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EXHIBIT 10.27
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, effective as of May 1, 1997, made by JLM
Industries, Inc., a Delaware corporation ("Pledgor") to Ultramar Diamond
Shamrock Corporation, a Delaware corporation ("UDSC").
W I T N E S S E T H
WHEREAS, UDSC and Olefins Terminal Corporation a Delaware corporation
("Borrower") and Bank of America Illinois are parties to a Credit Agreement,
effective as of May 1, 1997 (as amended, modified or supplemented from time to
time, the "Credit Agreement"), pursuant to which UDSC has unconditionally
guaranteed the obligations of Borrower (the "Guaranty"); and
WHEREAS, Pledgor is the legal and beneficial owner of certain of the issued and
outstanding shares of capital stock of Borrower (such shares being described in
Schedule 1 annexed hereto and, together with any stock options or rights
received pursuant to Section 3 of this Agreement, being hereinafter sometimes
referred to as the "Pledged Stock"); and
WHEREAS, it is a condition precedent to the commitment of UDSC to execute the
Guaranty of the Borrower's obligations under the Credit Agreement that Pledgor
and D-S Splitter, Inc., the sole Stockholders of Borrower, shall make additional
cash investments in Borrower, as provided in that certain Management Operating
and Stockholders Agreement of even date (the "Support Obligation") and that
Pledgor shall have executed and delivered this Agreement to UDSC to secure its
Support Obligation;
NOW, THEREFORE, in consideration of the premises and in order to induce UDSC to
deliver its Guaranty of the Credit Agreement and for other good and valuable
consideration, receipt of which is hereby acknowledged, Pledgor hereby agrees
with UDSC as follows:
1. Pledge. Pledgor hereby pledges, assigns, hypothecates, transfers, and
delivers all the Pledged Stock owned by it and hereby grants to UDSC a
first lien on, and security interest in, the Pledged Stock owned by it and
in all proceeds thereof, together with appropriate undated stock Powers
duly executed in blank with respect to the Pledged Stock as collateral
security for (i) the prompt and complete payment when due of the Support
Obligation and (ii) the due and punctual payment and performance by
Borrower and Pledgor of all their respective obligations and liabilities
under, arising out of and in connection with the Credit Agreement, the
Support Obligation and this Agreement (all the foregoing being hereinafter
called the "Liabilities").
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2. Stock Dividends. Interest Distributions. etc. If, while this Agreement is
in effect, Pledgor shall become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection
with any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for any shares of any Pledged Stock owned
by it, or otherwise, Pledgor agrees to accept the same as UDSC's agent and
to hold the same in trust or behalf of and for the ratable benefit of UDSC
and to deliver the same forthwith to render in the exact form received,
with the endorsement of Pledgor where necessary and/or appropriate undated
stock powers duly executed in blank, to be held by UDSC, subject to the
terms hereof, as additional collateral security for the Liabilities. Any
sums paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of the issuer thereof shall be paid over to UDSC to be held by
it in trust as additional collateral security for the Liabilities; and in
case any distribution of capital shall be made on or in respect of the
Pledged Stock or any property shall be distributed upon or with respect to
the Pledged Stock pursuant to the recapitalization or reclassification of
the capital of the issuer thereof or pursuant to the reorganization
thereof, the property so distributed shall be delivered to the UDSC to be
held by it as additional collateral security for the Liabilities. All sums
of money and property so paid or distributed in respect of any Pledged
Stock which are received by the Pledgor thereof shall, until paid or
delivered to the UDSC, be held by Pledgor in trust as additional collateral
security for the Liabilities.
3. Collateral. All property at any time pledged with UDSC hereunder (whether
described herein or not) and all income therefrom and proceeds thereof, are
herein collectively sometimes called the "Collateral".
4. Cash Dividends; Voting Rights. Unless an Event of Default under the Credit
Agreement, the Support Obligation or the Agreement shall have occurred and
be continuing, Pledgor shall be entitled to receive all cash dividends paid
in respect of the Pledged Stock owned by it, to vote the Pledged Stock
owned by it and to give consents, waivers and ratifications in respect of
the Pledged Stock owned by it; that no vote shall be cast or consent,
waiver or ratification given or action taken which would impair the
Collateral or be inconsistent with or violate any provision of this Pledge
Agreement, the Credit Agreement, or the Guaranty.
