EXHIBIT 10.3
CREDIT AGREEMENT
This Credit Agreement (the "Agreement") dated as of this 15th day of June,
2001, is by and between SOUTHTRUST BANK, an Alabama banking corporation (the
"Bank"), whose address is 000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, and
JLM INDUSTRIES, INC., (the "Borrower"), whose address is 0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxx, XX 00000. The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1. DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
"AFFILIATE" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with that Person.
For purposes of this definition, "control" as applied to any Person means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract, or otherwise.
"APPLICABLE RATE" means either a LIBOR Rate or the Base Rate.
"BASE RATE" means the lending rate as announced by the Bank from time to
time, as its base rate which may change as often as daily provided, however,
that at no time shall the rate of interest exceed the highest rate allowed by
law. In the event that Bank does not, for any reason, announce a Base Rate or
discontinues the use of the term "Base Rate" as a benchmark for interest rate on
its loans, the Base Rate shall be the rate quoted as the "prime rate" as
reported in the "Money Rates" section of the Wall Street Journal (or the
arithmetic average of the rates so quoted, if more than one rate is quoted) or,
in the event of discontinuance of such publication or such section thereof, the
Base Rate shall mean the monthly average prime rate as reported and published in
the FEDERAL RESERVE BULLETIN published monthly by the Board of Governors of the
Federal Reserve System under the table styled "Prime Rate Charged by Banks on
Short Term Business Loans". In the event of the discontinuance of both such
publications or such section or table thereof, the Base Rate shall mean the
prime rate as from time to time announced or published by Citibank, N.A. at its
principal office in New York, New York.
The terms "Base Rate" and "Prime Rate" are intended by the parties to be
benchmarks only and are not to be construed as indicating that such rates are
the best or lowest rates offered by the Lender to any of its customers
regardless of their creditworthiness.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or other day
on which commercial banks in Florida or Alabama are authorized or required to
close under applicable law.
"CLOSING DATE" means the date of this Agreement.
"COLLATERAL" means the Real Property Collateral, all Improvements thereon,
and all fixtures thereto.
"DEFAULT RATE" is defined in SECTION 2.04.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereof.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) which together with the Borrower would be treated as a single
employer under Section 4001 of ERISA.
"EUROCURRENCY RESERVE PERCENTAGE" means, with respect to each Interest
Period, a percentage (expressed as a decimal) equal to the percentage in effect
two Business Days prior to the first day of such Interest Period, as prescribed
by the Board of Governors of the Federal Reserve System (or any successor), for
determining reserve requirements applicable to any "Eurocurrency liabilities"
pursuant to Regulation D or any other applicable regulation of the Board of
Governors which prescribes reserve requirements applicable to "Eurocurrency
liabilities" as presently defined in Regulation D.
"GAAP" means generally accepted accounting principles in the United States
consistently applied.
"HEAD OFFICE" means the principal office of the Bank at 000 Xxxxx 00xx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
"IMPROVEMENTS" means all buildings and improvements of any kind or
character whatsoever located on the Real Property Collateral.
"INTERBANK RATE" means, with respect to each Interest Period, the rate per
annum at which dollar deposits in immediately available funds are offered to the
Bank two Business Days prior to the beginning of such Interest Period by major
banks in the London interbank eurodollar market as at or about 11:00 a.m. London
time, for delivery on the first day of such Interest Period, for the number of
days comprised therein and in an amount comparable to the amount of the Loan to
which such Interest Period relates.
"INTERBANK RATE (RESERVE ADJUSTED)" means, for any Interest Period, a rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined
pursuant to the following formula:
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Interbank Rate = Interbank Rate
-------------------------------------------
(Reserve Adjusted) 1 - Eurocurrency Reserve Percentage
"INTEREST PERIOD" means the period beginning on (and including) the date
on which the Loan is made or continued and ending on (but excluding) the day 30,
60 or 90 days thereafter, in either case as the Borrower may select in its
relevant notice to the Bank as provided in this Agreement, PROVIDED, that:
(a) if any Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next succeeding
Business Day; and
(b) no Interest Period may end later than the Maturity Date,
PROVIDED that if the final Interest Period for the Loan is less than
thirty (30) days, interest shall not accrue at a LIBOR Rate during such
Interest Period but rather shall accrue at the Base Rate.
"LIBOR RATE" means a rate of interest per annum equal to the Interbank
Rate (Reserve Adjusted) applicable to the Interest Period selected by Borrowers
plus 300 basis points, fixed for periods of 30, 60 or 90 days.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"LOAN" means the Loan made by the Bank to the Borrower pursuant to SECTION
2.01.
"LOAN DOCUMENTS" means the this Credit Agreement, the Note, the Mortgage
securing the Note and all documents executed and delivered to the Bank in
connection with the transactions contemplated thereby, whether referred to
collectively or separately in this Agreement, as the context may require.
"MATURITY DATE" means June 15, 2004.
"MORTGAGE" means the Mortgage, Security Agreement and Assignment of Rents
and Leases of even date with the Note given by Borrower to secure the Note.
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"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414 of the Internal Revenue Code of
1986, as amended, and the regulations promulgated thereunder, in which employees
of Borrower an ERISA Affiliate participate or to which Borrower or any ERISA
Affiliate contribute or are required to contribute.
"NOTE" means the promissory note of Borrower given to evidence Borrower's
obligation to repay the Loan to the Bank.
"PERSON" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
"PLAN" means any plan established, maintained, or to which contributions
have been made by the Borrower or any ERISA Affiliate.
"REAL PROPERTY COLLATERAL" means the real property that is subject to the
Mortgage, together with all improvements located thereon.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect and shall include any successor or
other regulation of said Board of Governors relating to reserve requirements
applicable to member banks of the Federal Reserve System.
"SUBSIDIARY" means, as to any Person, a corporation of which shares of
stock having ordinary voting power (other than stock having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly, or indirectly through one
or more intermediaries, or both, by such Person.
SECTION 1.02. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all financial data
submitted pursuant to this Agreement shall be prepared in accordance with such
principles. When used herein, the term "financial statements" shall include the
notes and schedules thereto.
SECTION 1.03. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or". The words "hereof", "herein", "hereby',
"hereunder", and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Section,
subsection, clause, schedule and exhibit references are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the Loan Documents to
this Agreement or any of the Loan Documents shall include all alterations,
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amendments, changes, extensions, modifications, renewals, replacements,
substitutions and supplements thereto and thereof, as applicable. All of the
schedules and exhibits attached to this Agreement shall be deemed incorporated
herein by reference.
ARTICLE II
THE LOAN
SECTION 2.01. (a) THE LOAN. The Bank agrees, on the terms and conditions
hereinafter set forth, to make a term loan to the Borrower in the amount of ONE
MILLION EIGHT HUNDRED EIGHTY FIVE THOUSAND AND NO/100 DOLLARS ($1,885,000.00).
There is no revolving feature to the Loan and Borrower may not re-borrow any
sums repaid thereunder.
(b) THE NOTE. The Borrower's obligation to repay the Loan shall be
evidenced by a promissory note of Borrower of even date with this Agreement in
substantially the form attached hereto as EXHIBIT "A".
(c) INTEREST RATE. The principal amount of the Note shall bear interest at
the LIBOR Rate based upon Interest Period selections made by the Borrower in
accordance with SECTION 2.01 (F). Interest shall be calculated based on a 360
day year for the actual number of days elapsed during any Interest Period.
