Exhibit 10.1
EXECUTION
LOAN AND SECURITY AGREEMENT
by and among
CONGRESS FINANCIAL CORPORATION (FLORIDA)
as Lender
and
JLM CHEMICALS, INC.
JLM MARKETING, INC.
as Borrowers
JLM INDUSTRIES, INC.
JLM INTERNATIONAL, INC.
as Guarantors
Dated: June 28, 2001
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS..........................................................................................1
SECTION 2. CREDIT FACILITIES...................................................................................21
2.1 LOANS..........................................................................................21
2.2 LETTER OF CREDIT ACCOMMODATIONS................................................................22
2.3 JOINT AND SEVERAL LIABILITY....................................................................25
SECTION 3. INTEREST AND FEES...................................................................................26
3.1 INTEREST.......................................................................................26
3.2 CLOSING FEE....................................................................................28
3.3 SERVICING FEE..................................................................................28
3.4 UNUSED LINE FEE................................................................................28
3.5 CHANGES IN LAWS AND INCREASED COSTS OF LOANS...................................................28
SECTION 4. CONDITIONS PRECEDENT................................................................................29
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT ACCOMMODATIONS......................29
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT ACCOMMODATIONS..........................32
SECTION 5. GRANT OF SECURITY INTEREST..........................................................................33
SECTION 6. COLLECTION AND ADMINISTRATION.......................................................................35
6.1 BORROWERS' LOAN ACCOUNTS.......................................................................35
6.2 STATEMENTS.....................................................................................35
6.3 COLLECTION OF ACCOUNTS.........................................................................35
6.4 PAYMENTS.......................................................................................37
6.5 AUTHORIZATION TO MAKE LOANS....................................................................37
6.6 APPOINTMENT OF AGENT FOR REQUESTING LOANS AND RECEIPTS OF LOANS AND STATEMENTS.................37
6.7 USE OF PROCEEDS................................................................................38
SECTION 7. COLLATERAL REPORTING AND COVENANTS..................................................................38
7.1 COLLATERAL REPORTING...........................................................................38
7.2 ACCOUNTS COVENANTS.............................................................................39
7.3 INVENTORY COVENANTS............................................................................41
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS..........................................................42
7.5 POWER OF ATTORNEY..............................................................................42
7.6 RIGHT TO CURE..................................................................................43
7.7 ACCESS TO PREMISES.............................................................................44
7.8 BILLS OF LADING AND OTHER DOCUMENTS OF TITLE...................................................44
SECTION 8. REPRESENTATIONS AND WARRANTIES......................................................................44
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES.........................................44
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE...............................................45
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS...................................................45
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES.........................................................45
(ii)
8.5 TAX RETURNS....................................................................................45
8.6 LITIGATION.....................................................................................46
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS...........................................46
8.8 ENVIRONMENTAL COMPLIANCE.......................................................................46
8.9 EMPLOYEE BENEFITS..............................................................................47
8.10 BANK ACCOUNTS..................................................................................48
8.11 INTELLECTUAL PROPERTY..........................................................................48
8.12 INTERRELATED BUSINESS..........................................................................49
8.13 CAPITALIZATION.................................................................................49
8.14 LABOR DISPUTES.................................................................................49
8.15 CORPORATE NAME; PRIOR TRANSACTIONS.............................................................50
8.16 RESTRICTIONS ON SUBSIDIARIES...................................................................50
8.17 MATERIAL CONTRACTS.............................................................................50
8.18 PAYABLE PRACTICES..............................................................................50
8.19 ACCURACY AND COMPLETENESS OF INFORMATION.......................................................50
8.20 SURVIVAL OF WARRANTIES; CUMULATIVE.............................................................50
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS.................................................................51
9.1 MAINTENANCE OF EXISTENCE.......................................................................51
9.2 NEW COLLATERAL LOCATIONS.......................................................................51
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.........................................................51
9.4 PAYMENT OF TAXES AND CLAIMS....................................................................53
9.5 INSURANCE......................................................................................53
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.....................................................54
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC........................................57
9.8 ENCUMBRANCES...................................................................................58
9.9 INDEBTEDNESS...................................................................................60
9.10 LOANS, INVESTMENTS, GUARANTEES, ETC............................................................64
9.11 DIVIDENDS AND REDEMPTIONS......................................................................67
9.12 TRANSACTIONS WITH AFFILIATES...................................................................68
9.13 ADDITIONAL BANK ACCOUNTS.......................................................................68
9.14 COMPLIANCE WITH ERISA..........................................................................68
9.15 ADJUSTED TANGIBLE NET WORTH....................................................................69
9.16 END OF FISCAL YEARS: FISCAL QUARTERS...........................................................69
9.17 CHANGE IN BUSINESS.............................................................................69
9.18 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES..............................................69
9.19 COSTS AND EXPENSES.............................................................................70
9.20 AFTER ACQUIRED REAL PROPERTY...................................................................70
9.21 FURTHER ASSURANCES.............................................................................71
SECTION 10. EVENTS OF DEFAULT AND REMEDIES.....................................................................71
10.1 EVENTS OF DEFAULT..............................................................................71
10.2 REMEDIES.......................................................................................73
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERSAND CONSENTS;
GOVERNING LAW......................................................................................74
(iii)
11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL WAIVER..........................75
11.2 WAIVER OF NOTICES..............................................................................76
11.3 AMENDMENTS AND WAIVERS.........................................................................76
11.4 WAIVER OF COUNTERCLAIMS........................................................................76
11.5 INDEMNIFICATION................................................................................76
11.6 CURRENCY INDEMNITY.............................................................................77
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS...................................................................77
12.1 TERM...........................................................................................77
12.2 INTERPRETATIVE PROVISIONS......................................................................79
12.3 NOTICES........................................................................................81
12.4 PARTIAL INVALIDITY.............................................................................81
12.5 SUCCESSORS.....................................................................................81
12.6 CONFIDENTIALITY................................................................................81
12.7 ENTIRE AGREEMENT...............................................................................83
(iv)
INDEX TO
EXHIBITS AND SCHEDULES
Exhibit A Information Certificate for Parent
Information Certificate for Chemicals
Information Certificate for Marketing
Information Certificate for International
Exhibit B Form of Borrowing Base Certificate
Exhibit C Form of Compliance Certificate
Schedule 1.35 Existing Letters of Credit
Schedule 1.66 Investors
Schedule 1.82 Subordinated Noteholders
Schedule 5.2(a) Sasol Inventory
Schedule 5.2(b) Sasol Contracts
Schedule 6.3 Bank Accounts
Schedule 8.4 Existing Liens
Schedule 8.7 Compliance with Other Agreements
Schedule 8.8 Environmental Matters
Schedule 8.10 Bank Accounts
Schedule 8.11 Licensed Intellectual Property
Schedule 8.14 Labor Matters
Schedule 8.17 Material Contracts
Schedule 9.9(l) Existing Unsecured Indebtedness
Schedule 9.9(k) Existing Secured Indebtedness
Schedule 9.10 Existing Loans, Advances and Guarantees
(i)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement dated June 28, 2001 is entered into by
and among Congress Financial Corporation (Florida), a Florida corporation
("Lender"), JLM Chemicals, Inc., a Delaware corporation ("Chemicals"), JLM
Marketing, Inc., a Delaware corporation ("Marketing", and together with
Chemicals and Marketing, each individually, a "Borrower" and collectively,
"Borrowers" as hereinafter further defined), JLM Industries, Inc., a Delaware
corporation ("Parent") and JLM International, Inc., a Delaware corporation
("International" and, together with Parent, each individually, a "Guarantor" and
collectively, "Guarantors" as hereinafter further defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrowers and Guarantors have requested that Lender enter into
certain financing arrangements with Borrowers pursuant to which Lender may make
loans and provide other financial accommodations to Borrowers; and
WHEREAS, Lender is willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:
1.1 "Accounts" shall mean, as to each Borrower, all present and future
rights of such Borrower to payment for goods sold or leased or for services
rendered, whether or not evidenced by instruments or chattel paper, and whether
or not earned by performance.
1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-sixteenth (1/16) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or applicable foreign banking authority
for determining the reserve requirement which is or would be applicable to
deposits of United States dollars in a non-United States or an international
banking office of Reference Bank used to fund a Eurodollar Rate Loan or any
Eurodollar Rate Loan made with the proceeds of such deposit, whether or not
the Reference Bank actually holds or has made any such deposits or loans. The
Adjusted Eurodollar Rate shall be adjusted on and as of the effective day of any
change in the Reserve Percentage.
1.3 "Adjusted Tangible Net Worth" shall mean as to any Person, at any
time, in accordance with GAAP (except as otherwise specifically set forth
below), on a consolidated basis for such Person and its Subsidiaries (if any),
the amount equal to the difference between: (a) the aggregate net book value of
all assets of such Person and its Subsidiaries (excluding the value of patents,
trademarks, tradenames, copyrights, licenses, goodwill, leasehold improvements,
prepaid assets and other intangible assets), calculating the book value of
inventory for this purpose on a first-in-first-out basis, after deducting from
such book values all appropriate reserves in accordance with GAAP (including all
reserves for doubtful receivables, obsolescence, depreciation and amortization)
and (b) the aggregate amount of the Indebtedness and other liabilities of such
Person and its Subsidiaries (including tax and other proper accruals) to the
extent required to be shown as liabilities on a balance sheet of such Person
prepared in accordance with GAAP.
1.4 "Affiliate" shall mean, with respect to a specified Person, any
other Person (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
person; (b) which beneficially owns or holds five (5%) percent or more of any
class of the Voting Stock or other equity interest of such specified person; or
(c) of which five (5%) percent or more of the Voting Stock or other equity
interest is beneficially owned or held by such specified person or a Subsidiary
of such specified person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with") when used with respect to any specified person shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Stock, by agreement or otherwise.
1.5 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.
1.6 "Borrowers" shall mean, collectively, the following (together with
their respective successors and assigns): (a) Chemicals, and (b) Marketing; each
sometimes being referred to herein individually as a "Borrower".
1.7 "Borrowing Base" shall mean, as to any Borrower, at any time, the
amount equal to:
(a) eighty-five (85%) percent multiplied by the Net Amount of
Eligible Accounts of Borrowers; PLUS
(b) the lesser of: (i) the sum of (A) fifty-five (55%) percent
multiplied by the Value (as defined in Section 1.87 hereof) of Eligible
Inventory consisting of finished goods plus (B) fifty-five (55%) multiplied by
the Value of Eligible Inventory consisting of raw materials for such finished
goods (PROVIDED, THAT, Lender reserves the right to set different advance rates
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with respect to the Eligible Inventory of Chemicals; the maximum Value of
Eligible Inventory included in the calculation of the Borrowing Base consisting
of Eligible Inventory of Chemicals shall be the lesser of the Value of such
Eligible Inventory of Chemicals or $2,000,000) or (ii) $12,000,000; LESS
(c) any Reserves.
For purposes only of applying the sublimit on Loans based on Eligible Inventory
set forth clause (b) above, Lender may treat the then undrawn amounts of
outstanding Letter of Credit Accommodations for the purpose of purchasing
Eligible Inventory as Revolving Loans to the extent Lender is in effect basing
the issuance of the Letter of Credit Accommodations on the Value of the Eligible
Inventory being purchased with such Letter of Credit Accommodations. In
determining the actual amounts of such Letter of Credit Accommodations to be so
treated for purposes of the sublimit, the outstanding Revolving Loans and
Reserves shall be attributed first to any components of the lending formulas set
forth above that are not subject to such sublimit, before being attributed to
the components of the lending formulas subject to such sublimit..
1.8 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which the Reference Bank and Lender are open for the transaction of business,
except that if a determination of a Business Day shall relate to any Eurodollar
Rate Loans, the term Business Day shall also exclude any day on which banks are
closed for dealings in dollar deposits in the London interbank market or other
applicable Eurodollar Rate market.
1.9 "Canadian Dollars" and "C$" shall each mean the lawful currency of
Canada.
1.10 "Canadian Pension Plan" shall mean any plan, program or
arrangement that is a pension plan for the purposes of any applicable pension
benefits legislation or any tax laws of Canada or a Province thereof, whether or
not registered under any such laws, which is maintained or contributed to by, or
to which there is or may be an obligation to contribute by, any Borrower or
Guarantor in respect of any Person's employment in Canada with any Borrower or
Guarantor.
1.11 "Capital Leases" shall mean, as applied to any Person, any lease
of (or any agreement conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee which in accordance with GAAP, is
required to be reflected as a liability on the balance sheet of such Person.
1.12 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock, partnership interests or limited liability
company interests at any time outstanding, and any and all rights, warrants or
options exchangeable for or convertible into such capital stock or other
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interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).
1.13 "Cash Equivalents" shall mean, at any time, (a) any evidence of
Indebtedness with a maturity date of one hundred eighty (180) days or less
issued or directly and fully guaranteed or insured by the United States of
America of any agency or instrumentality thereof; PROVIDED, THAT, the full faith
and credit of the United States of America is pledged in support thereof; (b)
certificates of deposit or bankers' acceptances with a maturity of one hundred
eighty (180) days or less of any financial institution that is a member of the
Federal Reserve System having combined capital and surplus and undivided profits
of not less than $250,000,000; (c) commercial paper (including variable rate
demand notes) with a maturity of one hundred eighty (180) days or less issued by
a corporation (except an Affiliate of a Borrower or Guarantor) organized under
the laws of any State of the United States of America or the District of
Columbia and rated at least A-1 by Standard & Poor's Ratings Service, a division
of The XxXxxx-Xxxx Companies, Inc. or at least P-1 by Xxxxx'x Investors Service,
Inc.; (d) repurchase obligations with a term of not more than thirty (30) days
for underlying securities of the types described in clause (a) above entered
into with any financial institution having combined capital and surplus and
undivided profits of not less than $250,000,000; (e) repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States of America or issued by any
governmental agency thereof and backed by the full faith and credit to the
United States of America, in each case maturing within one hundred eighty (180)
days or less from the date of acquisition; PROVIDED, THAT, the terms of such
agreements comply with the guidelines set forth in the Federal Financial
Agreements of Depository Institutions with Securities Dealers and Others, as
adopted by the Comptroller of the Currency on October 31, 1985; and (f)
investments in money market funds and mutual funds which invest substantially
all of their assets in securities of the types described in clauses (a) through
(e) above.
1.14 "Change of Control" shall mean shall mean (a) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of any Borrower or Guarantor to any Person or group (as such term is used
in Section 13(d)(3) of the Exchange Act) except as otherwise permitted in
Section 9.7 hereof; (b) the liquidation or dissolution of any Borrower or
Guarantor or the adoption of a plan by the stockholders of any Borrower or
Guarantor relating to the dissolution or liquidation of such Borrower or
Guarantor; (c) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), except for one or more Permitted Holder,
of beneficial ownership, directly or indirectly, of fifty (50%) percent or more
of the voting power of the total outstanding Voting Stock of Parent or the Board
of Directors of Parent; (d) during any period of two (2) consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of Parent (together with any new directors who have been appointed by
any Permitted Holder, or whose nomination for election by the stockholders of
Parent, as the case may be, was approved by a vote of at least sixty-six and
two-thirds (66 2/3%) percent of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of Parent then
4
still in office; or (e) the failure of Parent to own one hundred (100%) percent
of the voting power of the total outstanding Voting Stock of any of the
Borrowers, and Guarantors.
1.15 "Chemicals" shall mean JLM Chemicals, Inc., a Delaware
corporation, and its successors and assigns.
1.16 "Chem Canada" shall mean JLM Chemicals Canada Incorporated, a
company organized under the laws of Ontario, and its successors and assigns.
1.17 "Citizens" shall mean Citizens Bank of Massachusetts and its
successors and assigns.
1.18 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.
1.19 "Collateral" shall have the meaning set forth in Section 5 hereof.
1.20 "Collateral Access Agreement" shall mean an agreement in writing,
in form and substance satisfactory to Lender, from any lessor of premises to any
Borrower or Guarantor, or any other person to whom any Collateral (including
Inventory, bills of lading or other documents of title) is consigned or who has
custody, control or possession of any such Collateral or is otherwise the owner
or operator of any premises on which any of such Collateral is located, pursuant
to which such lessor, consignee or other person, INTER ALIA, acknowledges the
first priority security interest of Lender in such Collateral, agrees to waive
any and all claims such lessor, consignee or other person may, at any time, have
against such Collateral, whether for processing, storage or otherwise, and
agrees to permit Lender access to, and the right to remain on, the premises of
such lessor, consignee or other person so as to exercise Lender's rights and
remedies and otherwise deal with such Collateral and in the case of any person
who at any time has custody, control or possession of any bills of lading or
other documents of title, agrees to hold such bills of lading or other documents
as bailee for Lender and to follow all instructions of Lender with respect
thereto.
1.21 "Currency Exchange Convention" shall mean, in the calculation of
the US Dollar Equivalent, a procedure used by Lender to value in US Dollars (i)
the obligations or assets of any Borrower or Guarantor that are originally
measured in Canadian Dollars and (ii) any other amount expressed in Canadian
Dollars or any other currency, other than US Dollars, in each case by using the
spot price for the purchase of US Dollars with Canadian Dollars (or such other
currency) provided to Lender by the Reference Bank (or such other bank as Lender
may specify for such purpose) for the immediately preceding Business Day.
1.22 "Eligible Accounts" shall mean, as to each Borrower, Accounts
created by such Borrower which are and continue to be acceptable to Lender based
on the criteria set forth below. In general, Accounts shall be Eligible Accounts
if:
5
(a) such Accounts arise from the actual and BONA FIDE sale and
delivery of goods by such Borrower or rendition of services by such Borrower in
the ordinary course of its business which transactions are completed in
accordance with the terms and provisions contained in any documents related
thereto;
(b) such Accounts of Marketing and Chemicals are not unpaid more
than the earlier of (i) sixty (60) days after the original due date thereof or
(ii) ninety (90) days after the date of the original invoice for them;
(c) such Accounts comply with the terms and conditions contained
in Section 7.2(c) of this Agreement;
(d) such Accounts do not arise from sales on consignment,
guaranteed sale, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent;
(e) the chief executive office of the account debtor with respect
to such Accounts is located in the United States of America or Canada (PROVIDED,
THAT, at any time promptly upon Lender's request, such Borrower shall execute
and deliver, or cause to be executed and delivered, such other agreements,
documents and instruments as may be required by Lender to perfect the security
interests of Lender in those Accounts of an account debtor with its chief
executive office or principal place of business in Canada in accordance with the
applicable laws of the Province of Canada in which such chief executive office
or principal place of business is located and take or cause to be taken such
other and further actions as Lender may request to enable Lender as secured
party with respect thereto to collect such Accounts under the applicable Federal
or Provincial laws of Canada) or, at Lender's option, if the chief executive
office and principal place of business of the account debtor with respect to
such Accounts is located other than in the United States of America or Canada,
then if either: (i) the account debtor has delivered to such Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to
Lender and payable only in the United States of America and in U.S. dollars,
sufficient to cover such Account, in form and substance satisfactory to Lender
and if required by Lender, the original of such letter of credit has been
delivered to Lender or Lender's agent and the issuer thereof notified of the
assignment of the proceeds of such letter of credit to Lender, or (ii) such
Account is subject to credit insurance payable to Lender issued by an insurer
and on terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending formula
with respect thereto as Lender may determine);
(f) such Accounts do not consist of progress xxxxxxxx (such that
the obligation of the account debtors with respect to such Accounts is
conditioned upon such Borrower's satisfactory completion of any further
performance under the agreement giving rise thereto), xxxx and hold invoices or
retainage invoices, except as to xxxx and hold invoices, if Lender shall have
received an agreement in writing from the account debtor, in form and substance
satisfactory to Lender, confirming the unconditional obligation of the account
debtor to take the goods related thereto and pay such invoice;
6
(g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to any right of setoff or recoupment
against such Accounts (but the portion of the Accounts of such account debtor in
excess of the amount at any time and from time to time owed by Borrower to such
account debtor or claimed owed by such account debtor may be deemed Eligible
Accounts);
(h) there are no facts, events or occurrences which would impair
the validity, enforceability or collectability of such Accounts or reduce the
amount payable or delay payment thereunder;
(i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;
(j) neither the account debtor nor any officer or employee of the
account debtor with respect to such Accounts is an officer, employee, agent or
other Affiliate of such Borrower;
(k) the account debtors with respect to such Accounts are not any
foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, upon Lender's
request, the Federal Assignment of Claims Act of 1940, as amended or any similar
State or local law, if applicable, has been complied with in a manner
satisfactory to Lender;
(l) there are no proceedings or actions which are threatened or
pending against the account debtors with respect to such Accounts which might
result in any material adverse change in any such account debtor's financial
condition;
(m) such Accounts of a single account debtor or its Affiliates do
not constitute more than twenty (20%) percent of all otherwise Eligible Accounts
(but the portion of the Accounts not in excess of such percentage may be deemed
Eligible Accounts);
(n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than the earlier of (i) sixty (60) days after the due date
thereof and (ii) ninety (90) days after the date of the original invoice for
them, which constitute more than fifty (50%) percent of the total Accounts of
such account debtor;
(o) such Accounts are not evidenced by instruments or chattel
paper;
(p) the account debtor is not located in a state requiring the
filing of a Notice of Business Activities Report or similar report in order to
permit such Borrower to seek judicial enforcement in such State of payment of
such Account, unless such Borrower has qualified to do
7
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year or such failure to file and
inability to seek judicial enforcement is capable of being remedied without any
material delay or material cost;
(q) such Accounts are owed by account debtors whose total
indebtedness to such Borrower does not exceed the credit limit with respect to
such account debtors as determined by Borrower from time to time and as is
reasonably acceptable to Lender (but the portion of the Accounts not in excess
of such credit limit may be deemed Eligible Accounts); and
(r) such Accounts are owed by account debtors deemed creditworthy
at all times by such Borrower consistent with its current practice and who are
reasonably acceptable to Lender.
General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Lender has no written notice thereof from such Borrower, which
adversely affects or could reasonably be expected to adversely affect the
Accounts in the good faith determination of Lender. Any Accounts which are not
Eligible Accounts shall nevertheless be part of the Collateral.
1.23 "Eligible Inventory" shall mean, as to each Borrower, the
Inventory of such Borrower consisting of finished goods held for resale in the
ordinary course of the business of such Borrower, and raw materials which are
acceptable to Lender based on the criteria set forth below. In general, Eligible
Inventory shall not include:
(a) work-in-process;
(b) packaging and shipping materials;
(c) supplies used or consumed in such Borrower's business;
(d) Inventory at premises other than those owned and controlled
by such Borrower, EXCEPT (i) any Inventory which would otherwise be deemed
Eligible Inventory at locations in the United States of America which are not
owned and operated by Borrower may nevertheless be considered Eligible
Inventory: (A) as to locations which are leased by Borrower if Lender shall have
received a Collateral Access Agreement from the owner and lessor of such
location, duly authorized, executed and delivered by such owner and lessor, and
(B) as to locations owned and operated by a third person, if Lender shall have
received a Collateral Access Agreement from such owner and operator with respect
to such location, duly authorized, executed and delivered by such owner and
operator and, in addition, if required by Lender: (1) UCC-1 financing statements
between the owner and operator, as consignee or bailee and Borrower, as
consignor or xxxxxx, in form and substance satisfactory to Lender, which are
duly assigned to Lender and (2) a written notice to any lender to the owner and
operator of the first priority security interest in such Inventory of Lender,
and (ii) Inventory which is in transit, on land, to the premises of Borrower
8
in the United States which are either owned and controlled by Borrower or leased
by Borrower (but only if Lender has received a Collateral Access Agreement duly
authorized, executed and delivered by such owner and lessor of such leased
premises, as the case may be), PROVIDED, THAT, (A) Lender has a first priority
perfected security interest in and control and possession of all originals of
documents of title with respect to such Inventory, (B) Lender has received a
copy of the invoice and manifest with respect thereto, and (C) such Inventory is
not subject to any Letter of Credit Accommodation ("In-Transit Inventory");
(e) Inventory located outside the continental United States of
America;
(f) Inventory subject to a security interest or lien in favor of
any person other than Lender;
(g) xxxx and hold goods;
(h) unserviceable, obsolete or slow moving Inventory;
(i) Inventory which is not subject to the first priority, valid
and perfected security interest of Lender;
(j) damaged and/or defective Inventory;
(k) Inventory purchased or sold on consignment; and
(l) Inventory of Chemicals wherever located (until such time as
Lender determines to deem Inventory of Chemicals which otherwise meets the
criteria of Eligible Inventory to be "Eligible Inventory").
General criteria for Eligible Inventory may be established and revised from time
to time by Lender in good faith based on an event, condition or other
circumstance arising after the date hereof, or existing on the date hereof to
the extent Lender has no written notice thereof from such Borrower, which
adversely affects or could reasonably be expected to adversely affect the
Inventory in the good faith determination of Lender. Any Inventory which is not
Eligible Inventory shall nevertheless be part of the Collateral. The Inventory
of Chemicals shall not be deemed Eligible Inventory until such time as Lender
determines. In the event that Lender does determine that Inventory of Chemicals
is Eligible Inventory, Lender reserves its rights to determine advance rates
with respect to such Inventory, and Reserves with respect thereto.
