Line of Credit, Guarantee and Security Agreement Dated as of May 3, 2019 (As amended AND RESTATED as of May 9, 2019 and May 10, 2019) among PILOT TRAVEL CENTERS LLC the Lender, and NIXON PRODUCT STORAGE, LLC, the Borrower and THE OTHER LOAN PARTIES...
Exhibit 10.2
| Execution Version |
____________________________________________________________________________________
Dated as of May 3, 2019 (As amended AND RESTATED as of May 9, 2019
and May 10, 2019)
among
PILOT TRAVEL CENTERS LLC
the Lender,
and
▇▇▇▇▇ PRODUCT STORAGE, LLC,
the Borrower
and
THE OTHER LOAN PARTIES PARTY HERETO
____________________________________________________________________________________
TABLE OF CONTENTS
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Page
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Section
1
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DEFINITIONS.
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1
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1.1.
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Definitions.
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1
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Section
2
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LOANS.
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11
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2.1.
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Line
of Credit Commitment.
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11
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2.2.
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Advances;
Loans under Line of Credit.
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11
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2.3.
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Borrowing
Procedures.
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12
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2.4.
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Funding.
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12
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2.5.
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Repayment
of Loans.
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12
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2.6.
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Interest
on Loans.
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12
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2.7.
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Default
Interest.
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12
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2.8.
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Payment
Procedures.
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12
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2.9.
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Prepayments
of the Loans.
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13
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2.10.
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Commitment
Fee.
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13
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2.11.
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Recordkeeping.
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13
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2.12.
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Costs
and Expenses.
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12
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2.13.
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Taxes.
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14
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2.14.
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Maximum
Interest.
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15
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2.15.
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Change
in Circumstances.
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15
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2.16.
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Change
in Legality.
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15
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Section
3
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GUARANTY
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15
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3.1.
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Guaranty
of the Obligations.
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15
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3.2.
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Payment
by Guarantors.
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16
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3.3.
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Liability
of Guarantor Absolute.
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16
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3.4.
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Waivers
by Guarantor.
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17
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3.5.
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Guarantors’
Right of Subrogation.
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18
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3.6.
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Subordination
of Other Obligations.
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18
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3.7.
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Continuing
Guaranty.
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18
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3.8.
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Authority
of Guarantors or the Borrower.
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18
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3.9.
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Financial
Condition of the Borrower.
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18
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3.10.
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Bankruptcy,
Etc.
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19
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3.11.
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Maximum
Liability.
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19
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Section
4
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COLLATERAL
GRANTED.
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20
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4.1.
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Grant
of Security Interest to Lender.
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20
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4.2.
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Collection
of Receivables.
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20
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4.3.
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Other
Security.
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21
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4.4.
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Possessory
Collateral.
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21
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4.5.
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Electronic
Chattel Paper.
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21
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4.6.
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Preservation
of Collateral and Perfection of Security Interests
Therein.
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21
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Section
5
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TERMINATION
OF THIS AGREEMENT; TERMINATION OF LIENS.
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22
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Section
6
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REPRESENTATIONS
AND WARRANTIES.
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22
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6.1.
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Financial
Statements and Other Information.
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22
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6.2.
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Locations.
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22
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6.3.
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Loans
by Loan Parties.
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22
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6.4.
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Liens.
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23
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6.5.
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Organization,
Authority and No Conflict.
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23
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6.6.
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Litigation.
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23
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6.7.
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Compliance
with Laws and Maintenance of Permits.
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23
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6.8.
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Affiliate
Transactions.
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23
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6.9.
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Names
and Trade Names.
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23
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6.10.
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Equipment.
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24
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6.11.
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Enforceability.
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24
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6.12.
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Solvency.
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24
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6.13.
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Indebtedness.
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24
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6.14.
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Margin
Security and Use of Proceeds.
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24
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6.15.
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Parent,
Subsidiaries and Affiliates.
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24
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6.16.
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Contracts;
No Defaults.
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24
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6.17.
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Employee
Matters.
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25
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6.18.
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Intellectual
Property.
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25
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6.19.
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Environmental
Matters.
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25
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6.20.
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ERISA
Matters.
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25
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6.21.
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Investment
Company Act.
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25
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6.22.
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AML
Laws, Anti-Corruption Laws, Anti-Terrorism Laws and
Sanctions.
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26
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6.23.
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Taxes.
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26
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6.24.
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Collection
Accounts.
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26
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Section
7
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AFFIRMATIVE
COVENANTS.
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26
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7.1.
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Maintenance
of Records.
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26
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7.2.
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Notices.
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27
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7.3.
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Compliance
with Laws and Maintenance of Permits.
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27
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7.4.
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Inspection
and Audits.
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28
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7.5.
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Insurance.
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28
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7.6.
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Collateral.
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28
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7.7.
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Use of
Proceeds.
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29
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7.8.
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Taxes.
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29
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7.9.
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Intellectual
Property.
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29
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7.10.
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Deposit
Accounts.
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29
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7.11.
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AML
Laws, Anti-Corruption Laws, Anti-Terrorism Laws and
Sanctions.
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29
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7.12.
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Financial
Statements and Reports.
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30
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7.13.
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Commitment
Period Reports.
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30
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7.14.
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GEL
Tex Settlement Agreement.
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30
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7.15.
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Veritex
Lien Release.
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36
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7.16.
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Green
Bank Account.
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31
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Section
8
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NEGATIVE
COVENANTS.
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31
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8.1.
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[Reserved.]
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31
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8.2.
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Indebtedness.
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31
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8.3.
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Liens.
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31
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8.4.
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Mergers,
Sales, Acquisitions, Subsidiaries and Other Transactions Outside
the Ordinary Course of Business.
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31
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8.5.
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Restricted
Payments.
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32
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8.6.
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Investments;
Loans.
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32
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8.7.
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Prepayment
of Subordinated Debt.
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32
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8.8.
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Sale
Leasebacks.
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32
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8.9.
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Fundamental
Changes, Accounting Changes, Line of Business.
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32
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8.10.
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Equipment.
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32
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8.11.
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Affiliate
Transactions.
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33
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8.12.
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Settling
of Accounts.
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33
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8.13.
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Management
Fees; Compensation.
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33
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8.14.
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Restrictive
Agreements.
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33
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8.15.
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Dispositions.
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34
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8.16.
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ERISA.
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34
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Section
9
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DEFAULT.
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34
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9.1.
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Payment.
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34
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9.2.
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Breach
of this Agreement and the other Loan Documents.
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34
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9.3.
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Breaches
of Other Obligations.
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35
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9.4.
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Breach
of Representations and Warranties.
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35
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9.5.
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Loss
of Collateral.
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35
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9.6.
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Levy,
Seizure or Attachment.
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35
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9.7.
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Bankruptcy
or Similar Proceedings.
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35
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9.8.
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Appointment
of Receiver.
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35
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9.9.
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Judgment.
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36
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9.10.
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Dissolution
of Loan Party.
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36
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9.11.
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Default
or Revocation of Guaranty.
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36
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9.12.
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Criminal
Proceedings.
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36
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9.13.
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Change
of Control.
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36
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9.14.
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Material
Adverse Change.
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36
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Section
10
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REMEDIES
UPON AN EVENT OF DEFAULT.
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36
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10.1.
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Acceleration.
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36
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10.2.
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Other
Remedies.
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37
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Section
11
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CONDITIONS
PRECEDENT.
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37
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11.1.
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Conditions
to Loans.
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37
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Section
12
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MISCELLANEOUS.
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40
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12.1.
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Assignments;
Participations.
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40
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12.2.
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Customer
Identification - USA Patriot Act Notice.
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42
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12.3.
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Indemnification
by Borrower.
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42
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12.4.
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Notice.
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42
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12.5.
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Modification
and Benefit of Agreement.
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42
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12.6.
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Headings
of Subdivisions.
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42
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12.7.
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Power
of Attorney.
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42
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12.8.
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Counterparts.
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42
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12.9.
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Refinancing
Support.
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42
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12.10.
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Waiver
of Jury Trial: Other Waivers.
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42
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12.11.
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Choice
of Governing Laws; Construction; Forum Selection.
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43
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Section
13
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LIABILITY.
|
44
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Section
14
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NONLIABILITY
OF LENDER.
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45
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EXHIBIT
A
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–
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FORM OF
COMPLIANCE CERTIFICATE
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EXHIBIT
B
|
–
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FORM OF
NOTICE OF BORROWING
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EXHIBIT
C
|
–
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COMMERCIAL
TORT CLAIMS OF LOAN PARTIES
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EXHIBIT
D
|
–
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FORM OF
PLEDGE AGREEMENT
|
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EXHIBIT
E
|
–
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FORM OF
JOINDER AGREEMENT
|
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SCHEDULE
1.01
|
–
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EXISTING
INDEBTEDNESS
|
|
SCHEDULE
1.03
|
–
|
COLLECTION
ACCOUNTS OF GRANTORS
|
|
SCHEDULE
2.3
|
–
|
BORROWING
SCHEDULE
|
|
SCHEDULE
6.2
|
–
|
BUSINESS
AND COLLATERAL LOCATIONS OF LOAN PARTIES
|
|
SCHEDULE
6.4
|
–
|
PERMITTED
LIENS
|
|
SCHEDULE
6.6
|
–
|
LITIGATION
|
|
SCHEDULE
6.8
|
–
|
AFFILIATE
TRANSACTIONS
|
|
SCHEDULE
6.9
|
–
|
NAMES
& TRADE NAMES
|
|
SCHEDULE
6.14
|
–
|
MARGIN
SECURITIES OWNED BY LOAN PARTIES
|
|
SCHEDULE
6.15
|
–
|
PARENT,
SUBSIDIARIES AND AFFILIATES
|
|
SCHEDULE
6.16
|
–
|
BORROWER’S
CONTRACTS; MATERIAL CONTRACTS UNDER WHICH ANY LOAN PARTY HAS
DEFAULTED
|
|
SCHEDULE
6.23
|
–
|
TAXES
|
|
SCHEDULE
8.14
|
–
|
RESTRICTIVE
AGREEMENTS OF LOAN PARTIES
|
|
SCHEDULE
11.1(d)
|
–
|
LOAN
PARTIES MATERIAL ADVERSE EFFECT EVENTS
|
-1-
THIS
LINE OF CREDIT, GUARANTEE AND SECURITY AGREEMENT (as amended,
modified or supplemented from time to time, this
“Agreement”)
made as of May 3, 2019 (as amended as of May 9, 2019 and May 10,
2019) by and among Pilot Travel Centers LLC, a Delaware limited
liability company (the “Lender”),
▇▇▇▇▇ Product Storage, LLC, a Delaware limited liability company
(the “Borrower”),
Lazarus Refining & Marketing, LLC, a Delaware limited liability
company (“LR&M”
and, together with the Borrower, the “Grantors”),
Lazarus Energy Holdings LLC, a Delaware limited liability company
(“Lazarus”),
Lazarus Energy LLC, a Delaware limited liability company
(“Lazarus
Energy”), Blue Dolphin
Energy Company, a Delaware corporation (“Blue
Dolphin” or
“Pledgor”)
and any other Loan Parties (as defined below) from time to time a
party hereto.
WHEREAS, Borrower
may request advances from Lender under a line of credit, and the
parties wish to provide for the terms and conditions upon which
such advances, if made by Lender, shall be made; and
WHEREAS, the
Guarantors (as defined below) desire to guarantee the Obligations
(as defined below) of the Loan Parties (as defined below), and the
Grantors desire to grant to the Lender a security interest in the
Collateral (as defined below) to secure any and all
Obligations.
NOW,
THEREFORE, in consideration of any Loan (including any Loan by
renewal or extension) hereafter made to Borrower by Lender and for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by Borrower, the parties agree as
follows:
When
used herein the following terms shall have the following
meanings:
“Account”
has the meaning ascribed to such term in the UCC.
“Account
Debtor” has the meaning ascribed to such term in the
UCC.
“Affiliate”
of any Person means (a) any other Person which directly or
indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such Person,
(b) any other Person which beneficially owns or holds twenty
percent (20%) or more of the voting control or Equity Interests of
such Person, (c) any other Person of which twenty percent
(20%) or more of the voting control or Equity Interest of which is
beneficially owned or held by such Person, or (d) any officer
or director of such Person.
“Affiliate Funding
Transactions” means (a) any extension of credit by any
Loan Party (other than Borrower) to, and any corresponding payment
by any Loan Party (other than Borrower) in exchange for such credit
on account of, any Affiliate (or the ordinary-course repayment of
such credit to such Loan Party) to fund the ordinary course of
business operations, or administrative or capital expenditures
required in connection with ordinary course of business operations,
of such Affiliate consistent with past practice or (b) otherwise
expressly consented to by the Lender (which consent may be provided
by email).
-1-
“Agreement”
has the meaning assigned in the introductory paragraph
hereof.
“AML
Laws” means all laws, rules, and regulations of any
jurisdiction applicable to any Loan Party or their Subsidiaries
from time to time concerning or relating to anti-money
laundering.
“Anti-Corruption
Laws” means all laws, rules, and regulations of any
jurisdiction applicable to any Loan Party or their Subsidiaries
from time to time concerning or relating to bribery or
corruption.
“Anti-Terrorism
Laws” means any of the following: (a) the
Anti-Terrorism Order; (b) the Terrorism Sanctions
Regulations (Title 31 Part 595 of the U.S. Code
of Federal Regulations); (c) the Terrorism List Governments
Sanctions Regulations (Title 31 Part 596 of the
U.S. Code of Federal Regulations); (d) the Foreign
Terrorist Organizations Sanctions Regulations (Title 31
Part 597 of the U.S. Code of Federal Regulations);
(e) the PATRIOT Act; and (f) any regulations promulgated
pursuant thereto.
“Anti-Terrorism
Order” means Section 1 of Executive
Order 13224 of September 24, 2001, Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (Title 12, Part 595 of the
U.S. Code of Federal Regulations).
“Asset
Sale” means any sale, lease, transfer or other
disposition of property or series of related sales, leases,
transfers or other dispositions of property, in each case,
constituting Collateral by any of the Loan Parties and their
Subsidiaries that yields Net Cash Proceeds to any of the Loan
Parties and their Subsidiaries.
“Assignee”
has the meaning set forth in Section 12.1.1 hereof.
“Blue
Dolphin” has the meaning assigned in the introductory
paragraph hereof.
“Blue Dolphin Parent
Guarantee” has the meaning assigned in Section 11.1
hereof.
“Borrower”
has the meaning assigned in the introductory paragraph
hereof.
“Borrowing”
means a borrowing of an advance hereunder.
“Business
Day” means any day other than Saturday, Sunday or a
day on which banks in New York, New York, or Houston, Texas, are
authorized or required to close.
“Cadence Bank
Account” has the meaning set forth in Section 7.16
hereof.
“Change in
Law” means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking
effect of any law, rule, regulation or treaty, (b) any change in
any law, rule, regulation or treaty or in the administration,
interpretation, implementation or application thereof by any
Governmental Authority, or (c) the making or issuance of any
request, rule guideline or directive (whether or not having the
force of law) by any Governmental Authority.
-2-
“Chattel
Paper” has the meaning ascribed to such term in the
UCC.
“Closing
Date” has the meaning set forth in Section 11.1 hereof.
“Code”
means the Internal Revenue Code of 1986, as amended from time to
time.
“Collateral”
means (a) the “Pledged Collateral” as defined in the
Pledge Agreement, (b) all of the property of the Grantors described
in Section 4.1 hereof, and (c) all
other real or personal property of any Loan Party or any other
Person, now or hereafter pledged to Lender to secure, either
directly or indirectly, repayment of any of the
Obligations.
“Collection
Accounts” means each deposit account or securities
account maintained, in each case in the name of a Grantor at a bank
or other financial institution pursuant to a control agreement in
form and substance satisfactory to the Lender for the purpose of
receiving Collections and each other deposit account or securities
account maintained in Borrower’s name.
“Collections”
means, with respect to any Receivable that is Collateral, all funds that are
received by a Grantor in payment of any amounts owed in respect of
such Receivable (including purchase price, finance charges,
interest and all other charges and all proceeds of any drawing
under any letter of credit with respect to such Receivable), or
applied to amounts owed in respect of such Receivable (including
insurance payments and net proceeds of the sale or other
disposition of repossessed goods or other collateral or property of
the related obligor or any other Person directly or indirectly
liable for the payment of such Receivable and available to be
applied thereon).
“Commercial Tort
Claims” has the meaning ascribed to such term in the
UCC.
“Commitment
Period” means the period commencing on the date when
the Lender has received a copy of a commitment executed by the
Borrower and a proposed lender, subject only to customary and usual
conditions, for a loan for the purpose of refinancing all of the
Obligations, which commitment is in form and substance reasonably
satisfactory to Lender and is provided by a proposed lender
reasonably believed to be capable of providing such refinancing
prior to the Maturity Date on the terms in the commitment letter
and ending on the first to occur of (i) the termination,
withdrawal, repudiation, or similar action of such commitment
letter by either party thereto, (ii) termination of the commitment
period set forth in such commitment letter, (iii) the failure by
the Borrower to meet any condition set forth in such commitment
letter, (iv) the one hundred and fifty (150th) day following the
date of such commitment letter, (v) the Lender having a reasonable
belief that the proposed loan will not be provided by the proposed
lender in accordance with the terms of the commitment letter, or
(vi) a failure by any Loan Parties to comply with Section 7.13.
“Commodity
Transaction Documents” means (a) the Crude Supply
Agreement, (b) the Jet Fuel Master Agreement, (c) the Crude Storage
Lease, (d) the Jet Storage Lease, (e) the Blue Dolphin Parent
Guarantee, (f) the Jet Inventory Purchase and Sale Agreements, (g)
the NPS Exclusivity Letter, and (h) the crude sale agreement
(reference number NP519750001) dated April 30, 2019 by and among
the Lender and the Borrower.
“Connection Income
Taxes” means Other Connection Taxes that are imposed
on or measured by net income (however denominated) or that are
franchise Taxes or branch profits Taxes.
“Consent and
Assignment Agreement (Storage Tank Lease)” has the
meaning specified in Section 11.1 hereof.
-3-
“Consent and
Assignment Agreement (Haltermann MSA)” has the meaning
specified in Section 11.1 hereof.
“Covenant
Party” has the meaning specified in Section
8 hereof.
“Crude Storage
Lease” has the meaning specified in Section 11.1 hereof.
“Crude Supply
Agreement” has the meaning specified in Section 11.1 hereof.
“Debt”
of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all indebtedness of
such Person for the deferred purchase price of property or
services, (c) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments, (d) all
indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property),
(e) all obligations of such Person as lessee under capitalized
leases, (f) all reimbursement obligations, whether contingent
or otherwise, of such Person under acceptance, letter of credit or
similar facilities, (g) all mandatory obligations of such
Person to purchase, redeem, retire, defease or otherwise make any
payment in cash in respect of any disqualified capital stock in
such Person or any other Person or any warrants, rights or options
to acquire such disqualified capital stock, valued at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all obligations of such Person in respect of
hedge agreements, valued at the agreement value thereof,
(i) all guarantee obligations of such Person, and (j) all
indebtedness and other payment obligations referred to in
clauses (a) through (i) above of another Person secured by (or
for which the holder of such Debt has an existing right, contingent
or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable
for the payment of such indebtedness or other payment
obligations.
“Default”
means any event or condition which upon notice, lapse of time or
both would constitute an Event of Default.
“Deposit
Account” has the meaning ascribed to such term in the
UCC.
“Documents”
has the meaning ascribed to such term in the UCC.
“Electronic Chattel
Paper” has the meaning ascribed to such term in the
UCC.
“Employee Benefit
Plan” means any employee benefit plan as defined in
Section 3(3) of ERISA.
