Exhibit 10.22
LOAN AGREEMENT
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THIS AGREEMENT, effective this day of January, 2000 is made by and between
NOPEC CORPORATION, a Florida corporation and referred to herein as "NOPEC", and
SOUTHERN STATES POWER COMPANY, INC., a Louisiana corporation referred to as
"SSPC", and is intended to set forth the terms and conditions of a loan to be
extended to NOPEC and to express SSPC's interest in causing a merger of the two
companies.
RECITALS
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A. NOPEC, a privately held company, currently leases property in Lakeland,
Florida on which has been constructed a facility for processing, among other
things, soybean and other vegetable oil feed stocks for various uses. One of
it's divisions produces a product more commonly referred to as NOPEC Biodiesel,
which results in a cleaner, more cost effective alternative fuel for diesel
engines.
B. SSPC is a publicly held company with headquarters in Shreveport,
Louisiana. Among other ventures, SSPC has a genuine interest in developing and
marketing alternative fuels for public consumption. In this regard, the company
has been negotiating with NOPEC for the possible acquisition of the plant
facility in Lakeland, Florida, whether it be by purchase of the assets of NOPEC,
or by causing a merger between the two companies.
C. Pending further negotiations, NOPEC has indicated that it is in need of
and seeking funds for capital improvements and expansion, and for operating
expenses. SSPC is desirous of assisting NOPEC in this regard, providing the
monies which are lent can be used and credited toward the ultimate purchase of
the company's assets or to be partial consideration to cause a merger.
D. NOPEC is currently operated by the creation and appointment of a three
person Custodial Board who has the responsibility of reporting corporate
activities to the Court having oversight jurisdiction over NOPEC. The Custodial
Board is also responsible for calling meetings of and reporting to the
Shareholder's Advisory Committee, which is a select group of 25-30 shareholders
taken from the list of total shareholders in the approximate amount of 2800
persons or entities.
E. The purpose of this Agreement is to set forth the terms and conditions
upon which SSPC is willing to extend a loan to NOPEC, and to describe the
undertaking by NOPEC in an effort to cause a merger between the two companies.
NOW THEREFORE, in consideration of the premises contained herein, the
mutual promises and covenants of the parties, and other valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
I. LOAN AGREEMENT
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1.01. Loan Terms and Conditions
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SSPC agrees to extend a secured loan to NOPEC upon the following terms and
conditions:
a. PRINCIPAL AMOUNT OF LOAN: $1.5 million
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b. FUNDING SCHEDULE:
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1) Subject to the fulfillment of the conditions described in
paragraph 1.04a below, Two hundred fifty thousand dollars
($250,000.00) to be paid by company check from SSPC on or before
January 20, 2000.
2) $250,000 to be advanced on or before March 2, 1000 [subject to
the conditions contained in paragraph 1.04b below].
3) $135,000 on April 1, 2000
$105,000 on May 1, 2000
$85,000 on June 1, 2000
$75,000 on July 1, 2000
$50,000 on August 1, 2000
$50,000 on September 1, 2000
4) Balance of $500,000 to be funded on or before September 30, 2000.
c. Installments 3 through 5 are conditioned upon the fulfillment and
satisfaction of the conditions described below for installments 1 and
2.
1.02 PROMISSORY NOTE
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The loan to NOPEC shall be evidenced by a Promissory Note in the
principal amount of $1.5 million. The Note shall provide for monthly
payments of interest only on the funded, outstanding balance at 10%
simple interest per annum, commencing with the first payment due on March
1, 2000. The entire principal and interest then outstanding shall all be
due and payable on September 30, 2001, or one year from the date of the
last installment which is funded, whichever occurs later.
Payment of any interest due is a condition precedent to the payment of
any loan installments set forth in paragraph 1.01 (b) set forth above.
1.03 SECURITY.
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All advances to NOPEC shall be secured by a UCC-1 describing the personal
property of NOPEC, to include all future receivables. This secured
interest shall be subordinate to existing secured obligations in the
approximate amount of $375,000.00 NOPEC represents that there are no
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other secured obligations other than those disclosed to SSPC. All
security shall be released upon payment in full of the amounts funded
hereunder.