5. Subrogation. Notwithstanding any payment or payments made by Pledgor
hereunder, or the receipt of any amounts by UDSC with respect to the
Collateral, or any set off or application of funds of Pledgor by UDSC,
Pledgor shall not be entitled to be subrogated to any of the rights of UDSC
against
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Borrower or any collateral security held by UDSC for the payment of the
Liabilities until all amounts owing to UDSC by Borrower on account of the
Liabilities are paid in full.
6. Rights of UDSC. UDSC shall not be liable for failure to collect or realize
upon the Liabilities or any collateral security or guarantee therefor, or
any part thereof, or for any delay in so doing nor shall it be under any
obligation to take any action whatsoever with regard thereto. Any or all
shares of the Pledged Stock held by UDSC hereunder may, if any event of
default of the Support Obligations has occurred and is continuing, without
notice, be registered in the name of UDSC or its nominee, and UDSC or its
nominee may thereafter without notice, exercise all voting and corporate
rights at any meeting of any corporation issuing any of the shares included
in the Pledged Stock and exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options
pertaining to any shares of the Pledged Stock as if it were the absolute
owner thereof, including without limitation, the right to exchange at its
discretion, any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other readjustment of
any corporation issuing any of such shares or upon the exercise by any such
issuer or UDSC of any right, privilege or option pertaining to any shares
of the Pledged Stock, and in connection therewith, to deposit and deliver
any and all of the Pledged Stock with any committee, depository, transfer
agent, registrar or other designated agency upon such terms and conditions
as it may determine, all without liability except to account for property
actually received by it, but UDSC shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
7. Remedies. In the event that any portion of the Support Obligation has been
declared due and payable and Pledgor fails to make timely payment to
Borrower ("event of default"), UDSC, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon Pledgor or
any other person (all and each of which demands, advertisements and/or
notices are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the collateral, or any part thereof, and/or
may forthwith sell, assign, give option or options to purchase, contract to
sell or otherwise dispose of and deliver said Collateral, or any part
thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of UDSC's offices or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption
of any credit risk, with the right to UDSC upon any such sale or sales,
public or private, to purchase the whole or any part of said Collateral so
sold, free of any right or equity or redemption in Pledgor, which
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right or equity is hereby expressly waived or released. Pledgor agrees that
UDSC need not give more than ten days notice of the time and place of any
public sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable
notification of such matters. No notification need be given to Pledgor if
it has signed after an event of default a statement renouncing or modifying
any right to notification of sale or other intended disposition. In
addition to the rights and remedies granted to it in this Agreement and in
any other instrument or agreement securing, evidencing or relating to any
of the Liabilities, UDSC shall have all the rights and remedies of a
secured party under the Uniform Commercial Code of the State of Texas.
Pledgor further agrees to waive and agrees not to assert any rights or
privileges which he may acquire under Section 9-1 12 of the Uniform
Commercial Code; provided, however, Pledgor shall not be liable for the
deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay all amounts to which UDSC is entitled,
and the fees of any attorneys employed by UDSC to collect such deficiency.
8. Representation, Warranties and Covenants of the Pledgor. Pledgor
represents and warrants that with the exception of the limitations and
restrictions imposed by the Stockholder's Agreement of even date by and
among Pledgor, D-S Splitter, Inc. and Borrower, (a) it is the legal record
and beneficial Owner of, and has good and marketable title to, the Pledged
Stock described in Schedule 1 hereto as being owned by it, subject to no
pledge, lien, mortgage, hypothecation, security interest, charge, option or
other encumbrance whatsoever, except the lien and security interest created
by this Agreement; (b) it has full power, authority and legal right to
pledge the Pledged Stock pledged by it pursuant to this Agreement; (c) all
the shares of the Pledged Stock pledged by it have been duly validly
issued, are fully paid and non-assessable; and (d) the pledge, assignment
and delivery of such Pledged Stock pursuant to this Agreement creates a
valid first lien on and a first perfected security interest in such share
of the Pledged Stock, and the proceeds thereof, subject to no prior pledge,
lien, mortgage, hypothecation, security interest, charge, option or
encumbrance or to any agreement purporting to grant to any third party a
security interest in the property or assets of such Pledgor which would
include the Pledged Stock. Pledgor covenants and agrees that it will defend
UDSC's right, title and security interest in and to the Pledged Stock and
the proceeds thereof against the claims and demands of all persons
whomsoever;
9. No Disposition, etc. Without the prior written consent of UDSC, Pledgor
agrees that it will not sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Collateral, nor will
it create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance
with respect to any of the Collateral, or any interest
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therein, or any proceeds thereof, except for the lien and security interest
provided for by this Agreement. Without the prior written consent of UDSC,
Pledgor agrees that it will not vote to enable the issuer of the Pledged
Stock owned by Pledgor to, and will not otherwise permit such issuer to,
issue any stock or other securities of any nature in addition to or in
exchange or substitution for such Pledged Stock.
