Exhibit 10(cc)
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
Fax (405) 842-9901
(405) 842-2333
April 13, 1999
Interstate Travel Facilities, Inc.
Toby B. Tindell
Cristie R. Tindell
5880 N. I-35 Industrial Blvd.
Edmond, OK 73034
Re: Rearrangement of The Beard Company's
("Beard") Ownership Interest in and
Loans to Interstate Travel Facilities,
Inc. ("ITF")
Ladies and Gentlemen:
We have discussed with you a transaction which would result in
Beard giving up its present operating and voting control of
ITF (the "Transaction"). The Transaction and the basic terms
and conditions upon which it is made are set forth below:
1. Adjustment of Original Purchase Price. On February
27, 1998, ITF entered into an Asset Purchase Agreement with
the Tindells as "Sellers" whereby ITF purchased certain Real
Property and Business Assets from the Tindells for a total
purchase price of $2,060,875.54. The purchase price consisted
of (i) an ITF promissory note in the amount of $543,750, (ii)
assumption of debt in the amount of $1,335,875.54, and (iii)
6,250 shares of ITF $1.00 par value common stock, resulting in
the creation of more than $750,000 of Goodwill.
In view of ITF's operating results for the eleven months
ended December 31, 1998, we have mutually agreed that the
purchase price should be adjusted. The Tindells have agreed
to cancel the $543,750 note, which will result in reducing the
Goodwill by $543,750 on ITF's tax balance sheet.
2. Loans and Payables. Beard has loaned and/or
advanced a total of $2,465,531.45 (the "Loans") to ITF, and
has agreed to waive all interest thereon to March 31, 1999.
In addition, ITF had intercompany accounts payable to Beard of
$139,468.55 as of January 31, 1999 (the "Payables"). The
total amount of the Loans and Payables is $2,605,000.00.
3. Release and Assignment of Certificates of Deposit.
Stillwater National Bank and Trust Company ("SNB") is holding
Certificates of Deposit (the "CD's") in the total amount of
$327,070.16 as collateral for certain loans to ITF. ITF will
obtain a release from SNB of the CD's which will be assigned
to Beard and delivered at Closing (hereafter defined) in full
payment of the Payables, the 22,321 shares of stock being sold
by Beard to ITF (the "ITF Shares") (see paragraph 5) and in
partial payment of the Loans.
4. Restructure of Loans. The balance of the Loans
will be cancelled and in exchange therefor, ITF will give
Beard a promissory note ("Note A") in the principal amount of
$1,513,834.55 and a promissory note ("Note B") in the
principal sum of $539,117.33.
a. Note A will be dated March 31, 1999, will be
subject to a loan agreement (see paragraph 6), will be secured
by a first mortgage on the Cromwell and Lotawatah ("C&L")
properties and a security interest in related equipment (the
"Collateral") as well as the ITF Shares being sold to ITF by
Beard. All proceeds from the sale of the C&L properties and
Collateral will be applied first on Note A and second on Note
B. Note A will not bear interest until the C&L properties are
sold (the "Trigger Date") at which time the remaining
principal, if any, will bear interest at the rate of 8% per
annum. Note A will be subordinated to ITF's bank debt except
as to its collateral and the proceeds thereof which are to be
applied to the payment of Note A. ITF will promptly offer the
C&L properties for sale and use its best efforts to sell them
within one year from the date of the Closing.
b. Note B will also be dated March 31, 1999 and
will be subject to the same loan agreement, security and other
terms as Note A except (i) it will bear interest at the rate
of 6% per annum from March 31, 1999 until the Trigger Date and
thereafter at the rate of 8% per annum and (ii) it will not be
subordinated to the bank debt.
c. No payments other than proceeds from the sale
of the C&L properties and the Collateral shall be required to
be made on Note A or Note B until the Trigger Date and
thereafter the notes shall be amortized by equal monthly
payments over a period of months as follows:
If the aggregate unpaid Principal of Note A
and Note B is:
(1) $1,200,001 or greater, then the period of
amortization for each note shall be 60 months;
(2) $900,001 to $1,200,000, then the period
of amortization for each note shall be 48
months; and
(3) $900,000 or less, then the period of
amortization for each note shall be 36 months.
