs, if the Loan Amount is One Million One Hundred Thousand Dollars
($1,100,000.00) and provides Lessor with verification of the FTEs satisfactory to Lessor;
(iii) No Event of Default shall have occurred and be continuing
under this Agreement, the Lease, and the Security Agreement;
(iv) All of the Loan Documents shall have remained in full
force and effect; and
(v) There shall exist no action, suit, investigation, litigation or
proceeding affecting Lessee or threatened in writing before any court, governmental agency or
arbitrator that (A) would have a material adverse effect, or (B) purports to affect the legality,
validity or enforceability of this Agreement, the Lease, or any other Loan Document or the
consummation of the transactions contemplated hereby.
(b) To obtain each Advance from the Multiple Advance Draw Loan,
Lessee shall submit a written request for each Advance ("Request for Advance") which describes
the amount of the Advance, the assets to be purchased from the Advance, and the costs that are
attributable to each asset. Each Request for Advance shall be duly signed and certified by the
Lessee's designated representative, accompanied by a copy of Lessee's current financial
statements and a verification of the FTEs in a form satisfactory to Lessor.
(c) Lessor shall have the right to verify the information that is
contained in the Request for Advance. Lessee shall provide Lessor with any information and
documentation that Lessor may reasonably require in the verification process, including copies
of purchase orders, invoices, bills, and any other documentation that evidence the items and costs
described in the Request for Advance.
(d) Lessor shall approve the Request for Advance and provide the
Advance unless (i) the Request for Advance does not comply with the requirements under this
Agreement, or (ii) the costs identified in the Request for Advance do not qualify as an Approved
Equipment Cost. Unless otherwise agreed upon by the parties, upon approval of a Request for
ISE
Advance, the Lessor shall issue a check in the amount of the Advance to the vendor of the
Approved Equipment Costs identified in the Request for Advance. Lessee shall provide to
Lessor written evidence of delivery of the approved equipment to the Premises within ten (10)
days of delivery. Notwithstanding the foregoing, Lessee acknowledges and agrees that no
Advance shall be made in connection with Lessee's proposed purchase of an extruder and
related equipment manufactured by battenfeld-cincinnati USA or other manufacturer until
such equipment is delivered to the Project Site.
(e) In the event Lessor rejects a Request for Advance (or any part
thereof), Lessor shall inform Lessee of the grounds for Lessor's rejection, and accord Lessee an
opportunity to resubmit the Request for Advance.
(f) Notwithstanding anything to the contrary contained herein, if at
any time after receiving an Advance, Lessee's total FTEs fall below eighteen (18) for thirty (3 0)
consecutive days (allowing a cure period for rehiring), Lessor may, in its sole discretion, refuse
to make any further Advances under this Loan Agreement.
2.2 Promissory Notes. Each advance with respect to the Loan shall be
evidenced by a separate promissory note of the Lessor (each a "Note"), in form substantially the
same as the copy of the Note attached hereto as Exhibit "B".
2.3 Interest. The Loan shall bear interest at the rate of four and one half
percent (4.5%) per annum.
2.4 Repayment.
(a) Each Advance shall be repaid in equal monthly installments of
principal and interest, amortized over a period beginning on the date of the Advance through
June 30, 2024 (the "Maturity Date"), commencing on the first (1S) day of the first month
following the date of such Advance, and on the first day of each month thereafter through the
Maturity Date. The first twelve (12) monthly installment payments due under this Agreement
commencing on the first day of the first month following the first Advance under this Agreement
shall be collected from and paid by the Paducah Economic Development Foundation, Inc., (the
"PED"); provided, however, PED's obligation to make the aforesaid monthly installment
payments on behalf of Lessee shall cease and Lessee shall be fully responsible for all subsequent
monthly installment payments upon the first occurrence of Lessee's total FTEs falling below
eighteen (18) for thirty (3 0) consecutive days (allowing a cure period for rehiring) and thereafter
upon the occurrence of Lessee's total FTEs falling below eighteen (I8)(without a cure period).
PED shall not be responsible for prepayments of any kind, voluntary, involuntary, in whole or in
part, of the original principal amount of each Advance. Any failure by the PED to make such
payments, except in the event Lessee's total FTEs falls below the minimum of eighteen (18),
shall not constitute an Event of Default by Lessee under the Loan Documents, and all amounts
shall be treated as paid for purposes of determining the future installment payment amounts.
(b) Unless otherwise provided herein, each Advance shall mature on
June 30, 2024.
(c) Lessor shall direct Lessee in writing as to where payments shall be
made. All payments made by Lessee shall be applied first to accrued interest, and then to
the principal balance.
2.5 Termination by Lessor. Lessor shall have the right, at its sole discretion, to
terminate Lessee's right to receive advances under this loan upon the occurrence of any Event of
Default upon Lessor giving Lessee notice of such termination; provided, however, that the rights
and remedies of Lessor with respect to the liabilities and obligations hereunder and under the
Note(s) made prior to the termination will not be affected by the termination by Lessor. The
provisions of this Loan Agreement and the security interest in the liens created to secure the Loan
shall continue in full force and effect until all amounts owed by Lessee to Lessor shall have been
paid in full.
2.6 Termination by Lessee. In the event Lessee no longer desires to receive
advances under this Loan, then Lessee can terminate this Loan by providing Lessor written notice of
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termination which will be effective upon Lessor's receipt of the notification; provided, however, that
the rights and remedies of Lessor with respect to the liabilities and obligations hereunder and under
the Note(s) made prior to the termination will not be affected by the termination by Lessee. The
provisions of this Loan Agreement and the security interest in the liens created to secure the Loan
shall continue in full force and effect until all amounts owed by Lessee to Lessor shall have been
paid in full
2.7 Notation of Disbursements and Pa rte. Disbursement of payments of
principal with respect to the Loan shall be evidenced by notations made upon the internal records of
Lessor or its agents, which notations shall show the date and amount of each advance and/or each
payment of principal. The principal amount outstanding under the Note(s), from time to time, shall
also be recorded by Lessor on such records. Lessee agrees that the aggregate amount of all
disbursements of the Loan made as shown on the records maintained by Lessor, less all of the
payments of principal made by Lessee and recorded in such records, shall be sufficient to establish
the outstanding principal balance due under the Note(s).
2.8 Security for Loan. The Loan and all obligations incident thereto or created
as security therefor shall be secured by a continuing first priority security interest in Lessees' trade
fixtures, equipment and fixtures (collectively, the "Collateral") pledged by Lessee to secure
payment of the Multiple Advance Draw Loan, in substantially the form of the Security Agreement
attached hereto as Exhibit C, including all attachments; accessions; accessories; tools; parts;
supplies; increases and additions to and all replacements of substitutions for all of the foregoing; and
to the extent not listed above as original collateral, proceeds and products of all the foregoing,
wherever located, and now owned or hereafter acquired.
2.9 Acceleration of Maturity Date. If the Lease is terminated for any reason
prior to the payment in full of the Multiple Advance Draw Loan, such termination shall
accelerate the maturity date of all outstanding Notes under the Multiple Advance Draw Loan and
the entire unpaid Obligations shall become immediately due and payable.
3. Conditions Precedent. The Obligations of the Lessor, as discussed in Section 2,
are subject to the fulfillment, in a manner satisfactory to Lessor, in its sole discretion, of each of the
following conditions precedent:
3.1 No Material Change in Condition. There shall have been no material
adverse change in the condition, financial or otherwise, of the Lessee from that existing on the date
of the Financial Statements of the Lessee previously provided to Lessor.
3.2 Legal The making of the Loan shall not contravene, violate or otherwise
be restricted by any law, rule or regulation applicable to Lessor.
3.3 Delivery of Loan Documents and Other Instruments. The Lessor shall have
received, on or before the funding of the Loan, the following documents, which shall each be in the
form and substance satisfactory to Lessor and its counsel, which documents include the following:
to Lessor.
(a) Note in the amount of the advance executed and delivered by Lessee
(b) Security Documents executed and delivered by Lessee to Lessor.
(c) Subordination Agreement(s) executed and delivered to Lessor by
each of Lessee's Lenders or other creditors having or claiming to have a security interest in
Lessee's trade fixtures, equipment and fixtures to be purchased with proceeds of the Loan.
(d) Certificate of Existence for Lessee issued by the Secretary of the
Lessee's state of incorporation, or such other proof as is acceptable to Lessor in its sole discretion.
(e) A Corporate Resolution for Borrowing certified by the Secretary
or an Assistant Secretary of Lessee certifying (i) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of Lessee, authorizing the execution, delivery and
performance of this Agreement, the Note(s) and the other Loan Documents, and (ii) as to the
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incumbency and genuineness of the signature of each officer of Lessee executing this Agreement,
the Notes and the other Loan Documents on behalf of Lessee.
(f) Insurance. Lessee shall provide Lessor with evidence of insurance
with a company acceptable to Lessor, insuring all equipment and other Collateral for an amount
equal to or greater than the Loan amount, naming Lessor as an additional insured. Lessee shall
comply with Lessor's insurance requirements as set forth in the Security Agreement. Lessor shall
receive 30 days prior written notice of cancellation, non -renewal or amendment of such policy.
Lessor shall also be provided with evidence that premiums for such insurance have been paid for the
one-year period commencing upon the date of closing.
