1
EXHIBIT 10.11
PLEDGE AGREEMENT dated as of June 14, 1995 ("Pledge Agreement"), made
by JLM INDUSTRIES, INC., (the "Pledgor") to each of the Lenders (as defined
below) party to the Credit Agreement (as defined below) and THE CIT
GROUP/EQUIPMENT FINANCING, INC., as collateral agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Collateral
Agent").
PRELIMINARY STATEMENTS. 1. Reference is made to the Credit Agreement,
dated as of June 14, 1995 among JLM CHEMICALS, INC. ("Borrower"), THE CIT
GROUP/EQUIPMENT FINANCING, INC. ("CIT-EF"), THE CIT GROUP/BUSINESS CREDIT, INC.
("CIT-BC"), each other lender which may hereafter execute and deliver an
Assignment and Assumption Agreement with respect to the Loans and Commitments
pursuant to Section 11.01 of the Credit Agreement (CIT-EF, CIT-BC, each assignee
under an Assignment and Assumption Agreement, each a "Lender" and collectively,
the "Lenders") and THE CIT GROUP/EQUIPMENT FINANCING, INC. as agent for the Term
Lenders (in such capacity, together with its successors in such capacity, "Term
Agent") and THE CIT GROUP/BUSINESS CREDIT, INC., as agent for the Working
Capital Lenders (in such capacity, together with its successors in such
capacity, "Working Capital Agent") and the Collateral Agent and THE CIT
GROUP/EQUIPMENT FINANCING, INC., as agent for the Lenders (in such capacity,
together with its successors in such capacity, "Agent") (the Credit Agreement,
as it may hereafter be amended or otherwise modified from time to time, being
the "Credit Agreement"). The terms defined in the Credit Agreement and not
otherwise defined in this Pledge Agreement which are used in this Pledge
Agreement shall have the meanings set forth in the Credit Agreement.
2. It is a condition precedent to the obligation of the Lenders to
provide the Loans and Commitments to Borrower as provided in the Credit
Agreement that the Pledgor shall have granted the security interest contemplated
by this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Lenders to provide the Loans and Commitments under and in accordance
with the terms of the Credit Agreement, the Pledgor hereby agrees as follows:
SECTION 1. Pledge. The Pledgor hereby pledges and grants a security
interest to each Lender and hereby pledges and grants a security interest to the
Collateral
2
Agent for the benefit of each Lender in all of the following (the "Pledged
Collateral"):
(i) all of the stock described in Schedule I (the "Pledged Shares")
and the certificates representing the Pledged Shares, and all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Shares; and
(ii) all additional shares of stock of the Borrower from time to time
acquired by the Pledgor in any manner, and the certificates representing such
additional shares, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares; and
(iii) all proceeds of any and all of the foregoing.
SECTION 2. Security for Borrower's Obligations. The Pledged Collateral
secures the prompt and complete payment when due of all Borrower's Obligations.
SECTION 3. Delivery of Pledged Collateral. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by the Collateral Agent pursuant hereto and shall be in suitable
form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to the Collateral Agent. The Collateral Agent shall have the right,
at any time in its discretion and without notice to the Pledgor, to transfer to
or to register in the name of the Collateral Agent or any of its nominees any or
all of the Pledged Collateral. In addition, the Collateral Agent shall have the
right at any time to exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
SECTION 4. Representations and Warranties. The Pledgor represents and
warrants to the Collateral Agent and each Lender as follows:
(i) The Pledged Shares have been duly authorized and validly issued
and are fully paid and non-assessable.
(ii) The Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of any Lien,
2
3
option or other charge or encumbrance, except for the security interest created
by this Pledge Agreement.
(iii) The pledge of the Pledged Shares pursuant to this Pledge
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral securing the payment of the Borrower's Obligations.
