Exhibit 10.15
BT COMMERCIAL CORPORATION MEESPIERSON N.V., New York Agency
14 Wall Street, 3rd Floor 445 Park Avenue
New York, New York 10005 New York, New York 10022
BANKERS TRUST COMPANY
One Bankers Trust Plaza
130 Liberty Stree
New York, New York 10006
May 25, 1995
Indian Oil Company
South Seventh Street
Lawrenceville, Illinois 62439
Attention: Mr. William S. Sudhaus
BT Commercial Corporation ("BTCC") and MeesPierson N.V., New York Agency
("MP") are pleased to offer to make available to Indian Oil Company, an Illinois
corporation, a discretionary line of credit (the "Facility") on the following
terms and subject to the following conditions.
Borrower: Indian Oil Company ("Borrower"), an Illinois corporation.
Lenders: BTCC and MP (the "Line of Credit Lenders" or the
"Lenders"). The Line of Credit Lenders pro rata shares
of all loans and letters of credit shall be 50% each.
Issuing Lender: Bankers Trust Company ("BTCo" or the "Issuing Lender").
Administrative Agent
and Collateral Agent: BTCC (the "Administrative Agent" and the "Collateral
Agent," collectively the "Agent" and, together with the Line
of Credit Lenders and the Issuing Lender, the "Lender
Parties").
Amount: Up to $30 million (the "Total Facility") in revolving loans
("Loans") and standby letters of credit ("Letters of Credit"
and, together with the Loans, "Extensions of Credit"); to be
borrowed/issued, at the request of Borrower, BUT ONLY
IF EACH LINE OF CREDIT LENDER, IN ITS SOLE DISCRETION, SO
AGREES, from time to time prior to the Scheduled Termination
Date or such earlier date as of which either Line of Credit
Lender notifies Borrower that the Facility has been terminated
by such Lender, for the purposes set forth below.
For purposes hereof, Scheduled Termination Date shall
mean the earlier of (x) the occurrence of the termination of
the agreement referred to in item 5 of Annex 2 (giving effect
to any extension thereof) in accordance with its terms and
(y) August 31, 1995.
Extensions
of Credit: Extensions of Credit shall be made in accordance with
Annex 1 hereto.
Borrowing
Restrictions: In furtherance, but not in limitation of the other provisions
contained herein, no Loan may be borrowed hereunder if (a)
the aggregate principal amount of the Loan so requested to
be borrowed together with all other outstanding requests for
Loans and all other Loans then outstanding hereunder
would exceed (b) $25 million minus the Cumulative Step-
down Amount (the "Loan Sublimit"). In furtherance, but
not in limitation of the other provisions contained herein, no
Extension of Credit shall be made hereunder if (a) the
aggregate principal amount of the Loan so requested to be
borrowed or the stated amount of the Letter of Credit so
requested to be issued, together with all other outstanding
requests for Loans and Letters of Credit and all other
outstanding Loans, the undrawn stated amount of any
outstanding Letters of Credit and any unreimbursed
drawings under any Letter of Credit hereunder, would
exceed (b) the lesser of the Total Facility and the Borrowing
Base then in effect; provided that to the extent the proceeds
of a Loan are to be used to pay the purchase price of
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Eligible Contingent Inventory to the seller thereof at the
time title thereto transfers to Borrower, so long as (i) the
Notice of Borrowing applicable to such Loan identifies the
specific Letter of Credit supporting such Eligible Contingent
Inventory and (ii) the proceeds of such Loan are paid
directly by the Administrative Agent to such seller (as
specifically authorized by such Notice of Borrowing) and
(iii) after such payment, the beneficiary of such letter of
credit will no longer be able to draw thereunder, the Letter
of Credit Usage shall be concurrently reduced on a dollar-
for-dollar basis with the making of such Loan, with the
result being that such reduced Letter of Credit Usage and
such Loan will not be treated as outstanding at the same
time for purposes of this Letter Agreement and Annex 1
hereto.
For purposes hereof, "stated amount," in respect of any
Letter of Credit, means, at any date of determination, the
face amount of such Letter of Credit; provided that the
amount by which the original face amount of such Letter of
Credit exceeded the original amount of the underlying
obligation shall no longer be deemed outstanding if the
Lenders are satisfied that the underlying obligation
supported by such Letter of Credit has been paid (and
permanently reduced) in full and that no further drawings
will be made on such Letter of Credit.