1.04 Conditions Precedent to Funding
a. The initial installment of $250,000 due on January 20, 2000 shall not
be advanced to NOPEC until such time as the Custodial Board has
approved the terms and conditions and executed this Loan Agreement,
and if Court approval is necessary, promises to undertake whatever
measures are necessary and appropriate to obtain the approval of the
Court which has been charged with the oversight of this corporation.
b. The second advance of $250,000 which is due on March 1, 2000 shall not
be paid until the company has 1) obtained a release of control of the
Oversight Court over the affairs of NOPEC, or, if necessary, obtained
Court confirmation of this Agreement between NOPEC and SSPC, and 2)
has obtained approval of the shareholder's Advisory Committee
approving and confirming an expression of intent and interest in
entering into and causing a merger between NOPEC and SSPC.
c. Attornment Agreement. NOPEC shall obtain the approval of the lessor of
the real property which is leased to NOPEC to attorn to, recognize and
acknowledge SSPC's interest as a secured lender to NOPEC.
Additionally, lessor shall agree in writing to give written notice to
SSPC of any default in the terms of the lease agreement with NOPEC,
and give SSPC the right to cure any monetary default within 15 days
after receipt of notice before lessor shall take any remedial measures
against NOPEC.
1.05 EXCLUSIVITY
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NOPEC agrees that during the term of this Agreement and any outstanding
obligations owing to SSPC, SSPC shall have the exclusive right to
represent NOPEC for any of its lending and funding needs. In this regard,
NOPEC shall not approach nor negotiate with any other lender until it
first submits its funding needs to SSPC, and then in the event that SSPC
elects to forego any opportunity to further fund NOPEC, NOPEC is free to
secure additional financing from a third party.
1.06 PROHIBITIED NEGOTIATIONS
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During the term of this Agreement, and until such time as all outstanding
obligations are repaid to SSPC, NOPEC shall not contact nor negotiate
with any other party for the sale, lease, transfer or conveyance of any
of its assets or the stock of its shareholders. In the event of default
of any payment by SSPC, and after time to cure has passed (see 2.03
below), this prohibition is rescinded.
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1.07 ADDITIONAL CONSIDERATION
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As additional consideration for the extension of the loan to NOPEC, and
subject to the funding of the last and final installment hereunder, NOPEC
shall cause to be transferred to SSPC shares of stock in NOPEC equal to
10% of the issued and outstanding shares of the company. If SSPC fails to
advance any installment when due, subject to any conditions stated
herein, the 10% equity interest shall be revoked.
II. INTENT TO MERE THE TWO COMPANIES
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2.01 THE UNDERTAKING
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In consideration of the loan advanced to NOPEC, the Custodial Board and
any other committee or board governing the affairs of the corporation
shall undertake to solicit the approval of all of the shareholders of the
corporation to agree to the following terms and conditions of a merger.
2.02 CONSIDERATION FOR THE PROPOSED MERGER (OR PURCHASE OF ASSETS)
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a. [/S/ Consolidation] [Purchase Price.] $11.5 million
b. Terms of [/S/ Merger] [Purchase.]
1) Down payment of $1.5 million cash. All monies advanced by SSPC as
a loan to NOPEC, including interest due, and remaining unpaid at
the time of closing and transfer of the shares, shall be credited
to the down payment, and NOPEC shall be released from any further
obligation for repayment of this debt.
2) Subject to any and all approvals and registration that may be
required to comply with the Securities and Exchange Commission,
and the securities laws of the Department of Corporations for the
State of Florida, the balance of $10.0 million is to be paid and
satisfied by the transfer and exchange of 1,250,000 shares of
lettered stock in SSPC, with an imputed market value of $8.00 per
share. The strike price of the shares to be transferred shall be
determined as the average price of shares for the 5 days
immediately preceding the close of escrow for the transfer and
exchange, and the number of shares to be transferred will be
increased or decreased according to the strike price as it
compares to the $8.00 per share imputed value for these purposes.