(iv) No authorization, approval or other action by, and no notice to
or filing with, any Governmental Authority is required either (i) for the pledge
by the Pledgor of the Pledged Collateral pursuant to this Pledge Agreement or
for the execution, delivery or performance of the Pledge Agreement by the
Pledgor, or (ii) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Pledge Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Pledge Agreement (except as may be required
in connection with such disposition by Laws affecting the offering and sale of
securities generally).
(v) The Pledged Shares constitute all of the issued and outstanding
shares of stock of Borrower.
SECTION 5. Affirmative Covenant of Pledgor. So long as any Loans are
outstanding or the Lenders have any Commitments under the Credit Agreement or
any other amount is owing to any Agent or any Lender under any Loan Documents,
Pledgor shall furnish to each Lender:
(i) Annual Reporting Requirements: as soon as available and in any
event within one hundred twenty (120) days after the end of each fiscal year of
Pledgor, a consolidated and consolidating balance sheet of Pledgor and its
Consolidated Subsidiaries as at the end of such year and the related
consolidated and consolidating statements of income and cash flows for such
year, all in reasonable detail and setting forth in each case, in comparative
form the figures for the previous year, and all prepared in accordance with
generally accepted accounting principles consistently applied, and with regard
to the consolidated financial statements accompanied by a report thereon by, and
certified without qualification arising out of the scope of the audit by, a
nationally recognized firm of independent public accountants or other
independent public accountants satisfactory to Required Lenders; and
(ii) Quarterly Reporting Requirements: as soon as available, and in
any event within sixty (60) days after the end of the first, second and third
fiscal quarters of each fiscal year of the Pledgor, the unaudited consolidated
and consolidating balance sheet of the Pledgor and its Consolidated Subsidiaries
as at the end of such fiscal
3
4
quarter and the related unaudited consolidated and consolidating statements of
income and cash flows, setting forth in each case, in comparative form the
figures of the comparable period for the previous year, and all prepared in
accordance with generally accepted accounting principles consistently applied
and certified as to accuracy by Borrower (subject to normal year-end audit
adjustments).
SECTION 6. Further Assurances. The Pledgor agrees that at any time and
from time to time, at the expense of the Pledgor, it will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Collateral Agent or any Lender may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Collateral Agent or any Lender
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral.
SECTION 7. Voting Rights; Dividends; Etc. (a) So long as no Default or
Event of Default shall have occurred:
(i) The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or
any part thereof for any purpose not inconsistent with the terms of
this Pledge Agreement or the Credit Agreement; provided, however, that
the Pledgor shall not exercise or refrain from exercising any such
right if, in the Collateral Agent's judgment, such action would modify
or in any way adversely change the Pledgor's rights under the Pledged
Collateral or any part thereof.
(ii) To the extent permitted (if at all) under the Credit
Agreement, the Pledgor shall be entitled to receive and retain any and all
dividends paid in respect of the Pledged Collateral, provided, however,
that any and all
(A) dividends paid or payable, other than in cash, in respect
of, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a total
liquidation or dissolution, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in
4
5
redemption of, or in exchange for, any Pledged Collateral,
shall be, and shall be forthwith delivered to the Collateral Agent to hold
as, Pledged Collateral and shall, if received by the Pledgor, be received
in trust for the benefit of the Collateral Agent and the Lenders, be
segregated from the other property or funds of the Pledgor, and be
forthwith delivered to the Collateral Agent as Pledged Collateral in the
same form as so received (with any necessary indorsement).
(b) Upon the occurrence of a Default or an Event of Default:
(i) Upon the request of the Collateral Agent, all rights of the
Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 7(a)(i) and to
receive the dividends which it would otherwise be authorized to receive
and retain pursuant to Section 7(a)(ii) shall cease, and all such rights
shall thereupon become vested in the Collateral Agent and the Lenders, and
the Collateral Agent shall thereupon have the sole right to exercise such
voting and other consensual rights and to receive and hold as Pledged
Collateral such dividends.