1.24 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between Borrower and any
Governmental Authority, (a) relating to pollution and the protection,
preservation or restoration of the environment (including air, water vapor,
surface water, ground water, drinking water, drinking water supply, surface
land, subsurface land, plant and animal life
9
or any other natural resource), or to human health or safety, (b) relating to
the exposure to, or the use, storage, recycling, treatment, generation,
manufacture, processing, distribution, transportation, handling, labeling,
production, release or disposal, or threatened release, of Hazardous Materials,
or (c) relating to all laws with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Materials. The term
"Environmental Laws" includes (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Federal Superfund
Amendments and Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal
Resource Conservation and Recovery Act of 1976 (including the Hazardous and
Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws, and (iii) any common law or
equitable doctrine that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Materials.
1.25 "Equipment" shall mean, as to each Borrower, all of such
Borrower's now owned and hereafter acquired equipment, machinery, computers and
computer hardware and software (whether owned or licensed), vehicles, tools,
furniture, fixtures, all attachments, accessions and property now or hereafter
affixed thereto or used in connection therewith, and substitutions and
replacements thereof, wherever located.
1.26 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, together with all rules, regulations and interpretations
thereunder or related thereto.
1.27 "ERISA Affiliate" shall mean any person required to be aggregated
with a Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m)
or 414(o) of the Code.
1.28 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which a Borrower or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which a Borrower or any of its Subsidiaries could otherwise be liable
for amounts in excess of $50,000; (f) a complete or partial withdrawal by a
Borrower or any ERISA Affiliate from a Multiemployer Plan or a cessation of
operations which is treated as such a withdrawal or notification that a
Multiemployer Plan is in reorganization; (g) the filing of a notice of intent to
terminate, the treatment of a Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit
Guaranty Corporation to terminate a Plan or Multiemployer Plan; (h) an event or
condition
10
which might reasonably be expected to constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan or Multiemployer Plan; (i) the imposition of any liability under Title IV
of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but
not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA
Affiliate; and (j) any other event or condition with respect to a Plan or
Multiemployer Plan or any Plan subject to Title IV of ERISA maintained, or
contributed to, by any ERISA Affiliate that could reasonably be expected to
result in liability of a Borrower for amounts in excess of $50,000.
1.29 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-sixteenth (1/16) of one (1%) percent) at which Reference Bank is
offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by a Borrower and approved by Lender) on
or about 9:00 a.m. (New York time) two (2) Business Days prior to the
commencement of such Interest Period in amounts substantially equal to the
principal amount of the Eurodollar Rate Loans requested by and available to such
Borrower in accordance with this Agreement, with a maturity of comparable
duration to the Interest Period selected by such Borrower.
1.30 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.
1.31 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.
1.32 "Excess Availability" shall mean, as to Borrowers, the amount, as
determined by Lender, calculated at any time, equal to: (a) the lesser of: (i)
the Borrowing Base and (ii) the Maximum Credit, MINUS (b) the sum of: (i) the
amount of all then outstanding and unpaid Obligations, plus (ii) the aggregate
amount of all then outstanding and unpaid trade payables and other obligations
of Borrowers which are more than sixty (60) days past due as of such time, plus
(iii) the amount of checks issued by Borrowers to pay trade payables and other
obligations which are more than sixty (60) days past due as of such time, but
not yet sent and the book overdraft of Borrowers.
1.33 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
the same now exists or may hereafter from time to time be amended, modified,
recodified or supplemented, together with all rules, regulations and
interpretations thereunder or related thereto.
1.34 "Existing Letters of Credit" shall mean, collectively, the letters
of credit issued for the account of a Borrower or Guarantor or for which such
Borrower or Guarantor is otherwise liable listed on Schedule 1.34 hereto, as the
same now exist or may hereafter be amended, modified, supplemented, extended,
renewed, restated or replaced.
11
1.35 "Financing Agreements" shall mean, collectively, this Agreement,
and all notes, guarantees, security agreements and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by any
Borrower or any Obligor in connection with this Agreement.
1.36 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board which are applicable to the
circumstances as of the date of determination consistently applied.
1.37 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
1.38 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).
1.39 "Indebtedness" shall mean, with respect to any Person, any
liability, whether or not contingent, (a) in respect of borrowed money (whether
or not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) or evidenced by bonds, notes, debentures or
similar instruments; (b) representing the balance deferred and unpaid of the
purchase price of any property or services (except any such balance that
constitutes an account payable to a trade creditor (whether or not an Affiliate)
created, incurred, assumed or guaranteed by such Person in the ordinary course
of business of such Person in connection with obtaining goods, materials or
services that is not overdue by more than ninety (90) days, unless the trade
payable is being contested in good faith); (c) all obligations as lessee under
leases which have been, or should be, in accordance with GAAP recorded as
Capital Leases; (d) any contractual obligation, contingent or otherwise, of such
Person to pay or be liable for the payment of any indebtedness described in this
definition of another Person, including, without limitation, any such
indebtedness, directly or indirectly guaranteed, or any agreement to purchase,
repurchase, or otherwise acquire such indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof,
or to maintain solvency, assets, level of income, or other financial condition;
(e) all obligations with respect to redeemable stock and redemption or
repurchase obligations under any Capital Stock or other equity securities issued
by
12
such Person; (f) all reimbursement obligations and other liabilities of such
Person with respect to surety bonds (whether bid, performance or otherwise),
letters of credit, banker's acceptances or similar documents or instruments
issued for such Person's account; and (g) all indebtedness of such Person in
respect of indebtedness of another Person for borrowed money or indebtedness of
another Person otherwise described in this definition which is secured by any
consensual lien, security interest, collateral assignment, conditional sale,
mortgage, deed of trust, or other encumbrance on any asset of such Person,
whether or not such obligations, liabilities or indebtedness are assumed by or
are a personal liability of such Person, all as of such time.
1.40 "Information Certificate" shall mean the Information Certificates
with respect to each Borrower and Guarantor constituting Exhibit A hereto
containing material information with respect to such Borrower and Guarantor, its
business and assets provided by or on behalf of Borrowers or Guarantors to
Lender in connection with the preparation of this Agreement and the other
Financing Agreements and the financing arrangements provided for herein.
1.41 "Intellectual Property" shall mean each Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
registrations, trademarks, trade names, trade styles, trademark and service xxxx
applications, and licenses and rights to use any of the foregoing; all
extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to xxx for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill; customer and other lists in
whatever form maintained; and trade secret rights, copyright rights, rights in
works of authorship, and contract rights relating to computer software programs,
in whatever form created or maintained.
1.42 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as a
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; PROVIDED, THAT, no
Borrower may elect an Interest Period which will end after the last day of the
then-current term of this Agreement.
1.43 "Interest Rate" shall mean:
(a) Subject to clauses (b) and (c) below, as to Prime Rate Loans,
a rate equal to one-half (1/2%) percent per annum in excess of the Prime Rate
and, as to Eurodollar Rate Loans, a rate of two and one-half (2 1/2%) percent
per annum in excess of the Adjusted Eurodollar Rate (based on the Eurodollar
Rate applicable for the Interest Period selected by Borrower as in effect three
(3) Business Days after the date of receipt by Lender of the request of Borrower
for such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrower); and
(b Notwithstanding anything to the contrary contained in clause
(a) or clause (b) above, the Interest Rate shall mean the rate of two and
one-half (2 1/2%) percent per annum in
13
excess of the Prime Rate as to Prime Rate Loans and the rate of four and
one-half (4 1/2%) percent per annum in excess of the Adjusted Eurodollar Rate as
to Eurodollar Rate Loans, at Lender's option, without notice, (i) for the period
on and after the date of termination or non-renewal hereof until such time as
all Obligations (notwithstanding entry of a judgment against any Borrower) are
indefeasibly paid and satisfied in full, (ii) for the period from and after the
date of the occurrence of any Event of Default, and for so long as such Event of
Default is continuing as determined by Lender and (iii) on the Loans at any time
outstanding in excess of the amounts available to Borrower under Section 2
(whether or not such excess(es) arise or are made with or without Lender's
knowledge or consent and whether made before or after an Event of Default).
1.44 "International" shall mean JLM International, Inc., a Delaware
corporation, and its successors and assigns.
1.45 "Inventory" shall mean all of each Borrower's now owned and
hereafter existing or acquired raw materials, work in process, finished goods
and all other inventory of whatsoever kind or nature, wherever located.
1.46 "JLM Domestic Subsidiaries" shall mean, collectively, each of the
following (and their respective successors and assigns): (a) JLM (Ind.) Inc., an
Indiana corporation, (b) Illinois Marketing Services, Inc., an Illinois
corporation; and (c) any other direct or indirect Subsidiary formed under the
laws of the United States of America of Parent, any Borrower or other Guarantor,
however formed or acquired; sometimes being referred to herein individually as a
"JLM Domestic Subsidiary"; PROVIDED, THAT, the term "JLM Domestic Subsidiary"
shall not include JLM Foreign Subsidiaries (as such term is defined below).
1.47 "JLM Foreign Subsidiaries" shall mean, collectively, each of the
following (and their respective successors and assigns): (a) JLM Export Company,
a Barbados corporation; (b) JLM Europe B.V., a Holland corporation, (c) JLM
Industries de Columbia, CI SA, a Columbian corporation, (d) JLM Industries
(South Africa) Pty Ltd., a South African corporation, (e) Quibarca, a Venezuelan
corporation and (f) any other direct or indirect Subsidiary of Parent, any
Borrower or Guarantor formed under the laws of a jurisdiction other than the
United States of America; sometimes being referred to individually as a "JLM
Foreign Subsidiary", PROVIDED, THAT, the term "JLM Foreign Subsidiaries" shall
not include the JLM Domestic Subsidiaries.
1.48 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Lender for the account of any Borrower or Obligor
or (b) with respect to which Lender has agreed to indemnify the issuer or
guaranteed to the issuer the performance by Borrower of its obligations to such
issuer (including the Existing Letters of Credit; each sometimes being referred
to herein individually as a "Letter of Credit Accommodation").
14
1.49 "Loans" shall mean the loans made to or for the benefit of any
Borrower by or on behalf of Lender on a revolving basis (involving advances,
repayments and readvances) as set forth in Section 2.1 hereof.
1.50 "Marketing" shall mean JLM Marketing, Inc., a Delaware
corporation, and its successors and assigns.
1.51 "Material Adverse Effect" shall mean a material adverse effect on
(a) the financial condition, business, performance, operations or properties of
Borrowers and Guarantors (taken as a whole); (b) the legality, validity or
enforceability of this Agreement or any of the other Financing Agreements; (c)
the legality, validity, enforceability, perfection or priority of the security
interests and liens of Lender upon the Collateral; (d) the Collateral or any
other property which is security for the Obligations, or the value of the
Collateral or such other property; (e) the ability of any Borrower or Guarantor
to repay the Obligations or of any Borrower or Guarantor to perform its material
obligations under this Agreement or any of the other Financing Agreements; or
(f) the ability of Lender to enforce the Obligations or realize upon a material
portion of the Collateral or otherwise with respect to the rights and remedies
of Lender under this Agreement or any of the other Financing Agreements.
1.52 "Material Contract" shall mean (a) any contract or other agreement
(other than the Financing Agreements), written or oral, of any Borrower
involving monetary liability of or to any Person in an amount payable in excess
of $1,000,000 in any fiscal year and (b) any other contract or other agreement
(other than the Financing Agreements), whether written or oral, to which
Borrower is a party as to which the breach, nonperformance, cancellation or
failure to renew by any party thereto would have a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of any Borrower or Guarantor or the validity or enforceability of
this Agreement, any of the other Financing Agreements, or any of the rights and
remedies of Lender hereunder or thereunder.
1.53 "Maximum Credit" shall mean the amount of $20,000,000.
1.54 "Mortgage" shall mean the Mortgage and Security Agreement, dated
of even date herewith, by Chemicals in favor of Lender with respect to the Real
Property and related assets of Chemicals located in Blue Island, Illinois.
1.55 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by a Borrower or
any ERISA Affiliate.
1.56 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes included in the amount
thereof and (b) returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed with
respect thereto.
15
1.57 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by a Borrower or Guarantor to Lender and/or
its Affiliates, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement, or otherwise, whether now
existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of this Agreement or after the commencement of any
case with respect to a Borrower or Guarantor under the United States Bankruptcy
Code or any similar statute (including the payment of interest and other amounts
which would accrue and become due but for the commencement of such case, whether
or not such amounts are allowed or allowable in whole or in part in such case),
whether direct or indirect, absolute or contingent, joint or several, due or not
due, primary or secondary, liquidated or unliquidated, secured or unsecured, and
however acquired by Lender.
1.58 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations (including, without
limitation, Guarantors), other than a Borrower.
1.59 "Parent" shall mean JLM Industries, Inc., a Delaware corporation,
and its successors and assigns.
1.60 "Participant" shall mean any financial institution that acquires
and holds a participation in the interest of any Lender in any of the Loans and
Letter of Credit Accommodations in conformity with the provisions of Section
12.5 of this Agreement governing participations.
1.61 "Payment Account" shall have the meaning set forth in Section 6.3
hereof.
1.62 "Permits" shall have the meaning set forth in Section 8.7 hereof.
1.63 "Permitted Holder" shall mean (a Xxxx X. XxXxxxxx; (b) the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries of
the Person set forth in Section 1.64(a) hereof; (c) a trust, the beneficiaries
of which (ignoring remote contingent interests), or a corporation, partnership
or other entities, the stockholders, members, general or limited partners or
owners of which, include only any or all of the Person set forth in Section
1.64(a) hereof. For purposes of this definition, the term "control" (including
the correlative meanings, the terms "controlled by" and "under common control
with"), as used with respect to any Person shall mean the possession, directly,
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of Voting Stock or by
contract or otherwise.
1.64 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including any corporation which elects
subchapter S status under the Code), limited liability company, limited
liability partnership, business trust, unincorporated association, joint
16
stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.
1.65 "Phoenix Investors" shall mean the parties and individuals listed
on Schedule 1.65 hereto.
1.66 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which Borrower sponsors, maintains, or to which it makes, is making,
or is obligated to make contributions, or in the case of a Multiemployer Plan
has made contributions at any time during the immediately preceding six (6) plan
years.
1.67 "PPSA" shall mean the Personal Property Security Act as in effect
in the Province of Ontario, the Civil Code of Quebec as in effect in the
Province of Quebec, or any other Canadian Federal or Provincial statute
pertaining to the granting, perfecting, ranking or priority of security
interests, liens or hypothecs on personal property (i.e. movable property), and
any successor statutes, together with any regulations thereunder, in each case
as in effect from time to time.
1.68 "Priority Payables" shall mean, at any time, the full amount of
the liabilities at such time which have a trust imposed to provide for payment
or a security interest, lien or charge ranking or capable of ranking senior to
or pari passu with security interests, liens or charges securing the Obligations
on any of the Collateral under Federal, Provincial, State, county, district,
municipal, or local law including, but not limited to, claims for unremitted
and/or accelerated rents, taxes, wages, employee withholdings or deductions and
vacation pay, workers' compensation obligations, government royalties or pension
fund obligations, together with the aggregate value, determined in accordance
with GAAP, of all Eligible Inventory which Lender, in good faith, considers may
be or may become subject to a right of a supplier to recover possession thereof
under any Federal or Provincial law, where such supplier's right may have
priority over the security interests, liens or charges securing the Obligations
including, without limitation, Eligible Inventory subject to a right of a
supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and
Insolvency Act (Canada) or any applicable provincial laws granting revendication
or similar rights to unpaid suppliers.
1.69 "Prime Rate" shall mean the rate from time to time publicly
announced by First Union National Bank, or its successors, as its prime rate,
whether or not such announced rate is the best rate available at such bank.
1.70 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.
1.71 "Real Property" shall mean all now owned and hereafter acquired
real property of each Borrower and Guarantor, including leasehold interests,
together with all buildings, structures, and other improvements located thereon
and all licenses, easements and
17
appurtenances relating thereto, wherever located including the real property and
related assets more particularly described in the Mortgage.
1.72 "Receivables" shall mean: (a) all Accounts; (b) all amounts at any
time payable to any Borrower in respect of the sale or other disposition by any
Borrower of any Account or other obligation for the payment of money; (c) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (d all
letters of credit, indemnities, guarantees, security or other deposits and
proceeds thereof issued payable to any Borrower or otherwise in favor of or
delivered to any Borrower in connection with any Account; or (e) all other
contract rights, chattel paper, instruments, notes, general intangibles and
other forms of obligations owing to any Borrower, whether from the sale and
lease of goods or other property, licensing of any property (including
Intellectual Property or other general intangibles), rendition of services or
from loans or advances by any Borrower or to or for the benefit of any third
person (including loans or advances to any Affiliates or Subsidiaries) or
otherwise associated with any Accounts, Inventory or general intangibles of any
Borrower (including, without limitation, choses in action, causes of action, tax
refunds, tax refund claims, any funds which may become payable to any Borrower
in connection with the termination of any Plan or other employee benefit plan
and any other amounts payable to any Borrower from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds thereof, casualty
or any similar types of insurance and any proceeds thereof and proceeds of
insurance covering the lives of employees on which any Borrower is beneficiary).
1.73 "Records" shall mean, as to each Borrower, all of such Borrower's
present and future books of account of every kind or nature, purchase and sale
agreements, invoices, ledger cards, bills of lading and other shipping evidence,
statements, correspondence, memoranda, credit files and other data relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of such
Borrower with respect to the foregoing maintained with or by any other person).
1.74 "Reference Bank" shall mean First Union National Bank, or such
other bank as Lender may from time to time designate.
1.75 "Renewal Date" shall the meaning set forth in Section 12.1 hereof.
1.76 "Reserves" shall mean, as to each Borrower, as of any date of
determination, such amounts as Lender may from time to time establish and revise
in good faith reducing the amount of Loans and Letter of Credit Accommodations
which would otherwise be available to such Borrower under the lending formula(s)
provided for herein: (a) to reflect events, conditions, contingencies or risks
which, as determined by Lender in good faith, adversely affect, or would have a
reasonable likelihood of adversely affecting, either (i) the Collateral or any
other property which is security for the Obligations or its value, (ii) the
assets or business of such Borrower or any Obligor, or (iii) the security
interests and other rights of Lender in the Collateral (including
18
the enforceability, perfection and priority thereof), or (b) to reflect Lender's
good faith belief that any collateral report or financial information furnished
by or on behalf of such Borrower or any Obligor to Lender is or may have been
incomplete, inaccurate or misleading in any material respect, or (c) to reflect
outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof,
or (d) in respect of any state of facts which Lender determines in good faith
constitutes an Event of Default or may, with notice or passage of time or both,
constitute an Event of Default, or (e) to reflect Priority Payables. To the
extent Lender may revise the lending formulas used to determine the Borrowing
Base or establish new criteria or revise existing criteria for Eligible Accounts
or Eligible Inventory so as to address any circumstances, condition, event or
contingency in an manner satisfactory to Lender, Lender shall not establish a
Reserve for the same purpose. The amount of any Reserve established by Lender
shall have a reasonable relationship to the event, condition or other matter
which is the basis for such reserve as determined by Lender in good faith.
1.77 "SASOL" shall mean SASOL North America, Inc., a Delaware
corporation, and it successors and assigns.
1.78 "Solvent" shall mean, at any time with respect to any Person, that
at such time such Person (a) is able to pay its debts as they mature and has
(and has reason to believe it will continue to have) sufficient capital (and not
unreasonably small capital) to carry on its business consistent with its
practices as of the date hereof, and (b) the assets and properties of such
Person at a fair valuation and at their present fair salable value are greater
than the Indebtedness of such Person, and including subordinated and contingent
liabilities computed at the amount which, to the best of such Person's
knowledge, represents an amount which can reasonably be expected to become an
actual or matured liability.
1.79 "SouthTrust Bank" shall mean SouthTrust Bank and its successors
and assigns.
1.80 "SouthTrust Bank Agreements" shall mean, collectively, the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) Credit Agreement,
dated of even date herewith, by and between SouthTrust Bank and Parent, (b)
Mortgage Note, dated of even date herewith issued by Parent in favor of
SouthTrust Bank in the original principal amount of $1,885,000, (c) Mortgage,
Security Agreement and Assignment of Rents and Leases, dated of even date
herewith by and between SouthTrust Bank and Parent, and (d) all agreements,
documents, mortgages and instruments executed and/or delivered in connection
with any of the foregoing.
1.81 "Subordinated Noteholders" shall mean, collectively, each of the
persons listed on Schedule 1.81 hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
1.82 "Subordinated Notes" shall mean, collectively, the promissory
notes or other instruments issued by any Borrower or Guarantor, as the case may
be, payable to the
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Subordinated Noteholders described on Schedule 1.82 hereto, as the same now
exist or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.
1.83 "Subsidiary" or "subsidiary" shall mean, with respect to any
Person, any corporation, limited liability company, limited liability
partnership or other limited or general partnership, trust, association or other
business entity of which an aggregate of at least a majority of the outstanding
Capital Stock or other interests entitled to vote in the election of the board
of directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency), managers, trustees
or other controlling persons, or an equivalent controlling interest therein, of
such Person is, at the time, directly or indirectly, owned by such Person and/or
one or more subsidiaries of such Person. The term "Subsidiary" as used herein
shall be deemed to mean a Subsidiary of Parent unless otherwise specified.
1.84 "Term Loan Lender" shall mean GATX Capital Corporation, a Delaware
corporation and its successors and assigns.
1.85 "Term Loan Lender Agreements" shall mean, collectively, the
following (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) Loan Agreement,
dated of even date herewith, by and among Parent, Chemicals, Terminals, JLM
Realty, Inc. and Term Loan Lender, (b) Promissory Note, dated of even date
herewith, issued by Chemicals, Terminals and Realty in favor of Term Loan Lender
in the original principal amount of $7,135,000, (c) Security Agreement, dated of
even date herewith, by and between Chemicals and Term Loan Lender, (d) Security
Agreement, dated of even date herewith, by and between Terminals and Term Loan
Lender, (e) Mortgage and Security Agreement, dated of even date herewith, by
Chemicals in favor of Term Loan Lender with respect to the Real Property and
related assets of Chemicals located in Blue Island, Illinois, (f Deed of Trust,
dated of even date herewith, by Terminals and JLM Realty, Inc. in favor of Term
Loan Lender with respect to the Real Property and related assets of Terminals
and JL Realty, Inc. located in North, Carolina, (g) Collateral Assignment of
Q-Max Process License Agreement, dated of even date herewith, by Chemicals in
favor of Term Loan Lender, and (h) all agreements, documents, mortgages and
instruments executed and/or delivered in connection with any of the foregoing.
1.86 "Terminals" shall mean JLM Terminals, Inc., a North Carolina
corporation, and its successors and assigns.
1.87 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in first-out
basis in accordance with GAAP or (b) market value, PROVIDED, THAT, for purposes
of the calculation of the Borrowing Base, the Value of the Inventory shall not
include: (i) the portion of the value of Inventory equal to the profit earned by
any Affiliate on the sale thereof to a Borrower or Guarantor or (ii) write-ups
in value with respect to currency exchange rates.
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1.88 "Voting Stock" shall mean with respect to any Person, (a) one (1)
or more classes of Capital Stock of such Person having general voting powers to
elect at least a majority of the board of directors, managers or trustees of
such Person, irrespective of whether at the time Capital Stock of any other
class or classes have or might have voting power by reason of the happening of
any contingency, and (b) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (a) of this definition.
SECTION 2. CREDIT FACILITIES
2.1 LOANS.
(a) Subject to and upon the terms and conditions contained
herein, Lender agrees to make Loans to each Borrower from time to time in
amounts requested by such Borrower (or Marketing on behalf of such Borrower) up
to the Borrowing Base.
(b) Lender may, in its discretion, from time to time, upon not
less than five (5) days prior notice to a Borrower (or Marketing on behalf of
such Borrower), (i) reduce the lending formula with respect to Eligible Accounts
to the extent that Lender determines in its good faith, that, without
duplication: (A) the dilution with respect to the Accounts for any period (based
on the ratio of (1) the aggregate amount of reductions in Accounts other than as
a result of payments in cash to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Lender
determines in good faith, that, without duplication: (A) the number of days of
the turnover of the Inventory for any period has changed, or (B) the nature and
quality of the Inventory has deteriorated. In determining whether to reduce the
lending formula(s), Lender may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Reserves. To the extent Lender shall have
established a Reserve which is sufficient to address an event, condition or
matter described in this Section 2.1(b) in a manner satisfactory to Lender in
good faith, Lender shall not exercise its rights under this Section 2.1(b) to
reduce the lending formulas to address such event, condition or matter. The
amount of any reduction in the lending formula by Lender pursuant to this
Section 2.1(b) shall have a reasonable relationship to the matter which is the
basis for such a reduction.
(c) Except in Lender's discretion (i) the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall not
exceed the Maximum Credit, and (ii) the aggregate outstanding amount of Loans
based on In-Transit Inventory at any time shall not exceed $500,000. In the
event that the outstanding amount of any component of the Loans, or the
aggregate amount of the outstanding Loans and Letter of Credit Accommodations,
exceed the amounts available under the lending formulas, the sublimit for Letter
of Credit Accommodations set forth in Section 2.2(e), or the Maximum Credit, as
applicable, such event
21
shall not limit, waive or otherwise affect any rights of Lender in that
circumstance or on any future occasions and Borrowers shall, upon demand by
Lender, which may be made at any time or from time to time, immediately repay to
Lender the entire amount of any such excess(es) for which payment is demanded.