“Environmental
Laws” means all federal, state, district, local and
foreign laws, rules, regulations, ordinances, and consent decrees
relating to health, safety, hazardous substances, pollution and
environmental matters, as now or at any time hereafter in effect,
applicable to a Loan Party’s business or facilities owned or
operated by a Loan Party, including laws relating to emissions,
discharges, releases or threatened releases of pollutants,
contamination, chemicals, or hazardous, toxic or dangerous
substances, materials or wastes into the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials.
-4-
“Equipment”
has the meaning ascribed to such term in the UCC.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended, modified or restated from time to time.
“ERISA
Affiliate” means any trade or business (whether or not
incorporated) that together with any Loan Party or its Subsidiaries
is or, at any relevant time, was treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA.
“Event of
Default” has the meaning specified in Section
9 hereof.
“Excluded
Taxes” means with respect to any payment under any
Loan Document to Lender (a) taxes based upon, or measured by,
Lender's overall net income (including franchise taxes imposed in
lieu of such taxes), but only to the extent such taxes are imposed
by a taxing authority (i) in a jurisdiction in which Lender is
organized, (ii) in a jurisdiction which Lender's principal office
is located, or (iii) in a jurisdiction in which Lender's lending
office (or branch) in respect of which payments under this
Agreement are made is located; (b) branch profits taxes (x)
imposed by the United States and (y) that are Other Connection
Taxes; (c) any United States federal withholding taxes that
would not have been imposed but for the failure of the Lender to
comply with Section
2.13(d) hereof; or (d)
United States federal taxes imposed by FATCA.
“Existing
Indebtedness” means the Debt described and listed on
Schedule 1.01,
which shall describe whether such Debt is secured and the assets
subject to a security interest in the benefit of Persons other than
the Lender.
“FATCA”
means (a) Sections 1471 through 1474 of the Code (or successor
statutes that are substantially comparable and not materially more
onerous to comply with) and any current or future regulations or
official interpretations thereof, (b) any treaty, law, regulation
or other official guidance enacted in any other jurisdiction which
facilitates the implementation of the preceding clause (a), and (c)
any applicable intergovernmental agreements with respect to clause
(a) entered into with the United States Government or any
governmental or taxation authority under any other
jurisdiction.
“Equity
Interests” means, as to any Person, all of the shares
of capital stock of (or other ownership or profit interests in)
such Person, all of the warrants, options or other rights for the
purchase or acquisition from such Person of shares of capital stock
of (or other ownership or profit interests in) such Person, all of
the securities convertible into or exchangeable for shares of
capital stock of (or other ownership or profit interests in) such
Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in
such Person (including partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are
outstanding on any date of determination.
“Fiscal
Year” means each twelve (12) month
accounting period of Borrower, which ends on December 31 of each
year.
“Fixtures”
has the meaning ascribed to such term in the UCC.
“GAAP”
means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession) and the Securities and Exchange Commission, which are
applicable to the circumstances as of the date of
determination.
-5-
“GEL
Tex” has the meaning specified in Section 11.1 hereof.
“GEL Tex Settlement
Agreement” has the meaning specified in Section 11.1 hereof.
“General
Intangibles” has the meaning ascribed to such term in
the UCC.
“Goods”
has the meaning ascribed to such term in the UCC.
“Governmental
Authority” means any applicable federal, state, local
or foreign court or governmental agency, authority, instrumentality
or regulatory body having jurisdiction over a Person.
“Grantors”
has the meaning assigned in the introductory paragraph
hereof.
“Green Bank
Account” has the meaning set forth in Section 7.16
hereof.
“Guaranteed
Obligations” has the meaning specified in Section 3.1 hereof.
“Guarantors”
means Blue Dolphin, LR&M, Lazarus, Lazarus Energy, and all
future Subsidiaries of the Borrower, Lazarus Energy and
LR&M.
“Guaranty
Beneficiaries” has the
meaning specified in Section 3.1 hereof.
“Hazardous
Materials” means any hazardous, toxic or dangerous
substance, materials and wastes, including, without limitation,
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, without limitation, 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, without limitation any that
are or become classified as hazardous or toxic under any
Environmental Law).
“Indemnified
Liabilities” has the
meaning specified in Section 12.3 hereof.
“Indemnified
Taxes” means (a) Taxes, other than Excluded Taxes,
imposed on or with respect to any payment made by, or on account
of, a Loan Party under a Loan Document, and (b) to the extent not
otherwise described in (a), Other Taxes.
“Instruments”
has the meaning ascribed to such term in the UCC.
“Interest Payment
Date” means, (a) the second day of each calendar
month, commencing with the first such date to occur at least
fifteen days after the date hereof, (b) the Maturity Date, and (c)
the date of any prepayment.
“Inventory”
has the meaning ascribed to such term in the UCC.
-6-
“Investment
Property” has the meaning ascribed to such term in the
UCC.
“Jet Fuel Master
Agreement” has the meaning specified in Section 11.1 hereof.
“Jet Inventory
Purchase and Sale Agreements” has the meaning
specified in Section 11.1 hereof.
“Jet Storage
Lease” has the meaning specified in Section 11.1 hereof.
“Lazarus”
has the meaning assigned in the introductory paragraph
hereof.
“Lazarus
Energy” has the meaning assigned in the introductory
paragraph hereof.
“Lender”
has the meaning assigned in the introductory paragraph
hereof.
“Lender
Party” has the meaning set forth in Section 12.3 hereof.
“Line of
Credit” has the meaning given to such term in
Section 2.1
hereof.
“Loan
Documents” means (a) this Agreement, (b) the Pledge
Agreement, (c) the Consent and Assignment Agreement (Storage Tank
Lease), (d) the Consent and Assignment Agreement (Haltermann MSA),
and (e) each document, agreement or certificate executed by a Loan
Party and delivered to the Lender in connection with or pursuant to
any of the foregoing, as each of the same may be amended, modified
or supplemented from time to time.
“Loan
Party” means the Borrower, the Pledgor, each Grantor
and each Guarantor.
“Loans”
has the meaning given to such term in Section 2.2
hereof.
“LR&M”
has the meaning assigned in the introductory paragraph
hereof.
“LR&M
Receivables” means Receivables owed to LR&M
arising from or in connection with any lease of tank 66 (which
tank, for the avoidance of doubt, is being leased by LR&M to
Pilot ▇▇▇▇▇▇ Logistics LLC (f/k/a Western Petroleum LLC and ▇▇▇▇▇▇
Petroleum LLC) as of the date hereof).
“Material Adverse
Effect” means (a) a material adverse change in, or a
material adverse effect on, the business, property, assets,
operations or prospects of any of (x) the Borrower, (y) the
Refinery Assets taken as a whole, or (z) the Loan Parties taken as
a whole, (b) a material impairment of the ability of either (x) the
Borrower or (y) the Loan Parties taken as a whole to perform their
obligations under this Agreement and the other Loan Documents, (c)
a material adverse effect upon the Collateral, or (d) a material
impairment of the enforceability or priority of Lender's liens upon
the Collateral or the legality, validity, binding effect or
enforceability of the Loan Documents. Except during a Commitment
Period, the occurrence of a “Material Adverse Effect”
shall be determined by the Lender in its sole discretion, exercised
in good faith.
-7-
“Maturity
Date” means May 3, 2020, subject to the proviso in
Section 11.1.
“Maximum
Liability” has the meaning set forth in Section 3.11 hereof.
“Multiemployer
Plan” means a “multiemployer plan” as
defined in Section 4001(a)(3) of ERISA.
“Net Cash
Proceeds” means, with respect to any Asset Sale or
Recovery Event, the excess, if any, of (i) the sum of cash and
cash equivalents received in connection with such Asset Sale or
Recovery Event (including any cash or cash equivalents received by
way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) over
(ii) the sum of (A) the reasonable and customary
out-of-pocket costs, fees (including investment banking fees,
attorneys’ fees and accountants’ fees), commissions,
premiums and expenses incurred by any of the Loan Parties or their
Subsidiaries and (B) the amount of any reasonable reserve
established in accordance with GAAP against any adjustment to the
sale price or any liabilities.
“Notice of
Borrowing” has the meaning set forth in Section 2.3
hereof.
“NPS Exclusivity
Letter” has the meaning specified in Section 11.1 hereof.
“NPS
Note” means Intercompany Note made by Borrower in
favor of Lazarus Energy, effective as of June 1, 2018.
“Obligations”
means any and all obligations, liabilities and indebtedness of each
Loan Party to Lender or to any Affiliate of Lender of any and every
kind and nature, howsoever created, arising or evidenced and
howsoever owned, held or acquired, whether now or hereafter
existing, whether now due or to become due, whether primary,
secondary, direct, indirect, absolute, contingent or otherwise,
whether several, joint or joint and several, arising under any Loan
Document.
“Other
Connection Taxes” means Taxes imposed as a result of a
present or former connection between the Lender and the
jurisdiction imposing such Tax (other than connections arising from
the Lender having executed, delivered, become a party to, performed
its obligations under, received payments under, received or
perfected a security interest under, engaged in any other
transaction pursuant to or enforced any Loan Document, or sold or
assigned an interest in any Loan or Loan Document).
“Other
Taxes” means all present or future stamp, court or
documentary, intangible, excise, value added, transfer, recording,
filing or similar Taxes that arise from any payment made under,
from the execution, delivery, performance, enforcement or
registration of, from the receipt or perfection of a security
interest under, or otherwise with respect to, any Loan
Document.
“Outside
Date” has the meaning set forth in Section 11.1 hereof.
“Parent”
means any Person now or at any time or times hereafter owning or
controlling (alone or with any other Person) at least a majority of
the issued and outstanding equity of a Loan Party.
“Participant”
has the meaning specified in Section 12.1.2
hereof.
“Participant
Register” has the meaning specified in Section 12.1.2
hereof.
“PATRIOT
Act” means the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Pub. L.107-56, signed into law
October 26, 2001.
“Pension
Plan” means any Employee Benefit Plan, other than a
Multiemployer Plan, subject to the provisions of Section 302 or
Title IV of ERISA or Section 412 of the Code.
-8-
“Permitted
Liens” means (a) statutory liens of landlords,
carriers, warehousemen, processors, mechanics, materialmen or
suppliers incurred in the ordinary course of business and securing
amounts not yet due or declared to be due by the claimant
thereunder or amounts which are being contested in good faith and
by appropriate proceedings and for which the applicable Loan Party
has maintained adequate reserves; (b) liens or security
interests in favor of Lender; (c) liens for taxes, assessments and
governmental charges not yet due and payable or which are being
contested in good faith and by appropriate proceedings and the
applicable Loan Party is in compliance with clauses (i) and (iii)
of Section 7.8 hereof; (d) zoning
restrictions and easements, licenses, covenants and other
restrictions affecting the use of real property that do not
individually or in the aggregate have a material and adverse effect
on the applicable Loan Party’s ability to use such real
property for its intended purpose in connection with such Loan
Party’s business; (e) liens in connection with purchase
money indebtedness and capitalized leases otherwise permitted under
this Agreement, provided, that such liens
attach only to the assets the purchase of which was financed by
such purchase money indebtedness or which are the subject of such
capitalized leases; (f) liens set forth on Schedule 6.4; and (g)
liens specifically permitted by Lender in writing.
“Permitted Tax
Distribution” means, for any taxable period or portion
thereof in which Lazarus is a pass through entity for federal
income tax purposes, payments and distributions which are
distributed to the direct or indirect members of Lazarus on or
prior to each estimated payment date as well as each other
applicable due date to enable such holders to timely make payments
of federal, state and local taxes for such taxable period that are
imposed with respect to the income of Lazarus allocated to such
holders not to exceed the product of (a) the net taxable income of
Lazarus for such period, and (b) the highest applicable marginal
U.S. federal, state and local tax rates applicable to an individual
resident in Houston, Texas; provided that the amount of
such distribution shall be decreased by (i) the amount of any
taxable losses allocated to such direct or indirect members in
prior taxable periods in respect of Lazarus, and (ii) to the extent
the amount distributed to such direct or indirect members of
Lazarus in any prior taxable period exceeded the actual tax
liability for such member attributable to that taxable
period.
“Person”
means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity, party
or foreign or United States government (whether federal, state,
county, city, municipal or otherwise), including, without
limitation, any instrumentality, division, agency, body or
department thereof.
“Pledge
Agreement” means the Pledge Agreement, substantially
in the form of Exhibit
D, by Pledgor in favor of the Lender.
“Pledgor”
has the meaning assigned in the introductory paragraph
hereof.
“Proceeds”
has the meaning ascribed to such term in the UCC.
“Receivable”
means any right to payment from a Person, whether constituting an
“account,” “chattel paper,” “payment
intangible,” “instrument” or “general
intangible” (each, as defined in the UCC), arising from the
sale of goods and/or provision of services, and includes, without
limitation, the obligation of the obligor thereon to pay any
finance charges, fees and other charges with respect thereto,
including, without limitation, with respect to any unbilled
receivables, 100% of the amount to be or thereafter
invoiced.
“Recovery
Event” means any settlement of or payment in respect
of any property or casualty insurance claim or any condemnation
proceeding relating to any asset of a Loan Party or any of its
Subsidiaries constituting Collateral.
“Refinery
Assets” means a certain 15,000 BPD crude oil and
condensate processing facility located in ▇▇▇▇▇, TX, including
associated real and personal property such as the pipeline
infrastructure, crude oil, feedstock and refined product storage
tanks and truck racks (or, in each case, contracts granting rights
to use the same) and other assets and any other personal and real
property owned by Lazarus that is appurtenant to or necessary for
the commercial operation of such processing facility.
“Register”
has the meaning set forth in Section 12.1.1 hereof.
“Reinvestment
Event” shall mean any Asset Sale permitted under
Section 8.4 or Recovery Event in respect
of which a Loan Party has delivered a Reinvestment
Notice.
-9-
“Reinvestment
Notice” shall mean a written notice to the Lender
executed by an authorized officer of a Loan Party stating that no
Event of Default has occurred and is continuing or would result
therefrom and that such Loan Party (directly or indirectly through
a Subsidiary) intends and expects to use all or a specified portion
of the Net Cash Proceeds of a Reinvestment Event to acquire or
repair assets (in the case of any Asset Sale pursuant to
Section
8.4 hereof) or long-term
assets (in the case of any Recovery Event), in each case useful in
its business.
“Related Party
Agreements” has the meaning specified in Section 11.1 hereof.
“Related
Security” means, with respect to any Receivable
that is Collateral, (a) any
goods (including returned goods), and documentation of title
evidencing the shipment or storage of any goods (including returned
goods), the sale of which gave rise to such Receivable, (b) all
instruments and chattel paper that may evidence such Receivable,
(c) all other security interests or liens in favor of Grantor and
property subject thereto from time to time purporting to secure
payment of such Receivable, whether pursuant to a contract related
to such Receivable or otherwise, together with all UCC financing
statements or similar filings relating thereto, (d) to the extent
applicable to such Receivable, all rights, interests and claims
under the contracts relating to such Receivable, and all
guaranties, indemnities, insurance and other agreements (including
the related contract), Supporting Obligations or arrangements of
whatever character from time to time supporting or securing payment
of such Receivable or otherwise relating to such Receivable,
whether pursuant to the contract or other arrangement related to
such Receivable or otherwise and (e) all proceeds of such
Receivable or Related Security with respect thereto.
“Restricted
Payment” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any
Equity Interest of any Person, or any payment (whether in cash,
securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such
Equity Interest, or on account of any return of capital to such
Person’s shareholders, partners or members (or the equivalent
Persons thereof); provided that, for the
avoidance of doubt, ordinary-course payments under Affiliate
Funding Transactions are not Restricted Payments.
“Sanctioned
Country” means, at any time, a country or territory
which is, or whose government is, the subject or target of any
Sanctions broadly restricting or prohibiting dealings with such
country, territory or government (currently, Cuba, Iran, Crimea,
North Korea, and Syria).
“Sanctioned
Person” means, at any time, any Person with whom
dealings are restricted or prohibited under Sanctions, including
(a) any Person listed in any Sanctions-related list of designated
Persons maintained by the United States (including by the Office of
Foreign Assets Control of the U.S. Department of the Treasury, the
U.S. Department of State, or the U.S. Department of Commerce), the
United Nations Security Council, the European Union or any of its
member states, Her Majesty’s Treasury, Switzerland or any
other relevant authority, (b) any Person located, organized or
resident in, or any Governmental Authority or governmental
instrumentality of, a Sanctioned Country or (c) any Person 25% or
more directly or indirectly owned by, controlled by, or acting for
the benefit or on behalf of, any Person described in clauses (a) or
(b) hereof.
“Sanctions”
means economic or financial sanctions or trade embargoes or
restrictive measures enacted, imposed, administered or enforced
from time to time by (a) the U.S. government, including those
administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury, the U.S. Department of State, or the
U.S. Department of Commerce; (b) the United Nations Security
Council; (c) the European Union or any of its member states; (d)
Her Majesty’s Treasury; (e) the Australian Department of
Foreign Affairs and Trade, (f) Switzerland; or (g) any other
relevant authority.
“Subsidiary”
means with respect to any Person, a corporation of which such
Person owns, directly or indirectly, more than
fifty percent (50%) of the outstanding capital stock
having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time
stock of any other class of such corporation shall have or might
have voting power by reason of the happening of any contingency)
and any partnership, joint venture or limited liability company of
which more than fifty percent (50%) of the outstanding
Equity Interests are at the time, directly or indirectly, owned by
such Person or any partnership of which such Person is a general
partner. Unless the context otherwise requires, each reference to
Subsidiaries herein shall be a reference to Subsidiaries of
Borrower.
-10-
“Supporting
Obligations” has the meaning set forth in the
UCC.
“Tangible Chattel
Paper” has the meaning ascribed to such term in the
UCC.
“Taxes”
shall mean any and all present and future taxes, duties, levies,
imposts, deductions, assessments, charges or withholdings
(including backup withholding) and any and all liabilities
(including interest and penalties and other additions to taxes)
with respect to the foregoing.
“Termination
Date” shall be the date on which the Borrower shall
have repaid all of the Obligations (other than unasserted
contingent obligations) and this Agreement (including the
Lender’s commitment to make Loans hereunder) has
terminated.
“UCC”
means the Uniform Commercial Code as in effect from time to time in
the State of New York or any other state the laws of which are
required to be applied in connection with the creation or
perfection of the security interest granted hereunder.
“USA Patriot
Act” has the meaning set forth in Section 12.2 hereof.
“Veritex”
has the meaning set forth in Section 11.1 hereof.
“Veritex Release
Date” has the meaning set forth in Section 7.15.
Subject
to the terms and conditions of this Agreement and the other Loan
Documents, and relying upon the representations and warranties
herein set forth, Lender hereby establishes a line of credit to
Borrower in an aggregate principal amount of up to twelve million
eight hundred thousand Dollars ($12,800,000.00) (the
“Line of
Credit”).
Subject
to the terms and conditions of this Agreement and the other Loan
Documents, and relying upon the representations and warranties
herein set forth, (a) on the date hereof, notwithstanding that the
Closing Date has not yet occurred, Lender shall make an advance to
the Borrower in an aggregate principal amount of $3,300,000, (b) on
May 9, 2019 notwithstanding that the Closing Date has not yet
occurred, Lender shall make an advance to the Borrower in an
aggregate principal amount of $1,200,000 and (c) from time to time
after the Closing Date until the later of (i) the twentieth (20th)
Business Day following the Closing Date and (ii) such later date as
Lender may in its sole discretion agree from time to time, Lender
shall make advances to the Borrower in an aggregate principal
amount, when taken together with the advances contemplated by the
foregoing clauses (a) and (b), up to the amount of the Line of
Credit specified in Section 2.1 (such advances,
collectively, the “Loans”);
provided that each
advance hereunder shall be in an amount not less than one million
Dollars ($1,000,000). Amounts repaid with respect to the Loans may
not be reborrowed.
