TERM LOAN AGREEMENT
This Term Loan Agreement is made and entered into as of February 15,
2001, by and between ENVIRONMENTAL REMEDIATION HOLDING CORP., a Colorado
corporation (hereinafter called "Borrower") and CHROME ENERGY, L.L.C., a
Delaware limited liability company (hereinafter called "Lender").
W I T N E S S E T H:
--------------------
In consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF BORROWER
1.1 REPRESENTATIONS AND WARRANTIES CONCERNING BORROWER. Borrower
represents and warrants as follows:
A. EXISTENCE AND POWER. That Borrower is a corporation duly
incorporated and existing in good standing under the laws of
the State of Colorado and is duly licensed or qualified in all
jurisdictions wherein the character of the property owned or
leased by it or the nature of the business transacted by it
makes licensing or qualification necessary and where failure
to become so licensed or qualified would have a material
adverse effect on the financial condition of Borrower;
Borrower has all power to make and perform this agreement and
the notes executed pursuant hereto, and to borrow hereunder as
herein provided.
B. AUTHORITY. The making and performance by Borrower of this
Agreement and the Note executed or to be executed pursuant
hereto and all renewals and extensions thereof, and the
borrowing hereunder, and the making and performance of the
several agreements and instruments contemplated hereby have
been duly authorized by all necessary action and will not
violate any provision of law or of Borrower's Articles of
Incorporation or Bylaws or result in the breach of, or
constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of
Borrower (other than as contemplated under this Agreement)
pursuant to any indenture or loan, credit or other agreement
or instrument to which Borrower is a party or by which
Borrower or its property may be bound or affected. This
Agreement, the Note, and the several agreements and
instruments contemplated thereby, when duly executed and
delivered in accordance with this agreement will constitute
legal, valid and binding obligations of Borrower in accordance
with their respective terms.
C. USE OF PROCEEDS. The proceeds of the borrowing hereunder will
be used by Borrower solely for working capital for general
operating purposes and capital expenditures.
D. AVAILABILITY OF RECORDS. Borrower will permit Lender and/or
its representatives to
visit and inspect any of the properties of Borrower, to
examine the books and financial records of Borrower, to verify
the due investment and application of the proceeds in
accordance herewith and to discuss the affairs, finances and
accounts of Borrower with Borrower's officers and independent
certified public accountants, all at such reasonable times and
during reasonable business hours, and as often as Lender may
desire.
ARTICLE II
TERMS AND CONDITIONS OF LOANS
2.1 LOAN AGREEMENT. Subject to all the terms and conditions hereof,
Lender agree to loan to the Borrower, and Borrower shall have the right to
borrow but not repay and reborrow, at any time and from time to time prior to
the Maturity Date (as herein defined), the aggregate principal sum of
$5,000,000.00, at any one time outstanding (the "Commitment"). All such loans to
be evidenced by Borrower's promissory note to Lender (herein the "Note") in the
form of EXHIBIT "A", attached hereto, bearing interest prior to maturity or
default at a per annum rate equal to the lesser of (i) the maximum rate of
interest allowed by applicable law and (ii) or ten percent (10%), subject to the
terms set forth in the Note, and being payable to the order of the Lender on
February 15, 2003 unless otherwise extended in writing by the Lender at the
request of Borrower (the "Maturity Date"). Interest on the Note shall be payable
quarterly as it accrues, unless converted into common stock of the Borrower as
provided in the Note. The unpaid principal of the Note and accrued but unpaid
interest thereon shall be payable at maturity of the Note, regardless of how the
same shall occur, unless converted into common stock of the Borrower as provided
in the Note. All Advances and payments of principal with respect to such loans
shall be evidenced by notations made by the applicable Lender on a schedule for
the Note, and replacements therefor, such schedule to set forth the date and
amount of each such Advance or payment of principal on said Note. The aggregate
unpaid amount of loans set forth on the schedule and replacements therefor,
shall be rebuttably presumptive evidence of the principal amount owing and
unpaid on the Note. All renewals and rearrangements of the Note, if any, shall
be deemed to be made pursuant to this Agreement, and accordingly, shall be
subject to the terms and provisions hereof, and the Borrower shall be deemed to
have ratified as of the date of such renewal or rearrangement all of the
representations, covenants and agreements herein set forth.