2.2 LETTER OF CREDIT ACCOMMODATIONS.
(a) Subject to and upon the terms and conditions contained
herein, at the request of a Borrower, or Marketing on behalf of such Borrower,
Lender agrees to provide or arrange for Letter of Credit Accommodations for the
account of such Borrower containing terms and conditions acceptable to Lender
and the issuer thereof. Any payments made by Lender to any issuer thereof and/or
related parties in connection with the Letter of Credit Accommodations shall
constitute additional Loans to such Borrower pursuant to this Section 2.
(b) In addition to any charges, fees or expenses charged by any
bank or issuer in connection with the Letter of Credit Accommodations, Borrowers
shall pay to Lender a letter of credit fee at a rate equal to one and
one-quarter (1 1/4%) percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations for the immediately preceding month (or part
thereof), payable in arrears as of the first day of each succeeding month,
except that Borrowers shall pay to Lender such letter of credit fee, at Lender's
option, without notice, at a rate equal to three and one quarter (3 1/4%)
percent per annum on such daily outstanding balance for: (i) the period from and
after the date of termination or non-renewal hereof until Lender has received
full and final payment of all Obligations (notwithstanding entry of a judgment
against any Borrower) and (ii) the period from and after the date of the
occurrence of an Event of Default for so long as such Event of Default is
continuing as determined by Lender. Such letter of credit fee shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed and the obligation of Borrowers to pay such fee shall survive the
termination or non-renewal of this Agreement.
(c) The Borrower requesting a Letter of Credit Accommodation, or
Marketing on behalf of such Borrower, shall give Lender two (2) Business Days'
prior written of any Borrower's request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day) of issuance of such requested Letter of
Credit Accommodation, whether such Letter of Credit Accommodations may be drawn
in a single or in partial draws, the date on which such requested Letter of
Credit Accommodation is to expire (which date shall be a Business Day), the
purpose for which such Letter of Credit Accommodation is to be issued, and the
beneficiary of the requested Letter of Credit Accommodation. Such Borrower (or
Marketing on behalf of such Borrower) shall attach to such notice the proposed
form of the Letter of Credit Accommodation.
(d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions
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precedent have been satisfied in a manner satisfactory to Lender: (i) the
Borrower requesting such Letter of Credit Accommodation (or Marketing on behalf
of such Borrower) shall have delivered to the proposed issuer of such Letter of
Credit Accommodation at such times and in such manner as such proposed issuer
may require, an application in form and substance satisfactory to such proposed
issuer and Lender for the issuance of the Letter of Credit Accommodation and
such other documents as may be required pursuant to the terms thereof, and the
form and terms of the proposed Letter of Credit Accommodation shall be
satisfactory to Lender and such proposed issuer, (ii) as of the date of
issuance, no order of any court, arbitrator or other Governmental Authority
shall purport by its terms to enjoin or restrain money center banks generally
from issuing letters of credit of the type and in the amount of the proposed
Letter of Credit Accommodation, and no law, rule or regulation applicable to
money center banks generally and no request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over money
center banks generally shall prohibit, or request that the proposed issuer of
such Letter of Credit Accommodation refrain from, the issuance of letters of
credit generally or the issuance of such Letters of Credit Accommodation; and
(iii) the Excess Availability of such Borrower, prior to giving effect to any
Reserves with respect to such Letter of Credit Accommodation requested, on the
date of the proposed issuance of any Letter of Credit Accommodations, shall be
equal to or greater than: (A) if the proposed Letter of Credit Accommodation is
for the purpose of purchasing Eligible Inventory and the documents of title with
respect thereto are consigned to the issuer, the sum of (1) the percentage equal
to one hundred (100%) minus the then applicable percentage with respect to
Eligible Inventory set forth in Section 1.9(b) multiplied by the Value of such
Eligible Inventory, plus (2) freight, taxes, duty and other amounts which Lender
estimates must be paid in connection with such Inventory upon arrival and for
delivery to one of a Borrower 's locations for Eligible Inventory within the
United States of America and (B) if the proposed Letter of Credit Accommodation
is for any other purpose (or the documents of title are not consigned to the
issuer in connection with a Letter of Credit Accommodation which is for the
purpose of purchasing Eligible Inventory), an amount equal to one hundred (100%)
percent of the face amount thereof and all other commitments and obligations
made or incurred by Lender with respect thereto. Effective on the issuance of
each Letter of Credit Accommodation, a Reserve shall be established in the
applicable amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).
(e) Except in Lender's discretion, the amount of all outstanding
Letter of Credit Accommodations and all other commitments and obligations made
or incurred by Lender in connection therewith shall not at any time exceed
$12,000,000. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrowers will either furnish cash collateral
to secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for the
Letter of Credit Accommodations.
(f) Each Borrower shall indemnify and hold Lender harmless from
and against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or
23
acceptances relating thereto, including any losses, claims, damages,
liabilities, costs and expenses due to any action taken by any issuer or
correspondent with respect to any Letter of Credit Accommodation. Each Borrower
assumes all risks with respect to the acts or omissions of the drawer under or
beneficiary of any Letter of Credit Accommodation and for such purposes the
drawer or beneficiary shall be deemed such Borrower's agent. Each Borrower
assumes all risks for, and agrees to pay, all foreign, Federal, State and local
taxes, duties and levies relating to any goods subject to any Letter of Credit
Accommodations or any documents, drafts or acceptances thereunder. Each Borrower
hereby releases and holds Lender harmless from and against any acts, waivers,
errors, delays or omissions, whether caused by such Borrower, by any issuer or
correspondent or otherwise with respect to or relating to any Letter of Credit
Accommodation, except for the gross negligence or wilful misconduct of Lender as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of
Obligations and the termination or non-renewal of this Agreement.
(g) In connection with Inventory purchased pursuant to Letter of
Credit Accommodations, each Borrower will, at Lender's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Lender
holds a security interest to deliver them to Lender and/or subject to Lender's
order, and if they shall come into such Borrower's possession, to deliver them,
upon Lender's request, to Lender in their original form. Each Borrower shall
also, at Lender's request, designate Lender as the consignee on all bills of
lading and other negotiable and non-negotiable documents.
(h) Each Borrower hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name such Borrower as the account
party therein and to deliver to Lender all instruments, documents and other
writings and property received by issuer pursuant to the Letter of Credit
Accommodations and to accept and rely upon Lender's instructions and agreements
with respect to all matters arising in connection with the Letter of Credit
Accommodations or the applications therefor. Nothing contained herein shall be
deemed or construed to grant any Borrower any right or authority to pledge the
credit of Lender in any manner. Lender shall have no liability of any kind with
respect to any Letter of Credit Accommodation provided by an issuer other than
Lender unless Lender has duly executed and delivered to such issuer the
application or a guarantee or indemnification in writing with respect to such
Letter of Credit Accommodation. Each Borrower shall be bound by any
interpretation made in good faith by Lender, or any other issuer or
correspondent under or in connection with any Letter of Credit Accommodation or
any documents, drafts or acceptances thereunder, notwithstanding that such
interpretation may be inconsistent with any instructions of such Borrower.
Lender shall have the sole and exclusive right and authority to, and each
Borrower shall not: (i) at any time an Event of Default exists or has occurred
and is continuing, (A) approve or resolve any questions of non-compliance of
documents, (B) give any instructions as to acceptance or rejection of any
documents or goods or (C) execute any and all applications for steamship or
airway guaranties, indemnities or delivery orders, and (ii) at all times, (A)
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts,
24
acceptances, or documents, and (B) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letter of Credit Accommodations, or
documents, drafts or acceptances thereunder or any letters of credit included in
the Collateral. Lender may take such actions either in its own name or in any
Borrower's name.
(i) Any rights, remedies, duties or obligations granted or
undertaken by a Borrower to any issuer or correspondent in any application for
any Letter of Credit Accommodation, or any other agreement in favor of any
issuer or correspondent relating to any Letter of Credit Accommodation, shall be
deemed to have been granted or undertaken by such Borrower to Lender. Any duties
or obligations undertaken by Lender to any issuer or correspondent in any
application for any Letter of Credit Accommodation, or any other agreement by
Lender in favor of any issuer or correspondent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by such Borrower to
Lender and to apply in all respects to such Borrower.
2.3 JOINT AND SEVERAL LIABILITY. Borrowers shall be liable for all
amounts due to Lender under this Agreement, regardless of which Borrower
actually receives the Loans or other extensions of credit hereunder or the
amount of such Loans received or the manner in which Lender accounts for such
Loans, Letter of Credit Accommodations or other extensions of credit on its
books and records. The Obligations with respect to Loans made to a Borrower, and
the Obligations arising as a result of the joint and several liability of a
Borrower hereunder, with respect to Loans made to another Borrower hereunder,
shall be separate and distinct obligations, but all such other Obligations shall
be primary obligations of all Borrowers. The Obligations arising as a result of
the joint and several liability of a Borrower hereunder with respect to Loans,
Letter of Credit Accommodations or other extensions of credit made to the other
Borrower hereunder shall, to the fullest extent permitted by law, be
unconditional irrespective of (a) the validity or enforceability, avoidance or
subordination of the Obligations of another Borrower or of any promissory note
or other document evidencing all or any part of the Obligations of the other
Borrowers, (b) the absence of any attempt to collect the Obligations from any of
the other Borrowers, any Obligor or any other security therefor, or the absence
of any other action to enforce the same, (c) the waiver, consent, extension,
forbearance or granting of any indulgence by Lender with respect to any
provisions of any instrument evidencing the Obligations of the other Borrowers,
or any part thereof, or any other agreement now or hereafter executed by the
other Borrower and delivered to Lender, (d) the failure by Lender to take any
steps to perfect and maintain its security interest in, or to preserve its
rights and maintain its security or collateral for the Obligations of any of the
other Borrowers, (e) the election of Lender in any proceeding instituted under
the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy
Code, (f) the disallowance of all or any portion of the claim(s) of Lender for
the repayment of the Obligations of the other Borrowers under Section 502 of the
Bankruptcy Code, or (g) any other circumstances which might constitute a legal
or equitable discharge or defense of any Obligor or any of the other Borrowers,
other than the wilful misconduct, gross negligence or bad faith of Lender as
determined pursuant to a final, non-appealable order of a court of competent
jurisdiction. With respect to the Obligations arising as a result of the joint
and several liability of
25
a Borrower hereunder with respect to Loans, Letter of Credit Accommodations or
other extensions of credit made to the other Borrowers hereunder, each Borrower
waives, until the Obligations shall have been paid in full and this Agreement
shall have been terminated, any right to enforce any right of subrogation or any
remedy which Lender now has or may hereafter have against Borrowers, any
endorser or any guarantor of all or any part of the Obligations, and any benefit
of, and any right to participate in, any security or collateral given to Lender.
Upon any Event of Default and for so long as the same is continuing, Lender may
proceed directly and at once, without notice, against any Borrower to collect
and recover the full amount, or any portion of the Obligations, without first
proceeding against the other Borrower or any other Person, or against any
security or collateral for the Obligations. Each Borrower consents and agrees
that Lender shall be under no obligation to xxxxxxxx any assets in favor of
Borrower(s) or against or in payment of any or all of the Obligations.
SECTION 3. INTEREST AND FEES
3.1 INTEREST.
(a) Borrowers shall pay to Lender interest on the outstanding
principal amount of the Loans at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination or
non-renewal hereof shall be payable on demand.
(b) Each Borrower (or Marketing on behalf of such Borrower) may
from time to time request that Prime Rate Loans be converted to Eurodollar Rate
Loans or that any existing Eurodollar Rate Loans continue for an additional
Interest Period. Such request from a Borrower (or Marketing on behalf of such
Borrower) shall specify the amount of the Prime Rate Loans which will constitute
Eurodollar Rate Loans (subject to the limits set forth below) and the Interest
Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and
conditions contained herein, three (3) Business Days after receipt by Lender of
such a request from a Borrower, such Prime Rate Loans shall be converted to
Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case
may be, PROVIDED, THAT, (i) no Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred and be continuing, (ii) no party hereto
shall have sent any notice of termination or non-renewal of this Agreement,
(iii) Borrowers shall have complied with such customary procedures as are
established by Lender and specified by Lender to Borrowers from time to time for
requests by Borrowers for Eurodollar Rate Loans, (iv) no more than four (4)
Interest Periods may be in effect at any one time, (v) the aggregate amount of
the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof, (vi) the maximum amount of
the Eurodollar Rate Loans at any time requested by Borrower shall not exceed the
amount equal to eighty (80%) percent of the lowest principal amount of the Loans
which it is anticipated will be outstanding during the applicable Interest
Period, as determined by Lender (but with no obligation of Lender to make such
Loans), and (vii Lender shall have determined that the Interest Period or
Adjusted Eurodollar Rate is available to Lender through the Reference Bank and
can be readily determined as of the date of the request for such Eurodollar Rate
Loan by such Borrower. Any request by a Borrower to convert Prime
26
Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate
Loans shall be irrevocable. Notwithstanding anything to the contrary contained
herein, Lender and Reference Bank shall not be required to purchase United
States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Lender and Reference Bank had purchased
such deposits to fund the Eurodollar Rate Loans.
(c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Lender has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to Marketing, convert to Prime Rate Loans in the event that this
Agreement shall terminate or not be renewed. Borrowers shall pay to Lender, upon
demand by Lender (or Lender may, at its option, charge any loan account of a
Borrower) any amounts required to compensate Lender, the Reference Bank or any
Participant with Lender for any loss (including loss of anticipated profits),
cost or expense incurred by such person, as a result of the conversion of
Eurodollar Rate Loans to Prime Rate Loans pursuant to any of the foregoing.
(d) Interest shall be payable by Borrowers to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs.
(e) No agreements, conditions, provisions or stipulations
contained in this Agreement or any of the other Financing Agreements or any
Event of Default, or the exercise by Lender of the right to accelerate the
payment or the maturity of all or any portion of the Obligations, or the
exercise by Lender of any option whatsoever contained in this Agreement or any
of the other Financing Agreements, or the prepayment by or on behalf of a
Borrower of any of the Obligations, or the occurrence of any event or
contingency whatsoever, shall entitle Lender to contract for, charge or receive,
in any event, interest exceeding the maximum non-usurious rate of interest under
applicable Federal or State Law as in effect from time to time that may be
contracted for, taken, reserved, charged or received in respect of Indebtedness
of any Borrower to Lender (the "Maximum Interest Rate"). In no event shall a
Borrower be obligated to pay interest exceeding such Maximum Interest Rate. All
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel such Borrower to pay
a rate of interest exceeding the Maximum Interest Rate shall be without binding
force or effect, at law or in equity, to the extent of the excess of interest
over such Maximum Interest Rate. In the event any interest is contracted for,
charged or received in excess of the Maximum Interest Rate ("Excess"), each
Borrower acknowledges and stipulates that any such contract, charge or receipt
shall be the result of an accident and BONA FIDE error, and that any Excess
received by Lender shall be applied, first, to the payment of the then
outstanding and
27
unpaid principal hereunder; second, to the payment of the other Obligations then
outstanding and unpaid; and third, returned to such Borrower (or Marketing on
behalf of such Borrower), it being the intent of the parties hereto not to enter
at any time into a usurious or otherwise illegal relationship. Each Borrower
recognizes that, with fluctuations in the rate of interest set forth in this
Section 3.1 and the Maximum Interest Rate, such an unintentional result could
inadvertently occur. By the execution of this Agreement, each Borrower agrees
that (i) the credit or return of any Excess shall constitute the acceptance by
such Borrower of such Excess, and (ii) each Borrower shall not seek or pursue
any other remedy, legal or equitable, against Lender, based in whole or in part
upon contracting for, charging or receiving of any interest in excess of the
Maximum Interest Rate. For the purpose of determining whether or not any Excess
has been contracted for, charged or received by Lender, all interest at any time
contracted for, charged or received by Lender in connection with this Agreement
or any of the other Financing Agreements shall be amortized, prorated, allocated
and spread in equal parts during the entire term of this Agreement.
3.2 CLOSING FEE. Borrower shall pay to Lender as a closing fee the
amount of $25,000, which shall be fully earned and payable as of the date
hereof.
3.3 SERVICING FEE. Borrowers shall pay to Lender a servicing fee in an
amount equal to $1,750 in respect of Lender's services for each month (or part
thereof) while this Agreement remains in effect and for so long thereafter as
any of the Obligations are outstanding, which fee shall be fully earned as of
and payable in advance on the date hereof and on the first day of each month
hereafter.
3.4 UNUSED LINE FEE. While this Agreement is in effect and for so long
thereafter as any of the Obligations are outstanding, Borrowers shall pay to
Lender an unused line fee at a rate equal to one-quarter of one (1/4%) percent
per annum calculated upon the amount by which the Maximum Credit exceeds the
average daily principal balance of the outstanding Loans and Letter of Credit
Accommodations during the immediately preceding month (or part thereof) while
this Agreement is in effect and for so long thereafter as any of the Obligations
are outstanding, which fee shall be payable on the first day of each month in
arrears.
3.5 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.
(a) Notwithstanding anything to the contrary contained herein,
all Eurodollar Rate Loans shall, upon notice by Lender to a Borrower, convert to
Prime Rate Loans in the event that (i) any change in applicable law or
regulation (or the interpretation or administration thereof) shall either (A)
make it unlawful for Lender, Reference Bank or any Participant with Lender to
make or maintain Eurodollar Rate Loans or to comply with the terms hereof in
connection with the Eurodollar Rate Loans, or (B) shall result in the increase
in the costs to Lender, Reference Bank or any Participant of making or
maintaining any Eurodollar Rate Loans by an amount deemed by Lender to be
material, or (C) reduce the amounts received or receivable by Lender in respect
thereof, by an amount deemed by Lender to be material or (ii) the cost to
Lender, Reference Bank or any Participant of making or maintaining any
Eurodollar Rate Loans shall
28
otherwise increase by an amount deemed by Lender to be material. Borrowers shall
pay to Lender, upon demand by Lender (or Lender may, at its option, charge any
loan account with respect to a Borrower) any amounts required to compensate
Lender, the Reference Bank or any Participant with Lender for any loss
(including loss of anticipated profits), cost or expense incurred by such person
as a result of the foregoing, including, without limitation, any such loss, cost
or expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such person to make or maintain the Eurodollar Rate
Loans or any portion thereof. A certificate of Lender setting forth the basis
for the determination of such amount necessary to compensate Lender as aforesaid
shall be delivered to a Borrower and shall be conclusive, absent manifest error.
(b) If any payments or prepayments in respect of the Eurodollar
Rate Loans are received by Lender other than on the last day of the applicable
Interest Period (whether pursuant to acceleration, upon maturity or otherwise),
including any payments pursuant to the application of collections under Section
6.3 or any other payments made with the proceeds of Collateral, Borrowers shall
pay to Lender upon demand by Lender (or Lender may, at its option, charge any
loan account with respect to a Borrower) any amounts required to compensate
Lender, the Reference Bank or any Participant with Lender for any additional
loss (including loss of anticipated profits), cost or expense incurred by such
person as a result of such prepayment or payment, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such person to make or maintain such
Eurodollar Rate Loans or any portion thereof.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is a condition precedent to Lender making
the initial Loans and providing the initial Letter of Credit Accommodations
hereunder:
(a) Lender shall have received, in form and substance
satisfactory to Lender, all releases, terminations and such other documents as
Lender may request to evidence and effectuate the termination by Citizens of all
of its credit financing arrangements with Borrowers and Guarantors existing
pursuant to the Amended and Restated Credit Agreement, dated as of November 1,
1999, by and among the Borrowers and Guarantors, as guarantors, and otherwise
and the termination and release by Citizens of any interest in and to any assets
and properties of Borrowers and Guarantors, duly authorized, executed and
delivered by each of them, including, but not limited to, (i) UCC termination
statements for all UCC financing statements previously filed by Citizens or its
predecessors, as secured party and any Borrower or Guarantor, as debtor and (ii)
satisfactions and discharges of any mortgages, deeds of trust or deeds to secure
debt by any Borrower or Guarantor in favor of such lender, in form acceptable
for recording with the appropriate Governmental Authority;
29
(b) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Lender has valid perfected and first priority
security interests in and liens upon the Collateral and any other property which
is intended to be security for the Obligations or the liability of any Guarantor
in respect thereof, subject only to the security interests and liens permitted
herein or in the other Financing Agreements;
(c) all requisite corporate action and proceedings in connection
with this Agreement and the other Financing Agreements shall be satisfactory in
form and substance to Lender, and Lender shall have received all information and
copies of all documents, including records of requisite corporate action and
proceedings which Lender may have requested in connection therewith, such
documents where requested by Lender or its counsel to be certified by
appropriate corporate officers or Governmental Authority;
(d) no material adverse change shall have occurred in the assets
or business of any Borrower or Guarantor since the date of Lender's latest field
examination and no change or event shall have occurred which would impair the
ability of any Borrower or Guarantor to perform its obligations hereunder or
under any of the other Financing Agreements to which it is a party or of Lender
to enforce the Obligations or realize upon the Collateral;
(e) Lender shall have received, in form and substance
satisfactory to Lender, (i) evidence that the Term Loan Agreements have been
duly executed and delivered by and to the appropriate parties thereto and that
such Term Loan Agreements provide for, among other things, a committed term loan
facility from Term Loan Lender to Borrower in a principal amount of at least
$7,135,000, (ii) evidence that the transactions contemplated under the terms of
the Term Loan Agreements have been consummated prior to or contemporaneously
with the execution of this Agreement, and (iii) true and complete copies of all
of the Term Loan Agreements;
(f) Lender shall have received, in form and substance
satisfactory to Lender, (i) evidence that the SouthTrust Bank Agreements have
been duly executed and delivered by and to the appropriate parties thereto and
that such SouthTrust Bank Agreements provide for, among other things, a
committed mortgage loan facility from SouthTrust Bank to Parent in a principal
amount of at least $1,885,000, (ii) evidence that the transactions contemplated
under the terms of the SouthTrust Bank Agreements have been consummated prior to
or contemporaneously with the execution of this Agreement, and (iii) true and
complete copies of all of the SouthTrust Bank Agreements;
(g) Lender shall have received, in form and substance
satisfactory to Lender, an intercreditor agreement by and between Term Loan
Lender and Lender, as acknowledged and agreed to by Borrowers and Obligors,
providing for, among other things, the relative rights and priorities with
respect to the assets and properties of Borrower and Obligors as among Lender
and Term Loan Lender;
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(h) Lender shall have received evidence, in form and substance
satisfactory to Lender, that Borrower has received not less than $2,500,000 in
immediately available funds as an equity capital contribution from the Phoenix
Investors, on terms and conditions acceptable to Lender the proceeds of which
shall be used to repay Indebtedness to Existing Lender;
(i) Lender shall have completed a field review of the Records and
such other information with respect to the Collateral as Lender may require to
determine the amount of Loans available to Borrowers (including, without
limitation, current perpetual inventory records and/or roll-forwards of Accounts
and Inventory through the date of closing and test counts of the Inventory in a
manner satisfactory to Lender, together with such supporting documentation as
may be necessary or appropriate, and other documents and information that will
enable Lender to accurately identify and verify the Collateral), the results of
which each case shall be satisfactory to Lender, not more than seven (7)
Business Days prior to the date hereof;
(j) Lender shall have received originals of the shares of the
stock certificates representing all of the issued and outstanding shares of the
Capital Stock of the JLM Domestic Subsidiaries of Parent (other than Terminals,
Chemicals, Olefins Terminal Corp., and JLM Realty, Inc.) incorporated under the
laws of any State of the United States of America and stock certificates
representing sixty-five (65%) percent of the issued and outstanding shares of
Capital Stock of each direct JLM Foreign Subsidiary of Parent, in each case
together with stock powers duly executed in blank with respect thereto;
(k) Lender shall have received, in form and substance
satisfactory to Lender, all consents, waivers, acknowledgments and other
agreements from third persons which Lender may deem necessary or desirable in
order to permit, protect and perfect its security interests in and liens upon
the Collateral or to effectuate the provisions or purposes of this Agreement and
the other Financing Agreements, including, without limitation, Collateral Access
Agreements by owners and lessors of leased premises of Borrowers and by
warehouses at which Collateral is located;
(l) Lender shall have received, in form and substance
satisfactory to Lender, all agreements with the depository banks and Borrowers
with respect to the Blocked Accounts as Lender may require pursuant to Section
6.3 hereof, duly authorized, executed and delivered by such depository banks and
Borrowers;
(m) Lender shall have received and reviewed UCC and PPSA search
results for all jurisdictions in which assets of Borrowers and Guarantors are
located, which search results shall be in form and substance satisfactory to
Lender;
(n) Lender shall have received evidence of insurance and loss
payee endorsements required hereunder and under the other Financing Agreements,
in form and substance satisfactory to Lender, and certificates of insurance
policies and/or endorsements naming Lender as loss payee;
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(o) Lender shall have received, in form and substance
satisfactory to Lender, the collateral assignment of the life insurance policy
maintained by Parent on the life of Xxxx X. XxXxxxxx which shall be in the
amount of not less than $950,000;
(p) Lender shall have received, in form and substance
satisfactory to Lender, subordination agreements by and between each of the
Subordinated Noteholders and Lender, as acknowledged and agreed to by Borrower,
duly authorized, executed and delivered by each of the Subordinated Noteholders
and Borrower, providing for, INTER ALIA, the subordination in right of payment
of indebtedness of Borrower to each of the Subordinated Noteholders to the prior
indefeasible payment and satisfaction in full of the Obligations;
(q) Lender shall have received, in form and substance reasonably
satisfactory to Lender, a valid and effective title insurance policy issued by a
company and agent acceptable to Lender (i) insuring the priority, amount and
sufficiency of the Mortgage, (ii) insuring against matters that would be
disclosed by surveys and (iii) containing any legally available endorsements,
assurances or affirmative coverage requested by Lender for protection of its
interests;
(r) Lender shall have received, in form and substance
satisfactory to Lender, Asset Purchase Agreement, dated May 23, 2001, by and
among Parent, Marketing and SASOL, duly authorized, executed and delivered by
such parties, providing for, INTER ALIA, (i) the forgiveness of at least
$3,000,000 of past due indebtedness owed by Marketing to SASOL, and (ii) payment
of the remaining indebtedness owed by Marketing to SASOL in an amount not to
exceed $1,504,396.40 to be payable over six (6) months commencing July 15, 2001;
(s) the aggregate amount of the Excess Availability of Borrowers
as determined by Lender, as of the date hereof, shall be not less than
$5,000,000 after giving effect to the initial Loans made or to be made and
Letter of Credit Accommodations issued or to be issued in connection with the
initial transactions hereunder;
(t) Lender shall have received, in form and substance
satisfactory to Lender, such opinion letters of counsel to Borrowers and
Guarantors with respect to the Financing Agreements and such other matters as
Lender may request; and
(u) the other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.
