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EXHIBIT 10.20
[Standard Chartered Letterhead]
October 23, 1996
JLM International, Inc./Olefins Marketing Corp.
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxx
Ladies and Gentlemen:
Standard Chartered Bank (the "Bank") is pleased to advise that it may continue
to make available an uncommitted line of credit (the "Facility") to JLM
International, Inc. and/or Olefins Marketing Corp. (each a "Borrower" and
collectively the "Borrowers") pursuant to the following terms and conditions.
All previous Letter Agreements between the Bank and the Borrowers are hereby
superseded and replaced. No commitment to lend, to issue any letter of credit
or to enter into any foreign exchange transactions can be assumed or inferred
hereby. The purpose of this letter agreement is to outline the general
parameters of the transactions that the Bank would consider entering into with
the Borrower from time to time.
1. AMOUNT: An aggregate principal amount at any time outstanding of
up to USD18,000,000 (including amounts available under any
letters of credit, bankers' acceptances, outstanding
drawings and outstanding advances; the "Aggregate
Exposure") may be made available to the Borrower at the
sole discretion of the Bank to be allocated as follows.
A. DOCUMENTARY Within the Aggregate Exposure, up to USD18,000,000
LETTERS OF may be made available for the issuance of sight
CREDIT: and/or usance documentary letters of credit with
terms of up to 90 days ("Documentary Letters of
Credit") for the purchase, shipment and sale of
petrochemicals and related products.
Documentary Letters of Credit will require the
originals of all shipping documents, including
full sets of original title documents, to be
consigned to the order of the Bank and to be
presented as a condition of payment at the Bank's
counters.
Within this Limit, delivery of documents against
bankers' acceptances may be permitted up to USD
18,000,000 such that the maximum combined tenor
does not exceed the 90 day usance period.
B. ADVANCES/ Within the Aggregate Exposure and subject to the
ACCEPTANCES: terms and conditions contained in existing
Promissory Note, up to USD6,000,000 may be made
available for advances (each an "Advance") with
maturities of up to but not exceeding 90 days,
and/or for bankers' acceptances (each a "B/A") for
refinancing documents presented under letters of
credit. The amount of the financing shall not
exceed the FOB value of purchased merchandise or
90% of the value of accounts receivable, and in
any event, shall be at the Bank's sole discretion.
C. STAND-BY LETTERS Within the Aggregate Exposure. up to USD
OF CREDIT 13,000,000 may be made available for the
issuance of stand-by letters of credit ("Stand-by
Letters of Credit") with tenors of up to 90 days.
NOTWITHSTANDING THE ABOVE, THE MAXIMUM AGGREGATE EXPOSURE UNDER THE ABOVE
LIMITS [1.A. THROUGH AND INCLUDING 1.C.] SHALL NOT EXCEED USD18,000,000 AT ANY
ONE TIME.
Incorporated in England with limited liability by Royal Charter 1853
The Principal Office of the Company is situated in England at
0 Xxxxxxxxxxxx Xxxxxx Xxxxxx XX0X 0XX Reference Number ZC 18
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2. FOREIGN In addition to the above, up to USD1,000,000 may be
EXCHANGE: made available to Borrowers to engage in spot foreign
exchange transactions, and up to USD5,000,000 for
forward foreign exchange transaction in support of the
Borrower's foreign business. The spot and forward
foreign exchange transactions described herein shall be
staggered to ensure that the maximum net amount coming
due for settlement on any given day, for both spot and
forward transactions combined, does not exceed USD
1,000,000.
3. REVIEW DATE: The Facility shall be reviewed by the Bank on
or before July 31, 1997 (the "Review Date"); provided,
however, the Bank may terminate the Facility at any
time in its sole discretion and with immediate effect by
written notice to the Borrower. Should the Bank continue
to make credit facilities available to the Borrower
after the Review Date has passed, such credit facilities
shall be made under the terms and conditions contained
in this letter agreement. The Bank shall at all times
reserve the right to alter or extend the Review Date or
other terms of the Facility.