(ii) All dividends which are received by the Pledgor contrary to the
provisions of paragraph (i) of this Section 7(b) shall be received in
trust for the benefit of the Collateral Agent and the Lenders, shall be
segregated from other funds of the Pledgor and shall be forthwith paid
over to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary indorsement).
SECTION 8. Transfers and Other Liens; Additional Shares.
(a) The Pledgor agrees that it will neither (i) sell or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
nor (ii) create or permit to exist any Lien, security interest, or other charge
or encumbrance upon or with respect to any of the Pledged Collateral, except for
the security interest under this Pledge Agreement.
(b) The Pledgor agrees that it will (i) cause Borrower not to
issue any stock or other securities in addition to or in substitution for the
Pledged Shares, except to Pledgor so that after giving effect to such issuance
the Pledgor still owns one hundred percent (100%) of the outstanding stock of
Borrower, and (ii) pledge hereunder, immediately upon its acquisition (directly
or
5
6
indirectly) thereof, any and all additional shares of stock or other securities
of Borrower.
SECTION 9. Collateral Agent Appointed Attorney-in-Fact. The Pledgor
hereby appoints the Collateral Agent, the Pledgor's attorney-in-fact, with full
authority in the place and stead of the Pledgor and in the name of the Pledgor
or otherwise, to take any action and to execute any instrument which the
Collateral Agent may deem necessary or advisable to accomplish the purposes of
this Pledge Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to the Pledgor representing any dividend or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same.
SECTION 10. Collateral Agent May Perform. If the Pledgor fails to
perform any agreement contained herein, the Collateral Agent or any Lender may
itself perform or cause performance of, such agreement, and the expenses of the
Collateral Agent or such Lender incurred in connection therewith shall be
payable by the Pledgor under Section 13.
SECTION 11. The Collateral Agent's and Each Lender's Duties and
Reasonable Care. The powers conferred on the Collateral Agent and each of the
Lenders hereunder are solely to protect their interests in the Pledged
Collateral and shall not impose any duty upon them to exercise any such powers.
The Collateral Agent and the Lenders shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in
their possession if the Pledged Collateral is accorded treatment substantially
equal to that which the Collateral Agent or such Lender accords its own
property, it being understood that neither the Collateral Agent nor any Lender
shall have any responsibility for (a) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Collateral, whether or not the Collateral Agent or such Lender
has or is deemed to have knowledge of such matters, or (b) taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral.
SECTION 12. Remedies. If any Event of Default shall have occurred:
(a) The Collateral Agent may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code (the "Code") in effect in the State of
New York at that time, and the Collateral Agent may also, without notice, except
as specified below, sell
6
7
the Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Collateral
Agent's offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Collateral Agent may deem commercially reasonable.
The Pledgor agrees that, to the extent notice of sale shall be required by Law,
at least five (5) days' notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall not be obligated
to make any sale of Pledged Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) Any cash held by the Collateral Agent as Pledged Collateral and
all cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Collateral Agent, be held by the
Collateral Agent as collateral for, and/or then or at any time thereafter
applied (after payment of any amounts payable to the Collateral Agent and the
Lenders pursuant to Section 13) in whole or in part by the Collateral Agent
against, all or any part of the Borrower's Obligations in such order as the
Collateral Agent shall elect. Any surplus of such cash or cash proceeds held by
the Collateral Agent and remaining after payment in full of all Borrower's
Obligations shall be paid over to the Pledgor or to whosoever may be lawfully
entitled to receive such surplus.
SECTION 13. Indemnity and Expenses. (a) The Pledgor hereby
indemnifies the Collateral Agent and each of the Lenders from and against any
and all claims, losses, damages and liabilities growing out of or resulting from
this Pledge Agreement (including, without limitation, enforcement of this Pledge
Agreement), except claims, losses, damages or liabilities resulting from the
Collateral Agent's or such Lender's gross negligence and willful misconduct.