4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is an additional condition precedent to
Lender making Loans and/or providing Letter of Credit Accommodations to each
Borrower, including the initial Loans and Letter of Credit Accommodations and
any future Loans and Letter of Credit Accommodations:
(a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such
32
representations and warranties had been made on and as of the date of the making
of each such Loan or providing each such Letter of Credit Accommodation and
after giving effect thereto, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(b) no law, regulation, order, judgment or decree of any
Governmental Authority shall exist, and no action, suit, investigation,
litigation or proceeding shall be pending or threatened in any court or before
any arbitrator or Governmental Authority, which (i) purports to enjoin,
prohibit, restrain or otherwise affect (A) the making of the Loans or providing
the Letter of Credit Accommodations, or (B) the consummation of the transactions
contemplated pursuant to the terms hereof or the other Financing Agreements or
(ii) has or could reasonably be expected to have a a material adverse effect on
the assets or business of Borrower or would impair the ability of Borrower to
perform its obligations hereunder or under any of the other Financing Agreements
or of Lender to enforce any Obligations or realize upon any of the Collateral;
and
(c) no Event of Default and no act, condition or event which,
with notice or passage of time or both, would constitute an Event of Default,
shall exist or have occurred and be continuing on and as of the date of the
making of such Loan or providing each such Letter of Credit Accommodation and
after giving effect thereto.
SECTION 5. GRANT OF SECURITY INTEREST
5.1 To secure payment and performance of all Obligations, each
Borrower hereby grants to Lender a continuing security interest in, a lien upon,
and a right of set off against, and hereby assigns to Lender as security, the
following property and interests in property of such Borrower, whether now owned
or hereafter acquired or existing, and wherever located (together with all other
collateral security for the Obligations at any time granted to or held or
acquired by Lender, collectively, the "Collateral"):
(a) Receivables;
(b) all other present and future general intangibles (including
Intellectual Property, and existing and future leasehold interests in equipment,
real estate and fixtures), chattel paper, documents, instruments, investment
property (including securities, whether certificated or uncertificated,
securities accounts, security entitlements, commodity contracts or commodity
accounts), letters of credit, bankers' acceptances and guaranties;
(c) all present and future monies, securities and other
investment property, credit balances, deposits, deposit accounts and other
property of such Borrower now or hereafter held or received by or in transit to
Lender or its Affiliates or at any other depository or other institution from or
for the account of such Borrower, whether for safekeeping, pledge, custody,
transmission, collection or otherwise, and all present and future liens,
security interests, rights,
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remedies, title and interest in, to and in respect of Receivables and other
Collateral, including (i) rights and remedies under or relating to guaranties,
contracts of suretyship, letters of credit and credit and other insurance
related to the Collateral, (ii) rights of stoppage in transit, replevin,
repossession, reclamation and other rights and remedies of an unpaid vendor,
lienor or secured party, (iii) goods described in invoices, documents, contracts
or instruments with respect to, or otherwise representing or evidencing,
Receivables or other Collateral, including returned, repossessed and reclaimed
goods, and (iv) deposits by and property of account debtors or other persons
securing the obligations of account debtors;
(d) Inventory;
(e) Equipment;
(f) Real Property;
(g) Records; and
(h) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of any or all of the foregoing.
5.2 Notwithstanding anything to the contrary set forth in Section 5.1
above, the types or items of Collateral described in Section 5.1 shall not
include any of the following rights, property and assets owned by Marketing used
in the Business (as defined below), but only to the extent such rights, property
and assets exist on June 28, 2001 (the "Closing Date") and are sold and
transferred by Marketing to Sasol North America, Inc. ("Sasol") pursuant to the
Asset Purchase Agreement, dated June 28, 2001, by and between Debtor and Sasol
(the "Sasol Agreement") as in effect on the Closing Date:
(a) the inventory as of the Closing Date as more fully described
on Schedule 5.2(a) hereto;
(b) the contracts and other agreements listed on Schedule 5.2(b)
hereof;
(c) all customer and supplier lists and corresponding marketing
records, accounts or purchases and sales, other business records, promotional
materials, formula lists, regulatory materials and records and similar items (in
whatever format, including without limitation computer files and records) used
or acquired in the conduct of the Business;
(d) all prepaid expenses and deposits, if any, made by Marketing
and relating to the Business; and
(e) any goodwill associated with the Business.
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The term "Business" as used in this Section 5.2 shall mean, the
operation by Marketing of the distribution and sale of products historically
purchased from Sasol Chemicals Industries Limited, Sasol Solvents division
("SCIL"), CONDEA Vista Company and Lyondell Chemical Company, including acetone,
butanol, ethanol (excluding ethnanol purchased by Marketing from SCIL for sale
in the Northeast United States), methhyl ethyl ketone, methyl isobutyl ketone,
normal propylalcohol, normal propyl acetate, crude n-propyl acetate, crude
n-propanol and ethanol.
SECTION 6. COLLECTION AND ADMINISTRATION
6.1 BORROWERS' LOAN ACCOUNTS. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrowers and (c) all other appropriate debits and
credits as provided in this Agreement, including fees, charges, costs, expenses
and interest. All entries in the loan account(s) shall be made in accordance
with Lender's customary practices as in effect from time to time.
6.2 STATEMENTS. Lender shall render to Marketing each month a
statement setting forth the balance in each Borrower's loan account(s)
maintained by Lender for each such Borrower pursuant to the provisions of this
Agreement, including principal, interest, fees, costs and expenses. Each such
statement shall be subject to subsequent adjustment by Lender but shall, absent
manifest errors or omissions, be considered correct and deemed accepted by
Borrowers and Guarantors and conclusively binding upon Borrowers and Guarantors
as an account stated except to the extent that Lender receives a written notice
from Borrowers and Guarantors of any specific exceptions of Borrowers thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Marketing a written statement
as provided above, the balance in Borrowers' loan account(s) shall be
presumptive evidence of the amounts due and owing to Lender by Borrowers and
Guarantors.
6.3 COLLECTION OF ACCOUNTS.
(a) Each Borrower shall establish and maintain, at its expense,
deposit account arrangements and merchant payment arrangements with the banks
set forth on Schedule 6.3 hereto and after prior written notice to Lender,
subject to Section 9.13, such other banks as Borrower may hereafter select as
are acceptable to Lender. The banks set forth on Schedule 6.3 constitute all of
the banks with whom each Borrower has deposit account arrangements and merchant
payment arrangements as of the date hereof and identifies each of the deposit
accounts at such banks to a location of such Borrower or otherwise describes the
nature of the use of such deposit account by such Borrower.
(b) Each Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may
35
specify, with such banks as are acceptable to Lender into which Borrower shall
promptly deposit and direct its account debtors to directly remit all payments
on Receivables and all payments constituting proceeds of Inventory or other
Collateral in the identical form in which such payments are made, whether by
cash, check or other manner. The banks at which the Blocked Accounts are
established shall enter into an agreement, in form and substance satisfactory to
Lender, providing that all items received or deposited in the Blocked Accounts
are the property of Lender, that the depository bank has no lien upon, or right
to setoff against, the Blocked Accounts, the items received for deposit therein,
or the funds from time to time on deposit therein and that the depository bank
will wire, or otherwise transfer, in immediately available funds, on a daily
basis, all funds received or deposited into the Blocked Accounts to such bank
account of Lender as Lender may from time to time designate for such purpose
("Payment Account"). Each Borrower agrees that all payments made to such Blocked
Accounts or other funds received and collected by Lender, whether in respect of
the Receivables, as proceeds of Inventory or other Collateral or otherwise shall
be treated as payments to Lender in respect of the Obligations and therefore
shall constitute the property of Lender to the extent of the then outstanding
Obligations.
(c) For purposes of calculating the amount of the Loans available
to Borrowers, such payments will be applied (conditional upon final collection)
to the Obligations on the Business Day of receipt by Lender of immediately
available funds in the Payment Account provided such payments and notice thereof
are received in accordance with Lender's usual and customary practices as in
effect from time to time and within sufficient time to credit Borrower's loan
account on such day, and if not, then on the next Business Day. For the purposes
of calculating interest on the Obligations, such payments or other funds
received will be applied (conditional upon final collection) to the Obligations
one (1) Business Day following the date of receipt of immediately available
funds by Lender in the Payment Account provided such payments or other funds and
notice thereof are received in accordance with Lender's usual and customary
practices as in effect from time to time and within sufficient time to credit
Borrower's loan account on such day, and if not, then on the next Business Day.
(d) Each Borrower and all of its shareholders, directors,
employees, agents, Subsidiaries or other Affiliates shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Receivables or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Lender. In no event shall the same be commingled with a Borrower's own funds.
Each Borrower agrees to reimburse Lender on demand for any amounts owed or paid
to any bank at which a Blocked Account is established or any other bank or
person involved in the transfer of funds to or from the Blocked Accounts arising
out of Lender's payments to or indemnification of such bank or person. The
obligation of Borrowers to reimburse Lender for such amounts pursuant to this
Section 6.3 shall survive the termination or non-renewal of this Agreement.
36
6.4 PAYMENTS. All Obligations shall be payable to the Payment Account
as provided in Section 6.3 or such other place as Lender may designate from time
to time. Lender shall apply payments received or collected from Borrowers or for
the account of Borrowers (including the monetary proceeds of collections or of
realization upon any Collateral) as follows: FIRST, to pay any fees, indemnities
or expense reimbursements then due to Lender from Borrowers; SECOND, to pay
interest due in respect of any Loans; THIRD, to pay principal due in respect of
the Loans; FOURTH, to pay or prepay any other Obligations whether or not then
due, in such order and manner as Lender determines. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by Marketing, or
unless an Event of Default shall exist or have occurred and be continuing,
Lender shall not apply any payments which it receives to any Eurodollar Rate
Loans, except (a) on the expiration date of the Interest Period applicable to
any such Eurodollar Rate Loans, or (b) in the event that there are no
outstanding Prime Rate Loans. At Lender's option, all principal, interest, fees,
costs, expenses and other charges provided for in this Agreement or the other
Financing Agreements may be charged directly to the loan account(s) of a
Borrower. Borrowers shall make all payments to Lender on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrowers shall be liable to pay to Lender, and does
hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4 shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the
Loans and provide the Letter of Credit Accommodations based upon telephonic or
other instructions received from anyone purporting to be an officer of a
Borrower or other authorized person or, at the discretion of Lender, if such
Loans are necessary to satisfy any Obligations. All requests for Loans or Letter
of Credit Accommodations hereunder shall specify the date on which the requested
advance is to be made or Letter of Credit Accommodations established (which day
shall be a Business Day) and the amount of the requested Loan. Requests received
after 11:00 a.m. Miami, Florida time on any day shall be deemed to have been
made as of the opening of business on the immediately following Business Day.
All Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, a Borrower when deposited to the credit of such Borrower or
otherwise disbursed or established in accordance with the instructions of such
Borrower or in accordance with the terms and conditions of this Agreement.
6.6 APPOINTMENT OF AGENT FOR REQUESTING LOANS AND RECEIPTS OF LOANS
AND STATEMENTS.
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(a) Each Borrower hereby irrevocably appoints and constitutes
Marketing as its agent to request and receive Loans and Letter of Credit
Accommodations pursuant to this Agreement and the other Financing Agreements
from Lender in the name or on behalf of such Borrower. Subject to the terms and
conditions contained herein, Lender may disburse the Loans to such bank account
of a Borrower or otherwise make such Loans to a Borrower and provide such Letter
of Credit Accommodations to a Borrower as Marketing may designate or direct,
without notice to any other Borrower or Guarantor.
(b) Marketing hereby accepts the appointment by Borrowers to act
as the agent of Borrowers pursuant to this Section 6.5. Marketing shall ensure
that the disbursement of any Loans to each Borrower requested by or paid to
Marketing, or the issuance of any Letter of Credit Accommodations for a Borrower
hereunder, shall be paid to or for the account of such Borrower.
(c) Each Borrower hereby irrevocably appoints and constitutes
Marketing as agent to receive statements on account and all other notices from
Lender with respect to the Obligations or otherwise under or in connection with
this Agreement and the other Financing Agreements.
(d) No purported termination of the appointment of Marketing as
agent as aforesaid shall be effective, except after ten (10) days' prior written
notice to Lender.
6.7 USE OF PROCEEDS.
(a) Borrowers shall use the initial proceeds of the Loans
provided by Lender to Borrowers hereunder only for: (i) payments to each of the
persons listed in the disbursement direction letter furnished by Borrowers to
Lender on or about the date hereof and (ii) costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Financing Agreements. All other Loans made or Letter of
Credit Accommodations provided by Lender to Borrowers pursuant to the provisions
hereof shall be used by Borrowers only for general operating, working capital
and other proper corporate purposes of Borrowers not otherwise prohibited by the
terms hereof. None of the proceeds will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security or for the purposes of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Loans to be considered a "purpose credit" within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System, as amended.
SECTION 7. COLLATERAL REPORTING AND COVENANTS
7.1 COLLATERAL REPORTING.
(a) Borrowers shall provide Lender with the following documents
in a form satisfactory to Lender:
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(i) no less frequently than weekly, a (A) schedule of sales
made, credits issued and cash received, (B) a borrowing base certificate in the
form attached hereto as Exhibit B duly, authorized executed and delivered by
Borrowers, and (C) Inventory reports, including a detailed report of In-Transit
Inventory (broken down by rail, truck, ship) and a physical on-hand inventory
report with respect to Borrower's inventory at each location together with
authentication reports (prepared by an independent third party acceptable to
Lender, except as otherwise agreed to by Lender);
(ii) as soon as possible after the end of each month (but in
any event within ten (10) days after the end thereof), on a monthly basis or
more frequently as Lender may request, (A) perpetual inventory reports, (B)
inventory reports by location and category, (C) agings of accounts payable (and
including information indicating the status of payments to owners and lessors of
the leased premises of Borrowers), (D) agings of accounts receivable (together
with a reconciliation to the previous month's aging and general ledger) and (E)
the month-end physical on-hand inventory report with respect to Borrower's
inventory at each location together with authentication reports (prepared by an
independent third party acceptable to Lender, except as otherwise agreed to by
Lender);
(iii) upon Lender's request, (A) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, (B) copies of shipping and delivery
documents, and (C) copies of purchase orders, invoices and delivery documents
for Inventory and Equipment acquired by Borrower;
(iv) such other reports as to the Collateral as Lender shall
request from time to time; and
(b) If any of Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower hereby irrevocably authorizes such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Lender and
to follow Lender's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.
7.2 ACCOUNTS COVENANTS.
(a) Borrowers shall notify Lender promptly of: (i) any material
delay in any Borrower's performance of any of its obligations to any account
debtor or the assertion of any claims, offsets, defenses or counterclaims by any
account debtor, or any disputes with account debtors, or any settlement,
adjustment or compromise thereof, (ii) all material adverse information relating
to the financial condition of any account debtor and (iii) any event or
circumstance which, to any Borrower's knowledge would cause Lender to consider
any then existing Accounts as no longer constituting Eligible Accounts. No
credit, discount, allowance or extension or agreement for any of the foregoing
shall be granted to any account debtor without Lender's consent, except in the
ordinary course of such Borrower's business in accordance with
39
practices and policies previously disclosed in writing to Lender. So long as no
Event of Default exists or has occurred and is continuing, each Borrower shall
settle, adjust or compromise any claim, offset, counterclaim or dispute with any
account debtor. At any time that an Event of Default exists or has occurred and
is continuing, Lender shall, at its option, have the exclusive right to settle,
adjust or compromise any claim, offset, counterclaim or dispute with account
debtors or grant any credits, discounts or allowances.
(b) Without limiting the obligation of Borrowers to deliver any
other information to Lender, each Borrower shall promptly report to Lender any
return of Inventory by any one account debtor if the Inventory so returned in
such case has a value in excess of $500,000. At any time that Inventory is
returned, reclaimed or repossessed, the Account (or portion thereof) which arose
from the sale of such returned, reclaimed or repossessed Inventory shall not be
deemed an Eligible Account. In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, Borrower
shall, upon Lender's request, (i) hold the returned Inventory in trust for
Lender, (ii) segregate all returned Inventory from all of its other property,
(iii) dispose of the returned Inventory solely according to Lender's
instructions, and (iv) not issue any credits, discounts or allowances with
respect thereto without Lender's prior written consent.
(c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement, (iii)
no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of a Borrower's business in
accordance with practices and policies previously disclosed to Lender, (iv)
there shall be no setoffs, deductions, contras, defenses, counterclaims or
disputes existing or asserted with respect thereto except as reported to Lender
in accordance with the terms of this Agreement, (v) none of the transactions
giving rise thereto will violate any applicable State or Federal laws or
regulations, all documentation relating thereto will be legally sufficient under
such laws and regulations and all such documentation will be legally enforceable
in accordance with its terms.
(d) Lender shall have the right at any time or times, in Lender's
name or in the name of a nominee of Lender, to verify the validity, amount or
any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.
(e) Borrowers shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to Borrowers,
any chattel paper or instrument which a Borrower now owns or may at any time
acquire within five (5) Business Days after such Borrower's receipt thereof,
prior to an Event of Default, or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, if the amount of
any such chattel paper or instrument equals or exceeds $250,000, or all chattel
paper and instruments if the aggregate amount of all such chattel paper and
instruments equals or exceeds $500,000, and after
40
an Event of Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default, all such chattel paper and
other instruments regardless of the amount thereof, in each case except as
Lender may otherwise agree.
(f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors
or other obligors that the Receivables have been assigned to Lender and that
Lender has a security interest therein and Lender may direct any or all accounts
debtors and other obligors to make payment of Receivables directly to Lender,
(ii) extend the time of payment of, compromise, settle or adjust for cash,
credit, return of merchandise or otherwise, and upon any terms or conditions,
any and all Receivables or other obligations included in the Collateral and
thereby discharge or release the account debtor or any other party or parties in
any way liable for payment thereof without affecting any of the Obligations,
(iii) demand, collect or enforce payment of any Receivables or such other
obligations, but without any duty to do so, and Lender shall not be liable for
its failure to collect or enforce the payment thereof nor for the negligence of
its agents or attorneys with respect thereto and (iv) take whatever other action
Lender may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is continuing, at
Lender's request, all invoices and statements sent to any account debtor shall
state that the Receivables and such other obligations have been assigned to
Lender and are payable directly and only to Lender and Borrowers shall deliver
to Lender such originals of documents evidencing the sale and delivery of goods
or the performance of services giving rise to any Receivables as Lender may
require.
7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) each
Borrower shall at all times maintain inventory records reasonably satisfactory
to Lender, keeping correct and accurate records itemizing and describing the
kind, type, quality and quantity of Inventory, the cost therefor and daily
withdrawals therefrom and additions thereto; (b) each Borrower shall conduct a
physical count of the Inventory at least once each year, but at any time or
times as Lender may request on or after an Event of Default, and promptly
following such physical inventory shall supply Lender with a report in the form
and with such specificity as may be reasonably satisfactory to Lender concerning
such physical count; (c) each Borrower shall not remove any Inventory from the
locations set forth or permitted herein, without the prior written consent of
Lender, except for sales of Inventory in the ordinary course of such Borrower's
business and except to move Inventory directly from one location set forth or
permitted herein to another such location and except for Inventory shipped from
the manufacturer thereof to each Borrower which is in transit to the locations
set forth or permitted herein; (d) upon Lender's request, Borrowers shall, at
their expense, no more than two (2) times in any twelve (12) month period, but
at any time or times as Lender may request on or after an Event of Default,
deliver or cause to be delivered to Lender written appraisals as to the
Inventory in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender and upon which Lender is
expressly permitted to rely; (e) each Borrower shall produce, use, store and
maintain the Inventory with all reasonable care and caution and in accordance
with applicable standards of any insurance and in conformity with applicable
laws (including the requirements of the Federal Fair Labor Standards Act of
1938, as amended and all rules, regulations and orders
41
related thereto); (f) each Borrower assumes all responsibility and liability
arising from or relating to the production, use, sale or other disposition of
the Inventory; (g) each Borrower shall not sell Inventory to any customer on
approval, or any other basis which entitles the customer to return or may
obligate Borrower to repurchase such Inventory; (h) each Borrower shall keep the
Inventory in good and marketable condition; and (i) each Borrower shall not
acquire or accept any Inventory on consignment or approval without including
such Inventory in a report of such Inventory provided by Borrowers to Lender
pursuant to Section 7.1 hereof.
7.4 EQUIPMENT AND REAL PROPERTY COVENANTS. With respect to the
Equipment and Real Property: (a) upon Lender's request, Borrowers shall, at
their expense, no more than once in any twelve (12) month period, but at any
time or times as Lender may request on or after an Event of Default, deliver or
cause to be delivered to Lender written appraisals as to the Equipment and/or
the Real Property in form, scope and methodology acceptable to Lender and by an
appraiser acceptable to Lender, addressed to Lender and upon which Lender is
expressly permitted to rely; (b) each Borrower shall keep the Equipment in good
order, repair, running and marketable condition (ordinary wear and tear
excepted); (c) each Borrower shall use the Equipment and Real Property with all
reasonable care and caution and in accordance with applicable standards of any
insurance and in conformity with all applicable laws; (d) the Equipment is and
shall be used in Borrowers' businesses and not for personal, family, household
or farming use; (e) each Borrower shall not remove any Equipment from the
locations set forth or permitted herein, except to the extent necessary to have
any Equipment repaired or maintained in the ordinary course of the respective
businesses of Borrowers or to move Equipment directly from one location set
forth or permitted herein to another such location and except for the movement
of motor vehicles used by or for the benefit of Borrowers in the ordinary course
of business; (f) the Equipment is now and shall remain personal property and
each Borrower shall not permit any of the Equipment to be or become a part of or
affixed to real property; and (g) each Borrower assumes all responsibility and
liability arising from the use of the Equipment and Real Property. The covenants
set forth in this Section with respect to Real Property apply only to the Real
Property of Chemicals owned as the date hereof and property acquired by any
Borrower or Guarantor after the date hereof, pursuant to Section 9.20 hereof.
7.5 POWER OF ATTORNEY. Each Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in such Borrower's or Lender's
name, to: (a) at any time an Event of Default exists or has occurred and is
continuing (i) demand payment on Receivables or other Collateral, (ii) enforce
payment of Receivables by legal proceedings or otherwise, (iii) exercise all of
such Borrower's rights and remedies to collect any Receivable or other
Collateral, (iv) sell or assign any Receivable upon such terms, for such amount
and at such time or times as the Lender deems advisable, (v) settle, adjust,
compromise, extend or renew a Receivable, (vi) discharge and release any
Receivable, (vii) prepare, file and sign such Borrower's name on any proof of
claim in bankruptcy or other similar document against an account debtor or other
obligor in respect of any Receivables or other Collateral, (viii) notify the
post office authorities to change the address for delivery of remittances from
account debtors or other obligors in respect of Receivables or other proceeds of
Collateral to an address designated by Lender, and
42
open and dispose of all mail addressed to such Borrower and handle and store all
mail relating to the Collateral; and (ix) do all acts and things which are
necessary, in Lender's determination, to fulfill such Borrower's obligations
under this Agreement and the other Financing Agreements and (b) at any time to
(i) take control in any manner of any item of payment in respect of Receivables
or constituting Collateral or otherwise received in or for deposit in the
Blocked Accounts or otherwise received by Lender, (ii) have access to any
lockbox or postal box into which remittances from account debtors or other
obligors in respect of Receivables or other proceeds of Collateral are sent or
received, (iii) endorse such Borrower's name upon any items of payment in
respect of Receivables or constituting Collateral or otherwise received by
Lender and deposit the same in Lender's account for application to the
Obligations, (iv) endorse such Borrower's name upon any chattel paper, document,
instrument, invoice, or similar document or agreement relating to any Receivable
or any goods pertaining thereto or any other Collateral, including any warehouse
or other receipts, or bills of lading and other negotiable or non-negotiable
documents, (v) clear Inventory the purchase of which was financed with Letter of
Credit Accommodations through U.S. Customs in such Borrower's name, Lender's
name or the name of Lender's designee, and to sign and deliver to customs
officials powers of attorney in such Borrower's name for such purpose, and to
complete in such Borrower's or Lender's name, any order, sale or transaction,
obtain the necessary documents in connection therewith and collect the proceeds
thereof, (vi) sign such Borrower's name on any verification of Receivables and
notices thereof to account debtors or other obligors in respect thereof and
(vii) execute in such Borrower's name and file any UCC and PPSA financing
statements or amendments thereto. Each Borrower hereby releases Lender and its
officers, employees and designees from any liabilities arising from any act or
acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except as a result of Lender's own gross negligence or
wilful misconduct as determined pursuant to a final non-appealable order of a
court of competent jurisdiction.