(d) PAYMENTS UNDER THE NOTE. Borrower shall repay the Loan under the Note
in equal monthly installments of principal plus interest based upon a ten (10)
year amortization commencing with a payment due on the fifteenth (15th) day of
the month following the Closing Date and on the same day of each month
thereafter until the Maturity Date on which date all outstanding principal and
accrued interest shall be due and payable. All payments received by the Bank
shall be applied first to payment of any costs and expenses to which the Bank
may be entitled under any Loan Document, then to payment of accrued interest and
then to payment of principal.
(e) CONTINUATION OR CONVERSION OF INTEREST PERIOD. Subject to the
provisions hereof, the Borrower shall have the right to continue or change the
Interest Period applicable to the Loan, in each case by submitting to the Bank
(effective upon receipt) at least three (3) Business Days prior to the end of a
current Interest Period a written notice of Borrower's election to continue or
change the Interest Period as described in said notice. Such continuation or
conversion shall take effect at the end of the current Interest Period. If no
such notice of election is received by the Bank from the Borrower within the
time prescribed prior to the end of a current Interest Period, then the current
Interest Period shall be continued at a current rate. Notwithstanding anything
herein to the contrary, no Interest Period may end later than the Maturity Date
and if the Maturity Date falls in less than thirty (30) days, then the Loan
cannot accrue interest at a LIBOR Rate during the remaining term
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but rather shall accrue interest at a rate per annum equal to the Base Rate.
After the occurrence and during the continuance of an Event of Default, the
interest rate applicable to the Loan may not be continued at a LIBOR Rate and
shall be deemed automatically to have been converted to the Default Rate.
(f) RIGHT OF PREPAYMENT OF LOAN. Subject to the provisions of this
Agreement regarding payment of expenses relating to LIBOR Rate breakage,
Borrower shall have the right any time and from time to time to prepay the
principal outstanding under the Note, in whole or in part, without premium or
penalty provided, however, that Borrower shall pay accrued interest to the date
of such prepayment. Prepayments shall be made to Bank in immediately available
funds, and any such prepayment shall not affect or vary the obligation of
Borrower to pay any installment when due.
(g) USE OF PROCEEDS OF LOAN. The proceeds of the Loan shall be used to pay
off existing indebtedness owed by Borrower to Citizens Bank of Massachusetts.
SECTION 2.02. NON USURY. Notwithstanding any other provision of this
Agreement, the Note or of any instrument securing the Note or any other
instrument executed in connection with the Loan evidenced thereby, it is
expressly agreed that amounts payable under the Note or under the other
aforesaid instruments for the payment of interest or any other payment in the
nature of or which would be considered as interest or other charge for the use
or loan of money shall not exceed the highest rate allowed by law, from time to
time, and in the event the provisions of this Agreement, the Note or of such
other instruments referred to above in this paragraph with respect to the
payment of interest or other charge for the use or loan of money shall result in
payments of interest exceeding such limitation, then the excess over such
limitation shall not be payable and the amount otherwise agreed to have been
paid shall be reduced by the excess so that such limitation will not be
exceeded, and if any payment actually made shall result in such limitation being
exceeded, the amount of the excess shall constitute and be treated as a
repayment of principal and shall operate to reduce such principal by the amount
of such excess, or if any such payment is in excess of the principal
indebtedness, such excess shall be refunded.
SECTION 2.03. PAYMENTS AND COMPUTATIONS. All payments on account of the
indebtedness evidenced by the Note shall be made in lawful money no later than
1:00 p.m. (Eastern Time) on the date due in immediately available United States
funds. All payments shall be first applied to payment of costs and expenses to
which the Bank may be entitled under the Loan Documents, then to accrued
interest and the remainder to principal. All computations of interest shall be
made on the basis of a year of 360 days charged for the actual number of days
elapsed. Payments are to be made to the Bank in Birmingham, Alabama, or at any
one other place in the continental United States as the Bank may, from time to
time, in writing designate. Any payment made after 1:00 p.m. (Eastern Time)
shall be deemed received on the next Business Day and must include interest up
to but not including such next Business Day. If any payment becomes due on a
Saturday, Sunday, or any day on which banks in Florida or Alabama are legally
closed to business, such payment shall be made on the next succeeding Business
Day, and, in the case of a principal
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payment, interest on such principal payment shall be payable for such extension
of time and shall be included with such payment.
SECTION 2.04. DEFAULT RATE. Upon and after the occurrence of an Event of
Default hereunder, all principal amounts due under the Note shall bear interest,
payable on demand, at the Base Rate plus three percent (3.0%) (the "Default
Rate").
SECTION 2.05. LIBOR RELATED PROVISIONS.
(a) LIBOR RATE LENDING UNLAWFUL. If as a result of a regulatory change the
Bank shall reasonably determine that it is unlawful for the Bank to make,
continue or maintain the Loan at the LIBOR Rate, then the obligation of the Bank
to make, continue or maintain any such Loan at the LIBOR Rate shall, upon such
determination (and telephonic notice thereof, to be subsequently confirmed in
writing to the Borrower which notice shall, in the absence of manifest error,
create a rebuttable presumption as to the effect of such regulatory change as
specified above), forthwith be suspended until the earliest date the Bank can
determine and notify the Borrower that the circumstances causing such suspension
no longer exist, and the LIBOR Rate applicable to the Loan shall automatically
convert to the Base Rate on the last day(s) of the then current respective
Interest Period(s) with respect thereto or sooner, if required by such
regulatory change, PROVIDED that the Bank shall take any reasonable actions
available to it (including designation of its lending offices) consistent with
legal and regulatory restrictions that will avoid the need for such suspension
and will not, in the reasonable judgment of the Bank, be otherwise materially
disadvantageous to the Bank.
(b) DEPOSITS UNAVAILABLE. If the Bank shall have reasonably determined
that quotations of interest rates for the relevant deposits referred to in the
definition of "Interbank Rate" are not being provided in the relevant amounts or
for the relevant maturities for purposes of determining rates of interest for
LIBOR Rate determinations as provided herein or that, by reason of circumstances
affecting the London interbank eurodollar market, adequate means do not exist
for ascertaining the LIBOR Rate for the Loan, then, upon telephonic notice from
the Bank to the Borrower to be subsequently confirmed in writing (such notice,
in the absence of manifest error, to create a rebuttable presumption as to the
effect specified above), the obligations of the Bank to make or continue the
Loan at a LIBOR Rate shall forthwith be suspended until the earliest date that
the Bank can reasonably determine and notify the Borrower that the circumstances
causing such suspension no longer exist, PROVIDED that the Bank shall take any
reasonable actions available to it to obtain the necessary quotations of
interest rates in the London interbank eurodollar market (or another eurodollar
market acceptable to the Bank and to the Borrower).
(c) TREATMENT OF AFFECTED LOAN. If the obligation of the Bank to continue
or maintain the Loan at a LIBOR Rate shall be suspended pursuant to SECTION
2.05(A) OR 2.05(B) ABOVE, then the Applicable Rate shall be automatically
converted to the Base Rate on the last day(s) of the then current Interest
Period(s) (or, in the case of a suspension pursuant to SECTION 2.05(A), sooner,
if
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required by the regulatory change that gave rise to such suspension) and,
unless and until the Bank gives notice as provided below that the circumstances
specified in SECTION 2.05(A) OR 2.05(B) (as the case may be) that gave rise to
such suspension no longer exist the Loan that would otherwise be continued at a
LIBOR Rate by the Bank shall be continued instead at the Base Rate. If the Bank
gives notice to the Borrower that the circumstances specified in SECTION 2.05(A)
OR 2.05(B) that gave rise to such suspension no longer exist (which the Bank
agrees to do promptly upon such circumstances ceasing to exist) the Loan
converted to accrue interest at the Base Rate may be re-converted, on the first
day(s) of the next succeeding Interest Period(s) to the LIBOR Rate based upon
written notice received by the Bank at least three (3) Business Days prior to
the conversion.