2.2 ADVANCES. Advances under the Note shall be made by written request
signed by an authorized officer of Borrower. Each borrowing shall be made on a
business day. Lender shall be entitled to rely upon and act upon requests made
or purportedly made by any of the officers or employees of Borrower, and
Borrower shall be unconditionally and absolutely estopped from denying (i) the
authenticity and validity of any such transaction so acted upon by Lender once
Lender has advanced funds under the Note and has deposited or transferred such
funds as requested in any such request, and (ii) Borrower's liability and
responsibility therefor.
2.3 PREPAYMENTS. The Borrower may not make prepayments on the Note in
whole at any time without prior consent of the Lender.
2.4 FURTHER ADVANCES. Lender may but shall not be required to make or
continue any loan hereunder or renew the Note if an event has occurred which
constitutes an Event of Default or any
2
event which with notice or lapse of time or both would constitute an Event of
Default or if any breach of a covenant under this Agreement has occurred and is
continuing.
ARTICLE III
CONDITIONS OF LENDING
3.1 CONDITIONS. The obligation of Lender to make the initial loans and
other Advances hereunder to the Borrower is subject to the satisfaction of the
following conditions:
A. CONDITIONS TO ALL ADVANCES. Borrower shall have furnished to
Lender the following documentation, in form and substance
satisfactory to Lender:
1. Appropriate certified resolutions authorizing all the
transactions contemplated hereby;
2. A certificate, dated of even date herewith, of the president
and secretary of Borrower to the effect that:
(i) Borrower has performed or complied with all of
Borrower's covenants and agreements required hereby
and by the Note;
(ii) The borrowings hereunder will not contravene any
provision of law or regulation applicable to
Borrower;
(iii) No Event of Default and no condition or event which,
with the giving of notice or lapse of time or both,
would become an Event of Default, shall have occurred
or if occurred will be continuing; and
(iv) The representations and warranties contained in this
Agreement are true and correct in all material
respects on the date hereof;
ARTICLE IV
DEFAULTS
4.1 EVENTS OF DEFAULT. Borrower shall be in default hereunder if any
one of the following "Events of Default" shall occur and be continuing.
A. PAYMENT OF OBLIGATIONS. Any installment of principal or
interest on the Note issued pursuant to this Agreement shall
not be paid when due and payable, or in the failure or
performance of any obligations owed to Lender by Borrower, or
any other event of default provided for under the terms of the
Note.
B. INCORRECT STATEMENTS. Any representation, statement, covenant,
warranty or certificate made by Borrower in this Agreement or
in any agreement or instrument
3
executed pursuant hereto, or furnished to Lender in connection
with any loan or loans hereunder, shall prove to have been
incorrect in any material respect at the time of making or
issuance thereof.
C. BANKRUPTCY AND/OR INSOLVENCY. Borrower shall:
(1) Apply for, consent to or acquiesce in the appointment
of a receiver, trustee or liquidator of itself, or of
its property,
(2) Admit in writing its inability to pay debts as they
mature,
(3) Make a general assignment for the benefit of
creditors,
(4) Be adjudicated a bankrupt or insolvent by any court
having jurisdiction in the premises,
(5) File a voluntary petition in bankruptcy or a petition
or answer seeking reorganization, composition,
readjustment, an arrangement or similar relief with
creditors under any present or future statute, law,
or regulation or otherwise or to take advantage of
any insolvency law or file an answer admitting the
material allegations of a petition filed against it
in bankruptcy, reorganization or insolvency
proceeding, or corporate action shall be taken by it
for the purpose of effecting any of the foregoing,
and/or
(6) Have a receiver or trustee or assignee in bankruptcy
or insolvency appointed for it or its property
without its application or consent.