3) Assumption of Liabilities. SSPC agrees to assume existing and
stated liabilities in the approximate amount of $375,000 in the
event of any merger. Additional liabilities which will be assumed
are those which are incurred in the ordinary and customary course
of business. Before SSPC agrees to assume additional,
extraordinary liabilities (in excess of $50,000) which are
outside the ordinary course of business, approval in writing must
first be had and obtained.
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2.03 DEFAULT
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In the event that SSPC fails to advance any loan installment when due, by
its own action or inaction, the agreement to merge NOPEC into SSPC as
described above shall be terminated and of no further effect, providing
however, that NOPEC shall serve written notice on SSPC by certified mail
describing any alleged default in the terms of this Agreement or any
payment to be made hereunder, and shall give SSPC 15 days after receipt
of notice of such default to cure same before any remedial action or
termination is effective.
2.04 NOTICE REQUIREMENT
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When SSPC determines that it is in a position to commence to cause the
merger of the two companies, or alternatively, purchase and acquire the
assets of NOPEC, subject to any shareholder approvals, it shall give to
NOPEC sixty day (60) written notice in advance of the time proposed for
closing of the merger. This period is deemed necessary to allow
sufficient time for the Board of NOPEC to notify and solicit the approval
of the shareholders for the merger or sale of all or substantially all of
the corporation's assets.
As a condition precedent to any Notice of Intent to Merge, the Notice
must be dispatched and mailed not later than September 30, 2001 or SSPC
shall not be able to call for the Merger of the two companies.
As an additional condition precedent to the closing of any merger of the
two companies, SSPC must be listed on the NASDAQ Bulletin Board at the
time of Notice to the Shareholders.
III. LICENSE OF TECHNOLOGY
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3.01 EXCLUSIVE LICENSE
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Subject to and in consideration of the payment of the first loan
installment payment from SSPC, NOPEC hereby grants to SSPC the exclusive,
worldwide license to exploit and market technology owned by and
proprietary to NOPEC regarding the capturing, rendering and processing of
grease products discarded as waste. These products are processed by and
through module containers and vats referred to herein as "Grease Recovery
Units [GRU's]".
3.02 FUNDING
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SSPC shall be responsible for funding each of the GRU's as it deems
appropriate in its sole and absolute discretion. Establishment of each
GRU is intended to generate revenues from a) tipping fees, and b) sale of
hard residues as feed stock for the biodiesel business.
A separate exclusive license agreement shall be drafted and executed by
the parties which set forth in greater detail the parameters of the
license, and the sharing of revenues and payment of any royalties.
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IV. MISCELLANEOUS PROVISIONS
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4.01 REPRESENTATIONS AND WARRANTIES
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a. Each of the parties hereto represents that it has the authority to
enter into this Loan Agreement coupled with an interest and agreement
to undertake steps to effect a merger of the two companies. Further,
the parties each represent that if additional approvals are necessary
for any agreement herein, it has obtained said approval.
b. NOPEC represents that it has the proprietary rights to the technology
described in paragraph 3.01 above, and that all inventor rights have
been properly assigned to the corporation.
4.02 APPOINTMENT TO BOARD.
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In the event that a merger is consummated between the parties hereto,
NOPEC shall be entitled to the appointment of one Director or Custodial
Board member to the Board of Directors of SSPC. Such appointment shall be
subject to the approval of SSPC.
4.03 RESTRICTION ON STOCK ACTIVITY.
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SSPC agrees that any SSPC stock trading by an SSPC employee, agent,
officer, or director will be excluded from a determination of SSPC stock
trading range within 60 days from the date of the effective date of the
merger.
4.04 NOTICES.
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All notices required to be in writing to be effective shall be sent
certified mail to the following addressees:
To NOPEC: ▇▇▇ ▇▇▇▇
President
NOPEC CORPORATION
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇. ▇-▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To SSPC: ▇▇. ▇▇▇▇▇ ▇▇▇▇
Corporate Counsel
Southern States Power Company, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4.05 LEGAL.
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This Agreement shall be governed and construed in accordance with the
laws of the State of Florida, which shall be the choice of jurisdiction
and venue. If either party shall bring an action to enforce any provision
of this Agreement, the prevailing party shall be entitled to
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reimbursement for all legal fees and costs incurred in defending or
prosecuting its position.