7.6 RIGHT TO CURE. Lender may, at its option, after notice to
Borrowers (and so long as Borrowers have not taken such action within a
reasonable time after such notice, but in any event within five (5) days after
such notice, unless Lender determines in good faith that under the circumstances
it is necessary to act sooner): (a) cure any default by any Borrower under any
material agreement with a third party which affects the Collateral, its value or
the ability of Lender to collect, sell or otherwise dispose of the Collateral or
the rights and remedies of Lender therein or the ability of such Borrower to
perform its obligations under the other Financing Agreements, (b) pay or bond on
appeal any judgment entered against any Borrower, (c) discharge taxes, liens,
security interests or other encumbrances at any time levied on or existing with
respect to the Collateral and (d) pay any amount, incur any expense or perform
any act which, in Lender's judgment, is necessary or appropriate to preserve,
protect, insure or maintain the Collateral and the rights of Lender with respect
thereto. Lender may add any amounts so expended to the Obligations and charge a
Borrower's account therefor, such amounts to be repayable by such Borrower on
demand. Lender shall be under no obligation to effect such cure, payment or
bonding and shall not, by doing so, be deemed to have assumed any obligation or
liability of Borrowers. Any payment made or other action taken by Lender under
this Section
43
shall be without prejudice to any right to assert an Event of Default hereunder
and to proceed accordingly.
7.7 ACCESS TO PREMISES. From time to time as requested by Lender, at
the cost and expense of Borrowers, (a) Lender or its designee shall have
complete access to all premises of Borrowers and Guarantors during normal
business hours and after notice to Marketing, or at any time and without notice
to Marketing if an Event of Default exists or has occurred and is continuing,
for the purposes of inspecting, verifying and auditing the Collateral and all of
such Borrower's and Guarantor's books and records, including the Records, and
(b) each Borrower and Guarantor shall promptly furnish to Lender such copies of
such books and records or extracts therefrom as Lender may request, and (c)
Lender or its designee may, after reasonable notice to Marketing, use during
normal business hours such of each Borrower's and Guarantor's personnel,
equipment, supplies and premises as may be necessary for the foregoing and at
any time if an Event of Default exists or has occurred and is continuing for the
collection of Receivables and realization of other Collateral.
7.8 BILLS OF LADING AND OTHER DOCUMENTS OF TITLE. Each Borrower shall
cause all bills of lading and other documents of title relating to goods being
purchased by such Borrower which are in transit to the premises of Borrower to
name such Borrower as consignee, unless and until Lender may direct otherwise.
At such time and from time to time as Lender may direct, each Borrower shall
cause Lender or such other financial institution or other person as Lender may
specify to be named as consignee. Without limiting any other rights of Lender
hereunder, Lender shall have the right to endorse and negotiate on behalf of,
and as attorney-in-fact for, each Borrower any xxxx of lading or other document
of title with respect to such goods naming such Borrower as consignee to Lender.
Each Borrower shall cause all bills of lading or other documents of title
relating to goods purchased by Borrower which are in transit to the premises of
Borrower to be issued in a form so as to constitute negotiable documents as such
term is defined in the Uniform Commercial Code.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Each Borrower and Guarantor hereby, jointly and severally, represents
and warrants to Lender the following (which shall survive the execution and
delivery of this Agreement), the truth and accuracy of which are a continuing
condition of the making of Loans and providing Letter of Credit Accommodations
by Lender to Borrowers:
8.1 CORPORATE EXISTENCE, POWER AND AUTHORITY; SUBSIDIARIES. Each
Borrower and Guarantor is a corporation duly organized and in good standing
under the laws of its state of incorporation and is duly qualified as a foreign
corporation and in good standing in all states or other jurisdictions where the
nature and extent of the business transacted by it or the ownership of assets
makes such qualification necessary, except for those jurisdictions in which the
failure to so qualify would not have a material adverse effect on Borrower's
financial condition, results of operation or business or the rights of Lender in
or to any of the Collateral. The execution, delivery and performance of this
Agreement, the other Financing Agreements and the
44
transactions contemplated hereunder and thereunder are all within each
Borrower's or Guarantor's corporate powers, have been duly authorized and are
not in contravention of law or the terms of any Borrower's or Guarantor's
certificate of incorporation, by-laws, or other organizational documentation, or
any indenture, agreement or undertaking to which a Borrower or Guarantor is a
party or by which a Borrower or Guarantor or any of their property are bound.
This Agreement and the other Financing Agreements to which each is a party
constitute legal, valid and binding obligations of Borrowers and Guarantors
enforceable in accordance with their respective terms. Borrowers and Guarantors
do not have any Subsidiaries except as set forth on the Information
Certificates.
8.2 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to Borrowers and Guarantors which have been or may hereafter
be delivered by Borrowers or Guarantors to Lender have been prepared in
accordance with GAAP and fairly present the financial condition and the results
of operation of Borrowers and Guarantors as at the dates and for the periods set
forth therein. Except as disclosed in any interim financial statements furnished
by Borrowers or Guarantors to Lender prior to the date of this Agreement, there
has been no material adverse change in the assets, liabilities, properties and
condition, financial or otherwise, of Borrowers or Guarantors, since the date of
the most recent audited financial statements furnished by Borrower to Lender
prior to the date of this Agreement.
8.3 CHIEF EXECUTIVE OFFICE; COLLATERAL LOCATIONS. The chief executive
office of each Borrower and Guarantor and each Borrower's and Guarantor's
Records concerning Accounts are located only at the addresses set forth on the
signature page hereto and the only other places of business and the only other
locations of Collateral, if any, are the addresses set forth in the Information
Certificate, subject to the right of each Borrower and Guarantor to establish
new locations in accordance with Section 9.2 below. The Information Certificate
correctly identifies any of such locations which are not owned by Borrowers or
Guarantors and sets forth the owners and/or operators thereof and to the best of
each Borrower's and Guarantor's knowledge, the holders of any mortgages on such
locations.
8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4
hereto and the other liens permitted under Section 9.8 hereof. Each Borrower and
Guarantor has good and marketable title to all of its properties and assets
subject to no liens, mortgages, pledges, security interests, encumbrances or
charges of any kind, except those granted to Lender and such others as are
specifically listed on Schedule 8.4 hereto or permitted under Section 9.8
hereof.
8.5 TAX RETURNS. Each Borrower and Guarantor has filed, or caused to
be filed, in a timely manner all tax returns, reports and declarations which are
required to be filed by it. All information in such tax returns, reports and
declarations is complete and accurate in all material respects. Each Borrower
and Guarantor has paid or caused to be paid all taxes due and payable or claimed
due and payable in any assessment received by it, except taxes the validity of
which
45
are being contested in good faith by appropriate proceedings diligently pursued
and available to such Borrower and Guarantor and with respect to which adequate
reserves have been set aside on its books. Adequate provision has been made for
the payment of all accrued and unpaid Federal, State, county, local, foreign and
other taxes whether or not yet due and payable and whether or not disputed.
8.6 LITIGATION. There is no present investigation by any Governmental
Authority pending, or to the best of each Borrower's and Guarantor's knowledge
threatened, against or affecting any Borrower or Guarantor, its assets or
business and there is no action, suit, proceeding or claim by any Person
pending, or to the best of each Borrower's and Guarantor's knowledge threatened,
against any Borrower or Guarantor or its assets or goodwill, or against or
affecting any transactions contemplated by this Agreement, which, in each or any
case, if adversely determined against such Borrower and Guarantor would have a
Material Adverse Effect.
8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS.
(a) Except as set forth in Schedule 8.7 hereto, each Borrower,
Guarantor and their Subsidiaries is not in default in any material respect
under, or in violation in any material respect of any of the terms of, any
agreement, contract, instrument, lease or other commitment to which it is a
party or by which it or any of its assets are bound. Each Borrower, Guarantor
and their Subsidiaries is in compliance with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority relating to
its business, including, without limitation, those set forth in or promulgated
pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair
Labor Standards Act of 1938, as amended, ERISA, the Code, as amended, and the
rules and regulations thereunder, and all Environmental Laws where the failure
to so comply would have a Material Adverse Effect.
(b) Each Borrower, Guarantor and their Subsidiaries has obtained
all material permits, licenses, approvals, consents, certificates, orders or
authorizations of any Governmental Authority (the "Permits") required for the
lawful conduct of its business. The Permits constitute all permits, licenses,
approvals, consents, certificates, orders or authorizations necessary for each
Borrower, Guarantor and their Subsidiaries to own and operate its business as
presently conducted or proposed to be conducted. All of the Permits are valid
and subsisting and in full force and effect. There are no actions, claims or
proceedings pending or to the best of each Borrower's and Guarantor's knowledge,
threatened that seek the revocation, cancellation, suspension or modification of
any of the Permits which would have a Material Adverse Effect.
8.8 ENVIRONMENTAL COMPLIANCE.
(a) Except as set forth on Schedule 8.8 hereto, Borrowers,
Guarantors and any Subsidiary have not generated, used, stored, treated,
transported, manufactured, handled, produced or disposed of any Hazardous
Materials, on or off its premises (whether or not owned by it) in any manner
which at any time violates any applicable Environmental Law or any
46
license, permit, certificate, approval or similar authorization thereunder and
the operations of Borrowers, Guarantors and any Subsidiary complies in all
material respects with all Environmental Laws and all licenses, permits,
certificates, approvals and similar authorizations thereunder.
(b) Except as set forth on Schedule 8.8 hereto, there has been no
investigation, proceeding, complaint, order, directive, claim, citation or
notice by any Governmental Authority or any other person nor is any pending or
to the best of each Borrower's and Guarantor's knowledge threatened, with
respect to any non-compliance with or violation of the requirements of any
Environmental Law by any Borrower, Guarantor or Subsidiary or the release, spill
or discharge, threatened or actual, of any Hazardous Material or the generation,
use, storage, treatment, transportation, manufacture, handling, production or
disposal of any Hazardous Materials or any other environmental, health or safety
matter, which affects any Borrower or Guarantor or its business, operations or
assets or any properties at which any Borrower or Guarantor has transported,
stored or disposed of any Hazardous Materials.
(c) Except as set forth on Schedule 8.8, Borrowers, Guarantors
and Subsidiaries have no material liability (contingent or otherwise) in
connection with a release, spill or discharge, threatened or actual, of any
Hazardous Materials or the generation, use, storage, treatment, transportation,
manufacture, handling, production or disposal of any Hazardous Materials.
(d) Each Borrower, Guarantor and Subsidiary has all licenses,
certificates, approvals or similar authorizations and other Permits required to
be obtained or filed in connection with the operations of such Borrower,
Guarantor or Subsidiary under any Environmental Law and all of such licenses,
certificates, approvals or similar authorizations are valid and in full force
and effect.
8.9 EMPLOYEE BENEFITS.
(a) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service and to the best of each Borrower's and
Guarantor's knowledge, nothing has occurred which would cause the loss of such
qualification. Each Borrower and Guarantor and their ERISA Affiliates have made
all required contributions to any Plan subject to Section 412 of the Code, and
no application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or to the best of each Borrower's and
Guarantor's knowledge, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan.
47
(c) (i) No ERISA Event has occurred or is reasonably expected to
occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) do not exceed such Plan's liabilities under Section 400(a)(16) of ERISA;
(iii) each Borrower, Guarantor and its ERISA Affiliates have not incurred and do
not reasonably expect to incur, any liability under Title IV of ERISA with
respect to any Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) each Borrower, Guarantor and its ERISA Affiliates have not
incurred and do not reasonably expect to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) each Borrower, Guarantor and its ERISA Affiliates
have not engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
8.10 BANK ACCOUNTS. All of the deposit accounts, investment accounts or
other accounts in the name of or used by Borrowers and Guarantors maintained at
any bank or other financial institution are set forth on Schedule 8.10 hereto,
subject to the rights of Borrowers and Guarantors to establish new accounts in
accordance with Section 9.13 below.
8.11 INTELLECTUAL PROPERTY. Each Borrower owns or licenses or otherwise
has the right to use all Intellectual Property necessary for the operation of
its business as presently conducted or proposed to be conducted. As of the date
hereof, Borrowers do not have any Intellectual Property registered, or subject
to pending applications, in the United States Patent and Trademark Office or any
similar office or agency in the United States, any State thereof, any political
subdivision thereof or in any other country, other than those described in
Schedule 8.11 hereto and has not granted any licenses with respect thereto other
than as set forth in Schedule 8.11 hereto. No event has occurred which permits
or would permit after notice or passage of time or both, the revocation,
suspension or termination of such rights. To the best of each Borrower's
knowledge, no slogan or other advertising device, product, process, method,
substance or other Intellectual Property or goods bearing or using any
Intellectual Property presently contemplated to be sold by or employed by a
Borrower infringes any patent, trademark, servicemark, tradename, copyright,
license or other Intellectual Property owned by any other Person presently and
no claim or litigation is pending or threatened against or affecting a Borrower
contesting its right to sell or use any such Intellectual Property. Schedule
8.11 sets forth all of the agreements or other arrangements of Borrowers
pursuant to which a Borrower has a license or other right to use any trademarks,
logos, designs, representations or other Intellectual Property owned by another
person as in effect on the date hereof and the dates of the expiration of such
agreements or other arrangements of a Borrower as in effect on the date hereof.
No trademark, servicemark or other Intellectual Property at any time used by a
Borrower which is owned by another person, or owned by a Borrower subject to any
security interest, lien, collateral assignment, pledge or other encumbrance in
favor of any person other than Lender, is affixed to any Eligible Inventory,
except to the extent permitted under the term of the license agreements listed
on Schedule 8.11 hereto.
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8.12 INTERRELATED BUSINESS. Parent is the direct and beneficial owner
and holder of all of the issued and outstanding shares of Capital Stock of each
of the Borrowers and Guarantors. International, a wholly-owned Subsidiary of
Parent, is the direct and beneficial owner and holder of all of the issued and
outstanding shares of Capital Stock of JLM Chemicals Asia, Pte Ltd., JLM Jigsha
Chemicals (India) Pvt. Ltd., Inquinosa International, S.A.. Borrowers,
Guarantors and the other JLM Domestic Subsidiaries and JLM Foreign Subsidiaries
make up a related organization of various entities constituting a single
economic and business enterprise so that Borrowers, Guarantors and the other JLM
Domestic Subsidiaries and Foreign Subsidiaries share an identity of interests
such that any benefit received by any one of them benefits the others.
Borrowers, Guarantors and the other Domestic and Foreign Subsidiaries render
services to or for the benefit of the other Borrowers and/or Guarantors and
other Domestic and Foreign Subsidiaries, as the case may be, purchase or sell
and supply goods to or from or for the benefit of the others, make loans,
advances and provide other financial accommodations to or for the benefit of the
other Borrowers, Guarantors and the other Domestic and Foreign Subsidiaries
(including INTER ALIA, the payment by Borrowers and Guarantors of creditors of
the other Borrowers or Guarantors and guarantees by Borrowers and Guarantors of
indebtedness of the other Borrowers and Guarantors and provide administrative,
marketing, payroll and management services to or for the benefit of the other
Borrowers and Guarantors). Borrowers, Guarantors and the other Domestic and
Foreign Subsidiaries have centralized accounting and legal services, common
officers and directors and are identified to creditors as a single economic and
business enterprise.
8.13 CAPITALIZATION.
(a) All of the issued and outstanding shares of Capital Stock of
each Borrower and Guarantor (other than Parent) are directly and beneficially
owned and held by Parent, and in each case as to all of such shares have been
duly authorized and are fully paid and non-assessable, free and clear of all
claims, liens, pledges and encumbrances of any kind, except as disclosed in
writing to Lender.
(b) Each Borrower and Guarantor is Solvent and will continue to
be Solvent after the creation of the Obligations, the security interests of
Lender and the other transaction contemplated hereunder.
8.14 LABOR DISPUTES
(a) Set forth on Schedule 8.14 hereto is a list (including dates
of termination) of all collective bargaining or similar agreements between or
applicable to each Borrower and any union, labor organization or other
bargaining agent in respect of the employees of such Borrower on the date
hereof.
(b) There is (i) no significant unfair labor practice complaint
pending against a Borrower or Guarantor, to the best of each Borrower's and
Guarantor's knowledge, threatened against it, before the National Labor
Relations Board, and no significant grievance or significant
49
arbitration proceeding arising out of or under any collective bargaining
agreement is pending on the date hereof against a Borrower or, to best of each
Borrower's and Guarantor's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against a
Borrower or, to the best of each Borrower's and Guarantor's knowledge,
threatened against a Borrower.
8.15 CORPORATE NAME; PRIOR TRANSACTIONS. Each Borrower and Guarantor
has not, during the past five years, been known by or used by any other
corporate or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth in the Information Certificate.
8.16 RESTRICTIONS ON SUBSIDIARIES. Except for restrictions contained in
this Agreement or any other agreement with respect to Indebtedness of any
Borrower or Guarantor permitted hereunder as in effect on the date hereof, there
are no contractual or consensual restrictions on any Borrower or Guarantor or
any of its respective Subsidiaries which prohibit or otherwise restrict (a) the
transfer of cash or other assets (i) between any Borrower or Guarantor and any
of its respective Subsidiaries or (ii) between any Subsidiaries of any Borrower
or Guarantor or (b) the ability of any Borrower or Guarantor or any of its
respective Subsidiaries to incur Indebtedness or grant security interests to
Lender in the Collateral.
8.17 MATERIAL CONTRACTS. Schedule 8.17 hereto sets forth all Material
Contracts to which each Borrower and Guarantor is a party or is bound as of the
date hereof. Each Borrower and Guarantor has delivered true, correct and
complete copies of such Material Contracts to Lender on or before the date
hereof. Each Borrower and Guarantor is not in breach of or in default under any
Material Contract and has not received any notice of the intention of any other
party thereto to terminate any Material Contract.
8.18 PAYABLE PRACTICES. Each Borrower has not made any material change
in the historical accounts payable practices from those in effect immediately
prior to the date hereof.
8.19 ACCURACY AND COMPLETENESS OF INFORMATION. All information
furnished by or on behalf of each Borrower and Guarantor and its respective
Subsidiaries in writing to Lender in connection with this Agreement or any of
the other Financing Agreements or any transaction contemplated hereby or
thereby, including all information on the Information Certificate is true and
correct in all material respects on the date as of which such information is
dated or certified and does not omit any material fact necessary in order to
make such information not misleading. No event or circumstance has occurred
which has had or could reasonably be expected to have a material adverse affect
on the business or assets of any Borrower or Guarantor, which has not been fully
and accurately disclosed to Lender in writing.
8.20 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date
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of each additional borrowing or other credit accommodation hereunder and shall
be conclusively presumed to have been relied on by Lender regardless of any
investigation made or information possessed by Lender. The representations and
warranties set forth herein shall be cumulative and in addition to any other
representations or warranties which Borrowers and Guarantors shall now or
hereafter give, or cause to be given, to Lender.
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 MAINTENANCE OF EXISTENCE. Each Borrower and Guarantor shall, and
shall cause any Subsidiary to, at all times preserve, renew and keep in full,
force and effect its corporate existence and rights and franchises with respect
thereto (other than pursuant to a merger or liquidation permitted hereunder) and
maintain in full force and effect all material Permits, licenses, trademarks,
tradenames, approvals, authorizations, leases and contracts necessary to carry
on the business as presently or proposed to be conducted. Each Borrower and
Guarantor shall, and shall cause any Subsidiary to, give Lender thirty (30) days
prior written notice of any proposed change in its corporate name, which notice
shall set forth the new name and each Borrower and Guarantor shall deliver to
Lender a copy of the amendment to the certificate of incorporation of such
Borrower, Guarantor or Subsidiary providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation of such Borrower,
Guarantor or Subsidiary as soon as it is available.
9.2 NEW COLLATERAL LOCATIONS. Each Borrower and Guarantor may open any
new location within the continental United States provided such Borrower or
Guarantor (a) gives Lender thirty (30) days prior written notice of the intended
opening of any such new location and (b) executes and delivers, or causes to be
executed and delivered, to Lender such agreements, documents, and instruments as
Lender may deem reasonably necessary or desirable to protect its interests in
the Collateral at such location, including Collateral Access Agreements and UCC
financing statements and PPSA financing statements. For purposes hereof, a "new
location" shall mean any location of Collateral other than those set forth in
the Information Certificate.
9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC.
(a) Each Borrower and Guarantor shall, and shall cause its
Subsidiaries to, at all times, comply in all material respects with all laws,
rules, regulations, licenses, Permits, approvals and orders applicable to it and
duly observe all requirements of any Federal, State or local Governmental
Authority, including ERISA, the Code, the Occupational Safety and Health Act of
1970, as amended, the Fair Labor Standards Act of 1938, as amended, and all
statutes, rules, regulations, orders, permits and stipulations relating to
environmental pollution and employee health and safety, including all of the
Environmental Laws.
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(b) Each Borrower and Guarantor shall and shall cause its
Subsidiaries to, establish and maintain at its expense, a system to assure and
monitor its continued compliance with all Environmental Laws in all of its
operations, which system shall include annual reviews of such compliance by
employees or agents of each Borrower and Guarantor who are familiar with the
requirements of the Environmental Laws. Copies of all environmental surveys,
audits, assessments, feasibility studies and results of remedial investigations
shall be promptly furnished, or caused to be furnished, by each Borrower and
Guarantor to Lender. Each Borrower and Guarantor shall take prompt and
appropriate action to respond to any non-compliance with any of the
Environmental Laws and shall regularly report to Lender on such response.
(c) Each Borrower and Guarantor shall give both oral and written
notice to Lender immediately upon a Borrower's or Guarantor's receipt of any
notice of, or a Borrower's or Guarantor's otherwise obtaining knowledge of, (i)
the occurrence of any event involving the release, spill or discharge,
threatened or actual, of any Hazardous Material or (ii) any investigation,
proceeding, complaint, order, directive, claims, citation or notice with respect
to: (A) any non-compliance with or violation of any Environmental Law by a
Borrower or Guarantor or (B) the release, spill or discharge, threatened or
actual, of any Hazardous Material or (C) the generation, use, storage,
treatment, transportation, manufacture, handling, production or disposal of any
Hazardous Materials or (D) any other environmental, health or safety matter,
which affects a Borrower or Guarantor with respect to business, operations or
assets or any properties at which a Borrower or Guarantor transported, stored or
disposed of any Hazardous Materials.
(d) Without limiting the generality of the foregoing, whenever
Lender reasonably determines that there is material non-compliance, or any
condition which requires any action by or on behalf of a Borrower or Guarantor
in order to avoid any material non-compliance, with any Environmental Law, such
Borrower or Guarantor shall, at Lender's request and such Borrower's or
Guarantor's expense: (i) cause an independent environmental engineer acceptable
to Lender to conduct such tests of the site where such Borrower's or Guarantor's
non-compliance or alleged non-compliance with such Environmental Laws has
occurred as to such non-compliance and prepare and deliver to Lender a report as
to such non-compliance setting forth the results of such tests, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof and (ii) provide to Lender a supplemental report of such
engineer whenever the scope of such non-compliance, or such Borrower's or
Guarantor's response thereto or the estimated costs thereof, shall change in any
material respect.
(e) Each Borrower and Guarantor shall indemnify and hold harmless
Lender, its directors, officers, employees, agents, invitees, representatives,
successors and assigns, from and against any and all losses, claims, damages,
liabilities, costs, and expenses (including attorneys' fees and legal expenses)
directly or indirectly arising out of or attributable to the use, generation,
manufacture, reproduction, storage, release, threatened release, spill,
discharge, disposal or presence of a Hazardous Material, including the costs of
any required or necessary repair, cleanup or other remedial work with respect to
any property of a Borrower or Guarantor and the preparation and implementation
of any closure, remedial or other required plans. All
52
representations, warranties, covenants and indemnifications in this Section 9.3
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement.