4. SECURITY: The Borrower shall have executed and delivered to the
Bank the Bank's forms of Security Agreement (the
"Security Agreement"), UCC Financing Statements and
other documents as may be required to perfect its
security interest in the personal property of the
Borrower as described in the Security Agreement. In
addition, the Bank shall continue to hold cross
guarantees of JLM International, Inc. and Olefins
Marketing Corp., as well as the guarantees of JLM
Marketing, Inc. JLM Industries, Inc. and JLM Chemicals
Canada.
5. INTEREST AND (i) Interest on Advances shall be charged at the
FEES: rates specified in the Promissory Note.
(ii) The rate for B/A's will be as quoted by the Bank
from time to time.
(iii) The Borrower agrees to pay the fees established by
the Bank from time to time for Documentary and/or
Stand-by Letters of Credit (collectively, Letters of
Credit). The Bank's current fees for Letters of Credit
are as follows:
For Documentary Letters of Credit:
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Issuance: 1/4% per quarter, minimum USD400.00
Negotiation/Payment: 1/4%, minimum USD400.00
Acceptance Commission: 1.5% per annum
For Stand-by Letters of Credit:
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Issuance: 1/4% flat per 90 days, minimum USD400.00
Negotiation/Payment: 1/4%, minimum USD400.00
6. TAXES All payments relating to the Facility (including
payments relating to any Letter of Credit, B/A,
Advance or foreign exchange transaction) shall be made
free and clear of and without deduction or withholding
for any present or future taxes, levies, imposts or
duties imposed by any governmental authority in any
jurisdiction, or by any political subdivision or taxing
authority thereof or therein. If any such taxes, levies,
imposts or duties are required to be withheld from any
payments relating to this Facility, the amounts so
payable shall be increased to the extent necessary to
yield to the Bank (after deduction of all such taxes,
levies, imposts or duties) interest or any such other
amounts specified herein or in any letter of credit
reimbursement agreement, promissory note or other
documents relating to the Facility.
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7. EVIDENCE OF The Borrower agrees that the Bank's internal books and
INDEBTEDNESS: records shall be conclusive evidence (absent manifest
error) of the Borrower's indebtedness to the Bank.
8. CONDITIONS As a precondition to the Bank's considering to extend
PRECEDENT: the credit contemplated by this letter agreement
(but with the Bank retaining full discretion as to
whether to extend any credit from time to time), the
Borrower shall have executed and delivered to the Bank,
in form and substance satisfactory to the Bank the
following documents:
(a) Facility letter: the duplicate copy of this letter
agreement and the following documents duly signed by an
officer empowered to sign on the Borrower's behalf:
(b) Corporate Standing: a certificate of the Secretary
or Assistant Secretary of the Borrower certifying the
incumbency and specimen signatures of the officers of
the Borrower executing this Letter Agreement and each of
the related documents and that attached hereto are (i) a
true and complete copy of the resolutions of the
Borrower's board of directors which authorize the
acceptance of the credit (including if applicable,
foreign exchange transactions) and the related
obligations contemplated by this Letter Agreement
(which resolutions shall not have been rescinded as of
the date of such certification) and (ii) true and
complete copies of the Borrower's articles or
certificate of incorporation and all amendments thereto
as in effect as of the date of such certification; and
(c) Any and all other documents that the Bank may
reasonably request from time to time.
8. COVENANTS: From the date hereof until all amounts outstanding under
this Facility have been repaid in full, the Borrower
shall:
(a) Ensure that Xxxx X. XxxXxxxxx does not borrower in
excess of USD500,000 from either of the Borrowers or
from JLM Industries, Inc.;
(b) Ensure that if either Borrower requests that the
Bank finance a partially open position, the requesting
Borrower shall post a 15% cash margin with the Bank
until such position unwound or hedged;
(d) Ensure that funds from assigned accounts receivable
are remitted prior to the maturity of Advances and B/A's
and are deposited in a cash collateral account under
lien to the Bank;
(e) Ensure that when the Borrowers assign accounts
receivable to the Bank that the debtors are instructed
to pay the account(s) of Borrowers at Standard Chartered
Bank, New York;
(f) Ensure that the Bank or its agent(s) have at all
times access to the Borrowers' books, records and
storage locations:
(g) Ensure that the combined bank lines of the Borrowers
does not exceed USD31,000,000;
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(h) Ensure that the leverage ratio, defined at total
liabilities less subordinated shareholder debt divided
by capital funds, does not exceed 9.5:1.0 as measured
at the Borrowers' fiscal year end 1996;
(i) Ensure that the capital funds ratio (which shall be
measured quarterly), defined as shareholders' equity
plus subordinated shareholder debt less intangible
assets does not fall below USD13,000,000 measured at
Borrowers' fiscal year end 1996;
(j) Ensure that the Borrowers' cumulative net income in
any two consecutive quarters does not fall below
USD1,000,000 and does not fall below USD2,000,000 at
Borrowers' fiscal year end; and
(k) Ensure that Borrowers' cash flow, measured at their
fiscal year end and defined as net income plus non-cash
expenses less unfinanced capital expenditures divided by
current maturities of long-term debt does not fall below
1.3:1.0.