4.06 COUNTERPARTS.
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This Agreement may be executed in counterparts, which together shall make
the whole and entire Agreement. Faxed copies shall be enforceable as the
originals.
4.07 MODIFICATIONS AND AMENDMENTS.
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This Agreement is the entire agreement and understanding between the
parties with respect to the matters described herein, and supercedes all
prior agreements and understandings. It can only be modified and amended
by an agreement in writing signed by the parties to be charged.
4.08 CONSTRUCTION.
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This Agreement is considered to be drafted by both parties hereto, and no
provision shall be construed against either party by virtue of its role
in drafting any provision.
4.09 INVALIDITY.
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If any provision of this Agreement is deemed to be unenforceable for any
reason, it shall not affect the validity or enforceability of the
remaining provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
shown below:
NOPEC CORPORATION: By ___________________________________
------------------ ▇▇▇ ▇▇▇▇, President
Date:_________________________________
NOPEC CUSTODIAL BOARD: By____________________________________
----------------------
By____________________________________
By____________________________________
SOUTHERN STATES POWER COMPANY, INC.: By____________________________________
------------------------------------ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, EVP
Date:_________________________________
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ADDENDUM TO
LOAN AGREEMENT
DATED ___________________
This Addendum is intended to supplement and modify that Loan Agreement
between NOPEC Corporation (NOPEC) and Southern States Power Company (SSPC) dated
the same date hereof Any provision of the Loan Agreement not specifically
addressed herein is deemed ratified, approved and confirmed.
1. TEN PERCENT (10%) EQUITY INTEREST. In addition to interest on its loan,
SSPC shall be paid an amount of money equal to ten percent (10%) of the positive
cash flow (defined as pretax profit before depreciation) of NOPEC. In the event
SSPC elects not to acquire NOPEC by merger as provided for in the above
referenced Loan Agreement, then SSPC shall be entitled, upon request, to the
issuance of NOPEC stock equal to 10% of the outstanding stock of NOPEC. Upon
said stock issuance, SSPC's right to 10% of NOPEC's cash flow shall terminate.
2. SECURITY. It is intended that SSPC shall have a security interest in
NOPEC's personal property; including equipment and machinery in the
esterification plan, lab equipment, and glycerin plant. In addition to the
$375,000.00 in existing obligations, it is understood that U.S. Botanicals has a
superior interest in the glycerin plant and SSPC's interest in the glycerin
plant is additionally subject and inferior to that of U.S. Botanicals.
3. BUDGETARY APPROVAL. SSPC shall have approval over monthly budgetary
expenditures which are projected. Such expenditures will be submitted via
facsimile to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any faxed expenditures shall
be responded to within twenty-four (24) hours.
4. LOAN DRAWS. Article 1.01(b)(3) and (4) shall be deleted and replaced
with the following:
3) 185,000 on 4/1/2000
155,000 on 5/1/2000
85,000 on 6/1/2000
75,000 on 7/1/2000
50,000 on 8/l /2000
50,000 on 8/1/2000
Any available but undisbursed loan draw or any portion
thereof shall remain available until September 30,
2000.
4) Balance of $400,000 to be funded on September 30,
2000, or earlier as requested by NOPEC and approved by
SSPC.
ADDENDUM 1-1
5. EXCLUSIVITY. Article 1.05 of the Loan Agreement is amended by the
addition of the following sentence:
In the event SSPC fails to make a loan disbursement as
scheduled in Article 1.01 hereof, NOPEC is free to secure
additional financing from a third party.
6. GREASE RECOVERY UNIT. Article 3.02 of the Loan Agreement is amended by
substituting the following sentence for the first sentence thereof
SSPC shall be responsible for funding not less than two (2)
economically feasible GRU's per year.
7. MERGER. It is intended that NOPEC shall be merged into SSPC and that
any reference in the Loan Agreement to a purchase is therefore of no
consequence.
8. EXPENSE OF MERGER. The contemplated merger shall be at the expense and
under the control of SSPC.