-11-
Borrower shall give
written notice (each such written notice, a “Notice of
Borrowing”) substantially in the form of Exhibit B to Lender of each
proposed Borrowing not later than 11:00 A.M., New York time,
one Business Day prior to the proposed date of such Borrowing. Each
such notice shall be effective upon receipt by Lender, shall be
irrevocable, and shall specify the date and amount of such proposed
Borrowing, which shall be a Business Day. Borrower shall be deemed
to have duly provided a Notice of Borrowing (and, for the avoidance
of doubt, made the representations, warranties and certifications
set forth therein) in respect of (a) the advance on the date hereof
contemplated by Section
2.2(a), (b) the advance contemplated by Section 2.2(b) on the date thereof and (c)
each date and for each respective amount that, in each case, is set
forth in Schedule
2.3.
The
Lender shall make each advance to be made by it hereunder (other
than the advance on the date hereof and the advance contemplated by
Section 2.2(b) on the date thereof) on the
applicable Borrowing date by wire transfer of immediately available
funds by 2:00 P.M., New York time.
The
Borrower hereby unconditionally promises to pay to the Lender the
outstanding principal amount of the Loans on the Maturity Date. To
the extent not previously paid, the outstanding balance of the
Loans shall be due and payable on the Maturity Date, together with
accrued and unpaid interest thereon.
Subject
to the provisions of Section 2.7 below, the outstanding
principal amount of the Loans shall bear interest (computed on the
basis of the actual number of days elapsed over a year of three
hundred sixty (360) days) at a rate of twelve percent (12%) per
annum. Interest on the Loans shall be payable on each Interest
Payment Date.
If any
Event of Default has occurred and is continuing, then to the extent
permitted by law all amounts outstanding under this Agreement and
the other Loan Documents shall bear interest (after as well as
before judgment), immediately upon the occurrence and during the
continuance of such Event of Default, payable on demand, at a rate
of fourteen percent (14%) per annum (and not for the avoidance of
doubt at the rate set forth in Section 2.6); provided, however, that
immediately upon and after the date that such Event of Default is
cured, waived or no longer continuing, the interest rate shall
revert to the interest rate specified in Section 2.6.
The
Borrower shall make each payment (including principal of or
interest on any Borrowing or any fees or other amounts) required
hereunder and under any other Loan Document not later than 2:00
p.m., New York time, on the date when due in immediately available
Dollars, without setoff, defense or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Lender, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. Each
such payment shall be made to the Lender at the account designated
in writing by an authorized officer of the Lender. Except as
otherwise expressly provided herein, whenever any payment
(including principal of or interest on any Borrowing or any fees or
other amounts) hereunder or under any other Loan Document shall
become due, or otherwise would occur, on a day that is not a
Business Day, such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, if applicable,
unless such next succeeding Business Day would fall in the next
calendar month, in which case payment will be made on the next
preceding Business Day.
-12-
2.9.1. Voluntary
Prepayments.
Upon at
least three (3) days’ prior written notice to the Lender, the
Borrower may prepay a portion or all of the Loans, together with
accrued and unpaid interest thereon and all other amounts payable
by the Borrower under this Agreement, without premium or
penalty.
2.9.2. Mandatory
Prepayments of the Loans.
(a) Asset Sale. If at any time
Borrower shall receive Net Cash Proceeds in an aggregate amount
equal to or exceeding fifty thousand Dollars ($50,000) from (i) any
Asset Sale or (ii) any Recovery Event, the Borrower shall, within
five Business Days after the date of the receipt of such Net Cash
Proceeds by such Loan Party or any of its Subsidiaries, prepay the
Loans and other Obligations in an amount equal to 100% of such Net
Cash Proceeds; provided that, if prior to that
date a Reinvestment Notice is delivered to the Lender in respect
thereof, then the Loan Party or its Subsidiary shall be permitted
to defer such prepayment for a period of up to 45 days after the
date of such Asset Sale or Recovery Event and on such
45th day
shall be required to make such prepayment to the extent that such
reinvestment shall not have been made.
(b) Issuance of Debt. If at any
time any Loan Party or any of its Subsidiaries shall receive Net
Cash Proceeds from the issuance or incurrence of any Debt
prohibited under Section 8.2 below, the Borrower
shall, within one Business Day after the date of receipt of such
Net Cash Proceeds by such Loan Party or any of its Subsidiaries,
prepay the Loans and other Obligations in an amount equal to 100%
of such Net Cash Proceeds.
2.9.3. Prepayment
Procedures.
Any
prepayment under this section shall be applied first, to payment of that portion of
the Obligations constituting fees, indemnities, costs and expenses
payable to Lender hereunder, second, to payment of that portion of
the Obligations constituting accrued but unpaid interest,
third, to payment of that
portion of the Obligations constituting unpaid principal of the
Loans and, fourth, to
payment of any other Obligations due.
The
Borrower agrees to pay to the Lender on the date hereof the
following amounts which amount shall be paid from the proceeds of
the first Loan: (a) a commitment fee in the amount of one hundred
thousand Dollars ($100,000) and (b) all expenses contemplated by
Section 2.12(a)(i)
incurred through the date hereof.
Lender
shall record in its records, the date and amount of each advance
made by Lender hereunder, and each repayment thereof. The aggregate
unpaid principal amount so recorded shall be rebuttably presumptive
evidence of the principal amount of the Loans owing and unpaid. The
failure to so record any such amount or any error in so recording
any such amount shall not, however, limit or otherwise affect the
Obligations of Borrower hereunder to repay the principal amount of
the Loans hereunder, together with all interest accruing thereon.
The Lender shall provide the Borrower with the foregoing books and
records upon reasonable request.
Regardless of
whether the Loan Documents are executed and delivered, Borrower
agrees to reimburse Lender for (a) all reasonable, documented
out-of-pocket costs and expenses incurred by Lender in connection
with the (i) preparation, due diligence, development, consummation
and administration of any of the Loan Documents including, without
limitation, attorney’s fees and other expenses of internal
and external legal counsel, independent engineers, investigators or
other consultants to the Lender, Uniform Commercial Code and other
public record searches and filings, overnight courier, other
express or messenger delivery, appraisal costs, surveys, title
insurance and environmental audit or review costs; and
(ii) administration of this Agreement or any other Loan
Document (including, without limitation, any costs and expenses of
any third party provider engaged by Lender for such purposes) and
(b) all costs and expenses incurred by Lender (including, without
limitation, any costs and expenses of any third party provider
engaged by Lender for such purposes) in connection with the (i)
collection, protection or enforcement of any of Lender’s
rights in or to the Collateral; (ii) collection of any Obligations;
and (iii) enforcement of any of Lender's remedies under this
Agreement or any other Loan Document.
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(a)
All payments made
by a Loan Party hereunder or under any Loan Documents shall be made
without setoff, counterclaim, or other defense. To the extent
permitted by applicable law, all payments hereunder or under the
Loan Documents (including any payment of principal, interest, or
fees) to, or for the benefit, of any person shall be made by the
Loan Party free and clear of and without deduction or withholding
for, or account of, any Taxes now or hereinafter imposed by any
taxing authority.
(b) If a Loan Party
makes any payment hereunder or under any Loan Document in respect
of which it is required by applicable law to deduct or withhold any
Indemnified Taxes, the Loan Parties shall increase the payment
hereunder or under any such Loan Document such that after the
reduction for the amount of Indemnified Taxes withheld (and any
Taxes withheld or imposed with respect to the additional payments
required under this Section 2.13(b)), the amount paid
to Lender equals the sum it would have received
had no such deduction or withholding been made. To the extent a
Loan Party withholds any Taxes on payments hereunder or under any
Loan Document, such Loan Party shall pay the full amount deducted
to the relevant taxing authority within the time allowed for
payment under applicable law and shall deliver to Lender within 30
days after it has made payment to such authority a receipt issued
by such authority (or other evidence satisfactory to Lender)
evidencing the payment of all amounts so required to be deducted or
withheld from such payment. In addition, the Loan Parties shall
timely pay to the relevant Governmental Authority in accordance
with applicable law, or at the option of the Lender timely
reimburse it for the payment of, any Other Taxes.
(c) If Lender (or any
of its Affiliates, agents, or employees) is required by law to make
any payments of any Indemnified Taxes on or in relation to any
amounts received or receivable hereunder or under any other Loan
Document, or any Indemnified Tax is assessed against Lender (or any
of its Affiliates, agents, or employees) with respect to amounts
received or receivable hereunder or under any other Loan Document,
the Loan Parties will jointly and severally indemnify such person
within 10 days after demand therefor, for the full amount of
(i) such Indemnified Tax (and any reasonable counsel fees and
other expenses associated with such Tax) and (ii) any Taxes
imposed as a result of the receipt of the payment under this
Section 2.13, in each case, whether
or not such Indemnified Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate
prepared in good faith by Lender and delivered to any Loan Party as
to the amount of such payment or liability shall, absent manifest
error, be final, conclusive, and binding on all
parties.
(d) If a payment made
to Lender under any Loan Document would be subject to U.S. federal
withholding tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA
(including those contained in Section 1471(b) or 1472(b) of the
Code, as applicable), such Lender shall deliver to the Borrower at
the time or times prescribed by law and at such time or times
reasonably requested by the Borrower such documentation prescribed
by applicable law (including as prescribed by Section
1471(b)(3)(C)(i) of the Code) and such additional documentation
reasonably requested by the Borrower as may be necessary for the
Borrower to comply with its obligations under FATCA and to
determine that such Lender has complied with such Lender’s
obligations under FATCA or to determine the amount to deduct and
withhold from such payment. Solely for purposes of this clause
(d), “FATCA” shall include
any amendments made to FATCA after the date of this
Agreement.
(e) If any party
determines, in its sole discretion exercised in good faith, that it
has received a refund of any Indemnified Taxes as to which it has
been indemnified pursuant to this Section 2.13 (including by the
payment of additional amounts pursuant to Section 2.13(b)), it shall, so long
as no Event of Default has occurred and is continuing, pay to the
indemnifying party an amount equal to such refund (but only to the
extent of indemnity payments made under this Section with respect
to the Indemnified Taxes giving rise to such refund), net of all
out-of-pocket expenses (including Taxes) of such indemnified party
and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund). Such
indemnifying party, upon the request of such indemnified party,
shall repay to such indemnified party the amount paid over pursuant
to this Section
2.13(e) (plus any
penalties, interest or other charges imposed by the relevant
Governmental Authority) in the event that such indemnified party is
required to repay such refund to such Governmental Authority.
Notwithstanding anything to the contrary in this Section 2.13(e), in no event will
the indemnified party be required to pay any amount to an
indemnifying party pursuant to this Section, the payment of which
would place the indemnified party in a less favorable net after-Tax
position than the indemnified party would have been in if the
indemnification payments or additional amounts giving rise to such
refund had never been paid. This Section 2.13(e) shall not be
construed to require any indemnified party to make available its
Tax returns (or any other information relating to its Taxes that it
deems confidential) to the indemnifying party or any other
Person.
(f) All obligations of
the Loan Parties provided for in this Section 2.13 shall survive payment
in full of the Loans, any foreclosure thereunder, any modification,
release, discharge of, or termination of, any of the Loan
Documents.
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It is
the intent of the parties that the rate of interest and other
charges to Borrower under this Agreement and the other Loan
Documents shall be lawful; therefore, if for any reason the
interest or other charges payable under this Agreement are found by
a court of competent jurisdiction, in a final determination, to
exceed the limit which Lender may lawfully charge Borrower, then
the obligation to pay interest and other charges shall
automatically be reduced to such limit and, if any amount in excess
of such limit shall have been paid, then such amount shall be
refunded to such Borrower.
(a)
Notwithstanding any
other provision of this Agreement, if any Change in Law shall (i)
impose, modify or deem applicable any reserve, special deposit,
compulsory loan, insurance charge or similar requirement against
assets of, deposits with or for the account of or credit extended
by the Lender; or (ii) subject the Lender to any Taxes (other than
(A) Indemnified Taxes, (B) Taxes described in clauses (c) and (d)
of the definition of Excluded Taxes and (C) Connection Income
Taxes) on its loans, loan principal, letters of credit,
commitments, or other obligations, or its deposits, reserves, other
liabilities or capital attributable thereto; or (iii) impose on the
Lender or the London interbank market any other condition, cost or
expense (other than Taxes) affecting this Agreement or Loans made
by the Lender, and the result of any of the foregoing shall be to
increase the cost to the Lender of making, converting to,
continuing or maintaining any Loan or of maintaining its obligation
to make any such Loan or to reduce the amount of any sum received
or receivable by the Lender hereunder (whether of principal,
interest or any other amount), then the Borrower will pay to the
Lender, as the case may be, upon demand such additional amount or
amounts as will compensate the Lender, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If the Lender shall
have determined that any Change in Law regarding capital or
liquidity requirements has or would have the effect of reducing the
rate of return on the Lender’s capital or on the capital of
the Lender’s holding company, if any, as a consequence of
this Agreement, the Loans made to a level below that which the
Lender or the Lender’s holding company could have achieved
but for such Change in Law (taking into consideration the
Lender’s policies and the policies of the Lender’s
holding company with respect to capital adequacy), then from time
to time the Borrower shall pay to the Lender, as the case may be,
such additional amount or amounts as will compensate the Lender or
the Lender’s holding company for any such reduction actually
incurred or suffered. Lender agrees to provide Borrower with
reasonable evidence as to the basis for such determination and such
amounts, but Lender’s entitlement to such amounts shall not
be subject to delivery of such evidence or Borrower’s
satisfaction with any evidence so provided.
(c) A certificate of
the Lender setting forth the amount or amounts necessary to
compensate the Lender or its holding company, as applicable, as
specified in paragraph (a) or (b) above shall be delivered to the
Borrower and shall be conclusive absent manifest error. The
Borrower shall pay the Lender the amount shown as due on any such
certificate delivered by it within twenty (20) Business Days after
its receipt of the same.
(d) Failure or delay on
the part of the Lender to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction
in return on capital shall not constitute a waiver of the
Lender’s right to demand such compensation; provided that the Borrower
shall not be under any obligation to compensate the Lender under
paragraph (a) or (b) above with respect to increased costs or
reductions with respect to any period prior to the date that is one
hundred eighty (180) days prior to such request; provided further that the
foregoing limitation shall not apply to any increased costs or
reductions arising out of the retroactive application of any Change
in Law within such one hundred eighty (180)-day
period.
Notwithstanding any
other provision of this Agreement, if any Change in Law shall make
it unlawful for the Lender to make or maintain any Loan, if such
law shall mandate, then, upon notice from the Lender to the
Borrower, the Borrower shall prepay such Loans, together with
accrued and unpaid interest thereon and all other amounts payable
by the Borrower under this Agreement on or before such date as
shall be mandated by such law.
Each
Guarantor jointly and severally hereby irrevocably and
unconditionally guarantees to the Lender, and its successors and
permitted assignees (the “Guaranty
Beneficiaries”) the due and punctual payment in full
of all Obligations when the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 USC. § 362(a), collectively, the
“Guaranteed
Obligations”).
-15-
Each
Guarantor hereby jointly and severally agrees in furtherance of the
foregoing and not in limitation of any other right which any
Guaranty Beneficiaries may have at law or in equity against any
Guarantor by virtue hereof, that upon the failure of the Borrower
to pay any of the Guaranteed Obligations when and as the same shall
become due (or, in the case of any extension of time of payment or
renewal of any of the Guaranteed Obligations, in accordance with
the terms of such extension or renewal), whether at stated
maturity, by required prepayment, declaration, acceleration, demand
or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the
Bankruptcy Code, 11 USC. § 362(a)), each Guarantor will, upon
demand, pay, or cause to be paid, in cash, to the Guaranty
Beneficiaries, an amount equal to the sum of the unpaid principal
amount of all Guaranteed Obligations then due as aforesaid, accrued
and unpaid interest on such Guaranteed Obligations (including
interest which, but for the Borrower’s becoming the subject
of a proceeding under any debtor relief law, would have accrued on
such Guaranteed Obligations, whether or not a claim is allowed
against the Borrower for such interest in such proceeding) and all
other Guaranteed Obligations then owed to Guaranty Beneficiaries as
aforesaid.
Each
Guarantor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected
by any circumstance which constitutes a legal or equitable
discharge of a guarantor or surety other than payment in full of
the Guaranteed Obligations. In furtherance of the foregoing and
without limiting the generality thereof, each Guarantor agrees as
follows:
(a) this Guaranty is a
guaranty of payment when due and not of collectability; this
Guaranty is a primary obligation of each Guarantor and not merely a
contract of surety;
(b) any Guaranty
Beneficiary may enforce this Guaranty upon the occurrence of an
Event of Default notwithstanding the existence of any dispute
between the Borrower and any Guaranty Beneficiary with respect to
the existence of such Event of Default;
(c) the obligations of
each Guarantor hereunder are independent of the obligations of the
Borrower and the obligations of any other guarantor of the
obligations of the Borrower, and a separate action or actions may
be brought and prosecuted against each Guarantor whether or not any
action is brought against the Borrower or any of such other
guarantors and whether or not the Borrower is joined in any such
action or actions;
(d) payment by each
Guarantor of a portion, but not all, of the Guaranteed Obligations
shall in no way limit, affect, modify or abridge each
Guarantor’s liability for any portion of the Guaranteed
Obligations which has not been paid. Without limiting the
generality of the foregoing, if any Guaranty Beneficiary is awarded
a judgment in any suit brought to enforce each Guarantor’s
covenant to pay a portion of the Guaranteed Obligations, such
judgment shall not be deemed to release Guarantor from its covenant
to pay the portion of the Guaranteed Obligations that is not the
subject of such suit;
(e) any Guaranty
Beneficiaries, upon such terms as it deems appropriate, without
notice or demand and without affecting the validity or
enforceability hereof or giving rise to any reduction, limitation,
impairment, discharge or termination of any Guarantor’s
liability hereunder, from time to time may, without limiting this
Guaranty, (i) renew, extend, accelerate, increase the rate of
interest on, or otherwise change the time, place, manner or terms
of payment of the Guaranteed Obligations; (ii) settle, compromise,
release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Guaranteed Obligations
or any agreement relating thereto and/or subordinate the payment of
the same to the payment of any other obligations; (iii) request and
accept other guaranties of the Guaranteed Obligations and take and
hold security for the payment hereof or the Guaranteed Obligations;
(iv) release, surrender, exchange, substitute, compromise, settle,
rescind, waive, alter, subordinate or modify, with or without
consideration, any security for payment of the Guaranteed
Obligations, any other guaranties of the Guaranteed Obligations, or
any other obligation of any Person with respect to the Guaranteed
Obligations; (v) enforce and apply any security now or hereafter
held by or for the benefit of such Beneficiaries in respect hereof
or the Guaranteed Obligations and direct the order or manner of
sale thereof, or exercise any other right or remedy that such
Guaranty Beneficiaries may have against any such security, in each
case as such Guaranty Beneficiaries in its discretion may determine
consistent herewith or the applicable Loan Documents and any
applicable security agreement, including foreclosure on any such
security pursuant to one or more judicial or no judicial sales,
whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or
extinguish any right of reimbursement or subrogation or other right
or remedy of any Guarantor against the Borrower or any security for
the Guaranteed Obligations; and (vi) exercise any other rights
available to it under the Loan Documents. The foregoing shall not
be deemed to modify Section 12.5 of this Agreement;
and
-16-
(f) this Guaranty and
the obligations of each Guarantor hereunder shall be valid and
enforceable and shall not be subject to any reduction, limitation,
impairment, discharge or termination for any reason (other than
payment in full of the Guaranteed Obligations or the occurrence of
the Termination Date), including the occurrence of any of the
following, whether or not any Guarantor shall have had notice or
knowledge of any of them: (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the
stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand
or any right, power or remedy (whether arising under the Loan
Documents, at law, in equity or otherwise) with respect to the
Guaranteed Obligations or any agreement relating thereto, or with
respect to any other guaranty of or security for the payment of the
Guaranteed Obligations; (ii) any rescission, waiver, amendment or
modification of, or any consent to departure from, any of the terms
or provisions (including provisions relating to events of default)
hereof, any of the other Loan Documents, or any agreement or
instrument executed pursuant thereto, or of any other guaranty or
security for the Guaranteed Obligations, in each case whether or
not in accordance with the terms hereof or such Loan Document or
any agreement relating to such other guaranty or security; (iii)
the Guaranteed Obligations, or any agreement relating thereto, at
any time being found to be illegal, invalid or unenforceable in any
respect; (iv) the application of payments received from any source
(other than payments received pursuant to the other Loan Documents
or from the proceeds of any security for the Guaranteed
Obligations, except to the extent such security also serves as
collateral for indebtedness other than the Guaranteed Obligations)
to the payment of indebtedness other than the Guaranteed
Obligations, even though any Guaranty Beneficiaries might have
elected to apply such payment to any part or all of the Guaranteed
Obligations; (v) any failure to perfect or continue perfection of a
security interest in any collateral which secures any of the
Guaranteed Obligations; (vii) any defenses, set-offs or
counterclaims which the Borrower may allege or assert against any
Guaranty Beneficiaries in respect of the Guaranteed Obligations,
including failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction
and usury; and (viii) any other act or thing or omission, or delay
to do any other act or thing, which may or might in any manner or
to any extent vary the risk of any Guarantor as an obligor in
respect of the Guaranteed Obligations.