(g) Organizational Documents. Lessor shall be provided with certified
copies of all organizational documents of Lessee. Such documents shall include, without limitation,
articles of incorporation, code of regulations and certificate of good standing (with respect to
corporations) and partnership agreements, partnership certificates and fictitious name certificates
(with respect to partnerships). Lessor shall be provided with satisfactory evidence of qualification
to do business in each state where Lessee does business.
(h) Such other agreements, instruments, approvals, opinions, certificates
or documents as described in Section 2.1 herein and as Lessor may reasonably request in
conjunction with the making of the Loan.
The obligations of Lessee to provide the items listed above in this Section 3.3 shall
survive the closing of the Loan and any failure by Lessor to require compliance with the above
Loan closing requirements with respect to any one Advance shall not constitute a waiver by Lessor
of its right to require that such be provided by Lessee with respect to any later Advance.
4. Representations, Warranties, Affirmative and Negative Covenants by Lessee.
4.1 Inducing Representations. In order to induce Lessor to enter into this
Agreement and to make the loans and advances herein provided for, Lessee represents and warrants
to Lessor that:
(a) Lessee is a corporation duly organized and existing in good standing
under the laws of the State of Michigan and is qualified to do business and is in good standing in the
Commonwealth of Kentucky and every jurisdiction where the nature of its business, and the
ownership of its properties requires it to be so qualified and where failure so to qualify might
materially affect is business or property, and has all requisite power and authority, corporate and
otherwise, to conduct its business, to own its properties, and to execute, deliver and perform all of
its obligations under this Agreement, the Notes, and each of the other loan documents.
(b) Lessee's chief executive office and principal place of business, and
the place where Lessee maintains all records relating to receivables, is at the address set forth in
Section 8.7 herein.
(c) The execution, delivery and performance of this Agreement, the
Notes and each of the other Loan Documents and the creation of the security interests provided for
under this Agreement and each of the other Loan Documents are within Lessee's corporate power,
has been duly authorized by all necessary or proper corporation action, including the consent of its
shareholders where required, are not in contravention of any provision of law or of any agreement
or indenture by which Lessee is bound or of the Articles of Incorporation or Bylaws of Lessee, and
do not require the consent or approval of any governmental body, agency, authority or other person
which has not been obtained and a copy thereof furnished to Lessor.
(d) This Agreement, the Notes and each of the other Loan Documents
are the legal, valid and binding obligations of Lessee, enforceable against Lessee, in accordance
with their respective terms.
(e) Lessee is solvent.
(f) Lessee has filed all United States tax returns and all state, local and
foreign tax returns which are required to be filed, and have paid, or made provision for the payment
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of, all taxes which have become due pursuant to said returns or pursuant to any statement received
by Lessee, except such taxes, if any, as are being contested in good faith and as to which adequate
reserves have been provided. Such tax returns properly reflect Lessee's income and taxes for the
periods covered thereby, subject only to reasonable adjustments required by the Internal Revenue
Service upon audit, and having no material adverse effect on Lessee's financial condition, business
or results of operations.
(g) Lessee's financial statements which have been delivered by Lessee to
Lessor, are true and correct in all material respects and contain no material misstatement or
omission, and fairly presents the financial position of Lessee as of the date thereof. Since the date
of the financial statements referred to in this subsection, except as otherwise disclosed therein,
Lessee has not incurred any obligation or liability which would materially and adversely affect any
of its business operations or the Collateral.
(h) Lessee's uses of the proceeds of any loans and advances made by
Lessor to Lessee pursuant to this Agreement are, and will continue to be, legal and proper uses, and
such uses are and will be consistent with all applicable laws and statutes.
(i) Lessee has good, indefeasible and merchantable title to and
ownership of the Collateral pledged to Lessor, free and clear of all liens, claims, security interests
and encumbrances except as disclosed to Lessor in writing.
0) To the best of Lessee's knowledge following diligent inquiry, Lessee
is not in violation of any applicable environmental or other statute, law, rule, regulation or ordinance
of any governmental entity, or of any agency thereof, in any respect materially and adversely
affecting the Collateral or Lessee's business, property, assets, operations or condition, financial or
otherwise.
(k) Lessee is not in default with respect to any note, indenture, loan
agreement, mortgage, lease, deed or other similar agreement relating to indebtedness to which
Lessee is a party or by which Lessee is bound except as disclosed to Lessor in writing.
(1) Lessee does not have any Subsidiaries.
4.2 Examination of Records; Collateral Reporting. Lessor may at all times
during business hours and at all other times after reasonable prior written notice have access to,
examine and inspect the Collateral and have access to, inspect, audit and make extracts from all of
Lessee's records, files and books of account and Lessee will deliver to Lessor any instrument
necessary for Lessor to obtain records from any service bureau maintaining records for Lessee.
4.3. Financial Information. During the initial term and any renewal term of this
Agreement, and thereafter for so long as Lessee shall have any obligations to Lessor under this
Agreement, unless otherwise waived by Lessor in writing, the Lessee shall deliver to Lessor such
information as Lessor may reasonably request, specifically including, but not limited to:
(a) CPA Annual Audit. Lessee will (i) maintain accounting records in
accordance with generally recognized and accepted principles of accounting consistently applied
throughout the accounting periods involved; (ii) provide Lessor with such information concerning
its business affairs and financial conditions (including insurance coverage) as Lessor may
reasonably request; and (iii) without request, provide Lessor with an annual CPA Audit for Lessee
on or before April 3& of each year.
(b) Quarterly Management -Prepared Financial Statements. Lessee shall
provide Lessor with management -prepared financial statements quarterly within 45 days of
quarters -end.
(c) Monthly FTEs Report. Not later than 10 days following the end of
each month, a written report in form and content acceptable to Lessor, executed by Lessee's
chief financial officer or other officer or person acceptable to Lessor, certifying the number of
FTEs employed by Lessee at the Project as of the end of the preceding month.
—8—
(d) Promptly upon receipt thereof, copies of all written financial reports,
if any, submitted to Lessee, by certified public accountants in connection with any annual, special or
interim audit, compilation or review of the books of the Lessee made by such accountants, and a
copy of any and all written documentation relating to the resignation of any such certified public
accountants.
(e) With reasonable promptness, such other financial data and
information with respect to the Lessee as from time to time may reasonably be requested, including
without limitation, any such data or information which may be requested by any governmental or
public body or agency having jurisdiction over Lessor.
4.4. Affirmative Covenants. During the initial term and any renewal term of this
Agreement, and thereafter for so long as Lessee shall have any obligations to Lessor under this
Agreement, Lessee covenants that it shall comply with the following affirmative covenants, unless
otherwise consented to by Lessor in writing.
(a) Preserve and maintain its separate existence and all rights, privileges
and franchises in connection therewith, and maintain its qualification and good standing in all states
required by applicable law to be qualified.
(b) File all federal, state and local tax returns and other reports which it
is required by law to file, maintain adequate reserves for the payment of all taxes, assessments,
governmental charges, and levies imposed upon it, its income, or its profits, or taxes, assessments,
governmental charges and levies prior to the date on which penalties attached thereto, except where
the same may be contested in good faith by appropriate proceedings;
(c) Comply in all material respects with all laws, statutes, rules,
regulations and ordinances of any governmental entity, or any agency thereof, applicable to it, a
violation of which, in any respect, may materially and adversely affect the Collateral or Lessee's
business, property, assets, operations or condition, financial or otherwise, including, without
limitation, any such laws, statutes, rules, regulations or ordinances regarding the collection,
payment, and deposit of employees' income, unemployment, and Social Security taxes and with
respect to pension liabilities;
(d) Maintain adequate records and books of account with respect to its
business activities in which proper entries are made in accordance with Generally Accepted
Accounting Principles reflecting all of its financial transactions;
(e) Notify Lessor in writing:
(i) promptly upon, but in no event later than three (3) business
days after, Lessee's learning thereof, of any uninsured or partially uninsured loss through fire, theft,
liability or property damage in excess of an aggregate of One Hundred Thousand Dollars
($100,000).
(ii) promptly upon Lessee's learning thereof, of any material
litigation affecting Lessee, whether or not the claim is considered by Lessee to be covered by
insurance, and of the institution of any suit or administrative proceeding which may materially and
adversely affect Lessee's operations, financial condition, business or Lessor's security interest in the
Collateral;
(iii) promptly upon Lessee's learning thereof, of any material
labor dispute to which Lessee may become a party, any strikes or walkouts relating to any of its
facilities, and the expiration of any labor contract to which Lessee is a party or by which Lessee is
bound;
(iv) within three (3) business day after the occurrence thereof, of
Lessee's default under any note, indenture, loan agreement, mortgage, lease, deed or other similar
agreement to which Lessee is a party or by which Lessee is bound; and
(v) any change in name, identity or corporate structure of Lessee.
—9—
(f) Execute and deliver such further and other documents, instruments,
certificates, assignments, statements or agreements as may be required to carry out the purposes and
intent of this Agreement.
(g) Keep all Lessee's properties, real and personal, useful or necessary to
Lessee's business, in good repair and condition, free from waste or destruction, and from time to
time make necessary repairs, renewals and replacements thereto so that Lessee's property shall be
fully and efficiently preserved and maintained; and this covenant shall continue in full force and
effect with respect to any property in Lessee's possession or under Lessee's control, notwithstanding
any foreclosure or similar action regarding title or possession of any of Lessee's property, until such
time as Lessee's indebtedness to Lessor is paid in full or Lessor acquires possession or custody and
control over the property.
(h) Pay all debts and obligations when due (after expiration of any
applicable notice and/or cure periods provided with respect to such debts and obligations), including
all leasehold interests of Lessee.