(d) LIBOR RELATED LOSSES AND EXPENSES.
(i) If either (1) the introduction of or any change in any law or
regulation or in the interpretation or administration of any law or regulation
by any court or administrative or governmental authority charged with the
interpretation or administration thereof from the date hereof, or (2) the
compliance with any guideline or request from any such governmental authority,
including, without limitation, any central bank (whether or not having the force
of law), (x) subjects the Bank or any corporation controlling the Bank to any
tax of any kind whatsoever with respect to this Agreement or the Loan , or
changes the basis of taxation of payments to the Bank or corporation controlling
the Bank of principal, commissions, fees, interest, or any other amount payable
hereunder (except for (A) taxes on or measured by the overall net income of the
Bank or branch, office, or agency through which the Bank is acting for purposes
of this Agreement, (B) changes in the rate of such taxes, or (C) taxes for which
the Bank is indemnified under this Agreement); (y) imposes, modifies, or holds
applicable any reserve, special deposit, compulsory loan, or similar requirement
against assets held by, or deposits or other liabilities in or for the account
of, advances or loans by, or other credit or commitment therefor extended, by,
or any other acquisition of funds by, any office of the Bank which are not
otherwise included in any determination of the Base Rate or LIBOR Rate or
interest payable hereunder; or (z) imposes on the Bank or the corporation
controlling the Bank any other condition, and as a result there shall be any
increase in the cost to the Bank or the corporation controlling the Bank of
agreeing to make or making, funding, or maintaining the Loan by an amount deemed
by such Bank to be material, then Borrower shall from time to time, upon demand
by the Bank pay to the Bank additional amounts sufficient to compensate the Bank
for such increased cost. A certificate as to the amount of such increased cost,
submitted to Borrower by the Bank, shall be conclusive and binding for all
purposes absent manifest error.
(ii) If the Bank determines that compliance with any law or
regulation or with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) concerning
capital adequacy or otherwise has or would have the effect of reducing the rate
of return on the capital of the Bank or the corporation controlling the Bank as
a consequence of, or with reference to its maintaining the Loan below the rate
which the Bank or such other corporation could have achieved but for such
compliance (taking into account the
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policies of the Bank or such corporation with regard to capital) by an amount
deemed by the Bank material, Borrower shall from time to time, upon demand by
the Bank pay to the Bank additional amounts sufficient to compensate the Bank or
such other corporation for such reduction. A certificate as to such amounts,
submitted to Borrower by the Bank, shall be conclusive and binding for all
purposes, absent manifest error. The Bank agrees promptly to notify Borrower of
any circumstances that would cause Borrower to pay additional amounts pursuant
to this provision, provided that the failure to give such notice shall not
affect Borrower's obligation to pay such additional amounts hereunder.
(iii) If the Bank notifies the Borrower that the LIBOR Rate for any
Interest Period will not adequately reflect the cost to the Bank of making,
funding, or maintaining the Loan at the LIBOR Rate for such Interest Period,
then (1) the Applicable Rate will automatically, on the last day of the then
existing Interest Period therefor, convert into the Base Rate, and (2) the
obligation of the Bank to continue the Applicable Rate at a LIBOR Rate shall be
suspended until the Bank notifies the Borrower that the Bank has determined that
the circumstances causing such suspension no longer exist.
(iv) In the event that all or any portion of the Loan for which the
Applicable Rate is the LIBOR Rate is repaid, prepaid or converted prior to the
end of the applicable Interest Period, regardless of whether such payment is
optional or obligatory, Borrower shall be required to pay to the Bank
compensation as follows. Borrower shall be required to pay an amount equal to
the excess, if any, of (1) the amount of interest which otherwise would have
accrued on the portion of the Loan repaid, prepaid or converted from and after
the date of such payment, prepayment or conversion, to the last day of the
applicable Interest Period at the Applicable Rate of interest specified herein,
less (2) the amount of interest which would have accrued on the Loan or portion
thereof from and after the date of such payment, prepayment or conversion, to
the last day of the applicable Interest Period at the Applicable Rate of
interest specified herein, but calculated with respect to an Interbank Rate
(Reserve Adjusted) based on an amount substantially equal to the amount paid,
prepaid or converted and an Interest Period substantially equal to the number of
days remaining in the applicable Interest Period. Whether or not the foregoing
calculation results in a change to be paid by Borrower, Borrower shall also pay
all actual out-of-pocket expenses other than those taken into account in the
foregoing calculation incurred by the Bank (excluding any internal expenses) and
reasonably attributable to such payment, prepayment or conversion. Borrower
acknowledges that the Bank is relying on the Loan for which the Applicable Rate
is a LIBOR Rate remaining outstanding or being converted for the entire Interest
Period selected, and that the foregoing compensation represents reasonable
liquidated damages and is not a penalty. The foregoing compensation shall apply
with respect to all payments, prepayments and conversions of the Loan, whether
optional or obligatory, and shall include any prepayment, repayment or
conversion after default or acceleration of the Note.
SECTION 2.06. COSTS. If any miscellaneous items of cost or expense, or any
other expenditures are incurred by Bank in connection with the loan transactions
contemplated by this
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Agreement including, without limitation, the Loan evidenced by the Note, or in
order to protect, preserve or further secure the Bank's interests with respect
thereto, or, if any action or proceedings shall be commenced by any person other
than the Bank to which action or proceedings the Bank is made a party or in
which it shall become necessary to defend the interests of the Bank or the
provisions of this Agreement, all sums paid or incurred by the Bank for such
expenses, including reasonable attorney's fees, shall be paid by the Borrower,
together with interest thereon at the Default Rate. The sums paid or incurred by
the Bank in accordance with the terms of this paragraph shall be paid by the
Borrower to the Bank promptly upon demand and the failure or omission of the
Borrower to do so shall entitle the Bank to add such sums to the principal
indebtedness of the Note or, at its option, to declare the Note to be in
default, thereupon maturing all of the unpaid indebtedness including the sums
advanced hereunder.
SECTION 2.07. CREDITORS' INQUIRIES. Borrower hereby grants to the proper
officials of Bank the right to make response to any inquiries of creditors of
the Borrower concerning the status of the Loan. Bank agrees to furnish such
information from time to time to the best of its knowledge. Provided, however,
that the only duty of Bank in the furnishing of such information shall be not to
affirmatively deceive, as construed by decisions of the courts of the State of
Florida, which is equivalent to fraud and willful misrepresentation.
SECTION 2.08. ADDITIONAL REMEDIES OF BANK. In addition to other remedies
available to the Bank in an Event of Default under this Agreement, should
Borrower default, violate, breach or fail to comply with and perform any one or
more of the express covenants, conditions, and provisions of this Agreement not
involving the payment of money, which default, violation, breach or failure
remains uncured thirty (30) days after notice thereof to the Borrower, or
defaults under the Note then the Bank shall have the absolute right, at its
option and election, to (1) cancel this Agreement by written notice to the
Borrower; (2) institute appropriate proceedings to specifically enforce
performance hereof; (3) withhold further advances hereunder; (4) take immediate
possession of the Collateral; (5) appoint a receiver, as a matter of strict
right without regard to the solvency of Borrower, for the purpose of preserving
the Real Property Collateral, preventing waste, and to protect all rights
accruing to Bank by virtue of this Agreement, and expressly to make any and all
further improvements, whether on-site or off-site, as may be determined by Bank
for the purpose of completing the Improvements in accordance with this
Agreement. All expenses incurred in connection with the appointment of said
receiver, or in protecting, preserving, or improving the Real Property
Collateral and the Improvements, shall be chargeable against the Borrower and
shall be enforced as a lien against Borrower's property, both real and personal.