9. RIGHT OF In addition to the rights granted to it by applicable
SET-OFF: law, the Bank has the right to set-off and apply to any
of the Borrower's obligations hereunder any amount
received by it from the Borrower, including any balance
in any deposit account of the Borrower maintained with
the Bank or with any of its branches.
10. LEGAL FEES The Borrower agrees to pay to the Bank on its first
AND EXPENSES: demand all costs and expenses incurred by the Bank in
connection with the preparation, execution and/or
amendment of this letter agreement and the enforcement
or collection of any obligations arising in connection
with the transactions contemplated hereby, including,
without limitation, reasonable attorneys' fees, a
reasonable estimate of the allocated cost of Bank's
in-house counsel and other legal expenses.
11. WAIVERS: No modification or waiver of any provisions of
this letter agreement shall be effective unless in
writing, signed by the Bank, and only to the extent
specifically set forth therein; nor shall any such
waiver or modification be applicable except in the
specific instance for which given.
12. WAIVER OF TRIAL THE BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY
BY JURY;CONSENT WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
TO JURISDICTION; ACTION OR PROCEEDING ARISING OUT OF OR OTHERWISE
GOVERNING LAW: RELATING TO THIS LETTER AGREEMENT. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK. THIS LETTER AGREEMENT AND THE OBLIGATIONS
CONTEMPLATED HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
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If the terms and conditions specified in this letter agreement are acceptable
to you, please indicate your acceptance thereof by signing and returning the
attached copy of this letter agreement to us.
Very truly yours,
STANDARD CHARTERED BANK
By: /s/ Xxxxxxxxxx X. Xxxxxxxxxx, Esq. By: /s/ Xxxxx X. Xxxxxxxxx
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Xxxxxxxxxx X. Xxxxxxxxxx, Esq. Xxxxx X. Xxxxxxxx
Administrative Officer Senior Vice President
AGREED TO AND ACCEPTED BY:
JLM International, Inc.
By: /s/ Xxxxx X. Xxxxx By:
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Name: Xxxxx X. Xxxxx Name:
---------------------------------- ----------------------------------
Title: Vice President & CFO Title:
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Olefins Marketing Corp.
By: /s/ Xxxxx X. Xxxxx By:
------------------------------------ ------------------------------------
Name: Xxxxx X. Xxxxx Name:
----------------------------------- ----------------------------------
Title: Vice President & CFO Title:
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ACKNOWLEDGED: JLM Marketing, Inc. as Guarantor
By: /s/ Xxxxx X. Xxxxx By:
------------------------------------ ------------------------------------
Name: Xxxxx X. Xxxxx Name:
----------------------------------- ----------------------------------
Title: Vice President & CFO Title:
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ACKNOWLEDGED: JLM Industries, Inc. as Guarantor
By: /s/ Xxxxx X. Xxxxx By:
------------------------------------ ------------------------------------
Name: Xxxxx X. Xxxxx Name:
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Title: Vice President & CFO Title:
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ACKNOWLEDGED: JLM Chemicals Canada as Guarantor
By: /s/ Xxxxx X. Xxxxx By:
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Name: Xxxxx X. Xxxxx Name:
---------------------------------- ----------------------------------
Title: Vice President & CFO Title:
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