4.5 Negative Covenants. During the initial term and any renewal term of this
Agreement, and thereafter for so long as Lessee shall have any obligations to Lessor under this
Agreement, Lessee covenants that it will not, without the prior written consent, which consent will
not be unreasonably withheld, of Lessor:
(a) Other than in order to consummate an acquisition, merge into or
consolidate with any other Person;
(b) Enter into any new business or make any material change in
management personnel of Lessee's business that would result in a Change of Control or in any of
Lessee's business objectives, purposes and operations which might in any way adversely affect the
repayment of the Obligations;rop vided, however, that the foregoing shall not prevent Lessee from
engaging in any business that is reasonably related or ancillary to its business;
(c) Cancel any claim or debt, except for consideration and in the
ordinary course of its business;
(d) Create any direct or indirect subsidiary or divest itself of any material
assets by transferring them to any subsidiary or enter into any partnership, joint venture, or similar
arrangement, or make any material change in its capital structure; which might in any way adversely
affect the repayment of the Obligations
(e) Transfer its registered office, executives offices, or maintain
inventory or records with respect to receivables or inventory, at any other locations than those at
which the same are presently kept or maintained, except with Lessor's prior written notice and after
the delivery to Lessor of financing statements, if required by Lessor, in form satisfactory to Lessor;
(f) Enter into any contract or agreement which would materially and
adversely affect its business, property, assets, operations, condition (financial or otherwise), ability
to perform its obligations under this Agreement, or the Collateral;
(g) Enter into or be a party to any transaction with any of Lessee's
affiliates, except in the ordinary course of business and pursuant to the reasonable requirements of
Lessee's business and upon fair and reasonable terms which are fully disclosed to Lessor.
(h) Enter into any transaction which materially and adversely affects the
Collateral or Lessee's ability to repay all obligations;
(i) Effect any change in its capital structure that would result in a
Change of Control, or amend its Articles of Incorporation or Bylaws that would reasonably be
expected to be materially adverse to the interests of Lessor as a secured creditor of Lessee;
0) Allow its trade payables, accounts payable or taxes of any kind to fall
materially in arrears.
—10—
5. Environmental conditions and Covenants Concerning Hazardous Substances.
5.1. Additional Environmental Conditions. Except as heretofore disclosed in
writing by Lessee or its agent to Lessor: (1) no hazardous or toxic substance or material or other
waste (referred to hereinafter as a "Hazardous Substance") as defined in or regulated under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as Amended
(42 U.S.C. 9601 et. seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et. seq.),
or any other federal, state or local law, order or regulation pertaining to health, safety or the
environment (referred to hereinafter as "Environmental Laws") has ever been disposed, released,
discharged or spilled on or under all or any part of any property heretofore or now owned, leased,
operated or controlled by Lessee or any past or present subsidiary or affiliate of Lessee, or any
property by whomsoever owned which is to be granted as security for any of the loans or credits
from Lessor to Lessee which now or hereafter are established or covered by, in whole or in part, this
Agreement (each a "Loan" and collectively the "Loans"); (2) no property heretofore or now owned,
leased, operated or controlled by Lessee or any subsidiary or affiliate of Lessee, or other property by
whomsoever owned to be mortgaged or otherwise granted as security for any of the Loans, has
been used as a dump or landfill; (3) no underground storage tank, equipment containing
polychlorinated biphenyls; asbestos, or urea formaldehyde is located on, in or under any property or
building or improvement owned by Lessee or any subsidiary or affiliate of Lessee, or other property
by whomsoever owned which is to be mortgaged or granted as security for any of the Loans;
(4) Lessee and each past and present subsidiary and affiliate of Lessee have complied in all respects
with and are currently in compliance in all respects with all Environmental Laws; (5) no Hazardous
Substance is located or stored upon any property owned, leased, operated or controlled by Lessee or
any subsidiary or affiliate of Lessee, or any other property by whomsoever owned which is to be
mortgaged or otherwise granted as security for any of the Loans (except de minimis quantities if
and, in such event, as incident to the customary operations of Lessee or applicable subsidiary or
affiliate of Lessee, and then only in compliance with all Environmental Laws); and (6) no litigation
or administrative actions or proceeding has been commenced or, to the knowledge of Lessee,
threatened against Lessee or any past or present subsidiary or affiliate of Lessee alleging a violation
of any Environmental Law.
5.2 Covenants Concerning Hazardous Substance and Environmental
Com 1p iance. Lessee will not permit any Hazardous Substance to be placed or stored upon any
property owned, leased, operated or controlled by Lessee or any subsidiary or affiliate or Lessee
except for de minimis quantities if and, in such event, as incident to the customary operations of
Lessee or such subsidiary or affiliate on such property, and then only in compliance with all
Environmental Laws. Without limitation of the preceding sentence, Lessee warrants and covenants
that all property owned, leased, operated or controlled by Lessee or any subsidiary or affiliate of
Lessee at all times hereafter shall remain free from any contamination by any Hazardous Substance
and that Lessee and each subsidiary and affiliate of Lessee will comply with all Environmental
Laws affecting each of them, respectively, or any property owned, leased, operated or controlled by
any of them, respectively. Lessee shall notify Lessor promptly upon becoming aware of any
contamination of any property owned, leased, operated or controlled by Lessee or any subsidiary or
affiliate of Lessee by any Hazardous Substance, or upon Lessee or any subsidiary or affiliate of
Lessee, being threatened with receipt of or receiving any notice, citation, summons, complaint or
other communication alleging violation by Lessee or any subsidiary of affiliate of Lessee of any
Environmental Law or that Lessee or any subsidiary or affiliate of Lessee is or may be liable in
connection with any Hazardous Substance. Lessor shall have the right, but not the obligation, to
enter upon any property of Lessee to take such action as Lessor deems necessary or appropriate with
respect to any actual or threatened contamination of the property of Lessee by a Hazardous
Substance or any other circumstance relating to a Hazardous Substance or any Environmental Law
which, in the sole opinion of Lessor, could impair the value of any of such property pledged or
granted as security for any of the Loans or result in a claim against or liability of Lessor, and all cost
and expenses, including reasonable attorneys' fees, incurred by Lessor in doing so, shall be paid by
Lessee to Lessor upon demand and bear interest from the date of such demand at the rate then and
thereafter applicable under the Loan which bears interest at the highest rate as of the date of such
demand. Lessee hereby agrees to indemnify Lessor and hold Lessor harmless from and against any,
and all loss, cost, expense (including but not limited to reasonable attorneys' fees), injury damage,
liability and claim of any kind whatsoever paid, incurred or suffered by or asserted against Lessor
by any person or entity, including but not limited to any governmental entity, whatsoever with
respect to or as a direct or indirect result of the presence of any Hazardous Substance on or under
any property heretofore, now or hereafter owned by Lessee or any subsidiary or affiliate of Lessee,
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or the violation or alleged violation by Lessee or any subsidiary or affiliate of Lessee of any
Environmental Law or, without limitation of the foregoing, any inaccuracy of any representation or
warranty by Lessee contained in this Agreement applicable to Hazardous Substances or
Environmental Laws or any breach of the covenants contained in this Agreement.
6. Default. Notwithstanding any cure periods described below, Lessee will
immediately notify Lessor in writing when Lessee obtains knowledge of the occurrence of any
default specified below. Regardless of whether Lessee has given the required notice, the
occurrence of one or more of the following will constitute a default:
(a) Nonpayment. Lessee shall fail to pay (i) any interest and principal
due on the Note or any fees, charges, costs or expenses under the Loan Documents by ten (10) days
after the same becomes due; or (ii) Lessee shall fail to pay any monthly payment under the Lease by
ten (10) days after the same becomes due.
(b) Nonperformance. Lessee or any guarantor of Lessee's obligations to
Lessor shall fail to perform or observe any agreement, term, provision, condition or covenant (other
than a default occurring under (a), (c), (d), (e), (f) or (g) of this Section 6) required to be performed
or observed by Lessee hereunder or under any other Loan Document, Lease or other agreement with
or in favor of Lessor and such failure shall continue for thirty (30) days after written notice thereof
from Lessor to Lessee.
(c) Misrepresentation. Any financial information, statement, certificate,
representation or warranty given to Lessor by Lessee or any Guarantor (or any of their
representatives) in connection with entering into this Agreement or the other Loan Documents
and/or any borrowing thereunder, or required to be furnished under the terms thereof, shall prove
untrue or misleading in any material respect (as determined by Lessor in the exercise of its
judgment) as of the time when given.
(d) Default on Other Obligations. Lessee shall be in default under the
terms of any loan agreement, promissory note, lease, conditional sale contract or other agreement,
document or instrument evidencing, governing or securing any indebtedness owing by Lessee to
Lessor or any indebtedness in excess of Fifty Thousand Dollars ($50,000) owing by Lessee to any
third parry, and the period of grace, if any, to cure said default shall have passed.
(e) Judgments. Any judgment shall be obtained against Lessee which,
together with all other outstanding unsatisfied judgments against Lessee (or such Guarantor), shall
exceed the sum of Ten Thousand Dollars ($10,000) and shall remain unvacated, unbonded or
unstayed for a period of thirty (30) days following the date of entry thereof.