Nothing herein shall be construed to require notice or opportunity to cure in
the event that Borrower defaults in any obligation to pay money under the Note.
The said remedies and rights of Bank shall be cumulative and not exclusive, the
Bank to be privileged and have the absolute right to resort to any one or more,
or all of the said remedies, neither to the limited exclusion of the other, or
any other remedy available to the Bank at law or equity, in the event of any
such default or breach of said agreement or provisions by the Borrower. The Bank
shall have the absolute right to apply any balance of the any loan funds as a
payment toward the Note, and no other party, whether contractor,
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materialmen, laborer, sub-contractor, or supplier, shall have any interest in
any Loan funds so applied and shall not have any right to garnish, require or
compel payment thereof toward discharge or satisfaction of any claim or lien
which they or any of them have or may have for work performed or materials
supplied. Any additional funds advanced by Bank to complete construction of the
Improvements shall be secured by the Collateral and shall be considered part of
the Loan and shall be added to the amounts due under the Mortgage Note.
SECTION 2.09. TIME IS OF THE ESSENCE. It is specifically agreed that time
is of the essence of this Agreement, and that no waiver of any obligation or
requirement hereunder shall at any time thereafter be held to be a waiver of the
terms hereunder.
SECTION 2.10. TAXES. All payments of the principal of and interest on the
Note shall be made without deduction for any present and future taxes, levies,
imposts, deductions, charges or withholdings (other than any of the foregoing
levied on or measured by the net income of the Bank pursuant to the tax laws of
the jurisdictions in which it is incorporated or where such Bank's lending
installations are located or managed and controlled) which amount shall be paid
by Borrower. Borrower will pay the amounts necessary so that the gross amount of
the principal and interest paid is not less than that which would have been
required by the Note if such taxes and other items were not payable. All stamp
and documentary taxes shall be paid by Borrower. If, notwithstanding the
previous three sentences, the Bank pays any such taxes, Borrower will reimburse
the Bank for the amount paid, including interest and penalties for late payment,
if any.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. CONDITIONS PRECEDENT TO MAKING LOAN. In addition to the
conditions precedent set forth in Article II of this Agreement, the obligation
of the Bank to make the Loan as provided in Article II of this Agreement is
subject to the further condition precedent that the Bank shall have received on
or before the day of closing each of the following in form and substance
satisfactory to the Bank and its counsel:
(1) NOTE. The Note evidencing the Loan duly executed by the Borrower;
(2) EVIDENCE OF ALL CORPORATE ACTION BY THE BORROWER. Copies of all
corporate action taken by the Borrower, certified as of the date of this
Agreement, including resolutions of its Board of Directors, authorizing the
execution, delivery, and performance of the documents to which it is a party
relating to the Loan;
(3) INCUMBENCY AND SIGNATURE CERTIFICATE OF THE BORROWER. A certificate
(dated as of the date of this Agreement) of the Borrower certifying the names,
incumbency and true signatures
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of its officers authorized to sign the Loan Documents to which it is a party and
the other documents to be delivered by the Borrower under this Agreement, and
having attached thereto certified copies of the Articles of Incorporation and
By-Laws of the Borrower and all amendments to either;
(4) OPINION OF COUNSEL FOR THE BORROWER. A favorable opinion of counsel
for the Borrower in form and substance acceptable to the Bank and as to such
other matters as the Bank may reasonably request;
(5) ITEMS RELATING TO REAL PROPERTY. The Bank shall have received, at or
prior to the Closing, (a) the Mortgage duly executed in recordable form; (b) an
ALTA title insurance commitment naming the Bank as insured for the full amount
of the Note and showing that the Real Property Collateral is unencumbered by any
mortgage, lien or encumbrance of any kind other than the Mortgage; (c) a survey
showing the location of all buildings, improvements and easements and showing a
lack of boundary encroachments and overlaps; and (d) an environmental
indemnification agreement from Borrower in form and substance acceptable to the
Bank providing for indemnification against any loss or liability relating to
environmental hazards.
(6) INSURANCE. The Bank shall have received evidence satisfactory to it
that all Collateral is insured against fire, flood, theft and casualty loss to
its full insurable value, and that Borrower has obtained casualty and builder's
risk insurance relating to the Improvements in substance and with coverage
amounts satisfactory to the Bank; and that the Bank is named as loss payee and
an additional insured as its interest may appear in all such insurance policies
and certificates;
(7) OTHER DOCUMENTS. The Bank shall have received such other approvals,
opinions, or documents as the Bank may reasonably request.
(8) NO DEFAULTS. The Bank shall have received a certificate signed by the
Borrower dated the date of such Advance, stating that no Default or Event of
Default has occurred and is continuing, or would result from the passage of time
or the giving of notice; and
(9) PAYMENT OF FEES. Borrower shall have paid to or for the benefit of the
Bank all fees properly payable by the Borrower pursuant to this Agreement.
(10) PAYMENT OF CITIZENS BANK. The Bank shall have received evidence
satisfactory to it in its sole discretion that Borrower's mortgage loan,
revolving line of credit facility and term loan with Citizens Bank of
Massachusetts have been paid in full.
(11) GENERAL. All agreements, instruments and proceedings in connection
with the transactions contemplated by this Agreement shall be satisfactory in
form and substance to Bank, and Bank shall have received on the date of this
Agreement copies of all documents which it may have requested in connection with
this transaction, including, without limitation, certified copies of
12
resolutions adopted by the Boards of Directors of the Borrower and certificates
of good standing and incumbency certificates.
SECTION 3.02. CONDITIONS PRECEDENT FOR THE BANK'S BENEFIT. The foregoing
conditions precedent exist solely for the Bank's benefit, and the Bank in its
sole discretion shall determine whether they have been satisfied.
ARTICLE IV
REPRESENTATION AND WARRANTIES
The Borrower represents and warrants to the Bank that:
SECTION 4.01. INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION. The
Borrower is a corporation duly incorporated, validly existing, and having an
active status under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged; and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required, if any.
SECTION 4.02. CORPORATE POWER AND AUTHORITY. The execution, delivery, and
performance by the Borrower of the Loan Documents to which each is a party has
been duly authorized by all necessary corporate action and does not and will not
(1) require any consent or approval of the stockholders of the Borrower or of
any other corporation; (2) contravene Borrower's charter or bylaws; (3) violate
any provision of any law, rule, regulation (including, without limitation,
Regulation U of the Board of Governors of the Federal Reserve System), order,
writ, judgment, injunction, decree, determination, or award presently in effect
having applicability to Borrower; (4) result in a breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease, or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected; (5) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties now owned
or hereafter acquired by the Borrower; and (6) cause the Borrower to be in
default under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination, or award or any such indenture, agreement, lease, or
instrument.
SECTION 4.03. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each
of the other Loan Documents to which the Borrower is a party, when delivered
under this Agreement will be, legal, valid, and binding obligations of the
Borrower enforceable against the Borrower in accordance with their terms, except
to the extent that such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws affecting creditors' rights generally, and
principles of equity. Borrower represents and warrants that it is not insolvent
or contemplating filing a voluntary petition for bankruptcy nor is it aware of
any possibility or threat of being subject
13
to any petition for involuntary bankruptcy.