Each
Guarantor hereby waives, for the benefit of the Guaranty
Beneficiaries:
(a) any right to
require any Guaranty Beneficiaries, as a condition of payment or
performance by such Guarantor, to (i) proceed against the Borrower,
any other guarantor of the Guaranteed Obligations or any other
Person, (ii) proceed against or exhaust any security held from the
Borrower, any such other guarantor or any other Person, (iii)
proceed against or have resort to any balance of any deposit
account or credit on the books of any Guaranty Beneficiaries in
favor of the Borrower or any other Person, or (iv) pursue any other
remedy in the power of any Guaranty Beneficiaries
whatsoever;
(b) any defense arising
by reason of the incapacity, lack of authority or any disability or
other defense of the Borrower including any defense based on or
arising out of the lack of validity or the unenforceability of the
Guaranteed Obligations or any agreement or instrument relating
thereto or by reason of the cessation of the liability of the
Borrower from any cause other than payment in full of the
Guaranteed Obligations;
(c) any defense based
upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal;
(d) any defense based
upon any Guaranty Beneficiaries’ errors or omissions in the
administration of the Guaranteed Obligations, except behavior which
amounts to bad faith;
(e) (i) any principles
or provisions of Law, statutory or otherwise, which are or might be
in conflict with the terms hereof and any legal or equitable
discharge of such Guarantor’s obligations hereunder, (ii) the
benefit of any statute of limitations affecting such
Guarantor’s liability hereunder or the enforcement hereof,
(iii) any rights to set-offs, recoupments and counterclaims, and
(iv) promptness, diligence and any requirement that any Guaranty
Beneficiaries protect, secure, perfect or insure any security
interest or lien or any property subject thereto;
(f) notices, demands,
presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance hereof,
notices of default hereunder, or under any agreement or instrument
related thereto, notices of any renewal, extension or modification
of the Guaranteed Obligations or any agreement related thereto,
notices of any extension of credit to the Borrower and any right to
consent to any thereof; and
(g) any defenses or
benefits that may be derived from or afforded by Law which limit
the liability of or exonerate guarantors or sureties, or which may
conflict with the terms hereof.
-17-
Until
the Termination Date, each Guarantor hereby waives any claim, right
or remedy, direct or indirect, that such Guarantor now has or may
hereafter have against the Borrower or any of its assets in
connection with this Guaranty or the performance by such Guarantor
of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including:
(a) any right of
subrogation, reimbursement or indemnification that such Guarantor
now has or may hereafter have against the Borrower with respect to
the Guaranteed Obligations,
(b) any right to
enforce, or to participate in, any claim, right or remedy that any
Beneficiaries now has or may hereafter have against the Borrower,
and
(c) any benefit of, and
any right to participate in, any collateral or security now or
hereafter held by any Guaranty Beneficiaries. Guarantor further
agrees that, to the extent the waiver or agreement to withhold the
exercise of its rights of subrogation, reimbursement or
indemnification as set forth herein is found by a court of
competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification such
Guarantor may have against the Borrower or against any collateral
or security, shall be junior and subordinate to any rights of the
Beneficiaries against the Borrower, and to all right, title and
interest the Beneficiaries may have in any such collateral or
security. If any amount shall be paid to each Guarantor before the
Termination Date on account of any such subrogation, reimbursement,
indemnification contribution rights at any time when all Guaranteed
Obligations shall not have been finally and indefeasibly paid in
full, such amount shall be held in trust for the Guaranty
Beneficiaries and shall forthwith be paid over to the Guaranty
Beneficiaries to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured, in accordance with the
terms hereof.
Any
Debt of the Borrower now or hereafter held by any Guarantor is
hereby subordinated in right of payment to the Guaranteed
Obligations, and any such indebtedness collected or received by
such Guarantor after an Event of Default has occurred and is
continuing shall be held in trust for the Guaranty Beneficiaries
and shall forthwith be paid over to the Guaranty Beneficiaries to
be credited and applied against the Guaranteed Obligations but
without affecting, impairing or limiting in any manner the
liability of such Guarantor under any other provision
hereof.
This
Guaranty is a continuing guaranty and shall remain in effect until
the Termination Date. Each Guarantor hereby irrevocably waives any
right to revoke this Guaranty as to future transactions giving rise
to any Guaranteed Obligations.
It is
not necessary for any Guaranty Beneficiaries to inquire into the
capacity or powers of the Borrower or the officers, members of the
Board of Directors or any agents acting or purporting to act on
behalf of any of them.
Any
advance under the Line of Credit may be made to the Borrower or
continued from time to time, without notice to or authorization
from any Guarantor regardless of the financial or other condition
of the Borrower at the time of any such grant. No Guaranty
Beneficiaries shall have any obligation to disclose or discuss with
any Guarantor its assessment, or any Guarantor’s assessment,
of the financial condition of the Borrower. Each Guarantor has
adequate means to obtain information from the Borrower on a
continuing basis concerning the financial condition of the Borrower
and its ability to perform its obligations under the Loan
Documents, and each Guarantor assumes the responsibility for being
and keeping informed of the financial condition of the Borrower and
of all circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations. Each Guarantor hereby waives and
relinquishes any duty on the part of any Beneficiaries to disclose
any matter, fact or thing relating to the business, operations or
conditions of the Borrower now known or hereafter known by any
Guaranty Beneficiaries.
-18-
(a) So
long as any Guaranteed Obligations remain outstanding, each
Guarantor shall not, without the prior written consent of the
Lender, commence or join with any other Person in commencing any
proceeding under any debtor relief law of or against the Borrower.
The obligations of each Guarantor hereunder shall not be reduced,
limited, impaired, discharged, deferred, suspended or terminated by
any case or proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation
or arrangement of the Borrower or by any defense which the Borrower
may have by reason of the order, decree or decision of any court or
administrative body resulting from any such
proceeding.
(b) Each Guarantor
acknowledges and agrees that any interest on any portion of the
Guaranteed Obligations which accrues after the commencement of any
case or proceeding referred to in clause (a) above (or, if interest
on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of such case or
proceeding, such interest as would have accrued on such portion of
the Guaranteed Obligations if such case or proceeding had not been
commenced) shall be included in the Guaranteed Obligations because
it is the intention of Guarantors and Guaranty Beneficiaries that
the Guaranteed Obligations which are Guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of
law or order which may relieve the Borrower of any portion of such
Guaranteed Obligations. Each Guarantor will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the
benefit of creditors or similar Person to pay the Lender, or allow
the claim of the Lender in respect of, any such interest accruing
after the date on which such case or proceeding is
commenced.
(c) In the event that
all or any portion of the Guaranteed Obligations are paid by the
Borrower, the obligations of Guarantors hereunder shall continue
and remain in full force and effect or be reinstated, as the case
may be, in the event that all or any part of such payment(s) are
rescinded or recovered directly or indirectly from any
Beneficiaries as a preference, fraudulent transfer or otherwise,
and any such payments which are so rescinded or recovered shall
constitute Guaranteed Obligations for all purposes
hereunder.
It is
the desire and intent of the Guarantors and the Guaranty
Beneficiaries that this Guaranty shall be enforced against each
Guarantor to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement
is sought. The provisions of this Guaranty are severable, and in
any action or proceeding involving any state corporate law, or any
state, Federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the
obligations of any Guarantor under this Guaranty would otherwise be
held or determined to be avoidable, invalid or unenforceable on
account of the amount of such Guarantor’s liability under
this Guaranty, then, notwithstanding any other provision of this
Guaranty to the contrary, the amount of such liability shall,
without any further action by the Guarantor Subsidiaries or the
Guaranty Beneficiaries, be automatically limited and reduced to the
highest amount that is valid and enforceable as determined in such
action or proceeding (such highest amount determined hereunder
being the Guarantor’s “Maximum
Liability”). Each Guarantor agrees that the Guaranteed
Obligations may at any time and from time to time exceed the
Maximum Liability of Guarantor without impairing this Guaranty or
affecting the rights and remedies of the Guaranty Beneficiaries
hereunder; provided, nothing in this
sentence shall be construed to increase any Guarantor’s
obligations hereunder beyond its Maximum Liability.
-19-
As
security for the payment of the Loans made by Lender to the
Borrower hereunder and for the payment, performance or other
satisfaction of all other Obligations:
(a) Borrower hereby
grants to Lender and its Affiliates a continuing security interest
in Borrower’s right, title and interest in the following,
whether now or hereafter owned, existing, acquired or arising and
wherever now or hereafter located: (i) all Accounts and all
Goods whose sale, lease or other disposition has given rise to
Accounts and have been returned, repossessed or stopped in transit;
(ii) all Chattel Paper, Instruments, Documents and General
Intangibles (including, without limitation, all patents, patent
applications, trademarks, trademark applications, trade names,
trade secrets, goodwill, copyrights, copyright applications,
registrations, licenses, software, franchises, customer lists, Tax
refund claims, claims against carriers and shippers, guarantee
claims, contract rights, payment intangibles, security interests,
security deposits and rights to indemnification); (iii) all
Inventory; (iv) all Goods (other than Inventory), including,
without limitation, Equipment, vehicles and Fixtures; (v) all
Investment Property; (vi) all Deposit Accounts, Securities
Accounts, bank accounts, deposits and cash; (vii) all
Letter-of-Credit Rights; (viii) Commercial Tort Claims listed
on Exhibit C
hereto; (ix) all Supporting Obligations; (x) any other property now
or hereafter in the possession, custody or control of Lender,
Lender’s agent or Lender’s parent, any Affiliates of
Lender, or any Subsidiary of Lender or any participant with Lender
in the Loans, for any purpose (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise) and
(xi) all additions and accessions to, substitutions for, and
replacements, products and Proceeds of the foregoing property,
including, without limitation, proceeds of all insurance policies
insuring the foregoing property, and all books and records relating
to any of the foregoing and to Borrower’s
business.
(b) Borrower hereby
grants to Lender and its Affiliates a security interest in
Borrower’s right, title and interest in the following,
whether now or hereafter owned, existing, acquired or arising and
wherever now or hereafter located: (i) all Receivables and all
Related Security, (ii) all Collections, (iii) the Collection
Accounts and all amounts on deposit therein, and all certificates
and instruments, if any, from time to time evidencing such
Collection Accounts and amounts on deposit therein, (iv) all books
and records to the extent related to any of the foregoing, together
with all rights (but not obligations) under the contracts related
to the Receivables, and (v) all proceeds of, and all amounts
received or receivable under, any or all of the
foregoing.
(c) LR&M hereby
grants to Lender and its Affiliates a security interest in
LR&M’s right, title and interest in the following,
whether now or hereafter owned, existing, acquired or arising and
wherever now or hereafter located, upon the occurrence of the
Veritex Release Date: (i) all LR&M Receivables and Related
Security, (ii) all Collections in respect thereof, (iii) the
Collection Accounts and all amounts on deposit therein, and all
certificates and instruments, if any, from time to time evidencing
such Collection Accounts and amounts on deposit therein, (iv) all
books and records to the extent related to any of the foregoing,
and (v) all proceeds of, and all amounts received or receivable
under, any or all of the foregoing.
(a) Each
Grantor shall direct all of its Account Debtors to make all
payments on Receivables that are Collateral directly into a
Collection Account. If a Loan Party, any Affiliate or Subsidiary,
any shareholder, officer, director, employee or agent of a Loan
Party or any Affiliate or Subsidiary, or any other Person acting
for or in concert with a Loan Party shall receive any monies,
checks, notes, drafts or other payments relating to, or as
Collections of Receivables included in, the Collateral, such Loan
Party and each such Person shall receive all such items in trust
for the Lender and, immediately upon receipt thereof, shall remit
the same (or cause the same to be remitted) in kind to a Collection
Account in a manner satisfactory to Lender. Each Loan Party agrees
that, if an Event of Default occurs and is continuing, all payments
made to such Collection Account or otherwise received by Lender,
whether in respect of the Receivables or as Proceeds of other
Collateral or otherwise (except for proceeds of Collateral which
are required to be delivered to the holder of a Permitted Lien
which is prior in right of payment), may be applied on account of
the Obligations in accordance with the terms of this Agreement.
Each Loan Party agrees to pay all customary fees, costs and
expenses in connection with opening and maintaining each Collection
Account. All of such fees, costs and expenses if not paid by a Loan
Party, may be paid by Lender or otherwise charged to Borrower and
in such event all amounts paid by Lender or charged by Lender shall
constitute Obligations hereunder, shall be payable to Lender by
Borrower upon demand, and, until paid, shall bear interest at the
highest rate then applicable to Loans hereunder.
-20-
(b) Lender
may, at any time and from time to time after the occurrence and
during the continuance of an Event of Default, whether before or
after notification to any Account Debtor and whether before or
after the maturity of any of the Obligations, (i) enforce
collection of any of a Grantor’s Receivables that are
Collateral or other amounts owed to a Grantor by suit or otherwise
that are Collateral; (ii) exercise all of such Grantor’s
rights and remedies with respect to proceedings brought to collect
any Receivables that are Collateral or other amounts owed to such
Grantor that are Collateral; (iii) surrender, release or
exchange all or any part of any Receivables that are Collateral or
other amounts owed to such Grantor that are Collateral, or
compromise or extend or renew for any period (whether or not longer
than the original period) any indebtedness thereunder;
(iv) sell or assign any Receivable of a Grantor that is
Collateral or other amount owed to a Grantor that is Collateral
upon such terms, for such amount and at such time or times as
Lender deems advisable; (v) prepare, file and sign the
applicable Grantor’s name on any proof of claim in bankruptcy
or other similar document against any Account Debtor or other
Person obligated to such Grantor; and (vi) do all other acts
and things which are necessary, in Lender's sole discretion, to
fulfill Loan Parties' obligations under this Agreement and the
other Loan Documents and to allow Lender to collect the Receivables
that are Collateral or other amounts owed to each Grantor that are
Collateral. In addition to any other provision hereof, Lender may
at any time, after the occurrence and during the continuance of an
Event of Default, at Borrowers' expense, notify any parties
obligated on any of the Receivables that are Collateral to make
payment directly to Lender of any amounts due or to become due
thereunder.
Lender,
in its sole discretion, without waiving or releasing (i) any
obligation, liability or duty of any Loan Party under this Agreement or the other
Loan Documents or (ii) any Event of Default, may at any time or
times hereafter, but shall not be obligated to, pay, acquire or
accept an assignment of any security interest, lien, encumbrance or
claim asserted by any Person in, upon or against the Collateral
that is prohibited under Section 8.3, provided, that Lender may take
such actions with respect to Permitted Liens only after the
occurrence and during the continuance of an Event of Default. All
sums paid by Lender in respect thereof and all costs, fees and
expenses including, without limitation, reasonable attorney fees,
all court costs and all other charges relating thereto incurred by
Lender shall constitute Obligations, payable by Borrower to Lender
on demand and, until paid, shall bear interest at the highest rate
then applicable to Loans hereunder.
Immediately upon a
Loan Party’s receipt of any portion of the Collateral worth
in excess of fifty thousand dollars ($50,000) evidenced by an
Instrument or Document, including, without limitation, any Tangible
Chattel Paper or any Investment Property consisting of certificated
securities, such Loan Party shall deliver the original thereof to
Lender together with an appropriate endorsement or other specific
evidence of assignment thereof to Lender (in form and substance
acceptable to Lender). If an endorsement or assignment of any such
items shall not be made for any reason, Lender is hereby
irrevocably authorized, as such Loan Party’s attorney and
agent-in-fact, to endorse or assign the same on such Loan
Party’s behalf.
To the
extent that a Loan Party obtains or maintains any Electronic
Chattel Paper that is Collateral and worth in excess of fifty
thousand dollars ($50,000), such Loan Party shall create, store and
assign the record or records comprising the Electronic Chattel
Paper in such a manner that (i) a single authoritative copy of
the record or records exists which is unique, identifiable and
except as otherwise provided in clauses (iv), (v) and
(vi) below, unalterable, (ii) the authoritative copy
identifies Lender as the assignee of the record or records,
(iii) the authoritative copy is communicated to and maintained
by the Lender or its designated custodian, (iv) copies or
revisions that add or change an identified assignee of the
authoritative copy can only be made with the participation of
Lender, (v) each copy of the authoritative copy and any copy
of a copy is readily identifiable as a copy that is not the
authoritative copy and (vi) any revision of the authoritative
copy is readily identifiable as an authorized or unauthorized
revision.
(a) Each
Grantor shall, at Lender's request, at any time and from time to
time, authenticate, execute and deliver to Lender such financing
statements, documents and other agreements and instruments (and pay
the cost of filing or recording the same in all public offices
deemed necessary or desirable by Lender) and do such other acts and
things or cause third parties to do such other acts and things as
Lender may deem necessary or desirable in its sole discretion in
order to establish and maintain a valid, attached and perfected
security interest in the Collateral in favor of Lender (free and
clear of all other liens, claims, encumbrances and rights of third
parties whatsoever, whether voluntarily or involuntarily created,
except Permitted Liens) to secure payment of the Obligations, and
in order to facilitate the collection of the Collateral. Each
Grantor irrevocably hereby makes, constitutes and appoints Lender
(and all Persons designated by Lender for that purpose) as such
Grantor's true and lawful attorney and agent-in-fact solely to,
following the occurrence and during the continuation of an Event of
Default, execute and file such financing statements, documents and
other agreements and instruments and do such other acts and things
as may be necessary to preserve and perfect Lender's security
interest in the Collateral. Each Grantor further ratifies and
confirms the prior filing by Lender of any and all financing
statements which identify such Grantor as debtor, Lender as secured
party and any or all Collateral as collateral.
-21-
(b) The Lender is
hereby authorized to file (at the sole expense and cost of the
Borrower) UCC financing or continuation statements, intellectual
property security agreements and amendments to any of the foregoing
or any similar document, in any jurisdictions and with any filing
offices as the Lender may reasonably determine are necessary or
advisable to perfect or otherwise protect the security interests
granted to the Lender herein. Such documents may describe the
Collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such
property in any other manner as the Lender may reasonably determine
is necessary or advisable, including (in respect of the Borrower
only) describing such property as “all assets” or words
of similar effect.
Lender's
obligations under this Agreement shall be in effect from the date
hereof until the earlier of (i) the Maturity Date, (ii) the date
that the Obligations are accelerated pursuant to Section 10.1, and (iii) the
Termination Date. Upon the Termination Date, remaining Collateral
shall automatically be released from the Lien of this Agreement and
all rights to the Collateral shall revert to the Grantors and
Pledgor. Upon such release or any such sale, transfer or
disposition of Collateral or any part thereof, Lender shall, upon
the request of the Grantors and Pledgor and at the sole expense of
the Borrower, assign, transfer and deliver to the Grantors and/or
Pledgor proper documents and instruments (including UCC-3
termination financing statements or releases) acknowledging the
termination hereof or the release of such Collateral, as the case
may be.