(f) Inability to Perform; Bankruptcy/lnsolvency. (i) Lessee cease to
exist; or (ii) any bankruptcy, insolvency or receivership proceedings, or an assignment for the
benefit of creditors, shall be commenced under any federal or state law by or against Lessee or any
Guarantor and such proceeding or assignment is not dismissed within a period of sixty (60) days
after the filing thereof; or (iii) Lessee shall become the subject of any out-of-court settlement with
its creditors; or (iv) Lessee is unable or admits in writing its inability to pay its debts as they mature.
(g) Assignment or attempted assignment by Lessee of the Lease, this
Agreement, any rights hereunder, or any Advance to be made hereunder, or the conveyance,
lease, mortgage, or any other alienation or encumbrance of the Collateral or any interest therein
without the prior written consent of Lessor.
(h) Adverse Change; Insecurity. (i) There is a material adverse change
in the business, properties, financial condition or affairs of Lessee or any Guarantor; or in any
collateral securing the Obligations; or (ii) Lessor in good faith deems itself insecure.
Notwithstanding anything to the contrary contained herein, Lessee shall have thirty (30) days
after the giving of written notice by Lessor to Lessee of an event of default (except for a default
occurring under (a) of this Section 6) to cure such default.
7. Lessor's Rights on Default.
—12—
7.1. Lessee agrees that upon the occurrence of any Event of Default that has not
been cured as provided in Section 6, the full amount remaining unpaid under the Note shall
automatically accelerate and, at the sole discretion and option of the Lessor, become immediately
due and payable, in full to Lessee, and Lessor shall then have the rights, options, duties and
remedies guaranteed hereunder and in the Security Agreement and as a secured party under the
Uniform Commercial Code ("Code"), and/or the rights to exercise the Lessor's remedies under the
assignments securing the Loan, including without limitation, the right to take possession of the
Collateral and the right to enter any premises without legal process where the Collateral may be
found, to take possession or establish safekeeping procedures therefor. Lessee further agrees in any
such case, and if requested in writing by the Lessor, to deliver the Collateral to the Lessor or at a
place to be designated in writing by the Lessor. Any requirements of the Code of reasonable
notification of time, place of any public sale or of the time after which any private sale or other
intended disposition is to be made, shall be met by giving Lessee at the address shown herein at
least ten (10) days prior written notice, which time Lessee hereby agrees is reasonable notification
of the time and place of any public sale or the time after which any private sale or any other
intended disposition is to be made, but notice given in any other reasonable manner or at any other
time shall be sufficient. Without precluding any other methods of sale, the sale of Collateral shall
have been made in a commercially reasonable manner if conducted with conformity with reasonable
commercial practices of lenders disposing of similar property, but in any event, Lessor may sell on
such terms as Lessor may choose without assuming any credit risk and without any obligation to
advertise or, except as provided above, give notice of any kind. Lessee shall be and remain liable
for any deficiency remaining after applying the proceeds from the disposition of the Collateral first
to the reasonable expenses, including costs and attorney's fees, of exercising all of Lessor's rights
under this Agreement and then to the reduction of the Loans secured hereunder.
7.2. In addition to the foregoing, upon the occurrence of any Event of Default
and at any time thereafter, Lessor may, at its option, but without any obligation to do so, in addition
to any other right Lessor may have, do any one or more of the following without notice to Lessee:
(a) cancel this Agreement; (b) institute appropriate proceedings to enforce the performance of this
Agreement; (c) withhold further disbursement of loan funds; (d) expend funds necessary to remedy
the default; (e) take possession of the Property and continue construction of the Project;
(f) accelerate maturity of the Note and/or indebtedness and demand payment of all sums due under
the Note and/or indebtedness; (g) bring an action on the Note and/or indebtedness; and (h) exercise
any other right or remedy which it has under the Note(s) or related Loan Documents, or which is
otherwise available at law or in equity or by statute.
7.3 Cumulative Remedies. All of the rights and remedies of the Lessor upon the
occurrence of an Event of Default shall be cumulative to the greatest extent permitted by law, may
be exercised successively or concurrently, from time to time, and shall be in addition to all of those
rights and remedies afforded the Lessor at law, or in equity, or in bankruptcy.
—13—
8.1. Sole Benefit of Lessor. All conditions to the obligations of Lessor to make
advances hereunder, and the covenants and warranties of Lessee, are included herein solely and
exclusively for the benefit of Lessor and its successors and assigns, and no other person shall have
standing to require satisfaction of such conditions, covenants or warranties in accordance with their
terms or be entitled to assume that Lessor will refuse to make advances in the absence of strict
compliance with any or all thereof, and compliance with any or all of such conditions and covenants
may be freely waived, in whole or in part, by Lessor at any time it, in its sole discretion, deems it
advisable to do so.
8.2. Cross -Collateralization. It is the intent of the parties hereto that the security
interests in the collateral given by Lessee to Lessor secures all sums of money which Lessor
heretofore has advanced or hereafter advances or lends to Lessee or for which Lessee is obligated to
pay, including but not limited to all loans described herein. Satisfaction of any one loan or loan
advance will not cause a release of any part of the collateral or real property, but rather, the
collateral will be released only upon payment in full to Lessor of all of Lessee's obligations.
8.3. Construction. Should any provision of this Agreement require judicial
interpretation, the parties hereto agree that the court interpreting or construing the same shall not
apply a presumption that the terms hereof shall be more strictly construed against one party by
reason of the rule of construction that a document is to be construed more strictly against the party
who itself or through its agent prepared the same.
8.4. Waiver.
(a) Failure by Lessor to exercise any right, remedy or option under this
Agreement or in any other agreement between the parties hereto, or delay by Lessor in exercising
the same will not operate as a waiver;
(b) No waiver by Lessor will be effective unless it is in writing, and then
only to the extent specifically stated, and no waiver by Lessor on any occasion shall affect or
diminish Lessor's right thereafter to require strict performance by Lessee of any provision of this
Agreement.
8.5. Captions. The captions used in this Agreement are for convenience only and
shall not be used in construction or interpretation of or to limit the terms of the provisions hereof.
8.6. Severability Clause. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
8.7. Notice. All notices, requests and communications shall be in writing and the
sending or giving of such notices, requests or communications shall be sufficient in all respects if
sent by overnight courier, certified mail ( postage fully prepaid, with return receipt requested), or
personally delivered to the other party. Unless otherwise provided to the contrary, all notices shall
be effective when sent to the following addresses:
IF TO THE LESSOR:
McCracken County, Kentucky
300 South 7t' Street
Paducah, KY 42003
Attn:
City of Paducah, Kentucky
P. O. Box 2267
Paducah, KY 42002-2267
Attn: City Manager
—14—
With a copy to:
Denton Law Firm, PLLC
555 Jefferson Street, Suite 301
Post Office Box 969
Paducah, Kentucky, 42002-0969
Attention: W. David Denton
IF TO LESSEE:
Genova Products, Inc.
P. O. Box 309
Davison, MI 48423
Attn:
Any party hereto may change their address or addresses for the purpose of notice hereunder by
giving notice pursuant to the provisions of this section.
8.8. Waiver by Lessee. Lessee hereby waives, to the extent permitted by
applicable law, (a) all presentments, demands for performances, notices of nonperformance,
protests, notices of protest and notices of dishonor in connection with the Note, (b) any requirement
of diligence or promptness on the part of the Lessor in enforcement of its rights under the provisions
of this Agreement or any of the other Loan Documents, (c) any requirement of marshaling assets or
proceeding against Persons or assets in any particular order, and (d) any and all notice of every kind
and description which may be required to be given by any statute or rule of law and any defense of
any kind which Lessee may now or hereafter have with respect to its liabilities under this
Agreement or under the other Loan Documents.
8.9. Further Assurances. Lessee shall sign such financing statements or other
documents or instruments as the Lessor may reasonably request from time to time to more fully
create, perfect, continue, maintain or terminate the rights and security interests intended to be
granted or created pursuant to this Agreement or the other Loan Documents.
8.10. Assignments. Lessee may not assign its rights under this Agreement or the
Loan Documents to any other party. Any attempted assignment shall be a default under this
Agreement and shall be null and void.
8.11. Incorporation of Terms. Each and every provision of the Loan Documents is
incorporated herein as if fully set forth herein. Each and every provision of this Agreement is
incorporated in the Loan Documents as if fully set forth therein.
8.12. Execution and Counterparts. This Agreement may be executed by the
parties hereto in several counterparts, each of which shall be an original and all of which together
shall constitute one and the same agreement.
8.13. Governing Law; Jurisdiction. This Agreement shall be governed by the
internal laws of the Commonwealth of Kentucky (and not the law of conflicts), except to the extent
superseded by federal law. LESSEE HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN McCRACKEN
COUNTY, KENTUCKY AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR
PROCEEDINGS RELATING TO THIS AGREEMENT, THE COLLATERAL, ANY RELATED
DOCUMENT OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT
AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein shall affect the
Lessor's right to serve process in any manner permitted by law, or limit the Lessor's right to bring
proceedings against the Lessee in the competent courts of any jurisdiction or jurisdictions.
8.14. Cost, Expenses and Attorney. Lessee agrees to pay on demand all costs
and expenses in connection with filing, recording, and administration of any of the Loan
Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of the
attorneys for the Lessor, with respect to advising the Lessor as to its rights and responsibilities under
any of the Loan Documents, and all costs and expenses, if any, in connection with the enforcement
of any of the Loan Documents. Lessee shall also pay all costs associated with any lien search
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performed in connection with the Loan. Lessee also agrees to pay, and to save harmless Lessor
from any delay in paying, any intangibles, documentary stamp and other taxes, if any, which may be
payable in connection with the execution and delivery of this Agreement, the Note and any of the
other Loan Documents, or the recording of any thereof, or in any modification hereof or thereof.