IN WITNESS WHEREOF, the parties have executed this Addendum to Loan
Agreement Dated __________ on the dates shown below:
NOPEC CORPORATION: By ___________________________________
------------------ ▇▇▇ ▇▇▇▇, President
Date:_________________________________
NOPEC CUSTODIAL BOARD: By____________________________________
----------------------
By____________________________________
By____________________________________
SOUTHERN STATES POWER COMPANY, INC.: By____________________________________
------------------------------------ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, EVP
Date:_________________________________
ADDENDUM 1-2
ADDENDUM TO
LOAN AGREEMENT
DATED /S/ JAN. 25, 2000
-----------------
This Addendum is intended to supplement and modify that Loan Agreement
between NOPEC Corporation (NOPEC) and Southern States Power Company (SSPC) dated
the same date hereof. Any provision of the Loan Agreement not specifically
addressed- herein is deemed ratified, approved and confirmed.
1. TEN PERCENT (10%) EQUITY INTEREST. In addition to interest on its loan,
SSPC shall be paid `an amount of money equal to ten percent (10%) of the
positive cash flow (defined as pretax profit before depreciation) of NOPEC. In
the event SSPC elects not to acquire NOPEC by merger as provided for in the
above referenced Loan Agreement, then SSPC shall be entitled, upon request, to
the issuance of NOPEC stock equal to 10% of the outstanding stock of NOPEC. Upon
said stock issuance, SSPC's right to 10% of NOPEC's cash flow shall terminate.
2. SECURITY. It is intended that SSPC shall leave a security interest in
NOPEC's personal property; including equipment and machinery in the
esterification plan, lab equipment, and glycerin plant: in addition to the
$375,000.00 in existing obligations; it is understood that U.S. Botanicals has a
superior interest in the glycerin plant and SSPC's interest in the glycerin
plant is additionally subject and inferior to that of U.S. Botanicals.
3. BUDGETARY APPROVAL. SSPC shall have approval over monthly budgetary
expenditures which are projected. Such expenditures will be submitted via
facsimile to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Any faxed expenditures shall
be responded to within twenty-four (24) hours.
4) LOAN DRAWS. Article 1.01(b)(3) and. (4) shall be deleted and replaced
with the following:
3) 185,000 on 4/1/2000
155,000 on 5/1/2000
85,000 on 6/1/2000
75,000 on 7/1/2000
50,000 on 8/l /2000
50,000 on 8/1/2000
Any available but undisbursed loan draw or any portion
thereof shall remain available until September 30,
2000.
4) Balance of $400,000 to be funded on September 30,
2000, or earlier as requested by NOPEC and approved by
SSPC.
ADDENDUM 2-1
5. EXCLUSIVITY. Article 1.05 of the Loan Agreement is amended by the
addition of the following sentence:
[BEGINNING OF MISSING TEXT?:
In the event SSPC fails to make a loan disbursement as
scheduled in Article 1.01 hereof, NOPEC is free to secure
additional financing from a third party.
6. Grease Recovery Unit. Article 3.02 of the Loan Agreement is amended by
substituting the following sentence for the first sentence thereof
SSPC shall be responsible for funding not less than two (2)
economically feasible GRU's per year.
7. Merger. It is intended that NOPEC shall be merged into SSPC and that
any reference in the Loan Agreement to a purchase is therefore of no
consequence.
8. Expense of Merger. The contemplated merger shall be at the expense and
under the control of SSPC.
END OF MISSING TEXT?]
IN WITNESS WHEREOF, the parties have executed shown below:
NOPEC CORPORATION: By /S/ ▇▇▇ ▇▇▇▇
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▇▇▇ ▇▇▇▇, President
Date: /S/ 1/24/00
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NOPEC CUSTODIAL BOARD: By /S/ [ILLEGIBLE SIGNATURE]
-------------------------------
By /S/ [ILLEGIBLE SIGNATURE]
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By /S/ [▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇]
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SOUTHERN STATES POWER COMPANY, INC.: By /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, EVP
Date: /S/ 1/24/00
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ADDENDUM 2-2