(b) The Pledgor will upon demand pay to the Collateral Agent and each
of the Lenders the amount of any and all expenses, including the fees and
expenses of its counsel and of any experts and agents, which the Collateral
Agent or any of the Lenders may incur in connection with (i) any amendment to
this Pledge Agreement; (ii) the administration of this Pledge Agreement; (iii)
the custody or preservation of, or the sale of, collection from, or
7
8
other realization upon, any of the Pledged Collateral; (iv) the exercise or
enforcement of any of the rights of the Collateral Agent or any of the Lenders
hereunder or (v) the failure by the Pledgor to perform or observe any of the
provisions hereof.
SECTION 14. Amendments,_Etc. No amendment or waiver of any provision
of this Pledge Agreement, nor consent to any departure by the Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Collateral Agent and the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 15. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, if to the
Pledgor, mailed or delivered by messenger or sent by facsimile, addressed to it
at the address of the Pledgor specified on the signature page of this Pledge
Agreement; if to a Lender, mailed or delivered by messenger or sent by facsimile
to it, addressed to it at the address of such Lender specified in the Credit
Agreement; or if to the Collateral Agent, mailed or delivered by messenger or
sent by facsimile to it, addressed to it at the address of such Lender specified
in the Credit Agreement. All such notices and other communications shall, when
mailed or delivered by messenger or sent by facsimile, respectively, be
effective when deposited in the mails or delivered to the messenger or sent by
facsimile, respectively, addressed as aforesaid.
SECTION 16. Continuing Security Interest: Transfer of Loans and
Commitments. This Pledge Agreement shall create a continuing security interest
in the Pledged Collateral and shall (i) remain in full force and effect until
payment in full (after the later of the Capital Expenditure Loan Commitment
Termination Date or the Working Capital Loan Commitment Termination Date) of the
Borrower's Obligations, (ii) be binding upon the Pledgor, its successors and
assigns, and (iii) inure to the benefit of the Collateral Agent, the Lenders and
their successors, transferee and assigns. Without limiting the generality of the
foregoing clause (iii), the Collateral Agent and each Lender may assign or
otherwise transfer all or a portion of its rights or obligations under the
Credit Agreement and the Loans and Commitments to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Collateral Agent or such Lender herein or otherwise. Upon
the payment in full (after the later of the Capital Expenditure Loan Commitment
Termination Date or the Working Capital Loan Commitment Termination Date) of the
Borrower's Obligations, the Pledgor
8
9
shall be entitled to the return, upon its request and at its expense, of such of
the Pledged Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof.
SECTION 17. Governing Law; Terms. This Pledge Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Unless otherwise defined herein or in the Credit Agreement, terms defined in
Article 9 of the Uniform Commercial Code in the State of New York are used
herein as therein defined.
SECTION 18. Miscellaneous. This Pledge Agreement is in addition to and
not in limitation of any other rights and remedies the Collateral Agent or any
of the Lenders may have by virtue of any other instrument or agreement
heretofore, contemporaneously herewith or hereafter executed by the Pledgor or
any other Person or by law or otherwise. If any provision of this Pledge
Agreement is contrary to applicable law, such provision shall be deemed
ineffective without invalidating the remaining provisions hereof. Neither the
Collateral Agent nor the Lenders shall, by any act, delay, omission or
otherwise, be deemed to have waived any of their rights or remedies hereunder.
[Intentionally Left Blank]
9
10
IN WITNESS WHEREOF, the Pledgor has caused this Pledge Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
JLM INDUSTRIES, INC.
By /s/Xxxx X. Xxxxx
--------------------------------
Name: Xxxx X. Xxxxx
Title: President
Address for Notices:
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, X0xxxxx 00000
Attn: General Counsel
10
11
SCHEDULE I
Attached to and forming a part of that certain Pledge Agreement dated as of
June 14, 1995, by the Pledgor to the Collateral Agent and the Lenders.
% Total Par
of Value Number
Class of Certificate Stock of of
Stock Issuer Stock No(s). Issuer Shares Shares
------------ ------------ ------------ ------------ ------------ ------------
JLM Chemicals, Common l 100% None 3,000
Inc.