Additionally, Lessee shall pay to Lessor on demand, any and all fees, costs and expenses which
Lessor pays to a Bank or other similar institution arising out of or in connection with the depositing
for collection by Lessor of any check or item of payment received and/or delivered to Lessor on
account of the obligations and reimburse Lessor, on demand, for any returned or uncollected checks
received by such Lessor as proceeds of the Collateral.
8.15. Warranties and Representations Survive Termination. No termination or
cancellation (regardless of cause or procedure) of this Agreement shall in any way affect or impair
the powers, obligations, duties rights and liabilities of the parties hereto in any way with respect to
(i) any transaction or event occurring prior to such termination or cancellation, (ii) the collateral
and/or (iii) any of Lessee's undertakings, agreements, covenants, warranties and representations
contained in this Agreement and all such undertakings, agreements, covenants, warranties and
representations shall survive such termination or cancellation.
8.16. Lessor's Discretion to Release Security, etc. Lessor may, in its sole
discretion, (i) exchange, enforce, waive or release any security or portion of the Collateral, (ii) apply
such security or any proceeds of the Collateral and direct the order or manner of sale thereof as
Lessor may, from time to time, determine, and (iii) settle, compromise, collect or otherwise
liquidate any such security or Collateral for the Obligations in any manner following the occurrence
of an Event of Default without affecting or impairing Lessor's right to take any other further action
with respect to any security or Collateral for the Obligations or any part thereof.
8.17. Lessor's Right to Apply Pam. Lessor shall have the continuing and
exclusive right to apply or reverse and reapply any and all payments to any portion of the
Obligations. To the extent that Lessee makes a payment or payments to Lessor or Lessor receives
any payment or proceeds of the Collateral for Lessee's benefit, which payment or proceeds or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment or proceeds
received, the Obligations or part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by Lessor.
8.18. Disbursement of Proceeds. Lessee hereby authorizes and directs Lessor to
disburse, for and on behalf of Lessee and for Lessee's account, the proceeds of loans made by
Lessor to Lessee pursuant to this Agreement to such Person or Persons as Lessee shall direct,
whether in writing or orally.
8.19. Injunctive Relief. Lessee recognizes that, in the event Lessee fails to
perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy
of law may prove to be inadequate relief to Lessor; therefore, Lessee agrees that Lessor, if
Lessor so requests, shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages and without the necessity of posting a bond.
8.20. Relation Parties. This Agreement represents the conditions under which
Lessor will extend credit to Lessee. Nothing in this Agreement shall be construed to make Lessor
and Lessee joint venturers or partners or in any way create in Lessor an equity interest in Lessee.
8.21. Relationship to Other Documents. The warranties, covenants and other
obligations of Lessee (and the rights and remedies of Lessor) that are outlined in this Agreement
and the other Loan Documents are intended to supplement each other. In the event of any
inconsistencies in any of the terms in the Loan Documents, all terms will be cumulative so as to
give Lessor the most favorable rights set forth in the conflicting documents.
8.22. Participations. Upon the occurrence of any Event of Default and at any time
thereafter, Lessor may, at its option, sell all or any interests in the Note and other Loan Documents
to other financial institutions (the "Participant"), and in connection with such sales (and thereafter)
disclose any financial information Lessor may have concerning Lessee to any such Participant or
potential Participant.
—16—
8.23. Successors. The rights, options, powers and remedies granted in this
Agreement and the other Loan Documents will extend to Lessor and to its successors and assigns,
will be binding upon Lessee and its successors and assigns and will be applicable hereto and to all
renewals and/or extensions hereof.
8.24. Indemnification. Except for harm arising from Lessor's willful misconduct,
Lessee hereby indemnifies and agrees to defend and hold Lessor harmless from any and all losses,
costs, damages, claims and expenses of any kind suffered by or asserted against Lessor relating to
claims by third parties arising out of the financing provided under the Loan Documents or related to
any collateral (including, without limitation, Lessee's failure to perform its Obligations relating to
Environmental Matters described in Section 5.2 above). This indemnification and hold harmless
provision will survive the termination of the Loan Documents and the satisfaction of the Obligations
due Lessor.
8.25. Notice of Claims against Lessor, Limitation of Certain Damages. In order to
allow Lessor to mitigate any damages to Lessee from Lessor's alleged breach of its duties under the
Loan Documents or any other duty, if any, to Lessee, Lessee agrees to give Lessor immediate
written notice of any claim or defense it has against Lessor, whether in tort or contract, relating to
any action or inaction by Lessor under the Loan Documents, or the transactions related thereto, or of
any defense to payment of the Obligations for any reason. The requirement of providing timely
notice to Lessor represents the parties' agreed -to standard of performance regarding claims against
Lessor. Notwithstanding any claim that Lessee may have against Lessor, and regardless of any
notice Lessee may have given Lessor, Lessor will not be liable to Lessee for consequential
and/or special damages arising therefrom.
8.26. Copies; Entire Agreement; Modification. Lessee hereby acknowledges the
receipt of a copy of this Agreement and all other Loan Documents. This Agreement is a
"transferable record" as defined in applicable law relating to electronic transactions. Therefore, the
holder of this Agreement may, on behalf of Lessee, create a microfilm or optical disk or other
electronic image of this Agreement that is an authoritative copy as defined in such law. The holder
of this Agreement may store the authoritative copy of such Agreement in its electronic form and
then destroy the paper original as part of the holder's normal business practices. The holder, on its
own behalf, may control and transfer such authoritative copy as pennitted by such law.
8.27. Anti -Corruption Laws; Sanctions; Anti -Terrorism Laws.
(a) Definitions.
"Anti -Corruption Laws" means all laws, rules, and regulations of
any jurisdiction applicable to the Lessee or its Subsidiaries from time to time concerning or
relating to bribery or corruption.
"OFAC" means the U.S. Department of the Treasury's Office of
Foreign Assets Control, and any successor thereto.
"PATRIOT Act" means the USA PATRIOT Act (Title III of Pub.
L. 107-56 (signed into law October 26, 2001)), as amended from time to time, and any successor
statute.
"Sanctioned Country" means, at any time, any country or territory
which is itself the subject or target of any comprehensive Sanctions.
"Sanctioned Person" means, at any time, (a) any Person or group
listed in any Sanctions -related list of designated Persons maintained by OFAC or the U.S.
Department of State, the United Nations Security Council, the European Union or any EU
member state, (b) any Person or group operating, organized or resident in a Sanctioned Country,
(c) any agency, political subdivision or instrumentality of the government of a Sanctioned
Country, or (d) any Person 50% or more owned, directly or indirectly, by any of the above.
"Sanctions" means economic or financial sanctions or trade
embargoes imposed, administered or enforced from time to time by (a) the U.S. government,
—17—
including those administered by OFAC or the U.S. Department of State or (b) the United Nations
Security Council, the European Union or Her Majesty's Treasury of the United Kingdom.
(b) The Lessee, its Subsidiaries and their respective officers and
employees and to the knowledge of the Lessee its directors and agents, are in compliance with
Anti -Corruption Laws and applicable Sanctions in all material respects. None of the Lessee, any
Subsidiary or to the knowledge of the Lessee or such Subsidiary any of their respective directors,
officers or employees is a Sanctioned Person. No Loan, use of the proceeds of any Loan or other
transactions contemplated hereby will violate Anti -Corruption Laws or applicable Sanctions.
(c) Neither the making of the Loans hereunder nor the use of the
proceeds thereof will violate the PATRIOT Act, the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto or successor statute thereto. The Lessee and its Subsidiaries are in compliance in
all material respects with the PATRIOT Act.
(d) Use of Proceeds. Lessee will not request any Loan and Lessee
shall not use, and the Lessee shall ensure that its Subsidiaries and its or their respective directors,
officers, employees and agents shall not use, the proceeds of any Loan (i) in furtherance of an
offer, payment, promise to pay, or authorization of the payment or giving of money, or anything
else of value, to any Person in violation of any Anti -Corruption Laws or (ii) in any manner that
would result in the violation of any applicable Sanctions.
(e) Compliance with Laws. The Lessee will, and will cause each
Subsidiary to, comply in all material respects with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including, without
limitation, all Environmental Laws, Anti -Corruption Laws and applicable Sanctions.
(f) Patriot Act Compliance. The Lessee shall, and shall cause each
Subsidiary to, provide such information and take such actions as are reasonably requested by the
Lessor in order to assist the Lessor in maintaining compliance with the PATRIOT Act.
8.28. Waiver of Jury Trial. LESSEE AND LESSOR HEREBY JOINTLY
AND SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE
OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED
THERETO. LESSEE AND LESSOR EACH REPRESENTS TO THE OTHER THAT THIS
WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING,
EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE
ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN
THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS
AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT.
ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT
ENFORCEABLE AND SHOULD NOT BE RELIED UPON.
IN WITNESS WHEREOF, the undersigned have executed this document on the date first
above written.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
BUZ
LESSOR:
McCRACKEN COUNTY, KENTUCKY
Title:
COMMONWEALTH OF KENTUCKY )
ss.
COUNTY OF McCRACKEN )
Subscribed, sworn to and acknowledged before me by McCRACKEN COUNTY,
KENTUCKY, by and through , its , on this
the day of , 2015.