10. Private Sale Rights.
(a) Pledgor recognizes that UDSC may be unable to effect a public sale of
any or all the Pledged Stock by reason of certain prohibitions
contained in the Securities Act of 1933 as amended ("Securities Act")
and applicable state securities laws, but may be compelled to resort
to one or more private sales thereof to a restricted group or
purchasers who will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Pledgor
acknowledges and agrees that any such private sale may result in
prices and other terms less favorable to the UDSC than if such sale
were a public sale and, notwithstanding such circumstances, agree that
any such private sale shall be deemed to have been made in a
commercially reasonable manner, UDSC shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time
necessary to permit, the issuer of such securities to register such
securities for public sale under the Securities Act, or under
applicable state securities laws, even if the issuer would agree to do
so.
(b) Pledgor further agrees to do or cause to be done all such other acts
and things as may be reasonably necessary to make such sale or sales
of any portion or all of the Pledged Stock owned by it valid and
binding and in compliance with any and all applicable laws,
regulations, orders, writs, injunctions, decrees or awards of any and
all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at
Pledgor's expense; provided, however, That the foregoing shall not be
construed as requiring that the Pledgor file any registration
statement or provide any other document or information not readily
available to it which may be required to register the Pledged Stock
under the Securities Act or obtain an exemption therefrom. Pledgor
further agrees that a breach of any of the covenants contained in this
paragraph 11 will cause irreparable injury to the UDSC, that UDSC has
no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this
paragraph shall be specifically enforceable against such Pledgor and
such Pledgor hereby waives and agrees not to assert any defenses
against an
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action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit
Agreement.
11. Further Assurances. Pledgor agrees that at any time and from time to time
upon the written request of UDSC, Pledgor will execute and deliver such
further documents and do such further acts and things as UDSC may
reasonably request in order to effect the Purposes of this Agreement.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. No Waiver; Cumulative Remedies. UDSC shall not by any act, delay, omission
or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by UDSC,
and then only to the extent therein set forth. A waiver by UDSC of any
right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which UDSC would otherwise have on any future
occasion. No failure to exercise nor any delay in exercising on the part of
UDSC, any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights or remedies
provided by law.
14. Waivers, Amendments; Applicable Law. None of the terms or provisions of
this Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by UDSC. This Agreement and all
obligations of Pledgor hereunder shall be binding upon the successors and
assigns of Pledgor, and shall, together with the rights and remedies of
UDSC hereunder, inure to the benefit of UDSC and its successors and
assigns. This Agreement shall be governed by, and be construed and
interpreted in accordance with, the laws of the State of Texas.
15. Termination. Upon the full performance of all obligations of the Borrower
under the Credit Agreement, the release of the Guaranty, and the pledge
under this Agreement (a) UDSC shall forthwith sign and deliver to the
Pledgor such of the Pledged Stock and any property received in respect
thereof, as has not
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theretofore been sold or otherwise applied pursuant to the provisions of
this Agreement and (b) this Agreement shall terminate and UDSC shall, at
such time, execute and deliver such documents, and take such other action,
as the Pledgor may reasonably request in order to effectuate the
termination of this Agreement and the security interest created hereby.
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be duly executed and
delivered on the day and year first above written.
JLM INDUSTRIES, INC.
By:/s/ Xxxx X. Xxxxx
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Title: Vice President
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SCHEDULE 1
DESCRIPTION OF PLEDGED STOCK
___________________________ shares of the common stock of _______________
________________________________________, a ___________________ corporation,
evidenced by Certificate Nos._________________ and _____________.
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