9.4 PAYMENT OF TAXES AND CLAIMS. Each Borrower and Guarantor shall,
and shall cause any Subsidiary to, duly pay and discharge all taxes,
assessments, contributions and governmental charges upon or against it or its
properties or assets, except for taxes the validity of which are being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower or Guarantor or such Subsidiary, as the case may be, and with
respect to which adequate reserves have been set aside on its books. Each
Borrower and Guarantor shall be liable for any tax or penalties imposed on
Lender as a result of the financing arrangements provided for herein and each
Borrower and Guarantor agrees to indemnify and hold Lender harmless with respect
to the foregoing, and to repay to Lender on demand the amount thereof, and until
paid by Borrowers such amount shall be added and deemed part of the Loans,
PROVIDED, THAT, nothing contained herein shall be construed to require Borrowers
or Guarantors to pay any income or franchise taxes attributable to the income of
Lender from any amounts charged or paid hereunder to Lender. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.
9.5 INSURANCE. (a) Each Borrower and Guarantor shall, and shall cause
any Subsidiary to, at all times, maintain with financially sound and reputable
insurers insurance with respect to the Collateral against loss or damage and all
other insurance of the kinds and in the amounts customarily insured against or
carried by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
satisfactory to Lender as to form, amount and insurer. Each Borrower and
Guarantor shall furnish certificates, policies or endorsements to Lender as
Lender shall require as proof of such insurance, and, if any Borrower or
Guarantor fails to do so, Lender is authorized, but not required, to obtain such
insurance at the expense of Borrowers. All policies shall provide for at least
thirty (30) days prior written notice to Lender of any cancellation or reduction
of coverage and that Lender may act as attorney for any Borrower or Guarantor in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. Each
Borrower and Guarantor shall cause Lender to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and each Borrower and Guarantor shall obtain non-contributory
lender's loss payable endorsements to all insurance policies in form and
substance satisfactory to Lender. Such lender's loss payable endorsements shall
specify that the proceeds of such insurance shall be payable to Lender as its
interests may appear and further specify that Lender shall be paid regardless of
any act or omission by Borrowers or any of their Affiliates.
(b) At its option, Lender may apply any insurance proceeds (other
than insurance proceeds of Equipment which is subject to purchase money security
interests or liens permitted by Section 9.8 hereof; in which case Lender shall,
to the extent it receives such insurance proceeds, remit same to Borrowers)
received by Lender at any time to the cost of repairs or replacement of
Collateral and/or to payment of the Obligations, whether or not then due, in any
order and in such manner as Lender may in good faith determine or hold such
proceeds as cash
53
collateral for the Obligations, EXCEPT THAT notwithstanding anything to the
contrary contained herein, if any Equipment is lost, physically damaged or
destroyed, upon the written request of Borrowers, Lender shall release the net
cash proceeds from insurance received by Lender pursuant to this Section 9.5 to
Borrowers as a result of such loss, damage or destruction to the extent
necessary for the repair, refurbishing or replacement of such Equipment,
PROVIDED, THAT, each of the following conditions is satisfied: (i) no Event of
Default shall exist or have occurred and be continuing at the time immediately
after giving effect to such release, (ii) such proceeds shall be used solely to
repair, refurbish or replace the property so lost, damaged or destroyed (free
and clear of any security interests, liens, claims or other encumbrances other
than as permitted in Section 9.8 hereof), (iii) the repair, refurbishing or
replacement of the property so lost, damaged or destroyed shall be commenced as
soon as reasonably practicable and shall be diligently pursued to satisfactory
completion, (iv) the proceeds shall be held by Lender as cash collateral for the
Obligations and shall be disbursed from such cash collateral from time to time
as needed and/or, at Lender's option, released by Lender directly to the
contractor, subcontractor, materialmen, laborers, engineers, architects and
other persons rendering services or materials to repair, refurbish or replace
the property so lost, damaged or destroyed, (v) the amount of the insurance
proceeds and Borrowers' unrestricted cash available for such purposes are
sufficient in Lender's reasonable determination, to allow Borrowers to effect
such repair, refurbishing or replacement in a satisfactory manner, (vi) the
repair, refurbishing or replacement to which the proceeds are applied shall
cause the Equipment so lost, damaged, destroyed to be of at least equal value
and substantially the same character as prior to such loss, damage or
destruction, and (vii) the casualty shall have resulted in payment of $250,000
in insurance proceeds or less. Upon completion of the work and payment in full
therefor, or upon the failure to commence, or diligently to continue the work or
the replacement of the Collateral, Lender may, at Lender's option and after
prior notice to Borrowers, either apply the amount of any such proceeds then or
thereafter in the possession of Lender to the payment of the Obligations or hold
such proceeds as cash collateral for the Obligations on terms and conditions
acceptable to Lender and not release such funds to Borrowers, PROVIDED, THAT,
nothing contained herein shall limit the right of Lender to apply any or all of
such proceeds to the Obligations at any time an Event of Default shall exist or
have occurred and be continuing.
9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.
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(a) Each Borrower and Guarantor shall, and shall cause any
Subsidiary to, keep proper books and records in which true and complete entries
shall be made of all dealings or transactions of or in relation to the
Collateral and the business of Borrowers, Guarantors and their Subsidiaries in
accordance with GAAP and Borrowers and Guarantors shall promptly furnish to
Lender all such financial and other information as Lender shall reasonably
request relating to the Collateral and the assets, business and operations of
Borrower and Guarantors, and to notify the auditors and accountants of Borrowers
and Guarantors that Lender is authorized to obtain such information directly
from them. Without limiting the foregoing, Borrowers and Guarantors shall each
furnish or cause to be furnished to Lender, the following: (i) within thirty
(30) days after the end of each fiscal month, (A) monthly unaudited consolidated
financial statements, and unaudited consolidating financial statements for
Parent and its Subsidiaries (including in each case balance sheets, statements
of income and loss, statements of cash flow, and statements of shareholders'
equity), all in reasonable detail, fairly presenting the financial position and
the results of the operations of Parent and its Subsidiaries as of the end of
and through such fiscal month, certified to be correct by the chief financial
officer of each of Parent and its Subsidiaries, subject to normal year-end
adjustments and accompanied by a compliance certificate substantially in the
form of Exhibit C hereto, and (B) monthly unaudited consolidated financial
statements, and unaudited consolidating financial statements for Borrowers
(including in each case balance sheets, statements of income and loss,
statements of cash flow, and statements of shareholders' equity), all in
reasonable detail, fairly presenting the financial position and the results of
the operations of Borrowers as of the end of and through such fiscal month,
certified to be correct by the chief financial officer of each of Borrowers,
subject to normal year-end adjustments and accompanied by a compliance
certificate substantially in the form of Exhibit C hereto along with a schedule
in form reasonably satisfactory to Lender of the calculations used in
determining, as of the end of such month, whether Borrowers were in compliance
with the covenants set forth in Sections 9.10(d), 9.12(a)(iii), and 9.15 of this
Agreement for such month; (ii) within forty-five (45) days after the end of each
fiscal quarter, (A) quarterly unaudited consolidated financial statements of
Parent and its Subsidiaries (including in each case, balance sheets, statements
of income and loss and statements of cash flow) and unaudited consolidating
financial statements of Parent and its Subsidiaries (including in each case,
balance sheets, statements of income and loss and statements of cash flow), in
each case all in reasonable detail, fairly presenting the financial position and
the results of operations of Parent and its Subsidiaries as of the end of and
through such fiscal quarter, and (B) quarterly unaudited consolidated financial
statements of Borrowers (including in each case, balance sheets, statements of
income and loss and statements of cash flow) and unaudited consolidating
financial statements of Borrowers (including in each case, balance sheets,
statements of income and loss and statements of cash flow), in each case all in
reasonable detail, fairly presenting the financial position and the results of
operations of Borrowers as of the end of and through such fiscal quarter, and
(iii) within ninety (90) days after the end of each fiscal year, (A) audited
consolidated financial statements and audited consolidating financial statements
of Parent and its Subsidiaries (including in each case balance sheets,
statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Parent and its Subsidiaries as of the end of and for such fiscal
year, together with the unqualified
55
opinion of independent certified public accountants, which accountants shall be
an independent accounting firm selected by Borrowers and Parent and reasonably
acceptable to Lender, that such financial statements have been prepared in
accordance with GAAP, and present fairly the results of operations and financial
condition of Parent and its Subsidiaries as of the end of and for the fiscal
year then ended, and (B) audited consolidated financial statements and audited
consolidating financial statements of Borrowers (including in each case balance
sheets, statements of income and loss, statements of cash flow and statements of
shareholders' equity), and the accompanying notes thereto, all in reasonable
detail, fairly presenting the financial position and the results of the
operations of Borrowers as of the end of and for such fiscal year, together with
the unqualified opinion of independent certified public accountants, which
accountants shall be an independent accounting firm selected by Borrowers and
Parent and reasonably acceptable to Lender, that such financial statements have
been prepared in accordance with GAAP, and present fairly the results of
operations and financial condition of Borrowers as of the end of and for the
fiscal year then ended.
(b) Borrowers and Guarantors shall promptly notify Lender in
writing of the details of (i) any loss or damage that involves Collateral having
a value in excess of $500,000, (ii) any action, suit or proceeding relating to
Collateral having a value in excess of $500,000, (iii) any Material Contract of
a Borrower or Guarantor being terminated or amended or any new Material Contract
entered into (in which event such Borrower or Guarantor shall provide Lender
with a copy of such Material Contract), (iv) any order, judgment or decree in
excess of $1,000,000 shall have been entered against a Borrower or Guarantor or
any of its properties or assets, (v) any notification of violation of laws or
regulations received by a Borrower or Guarantor, (vi) any ERISA Event, and (vii)
the occurrence of any Event of Default or act, condition or event which, with
notice or the passage of time or giving of notice or both, would constitute an
Event of Default.
(c) Borrowers and Guarantors shall promptly after the sending or
filing thereof furnish or cause to be furnished to Lender copies of all reports
which any Borrower or Guarantor sends to its stockholders generally and copies
of all reports and registration statements which any Borrower or Guarantor files
with the Securities and Exchange Commission, any national securities exchange or
the National Association of Securities Dealers, Inc.
(d) Borrowers and Guarantors shall furnish or cause to be
furnished to Lender such budgets, forecasts, projections and other information
respecting the Collateral and the businesses of Borrowers and Guarantors, as
Lender may, from time to time, reasonably request. Lender is hereby authorized
to deliver a copy of any financial statement or any other information relating
to the businesses of Borrowers and Guarantors to any court or other Governmental
Authority or to any Participant or assignee or prospective Participant or
assignee. Each Borrower and Guarantor hereby irrevocably authorizes and directs
all accountants or auditors to deliver to Lender, at Borrowers' expense, copies
of the financial statements of Borrowers and Guarantors and any reports or
management letters prepared by such accountants or auditors on behalf of
Borrowers and Guarantors and to disclose to Lender such information as they may
have regarding the businesses of Borrowers and Guarantors. Any documents,
schedules, invoices or
56
other papers delivered to Lender may be destroyed or otherwise disposed of by
Lender one (1) year after the same are delivered to Lender, except as otherwise
designated by Borrowers to Lender in writing.
9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Each
Borrower and Guarantor shall not, and shall not permit any JLM Domestic
Subsidiary (other than Terminals and JLM Realty, Inc.) or Chem Canada to,
directly or indirectly:
(a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or consolidate with it, EXCEPT,
THAT, any Borrower or Guarantor may merge with and into or consolidate with any
other Borrower or Guarantor (other than International), PROVIDED, THAT, each of
the following conditions is satisfied as determined by Lender: (i) Lender shall
have received not less than ten (10) Business Days' prior written notice of the
intention of such Borrower or Guarantor to so merge or consolidate and such
information with respect thereto as Lender may reasonably request, (ii) as of
the effective date of the merger or consolidation and after giving effect
thereto, no Event of Default or act, condition or event which with notice or
passage of time or both would constitute an Event of Default, shall exist or
have occurred, (iii) Lender shall have received, true, correct and complete
copies of all agreements, documents and instruments relating to such merger,
including, but not limited to, the certificate or certificates of merger as
filed with each appropriate Secretary of State, (iv) the surviving entity shall,
immediately before and immediately after giving effect to such transaction or
series of transactions have a net worth (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions) equal to or greater than
the net worth of each of the entities involved in such merger immediately prior
to such transaction or series of transactions, (v) in the case of the merger of
any Borrower, such Borrower as the surviving corporation shall expressly
confirm, ratify and assume the Obligations and the Financing Agreements to which
it is a party in writing, in form and substance satisfactory to Lender, and
execute and deliver such other agreements, documents and instruments as Lender
may request in connection therewith, and (vi) each Borrower and Guarantor shall
ratify and confirm that its guarantees of the Obligations (and in the case of
Borrowers, its joint and several liability, the guarantees of the Obligations of
the other Borrowers) shall apply to the Obligations as assumed by such surviving
entity; or
(b) sell, assign, lease, transfer, abandon or otherwise dispose
of any Capital Stock or Indebtedness to any other Person or any of its assets to
any other Person EXCEPT, FOR,
(i) sales of Inventory in the ordinary course of business,
(ii) the sale or other disposition of Equipment so long as
(A) any proceeds are paid to Lender for application to the Obligations and (B)
as of the date of such sale and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of time or both
would constitute an Event of Default shall exist or have occurred,
57
(iii) the issuance and sale by Parent of Capital Stock
after the date hereof; PROVIDED, THAT, (A) Lender shall have received not less
than ten (10) Business Days' prior written notice of such issuance and sale by
Parent, which notice shall specify the parties to whom such shares are to be
sold, the terms of such sale, the total amount which it is anticipated will be
realized from the issuance and sale of such stock and the net cash proceeds
which it is anticipated will be received by such Borrower or Parent, as the case
may be, from such sale, (B) Parent shall not be required to pay any cash
dividends or repurchase or redeem such Capital Stock or make any other payments
in respect thereof, except to the extent such dividends, or repurchases or
redemptions are otherwise permitted under Section 9.11 hereof, (C) the terms of
such Capital Stock, and the terms and conditions of the purchase and sale
thereof, shall not include any terms that include any limitation on the right of
Borrowers to request or receive Loans or Letter of Credit Accommodations or the
right of Borrowers to amend or modify any of the terms and conditions of this
Agreement or any of the other Financing Agreements or otherwise in any way
relate to or affect the arrangements of Borrowers with Lender or are more
restrictive or burdensome to Borrowers than the terms of any Capital Stock in
effect on the date hereof, (D) any proceeds payable to Parent in connection with
the issuance and sale of such Capital Stock shall be paid to Lender for
application to the Obligations, and (E) as of the date of such issuance and sale
and after giving effect thereto, no Event of Default or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default shall exist or have occurred; and
(iv) the issuance of (A) Capital Stock of any Borrower or
Guarantor consisting of common stock pursuant to a stock option plan or 401(k)
plan of such Borrower or Guarantor for the benefit of its employees, directors
and consultants, and (B) warrants (issued as of the date hereof) to purchase up
to 955,109 shares, in the aggregate of Capital Stock of the Parent and warrants,
after the date hereof to purchase up to an aggregate of 1,000,000 shares of
Capital Stock of the Parent, PROVIDED, THAT, in no event shall such Borrower or
Guarantor be required to issue, or shall such Borrower or Guarantor issue,
Capital Stock pursuant to any of the foregoing agreements which would result in
a Change of Control or other Event of Default;
(c) form or acquire any Subsidiaries other than those listed on
the Information Certificates;
(d) wind up, liquidate or dissolve; or
(d) agree to do any of the foregoing (unless such agreement has
been consented to in writing by Lender or includes as a condition to the
effectiveness of such agreement that Lender's consent thereto be obtained).
9.8 ENCUMBRANCES. Each Borrower and Guarantor shall not, and shall not
permit any JLM Domestic Subsidiary or Chem Canada to, create, incur, assume or
suffer to exist any security interest, mortgage, pledge, lien, charge or other
encumbrance of any nature whatsoever on any of its assets or properties,
including the Collateral, EXCEPT:
58
(i) liens and security interests of Lender;
(ii) liens securing the payment of taxes, either not yet
overdue or the validity of which are being contested in good faith by
appropriate proceedings diligently pursued and available to such Borrower,
Guarantor or Subsidiary and with respect to which adequate reserves have been
set aside on its books;
(iii) non-consensual statutory liens (other than liens
securing the payment of taxes) arising in the ordinary course of such
Borrower's, Guarantor's or Subsidiary's business to the extent: (A) such liens
secure indebtedness which is not overdue or (B) such liens secure indebtedness
relating to claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by appropriate proceedings diligently pursued and available to
such Borrower, Guarantor or Subsidiary, in each case prior to the commencement
of foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books;
(iv) zoning restrictions, easements, licenses, covenants and
other restrictions affecting the use of real property which do not interfere in
any material respect with the use of such real property or ordinary conduct of
the business of such Borrower, Guarantor or Subsidiary as presently conducted
thereon or materially impair the value of the real property which may be subject
thereto;
(v) purchase money security interests in Equipment (including
Capital Leases) and purchase money mortgages on Real Property, in each case,
acquired after the date hereof so long as such security interests and mortgages
do not apply to any property of a Borrower, Subsidiary or Guarantor other than
the Equipment or Real Property so acquired, and the Indebtedness secured thereby
does not exceed the cost of the Equipment or Real Property so acquired, as the
case may be and is otherwise permitted under Section 9.9(b);
(vi) pledges and deposits of cash by any Borrower, Subsidiary
or Guarantor after the date hereof in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security benefits consistent with the practices of Borrowers,
Subsidiaries and Guarantors as of the date hereof;
(vii) pledges and deposits of cash by Borrowers, Guarantors
and Subsidiaries after the date hereof to secure the performance of tenders,
bids, leases, trade contracts (other than for the repayment of Indebtedness),
and other similar obligations in each case in the ordinary course of business
consistent with the practices of Borrowers, such Subsidiaries and Guarantors as
of the date hereof; PROVIDED, THAT, in connection with any performance bonds
issued by a surety or other person, the issuer of such bond shall have waived in
writing any rights in or to, or other interest in, any of the Collateral in an
agreement, in form and substance reasonably satisfactory to Lender;
59
(viii) liens arising from (A) operating leases and the
precautionary UCC financing statement filings or registrations in respect
thereof and (B) equipment or other materials which are not owned by a Borrower,
Guarantor or Subsidiary, as the case may be, located on the premises of such
Borrower, Guarantor or Subsidiary, as the case may be (but not in connection
with, or as part of, the financing thereof) from time to time in the ordinary
course of business and consistent with current practices of Borrowers in and the
precautionary UCC financing statement filings in respect thereof;
(ix) liens and security interests set forth on Schedule 8.4
hereto;
(x) judgment liens in respect of judgments that would not
cause an Event of Default under Section 10 hereof;
(xi) liens and security interests on the Collateral and other
assets of Chemicals, JLM Realty, Inc. and Terminals in favor of the Term Loan
Lender to secure the Indebtedness of Chemicals and Terminals to Term Loan Lender
permitted under Section 9.9 below; and
(xii) liens and security interests on the Real Property of
Parent located at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx, Xxxxxxx, in favor of the
SouthTrust Bank to secure the Indebtedness of Borrowers and Guarantors to
SouthTrust Bank permitted under Section 9.9 below.
9.9 INDEBTEDNESS. Each Borrower and Guarantor shall not, and shall not
permit any JLM Domestic Subsidiary or Chem Canada to, incur, create, assume,
become or be liable in any manner with respect to, or permit to exist, any
Indebtedness, EXCEPT for:
(a) the Obligations;
(b) purchase money Indebtedness (including Capital Leases) arising
after the date hereof to the extent secured by purchase money security interests
in Equipment (including Capital Leases) and purchase money mortgages on real
estate not to exceed $500,000 in the aggregate at any time outstanding so long
as such security interests and mortgages do not apply to any property of such
Person other than the Equipment or real estate so acquired, and the Indebtedness
secured thereby does not exceed the cost of the Equipment or real estate so
acquired, as the case may be;
(c) unsecured Indebtedness of a Borrower to any other Borrower
arising after the date hereof pursuant to loans by such Borrower to such other
Borrower to the extent permitted under Section 9.10(d) hereof;
(d) unsecured Indebtedness of a Borrower to Parent arising after
the date hereof pursuant to loans by Parent to such Borrower to the extent
permitted under Section 9.10(d) hereof;
(e) unsecured Indebtedness of a Guarantor or a Subsidiary of any
Guarantor or any Borrower (other than a Borrower) to any Borrower arising after
the date hereof pursuant to
60
loans by such Borrower to such Guarantor or a Subsidiary of such Guarantor to
the extent permitted under Section 9.10(d) hereof,
(f) Indebtedness of any Subsidiary of Parent, other than
Borrowers, Guarantors and Chem Canada, PROVIDED, THAT, (i) as to any such
Indebtedness, Borrowers and Guarantors shall not be directly or indirectly
liable (by virtue of such Borrower or Guarantor being the primary obligor on,
guarantor of, or otherwise liable in any respect of such Indebtedness), and (ii)
the occurrence of a default with respect thereto shall not result in, or permit
any holder of any Indebtedness of any Borrower or Guarantor to declare a default
on Indebtedness of any Borrower or Guarantor or cause the payment thereof to be
accelerated or payable prior to its stated maturity;
(g) Indebtedness of Borrowers, Guarantors or any of their
respective Subsidiaries under swap agreements, cap agreements, collar
agreements, exchange agreements, futures or forward hedging contracts or similar
contractual arrangements intended to protect a Person against fluctuations in
interest rates, currency exchange rates or the price of raw materials used or
produced in the business of any Borrower or Guarantor or any of their respective
Subsidiaries; PROVIDED, THAT, such arrangements are with banks or other
financial institutions that have combined capital and surplus and undivided
profits of not less than US$250,000,000 and are not for speculative purposes and
such Indebtedness shall be unsecured;
(h) Indebtedness of Chemicals, JLM Realty, Inc. and Terminals to
Term Loan Lender evidenced by or arising under the Term Loan Lender Agreements
(as in effect on the date hereof), PROVIDED, THAT:
(i) the aggregate principal amount of such Indebtedness
shall not exceed $7,135,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof, whether optional or mandatory, plus interest
thereon at the applicable rates provided in the Term Loan Lender Agreements in
effect on the date hereof,
(ii) as of the date hereof, no default or event of default,
or event which with notice or passage of time or both would constitute an event
of default exists or has occurred under any of the Term Loan Lender Agreements;
(iii) Borrowers, Guarantors and their Subsidiaries shall not,
directly or indirectly, make, or be required to make, any payments in respect of
such Indebtedness, EXCEPT, THAT, Chemicals, Terminals and JLM Realty, Inc. may
(A) make regularly scheduled payments of principal, interest and fees, on an
unaccelerated basis, in respect of such Indebtedness in accordance with the
terms of the Term Loan Lender Agreements as in effect on the date hereof, and
(B) prepay such Indebtedness but only with the proceeds of the sale of the
Collateral subject to the first Lien of Term Loan Lender and not the proceeds of
any Collateral subject to the first lien of Lender or with the proceeds of any
Loans;
(iv) Borrowers and Guarantors shall not, directly or
indirectly, amend, modify, alter or change any of the material terms of such
Indebtedness or any of the
61
Term Loan Lender Agreements as in effect on the date hereof, EXCEPT, THAT,
Borrowers may, after prior written notice to Lender, amend, modify, alter or
change the terms thereof so as to extend the maturity thereof or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness other than pursuant to payments thereof, or to reduce the
interest rate or any fees in connection therewith, or to make the provisions
thereof less restrictive or burdensome than the terms or conditions of the Term
Loan Lender Agreements as in effect on the date hereof; and
(v) Borrowers shall furnish to Lender all notices or demands
in connection with such Indebtedness either received by any Borrower or
Guarantor or on its behalf promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
(i) Indebtedness of Parent to SouthTrust Bank evidenced by or
arising under the SouthTrust Bank Agreements (as in effect on the date hereof),
PROVIDED, THAT:
(i) the aggregate principal amount of such Indebtedness
shall not exceed $1,885,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof, whether optional or mandatory, plus interest
thereon at the applicable rates provided in the SouthTrust Bank Agreements in
effect on the date hereof,
(ii) as of the date hereof, no default or event of default,
or event which with notice or passage of time or both would constitute an event
of default exists or has occurred under any of the SouthTrust Bank Agreements;
(iii) Borrowers, Guarantors or their Subsidiaries shall not,
directly or indirectly, make, or be required to make, any payments in respect of
such Indebtedness, EXCEPT, THAT, Parent may make regularly scheduled payments of
principal, interest and fees, on an unaccelerated basis, in respect of such
Indebtedness in accordance with the terms of the SouthTrust Bank Agreements as
in effect on the date hereof;
(iv) Borrowers and Guarantors shall not, directly or
indirectly, amend, modify, alter or change any of the material terms of such
Indebtedness or any of the SouthTrust Bank Agreements as in effect on the date
hereof, EXCEPT, THAT, Borrowers and Guarantors may, after prior written notice
to Lender, amend, modify, alter or change the terms thereof so as to extend the
maturity thereof or defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness other than pursuant to
payments thereof, or to reduce the interest rate or any fees in connection
therewith, or to make the provisions thereof less restrictive or burdensome than
the terms or conditions of the SouthTrust Bank Agreements as in effect on the
date hereof; and
(v) Borrowers shall furnish to Lender all notices or demands
in connection with such Indebtedness either received by any Borrower or
Guarantor or on its behalf promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
62
(j) Indebtedness of Borrowers or Parent evidenced by or arising
under the Subordinated Notes (as in effect on the date hereof), PROVIDED, THAT:
(i) the aggregate principal amount of such Indebtedness
shall not exceed $200,000, less the aggregate amount of all repayments,
repurchases or redemptions thereof, whether optional or mandatory, plus interest
thereon at the applicable rates provided in the Subordinated Notes in effect on
the date hereof,
(ii) as of the date hereof, no default or event of default,
or event which with notice or passage of time or both would constitute an event
of default exists or has occurred under any of the Subordinated Notes;
(iii) such Indebtedness is and shall remain unsecured;
(iv) such Indebtedness is, in all respects, subject to, and
subordinate in right of payment to, the right of Lender to receive the prior
indefeasible payment and satisfaction in full of all of the Obligations;
(v) Borrowers and Guarantors shall not, directly or
indirectly, make, or be required to make, any payments in respect of such
Indebtedness;
(vi) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any of the material terms of such
Indebtedness or any of the Subordinated Notes as in effect on the date hereof,
EXCEPT, THAT, Borrowers may, after prior written notice to Lender, amend,
modify, alter or change the terms thereof so as to extend the maturity thereof
or defer the timing of any payments in respect thereof, or to forgive or cancel
any portion of such Indebtedness other than pursuant to payments thereof, or to
reduce the interest rate or any fees in connection therewith, or to make the
provisions thereof less restrictive or burdensome than the terms or conditions
of the Subordinated Notes as in effect on the date hereof, or (B) make optional
prepayments of principal or redeem, retire, defease, purchase or otherwise
acquire such Indebtedness, or set aside or otherwise deposit or invest any sums
for such purpose, and
(vii) Borrowers shall furnish to Lender all notices or
demands in connection with such Indebtedness either received by any Borrower or
Guarantor or on its behalf promptly after the receipt thereof, or sent by any
Borrower or Guarantor or on its behalf concurrently with the sending thereof, as
the case may be;
(k) the unsecured Indebtedness of Borrowers, Guarantors and their
Subsidiaries set forth on Schedule 9.9(k) hereto; PROVIDED, THAT, (i) the
Borrower, Guarantor or Subsidiary obligated on such Indebtedness may only make
regularly scheduled or other mandatory payments of principal and interest in
respect of such Indebtedness in accordance with the terms of the agreement or
instrument evidencing or giving rise to such Indebtedness as in effect on the
date hereof, (ii) Borrowers, Guarantors and Subsidiaries shall not, directly or
indirectly, (A) amend, modify, alter or change the terms of such Indebtedness or
any agreement,
63
document or instrument related thereto as in effect on the date hereof EXCEPT,
THAT, Borrowers may, after prior written notice to Lender, amend, modify, alter
or change the terms thereof so as to extend the maturity thereof, or defer the
timing of any payments in respect thereof, or to forgive or cancel any portion
of such Indebtedness (other than pursuant to payments thereof), or to reduce the
interest rate or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or set aside or
otherwise deposit or invest any sums for such purpose, and (iii) Borrowers and
Guarantors shall furnish to Lender all notices or demands in connection with
such Indebtedness either received by a Borrower or Guarantor or on its behalf,
promptly after the receipt thereof, or sent by a Borrower or Guarantor or on its
behalf, concurrently with the sending thereof, as the case may be;
(l) the Indebtedness set forth on Schedule 9.9(l) hereto;
PROVIDED, THAT, (i) Borrowers and Guarantors may only make regularly scheduled
payments of principal and interest in respect of such Indebtedness in accordance
with the terms of the agreement or instrument evidencing or giving rise to such
Indebtedness as in effect on the date hereof, (ii) Borrowers and Guarantors
shall not, directly or indirectly, (A) amend, modify, alter or change the terms
of such Indebtedness or any agreement, document or instrument related thereto as
in effect on the date hereof EXCEPT, THAT, Borrowers and Guarantors may, after
prior written notice to Lender, amend, modify, alter or change the terms thereof
so as to (1) extend the maturity thereof, or (2) defer the timing of any
payments in respect thereof, or to forgive or cancel any portion of such
Indebtedness (other than pursuant to payments thereof), or (3) reduce the
interest rate or any fees in connection therewith, (4) make any covenants
contained therein less restrictive or burdensome as to such Borrower or
Guarantor, or (B) redeem, retire, defease, purchase or otherwise acquire such
Indebtedness, or set aside or otherwise deposit or invest any sums for such
purpose (except with the proceeds of Refinancing Indebtedness with respect
thereto), and (iii) Borrowers shall furnish to Lender all material notices or
demands in connection with such Indebtedness either received by Borrower or on
its behalf, promptly after the receipt thereof, or sent by such Borrower or
Guarantor or on its behalf, concurrently with the sending thereof, as the case
may be; and
(m) Indebtedness of any Borrower, Guarantor or its Subsidiaries
arising pursuant to loans permitted under Section 9.10 hereof.