My commission expires:
Notary ID #
—19—
NOTARY PUBLIC
KENTUCKY STATE AT LARGE
I , , i I T- - _. - ----
CITY OF PADUCAH, KENTUCKY
BY:
Title:
COMMONWEALTH OF KENTUCKY )
ss.
COUNTY OF McCRACKEN )
Subscribed, sworn to and acknowledged before me by CITY OF PADUCAH,
KENTUCKY, by and through , its , on
this the day of , 2015.
My commission expires:
Notary ID #
—20—
NOTARY PUBLIC
KENTUCKY STATE AT LARGE
LESSEE:
GENOVA PRODUCTS, INC.
Title:
STATE OF MICHIGAN )
ss.
COUNTY OF )
Subscribed, sworn to and acknowledged before me on
by , the
PRODUCTS, INC., a Michigan corporation, on behalf of said entity.
'2015,
of GENOVA
Notary Public
County, Michigan
Acting in County, Michigan
My commission expires:
—21—
IN TESTIMONY WHEREOF, the undersigned acknowledges and agrees to Section
2.4(a) hereof, and the undersigned has caused this instrument to be executed in its name and on
its behalf by their Authorized Officers, effective as of the day and year first above written.
PED:
PADUCAH ECONOMIC DEVELOPMENT
FOUNDATION, INC.
By:_
Title:
Date:
COMMONWEALTH OF KENTUCKY )
ss.
COUNTY OF McCRACKEN )
Subscribed, sworn to and acknowledged before me by PADUCAH ECONOMIC
DEVELOPMENT FOUNDATION, INC., by and through its duly authorized officer,
on this the day of
2015.
My commission expires:
Notary ID #
—22—
NOTARY PUBLIC
KENTUCKY STATE AT LARGE
EXHIBIT `B"
NOTE
(For Multiple Advance Draw Loan Agreement)
$ Date:
FOR VALUE RECEIVED, GENOVA PRODUCTS, INC., a Michigan corporation,
with a principal mailing address of Post Office Box 309, Davison, Michigan 48423 (the
"Borrower"), promises to pay to the order of MCCRACKEN COUNTY, KENTUCKY
("County"), with a principal mailing address of 300 South 7th Street, Paducah, Kentucky 42003;
and CITY OF PADUCAH, KENTUCKY ("City"), with a principal mailing address of Post Office
Box 2267, Paducah, Kentucky 42002-2267 (herein referred to jointly as "Lender"), the principal
sum of DOLLARS
Interest. Interest on the Term Loan shall accrue at a fixed interest rate of four and one half
percent (4.5%) per annum.
Payment Schedule. Principal and interest are payable in installments of $
each, beginning , 20_, and on the same date of each consecutive month thereafter
(except that if a given month does not have such a date, the last day of such month), plus a final
payment equal to all unpaid principal and accrued interest on June 30, 2024, the maturity date.
Interest will be computed for the actual number of days principal is unpaid, using a daily
factor obtained by dividing the stated interest rate by 360.
In no event will the interest rate hereunder exceed that permitted by applicable law. If any
interest or other charge is finally determined by a court of competent jurisdiction to exceed the
maximum amount permitted by law, the interest or charge shall be reduced to the maximum
permitted by law, and the Lender may credit any excess amount previously collected against the
balance due or refund the amount to the Borrower.
Subject to applicable law, if any payment is not made on or before its due date, the
Lender may collect a delinquency charge of five percent (5%) of the unpaid amount. Collection
of the late payment fee shall not be deemed to be a waiver of the Lender's right to declare a
default hereunder.
Without affecting the liability of any Borrower, endorser, surety or guarantor, the Lender
may, without notice, renew or extend the time for payment, accept partial payments, release or
impair any collateral security for the payment of this Note, or agree not to sue any party liable on
it.
This Note constitutes a note issued under a Multiple Advance Draw Loan Agreement
dated the day of , 2015 between the Borrower and the Lender, to
which Agreement reference is hereby made for a statement of the terms under which the loan
evidenced hereby was made and a description of the terms and conditions upon which the
maturity of this Note may be accelerated, and for a description of the collateral securing this
Note.
This Note is a "transferable record" as defined in applicable law relating to electronic
transactions. Therefore, the holder of this Note may, on behalf of Borrower, create a microfilm
or optical disk or other electronic image of this Note that is an authoritative copy as defined in
such law. The holder of this Note may store the authoritative copy of such Note in its electronic
form and then destroy the paper original as part of the holder's normal business practices. The
holder, on its own behalf, may control and transfer such authoritative copy as permitted by such
law.
—1—
All documents referred to herein or attached hereto, including any appendices,
schedules, riders, and exhibits to this Note, are hereby expressly incorporated by reference.
The Borrower hereby acknowledges the receipt of a copy of this Note.
BORROWER:
GENOVA PRODUCTS, INC.
LN
Title:
Ira
SECURITY AGREEMENT
THIS SECURITY AGREEMENT made and executed on this day of ,
2015, by and among GENOVA PRODUCTS, INC., a Michigan corporation, with a mailing
address of Post Office Box 309, Davison, Michigan 48423, hereinafter referred to as "Grantor,"
and MCCRACKEN COUNTY, KENTUCKY, with a principal mailing address of 300 South 7th
Street, Paducah, Kentucky 42003, and CITY OF PADUCAH, KENTUCKY, with a principal
mailing address of Post Office Box 2267, Paducah, Kentucky 42002-2267, hereinafter collectively
referred to as "Secured Parry." Terms not otherwise defined herein shall have the same meaning as
defined in the Credit Agreement (defined below).
WITNESSETH:
WHEREAS, Grantor and Secured' Party entered into a Multiple Advance Draw Loan
Agreement of even date herewith (the "Credit Agreement") wherein Secured Parry agreed to
extend certain credit to Grantor for the sole purpose of purchasing trade fixtures, equipment, and
fixtures for Grantor's manufacturing and distribution facility of vinyl building products (the
"Project") upon certain a certain tract of real property located at 5400 Commerce Drive in
Paducah, McCracken County, Kentucky (the "Property"); and
WHEREAS, the Project would have a positive impact on the entire community by
stimulating the local economy, expanding the tax base, and reducing unemployment within the
boundaries of Paducah, McCracken County, Kentucky; and
WHEREAS, as a condition to consummating the Loan, Secured Parry has requested that
Grantor grant and assign unto Secured Parry a security interest in the Collateral hereinafter
described in accordance with the terms and provisions herein contained, to which Grantor is
agreeable; and
WHEREAS, Grantor does hereby expressly acknowledge and agree that Grantor executes
this Security Agreement as inducement to Secured Party in consummating the Loan, without which
execution the Loan would not have been consummated.
NOW, THEREFORE, in consideration of the foregoing premises, and for valuable
consideration, the legal adequacy and sufficiency of which is hereby acknowledged by all parties
hereto, the parties do covenant and agree as follows:
1) Assignment of Security Interest. Grantor does hereby grant, transfer, and assign
unto Secured Parry a first priority security interest in the Collateral to secure the payment of the
Multiple Advance Draw Loan under the Credit Agreement and all other Obligations (as defined in
the Credit Agreement) and duties of Grantor under the Credit Agreement, and all interest accruing
thereon, and any renewals and extensions thereof. The Collateral shall also secure any and all
other obligations and liabilities of Grantor to Secured Parry under the Credit Agreement, now
existing or hereafter arising, including but not limited to any and all late charges, collection costs
and expenses, including Secured Parry's reasonable attorney's fees and legal expenses, any
expenditures made by Secured Parry hereunder, any future advances extended by Secured Party to
Grantor.
2) Collateral. The Collateral covered by this Agreement includes all of the following -
described property of Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located (collectively, the "Collateral"): All trade fixtures,
equipment, and fixtures (including but not limited to items referenced on Exhibit "A" attached
hereto), purchased with Advances from the Credit Agreement and owned or to be owned by
Grantor and located at the Property. The Collateral shall also include all attachments, accessions,
accessories, tools, parts, supplies, increases and additions to and all replacements of and
substitutions for, and proceeds (as defined in the Uniform Commercial Code) (including insurance
proceeds) of, the Collateral.
-T -
3) Warranty of Title. Grantor represents and warrants to Secured Party that Grantor
is the absolute owner of the legal and beneficial title to the Collateral and is in full possession
thereof, and that, except for Permitted Liens (a) the Collateral is free and clear of all liens,
encumbrances, and adverse claims whatsoever, and (b) the Collateral shall at all times remain free
and clear of any liens, encumbrances, and adverse claims. As used in this Agreement, "Permitted
Liens" shall mean, collectively:
(a) liens, mortgages, security interests and encumbrances to or in favor of
Secured Party;
(b) liens for taxes, assessments or other governmental charges incurred in the
ordinary course of business and for which no interest, late charge or penalty is attaching or which
is being contested in good faith by appropriate proceedings diligently pursued;
(c) liens created by statute in connection with workers' compensation,
unemployment insurance, social security, old age pensions (subject to the applicable provisions
of this Agreement) and similar statutory obligations incurred in good faith in the ordinary course
of business that are not yet due and payable; and
(d) liens in favor of mechanics, materialmen, carriers, warehousemen or other
like statutory or common law liens securing obligations incurred in good faith in the ordinary
course of business that are not yet due and payable.
4) Perfection of Collateral. Grantor shall take all other steps as reasonably required
by Secured Party to perfect and to continue the perfection of the Secured Party's interest in the
Collateral. Grantor does hereby appoint Secured Party as its attorney-in-fact, without requiring the
Secured Party to act as such, to perform all acts that the Secured Party deems reasonably necessary
to perfect and continue to perfect its security interest in, and to protect and preserve, the Collateral.