SECTION 4.04. FINANCIAL STATEMENTS. All financial statements of Borrower
which have been furnished to the Bank, are complete (except that footnotes are
not included in interim financial statements) and correct and fairly present in
all material respects the financial condition of the Borrower and the results of
the operations of the Borrower for the periods covered by such statements, all
in accordance with GAAP consistently applied and there has been no material
adverse change in the condition (financial or otherwise), business, or
operations of the Borrower. There are no liabilities of the Borrower fixed or
contingent, which are material but are not reflected in the financial statements
or in the notes thereto, other than liabilities arising in the ordinary course
of business. No information, exhibit, or report furnished by the Borrower to the
Bank in connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading.
SECTION 4.05. LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
properties of the Borrower are now affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty, nor does the
Borrower have any reason to believe that they will be affected in the future, by
any strike, lockout or other labor dispute or embargo (whether or not any of the
foregoing are covered by insurance) materially and adversely affecting such
business or properties or the operation of the Borrower.
SECTION 4.06. OTHER AGREEMENTS. The Borrower is not a party to any
indenture, loan, or credit agreement, or, to Borrower's knowledge, to any lease
or other agreement or instrument, or subject to any charter or corporate
restriction which could have a material adverse effect on the business,
properties, assets, operations, or conditions, financial or otherwise, of the
Borrower, or the ability of either of the Borrower to carry out its obligations
under the Loan Documents to which it is a party. The Borrower is not in default
in any respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
material to its business to which it is a party.
SECTION 4.07. LITIGATION. There is no pending or, to Borrower's knowledge,
threatened action or proceedings against or affecting the Borrower before any
court, governmental agency or arbitrator which may, in any one case or in the
aggregate, materially adversely affect the financial condition, operations,
properties, or business of the Borrower or the ability of the Borrower to
perform its obligations under the Loan Documents to which it is a party.
SECTION 4.08. NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS. The Borrower
has satisfied all judgments against it and is not in default with respect to any
judgment, writ, injunction, decree, rule, or regulation of any court,
arbitrator, or federal, state, municipal, or other governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign.
14
SECTION 4.09. OWNERSHIP AND LIENS. The Borrower has title to, or valid
leasehold interests in, all of its properties and assets, real and personal,
including the properties and assets pledged as Collateral to the Bank (other
than any properties or assets disposed of in the ordinary course of business),
and none of the properties and assets owned by the Borrower is subject to any
Lien, except such as may be permitted pursuant to Section 6.01 of this
Agreement.
SECTION 4.10. ERISA. Neither the Borrower nor any ERISA Affiliate (if any)
is party to or a participant in any Plan including, without limitation, any
Multiemployer Plan, that is subject to ERISA.
SECTION 4.11. OPERATION OF BUSINESS. To the best of Borrower's knowledge,
the Borrower possesses all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, necessary to conduct its
business substantially as now conducted and as presently proposed to be
conducted, and the Borrower is not in violation of any valid rights of others
with respect to any of the foregoing.
SECTION 4.12. TAXES. The Borrower has filed all tax returns (federal,
state and local) required to be filed and has paid all taxes, assessments, and
governmental charges and levies thereon which are due, including interest and
penalties.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have any
Commitment under this Agreement, the Borrower will:
SECTION 5.01. MAINTENANCE OF EXISTENCE. Preserve and maintain its
corporate existence and good standing in the jurisdiction of its incorporation,
and qualify and remain qualified as a foreign corporation in each jurisdiction
in which such qualification is required.
SECTION 5.02. MAINTENANCE OF RECORDS. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Borrower.
SECTION 5.03. MAINTENANCE OF PROPERTIES. Maintain, keep, and preserve, all
of its properties (tangible and intangible) necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
SECTION 5.04. CONDUCT OF BUSINESS. Continue to engage in an efficient and
economical
15
manner in business of the same general type as conducted by it on the date of
this Agreement.
SECTION 5.05. MAINTENANCE OF INSURANCE. Maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated, which insurance may
provide for reasonable deductibility from coverage thereof, and shall include,
without limitation, (i) fire, theft and casualty insurance insuring property
pledged to secure the Loan in an amount of not less than full replacement value
and (ii) public liability insurance including, without limitation automobile and
appropriate liability coverage relating to the Collateral in the amount of not
less that $1,000,000.00 per occurrence and $2,000,000.00 annual aggregate, and
(iii) business interruption insurance. All personal property and Improvements
pledged as Collateral for the Loan shall be insured against fire, theft and
casualty loss to the full insurable value thereof but, anything in this section
to the contrary notwithstanding, need only be insured once, whether by one of
the Borrower or by the Borrower jointly. All policies of insurance shall name
the Bank as an additional insured, loss payee or primary beneficiary as its
interest may appear.
Borrower shall immediately notify the Bank upon the occurrence of any
business interruption or of any casualty, damage or loss to Collateral or
seizure of any Collateral for any reason including, without limitation, action
of any foreign government.
SECTION 5.06. COMPLIANCE WITH LAWS. Comply in all respects with all
applicable laws, rules, regulations, and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments, and governmental charges imposed upon it or upon its property.
SECTION 5.07. RIGHT OF INSPECTION. Upon reasonable prior notice, at any
reasonable time and from time to time, permit the Bank or any agent or
representative thereof to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Borrower, and
to discuss the affairs, finances, and accounts of the Borrower with any of its
officers and directors and the Borrower's independent accountants.
SECTION 5.08. REPORTING REQUIREMENTS. Furnish to the Bank:
(1) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any event
within forty five (45) days after the end of each quarter of each fiscal year of
the Borrower, statements of income of the Borrower and balance sheets for the
period commencing at the end of the previous fiscal year, if any, and ending
with the end of such quarter, and a statement of change in cash flow of the
Borrower for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the previous fiscal year, if
any, and all prepared in accordance with GAAP consistently applied (except for
footnotes) and certified by the controller or treasurer of the Borrower (subject
to year-end adjustments);
16
(2) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of the Borrower,
audited financial statements prepared by an independent certified public
accountant acceptable to the Bank including, without limitation, a balance sheet
of the Borrower as of the end of such fiscal year and a statement of income and
retained earnings of the Borrower for such fiscal year, and a statement of
change in cash flow, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the prior fiscal
year, if any, and all prepared in compilation form by an independent certified
public accountant acceptable to the Bank in accordance with GAAP consistently
applied and certified by the controller or treasurer of the Borrower;
(3) ENVIRONMENTAL REPORTS. Promptly upon sending same to any federal,
state or local environmental regulatory agency, copies of any reports or
assessments relating to the environmental condition of any real estate assets
owned, leased or controlled by Borrower including, without limitation, reports
or assessments relating to the presence, suspected presence, release or
discharge or suspected release or discharge of any Hazardous Material or
Hazardous Substance in or into the air, soil, surface water, groundwater or soil
vapor at, on, about, under, or within any of the real estate assets or any
portion thereof. Borrower shall, in any event, provide to the Bank any and all
environmental reports, test results or other assessments prepared by or for it
promptly upon receipt thereof by Borrower.