Each
Loan Party hereby represents and warrants to Lender, which
representations and warranties (whether appearing in this Section
6,
elsewhere in this Agreement or in any other Loan Document) shall be
true at the time of the date hereof (other than the representation
in Section 6.5 that Blue Dolphin is in
good standing in the State of Delaware), the date of the advance
contemplated by Section 2.2(b) (other than the
representation in Section 6.5 that Blue Dolphin is in
good standing in the State of Delaware), and the Closing Date, and
shall be remade by each applicable Loan Party at the time each Loan
is made pursuant to this Agreement, provided, that representations
and warranties made as of a particular date shall be true and
correct as of such date:
The
financial statements and other information delivered or to be
delivered by any Loan Party to Lender at or prior to the date of
this Agreement fairly present in all material respects the
financial condition of each Loan Party, and there has been no
material adverse change in the financial condition, the operations
or any other status of any Loan Party since the date of the
financial statements delivered to Lender most recently prior to the
date of this Agreement. All written information now or heretofore
furnished by each Loan Party to Lender is true and correct as of
the date with respect to which such information was
furnished.
The
office where each Loan Party keeps its books, records and accounts
(or copies thereof) concerning the Collateral, each Loan
Party’s principal place of business and all of each Loan
Party’s other places of business, locations of Collateral and
post office boxes and locations of bank accounts are as set forth
in Schedule 6.2 and
at other locations within the continental United States of which
Lender has been advised by a Loan Party in accordance with
Section 7.2.1. The Collateral
(except any part thereof which a Loan Party shall have advised
Lender in writing consists of Collateral normally used in more than
one state) is kept, or, in the case of vehicles, based, only at the
addresses set forth on Schedule 6.2, and at other
locations within the continental United States of which Lender has
been advised by a Loan Party in writing in accordance with
Section 7.2.1 hereof.
No Loan
Party has made any loans or advances to any Affiliate or other
Person except (i) Existing Indebtedness, (ii) advances
authorized hereunder to employees, officers and directors of a Loan
Party for travel and other expenses arising in the ordinary course
of such Loan Party’s business and (iii) Affiliate
Funding Transactions.
-22-
Each
Loan Party is the lawful owner of all Collateral now purportedly
owned or hereafter purportedly acquired by such Loan Party, free
from all liens, claims, security interests and encumbrances
whatsoever, whether voluntarily or involuntarily created and
whether or not perfected, other than Permitted Liens.
The
Borrower is a limited liability company, duly organized, validly
existing and in good standing in the State of Delaware and its
state organizational identification number is 5279048. Lazarus is a
limited liability company, duly organized, validly existing and in
good standing in the State of Delaware and its organizational
identification number is 4108611. Blue Dolphin is a corporation,
duly organized, validly existing and in good standing in the State
of Delaware and its organizational identification number is
2081487. LR&M is a limited liability company, duly organized,
validly existing and in good standing in the State of Delaware and
its organizational identification number is 4169296. Each Loan
Party is duly qualified and in good standing in all states where
the nature and extent of the business transacted by it or the
ownership of its assets makes such qualification necessary or, if
such Loan Party is not so qualified, such Loan Party may cure any
such failure without losing any of its rights, incurring any liens
or material penalties, or otherwise affecting Lender's rights. Each
Loan Party has the right and power and is duly authorized and
empowered to enter into, execute and deliver this Agreement and the
other Loan Documents and perform its obligations hereunder and
thereunder. Each Loan Party’s execution, delivery and
performance of this Agreement and the other Loan Documents does not
conflict with the provisions of the organizational documents of
such Loan Party, any statute, regulation, ordinance or rule of law,
or any agreement, contract or other document which may now or
hereafter be binding on such Loan Party, except for conflicts with
agreements, contracts or other documents which would not have a
Material Adverse Effect, and such Loan Party’s execution,
delivery and performance of this Agreement and the other Loan
Documents shall not result in the imposition of any lien or other
encumbrance upon any of such Loan Party’s property (other
than Permitted Liens) under any existing indenture, mortgage, deed
of trust, loan or credit agreement or other agreement or instrument
by which such Loan Party or any of its property may be bound or
affected. If a Loan Party is a partnership or limited liability
company, such Loan Party has not expressly elected to have its
Equity Interests treated as “Securities” under and as
defined in Article 8 of the Uniform Commercial Code.
(a) Except
as disclosed to Lender on Schedule 6.6 hereto, there are no actions
or proceedings which are pending or, to the best of any Loan
Party’s knowledge, threatened against a Loan Party which is,
in the determination of Lender, reasonably likely to have a
Material Adverse Effect, and each Loan Party shall, promptly upon
becoming aware of any such pending or threatened action or
proceeding, give written notice thereof to Lender.
(b) Borrower has no
Commercial Tort Claims pending other than those set forth on
Exhibit C
hereto as such exhibit may be amended from time to
time.
Each
Loan Party has obtained all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the
lack of which would have a Material Adverse Effect. Each Loan Party
is in compliance in all material respects with all applicable
federal, state, local and foreign statutes, orders, regulations,
rules and ordinances (including, without limitation, Environmental
Laws and statutes, orders, regulations, rules and ordinances
relating to taxes, employer and employee contributions and similar
items, securities, ERISA or employee health and safety) the failure
to comply with which would have a Material Adverse
Effect.
Except
as set forth on Schedule
6.8 hereto or as permitted pursuant to Section 8.11 hereof, no Loan Party
is conducting, permitting or suffering to be conducted,
transactions with any Affiliate other than Affiliate Funding
Transactions and transactions with Affiliates for the purchase or
sale of Inventory or services in the ordinary course of business
pursuant to terms that are no less favorable to such Loan Party
than the terms upon which such transactions would have been made
had they been made to or with a Person that is not an
Affiliate.
Each
Loan Party’s name has always been as set forth on the first
page of this Agreement and no Loan Party uses any trade names,
assumed names, fictitious names or division names in the operation
of its business, except as set forth on Schedule 6.9
hereto.
-23-
Except
for Permitted Liens, Borrower has good and indefeasible and
merchantable title to and ownership of all of its Equipment. No
Equipment is a Fixture to real estate unless such real estate is
owned by a Loan Party and is subject to a mortgage in favor of
Lender, or if such real estate is leased, is subject to a
landlord's agreement in favor of Lender on terms acceptable to
Lender, or an accession to other personal property unless such
personal property is subject to a first priority lien in favor of
Lender.
This
Agreement and the other Loan Documents to which each Loan Party is
a party are the legal, valid and binding obligations of such Loan
Party and are enforceable against such Loan Party in accordance
with their respective terms.
Borrower is and,
upon the occurrence of the Settlement Payment Date (as defined in
the GEL Tex Settlement Agreement), each other Loan Party is, after
giving effect to the transactions contemplated hereby solvent, able
to pay its debts as they become due, has capital sufficient to
carry on its business, now owns property having a value both at
fair valuation and at present fair saleable value greater than the
amount required to pay its debts, and will not be rendered
insolvent by the execution and delivery of this Agreement or any of
the other Loan Documents or by completion of the transactions
contemplated hereunder or thereunder.
As of
the date hereof, except as set forth on Schedule 1.01 hereto, no Loan
Party is obligated (directly or indirectly), for any loans or other
indebtedness for borrowed money other than the Loans.
Except
as set forth on Schedule
6.14 hereto, no Loan Party owns any margin securities. None
of the proceeds of the Loans hereunder shall be used for the
purpose of purchasing or carrying any margin securities or for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase any margin securities or for any
other purpose not permitted by Regulation U of the Board of
Governors of the Federal Reserve System as in effect from time to
time.
Except
as set forth on Schedule
6.15 hereto, no Loan Party has any Parents, Subsidiaries or
other Affiliates or divisions, nor is any Loan Party engaged in any
joint venture or partnership with any other Person.
Schedule 6.16 includes all
contracts, leases, commitments and other agreements to which the
Borrower is a party. Except as set forth on Schedule 6.16, (i) (a) the
Borrower is not in default under any material contract, lease or
commitment to which it is a party or by which it is bound, and (b)
no other Loan Party is in default under any material contract,
lease or commitment to which it is a party or by which it is bound
other than a default which would not have a Material Adverse
Effect; and (ii) no Loan Party knows of any dispute regarding any
contract, lease or commitment which would have a Material Adverse
Effect.
-24-
There
are no controversies pending or threatened between a Loan Party and
any of its employees, agents or independent contractors other than
employee grievances arising in the ordinary course of business
which would not, in the aggregate, have a Material Adverse Effect,
and each Loan Party is in compliance with all federal and state
laws respecting employment and employment terms, conditions and
practices except for such non-compliance which would not have a
Material Adverse Effect.
(a) Each Loan Party
possesses adequate licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications,
tradestyles and trade names to continue to conduct its business as
heretofore conducted by it
except to the extent that the failure to possess such items would
not have a Material Adverse Effect.
(b) The Borrower owns
no registered intellectual property.
No Loan
Party has 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 in any material respect any
Environmental Law or any license, permit, certificate, approval or
similar authorization thereunder and the operations of each Loan
Party comply in all material respects with all Environmental Laws
and all licenses, permits, certificates, approvals and similar
authorizations thereunder. 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 Loan Party’s knowledge
threatened with respect to any non-compliance with or violation of
the requirements of any Environmental Law by a Loan Party or the
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 or any other environmental, health or
safety matter, which affects the Loan Party or its business,
operations or assets or any properties at which a Loan Party has
transported, stored or disposed of any Hazardous Materials. No Loan
Party has any 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.
None of
the Loan Parties nor any of their respective Subsidiaries sponsors,
maintains, contributes to, or has any obligation to contribute to,
and within the prior six (6) years has not sponsored, maintained,
contributed to or had any obligation to contribute to, any Employee
Benefit Plan. None of the Loan Parties nor any of their respective
Subsidiaries has any liability (whether actual, contingent or
otherwise) with respect to a Pension Plan or a Multiemployer Plan.
No ERISA Affiliate of any Loan Party sponsors, maintains,
contributes to, or has any liability (whether actual, contingent or
otherwise) with respect to a Pension Plan, or has any obligation to
contribute to or any liability (whether actual, contingent or
otherwise) with respect to any Multiemployer Plan.
No Loan
Party is an “investment company” or a company
“controlled” by an “investment company” or
a “subsidiary” of an “investment company”
within the meaning of the Investment Company Act of
1940.
-25-
(a) Each
of the Loan Parties has implemented and maintains in effect
policies and procedures designed to ensure compliance by such Loan
Party, its Subsidiaries and their respective directors, officers,
employees and agents with Anti-Corruption Laws, Anti-Terrorism
Laws, applicable AML Laws and applicable Sanctions. None of (i) the Loan Parties or any of their
Subsidiaries or any of their respective directors or officers, or,
to the knowledge of the Loan Parties, any of their respective
employees or Affiliates, or (ii) to the knowledge of the Loan
Parties, any agent of a Loan Party (A) is a Sanctioned Person, or
(B) is in violation of AML Laws, Anti-Corruption Laws,
Anti-Terrorism Laws or Sanctions.
(b) The use of the
proceeds of the Loan by the Borrower will not violate the Trading
with the Enemy Act, or any of the foreign assets control
regulations of the United States Treasury Department
(Title 31, Subtitle B, Chapter V of the U.S.
Code of Federal Regulations, as amended) or any enabling
legislation or executive order relating thereto.
(c) No
Borrowing, use of proceeds or other transaction contemplated by
this Agreement will cause a violation of AML Laws, Anti-Corruption
Laws, Anti-Terrorism Laws or applicable Sanctions by any Person
participating in the transactions contemplated by this Agreement,
whether as lender, borrower, guarantor, agent or otherwise. Each of
the Loan Parties represents that, except as disclosed in writing to
the Lender prior to the date of this Agreement, none of the Loan
Parties nor any of their Subsidiaries, nor, to the knowledge of the
Loan Parties, any of their Affiliates, or and of their members has
engaged in or intends to engage in any dealings or transactions
with, or for the benefit of, any Sanctioned Person or with or in
any Sanctioned Country.
The
Borrower and each other Loan Party has timely filed all federal and
state income tax returns and other material tax returns and reports
required by law to have been filed by it, and the Borrower and each
other Loan Party and has paid all material Taxes and governmental
charges due and owing, whether or not shown on any return or
report, except for any such Taxes or charges which are being
diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been
set aside on its books. Schedule 6.23 hereto sets forth
the entity classification for United States federal income tax
purposes of each Loan Party as of the date hereof.
Schedule 1.03 sets
forth the Collection Accounts of each Grantor.
Until
the Termination Date, unless Borrower obtains Lender’s prior
written consent waiving or modifying any of Loan Parties’
covenants hereunder in any specific instance, each Loan Party
covenants and agrees as follows:
Each
Loan Party shall at all times keep accurate and complete books,
records and accounts with respect to all of such Loan Party’s
business activities, in accordance with sound accounting practices
and GAAP consistently applied, and shall keep such books, records
and accounts, and any copies thereof, only at the addresses
indicated for such purpose on Schedule 6.2.
-26-
Each
Loan Party shall:
7.2.1. Locations. Promptly (but in no
event less than ten (10) days prior to the occurrence thereof)
notify Lender in writing of the proposed opening of any new place
of business or new location of Collateral, the closing of any
existing place of business or location of Collateral, any change of
in the location of such Loan Party’s books, records and
accounts (or copies thereof), the opening or closing of any post
office box, the opening or closing of any bank account or, if any
of the Collateral consists of Goods of a type normally used in more
than one state, the use of any such Goods in any state other than a
state in which such Loan Party has previously advised Lender that
such Goods will be used.
7.2.1. Litigation
and Proceedings. Promptly upon becoming aware thereof,
notify Lender of any actions or proceedings which are pending or
threatened against a Loan Party in which the claim exceeds
one-hundred thousand Dollars ($100,000) or which might have a
Material Adverse Effect and of any Commercial Tort Claims of
Borrower which may arise, which notice shall constitute such Loan
Party’s authorization to amend Exhibit C to add such
Commercial Tort Claim.
7.2.2. Names
and Trade Names. Provide Lender with at least ten (10)
days’ advance written notice of the change of its name or the
use of any trade name, assumed name, fictitious name or division
name not previously disclosed to Lender in writing.
7.2.3. [Reserved].
7.2.4. Environmental
Matters. Immediately notify Lender upon becoming aware of
any investigation, proceeding, complaint, order, directive, claim,
citation or notice with respect to any non-compliance with or
violation of the requirements of any Environmental Law by such Loan
Party 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 such Loan Party or its business operations or assets or any
properties at which such Loan Party has transported, stored or
disposed of any Hazardous Materials unless the foregoing could not
reasonably be expected to have a Material Adverse
Effect.
7.2.5. Default;
Material Adverse Change. Promptly advise Lender of the
occurrence of any event having or causing a Material Adverse Effect
or the occurrence of any Default or Event of Default
hereunder.
7.2.6. New
Subsidiaries of the Borrower, Lazarus Energy or LR&M.
Promptly (but in no event less than ten (10) days prior to the
occurrence thereof) notify Lender of the proposed formation of any
new Subsidiary of the Borrower, Lazarus Energy or LR&M. The
Loan Party that is a Parent to the new Subsidiary of the Borrower,
Lazarus Energy, or LR&M shall cause such Subsidiary to become a
Guarantor by executing a Joinder Agreement substantially in the
form of Exhibit
E.
All of
the notices provided for in this section shall be provided by each
Loan Party to Lender in writing in accordance with the provisions
of Section 12.4 below.
Each
Loan Party shall maintain all governmental consents, franchises,
certificates, licenses, authorizations, approvals and permits, the
lack of which would have a Material Adverse Effect and each Loan
Party shall remain in compliance with all applicable federal,
state, local and foreign statutes, orders, regulations, rules and
ordinances (including, without limitation, Environmental Laws and
statutes, orders, regulations, rules and ordinances relating to
taxes, employer and employee contributions and similar items,
securities, ERISA or employee health and safety) the failure with
which to comply would have a Material Adverse Effect. Following any
determination by Lender that there is non-compliance, or any
condition which requires any action by or on behalf of such Loan
Party in order to avoid non-compliance, with any Environmental Law,
at Borrower’s expense cause an independent environmental
engineer acceptable to Lender to conduct such tests of the relevant
site(s) as are appropriate and prepare and deliver a report setting
forth the results of such tests, a proposed plan for remediation
and an estimate of the costs thereof.
-27-
(a) Each
Loan Party shall permit Lender, or any Persons designated by it, to
call at such Loan Party’s places of business at any
reasonable times, and, without hindrance or delay, to inspect the
Collateral and to inspect, audit, check and make extracts from such
Loan Party’s books, records, journals, orders, receipts and
any correspondence and other data relating to such Loan
Party’s business, the Collateral or any transactions between
the parties hereto, and shall have the right to make such
verification concerning such Loan Party’s business as Lender
may consider reasonable under the circumstances. Each Loan Party
shall furnish to Lender such information relevant to Lender's
rights under this Agreement and the other Loan Documents as Lender
shall at any time and from time to time request. Lender, through
its officers, employees or agents shall have the right, at any time
and from time to time, to verify the validity, amount or any other
matter relating to any of such Loan Party’s Accounts and
other Receivables that are
Collateral, by mail, telephone, telecopy, electronic mail,
or otherwise.
(b) Prior to Closing
Date and upon reasonable prior notice by Lender, the Loan Parties
shall permit any representative designated by the Lender to
perform, to the reasonable satisfaction of Lender, engineering,
environmental, commercial, operations and legal due diligence of
the Refinery Assets, a review of the required permits and
authorizations, and a review the financial model of Lazarus of the
Refinery Assets.
(c) Each Loan Party
agrees to provide Lender and its agents with reasonable access
during normal business hours to any officers, employees or
directors of such Loan Party, its Parent and its Affiliates to
discuss the affairs, finances and business of such Loan Party, and
to permit discussions of the financial condition of such Loan Party
with such Loan Party’s independent public accountants. Any
such discussions shall be without liability to Lender or to such
Loan Party’s independent public accountants.
Each
Loan Party shall:
7.5.1. Casualty
Insurance; Business Interruption Insurance. Keep the Collateral
properly housed and insured for the full insurable value thereof
against loss or damage by fire, theft, explosion, sprinklers,
collision (in the case of motor vehicles) and such other risks as
are customarily insured against by Persons engaged in businesses
similar to that of such Loan Party, with such companies, in such
amounts, with such deductibles, and under policies in such form, as
shall be satisfactory to Lender. Original (or certified) copies of
such policies of insurance have been or shall be, within ninety
(90) days of the date hereof, delivered to Lender, together with
evidence of payment of all premiums therefor, and shall contain an
endorsement, in form and substance acceptable to Lender, showing
loss under such insurance policies payable to Lender. Such
endorsement, or an independent instrument furnished to Lender,
shall provide that the insurance company shall give Lender at least
thirty (30) days written notice before any such policy of insurance
is altered or canceled and that no act, whether willful or
negligent, or default of such Loan Party or any other Person shall
affect the right of Lender to recover under such policy of
insurance in case of loss or damage. In addition, each Loan Party
shall cause to be executed and delivered to Lender an assignment of
proceeds of its business interruption insurance policies. Each Loan
Party hereby directs all insurers under all policies of insurance
to pay all proceeds payable thereunder directly to Lender. Each
Loan Party irrevocably makes, constitutes and appoints Lender (and
all officers, employees or agents designated by Lender) as such
Loan Party’s true and lawful attorney (and agent-in-fact) for
the purpose of making, settling and adjusting claims under such
policies of insurance, endorsing the name of such Loan Party on any
check, draft, instrument or other item of payment for the proceeds
of such policies of insurance and making all determinations and
decisions with respect to such policies of insurance, provided however, that if no
Event of Default shall have occurred and is continuing, such Loan
Party may make, settle and adjust claims involving less than
$100,000 in the aggregate without Lender's consent.