9.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Each Borrower and Guarantor
shall not, and shall not permit any Subsidiary to, directly or indirectly, make
any loans or advance money or property to any Person, or invest in (by capital
contribution, dividend or otherwise) or purchase or repurchase the Capital Stock
or Indebtedness or all or a substantial part of the assets or property of any
person, or guarantee, assume, endorse, or otherwise become responsible for
(directly or indirectly) the Indebtedness, performance, obligations or dividends
of any Person, or form or acquire any Subsidiaries or agree to do any of the
foregoing, EXCEPT:
(a) the endorsement of instruments for collection or deposit in
the ordinary course of business;
64
(b) investments in cash or Cash Equivalents, PROVIDED, THAT, (i)
no Loans are then outstanding and (ii) as to any of the foregoing, unless waived
in writing by Lender, each Borrower and Guarantor shall take such actions as are
deemed necessary by Lender to perfect the security interest of Lenders in such
investments;
(c) guarantees by each Borrower and Guarantor of the Obligations
of any Borrower in favor of Lender;
(d) loans by a Borrower, Guarantor or any Subsidiary of a
Borrower or Guarantor to a Borrower, Guarantor or Subsidiary of a Borrower or
Guarantor after the last day of the month immediately prior to the date hereof,
PROVIDED, THAT,
(i) as to all of such loans, (A) within forty-five (45) days
after the end of each fiscal month, Borrowers shall provide to Lender a report
in form and substance satisfactory to Lender of the outstanding amount of such
loans as of the last day of the immediately preceding month and indicating any
loans made and payments received during the immediately preceding month, (B) the
Indebtedness arising pursuant to any such loan shall not be evidenced by a
promissory note or other instrument, unless the single original of such note or
other instrument is promptly delivered to Lender upon its request to hold as
part of the Collateral, with such endorsement and/or assignment by the payee of
such note or other instrument as Lender may require, (C) as of the date of any
such loan and after giving effect thereto, the Borrower or Guarantor making such
loan shall be Solvent, (D) no loan shall be made by either Borrower to Terminals
and (E) as of the date of any such loan and after giving effect thereto, no
Default or Event of Default shall exist or have occurred and be continuing,
(ii) as to loans by a Guarantor or any Subsidiary of a
Guarantor (other than a Borrower) to a Borrower, (A) the Indebtedness arising
pursuant to such loan shall be subject to, and subordinate in right of payment
to, the right of Lender to receive the prior final payment and satisfaction in
full of all of the Obligations on terms and conditions acceptable to Lender, (B)
promptly upon Lender's request, Lender shall have received a subordination
agreement, in form and substance satisfactory to Lender, providing for the terms
of the subordination in right of payment of such Indebtedness of such Borrower
to the prior final payment and satisfaction in full of all of the Obligations,
duly authorized, executed and delivered by such Guarantor or Subsidiary (as the
case may be) and such Borrower, and (C) such Borrower shall not, directly or
indirectly make, or be required to make, any payments in respect of such
Indebtedness;
(iii) as to loans by Chemicals to a Subsidiary of Parent (other
than Borrowers and Terminals) in no event shall the aggregate amount of all such
loans outstanding at any time exceed $1,500,000;
(iv) as to loans by Marketing to a Subsidiary of Parent (other
than Borrowers and Terminals) in no event shall the aggregate amount of all such
loans outstanding at anytime exceed $13,500,000;
(v) as to loans by a Borrower to Parent, as of the date of any
such loan and after giving effect thereto, the aggregate amount of the Excess
Availability of Borrowers shall be not
65
less than $1,000,000 and in no event shall the aggregate amount of all such
loans to Parent exceed $3,000,000;
(vi) as to such loans by a Subsidiary of a Guarantor (other than
a Borrower) to a Guarantor, (A) the Indebtedness arising pursuant to such loan
shall be subject to, and subordinate in right of payment to, the right of Lender
to receive the prior final payment and satisfaction in full of all of the
Obligations on terms and conditions acceptable to Lender, and (B) promptly upon
Lender's request, Lender shall have received a subordination agreement, in form
and substance satisfactory to Lender, providing for the terms of the
subordination in right of payment of such Indebtedness of such Guarantor to the
prior final payment and satisfaction in full of all of the Obligations, duly
authorized, executed and delivered by such Subsidiary and such Guarantor;
(e) subject to Section 9.10(d) above and Section 9.12 below, any
Borrower or Guarantor (or any of their respective Subsidiaries) may acquire and
hold receivables owing to them in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
(f) the existing equity investments of Borrowers, Guarantors and
their Subsidiaries as of the date hereof in their respective Subsidiaries,
PROVIDED, THAT, Borrowers and Guarantors shall have no further obligations or
liabilities to make any capital contributions or other additional investments or
other payments to or in or for the benefit of any of such Subsidiaries;
(g) stock or obligations issued to any Borrower, Guarantor or
Subsidiary by any Person (or the representative of such Person) in respect of
Indebtedness of such Person owing to any Borrower, Guarantor or Subsidiary in
connection with the insolvency, bankruptcy, receivership or reorganization of
such Person or a composition or readjustment of the debts of such Person;
PROVIDED, THAT, prior to an Event of Default, if the amount or value of all of
such stock and instruments in the aggregate is greater than $100,000, and after
an Event of Default, regardless of the amount or value thereof, the original of
any such stock or instrument evidencing such obligations to a Borrower,
Guarantor or any Subsidiary shall be promptly delivered to Lender, upon Lender's
request, together with such stock power, assignment or endorsement by such
Borrower, Guarantor or Subsidiary or as Lender may request;
(h) obligations of account debtors to any Borrower, Guarantor or
Subsidiary arising from Accounts which are past due evidenced by a promissory
note made by such account debtor payable to such Borrower, Guarantor or
Subsidiary, as the case may be; PROVIDED, THAT, prior to an Event of Default, if
the amount of all of such notes in the aggregate is greater than $250,000 and
after an Event of Default, regardless of the amount thereof, promptly upon the
receipt of the original of any such promissory note by a Borrower Guarantor or
any Subsidiary such promissory note shall be endorsed to the order of Lender by
such Borrower Guarantor or any Subsidiary and promptly delivered to Lender as so
endorsed;
(i) loans or advances by any Borrower, Guarantor or any of their
respective Subsidiaries to any of its employees, after the date hereof, not to
exceed the principal amount of $25,000 in the aggregate at any time outstanding
in the ordinary course of such Borrower's,
66
Guarantor's or Subsidiary's business for reasonable and necessary work-related
travel and other ordinary business expenses to be incurred by such employees in
connection with their employment with such Borrower, Guarantor or Subsidiary, as
the case may be;
(j) unsecured guarantees by any Borrower or Guarantor of the
Indebtedness of any Borrower, Guarantor or any of their respective Subsidiaries
permitted under Section 9.9(b) hereof;
(k) any investments of any Borrower, Guarantor or any of their
respective Subsidiaries in swap agreements, cap agreements, collar agreements,
exchange agreements futures or forward hedging contracts or similar contractual
arrangements intended to protect a Person against fluctuations in interest
rates, currency exchange rates or the price of raw materials and other chemical
products used or produced in the business of any Borrower; PROVIDED, THAT, such
arrangements are with banks or other financial institutions that have combined
capital and surplus and undivided profits of not less than the $250,000,000 and
are not for speculative purposes and are unsecured;
(l) the guarantee by Parent in favor of SASOL with respect to the
obligations of Marketing to SASOL pursuant to the terms of the Asset Purchase
Agreement, dated May 23, 2001, by and among Parent, Marketing and SASOL (as in
effect on the date hereof);
(m) the existing loans, advances and guarantees set forth on
Schedule 9.10 hereto, PROVIDED, that, as to such loans, advances and guarantees,
(i) Borrowers, Guarantors, or their respective Subsidiaries, as the case may be,
shall not, directly or indirectly, amend, modify, alter or change in any
material respect the terms of such loans, advances or guarantees or any
agreement, document or instrument related thereto, or as to such guarantees,
redeem, retire, defease, purchase or otherwise acquire such guarantee or set
aside or otherwise deposit or invest any sums for such purpose (except as
expressly required pursuant to the terms thereof or pursuant to regularly
scheduled payments permitted herein) and (ii) Borrowers shall furnish to Lender
all notices or demands in connection with such loans, advances or guarantees
received by a Borrower, Guarantor or Subsidiary or on its behalf, promptly after
the receipt thereof.
9.11 DIVIDENDS AND REDEMPTIONS. Each Borrower and Guarantor shall not,
and shall not permit any Subsidiary to, directly or indirectly, declare or pay
any dividends on account of any shares of class of Capital Stock of such
Borrower, Guarantor or Subsidiary now or hereafter outstanding, or set aside or
otherwise deposit or invest any sums for such purpose, or redeem, retire,
defease, purchase or otherwise acquire any shares of any class of Capital Stock
(or set aside or otherwise deposit or invest any sums for such purpose) for any
consideration or apply or set apart any sum, or make any other distribution (by
reduction of capital or otherwise) in respect of any such shares or agree to do
any of the foregoing, EXCEPT, THAT:
(a) any Subsidiary of a Borrower or Guarantor may pay dividends
to such Borrower or Guarantor or Subsidiary and any Subsidiary of Parent (other
than a Borrower) may redeem or repurchase any of its Capital Stock by making
payments to a Borrower, Guarantor, or Subsidiary; and
67
(b) any Borrower or Guarantor may pay dividends or may redeem or
repurchase any of its Capital Stock for consideration consisting of common stock
or preferred stock.
9.12 TRANSACTIONS WITH AFFILIATES. Each Borrower and Guarantor shall
not, and shall not permit any Subsidiary to, directly or indirectly:
(a) purchase, acquire or lease any property from, or sell,
transfer or lease any property to, any officer, employee, shareholder, director,
agent or any other Affiliate, EXCEPT (i) in the ordinary course of and pursuant
to the reasonable requirements of such Borrower's, Guarantor's or Subsidiary's
business (as the case may be) and upon fair and reasonable terms no less
favorable to such Borrower, Guarantor or Subsidiary than it would obtain in a
comparable arm's length transaction with a person that is not an Affiliate, (ii)
the loans and advances permitted by Sections 9.10(d) hereof, (iii) accounts
receivable of Borrowers in respect of which any Subsidiary of Borrowers or any
Guarantor is the account debtor (the "Intercompany Accounts Receivable"),
provided, that, (A) as of the date of the creation of any such Intercompany
Account Receivable by any Borrower and after giving effect thereto, no Event of
Default or act, condition or event which with notice or passage of time or both
would constitute an Event of Default shall exist or have occurred, and (B) after
giving effect to the creation of any Intercompany Account Receivable, Excess
Availability shall be not less than $1,000,000 and (C) the aggregate dollar
amount of Intercompany Accounts Receivable outstanding at any time shall not, at
any time exceed $1,500,000; or
(b) make any payments of management, consulting or other fees for
management or similar services, or of any Indebtedness owing to any officer,
employee, shareholder, director or any other Affiliate of any Borrower or
Guarantor EXCEPT (i) reasonable compensation to officers, employees and
directors for services rendered to such Borrower, Guarantor or Subsidiary, as
the case may be, in the ordinary course of business, and (ii) payments by a
Borrower to any other Borrower in respect of Indebtedness arising pursuant to
loans made by such Borrower to the extent such Indebtedness is permitted under
Section 9.9 hereof.
9.13 ADDITIONAL BANK ACCOUNTS. Each Borrower and Guarantor shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the Blocked Accounts and the accounts set forth in
Schedule 8.10 hereto, except: (a) as to any new or additional Blocked Accounts
and other such new or additional accounts which contain any Collateral or
proceeds thereof, with the prior written consent of Lender and subject to such
conditions thereto as Lender may establish and (b) as to any accounts used by
such Borrower or Guarantor to make payments of payroll, taxes or other
obligations to third parties, after prior written notice to Lender.
9.14 COMPLIANCE WITH ERISA. Each Borrower shall and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal and
State law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) not terminate any of such Plans so as
to incur any liability to the Pension Benefit Guaranty Corporation; (d) not
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allow or suffer to exist any prohibited transaction involving any of such Plans
or any trust created thereunder which would subject Borrower or such ERISA
Affiliate to a tax or penalty or other liability on prohibited transactions
imposed under Section 4975 of the Code or ERISA; (e) make all required
contributions to any Plan which it is obligated to pay under Section 302 of
ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or
suffer to exist any accumulated funding deficiency, whether or not waived, with
respect to any such Plan; or (g) allow or suffer to exist any occurrence of a
reportable event or any other event or condition which presents a material risk
of termination by the Pension Benefit Guaranty Corporation of any such Plan that
is a single employer plan, which termination could result in any liability to
the Pension Benefit Guaranty Corporation.
9.15 ADJUSTED TANGIBLE NET WORTH. Borrowers, on a consolidated basis,
shall at all times maintain Adjusted Tangible Net Worth of not less than
$16,000,000.
9.16 END OF FISCAL YEARS: FISCAL QUARTERS. Parent shall, for financial
reporting purposes, and shall cause each of its Subsidiaries' cause its, and
each of its Subsidiaries' (a) fiscal years to end on December 31 of each year
and (b) fiscal quarters to end on March 31, June 30, September 30 and December
31 of each year.
9.17 CHANGE IN BUSINESS.
Parent and its Subsidiaries shall not engage in any business
other than the businesses of Parent and its Subsidiaries on the date hereof and
any business reasonably related, ancillary or complimentary to the business in
which Parent and its Subsidiaries are engaged on the date hereof.
9.18 LIMITATION OF RESTRICTIONS AFFECTING SUBSIDIARIES. Each Borrower
and Guarantor shall not, directly, or indirectly, create or otherwise cause or
suffer to exist any encumbrance or restriction which prohibits or limits the
ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or
make other distributions or pay any Indebtedness owed to such Borrower,
Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or
advances to such Borrower, Guarantor or any Subsidiary of such Borrower or
Guarantor other than the restriction that such loans be on arms-length terms,
(c) transfer any of its properties or assets to such Borrower, Guarantor or any
Subsidiary of such Borrower or Guarantor other than the restriction that such
transactions be on an arms-length basis; or (d) create, incur, assume or suffer
to exist any lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, other than encumbrances and restrictions arising
under (i) applicable law, (ii) this Agreement, (iii) customary provisions
restricting subletting or assignment of any lease governing a leasehold interest
of such Borrower, Guarantor or any of its Subsidiaries, (iv) customary
restrictions on dispositions of real property interests found in reciprocal
easement agreements of such Borrower, Guarantor or its Subsidiary, (v) any
agreement relating to permitted Indebtedness incurred by a Subsidiary of such
Borrower or Guarantor prior to the date on which such Subsidiary was acquired by
such Borrower or Guarantor and outstanding on such acquisition date, (vi) the
extension or continuation of contractual obligations in existence on the date
hereof; PROVIDED, THAT, any such encumbrances or restrictions contained in such
extension or continuation are no
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less favorable to Lender than those encumbrances and restrictions under or
pursuant to the contractual obligations so extended or continued, and (e) except
to the extent the restrictions and other limitations set forth in clauses (a)
through (d) are otherwise permitted in this Agreement.
9.19 COSTS AND EXPENSES. Borrowers and Guarantors shall pay to Lender
on demand all reasonable costs, expenses, filing fees and taxes paid or payable
in connection with the preparation, negotiation, execution, delivery, recording,
administration, collection, liquidation, enforcement and defense of the
Obligations, Lender's rights in the Collateral, this Agreement, the other
Financing Agreements and all other documents related hereto or thereto,
including any amendments, supplements or consents which may hereafter be
contemplated (whether or not executed) or entered into in respect hereof and
thereof, including: (a) all costs and expenses of filing or recording (including
Uniform Commercial Code and PPSA financing statement filing taxes and fees,
documentary taxes, intangibles taxes and mortgage recording taxes and fees, if
applicable); (b) costs and expenses and fees for insurance premiums,
environmental audits, surveys, assessments, engineering reports and inspections,
appraisal fees and search fees, costs and expenses of remitting loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
the Blocked Accounts, together with Lender's customary charges and fees with
respect thereto; (c) charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations; (d) costs and expenses of
preserving and protecting the Collateral; (e) costs and expenses paid or
incurred in connection with obtaining payment of the Obligations, enforcing the
security interests and liens of Lender, selling or otherwise realizing upon the
Collateral, and otherwise enforcing the provisions of this Agreement and the
other Financing Agreements or defending any claims made or threatened against
Lender arising out of the transactions contemplated hereby and thereby
(including preparations for and consultations concerning any such matters); (f)
all out-of-pocket expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field examinations of the
Collateral and Borrowers' and Guarantors' operations, plus a per diem charge at
the rate of $750 per person per day for Lender's examiners in the field and
office, PROVIDED, THAT, the aggregate per diem charged to Borrowers in each year
of this Agreement shall not exceed $15,000 (exclusive of out-of-pocket costs and
expenses); and (g) the reasonable fees and disbursements of counsel (including
legal assistants) to Lender in connection with any of the foregoing.
9.20 AFTER ACQUIRED REAL PROPERTY. If any Borrower or Guarantor
hereafter acquires any Real Property, fixtures or any other property that is of
the kind or nature described in the Mortgage and such Real Property, fixtures or
other property at any one location has a fair market value in an amount equal to
or greater than $500,000 (or if an Event of Default, or act, condition or event
which with notice or passage of time or both would constitute an Event of
Default exists, then regardless of the fair market value of such assets),
without limiting any other rights of Lender, or duties or obligations of such
Borrower or Guarantor, upon Lender's request, such Borrower or Guarantor shall
execute and deliver to Lender a mortgage, deed of trust or deed to secure debt,
as Lender may determine, in form and substance substantially similar to the
Mortgage and as to any provisions relating to specific state laws satisfactory
to Lender and in form appropriate for recording in the real estate records of
the jurisdiction in which such Real Property or other property is located
granting to Lender a first and only lien and mortgage on and
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security interest in such Real Property, fixtures or other property (except as
such Borrower or Guarantor would otherwise be permitted to incur hereunder or
under the Mortgage or as otherwise consented to in writing by Lender) and such
other agreements, documents and instruments as Lender may require in connection
therewith.
9.21 FURTHER ASSURANCES. At the request of Lender at any time and from
time to time, each Borrower and Guarantor shall, at its expense, duly execute
and deliver, or cause to be duly executed and delivered, such further
agreements, documents and instruments, and do or cause to be done such further
acts as may be necessary or proper to evidence, perfect, maintain and enforce
the security interests and the priority thereof in the Collateral and to
otherwise effectuate the provisions or purposes of this Agreement or any of the
other Financing Agreements. Lender may at any time and from time to time request
a certificate from an officer of Borrowers representing that all conditions
precedent to the making of Loans and providing Letter of Credit Accommodations
contained herein are satisfied. In the event of such request by Lender, Lender
may, at its option, cease to make any further Loans or provide any further
Letter of Credit Accommodations until Lender has received such certificate and,
in addition, Lender has determined that such conditions are satisfied. Where
permitted by law, each Borrower and Guarantor hereby authorizes Lender to
execute and file one or more UCC financing statements and PPSA financing
statements signed only by Lender.