In the event any item or items of Collateral may only be perfected by possession, Grantor agrees
that Secured Party shall have the right to the possession of such item or items of Collateral until the
above-described indebtedness is fully paid and satisfied. Any and all costs, taxes, and expenses of
filing or recording any financing statement or continuation statement shall be at the sole cost and
expense of Grantor. Grantor shall pay and satisfy such costs, tax, and expense which may be
incurred by Secured Party regarding same upon demand from Secured Party.
5) Location of Collateral. The Grantor shall keep the Collateral at the Property.
Grantor shall not remove the Collateral from any approved location without the prior written
consent of Secured Parry, excepting, however, (a) any assets sold in the ordinary course of
business, and (b) sales or dispositions of obsolete or worn Collateral.
6) Identification of Collateral. The Secured Party shall have the right, upon any
Event of Default, without written waiver by Secured Party, to require Grantor to prepare a schedule
or itemization of all items of Collateral, containing such descriptions, terms, and provisions as
reasonably required by Secured Party, including, without limitation, the nature, extent, and location
of each item of Collateral.
7) Maintenance and Repair to Collateral. Grantor shall at all times maintain all
tangible items of Collateral in good condition and repair (ordinary wear and tear excepted).
Secured Party, through its designated representatives, shall have the right at all reasonable times
upon two (2) business days prior written notice, to examine, inspect, and audit the Collateral.
Grantor shall immediately notify Secured Party of all loss or damage to Collateral, the aggregate
book value of which, exceeds Fifty Thousand Dollars ($50,000).
8) Insurance. The Grantor shall maintain, or cause to be maintained, public liability
insurance and casualty, hazard, fire, earthquake, and extended coverage insurance for replacement
value on all tangible items of Collateral, and replacements thereto, all in such form and amounts
and with such insurers as acceptable to Secured Party (it being agreed that the amount of the
insurance, the types of insurance coverage, the insurance companies, and the insurance policies,
certificates and endorsements, maintained by Grantor as of the Closing Date are satisfactory to
Secured Party). Secured Parry shall be named on any insurance procured hereunder as a first and
prior secured party loss payee with respect to the Collateral. Any policies provided hereunder shall
contain a provision whereby they cannot be cancelled except after ten (10) days written notice to
Secured Party. The Grantor shall furnish to Secured Party such evidence of insurance as the
—2—
Secured Party may reasonably require. If no Event of Default has occurred and is continuing,
proceeds payable under any casualty policy will, at Grantor's option, be payable to Grantor to
replace the property subject to the claim, provided that any such replacement property shall be
deemed Collateral in which Secured Parry has been granted a first priority security interest. Upon
any Event of Default, without written waiver by Secured Party, any insurance proceeds received by
Secured Party, as a loss payee, shall, at the Secured Party's discretion, be applied either to the
repair or replacement of any item of Collateral which is damaged or destroyed which resulted in
the payment of the insurance proceeds, or in the alternative, be applied toward the satisfaction of
the indebtedness as described above. Grantor does hereby appoint Secured Party as its attorney-in-
fact for the purpose of processing and collecting upon any claim under any insurance policy
provided hereunder.
9) Taxes, Assessments, and Liens. Grantor will pay before delinquent all taxes,
assessments, and liens upon the Collateral, its use or operation, upon this Agreement, the Credit
Agreement, or upon any promissory note or notes evidencing the Obligations. If the Collateral is
subject to a lien (other than Permitted Liens) which is not discharged within fifteen (15) days,
Grantor shall deposit with Secured Party, cash or acceptable bond or surety, in an amount to
adequately provide for the discharge of the lien, plus any interest, cost, reasonable attorney fees or
other charges that could accrue as a result of foreclosure sale of the Collateral. In any contest,
Grantor shall defend itself and Secured Party and shall satisfy all final adverse judgments before
enforcement against the Collateral. Grantor shall name Secured Party as an additional obligee
under any bond furnished in any contest proceeding.
10) Collection on Collateral. So long as no Event of Default exists, Grantor shall have
the right to collect the Collateral. Upon any Event of Default, without written waiver by Secured
Party, Grantor's right to collect upon and realize on the Collateral shall immediately terminate, and
all sums payable thereunder shall be paid directly to Secured Party and applied to the Obligations.
Grantor hereby appoints Secured Party as its attorney-in-fact for the purpose of notifying any
debtor of Grantor with respect to any Collateral of the existence of the security interest herein
created and of collecting upon any and all sums due under the Collateral, and does hereby
authorize and empower Secured Party to take any act for and in its behalf to effectuate same.
11) Conduct of Business. Debtor shall not conduct business under any other name
other than given above nor change or reorganize the type of business entity under which it does
business nor change the office of its registered agent except upon thirty (30) days prior written
notice to Secured Party. In the event of such change of name or business entity, Grantor
guarantees that all documents, instruments, and agreements demanded by Secured Party shall be
prepared and filed at Grantor's expense before such change of name or business entity occurs.
Additionally, Grantor hereby covenants and agrees to Secured Party that it shall operate its
business in a reasonable and prudent manner in conformance with all Obligations and liabilities of
Grantor to Secured Party under the Loan Documents.
12) Hazardous Use. Grantor has not and shall not utilize any item of Collateral in
noncompliance with any federal, state, or local environmental law or regulation. Grantor shall
indemnify Secured Party and save it harmless from any claim, demand, or cause of action
regarding Grantor's failure to comply with this covenant, except and to the extent caused by
Secured Party's gross negligence or willful misconduct.
13) Expenditures by Secured Party. In the event Grantor fails to timely pay and
satisfy all of its obligations hereunder, including but not limited to Grantor's obligations to pay and
satisfy any costs of maintenance and repair of the Collateral, insurance premiums, taxes, liens,
security interests, encumbrances, and other claims, the Secured Party shall have the right, but not
the obligation, at its option, to pay such costs, and additionally have the right, but not the
obligation, at its option, to pay any and all other costs and expenses for insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Secured Party shall bear
interest at the rate charged under the Credit Agreement from the date incurred. All such
expenditures shall become part of the Obligations and, at Secured Party's option, shall be (a)
payable upon demand, (b) be added to the balance on the Credit Agreement and be apportioned
among and be payable with any installment payments to become due thereunder, or (c) be treated
as a balloon payment which shall be due and payable at the Loan Maturity Date as defined in the
Credit Agreement. This Agreement shall also secure payment of these amounts. Such rights of
—3—
Secured Party shall be in addition to all other rights and remedies to which Secured Parry may be
entitled upon the occurrence of an event of default.
14) Events of Default. The occurrence of an Event of Default (under and as defined in
the Credit Agreement) shall constitute an "Event of Default" under this Agreement.
15) Remedies of Secured Party Upon Default. Upon any Event of Default, without
written waiver by Secured Party, Secured Party shall have all of the following rights and remedies,
and additionally, shall have all other rights and remedies provided by law, specifically including all
rights and remedies as set forth in KRS 355.9-501 et seq. Specifically, Secured Party shall have
the following rights and remedies:
a. Secured Party shall have the right to accelerate the unpaid principal and
interest due under the Credit Agreement, and all other Obligations of Grantor to Secured Party, at
which time all of the Obligations shall be immediately due and payable.
b. Upon request of Secured Party, Grantor shall assemble all Collateral at any
place designated by Secured Party. Secured Parry shall have the right to take possession of the
Collateral and to enter the Premises for the taking of possession or of removing the Collateral.
Grantor hereby grants to Secured Party the use of the Premises for the purpose of possession,
removal, placing the Collateral in saleable form, sale, or other disposition of the Collateral.
Secured Party shall have the right to sell Collateral at its discretion.
C. Secured Party shall have the right to appoint a receiver to take possession
of, operate, control, and other sell and dispose of the Collateral. It is agreed by Grantor that the
receiver may be an employee of Secured Party and may serve without bond. All fees incurred by
virtue of the appointment of a receiver and his or her attorney shall become part of the Obligations
secured by this Agreement and deemed an expenditure hereunder.
d. Any notices required under the Kentucky Revised Statutes shall be deemed
reasonable if mailed by Secured Party to the persons entitled thereto at Grantor's last known
address at least ten (10) days prior to disposition of the Collateral and, in reference to a private sale,
need state only that Secured Party intends to negotiate such a sale. Disposition of the Collateral
shall be deemed commercially reasonable if made to a public offering advertised at least once in a
newspaper of general circulation in the community where the Collateral is located or by a private
sale for a sum equal to or in excess of the liquidating value of the Collateral as determined by
Secured Party.
e. All of Secured Party's rights and remedies, whether evidence by this
Agreement or any other agreement executed by Grantor to Secured Party, shall be cumulative and
may be exercised singularly or concurrently. Election by Secured Party to pursue any remedy shall
not exclude pursuit of or other remedy, and an election to make expenditures or take action to
perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not
affect the Secured Party's right to declare an Event of Default and to exercise its remedies.
f. All costs and expenses incurred by Secured Parry upon any Event of
Default, without written waiver by Secured Party, including its reasonable attorney's fees, shall
become part of the Obligations secured by this Agreement and shall be deemed as an expenditure
hereunder. Costs and expenses include Secured Party's reasonable attorney's fees and legal
expenses whether or not there is a lawsuit, including reasonable attorney's fees and legal expenses
for protection and preservation of the Collateral, for bankruptcy proceedings, appeals, and any
anticipated post judgment collection services. Grantor shall also pay all court costs and such r
additional fees as be directed by a court of competent jurisdiction.