7.5.2. Liability
Insurance. Maintain, at its expense, such public liability and
third party property damage insurance as is customary for Persons
engaged in businesses similar to that of such Loan Party with such
companies and in such amounts, with such deductibles and under
policies in such form as shall be satisfactory to Lender and
original (or certified) copies of such policies have been or shall
be, within ninety (90) days after the date hereof, delivered to
Lender, together with evidence of payment of all premiums therefor;
each such policy shall contain an endorsement showing Lender as
additional insured thereunder and providing that the insurance
company shall give Lender at least thirty (30) days written notice
before any such policy shall be altered or canceled.
Each
Loan Party shall keep the Collateral in good condition, repair and
order and shall make all necessary repairs to the Equipment that is
Collateral and replacements thereof so that the operating
efficiency and the value thereof shall at all times be preserved
and maintained in all material respects. Each Loan Party shall
permit Lender to examine any of the Collateral at any time and
wherever the Collateral may be located and, such Loan Party shall,
immediately upon request therefor by Lender, deliver to Lender any
and all evidence of ownership of any of the Equipment that is
Collateral including, without limitation, certificates of title and
applications of title. Each Loan Party shall, at the request of
Lender, indicate on its records concerning the Collateral a
notation, in form satisfactory to Lender, of the security interest
of Lender hereunder.
-28-
All
monies and other property obtained by Borrower from Lender pursuant
to this Agreement shall be used solely for working capital purposes
and for other business purposes of Borrower.
Each
Loan Party shall file all required tax returns and pay all of its
Taxes when due, subject to any extensions granted by the applicable
taxing authority, including, without limitation, taxes imposed by
federal, state or municipal agencies, and shall cause any liens for
Taxes to be promptly released; provided, that each Loan Party
shall have the right to contest the payment of such Taxes in good
faith by appropriate proceedings so long as (i) the amount so
contested is shown on such Loan Party’s financial statements,
(ii) adequate reserves for such Taxes have been set aside in
accordance with GAAP, and (iii) the contesting of any such
payment does not give rise to a lien for Taxes. If such Loan Party
fails to pay any such Taxes and in the absence of any such contest
by such Loan Party, Lender may (but shall be under no obligation
to) advance and pay any sums required to pay any such Taxes and/or
to secure the release of any lien therefor, and any sums so
advanced by Lender shall constitute Loans hereunder, shall be
payable by Borrower to Lender on demand, and, until paid, shall
bear interest at the highest rate then applicable to Loans
hereunder.
Each
Loan Party shall maintain adequate licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark
applications, tradestyles and trade names to continue its business
as heretofore conducted by it or as hereafter conducted by it
unless the failure to maintain any of the foregoing could not
reasonably be expected to have a Material Adverse
Effect.
Each
Grantor shall notify Lender in writing thirty (30) days prior to
opening any new Deposit Account or Securities Account and shall
enter into a control agreement satisfactory to Lender for each such
Deposit Account or Securities Account of any Grantor on or before
the opening of such Deposit Account or Securities Account;
provided, however,
that no control agreement shall be required in respect of (i) any
Deposit Account or Securities Account of LR&M if no obligor on
LR&M Receivables will be directed to make payment of
Collections to such account or (ii) the Green Bank
Account.
(a) The
Loan Parties shall not request any Borrowing, and the Loan Parties
shall not use, and shall cause their Subsidiaries and its or their
respective directors, officers, employees, Affiliates and agents
not to use, directly or indirectly, the proceeds of any Borrowing,
or lend, contribute or otherwise make available such proceeds to
any Subsidiary, other Affiliate, joint venture partner or other
Person, (A) in furtherance of an offer, payment, promise to pay, or
authorization of the payment or giving of money, or anything else
of value, to any Person in violation of any Anti-Corruption Laws,
AML Laws or Anti-Terrorism Laws, (B) for the purpose of funding,
financing or facilitating any activities, business or transaction
of or with any Sanctioned Person, or in any Sanctioned Country, or
involving any goods originating in or with a Sanctioned Person or
Sanctioned Country, or (C) in any manner that would result in the
violation of any Sanctions by any Person (including any Person
participating in the transactions contemplated hereunder, whether
as underwriter, advisor, lender, investor or
otherwise).
(b) The Loan Parties
shall not fund all or part of any repayment under the Loans out of
proceeds derived from transactions which would be prohibited by AML
Laws, Anti-Terrorism Laws, Anti-Corruption Laws or applicable
Sanctions or would otherwise cause any Person to be in breach of
any of the foregoing.
(c) The Loan Parties
shall ensure, and cause each other Loan Party to ensure, that no
Person who owns a controlling interest in or otherwise controls a
Loan Party is or shall be a Sanctioned Person, and comply, and
cause each other Loan Party to comply, with all applicable
Anti-Corruption Laws, AML Laws and Anti-Terrorism
Laws.
-29-
(a) Monthly
Reports. The Grantors shall deliver to Lender, in addition
to any other reports, as soon as practicable and in any event:
(i) within ten (10) days after the end of each
month, (A) a detailed trial balance of the Accounts of the
Grantors aged per invoice date, in form and substance reasonably
satisfactory to Lender including, without limitation, the names and
addresses of all Account Debtors of the Grantors, and (B) a
summary and detail of accounts payable (such Accounts and accounts
payable divided into such time intervals as Lender may require in
its sole discretion), including a listing of any held checks; and
(ii) within ten (10) days after the end of each month,
the general ledger inventory account balance and a perpetual
inventory report, for Borrower by each category of Inventory,
together with a description of the monthly change in each category
of Inventory.
(b) Financial Statements. The
Borrower and each Guarantor shall deliver to Lender the following
financial information, all of which shall be prepared in accordance
with generally accepted accounting principles consistently applied,
and shall be accompanied by a compliance certificate in the form of
Exhibit A
hereto: (i) no later than twenty (20) days after each
calendar month, copies of internally prepared financial statements,
including, without limitation, balance sheets and statements of
income, retained earnings and cash flow of the Borrower and each
Guarantor, on a consolidated and consolidating basis, certified by
the Chief Financial Officer of each of the Borrower and each
Guarantor; and (iii) no later than ninety (90) days after the
end of each of the Fiscal Years of the Borrower and each Guarantor,
audited annual financial statements with an unqualified opinion by
independent certified public accountants selected by the Borrower
and each Guarantor and reasonably satisfactory to Lender, which
financial statements shall be accompanied by (A) a letter from
such accountants acknowledging that they are aware that a primary
intent of the Borrower and each Guarantor in obtaining such
financial statements is to influence Lender and that Lender is
relying upon such financial statements in connection with the
exercise of its rights hereunder, provided, that the Borrower and
each Guarantor shall only be required to use their reasonable
efforts exercised in good faith to obtain such letter; and
(B) copies of any management letters sent to the Borrower and
each Guarantor by such accountants.
(c) Annual Projections of the Borrower and
each Guarantor. As soon as practicable and in any event
prior to the beginning of each Fiscal Year, the Borrower and each
Guarantor shall deliver to Lender projected balance sheets,
statements of income and cash flow for the Borrower and each
Guarantor, on a consolidated and consolidating basis for each of
the twelve (12) months during such Fiscal Year, which shall include
the assumptions used therein, together with appropriate supporting
details as reasonably requested by Lender.
(d) Public Reporting of Blue
Dolphin. Promptly upon the filing thereof, Borrower shall
deliver to Lender copies of all registration statements and annual,
quarterly, monthly or other regular reports which Blue Dolphin or
any of its Subsidiaries files with the Securities and Exchange
Commission, as well as promptly providing to Lender copies of any
reports and proxy statements delivered to its
shareholders.
(e) Other Information. Promptly
following request therefor by Lender, such other business or
financial data, reports, appraisals and projections as Lender may
reasonably request.
During
a Commitment Period, the Loan Parties shall provide Lender with (i)
weekly updates regarding the status of negotiations regarding the
applicable commitment and documentation of the refinancing
contemplated thereby, (ii) subject to Lender’s execution of a
nondisclosure agreement, if applicable, copies of all material
communications regarding the commitment letter and the proposed
loan set forth therein, and (iii) copies of any final term sheets
and other related documents regarding such commitment or the
financing contemplated thereby within five (5) business days of any
Loan Party’s execution of such documents.
Lazarus
Energy shall (a) pay all payments required under the GEL Tex
Settlement Agreement when due and (b) promptly provide Lender with
evidence of each such payment in a form satisfactory to
Lender.
-30-
By June
1, 2019, all liens granted by LR&M to Veritex on the Collateral
shall be released and LR&M shall provide evidence thereof
satisfactory to the Lender (the date of such occurrence, the
“Veritex Release
Date”); provided that, if such liens
are not released by June 1, 2019, LR&M may elect, in its sole
discretion with notice to the Lender, to instead grant a perfected,
first lien security interest in cash collateral in an amount of no
less than $60,000 (which shall be “Collateral”) on such
date; provided,
further, that upon providing such perfected first lien security
interest on such collateral, the definition for the term
“LR&M Receivables” shall be deleted in its entirety
and replaced with the following: ““LR&M
Receivables” means nothing.”
(a) On
or before May 17, 2019, Borrower shall transfer the entire balance
of funds in or credited to the Borrower’s account at Green
Bank with the account number 5501265168 as further described in
Schedule 1.03 (the
“Green Bank
Account”) to the Borrower’s account at Cadence
Bank, N.A., a national banking association, with the account number
5500212658 as further described in Schedule 1.03 (the
“Cadence Bank
Account”) and provide Lender with evidence thereof
(satisfactory to Lender) on the date of such transfer, (b) after
the transfer described in the preceding clause (a), if, at any
time, funds are deposited in or credited to the Green Bank Account,
Borrower shall promptly transfer such funds to the Cadence Bank
Account and provide Lender with evidence thereof (satisfactory to
Lender) on the date of such transfer, (c) on or before May 17,
2019, Borrower shall close the Green Bank Account and provide
Lender with evidence of such closure (satisfactory to Lender) and
(d) on each Business Day until Borrower has closed the Green Bank
Account, Borrower shall provide an electronic screen capture image
of the online balance statement for the Green Bank Account by email
to the following address: ▇▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
Until
the Termination Date, unless Borrower obtains Lender’s prior
written consent waiving or modifying any of Loan Party’s
covenants hereunder in any specific instance (which consent may be
provided by email), each Loan Party (other than Blue Dolphin)
(each, a “Covenant
Party”) agrees as follows:
No
Covenant Party shall create, incur, assume or become obligated
(directly or indirectly), for any Debt other than the Loans, except
that Borrower and the other Covenant Parties may (i) maintain
their present indebtedness listed on Schedule 1.01 hereto;
(ii) incur unsecured indebtedness to trade creditors in the
ordinary course of business; (iii) incur indebtedness under
Affiliate Funding Transactions; (iv) incur purchase money
indebtedness or capitalized lease obligations in the ordinary
course of business in an aggregate principal amount not to exceed
two million Dollars ($2,000,000); and (v) incur indebtedness under
the Loan Documents.
No
Covenant Party shall grant or permit to exist (voluntarily or
involuntarily) any lien, claim, security interest or other
encumbrance whatsoever on any of its assets (other than margin
stock) other than Permitted Liens, and no Loan Party shall grant or
permit to exist (voluntarily or involuntarily) any lien, claim,
security interest or other encumbrance whatsoever on any Collateral
other than Permitted Liens set forth in clauses (a) through (f) of
the definition thereof and, until the Veritex Release Date, liens
of Veritex on the LR&M Collateral granted by
LR&M.
8.4. Mergers, Sales, Acquisitions,
Subsidiaries and Other Transactions Outside the Ordinary Course of
Business.
No
Covenant Party shall (i) enter into any merger or
consolidation; (ii) change the state of such Covenant
Party’s organization or enter into any transaction which has
the effect of changing such Covenant Party’s state of
organization; (iii) sell, lease or otherwise dispose of any of
its assets other than in the ordinary course of business or as
permitted under Section 8.15 hereto;
(iv) purchase the stock, other Equity Interests or all or a
material portion of the assets of any Person or division of such
Person; or (v) enter into any other transaction outside the
ordinary course of such Covenant Party’s business, including,
without limitation, any purchase, redemption or retirement of any
shares of any class of its stock or any other Equity Interest, and
any issuance of any shares of, or warrants or other rights to
receive or purchase any shares of, any class of its stock or any
other Equity Interest. No Covenant Party shall enter into any joint
ventures or partnerships with any other Person.
-31-
No
Covenant Party shall declare or pay, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except that, so long as no Event of Default
shall have occurred and be continuing at the time of payment
thereof, Permitted Tax Distributions may be declared or
paid.
No
Covenant Party shall purchase or otherwise acquire, or contract to
purchase or otherwise acquire, the obligations or stock of any
Person, other than direct obligations of the United States,
obligations insured by the Federal Deposit Insurance Corporation
and obligations unconditionally guaranteed by the United States;
nor shall Covenant Party lend or otherwise advance funds to any
Person except for advances made to employees, officers and
directors for travel and other expenses arising in the ordinary
course of business and Affiliate Funding Transactions.
The
Covenant Parties will not, and will not permit any of their
Subsidiaries to, purchase, redeem, retire, or otherwise acquire for
value, or set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement, or other
acquisition of, or make any voluntary payment or prepayment of the
principal of or interest on, or any other amount owning in respect
of, any Debt that is subordinate to the Obligations, except for (a)
regularly scheduled payments, prepayments, or redemptions of
principal and interest in respect thereof required pursuant to the
instruments evidencing such Debt, (b) extensions, renewals, and
refinancings thereof permitted under Section 8.2 above, and
(c) dispositions permitted under Section 8.15(a).
The
Covenant Parties will not, directly or indirectly, enter into any
arrangement providing for the sale or transfer of property, real or
personal, used or useful in the business of any of the Covenant
Parties, whether now owned or hereafter acquired, and thereafter
rent or lease such property or other property that any of them
intend to use for substantially the same purpose or purposes as the
property sold or transferred.
No
Covenant Party shall (i) amend its organizational documents or
change its Fiscal Year or make any change in accounting treatment
or reporting except as required by GAAP unless (w) such actions
would not have a Material Adverse Effect; (x) such actions
would not affect the obligations of such Covenant Party to Lender;
(y) such actions would not adversely affect the interpretation
of any of the terms of this Agreement or the other Loan Documents
and (z) Lender has received ten (10) days prior written
notice of such amendment or change or (ii) enter into a new
line of business materially different from such Covenant
Party’s current business. No Covenant Party shall change its
entity classification for United States federal income tax purposes
from that set forth on Schedule 6.23 without prior
written notice to, and consent of, Lender.
Borrower shall not
(i) permit any Equipment that is Collateral to become a
Fixture to real property unless such real property is owned by
Borrower and is subject to a mortgage in favor of Lender, or if
such real estate is leased, is subject to a landlord's agreement in
favor of Lender on terms acceptable to Lender, or (ii) permit
any Equipment that is Collateral to become an accession to any
other personal property unless such personal property is subject to
a first priority lien in favor of Lender.
-32-
Except
as set forth on Schedule 6.8 hereto or as
permitted under Sections 6.3 or 8.5 hereof, no Covenant
Party shall conduct, permit or suffer to be conducted, transactions
with Affiliates other than Affiliate Funding Transactions,
transactions for the purchase or sale of Inventory or services in
the ordinary course of business pursuant to terms that are no less
favorable to such Covenant Party than the terms upon which such
transactions would have been made had they been made to or with a
Person that is not an Affiliate or transfers of items to the
Borrower for no consideration.
No
Grantor shall settle or adjust any Account that is Collateral
without the consent of Lender.
Borrower shall not
pay any management or consulting fees to any Persons, or pay annual
aggregate compensation, whether as salary, bonus or otherwise, to
all directors or officers of such Borrower in excess of $70,000.
The aggregate annual compensation amount(s) shall be adjusted each
year for the net addition or loss of directors or
officers.
Except
as set forth on Schedule
8.14, no Covenant Party shall enter into any agreement
prohibiting or otherwise restricting the creation or assumption of
any lien in favor of the Lender upon the properties, revenues or
assets of such Covenant Party, whether now owned or hereafter
acquired, except restrictions existing by reason of:
(a) restrictions
imposed by applicable law;
(b) any restrictions
imposed by any agreement relating to secured Debt permitted by this
Agreement to the extent that such restrictions apply only to the
property or assets securing such Debt;
(c) customary
provisions contained in leases or licenses of intellectual property
and other similar agreements entered into in the ordinary course of
business;
(d) customary
provisions restricting subletting or assignment of any lease
governing a leasehold interest and not for the purpose of avoiding
the restrictions imposed by this Section 8.14;
(e) customary
provisions restricting assignment of any agreement entered into in
the ordinary course of business and not for the purpose of avoiding
the restrictions imposed by this Section 8.14;
(f) customary
restrictions and conditions contained in any agreement relating to
the sale of any asset permitted under Section 8.15 hereto pending the
consummation of such sale;
(g) contractual
encumbrances or restrictions contained in any agreement in respect
of permitted unsecured Debt so long as such encumbrances or
restrictions permit the liens granted to secure the
Obligations;
(h) customary
restrictions and conditions contained in the documents relating to
any lien, so long as: (i) such lien is permitted hereunder and
such restrictions or conditions relate only to the specific asset
subject to such lien; and (ii) such restrictions and
conditions are not created for the purpose of avoiding the
restrictions imposed by this Section 8.14;
The
foregoing prohibitions shall not apply to restrictions contained in
any Loan Document or Commodity Transaction Document.
-33-
No
Covenant Party shall dispose of any of such Covenant Party’s
assets (other than margin stock), including (i) Equity Interests
and (ii) Receivables that are Collateral, to any Person in one
transaction or a series of transactions, unless such disposition
is:
(a) sales of crude oil
by Borrower to Lazarus Energy at a price no less than the price
paid by Borrower for such crude oil and not to exceed the price
paid by the Borrower plus $0.50 per barrel;
(b) of
inventory or obsolete, damaged, worn out, or surplus assets
disposed of in the ordinary course of business;
(c) of
cash equivalent investments in the ordinary course of
business;
(a) in respect of investments permitted under
Section 8.6
hereto; Permitted Liens permitted
pursuant to Section 8.3
(to the extent that the granting of
any such lien would constitute a disposition); or Restricted
Payments permitted under Section 8.5;
(b) for
cash or cash equivalents and for fair market value, in an
aggregate amount not to exceed one hundred thousand Dollars
($100,000) during the term of this Agreement; and
(c) leases,
granting of easements, or subleases of real or personal property in
the ordinary course of business that could not reasonably be
expected, either individually or in the aggregate, to materially
and adversely impact the operation of the Refinery Assets taken as
a whole.
No Loan
Party shall, nor shall any Loan Party permit any of its
Subsidiaries to, sponsor, maintain, contribute to, or incur any
liability (whether actual, contingent or otherwise) with respect to
any Employee Benefit Plan, including a Pension Plan or a
Multiemployer Plan. No Loan Party shall permit any ERISA
Affiliate to sponsor, maintain, contribute to, or have any
liability (whether actual, contingent or otherwise) with respect to
a Pension Plan, or to have an obligation to contribute to or have
any liability (whether actual, contingent or otherwise) with
respect to a Multiemployer Plan.
The
occurrence of any one or more of the following events shall
constitute an “Event of
Default” by Borrower hereunder:
The
failure of any Loan Party to (i) pay any principal of or interest
on the Loans when due in accordance with the terms hereof or (ii)
pay any other amount payable hereunder or under any other Loan
Document if such failure is not remedied within (x) during a
Commitment Period, ten (10) Business Days and (y) otherwise, five
(5) Business Days.
The
failure of any Loan Party to perform, keep or observe any of the
covenants, conditions, promises, agreements or obligations of such
Loan Party under this Agreement or any of the other Loan Documents
(a) set forth in Section
7.2, 7.5
7.10, 7.12, 7.13 or 7.14 of this Agreement or in
Section 8 of this
Agreement or (b) otherwise, if such failure is not remedied on or
before (i) during a Commitment Period, fifteen (15) Business Days
and (ii) otherwise, five (5) Business Days, in each case, after
notice of such failure is given to Borrower; provided that any such failure
by a Loan Party under subsections 7.2.1 and
7.2.3 of this
Agreement shall not constitute an Event of Default hereunder until
the fifteenth (15th) day following the occurrence
thereof.