(4) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of any
reports submitted to the Borrower by independent certified public accountants in
connection with examination of the financial statements of the Borrower or any
Subsidiary made by such accountants;
(5) CERTIFICATE OF NO DEFAULT. Within forty five (45) days after the end
of each of the first three quarters of each fiscal year of each of the Borrower,
and concurrently with delivery to the Bank of the Borrower's annual, financial
statements, a certificate of the controller or treasurer of the Borrower (i)
certifying that to the best of his knowledge no Default or Event of Default has
occurred and is continuing or, if a Default or Event of Default has occurred and
is continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto; and (ii) setting forth calculations
showing compliance with the financial covenants contained in Article VII of this
Agreement and certifying that such calculations are complete and accurate;
(6) ACCOUNTANT'S REPORT. Simultaneously with the delivery of any annual
audited financial statements referred to in SECTION 5.08(2), a certificate of
each of the independent public accountants who prepared or reviewed such
statements to the effect that in making the examination necessary for the
preparation of such statements, they have obtained no knowledge of any condition
or event that would constitute a Default or Event of Default under this
Agreement or, if they have, specify in such certificate each such condition or
event of which they have knowledge and the nature and status thereof;
17
(7) NOTICE OF LITIGATION. Promptly after the commencement thereof, notice
of all actions, suits, and proceedings before any court or governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, affecting the Borrower or any Subsidiary, which, if determined
adversely to the Borrower or such Subsidiary, would have a material adverse
effect on the financial condition, properties, or operations of the Borrower or
such Subsidiary;
(8) NOTICE OF DEFAULTS AND EVENTS OF DEFAULT. Immediately after the
occurrence of each Default or Event of Default, a written notice setting forth
the details of such Default or Event of Default and the action which is proposed
to be taken by the Borrower with respect thereto;
(9) PROXY STATEMENTS, ETC. Promptly after the sending or filing thereof,
copies of all proxy statements, financial statements, and reports which the
Borrower or any corporation of which such Borrower is a Subsidiary sends to its
stockholders, and copies of all regular, periodic, and special reports, and all
registration statements which the Borrower or any parent corporation files with
the Securities and Exchange Commission or any governmental authority which may
be substituted therefor, or with any national securities exchange;
(10) NOTICE OF ACQUISITION, BULK SALE, MERGER OR CHANGE IN CONTROL. Prior
to any (i) proposed acquisition of control of or purchase of all or any
substantial part of the assets of any corporation or business entity by the
Borrower; (ii) sale of all or any substantial part of the assets of the
Borrower; or (iii) any merger by the Borrower with any other entity whether or
not a Borrower is to survive the merger; the Bank shall be provided with not
less than thirty (30) days advance written notice.
(11) NOTICE OF BUSINESS INTERRUPTION, ETC. The Borrower shall immediately
notify the Bank upon the occurrence of any business interruption, any casualty
or damage or loss of property which could have a material adverse effect on the
business of the Borrower for any reason, including, but not limited to any
action of any foreign government.
(12) GENERAL INFORMATION. Such other information respecting the condition
or operations, financial or otherwise, of the Borrower or any subsidiary as the
Bank may from time to time reasonably request.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have any
Commitment under this Agreement, the Borrower will not, without the prior
written consent of the Bank:
18
SECTION 6.01. LIENS. Create, incur, assume, or suffer to exist, or permit
any Subsidiary to create, incur, assume, or suffer to exist, any Lien upon or
with respect to the Real Property Collateral except:
(l) Liens for taxes or assessments or other government charges or levies
if not yet due and payable or, if due and payable, if they are being contested
in good faith by appropriate proceedings and for which appropriate reserves are
maintained;
(2) Liens imposed by law, such as mechanics', materialmen's, landlords',
warehousemen's, and carriers' Liens, and other similar Liens, securing
obligations incurred in the ordinary course of business which are not past due
or which are being contested in good faith by appropriate proceedings and for
which appropriate reserves or bonds have been established;
(3) Judgment and other similar Liens arising in connection with court
proceedings, provided the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(4) Easements, rights-of-way, restrictions, and other similar encumbrances
which, in the aggregate, do not materially interfere with the occupation, use
and enjoyment by the Borrower or any Subsidiary of the Real Property Collateral
or materially impair the value of the Real Property Collateral;
SECTION 6.02. MERGERS, BULK SALE OR ACQUISITION OF ASSETS, ETC. Merge or
consolidate with, or sell, assign, lease, or otherwise dispose of (whether in
one transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to any Person, or acquire all
or substantially all of the assets or the business of any Person, or permit any
Subsidiary to do so, except that (l) any Subsidiary may merge into or transfer
assets to the Borrower and (2) any Subsidiary may merge into or consolidate with
or transfer assets to any other Subsidiary.
SECTION 6.03. SALE AND LEASEBACK. Sell, transfer, or otherwise dispose of,
or permit any subsidiary to sell, transfer, or otherwise dispose of, any real or
personal property to any Person and thereafter directly or indirectly lease back
the same or similar property, for less than fair market value.
SECTION 6.04. SALE OF ASSETS. Except for (i) the sale of goods and
services in the ordinary course of Borrower's business, and (ii) the sale or
other disposition of assets that have reached the end of their useful life for
purposes of Borrower's business and which are to be replaced by assets of like
kind or function, sell, lease, assign, transfer, or otherwise dispose of any of
its now owned or hereafter acquired assets for other than a price equal to 90%
or more of the original purchase value to be paid to Borrower in currently
available funds at or prior to the transfer.
19
SECTION 6.05. DIVIDENDS. Pay or distribute any dividends, distribution of
capital or redemption of stock except for consideration consisting of common
stock.
SECTION 6.06. INVESTMENTS. Make, or permit any Subsidiary to make, any
loan or advance to any Person, or purchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any capital stock or investment
other than in the ordinary course of business or other securities of, make any
capital contribution to, or otherwise invest in or acquire any interest in any
Person, except: (l) direct obligations of the United States or any agency
thereof with maturities of one year or less from the date of acquisition; (2)
commercial paper of a domestic issuer rated at least "A-l" by Standard & Poor's
Corporation or "P-l" by Xxxxx'x Investors Service, Inc.; (3) certificates of
deposit with maturities of one year or less from the date of acquisition issued
by any commercial bank having capital and surplus in excess of Twenty Million
Dollars ($20,000,000.00); and (4) stock, obligations, or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any Subsidiary. Nothing in this SECTION 6.06 shall be deemed to
prohibit (i) any transaction permitted under SECTION 6.02; (ii) loans or
advances by the Borrower or any Subsidiary to Borrower or any other Subsidiary,
(iii) inter-company capital contributions between or among Borrower and any
Subsidiaries, (iv) loans to employees for travel and other business related
expenses, (v) investments in swap agreements, and (v) loans and investments
existing on the date of this Agreement.
SECTION 6.07. TRANSACTION WITH AFFILIATE. Make any loans to any Affiliate
nor enter into any transaction, including, without limitation, the purchase,
sale, or exchange of property or the rendering of any service, with any
Affiliate including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of the Borrower's
business and upon fair and reasonable terms no less favorable to the Borrower
than would obtain in a comparable arm's-length transaction with a Person not an
Affiliate. Transactions described in this section which exist on the date of
this Agreement shall not be deemed to be prohibited hereunder.
SECTION 6.08. STOCK OF SUBSIDIARY, ETC. Sell or otherwise dispose of any
shares of capital stock of any Subsidiary or permit any Subsidiary to issue any
additional shares of its capital stock other than to Borrower or another
Subsidiary.
SECTION 6.09. GUARANTIES AND CONTINGENT LIABILITIES. Enter into any
guaranty agreement whereby the Borrower guaranties payment or performance of any
indebtedness or obligations of any Person; nor assume any contingent liability
of any kind or character whatsoever. This section shall not be deemed to
prohibit guaranties existing on the date of this Agreement nor guaranties
entered into on or as of the date of this Agreement in favor of Congress
Financial Corporation or GATX Capital Corporation.
SECTION 6.10 DEBT. Enter into any capitalized leases or incur any
indebtedness, whether direct or contingent, other than trade payables, equipment
leases and normal accrued expenses
20
which arise under normal operation of Borrower's business. This section shall
not be deemed to prohibit indebtedness existing on the date of this Agreement
nor indebtedness undertaken on or as of the date of this Agreement payable to
Congress Financial Corporation or GATX Capital Corporation.