4.2 REMEDIES. Upon the occurrence and during the continuance of an
Event of Default and in any such event, in addition to the remedies provided for
in the Note (i) the obligation of Lender to extend credit to Borrower pursuant
hereto shall immediately terminate and (ii) the holder of the Note issued
pursuant hereto may, at its option, without notice to Borrower, declare the
principal of and interest accrued thereon and on any other obligations of
Borrower to Lender to be forthwith due and payable, whereupon the same shall
become due and payable without any presentment, demand, protest, notice of
protest, or notice of any kind (except notice required pursuant to this
Agreement or otherwise by law) which are all hereby waived; provided, however,
that Lender shall give telegraphic or written notice to Borrower after taking
any of such action.
ARTICLE V
NOTICES
Any notice required or permitted to be given hereunder shall
be in writing and shall be deemed to be delivered if delivered personally or by
facsimile confirmed by mail or by depositing same with the United States Postal
Service, postage prepaid, certified mail, return receipt requested, to the
respective parties at the addresses set out below which may be changed by the
giving of written notice to that effect pursuant hereto:
4
If to Borrower:
If to Lender:
ARTICLE VI
MISCELLANEOUS
6.1 INTEREST. It is the intention of the parties hereto to comply with
all applicable usury laws; accordingly, it is agreed that notwithstanding any
provision to the contrary in this agreement or in the Note, or in any of the
documents executed pursuant hereto or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the maximum permitted by such laws. If any excess of interest in such
respect is provided for, or shall be adjudicated to be so provided for, in this
Agreement or the Note or in any of the documents executed pursuant hereto or
otherwise relating hereto, then in such event the provisions of this paragraph
shall govern and control and (a) neither the Borrower, nor Borrower's successors
or assigns, or any other party liable for the payment of any sums to become due
hereunder or under the Note, shall be obligated to pay the amount of such
interest to the extent that it is in excess of the maximum amount permitted by
law and (b) any such excess which may have been collected shall be first applied
as a credit against the then unpaid principal amount on the Note and the excess,
if any, refunded to Borrower and the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed under
applicable usury laws as they now exist or may be hereafter amended. It is
expressly understood and agreed that any guarantor hereof shall not be required
to pay interest in excess of the maximum rate allowed by law. It is further
agreed that without limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received under this agreement or the Note or
under any documents securing the payment hereof, which are made for the purpose
of determining whether such rate exceeds the maximum lawful contract rate, shall
be made, to the extent permitted by applicable usury laws, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the loan evidenced hereby, all interest at any time contracted
for, charged or received from Borrower or otherwise by the holder or holders of
the Note in connection with such loan.
6.2 WAIVER. No failure on the part of Lender to exercise and no delay
in exercising any right hereunder will operate as a waiver thereof; or, will any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law or in
any other agreements executed pursuant hereto.
6.3 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING TO THE
LAWS OF THE STATE OF COLORADO WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAWS.
6.4 SURVIVAL OF REPRESENTATIONS. All representations and warranties
made herein shall survive the making of the loan hereunder and delivery of all
notes executed pursuant hereto.
5
6.5 SUCCESSORS AND ASSIGNS. This agreement shall be binding upon
Borrower and Lender and shall inure to the benefit of Borrower and Lender and
the successors and assigns of Lender. This Agreement may not be assigned by
Borrower.
6.6 SEVERABILITY. In the event any one or more of the provisions
contained in this agreement should be held to be invalid, illegal or
unenforceable in any respect, the validity, enforceability and legality of the
remaining provisions contained herein shall not in any way be affected thereby
and shall be enforceable in accordance with their terms.
6.7 CAPTIONS. The captions, headings, and arrangements used in this
agreement are for convenience only and do not in any manner affect, limit,
amplify, or modify the terms and provisions hereof.
6.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be deemed an original. Facsimile signatures
shall serve in lieu of originals.
IN WITNESS WHEREOF, the parties have duly executed this
agreement on the day and year hereinabove first set forth.
ENVIRONMENTAL REMEDIATION HOLDING CORP.
By: /s/ Chude Mba
------------------------------------
Its: President
------------------------------------
CHROME ENERGY, L.L.C.
By: /s/ Xxx Xxxxx Xxxxx
------------------------------------
Its: Manager
------------------------------------
6