-34-
The
failure of any Loan Party to perform, keep or observe (after any
applicable notice and cure period) any of the covenants,
conditions, promises, agreements or obligations of such Loan Party
(other than a covenant not to incur liens on margin stock) under
(a) any agreement with any Person other than the Loan Documents or
the Commodity Transaction Documents if such failure could
reasonably be expected to have a Material Adverse Effect and such
failure is not remedied within (i) during a Commitment Period,
fifteen (15) Business Days and (ii) otherwise, five (5) Business
Days, in each case, after notice of such failure is given to
Borrower, or (b) any Commodity Transaction Document and such
failure is not remedied within five (5) Business Days after notice
of such failure is given to Borrower.
The
making or furnishing by any Loan Party to Lender of any
representation, warranty, certificate, schedule, report or other
communication within or in connection with this Agreement or the
other Loan Documents or in connection with any other agreement
between such Loan Party and Lender, which is untrue or misleading
in any material respect as of the date made. Any Event of Default
under this Section
9.4 shall be deemed cured at such time as the applicable
representation, warranty, certificate, schedule, report or other
communication becomes true in all respects if none of the Loan
Parties or the Lender suffered any uncured harm as a result of the
facts and circumstances that made the representation, warranty,
certificate, schedule, report or other communication untrue or
misleading.
The
loss, theft, damage or destruction of any of the Collateral in an
amount in excess of five hundred thousand Dollars ($500,000) in the
aggregate for all such events during any Fiscal Year as determined
by Lender in its sole discretion determined in good faith, or
(except as permitted hereby) sale, lease or furnishing under a
contract of service of, any of the Collateral.
The
making or any attempt by any Person to make any levy, seizure or
attachment upon any of the Collateral in excess of five hundred
thousand Dollars ($500,000).
The
commencement of any proceedings in bankruptcy by or against any
Loan Party or for the liquidation or reorganization of any Loan
Party, or alleging that such Loan Party is insolvent or unable to
pay its debts as they mature, or for the readjustment or
arrangement of any Loan Party 's debts, whether under the United
States Bankruptcy Code or under any other law, whether state or
federal, now or hereafter existing, for the relief of debtors, or
the commencement of any analogous statutory or non-statutory
proceedings involving any Loan Party; provided, however, that if such
commencement of proceedings against such Loan Party is involuntary,
such action shall not constitute an Event of Default unless such
proceedings are not dismissed within forty-five (45) days after the
commencement of such proceedings.
The
appointment of a receiver or trustee for any Loan Party, for any of
the Collateral or for any substantial part of any Loan
Party’s assets or the institution of any proceedings for the
dissolution, or the full or partial liquidation, or the merger or
consolidation, of any Loan Party which is a corporation, limited
liability company or a partnership; provided, however, that if such
appointment or commencement of proceedings against such Loan Party
is involuntary, such action shall not constitute an Event of
Default unless such appointment is not revoked or such proceedings
are not dismissed within forty-five (45) days after the
commencement of such proceedings.
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The
entry of any judgments or orders aggregating in excess of five
hundred thousand Dollars ($500,000) against any Loan Party which
remains unsatisfied or undischarged and in effect for thirty
(30) days after such entry without a stay of enforcement or
execution.
The
dissolution of any Loan Party.
The
occurrence of an event of default under, or the revocation or
termination of, any agreement, instrument or document executed and
delivered by any Loan Party to Lender pursuant to which such Loan
Party has guaranteed to Lender the payment of all or any of the
Obligations or has granted Lender a security interest in or lien
upon some or all of such Loan Party's real and/or personal property
to secure the payment of all or any of the
Obligations.
(a) The
institution in any court of a criminal proceeding against any Loan
Party which would have a Material Adverse Effect, (b) the
indictment of any officer of a Loan Party, for any crime which would have a
Material Adverse Effect or (c) the indictment of any Loan Party for
any crime.
The
failure of (i) Lazarus to own and have voting control of at
least seventy-nine percent (79%) of the issued and outstanding
voting Equity Interests of Blue Dolphin; (ii) Blue Dolphin to own
and have voting control of one hundred percent (100%) of the issued
and outstanding voting Equity Interests of each of the Borrower and
LR&M; (iii) the Borrower to own and have voting control of at
least one hundred percent (100%) of the issued and outstanding
voting Equity Interests of each Subsidiary of the Borrower, if any;
or (iv) LR&M to own and have voting control of at least one
hundred percent (100%) of the issued and outstanding voting Equity
Interests of each Subsidiary of LR&M, if any.
The
occurrence and continuation of any Material Adverse
Effect.
Upon
the occurrence and during the continuance of an Event of Default
described in Sections 9.7 or 9.8 hereof, all of the
Obligations shall immediately and automatically become due and
payable, without notice of any kind. Upon the occurrence and during
the continuation of any other Event of Default, the Lender, by
notice to the Borrower, may take any or all of the following
actions, at the same or different times: (i) declare the Loans then
outstanding to be forthwith due and payable in whole or in part,
whereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and any unpaid
accrued fees and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall become forthwith
due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document
to the contrary notwithstanding; and (ii) exercise any rights and
remedies provided to the Lender under this Agreement, any other
Loan Documents (subject to the restrictions referred to therein) or
at law or at equity.
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Upon
the occurrence and during the continuance of an Event of Default,
Lender may exercise from time to time any rights and remedies
available to it under the Uniform Commercial Code and any other
applicable law in addition to, and not in lieu of, any rights and
remedies expressly granted in this Agreement or in any of the other
Loan Documents and all of Lender's rights and remedies shall be
cumulative and non-exclusive to the extent permitted by law. In
particular, but not by way of limitation of the foregoing, Lender
may, without notice, demand or legal process of any kind, take
possession of any or all of the Collateral (in addition to
Collateral of which it already has possession), wherever it may be
found, and for that purpose may pursue the same wherever it may be
found, and may enter onto any of each Loan Party’s premises
where any of the Collateral may be, and search for, take possession
of, remove, keep and store any of the Collateral until the same
shall be sold or otherwise disposed of, and Lender shall have the
right to store the same at any of Loan Party’s premises
without cost to Lender. At Lender's request, each Loan Party shall,
at Borrower’s expense, assemble the Collateral and make it
available to Lender at one or more places to be designated by
Lender and reasonably convenient to Lender and Loan Parties. Each
Loan Party recognizes that if a Loan Party fails to perform,
observe or discharge any of its Obligations under this Agreement or
the other Loan Documents, no remedy at law will provide adequate
relief to Lender, and agrees that Lender shall be entitled to
temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages. Any notification of
intended disposition of any of the Collateral required by law will
be deemed to be a reasonable authenticated notification of
disposition if given at least ten (10) days prior to such
disposition and such notice shall (i) describe Lender and such
Loan Party, (ii) describe the Collateral that is the subject
of the intended disposition, (iii) state the method of the
intended disposition, (iv) state that such Loan Party is
entitled to an accounting of the Obligations and state the charge,
if any, for an accounting and (v) state the time and place of
any public disposition or the time after which any private sale is
to be made. Lender may disclaim any warranties that might arise in
connection with the sale, lease or other disposition of the
Collateral and has no obligation to provide any warranties at such
time. Any Proceeds of any disposition by Lender of any of the
Collateral may be applied by Lender to the payment of expenses in
connection with the Collateral, including, without limitation,
legal expenses and reasonable attorneys' fees, and any balance of
such Proceeds and all other payments received by Lender during the
continuance of an Event of Default may be applied by Lender toward
the payment of such of the Obligations, and in such order of
application, as Lender may from time to time elect.
The
obligation of Lender to fund the Loans is subject to the
satisfaction or waiver (each in form and substance satisfactory to
the Lender in its sole discretion) of the following conditions
precedent on or before the date falling one month after the date of
this Agreement (the “Outside
Date”) (and “Closing
Date” is the first Business Day on or before the
Outside Date on which all such conditions precedent have been
satisfied or waived (in form and substance satisfactory to the
Lender in its sole discretion), as applicable). If the conditions
set forth in this Section 11.1 are not satisfied or
waived (in form and substance satisfactory to the Lender in its
sole discretion) by the Outside Date, then (x) the obligation of
the Lender to fund the Loans shall not become effective, (y) the
Lender's commitments under this Agreement shall automatically
terminate without further action by any party hereto, and (z) the
Maturity Date shall be deemed to be the Outside Date:
(a) Lender shall have
received (i) a copy of the certificate of formation, including all
amendments thereto, of Borrower, certified as of a recent date by
the Secretary of State of the State of Delaware; (ii) a certificate
as to the good standing of Borrower as of a recent date from such
Secretary of State of the State of Delaware; and (iii) a
certificate of the Secretary or Assistant Secretary or other
authorized officer of Borrower dated as of the Closing Date and
certifying: (A) that attached thereto is a true and complete copy
of the constitutive documents of Borrower as in effect on the
Closing Date, (B) that attached thereto is a true and complete copy
of the written consent duly adopted by an authorized officer of the
sole member of the Borrower authorizing the execution, delivery and
performance of the Loan Documents to which Borrower is a party, (C)
that such written consent has not been modified, rescinded or
amended and is in full force and effect, (D) that the
certificate of formation of Borrower has not been amended since the
date of the last amendment thereto shown on the certificate of good
standing furnished pursuant to clause (ii) above, and (E) as to the
incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection
herewith on behalf of Borrower;
(b) Lender shall have
received (i) a copy of the certificate of formation, including all
amendments thereto, of each Guarantor and Grantor, certified as of
a recent date by the Secretary of State of the State of Delaware;
(ii) a certificate as to the good standing of each Guarantor and
Grantor as of a recent date from such Secretary of State of the
State of Delaware; and (iii) a certificate of the Secretary or
Assistant Secretary or other authorized officer of each Guarantor
and Grantor dated as of the Closing Date and certifying: (A) that
attached thereto is a true and complete copy of the constitutive
documents of such Guarantor and/or Grantor as in effect on the
Closing Date, (B) that attached thereto is a true and complete copy
of the written consent duly adopted by the sole Member or Board (as
applicable) of such Guarantor and/or Grantor authorizing the
execution, delivery and performance of the Loan Documents to which
such Guarantor and/or Grantor is a party, (C) that such written
consent has not been modified, rescinded or amended and is in full
force and effect, (D) that the certificate of formation of
such Guarantor and/or Grantor has not been amended since the date
of the last amendment thereto shown on the certificate of good
standing furnished pursuant to clause (ii) above, and (E) as to the
incumbency and specimen signature of each officer executing any
Loan Document or any other document delivered in connection
herewith on behalf of such Guarantor and/or Grantor;
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(c) [Reserved];
(d) except as set forth
on Schedule
11.1(d), since December 31, 2018, no event shall have
occurred which has had or could reasonably be expected to have a
Material Adverse Effect on any Loan Party, its lines of business or
the markets in which such Person operates or in the ownership,
control and/or management of any Loan Party, as determined by
Lender in its sole discretion and in good faith (it being agreed
for the purpose of this Section 11.1(d) that a Material
Adverse Effect includes the Refinery Assets (i) not producing
refined products for a period of five (5) consecutive days, or (ii)
being shut down or ceasing to operate for a period of one (1) day,
in each case as determined by the Lender in its sole
discretion);
(e) Lender shall have
received payment in full of all fees and expenses payable to it by
Borrower or any other Person in connection herewith, on or before
disbursement of the Loans hereunder;
(f) each Loan Party
shall have duly executed and delivered to Lender the following
documents, each in form and substance satisfactory to the Lender in
its sole discretion:
(i) this
Agreement;
(ii) the
Pledge Agreement;
(iii) a
one-year crude supply agreement automatically renewed for
successive terms of one year, dated on or about the date hereof,
between the Lender as seller and Lazarus Energy as buyer (the
“Crude Supply
Agreement”);
(iv) a
one-year master purchase and sale agreement, dated on or about the
date hereof, between the Lender and Lazarus (including any
confirmations thereunder, the “Jet Fuel Master
Agreement”);
(v) a one-year crude
storage lease dated on or about the date hereof, between the Lender
as customer and the Borrower as terminal (the “Crude Storage
Lease”);
(vi) a
one-year jet storage lease dated on or about the date hereof,
between the Lender as customer and the Borrower as terminal (the
“Jet Storage
Lease”);
(vii) (i)
a jet fuel purchase agreement dated on or about the date hereof
between the Lender as buyer and the Lazarus as seller, and (ii) a
jet fuel sale agreement dated on or about the date hereof between
the Lender as seller and Lazarus as buyer (together the
“Jet Inventory
Purchase and Sale Agreements”);
(viii) a
parent guaranty from Blue Dolphin guaranteeing certain obligations
under the Crude Supply Agreement (the “Blue Dolphin Parent
Guarantee”);
(ix) a
letter agreement dated on or about the date hereof between the
Borrower, Lazarus Energy, LR&M and the Lender (the
“NPS Exclusivity
Letter”);
(x) a consent and
assignment agreement for the benefit of the Lender dated as of the
date hereof among the Borrower, Lazarus Energy, and the Lender (the
“Consent and
Assignment Agreement (Storage Tank Lease)”) in
relation to the Storage Tank Lease Agreement effective as of June
1, 2018 between Lazarus Energy and the Borrower;
(xi) a
consent and assignment agreement for the benefit of the Lender
dated as of the date hereof among the Borrower, Haltermann
Solutions and the Lender (the “Consent and
Assignment Agreement (Haltermann MSA)”) in relation to
the Master Service Agreement effective as of January 1, 2018
between Haltermann Solutions and the Borrower; and
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(xii) amendments,
subordinations, notes, forbearances, consents, and such other
agreements from each of the following parties as may be required by
the Lender in its sole discretion, in form and substance acceptable
to Lender (collectively, the “Related Party
Agreements”):
(A) Veritex Community
Bank (“Veritex”);
(B) GEL Tex Marketing,
LLC (“GEL
Tex”);
(C) Notre Dame
Investors, Inc.; and
(D) all other holders
of Debt of the Loan Parities set forth on Schedule 1.01 other than
Affiliates of Loan Parties;
(xiii) A Subordination
Agreement in form and substance satisfactory to the Lender from
each Affiliate of a Loan Party (other than any other Loan Party)
that is a holder of Existing Indebtedness of a Loan Party (which,
for the avoidance of doubt, shall not restrict or subordinate
Affiliate Funding Transactions that are (A) extensions of credit by
Lazarus to, or (B) payments by Lazarus in exchange for such
extensions of credit on account, any other Loan
Party);
(xiv) control
agreements in respect of each account listed on Schedule 1.03, other than the
Green Bank Account;
(xv) any
other documents, instruments and agreements which Lender determines
are reasonably necessary to consummate the transactions
contemplated hereby;
(g) as of the date
hereof and at the time of and immediately after giving effect to
each Borrowing, no Default or Event of Default shall exist at the
time of or result from such funding, grant or pledge;
(h) as of the date
hereof and at the time of and immediately after giving effect to
each Borrowing, the representations and warranties of each Loan
Party in this Agreement and the other Loan Documents shall be true
and correct in all material respects (except for representations
and warranties that expressly relate to an earlier date which must
be true and correct as of such earlier date);
(i) there is no action
or proceeding from a Governmental Authority and no Person has
initiated litigation that is pending or has been threatened in
writing against a Loan Party which is reasonably likely to prevent
any Loan Party from continuing operations;
(j) this Agreement and
the Pledge Agreement shall be in full force and effect on the date
hereof through the Closing Date, as applicable, and the Lender
shall have a perfected security interest in the Collateral of the
type and priority described in this Agreement and the Pledge
Agreement;
(k) the Lender shall
have received the Notice of Borrowing for any Loans made as of the
Closing Date as contemplated by Section 2.3 above;
(l) [Reserved];
(m) the Lender shall
have received a copy of an amendment to the Settlement Agreement,
dated as of July 20, 2018, among GEL Tex Marketing, LLC, Lazarus
Energy, Blue Dolphin, Lazarus, the Borrower, ▇▇▇▇▇▇▇ & Company
Financial Holdings, L.P. and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (as amended pursuant
to the First Amendment to the Settlement Agreement dated as of
October 17, 2018, the Second Amendment to the Settlement Agreement
dated as of November 15, 2018, the Third Amendment to the
Settlement Agreement dated as of December 19, 2018, and the Fourth
Amendment to the Settlement Agreement dated as of March 19, 2019,
and as further amended, supplemented or otherwise modified from
time to time, the “GEL Tex Settlement
Agreement”) in form and substance satisfactory to
Lender in its sole discretion;
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(n) the Lender shall
have received copies of all consents from third parties, including
Veritex and GEL Tex (which may be in the form of an amendment to
the GEL Tex Settlement Agreement specifically authorizing the Loan
Parties to enter into the Loan Documents), which are required for
the Loan Parties to enter into the Loan Documents, as determined by
Lender in its sole discretion and in good faith;
(o) the Lender shall
have received (i) a duly executed release agreement (in form and
substance satisfactory to the lender in its sole discretion) in
respect of any liens or other encumbrances granted in favor of any
Person in respect of the Collateral, and (ii) satisfactory evidence
that any lien filings, fixture filings or other filings in respect
of any such liens and encumbrances have been terminated or amended
to exclude the Collateral from the collateral description therein
(the form of any such amendment to be pre-approved by the Lender),
and (iii) satisfactory lien search results;
(p) the Lender shall
have received a copy of an IRS Form W-9 in respect of the Borrower;
and
(q) the Lender shall
have received a certified copy of each of the following: (i) a
crude purchase contract between the Borrower and Lazarus Energy,
(ii) a Subordination and Attornment Agreement between Borrower,
Lazarus Energy and Veritex Community Bank, and (iii) a Tank Access
Agreement between Lender and Veritex.
(a) Lender may at any
time assign to one or more Persons (any such Person, an
“Assignee”)
all or any portion of its Loans or its commitment to make advances
under the Line of Credit, without consent of Borrower. Any such
assignment shall be made with prior written notice to Borrower and
delivery to Borrower of an Assignment Agreement that identifies the
Assignee, its address, its U.S. tax identification number, if any,
and any requisite documentation required by Section 12.2 and the principal
amount of the Loans and interest owing thereon assigned to
Assignee. Borrower shall maintain a copy of each such notice and
Assignment Agreement delivered to it and register (the
“Register”)
for the recordation of names and addresses of the Lenders and the
commitment of, and principal amount and interest thereon of each
Loan assigned to each Lender from time to time and whether such
Lender is the original Lender or the Assignee. No assignment shall
be effective unless and until the Assignment Agreement is accepted
and registered in the Register. All records of transfer of a
Lender's interest in the Register shall be conclusive, absent
manifest error, as to the ownership of the interests in the Loans.
The parties hereto agree and intend that the Loans shall be treated
as being in “registered form” for the purposes of the
Code, and the Register shall be maintained in accordance with such
intention. Each Lender granting a participation shall, as a
non-fiduciary agent of the Borrower, maintain a register containing
information similar to that of the Register in a manner such that
the Loans hereunder are in “registered form” for the
purposes of the Code. To the extent Lender assigns all or a portion
of the Loans and commitments hereunder, Borrower and the other Loan
Parties hereby agree to execute such amendments and/or restatements
of this agreement and the other Loan Documents to reflect the
existence of an administrative agent for the Lenders and/or reflect
tax provisions to protect any foreign lenders.