SECTION 10. EVENTS OF DEFAULT AND REMEDIES
10.1 EVENTS OF DEFAULT. The occurrence or existence of any one or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":
(a) (i) any Borrower fails to pay when due any of the Obligations
or (ii) any Borrower or Obligor fails to perform any of the covenants contained
in Sections 9.3, 9.4, 9.6, 9.14, 9.16, 9.17, or 9.18 of this Agreement and such
failure shall continue for thirty (30) days; PROVIDED, THAT, such thirty (30)
day period shall not apply in the case of: (A) any failure to observe any such
covenant which is not capable of being cured at all or within such thirty (30)
day period or which has been the subject of a prior failure within a six (6)
month period or (B) an intentional breach by any Borrower or Obligor of any such
covenant or (iii) any Borrower or Obligor fails to perform, or otherwise
breaches or violates, any of the terms, covenants, conditions or provisions
contained in this Agreement or any of the other Financing Agreements (or any
other default under any of the other Financing Agreements shall occur), other
than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;
(b) any representation, warranty or statement of fact made by any
Borrower Obligor or Guarantor to Lender in this Agreement, the other Financing
Agreements or any other agreement, schedule, confirmatory assignment or
otherwise shall when made or deemed made be false or misleading in any material
respect;
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(c) any Obligor revokes, terminates or fails to perform any of
the terms, covenants, conditions or provisions of any guarantee, endorsement or
other agreement of such party in favor of Lender;
(d) any judgment for the payment of money is rendered against any
Borrower or Obligor in excess of $500,000 in any one case or in excess of
$500,000 in the aggregate, exclusive in each case of any portion of such
judgment covered by insurance, and shall remain undischarged or unvacated for a
period in excess of thirty (30) days or execution shall at any time not be
effectively stayed, or any judgment other than for the payment of money, or
injunction, attachment, garnishment or execution is rendered against any
Borrower or Obligor or any of their assets;
(e) any Borrower or Obligor, which is a partnership, limited
liability company, limited liability partnership or a corporation, dissolves or
suspends or discontinues doing business;
(f) any Borrower or Obligor becomes insolvent (however defined or
evidenced), makes an assignment for the benefit of creditors, makes or sends
notice of a bulk transfer or calls a meeting of its creditors or principal
creditors;
(g) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against any Borrower or Obligor or all or any part of its
properties and such petition or application is not dismissed within thirty (30)
days after the date of its filing or any Borrower or Obligor shall file any
answer admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;
(h) a case or proceeding under the bankruptcy laws of the United
States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by any Borrower or Obligor or for all or any part of its
property;
(i) any default by any Borrower or Obligor under any agreement,
document or instrument relating to any indebtedness for borrowed money owing to
any person other than Lender, or any capitalized lease obligations, contingent
indebtedness in connection with any guarantee, letter of credit, indemnity or
similar type of instrument in favor of any person other than Lender, which
results in the right of the holder of such obligation or indebtedness to
accelerate indebtedness owing to such holder in an amount equal to at least
$500,000 or any default by any Borrower or Obligor under any Material Contract,
which default continues for more than the applicable cure period, if any, with
respect thereto and would have a Material Adverse Effect;
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(j) an ERISA Event shall occur;
(k) any Change of Control;
(l) the indictment by any Governmental Authority, or as Lender
may reasonably and in good faith determine, the threatened indictment by any
Governmental Authority of a Borrower or Guarantor of which any Borrower,
Guarantor or Lender receives notice, in either case, as to which there is a
reasonable possibility of an adverse determination, in the good faith
determination of Lender, under any criminal or civil statute, or commencement or
threatened commencement of criminal or civil proceedings by any Governmental
Authority against such Borrower or Guarantor, pursuant to which statute or
proceedings the penalties or remedies sought or available include forfeiture of
(i) any of the Collateral or (ii) any other property of Borrower or Guarantor
which is necessary or material to the conduct of its business; or
(m) there shall be an event, condition or circumstance which has a
Material Adverse Effect.
10.2 REMEDIES.
(a) At any time an Event of Default exists or has occurred and is
continuing, Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code, the PPSA
and other applicable law, all of which rights and remedies may be exercised
without notice to or consent by any Borrower or Obligor, except as such notice
or consent is expressly provided for hereunder or required by applicable law.
All rights, remedies and powers granted to Lender hereunder, under any of the
other Financing Agreements, the Uniform Commercial Code, the PPSA or other
applicable law, are cumulative, not exclusive and enforceable, in Lender's
discretion, alternatively, successively, or concurrently on any one or more
occasions, and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by any
Borrower or Guarantor of this Agreement or any of the other Financing
Agreements. Lender may, at any time or times, proceed directly against any
Borrower or any Obligor to collect the Obligations without prior recourse to the
Collateral.
(b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender (PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations
shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrowers and Guarantors, at Borrowers'
expense, to assemble and make available to Lender any part or all of the
Collateral at any place and time designated by Lender, (iv) collect, foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (v) remove
any or all of the Collateral from any premises on or in which the same may be
located for the purpose of effecting the sale,
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foreclosure or other disposition thereof or for any other purpose, (vi) sell,
lease, transfer, assign, deliver or otherwise dispose of any and all Collateral
(including entering into contracts with respect thereto, public or private sales
at any exchange, broker's board, at any office of Lender or elsewhere) at such
prices or terms as Lender may deem reasonable, for cash, upon credit or for
future delivery, with the Lender having the right to purchase the whole or any
part of the Collateral at any such public sale, all of the foregoing being free
from any right or equity of redemption of any Borrower or Guarantor, which right
or equity of redemption is hereby expressly waived and released by each Borrower
and Guarantor and/or (vii) terminate this Agreement. If any of the Collateral is
sold or leased by Lender upon credit terms or for future delivery, the
Obligations shall not be reduced as a result thereof until payment therefor is
finally collected by Lender. If notice of disposition of Collateral is required
by law, ten (10) days prior notice by Lender to Parent designating the time and
place of any public sale or the time after which any private sale or other
intended disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and each Borrower and Guarantor waives any other
notice. In the event Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, each Borrower and
Guarantor waives the posting of any bond which might otherwise be required.
(c) For the purpose of enabling Lender to exercise the rights and
remedies hereunder, each Borrower and Guarantor hereby grants to Lender, to the
extent assignable, an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to any Borrower or Guarantor) to use,
assign, license or sublicense any of the trademarks, service-marks, trade names,
business names, trade styles, designs, logos and other source of business
identifiers and other Intellectual Property and general intangibles now owned or
hereafter acquired by Borrowers and Guarantors, wherever the same maybe located,
including in such license reasonable access to all media in which any of the
licensed items may be recorded or stored and to all computer programs used for
the compilation or printout thereof.
(d) Lender may apply the cash proceeds of Collateral actually
received by Lender from any sale, lease, foreclosure or other disposition of the
Collateral to payment of the Obligations, in whole or in part and in such order
as Lender may elect, whether or not then due. Borrowers and Guarantors shall
remain jointly and severally liable to Lender for the payment of any deficiency
with interest at the highest rate provided for herein and all costs and expenses
of collection or enforcement, including attorneys' fees and legal expenses.
(e) Without limiting the foregoing, upon the occurrence of an
Event of Default or an event which with notice or passage of time or both would
constitute an Event of Default, Lender may, at its option, without notice, (i)
cease making Loans or arranging for Letter of Credit Accommodations or reduce
the lending formulas or amounts of Loans and Letter of Credit Accommodations
available to Borrowers and/or (ii) terminate any provision of this Agreement
providing for any future Loans or Letter of Credit Accommodations to be made by
Lender to Borrowers.
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS
AND CONSENTS; GOVERNING LAW
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11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
(a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements and any dispute arising out of the
relationship between the parties hereto, whether in contract, tort, equity or
otherwise, shall be governed by the internal laws of the State of Florida
(without giving effect to principles of conflicts of law).
(b) Borrowers, Guarantors and Lender irrevocably consent and
submit to the non-exclusive jurisdiction of the Circuit Court of Dade County,
Florida and the United States District Court for the Southern District of
Florida and waive any objection based on venue or FORUM NON CONVENIENS with
respect to any action instituted therein arising under this Agreement or any of
the other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement or
any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to
any such matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against any
Borrower, Guarantor or its property in the courts of any other jurisdiction
which Lender deems necessary or appropriate in order to realize on the
Collateral or to otherwise enforce its rights against any Borrower, Guarantor or
its property).
(c) Each Borrower and Guarantor hereby waives personal service of
any and all process upon it and consents that all such service of process may be
made by certified mail (return receipt requested) directed to its address set
forth on the signature pages hereof and service so made shall be deemed to be
completed five (5) days after the same shall have been so deposited in the U.S.
mails, or, at Lender's option, by service upon any Borrower or Guarantor in any
other manner provided under the rules of any such courts. Within thirty (30)
days after such service, such Borrower or Guarantor shall appear in answer to
such process, failing which such Borrower or Guarantor shall be deemed in
default and judgment may be entered by Lender against such Borrower or Guarantor
for the amount of the claim and other relief requested.
(d) BORROWERS, GUARANTORS AND LENDER EACH HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING
UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN
RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE
TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
BORROWERS, GUARANTORS AND LENDER EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT BORROWERS, GUARANTORS OR LENDER MAY FILE AN ORIGINAL COUNTERPART
OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
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THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
(e) Lender shall not have any liability to Borrowers or
Guarantors (whether in tort, contract, equity or otherwise) for losses suffered
by Borrowers or Guarantors in connection with, arising out of, or in any way
related to the transactions or relationships contemplated by this Agreement, or
any act, omission or event occurring in connection herewith, unless it is
determined by a final and non-appealable judgment or court order binding on
Lender, that the losses were the result of acts or omissions constituting gross
negligence or willful misconduct. In any such litigation, Lender shall be
entitled to the benefit of the rebuttable presumption that it acted in good
faith and with the exercise of ordinary care in the performance by it of the
terms of this Agreement.
11.2 WAIVER OF NOTICES. Each Borrower and Guarantor hereby expressly
waives demand, presentment, protest and notice of protest and notice of dishonor
with respect to any and all instruments and commercial paper, included in or
evidencing any of the Obligations or the Collateral, and any and all other
demands and notices of any kind or nature whatsoever with respect to the
Obligations, the Collateral and this Agreement, except such as are expressly
provided for herein. No notice to or demand on any Borrower or Guarantor which
Lender may elect to give shall entitle any Borrower or Guarantor to any other or
further notice or demand in the same, similar or other circumstances.
11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of
Lender, and as to amendments, as also signed by an authorized officer of
Borrowers and Guarantors. Lender shall not, by any act, delay, omission or
otherwise be deemed to have expressly or impliedly waived any of its rights,
powers and/or remedies unless such waiver shall be in writing and signed by an
authorized officer of Lender. Any such waiver shall be enforceable only to the
extent specifically set forth therein. A waiver by Lender of any right, power
and/or remedy on any one occasion shall not be construed as a bar to or waiver
of any such right, power and/or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.
11.4 WAIVER OF COUNTERCLAIMS. Each Borrower and Guarantor waives all
rights to interpose any claims, deductions, setoffs or counterclaims of any
nature (other then compulsory counterclaims) in any action or proceeding with
respect to this Agreement, the Obligations, the Collateral or any matter arising
therefrom or relating hereto or thereto.
11.5 INDEMNIFICATION. Borrowers and Guarantors shall indemnify and hold
Lender, and its directors, agents, employees and counsel, harmless from and
against any and all losses, claims, damages, liabilities, costs or expenses
imposed on, incurred by or asserted against any of them in connection with any
litigation, investigation, claim or proceeding commenced or threatened related
to the negotiation, preparation, execution, delivery, enforcement, performance
or administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or
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transaction related or attendant thereto, including amounts paid in settlement,
court costs, and the fees and expenses of counsel. Borrowers and Guarantors will
not, however, be responsible to any Indemnified Party hereunder for any claim to
the extent that a court having jurisdiction shall have determined by a final
non-appealable judgment that any such claim shall have arisen out of or resulted
from actions taken or omitted to be taken by such Indemnified Party which
constitute gross negligence or willful misconduct of such Indemnified Party. To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
this Section may be unenforceable because it violates any law or public policy,
Borrowers and Guarantors shall pay the maximum portion which it is permitted to
pay under applicable law to Lender in satisfaction of indemnified matters under
this Section. The foregoing indemnity shall survive the payment of the
Obligations and the termination or non-renewal of this Agreement.
11.6 CURRENCY INDEMNITY. If, for the purposes of obtaining judgment in
any court in any jurisdiction with respect to this Agreement or any of the other
Financing Agreements, it becomes necessary to convert into the currency of such
jurisdiction (the "Judgment Currency") any amount due under this Agreement or
under any of the other Financing Agreements in any currency other than the
Judgment Currency (the "Currency Due"), then conversion shall be made pursuant
to the Currency Exchange Convention at which Lender is able, on the relevant
date, to purchase the Currency Due with the Judgment Currency prevailing on the
Business Day before the day on which judgment is given. In the event that there
is a change in the rate pursuant to the Currency Exchange Convention prevailing
between the Business Day before the day on which the judgment is given and the
date of receipt by Lender of the amount due, Borrower will, on the date of
receipt by Lender, pay such additional amounts, if any, or be entitled to
receive reimbursement of such amount, if any, as may be necessary to ensure that
the amount received by Lender on such date is the amount in the Judgment
Currency which when converted at the rate of exchange prevailing on the date of
receipt by Lender is the amount then due under this Agreement or such other of
the Financing Agreements in the Currency Due. If the amount of the Currency Due
which Lender is able to purchase is less than the amount of the Currency Due
originally due to it, Borrower shall indemnify and save Lender harmless from and
against loss or damage arising as a result of such deficiency. The indemnity
contained herein shall constitute an obligation separate and independent from
the other obligations contained in this Agreement and the other Financing
Agreements, shall give rise to a separate and independent cause of action, shall
apply irrespective of any indulgence granted by Lender from time to time and
shall continue in full force and effect notwithstanding any judgment or order
for a liquidated sum in respect of an amount due under this Agreement or any of
the other Financing Agreements or under any judgment or order.
SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS
12.1 TERM.
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(a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending on the date which is the
second (2nd) anniversary of the date hereof (the "Renewal Date"); PROVIDED,
THAT, Lender may at its option, extend the Renewal Date to the date three (3)
years from the date hereof by giving Borrowers notice at least sixty (60) days
prior to the second (2nd) anniversary of this Agreement) and from year to year
thereafter, unless sooner terminated pursuant to the terms hereof. Lender or
Borrowers (subject to Lender's right to extend the Renewal Date as provided
above) may terminate this Agreement and the other Financing Agreements effective
on the Renewal Date or on the anniversary of the Renewal Date in any year by
giving to the other party at least sixty (60) days prior written notice;
PROVIDED, THAT, this Agreement and all other Financing Agreements must be
terminated simultaneously. In addition, Borrowers may terminate this Agreement
at any time upon ten (10) Business Days' prior written notice to Lender (which
notice shall be irrevocable) and Lender may terminate this Agreement and all
other Financing Agreements at any time on or after the occurrence of an Event of
Default. Upon the effective date of termination or non-renewal of the Financing
Agreements, Borrowers shall pay to Lender, in full, all outstanding and unpaid
Obligations that are not contingent and shall furnish cash collateral, (or at
Lender's option, a letter of credit issued for the account of Borrowers and at
Borrowers' expense, in form and substance satisfactory to Lender, by an issuer
acceptable to Lender and payable to Lender as beneficiary) in such amounts as
Lender determines in good faith are reasonably necessary to secure Lender from
loss, cost, damage or expense, including reasonable attorneys' fees and legal
expenses, in connection with any contingent Obligations, including issued and
outstanding Letter of Credit Accommodations and checks or other payments
provisionally credited to the Obligations and/or as to which Lender has not yet
received final and indefeasible payment. Such payments in respect of the
Obligations and cash collateral, if any, shall be remitted by wire transfer, as
directed by Lender, to such bank account of Lender, as Lender may, in its
discretion, designate to Marketing for such purpose. Interest shall be due until
and including the next Business Day, if the amounts so paid by Borrowers to the
bank account designated by Lender are received in such bank account later than
12:00 noon, Miami, Florida time.
(b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge any Borrower or Guarantor of its
respective duties, obligations and covenants under this Agreement or the other
Financing Agreements until all Obligations have been fully and finally
discharged and paid (or for which Agent has received cash collateral as provided
in Section 12.1(a) above, as to contingent Obligations), and Lender's continuing
security interest in the Collateral and the rights and remedies of Lender
hereunder, under the other Financing Agreements and applicable law, shall remain
in effect until all such Obligations have been fully and finally discharged and
paid.
(c) If for any reason this Agreement is terminated prior to the
end of the then current term or renewal term of this Agreement, in view of the
impracticality and extreme difficulty of ascertaining actual damages and by
mutual agreement of the parties as to a reasonable calculation of Lender's lost
profits as a result thereof, Borrowers agree to pay to Lender, upon the
effective date of such termination, an early termination fee in the amount set
forth below if such termination is effective in the period indicated:
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AMOUNT PERIOD
(i) Two (2%) percent of the Maximum From the date hereof to and including the first
Credit (1st) anniversary of the date hereof
(ii) One (1%) percent of the Maximum From the first anniversary of the date hereof to
Credit and including the second (2nd) anniversary of
the date hereof or if the term of this Agreement
is extended, at any time prior to the end of the
then current term.
Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrowers agree
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise its right to terminate this Agreement, but elects, at
its option, to provide financing to Borrowers or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.
(d) Notwithstanding anything to the contrary contained in Section
12.1(c) above, in the event of the termination of this Agreement by Borrowers
prior to the end of the then current term or renewal term of this Agreement and
the full and final repayment of all of the Obligations and the receipt by Lender
of cash collateral all as provided in Section 12.1(a) above with the proceeds of
initial loans and advances by First Union National Bank to Borrowers pursuant to
a revolving credit facility provided by First Union National Bank to Borrowers
to replace the financing arrangements provided for herein, Borrowers shall not
be required to pay the early termination fee provided for above.
12.2 INTERPRETATIVE PROVISIONS.
(a) All terms used herein which are defined in Article 1 or
Article 9 of the Uniform Commercial Code shall have the meanings given therein
unless otherwise defined in this Agreement.
(b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.
(c) All references to any Person herein, shall include their
respective successors and assigns.
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(d) The words "hereof", "herein", "hereunder", "this Agreement"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not any particular provision of this Agreement and as
this Agreement now exists or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
(e) The word "including" when used in this Agreement shall mean
"including, without limitation".
(f) An Event of Default shall exist or continue or be continuing
until such Event of Default is waived in accordance with Section 11.3 or is
cured in a manner satisfactory to Lender, if such Event of Default is capable of
being cured as determined by Lender.
(g) Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Lender prior to the date hereof.
(h) In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including", the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including".
(i) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.
(j) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(k) This Agreement and other Financing Agreements may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(l) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Lender and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements shall not be construed against Lender merely
because of Lender's involvement in their preparation.
80
12.3 NOTICES. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Marketing,
as agent for Borrowers and Guarantors at its chief executive office set forth
below, or to such other address as either party may designate by written notice
to the other in accordance with this provision, and (b) deemed to have been
given or made: if delivered in person, immediately upon delivery; if by telex,
telegram or facsimile transmission, immediately upon sending and upon
confirmation of receipt; if by nationally recognized overnight courier service
with instructions to deliver the next Business Day, one (1) Business Day after
sending; and if by certified mail, return receipt requested, five (5) days after
mailing.
12.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.
12.5 SUCCESSORS. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrowers, Guarantors and their
respective successors and assigns, except that Borrower may not assign its
rights under this Agreement, the other Financing Agreements and any other
document referred to herein or therein without the prior written consent of
Lender. Lender may, after notice to any Borrower, assign its rights and delegate
its obligations under this Agreement and the other Financing Agreements and
further may assign, or sell participations in, all or any part of the Loans, the
Letter of Credit Accommodations or any other interest herein to another
financial institution or other person, in which event, the assignee or
participant shall have, to the extent of such assignment or participation, the
same rights and benefits as it would have if it were the Lender hereunder,
except as otherwise provided by the terms of such assignment or participation.
12.6 CONFIDENTIALITY.
(a) Lender shall use all reasonable efforts to keep confidential,
in accordance with its customary procedures for handling confidential
information and safe and sound lending practices, any non-public information
supplied to it by Borrowers or Guarantors pursuant to this Agreement, PROVIDED,
THAT, nothing contained herein shall limit the disclosure of any such
information: (i) to the extent required by statute, rule, regulation, subpoena
or court order, (ii) to bank examiners and other regulators, auditors and/or
accountants, (iii) in connection with any litigation to which Lender is a party,
(iv) to any assignee or participant (or prospective assignee or participant) so
long as such assignee or participant (or prospective assignee or participant)
shall have first agreed in writing to treat such information as confidential in
accordance with this Section 12.6, or (v) to counsel for Lender or any
participant or assignee (or prospective participant or assignee).
(b) In no event shall this Section 12.6 or any other provision of
this Agreement or applicable law be deemed: (i) to apply to or restrict
disclosure of information that has been or is
81
made public by a Borrower or any third party without breach of this Section 12.6
or otherwise become generally available to the public other than as a result of
a disclosure in violation hereof, (ii) to apply to or restrict disclosure of
information that was or becomes available to Lender on a non-confidential basis
from a person other than a Borrower or a Guarantor, (iii) require Lender to
return any materials furnished by Borrowers to Lender or (iv) prevent Lender
from responding to routine informational requests in accordance with the CODE OF
ETHICS FOR THE EXCHANGE OF CREDIT INFORMATION promulgated by The Xxxxxx Xxxxxx
Associates or other applicable industry standards relating to the exchange of
credit information. The obligations of Lender under this Section 12.6 shall
supersede and replace the obligations of Lender under any confidentiality letter
signed prior to the date hereof.
82
12.7 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered
or to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written. In the event of any inconsistency between
the terms of this Agreement and any schedule or exhibit hereto, the terms of
this Agreement shall govern.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
83
IN WITNESS WHEREOF, Lender, Borrowers and Guarantors have caused these
presents to be duly executed as of the day and year first above written.
LENDER BORROWERS
------ ---------
CONGRESS FINANCIAL CORPORATION JLM CHEMICALS, INC.
(FLORIDA)
By: /s/ Xxxxxx Cott By: /s/ Xxxxxxx X Xxxxx
--------------------------------- --------------------------------
Title: First Vice President Title: Vice President
ADDRESS: CHIEF EXECUTIVE OFFICE:
-------- ----------------------
000 Xxxxxxxx Xxxxxx 0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000 Xxxxx, Xxxxxxx 00000
JLM MARKETING, INC.
By: /s/ Xxxxxxx X Xxxxx
--------------------------------
Title: Vice President
CHIEF EXECUTIVE OFFICE:
----------------------
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
GUARANTORS
----------
JLM INDUSTRIES, INC.
By: /s/ Xxxxxxx X Xxxxx
--------------------------------
Title: Vice President
CHIEF EXECUTIVE OFFICE:
----------------------
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
[SIGNATURES CONTINUED ON NEXT PAGE]
84
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
JLM INTERNATIONAL, INC.
By: /s/ Xxxxxxx X Xxxxx
--------------------------------
Title: Vice President
CHIEF EXECUTIVE OFFICE:
----------------------
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
85
EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT
[See Attached Information Certificates]
A-1
EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT
[Form of Borrowing Base Certificate]
B-1
EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT
FORM OF COMPLIANCE CERTIFICATE
To: Congress Financial Corporation (Florida)
000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
I hereby certify to you as follows:
1. I am the duly elected Chief Financial Officer of JLM Chemicals,
Inc., a Delaware corporation ("Chemicals"), and JLM Marketing, Inc., a Delaware
corporation ("Marketing", together with Chemicals, collectively, "Borrowers").
Capitalized terms used herein without definition shall have the meanings given
to such terms in the Loan and Security Agreement, dated June __, 2001, by and
among Congress Financial Corporation (Florida) ("Lender"), Borrowers, JLM
Industries, Inc., a Delaware corporation ("Industries"), JLM International,
Inc., a Delaware corporation ("International", together with Industries,
collectively "Guarantors") and Borrowers (as amended, modified or supplemented,
from time to time, the "Loan Agreement").
2. I have reviewed the terms of the Loan Agreement, and have made, or
have caused to be made under my supervision, a review in reasonable detail of
the transactions and the financial condition of Borrowers, during the
immediately preceding fiscal month.
3. The review described in Section 2 above did not disclose the
existence during or at the end of such fiscal month, and I have no actual
knowledge of the existence and continuance on the date hereof, of any condition
or event which constitutes an Event of Default, or act, condition or event which
with notice or passage of time or both would constitute an Event of Default,
except as set forth on Schedule I attached hereto. Described on Schedule I
attached hereto are the exceptions, if any, to this Section 3 listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which Borrower or Guarantor has taken, is taking, or
proposed to take with respect to such condition or event.
4. I further certify that, based on the review described in Section 2
above, Borrowers and Guarantors have not at any time during or at the end of
such fiscal month, except as specifically described on Schedule II attached
hereto or as permitted by the Loan Agreement, done any of the following:
C-1
(A) Changed its respective corporate name, or transacted
business under any trade name, style, or fictitious
name, other than those previously described to you and
set forth in the Financing Agreements.
(B) Changed the location of its chief executive office, or
changed the location of or disposed of any of its
properties or assets (other than permitted by the
Financing Agreements), or established any new asset
locations.
(C) Materially changed the terms upon which it sells goods
(including sales on consignment) or provides services,
nor has any vendor or trade supplier to Borrowers or
Guarantors during or at the end of such period
materially adversely changed the terms upon which it
supplies goods to Borrowers or Guarantors.
(D) Permitted or suffered to exist any security interest in
or liens on any of its properties, whether real or
personal, other than as specifically permitted in the
Financing Agreements.
(E) Become aware of, obtained knowledge of, or received
notification of, any breach or violation of any covenant
contained in any instrument or agreement in respect of
Indebtedness for money borrowed by Borrowers or
Guarantors.
5. Attached hereto as Schedule III are the calculations used in
determining, as of the end of such fiscal month, whether Borrowers were in
compliance with the covenants set forth in Sections 9.10(d), 9.12(a)(iii) and
9.15 of the Loan Agreement for such fiscal month.
The foregoing certifications are made and delivered this day of
___________, _____.
Very truly yours,
JLM CHEMICALS, INC.
By:_____________________________
Title:__________________________
JLM MARKETING, INC.
By:_____________________________
Title:__________________________
C-2