ARTICLE VII
FINANCIAL COVENANTS
[RESERVED]
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an Event of Default:
(l) The Borrower should fail to pay the principal of or interest on the
Note, or any amount of fee, as and when due and payable;
(2) Any representation or warranty made or deemed made by the Borrower in
this Agreement or which is contained in any certificate, document, opinion, or
financial or other statement furnished at any time under or in connection with
any Loan Document shall prove to have been incorrect in any material respect on
or as of the date made or deemed made;
(3) Borrower shall fail to perform or observe any term, covenant, or
agreement or defaults under any material provision contained in any Loan
Document to which it is a party on its part to be performed or observed and
fails to cure within thirty (30) days after receipt of written notice of default
from the Bank;
(4) Borrower, or any of its Subsidiaries, if any, shall (a) fail to pay
any indebtedness for borrowed money (other than the Note), or any interest or
premium thereon, when due or within any applicable grace period (whether by
scheduled maturity, required prepayment, acceleration, demand, or otherwise), or
(b) fail to perform or observe any material term, covenant, or condition on its
part to be performed or observed under any agreement or instrument relating to
any such indebtedness, when required to be performed or observed, if the effect
of such failure of payment or to perform or observe is to accelerate, or to
permit the acceleration after the giving of notice or passage of time, or both,
of the maturity of such indebtedness; or any such indebtedness shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled
21
required prepayment), prior to the stated maturity thereof;
(5) Borrower (a) shall generally not, or shall be unable to, or shall
admit in writing its inability to pay its debts as such debts become due; or (b)
shall make an assignment for the benefits of creditors, petition or apply to any
tribunal for the appointment of a custodian, receiver, or trustee for it or a
substantial part of its assets; or (c) shall commence any proceeding under any
bankruptcy, reorganization, arrangements, readjustment of debt, dissolution, or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) shall have any such petition or application filed or any such
proceeding commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains undismissed for a period
of thirty (30) days or more; or (e) by any act or omission shall indicate its
consent to, approval of, or acquiescence in any such petition, application, or
proceeding, or order for relief, or the appointment of a custodian, receiver, or
trustee for all or any substantial part of its properties; or (f) shall suffer
any such custodianship, receivership, or trusteeship to continue undischarged
for a period of Thirty (30) days or more;
(6) Any event of default (after the expiration of any applicable grace or
cure period) as defined in any loan or similar agreement to which the Borrower
is now or hereafter a party, or any other event thereunder or upon the
occurrence of which any holder or holders of indebtedness outstanding thereunder
may declare the same due and payable, shall occur;
(7) One or more judgments, decrees, or orders for the payment of money in
excess of One Hundred Thousand Dollars ($100,000.00) in the aggregate shall be
rendered against the Borrower and such judgments, decrees, or orders shall
continue unsatisfied and in effect for a period of thirty (30) consecutive days
without being vacated, discharged, satisfied, or stayed or bonded pending
appeal;
(8) Borrower shall in any material respect fail to comply with any
material statute, rule, regulation, ordinance, order, or other law or judicial
decree regarding Borrower, their premises or assets;
SECTION 8.02. ACTION IF BANKRUPTCY. If any Event of Default described in
SECTION 8.01 (5) shall occur, the Commitment (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and advances and all other obligations of the Borrower under
the Loan Documents shall automatically be and become immediately due and
payable, without notice or demand or presentment and the Bank shall, subject to
limitations imposed by laws relating to bankruptcy, moratorium and equitable
limitations on enforcement of creditors' rights generally, pursue any and all
rights of the Bank under the Loan Documents including, without limitation,
foreclosure as to any and all pledged Collateral.
SECTION 8.03. ACTION IF OTHER EVENT OF DEFAULT. Upon the occurrence of any
of the events described in SECTION 8.01 (2), (3), (4), (6), (7) OR (8), the
Borrower shall have thirty (30)
22
days after receipt of written notice from the Bank (which may be given by
telefacsimile) within which to effect a cure. If any Event of Default (other
than any Event of Default described in SECTION 8.01 (5) with respect to the
Borrower) shall occur for any reason, whether voluntary or involuntary, and be
continuing after any applicable cure period, then, and in any such event, the
Bank may; (l) declare its obligations under this Agreement to be terminated,
whereupon the same shall forthwith terminate; (2) declare the Note, all interest
thereon, and all other amounts payable under this Agreement and the Loan
Documents to be forthwith due and payable, whereupon the Note, all such
interest, and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any kind, all of
which are hereby expressly waived by the Borrower; and (3) pursue any and all
rights of the Bank under the Loan Documents including, without limitation,
foreclosure as to any and all pledged Collateral.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment, modification, termination, or
waiver of any provision of any Loan Document to which the Borrower is a party,
nor consent to any departure by the Borrower from any Loan Document to which it
is a party, shall in any event be effective unless the same shall be in writing
and signed by the Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 9.02. NOTICES, ETC. All notices and other communications provided
for under this Agreement and under the other Loan Documents to which the
Borrower is a party shall be in writing (including telefacsimile) and mailed or
delivered, if to the Borrower, at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx, XX 00000,
Fax No. (000) 000-0000, Attention: President; and if to the Bank, at its address
at 000 Xxxxx 00xx Xxxxxx, Xxxxxxxxxx, XX 00000, Attn. Florida Corporate (Tampa),
with copy to the Bank at Fax No. 000-000-0000; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other party complying as to delivery with the terms of this SECTION 9.02. All
such notices and communications shall, when mailed or delivered, be effective
when deposited in the mails or delivered to the courier service, respectively,
addressed as aforesaid, except that notices to the Bank pursuant to the
provisions of Article II shall not be effective until received by the Bank.
Notices sent by telefacsimile shall be deemed to be effective upon machine
confirmation of receipt.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of the Bank to
exercise, and no delay in exercising, any right, power, or remedy under any Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any rights under any Loan Documents preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies provided by
law.
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SECTION 9.04. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under any Loan Document to which the Borrower is a party without
the prior written consent of the Bank.
SECTION 9.05. COSTS, EXPENSES, AND TAXES. The Borrower agrees to pay on
demand all costs and expenses in connection with the preparation, execution,
delivery, filing, recording, and administration of any of the Loan Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Bank, with respect thereto and with respect to advising the Bank
as to its rights and responsibilities under any of the Loan Documents, and all
costs and expenses, if any, in connection with the enforcement of any of the
Loan Documents. In addition, the Borrower shall pay any and all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of any of the Loan Documents and the
other documents to be delivered under any such Loan Documents, and agrees to
save the Bank harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 9.06. RIGHT OF SETOFF. Upon the occurrence and during the
continuance of any Event of Default the Bank is hereby authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or the Note or any other Loan
Document, irrespective of whether or not the Bank shall have made any demand
under this Agreement or the Note or such other Loan Document and although such
obligations may be unmatured. The Bank agrees promptly to notify the Borrower
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of the Bank under this SECTION 9.06 are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Bank may have.
SECTION 9.07. GOVERNING LAW AND VENUE. This Agreement and the Note and all
Loan Documents shall be governed by, and construed in accordance with, the laws
of the State of Florida. Any suit brought under or relating to this Agreement,
the Note or any Loan Document shall be brought exclusively in a court of
competent jurisdiction in either Pinellas County or Hillsborough County,
Florida. The prevailing party in any action brought under or relating to this
Agreement, the Note or any Loan Document shall be entitled to recover its
reasonable attorneys' fees, paralegal's fees and costs of suit, including fees
and costs on appeal and in bankruptcy proceedings.