16. Miscellaneous Provisions. This Agreement, together with the Loan Documents,
constitute the entire understanding and agreement of the parties as to the matters as set forth in this
Agreement. No alteration of or amendment to this Agreement shall be effective unless given in
writing and signed by the party or parties sought to be charged or bound by the alteration or
amendment. This Agreement shall be construed under the laws of the Commonwealth of
Kentucky. Grantor does hereby submit itself to the jurisdiction of the courts of McCracken
County, Commonwealth of Kentucky. Grantor does further waive its right to trial by jury. This
Agreement shall be binding upon the parties hereto, their heirs, successors and assigns.
—4—
WITNESS our signatures on the date first above written.
MI\ 1►
GENOVA PRODUCTS, INC.
Title:
STATE OF MICHIGAN )
ss.
COUNTY OF )
Subscribed, sworn to and acknowledged before me on , 2015,
by , the of GENOVA PRODUCTS, INC., a
Michigan corporation, on behalf of said entity.
Acting in
My commission expires:
—5—
Notary Public
County, Michigan
County, Michigan
T
SECURED PARTY:
CITY OF PADUCAH, KENTUCKY
By:_
Title:
COMMONWEALTH OF KENTUCKY )
) ss.
COUNTY OF MCCRACKEN )
The foregoing instrument was sworn and acknowledged before me this
, 2015, by _
(title) of City of Paducah, Kentucky, on behalf of said entity, Lessor.
My commission expires:
Mil
day of
NOTARY PUBLIC, STATE AT LARGE
SECURED PARTY:
MCCRACKEN COUNTY, KENTUCKY
Title:
COMMONWEALTH OF KENTUCKY )
) ss.
COUNTY OF MCCRACKEN )
The foregoing instrument was sworn and acknowledged before me this
, 2015, by ,
(title) of McCracken County, Kentucky, on behalf of said entity, Lessor.
My commission expires:
This instrument prepared by:
McMURRY & LIVINGSTON, PLLC
P. O. Box 1700
Paducah, KY 42002-1700
-7-
day of
NOTARY PUBLIC, STATE AT LARGE
-- -,--- - --- 1-�- -„ T
EXHIBIT B TO THE ORDINANCE
SECURITY AGREEMENT
See attachment
4
EXHIBIT C TO THE ORDINANCE
SUBORDINATION AGREEMENT
See attachment
G
-. 1 ,,. 1....i I ,I I , I, -I, --:-. ie , , -I ,----- --:- -----,-r-
SUBORDINATION AGREEMENT -----
THIS SUBORDINATION AGREEMENT (the "Agreement") is this day of
2015, by and between ,
with an address of ("Subordinated Lender")
and McCRACKEN COUNTY, KENTUCKY ("County"), with a principal mailing address of 300
South 7th Street, Paducah, Kentucky 42003; and CITY OF PADUCAH, KENTUCKY ("City"),
with a principal mailing address of Post Office Box 2267, Paducah, Kentucky 42002-2267 (County
and City shall collectively be referred to as the "Lender")
WITNESSETH:
WHEREAS, Subordinated Lender and Lender have filed or intend to file a financing
statement or statements under the Uniform Commercial Code giving notice of a security interest in
all or some of the assets of GENOVA PRODUCTS, INC. ("Borrower"). Borrower wishes to
obtain financing from Lender and Lender has agreed to provide such financing to Borrower on the
condition that Subordinated Lender subordinate to Lender any and all interest which Subordinated
Lender may presently have or may hereafter acquire in and to certain of Borrower's assets.
Subordinated Lender is willing to subordinate its interest in accordance with the terms of this
Agreement.
NOW, THEREFORE, in order to induce Lender to extend financing and/or continue to
extend financing to Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Subordinated Lender hereby unconditionally subordinates to Lender any and all
right, title and security interest which Subordinated Lender may presently have or which it may
hereafter acquire in and to All trade fixtures, equipment, and fixtures purchased with Advances
from the Multiple Advance Draw Loan between Borrower and Lender and owned or to be owned
by Borrower and located at 5400 Commerce Drive in Paducah, McCracken County, Kentucky
(the "Collateral"). The Collateral shall also include all attachments, accessions, accessories,
tools, parts, supplies, increases and additions to and all replacements of and substitutions for, and
proceeds (as defined in the Uniform Commercial Code) (including insurance proceeds) of, the
Collateral.
2. Except for the subordination by Subordinated Lender to Lender described herein,
nothing herein contained shall impair any rights of Lender or Subordinated Lender with respect
to any collateral heretofore, now or hereafter pledged to Subordinated Lender or Lender as
security for any indebtedness of Borrower, or the proceeds thereof.
3. This Agreement shall constitute a continuing agreement of subordination;
provided, however, that this Agreement shall terminate upon payment in full of all of Borrower's
obligations to Lender.
4. This Agreement shall be binding on, and shall inure to the benefit of, the
successors and assigns of Lender and Subordinated Lender. Subordinated Lender hereby
represents and warrants to Lender that Subordinated Lender has not heretofore assigned,
transferred, subordinated or terminated any of Subordinated Lender's right, title or security
interest in or to any of Borrower's assets subordinated to Lender pursuant to the terms of this
Agreement.
S. The subordinations and priorities specified herein are applicable irrespective of
the time, manner or order of attachment or perfection of any security interest, liens or claims, or
the time or order of filing of any financing statements, or the giving or failure to give notice of
the acquisition or expected acquisition of any purchase money security interest or other security
interest.
6. Neither Subordinated Lender nor Lender shall be responsible to the other for
Borrower's solvency or condition (financial or otherwise), statements, representations or
warranties of Borrower (whether oral or written), the validity, sufficiency or enforceability of the
documents executed by Borrower or the validity, sufficiency or enforceability or priority of any
security interest granted by Borrower in connection therewith. Each of Subordinated Lender and
Lender have entered into their respective financing arrangements with Borrower based on its
own investigation, and neither has made any representation or warranty to the other with respect
to the matters described in this paragraph, or relied upon any such representation or warranty by
the other.
7. This Agreement shall be governed, construed and enforced and the rights and
obligations of the parties hereunder determined in accordance with the internal laws of the
Commonwealth of Kentucky and not the conflict of law provisions. SUBORDINATED
LENDER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT SITUATED IN McCRACKEN COUNTY, KENTUCKY AND
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO
ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS
AGREEMENT, THE COLLATERAL, ANY RELATED DOCUMENT OR ANY
TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING.
8. This Agreement and the terms and provisions hereof are solely for the benefit of
Lender and Subordinated Lender and their respective transferees, successors and assigns.
Nothing contained in this Agreement is intended, or shall be construed, to limit, diminish, restrict
or otherwise affect in any manner the respective rights, entitlements, remedies or claims of
Subordinated Lender or Lender, or the liens, security interests or other interests which Lender or
Subordinated Lender presented has or hereafter may have in any assets or properties of
Borrower, whether real or personal, tangible or intangible, with respect to Borrower or any third
party. The parties hereto reserve each and all of their respective rights, entitlements, remedies,
claims, liens, security interests or other interests and rights to assert claims, security interests and
other interests as against Borrower and any third parry.
9. This instrument embodies the whole agreement of the parties hereto, and it is
acknowledged that there are no customs, representations, promises, terms, conditions or
obligations referring to the subject matter, and no inducements or representations leading to the
execution hereof other than mentioned herein; and there may be no modification of this
Agreement except in writing executed by the parties hereto. No failure by Lender to exercise
any right hereunder or under any agreement or note between Lender and Borrower shall be
construed as a waiver of the right to exercise the same or any other right at any time and from
time to time thereafter.
10. Lender may at any time, without notice to Subordinated Lender, release any party
primarily or secondarily liable for any indebtedness of Borrower to Lender, and release part or
all of any Collateral held by it as security for said indebtedness without in any manner affecting
the obligations of Subordinated Lender under this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this document on the date first
above written.
2
SUBORDINATED LENDER:
Title:
STATE OF
ss.
COUNTY OF
Subscribed, sworn to and acknowledged before me by
, by and through , its , on
this the day of , 2015.
My commission expires:
Notary ID #
NOTARY PUBLIC
3
- -- - T -- -
LENDER:
McCRACKEN COUNTY, KENTUCKY
By:
Title:
COMMONWEALTH OF KENTUCKY )
. ss.
COUNTY OF McCRACKEN )
Subscribed, sworn to and acknowledged before me by McCRACKEN COUNTY,
KENTUCKY, by and through , its ,
on this the day of , 2015.
My commission expires:
Notary ID #
4
NOTARY PUBLIC
KENTUCKY STATE AT LARGE
CITY OF PADUCAH, KENTUCKY
Title:
COMMONWEALTH OF KENTUCKY )
ss.
COUNTY OF McCRACKEN )
Subscribed, sworn to and acknowledged before me by CITY OF PADUCAH,
KENTUCKY, by and through , its ,
on this the day of , 2015.
My commission expires:
Notary ID #
I hereby certify that the foregoing
instrument has been prepared by:
Law Offices
McMurry & Livingston, PLLC
201 Broadway, P. O. Box 1700
Paducah, KY 42002-1700
(270) 443-6511
DAVID C. BOOTH
5
NOTARY PUBLIC
KENTUCKY STATE AT LARGE