5. Sale of Stock; Irrevocable Proxy. At the Closing,
Beard will (i) sell and ITF will purchase the ITF Shares for
$1,000 and shall be considered paid as a part of the
assignment of the CD's as described in paragraph 3; and (ii)
deliver to ITF an irrevocable proxy to vote Beard's remaining
2,679 shares.
6. Loan Agreement. Both Notes A and B shall be
subject to a Loan Agreement that will provide the covenants
and warranties that are usual for this kind of transaction.
Among other things, the Loan Agreement will provide (i) for
the granting to Beard of a first mortgage, lien and security
interest in C&L until such properties are sold, (ii) that if
any of the presently owned equipment on C&L is disposed of,
the net proceeds thereof will be promptly remitted to Beard,
credited first against the principal balance of Note A and
second to the principal balance of Note B, and (iii) that so
long as either Note A or Note B is outstanding, ITF will
furnish to Beard monthly financial statements as soon as
available and in any event within 28 days after the end of
each calendar month, including balance sheets of ITF as of the
end of such calendar month and statements of income of ITF for
each such month, all in reasonable detail and all prepared in
accordance with GAAP consistently applied.
7. Sale of C&L; Interim Management of Properties. ITF
will continue to manage C&L until such properties have been
sold (at a price mutually acceptable to Beard and ITF) with no
management fee and will assist in and use its best efforts to
facilitate the marketing of the two properties as soon as
"better numbers" are available.
8. Insurance Transition. Following Closing, there
will be a 90-day insurance transition period, during which
ITF's present insurance (both liability and property damage)
will remain in effect until ITF can obtain new coverage. ITF
will reimburse Beard any costs incurred for maintaining such
coverage.
9. Term Life Insurance. ITF will continue to maintain
the existing term $1,000,000 life insurance policy on Toby
Tindell. Beard will remain as the primary beneficiary so long
as either Note A or Note B is outstanding. Once the principal
balance of Note A or Note B has been reduced below $1,000,000,
ITF and Beard will be designated as co-beneficiaries, with
Beard's designation limited to the principal amount owed on
the Note at the time of death.
Beard may, at its option, purchase an additional
$1,000,000 of term life insurance on Toby Tindell, be the
owner and beneficiary of such policy, and pay the premiums
thereon. Once the principal balance of the Note has been
reduced below $1,000,000, ITF or Sellers (at Sellers' choice)
will have the option to purchase the policy.
10. Resignation of Officers and Directors. At Closing,
W. M. Beard and Herb Mee, Jr. will resign as Directors of ITF
and Herb Mee, Jr., Rebecca G. Witcher and Gail R. Kautz will
resign as Officers of ITF.
11. Additional Documentation to be Furnished Prior to
Closing. Beard agrees to furnish the following prior to
Closing:
Closing Documents. Upon the execution of this
Agreement Beard will proceed expeditiously with the
preparation of the necessary Closing Documents including, but
not limited to, the following:
Note A
Note B
Irrevocable Proxy
Loan Agreement
Such mortgages, security agreements, etc. as may be
necessary to give Beard a perfected security interest in the real
property, equipment at C&L and the ITF Shares.
12. Conduct of Business. From the date hereof to the
Closing of the Transaction, ITF will operate its business only
in the ordinary course.
13. Closing and Effective Date. The effective date of
the Transaction will be as of March 31, 1999. Closing of the
Transaction will occur on April 16, 1999 or as soon thereafter
as possible. If such Closing does not occur on April 16, it
will occur within the next seven (7) days thereafter and be
treated for both tax and financial purposes as if such Closing
had occurred on March 31, 1999.
14. Binding Effect. It is the intent of the parties
that the Transaction shall become binding obligations of each
of the parties hereto upon the occurrence of all of the
following:
A. Beard and ITF have received the Closing
Documents and acknowledged that same are in a
form reasonably acceptable to them.
If the foregoing meets with your approval, please execute a
counterpart of this letter at the places provided below and
return one copy to us. Upon receipt, we will promptly
instruct our attorneys to commence preparation of the Closing
Documents.
Very truly yours,
THE BEARD COMPANY
By HERB MEE, JR.
Herb Mee, Jr., President
ACCEPTED this 13 day of April, 1999.
INTERSTATE TRAVEL FACILITIES, INC.
By TOBY B. TINDELL
Toby B. Tindell, President
TOBY B. TINDELL
Toby B. Tindell
CRISTIE R. TINDELL
Cristie R. Tindell