SECTION 9.08. SEVERABILITY OF PROVISIONS. Any provision of any Loan
Document which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the
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extent of such prohibition or unenforceability without invalidating the
remaining provisions of such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 9.09. HEADINGS. Article and Section headings in the Loan Documents
are included in such Loan Documents for the convenience of reference only and
shall not constitute a part of the applicable Loan Documents for any other
purpose.
SECTION 9.10. WAIVER OF JURY TRIAL. As an important inducement to the Bank
to enter this Agreement, Borrower each waive the right to trial by jury in any
action arising under or in any way related to this Agreement.
SECTION 9.11. CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the term "including" is not limiting, and the
term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or". The word "Borrower" shall include multiple
borrowers, each constituting a Borrower, where more than one party signs this
Agreement as Borrower in which case all obligations and undertakings of the
Borrower hereunder shall be joint and several obligations of each of the parties
constituting the Borrower. The words "hereof", "herein", "hereby", "hereunder",
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement. Section, subsection, clause,
schedule and exhibit references are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the Loan Documents to this
Agreement or any of the Loan Documents shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements thereto and thereof, as applicable.
SECTION 9.12. LOAN COMMITMENT. The terms and provisions of the Bank's
commitment letter to Borrower dated February 9, 2001, are incorporated herein by
reference.
IN WITNESS WHEREOF, the parties have caused this Credit Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
SOUTHTRUST BANK JLM INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------------------ ------------------------------
Xxxxxx X. Xxxxxxxxxx, Vice President Print Name: Xxxxxxx X. Xxxxx
Title: Vice President
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EXHIBIT "A"
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
$1,885,000.00 June 15, 2001
Being indebted for value received, JLM INDUSTRIES, INC., a Florida
corporation, (referred to herein as the "Borrower"), promises to pay to
SOUTHTRUST BANK, an Alabama banking corporation (the "Lender"), or order, at its
offices in the City of Birmingham, Alabama, the sum of ONE MILLION EIGHT HUNDRED
EIGHTY FIVE THOUSAND AND NO/100 DOLLARS ($1,885,000.00) together with interest
on the unpaid balance from the date of disbursement until maturity as provided
in a Credit Agreement (the "Credit Agreement") of even date herewith between
Lender and Borrower. Interest shall be calculated on the basis of an assumed
year of 360 days for the actual number of days elapsed.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed thereto in the Credit Agreement the terms of which are incorporated
herein by reference.
Borrower shall pay to Lender monthly installment payments of principal
plus interest as provided in the Credit Agreement commencing with a payment on
July 15, 2001, and on the same day of each month thereafter until June 15, 2004
(the "Maturity Date").
The remaining principal balance together with all accrued interest and all
other sums payable under this Note or any Mortgage securing payment of this
Note, if not sooner paid, shall be due and payable in a single payment and shall
be paid on the Maturity Date. Payment shall be made at the Maturity Date without
demand, counterclaim, offset, deduction or defense, (whether now or hereafter
conferred by statute or otherwise.)
All payments made upon this Note shall be applied first to payment of any
costs and expenses to which the Lender may be entitled under any Loan Document,
then to accrued interest and thereafter to payment of principal.
Any payment not received within ten (10) days when due shall be subject
to, and it is agreed that the holder hereof shall collect thereon, a "late
charge" in the amount of five percent (5%) of the amount of the delinquent
payment to defray costs of collection and losses of the holder. Said late charge
shall be immediately due and payable and shall be paid by the maker hereof
without notice or demand by the holder. The holder's entitlement to collect a
late charge shall in no way detract from or affect its right to accelerate
payment of this Note in the event of a failure by Borrower to make any payment
hereunder when due.
Privilege is hereby reserved to prepay the principal of this Note in whole
or in part at any
26
time as provided in the Credit Agreement.
Notwithstanding any other provision of this Note or of any instrument
securing this Note or any other instrument executed in connection with the Loan
evidenced hereby, it is expressly agreed that amounts payable under this Note or
under the other aforesaid instruments for the payment of interest or any other
payment in the nature of or which would be considered as interest or other
charge for the use or loan of money shall not exceed the highest rate allowed by
law, from time to time, and in the event the provisions of this Note or of such
other instruments referred to above in this paragraph with respect to the
payment of interest or other charge for the use or loan of money shall result in
exceeding such limitation, then the excess over such limitation shall not be
payable and the amount otherwise agreed to have been paid shall be reduced by
the excess so that such limitation will not be exceeded, and if any payment
actually made shall result in such limitation being exceeded, the amount of the
excess shall constitute and be treated as a payment on the principal hereof and
shall operate to reduce such principal by the amount of such excess, or if in
excess of the principal indebtedness, such excess shall be refunded.
This Note shall be in default upon any default or event by which, under
the terms of this Note, any mortgage securing this Note, the Credit Agreement,
or any Document executed in connection with the Loan evidenced by any of such
documents, this Note may or shall become due and payable. In any event, this
Note shall be in default upon failure of the Borrower to make any payment
hereunder when due without notice or demand. In the event of default, the holder
of this Note may, at its option, declare all unpaid indebtedness evidenced by
this Note and any modifications thereof, immediately due and payable without
notice regardless of the date of maturity. Failure at any time to exercise this
option shall not constitute a waiver of the right to exercise the same at any
other time. In the event of the acceleration of this Note by reason of default,
any unearned interest in the payments precipitated to maturity will be
eliminated.
From and after the stated, or if this Note is accelerated, the
accelerated, maturity date of this Note, it shall bear interest at the Default
Rate.
The parties acknowledge that this Note may be assigned and that any holder
of this Note shall be entitled to recover directly against any endorser or
guarantor hereof without first proceeding against the Borrower or any other
party.
Each Obligor (which term shall mean and include each Borrower, endorser,
and all others who may become liable for all or any part of the obligations
evidenced and secured hereby), does hereby jointly and severally: (a) consent to
any forbearance or extension of the time or manner of payment hereof and to the
release of all or any part of any security held by the Lender to secure payment
of this Note and to the subordination of the lien of the mortgage and any other
instrument of security securing this Note as to all or any part of the property
encumbered thereby, all without notice to or consent of that party; (b) agree
that no course of dealing or delay or omission or forbearance on the part of the
Lender in exercising or enforcing any of its rights or remedies
27
hereunder or under any instrument securing this Note shall impair or be
prejudicial to any of the Lender's rights and remedies hereunder or to the
enforcement hereof and that the Lender may extend, modify or postpone the time
and manner of payment and performance of this Note and any instrument securing
this Note, may grant forbearance and may release, wholly or partially, any
security held by the Lender as security for this Note and release, partially or
wholly, any person or party primarily or secondarily liable with respect to this
Note, all without notice to or consent by any party primarily or secondarily
liable hereunder and without thereby releasing, discharging or diminishing its
rights and remedies against any other party primarily or secondarily liable
hereunder; and (c) waive notice of acceptance of this Note, notice of the
occurrence of any default hereunder or under any instrument securing this Note
and presentment, demand, protest, notice of dishonor and notice of protest and
notices of any and all action at any time taken or omitted by the Lender in
connection with this Note or any instrument securing this Note and waives all
requirements necessary to hold that party to the liability of that party.
All parties liable for the payment of this Note agree to pay the Lender
reasonable attorneys' fees and costs, whether or not an action be brought, for
the services of counsel employed after maturity or default to collect this Note
or any principal or interest due hereunder, or to protect the security, if any,
or enforce the performance of any other agreement contained in this Note or in
any instrument of security as aforesaid, including costs and attorneys' fees on
any appeal, or in any proceedings under the Bankruptcy Code or in any post
judgment proceedings.
This Note is executed under seal.
JLM INDUSTRIES, INC.
By:__________________________
Print Name and Title:
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