(b) From and after the
date on which the conditions described above have been met, (i)
such Assignee shall be deemed automatically to have become a party
hereto and, to the extent that rights and obligations hereunder
have been assigned to such Assignee pursuant to an assignment
agreement between Lender and the Assignee, shall have the rights
and obligations of Lender hereunder and (ii) Lender, to the extent
that rights and obligations hereunder have been assigned by it
pursuant to such Assignment Agreement, shall be released from its
rights (other than its indemnification rights) and obligations
hereunder. Upon the request of the Assignee (and, as applicable,
Lender) pursuant to an effective assignment agreement, Borrower
shall execute and deliver to the Assignee (and, as applicable,
Lender) a note in the principal amount of the principal amount of
the Assignee's Loans (and, as applicable, a note in the principal
amount of the pro rata share of the principal amount of the Loans
retained by Lender). Each such note shall be dated the effective
date of such assignment. Upon receipt by Lender of such note,
Lender shall return to Borrower any prior note held by
it.
(c) Lender may at any
time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of Lender,
including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release Lender from any of
its obligations hereunder or substitute any such pledgee or
assignee for Lender as a party hereto.
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12.1.2. Participations.
Lender may at any time sell to one or more Persons participating
interests in its Loans, commitment to make advance under the Line
of Credit or other interests hereunder (any such Person, a
“Participant”).
In the event of a sale by Lender of a participating interest to a
Participant, (a) Lender's obligations hereunder shall remain
unchanged for all purposes, (b) Borrower shall continue to deal
solely and directly with Lender in connection with Lender's rights
and obligations hereunder and (c) all amounts payable by
Borrower shall be determined as if Lender had not sold such
participation and shall be paid directly to Lender. Each Loan Party
agrees that, if amounts outstanding under this Agreement are due
and payable (as a result of acceleration or otherwise), each
Participant shall be deemed to have the right of set-off in respect
of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest
were owing directly to it as Lender under this Agreement;
provided that such
right of set-off shall be subject to the obligation of each
Participant to share with Lender, and Lender agrees to share with
each Participant, on a pro rata basis. Each Loan Party also agrees
that each Participant shall be entitled to the benefits of
Sections 2.13 and 2.15 as if it were Lender; provided that on the date of
the participation no Participant shall be entitled to any greater
compensation pursuant to Sections 2.13 and 2.15 than would have been paid to
Lender on such date if no participation had been sold, except to
the extent such entitlement to receive a greater payment results
from a Change in Law that occurs after the Participant acquired the
applicable participation. Lender, acting solely for this purpose as
a non-fiduciary agent of Borrower, shall maintain a register on
which it enters the name and address of each Participant and the
principal amounts (and stated interest) of each Participant’s
interest in the Loans or other obligations under the Loan Documents
(the “Participant
Register”); provided that Lender shall not
have any obligation to disclose all or any portion of the
Participant Register (including the identity of any Participant or
any information relating to a Participant’s interest in any
commitments, loans, letters of credit or its other obligations
under any Loan Document) to any Person except to the extent that
such disclosure is necessary to establish that such commitment,
loan, letter of credit or other obligation is in registered form
under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each
Person whose name is recorded in the Participant Register as the
owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.
Lender
(for itself and not on behalf of any other party) hereby notifies
the Loan Parties that, pursuant to the requirements of the USA
Patriot Act, Title III of Pub. L. 107-56, signed into law October
26, 2001 (the “USA Patriot
Act”), it is required to obtain, verify and record
information that identifies the Loan Parties, which information
includes the name and address of the Loan Parties and other
information that will allow Lender, as applicable, to identify the
Loan Parties in accordance with the Act.
IN
CONSIDERATION OF THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND
THE AGREEMENT TO EXTEND THE COMMITMENTS PROVIDED HEREUNDER, EACH
LOAN PARTY HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD LENDER
AND EACH OF THE OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES AND
AGENTS OF LENDER (EACH A “LENDER
PARTY”) FREE AND HARMLESS FROM AND AGAINST ANY AND ALL
ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES, TAXES,
DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS (COLLECTIVELY, THE
“INDEMNIFIED
LIABILITIES”), INCURRED BY LENDER PARTIES OR ANY OF
THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY
TENDER OFFER, MERGER, PURCHASE OF CAPITAL SECURITIES, PURCHASE OF
ASSETS OR OTHER SIMILAR TRANSACTION FINANCED OR PROPOSED TO BE
FINANCED IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE
PROCEEDS OF ANY OF THE LOANS, (B) THE USE, HANDLING, RELEASE,
EMISSION, DISCHARGE, TRANSPORTATION, STORAGE, TREATMENT OR DISPOSAL
OF ANY HAZARDOUS MATERIAL AT ANY PROPERTY OWNED OR LEASED BY ANY
LOAN PARTY, (C) ANY VIOLATION OF ANY ENVIRONMENTAL LAWS WITH
RESPECT TO CONDITIONS AT ANY PROPERTY OWNED OR LEASED BY ANY LOAN
PARTY OR THE OPERATIONS CONDUCTED THEREON, (D) THE INVESTIGATION,
CLEANUP OR REMEDIATION OF OFFSITE LOCATIONS AT WHICH ANY LOAN PARTY
OR THEIR RESPECTIVE PREDECESSORS ARE ALLEGED TO HAVE DIRECTLY OR
INDIRECTLY DISPOSED OF HAZARDOUS MATERIALS OR (E) THE
EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT BY ANY OF LENDER PARTIES, EXCEPT FOR ANY
SUCH INDEMNIFIED LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE
LENDER PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS
DETERMINED BY A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF
COMPETENT JURISDICTION. IF AND TO THE EXTENT THAT THE FOREGOING
UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, EACH LOAN PARTY
HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND
SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES WHICH IS
PERMISSIBLE UNDER APPLICABLE LAW. ALL OBLIGATIONS PROVIDED FOR IN
THIS SECTION
12.3 SHALL SURVIVE REPAYMENT
OF THE LOANS, CANCELLATION OF THE LOANS, ANY FORECLOSURE UNDER, OR
ANY MODIFICATION, RELEASE OR DISCHARGE OF, ANY OR ALL OF THE
COLLATERAL DOCUMENTS AND TERMINATION OF THIS AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE FOREGOING, THIS
SECTION 12.3 SHALL NOT APPLY WITH
RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES,
CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM. The foregoing
indemnity shall not require reimbursement of costs and expenses in
connection with the execution and delivery of the Loan Documents
and the ongoing ordinary course administration thereof, which
amounts are subject to Section 2.12
hereof.
-41-
All
written notices and other written communications with respect to
this Agreement shall be sent by ordinary, certified or overnight
mail, by telecopy or delivered in person, and in the case of Lender
shall be sent to it at Pilot Travel Centers LLC, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, attention: Head of Commercial Credit
and Finance (▇▇▇▇▇ ▇▇▇▇▇▇), email:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, and in the case of Loan
Parties shall be sent to it at its principal place of business set
forth on Schedule
6.2 hereto or as otherwise directed by Borrower in writing.
All notices shall be deemed received upon actual receipt thereof or
refusal of delivery. Notwithstanding the foregoing, requests for
written consent may be communicated by email to
▇▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, or such other person or address
that Lender may designate from time to time.
This
Agreement and the other Loan Documents may not be modified, altered
or amended except by an agreement in writing signed by each Loan
Party who is a party to such Loan Document and Lender.
The
headings of subdivisions in this Agreement are for convenience of
reference only, and shall not govern the interpretation of any of
the provisions of this Agreement.
Each
Loan Party acknowledges and agrees that its appointment of Lender
as its attorney and agent-in-fact for the purposes specified in
this Agreement is an appointment coupled with an interest and shall
be irrevocable until the Termination Date, provided that Lender shall have
no rights in respect of such appointment except after the
occurrence and during the continuance of an Event of
Default.
This
Agreement, any of the other Loan Documents, and any amendments,
waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which, when so executed and delivered, shall
be deemed an original, but all of which counterparts together shall
constitute but one agreement.
Lender
agrees to make available information regarding the Line of Credit
as may be reasonably requested by the Loan Parties to facilitate a
refinancing of the Loans.
(a) EACH
LOAN PARTY AND LENDER EACH HEREBY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR
INDIRECTLY TO THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, THE
OBLIGATIONS, THE COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY A LOAN
PARTY OR LENDER OR WHICH, IN ANY WAY, DIRECTLY OR INDIRECTLY,
ARISES OUT OF OR RELATES TO THE RELATIONSHIP BETWEEN A LOAN PARTY
AND LENDER. IN NO EVENT SHALL LENDER BE LIABLE FOR LOST PROFITS OR
OTHER SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
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(b) Each Loan Party
hereby waives demand, presentment, protest and notice of
nonpayment, and further waives the benefit of all valuation,
appraisal and exemption laws.
(c) Each Loan Party
hereby waives the benefit of any law that would otherwise restrict
or limit Lender or any Affiliate of Lender in the exercise of its
right, which is hereby acknowledged and agreed to, to set-off
against the Obligations, without notice at any time hereafter, any
indebtedness, matured or unmatured, owing by Lender or such
Affiliate of Lender to such Loan Party.
(d) EACH LOAN PARTY
HEREBY WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO
THE EXERCISE BY LENDER OF ITS RIGHTS TO REPOSSESS THE COLLATERAL OF
SUCH LOAN PARTY WITHOUT JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR
LEVY UPON SUCH COLLATERAL, PROVIDED THAT IN THE EVENT THAT
LENDER SEEKS TO ENFORCE ITS RIGHTS HEREUNDER BY JUDICIAL PROCESS OR
SELF HELP, LENDER SHALL PROVIDE SUCH LOAN PARTY WITH SUCH NOTICES
AS ARE REQUIRED BY LAW.
Lender's failure,
at any time or times hereafter, to require strict performance by
any Loan Party of any provision of this Agreement or any of the
other Loan Documents shall not waive, affect or diminish any right
of Lender thereafter to demand strict compliance and performance
therewith. Any suspension or waiver by Lender of an Event of
Default under this Agreement or any default under any of the other
Loan Documents shall not suspend, waive or affect any other Event
of Default under this Agreement or any other default under any of
the other Loan Documents, whether the same is prior or subsequent
thereto and whether of the same or of a different kind or
character. No delay on the part of Lender in the exercise of any
right or remedy under this Agreement or any other loan Document
shall preclude other or further exercise thereof or the exercise of
any right or remedy. None of the undertakings, agreements,
warranties, covenants and representations of Loan Parties contained
in this Agreement or any of the other Loan Documents and no Event
of Default under this Agreement or default under any of the other
Loan Documents shall be deemed to have been suspended or waived by
Lender unless such suspension or waiver is in writing, signed by a
duly authorized officer of Lender and directed to Borrower
specifying such suspension or waiver.
(a) This
Agreement and the other Loan Documents are submitted by each Loan
Party to Lender for Lender's acceptance or rejection at Lender's
principal place of business as an offer by Borrower to borrow
monies from Lender now and from time to time hereafter, and shall
not be binding upon Lender or become effective until accepted by
Lender, in writing, at said place of business. If so accepted by
Lender, this Agreement and the other Loan Documents shall be deemed
to have been made at said place of business. THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED AND CONTROLLED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK AS TO INTERPRETATION,
ENFORCEMENT, VALIDITY, CONSTRUCTION, EFFECT, AND IN ALL OTHER
RESPECTS, INCLUDING, WITHOUT LIMITATION, THE LEGALITY OF THE
INTEREST RATE AND OTHER CHARGES, BUT EXCLUDING PERFECTION OF THE
SECURITY INTERESTS IN COLLATERAL LOCATED OUTSIDE OF THE STATE OF
NEW YORK, WHICH SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
RELEVANT JURISDICTION IN WHICH SUCH COLLATERAL IS LOCATED. If any
provision of this Agreement shall be held to be prohibited by or
invalid under applicable law, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or remaining
provisions of this Agreement.
(b) To induce Lender to
accept this Agreement, EACH LOAN PARTY IRREVOCABLY AGREES THAT,
SUBJECT TO LENDER'S SOLE AND ABSOLUTE ELECTION, ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR WITH RESPECT TO THIS AGREEMENT AND ANY ACTION FOR
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF (OTHER THAN THE
RIGHTS AND OBLIGATIONS UNDER ANY LOAN DOCUMENT EXPRESSLY GOVERNED
BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE BROUGHT ONLY IN ANY
OF THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA SITTING IN THE BOROUGH OF MANHATTAN, IN THE CITY OF NEW
YORK. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN
PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND APPELLATE COURTS
IN ANY LEGAL ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT. EACH OF THE LOAN PARTIES HERETO HEREBY EXPRESSLY
AND IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE JURISDICTION OF ANY OTHER COURTS THAT MAY
CORRESPOND BY VIRTUE OF SUCH PARTY’S DOMICILE (PRESENT OR
FUTURE), THE LOCATION OF ITS ASSETS OR OTHERWISE. FURTHERMORE, EACH
OF THE LOAN PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE
AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO ABOVE AND
HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM
IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN
THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY HAVE TO
BRING ANY ACTION OR PROCEEDING ARISING OUT OF OR WITH RESPECT TO
THIS AGREEMENT AGAINST ANY OF THE LOAN PARTIES OR THEIR PROPERTY IN
THE COURTS OF ANY JURISDICTION.
-43-
(a) Notwithstanding any
provisions of this Agreement to the contrary, it is intended that
the joint and several nature of the Obligations of the Loan Parties
and the liens and security interests granted by Borrower to secure
the Obligations, not constitute a “Fraudulent
Conveyance” (as defined below). Consequently, Lender and of
the Loan Parties agree that if the Obligations of the Loan Parties,
or any liens or security interests granted by such Loan Parties
securing the Obligations would, but for the application of this
sentence, constitute a Fraudulent Conveyance, the Obligations of
such Loan Party and the liens and security interests securing such
Obligations shall be valid and enforceable only to the maximum
extent that would not cause such Obligations or such lien or
security interest to constitute a Fraudulent Conveyance, and the
Obligations of such Loan Party and this Agreement shall
automatically be deemed to have been amended accordingly. For
purposes hereof, “Fraudulent Conveyance” means a
fraudulent conveyance under Section 548 of Chapter 11 of Title II
of the United States Code (11 U.S.C. § 101, et seq.), as
amended (the “Bankruptcy Code”) or a fraudulent
conveyance or fraudulent transfer under the applicable provisions
of any fraudulent conveyance or fraudulent transfer law or similar
law of any state, nation or other governmental unit, as in effect
from time to time.
(b) Each Loan Party
assumes responsibility for keeping itself informed of the financial
condition of each other Loan Party, and any and all endorsers
and/or guarantors of any instrument or document evidencing all or
any part of such other Loan Party 's Obligations and of all other
circumstances bearing upon the risk of nonpayment by such other
Loan Party of their Obligations and each Loan Party agrees that
Lender shall not have any duty to advise such Loan Party of
information known to Lender regarding such condition or any such
circumstances or to undertake any investigation not a part of its
regular business routine. If Lender, in its sole discretion,
undertakes at any time or from time to time to provide any such
information to a Loan Party, Lender shall not be under any
obligation to update any such information or to provide any such
information to such Loan Party on any subsequent
occasion.
(c) Lender is hereby
authorized, without notice or demand and without affecting the
liability of Loan Party hereunder or under the other Loan
Documents, to, at any time and from time to time, (i) accept
partial payments on Loan Party’s Obligations; (ii) take
and hold security or collateral for the payment of Loan
Party’s Obligations hereunder or for the payment of any
guaranties of Loan Party’s Obligations or other liabilities
of Loan Party and exchange, enforce, waive and release any such
security or collateral; (iii) apply such security or
collateral and direct the order or manner of sale thereof as
Lender, in its sole discretion, may determine; and
(iv) settle, release, compromise, collect or otherwise
liquidate Loan Party’s Obligations and any security or
collateral therefor in any manner, without affecting or impairing
the obligations of the other Loan Parties. Lender shall have the
exclusive right to determine the manner of application of any
payments or credits, whether received from a Loan Party or any
other source, and such determination shall be binding on such
Borrower. All such payments and credits may be applied, reversed
and reapplied, in whole or in part, to any of a Loan Party’s
Obligations as Lender shall determine in its sole discretion
without affecting the validity or enforceability of the Obligations
of the other Loan Parties.
(d) Each Loan Party
hereby agrees that, except as hereinafter provided, its obligations
hereunder shall be unconditional, irrespective of (i) the
absence of any attempt to collect Loan Party’s Obligations
from any Borrower or any guarantor or other action to enforce the
same; (ii) the waiver or consent by Lender with respect to any
provision of any instrument evidencing Borrower’s
Obligations, or any part thereof, or any other agreement
heretofore, now or hereafter executed by a Loan Party and delivered
to Lender; (iii) failure by Lender to take any steps to
perfect and maintain its security interest in, or to preserve its
rights to, any security or collateral for Borrower’s
Obligations; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against a Loan
Party or Lender’s election in any such proceeding of the
application of Section 1111(b)(2) of the Bankruptcy Code;
(v) any Borrowing or grant of a security interest by any
Borrower as debtor-in-possession, under Section 364 of the
Bankruptcy Code; (vi) the disallowance, under Section 502 of
the Bankruptcy Code, of all or any portion of Lender's claim(s) for
repayment of any of Loan Parties’ Obligations; or
(vii) any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a
guarantor.
(e) No payment made by
or for the account of a Loan Party including, without limitations,
(i) a payment made by such Loan Party on behalf of another
Loan Party 's Obligations or (ii) a payment made by any other
person under any guaranty, shall entitle such Loan Party, by
subrogation or otherwise, to any payment from such other Borrower
or from or out of such other Loan Party 's property and such Loan
Party shall not exercise any right or remedy against such other
Loan Party or any property of such other Loan Party by reason of
any performance of such Loan Party of its joint and several
obligations hereunder.
-44-
The
relationship between the Loan Parties on the one hand and Lender on
the other hand shall be solely that of borrower, guarantor or
grantor (as applicable) and lender. Lender has no fiduciary
relationship with or duty to any Loan Party arising out of or in
connection with this Agreement or any of the other Loan Documents,
and the relationship between the Loan Parties, on the one hand, and
Lender, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor. Lender undertakes no
responsibility to any Loan Party to review or inform any Loan Party
of any matter in connection with any phase of any Loan
Party’s business or operations. Each Loan Party agrees that
Lender shall have no liability to any Loan Party (whether sounding
in tort, contract or otherwise) for losses suffered by any Loan
Party in connection with, arising out of, or in any way related to
the transactions contemplated and the relationship established by
the Loan Documents, or any act, omission or event occurring in
connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that
such losses resulted from the gross negligence or willful
misconduct of the party from which recovery is sought. NO LENDER PARTY SHALL HAVE ANY LIABILITY WITH
RESPECT TO, AND EACH LOAN PARTY HEREBY WAIVES, RELEASES AND AGREES
NOT TO ▇▇▇ FOR ANY SPECIAL, PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR
THEREWITH (WHETHER BEFORE OR AFTER THE CLOSING DATE). Each
Loan Party acknowledges that it has been advised by counsel in the
negotiation, execution and delivery of this Agreement and the other
Loan Documents to which it is a party. No joint venture is created
hereby or by the other Loan Documents or otherwise exists by virtue
of the transactions contemplated hereby among the Loan Parties and
Lender.
[Signature
Pages Follow]
-45-
IN
WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.
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▇▇▇▇▇ PRODUCT STORAGE, LLC,
as
Borrower and Grantor
By:
BLUE DOLPHIN ENERGY COMPANY, its sole Member
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
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President
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PILOT TRAVEL CENTERS LLC,
as
Lender
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By:
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/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇
▇▇▇▇▇
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Title:
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CSO
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LAZARUS ENERGY HOLDINGS LLC,
as
Guarantor
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
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President
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LAZARUS ENERGY LLC,
as
Guarantor
By:
BLUE DOLPHIN ENERGY COMPANY, its sole Member
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
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President
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BLUE DOLPHIN ENERGY COMPANY,
as
Guarantor and Pledgor
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
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President
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LAZARUS REFINING & MARKETING, LLC,
as
Guarantor and Grantor
By:
BLUE DOLPHIN ENERGY COMPANY, its sole Member
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By:
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/s/
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title:
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President
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