For purposes hereof, "Borrowing Base" means, at any date
of determination, an amount equal to the Advance Rate for
the applicable item of Eligible Cash Equivalents, Eligible
Accounts Receivable and Eligible Inventory described
below, multiplied, in the case of Eligible Cash Equivalents,
by the face amount thereof, in the case of Eligible Accounts
Receivable, by the amount thereof and, in the case of
Eligible Inventory, by the Market Value thereof for all such
items. Market Values and Advance Rates will be as
determined in the sole discretion of the Line of Credit
Lenders with Market Value being tied to publicly published
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benchmarks described in Annex A to Schedule II to the
form of Borrowing Base Certificate attached hereto as
Exhibit B and Advance Rates expected to be not in excess
of the following (capitalized terms used in the following list
but not defined in this Letter Agreement shall have the
meanings assigned to them in Schedule II to Exhibit B
hereto):
(a) 100% of Eligible Cash; plus
(b) 100% of Eligible Cash Equivalents; plus
(c) 80% of Eligible Accounts Receivable supported by
irrevocable letters of credit; plus
(d) 80% of all other Eligible Accounts Receivable not
included in clause (e) below, to the extent covered by
credit insurance with an aggregate deductible and co-
insurance of not more than the sum of (i) 10% of each
Account plus (ii) $20,000 and not supported by
irrevocable letters of credit (subject to a maximum of
$5 million, after application of such 80% figure); plus
(e) 80% of Eligible Accounts Receivable pursuant to the
Louis Dreyfus Agreement to the extent covered by
credit insurance with an aggregate deductible co-
insurance of not more than the sum of (i) 10% of each
Account plus (ii) $20,000 and not supported by
irrevocable letters of credit (subject to a maximum of
$10 million, before giving effect to such 80% figure);
plus
(f) 50% of Eligible Hedged Intermediate Feedstocks
Inventory (subject to a limit to be determined by each
Line of Credit Lender in its sole discretion); plus
(g) 50% of Other Eligible Hedged Crude Inventory not
included in clause (h) below (subject to a limit to be
determined by each Line of Credit Lender in its sole
discretion) minus 3,000 barrels; plus
(h) 75% of Eligible Hedged Caroline Condensate
Inventory and Other Eligible Hedged Crude Inventory
mutually agreed upon by Borrower and the Line of
Credit Lenders; plus
(i) 80% of Eligible Hedged Refined Products Inventory;
plus
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(j) 100% of (i) the stated amount of each Letter of Credit
supporting such Eligible Contingent Inventory, which
letters of credit are described in clause (c) of the
definition of Eligible Contingent Inventory or (ii) the
amount of cash prepaid (up to $1 million in the
aggregate) in respect of such Eligible Contingent
Inventory; plus
(k) 80% of Eligible Hedged Inventory In-Transit that is
not Eligible Hedged Caroline Condensate Inventory;
minus
(l) 100% of Unrealized Losses on Hedging Contracts or
Positions; plus
(l) 100% of Unrealized Gains on Hedging Contracts or
Positions; plus
(m) 75% of Eligible Hedged Caroline Condensate
Inventory-in-Transit; plus
(n) 80% of Eligible Refined Products Exchange
Agreements; [minus] or [plus]
(o) 100% of the net Unrealized [Loss] or [Gain] on
Future Commitments;
all as set forth in the most recent Borrowing Base
Certificate that was both duly delivered by Borrower and
satisfactory to the Line of Credit Lenders in their sole
discretion, and all without duplication. If, at any time,
Borrower fails to deliver a Borrowing Base Certificate
satisfactory to the Line of Credit Lenders and the
Administrative Agent as required herein, then the
Borrowing Base for the relevant determination shall be
deemed to be zero.
For purposes hereof, Cumulative Step-down Amount
means (a) on and after June 30, 1995, $10 million and
(b) on and after July 31, 1995, $15 million.
Purpose: To finance short-term working capital needs of Borrower
and fees and expenses incurred in connection with entering
into the Line Documents (as defined in Section 3 of the
Security Agreement) and the bank commitment and high
yield debt highly confident letters in connection with the
Permanent Financing.
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Guaranty: The obligations of Borrower to the Lender Parties under the
Line Documents shall be guaranteed (as the same may be
amended, amended and restated, supplemented or otherwise
modified from time to time, the Guaranty) by Castle
Energy Corporation, a Delaware corporation (Parent) and
by Castle Resources Production Company (CPRC) and
Castle Production Company (CPC).
Collateral: (a) The obligations of Borrower to the Lender Parties under
the Line Documents shall be secured by all tangible and
intangible personal property and assets of Borrower
(including, without limitation, inventory, accounts, hedging
contracts, receivables and any platinum catalyst)
(collectively, the "Borrower Collateral"), as more
specifically described in the Borrower Security Agreement
being entered into simultaneously herewith by Borrower in
favor of the Collateral Agent (the "Security Agreement");
and (b) the obligations of Parent, CPRC and CPC
(collectively, the Guarantors) to the Lender Parties under
the Guaranty shall be secured by a pledge of the
Guarantors (i) limited and general partnership interests in
Castle Texas Production L.P., (ii) capital stock of Castle
Exploration Company, Inc., CPRC and CPC and (iii)
common stock of Borrower (collectively, the Parent
Collateral and, together with the Borrower Collateral,
the Collateral), as more specifically described in the
Guarantors Pledge Agreement being entered into
simultaneously herewith by the Guarantors in favor of the
Collateral Agent (the "Pledge Agreement" and, together
with the Security Agreement and any Lock-Box agreement,
the "Collateral Documents").
Interest Rate: The principal amount of Loans outstanding hereunder from
time to time shall bear interest at a rate per annum equal to
the Prime Rate (as defined below) plus 2%. Interest shall be
payable on such amounts on the last day of each calendar
month, upon any payment (other than automatic payments
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from the Loan Account), upon demand for repayment and
on the Scheduled Termination Date if any such amounts are
outstanding at such time. Any principal or interest
payments on such amounts not paid when due shall bear
interest at a rate which is 2.0% per annum in excess of the
rate otherwise payable under the note or notes executed in
connection herewith.
For purposes hereof, "Prime Rate" means, at any time, the
higher of:
(i) the rate announced by BTCo from time to time at
its principal office as its prime lending rate for domestic
unsecured commercial loans, the Prime Rate to change
when and as such prime lending rate changes; it being
understood that (A) the prime lending rate is a reference
rate and does not necessarily represent the lowest or best
rate actually charged to any customer; and (B) either or
both of the Line of Credit Lenders may make commercial or
other loans at rates of interest at, above or below the prime
lending rate; and
(ii) the Federal Funds Rate then in effect plus 1/2% of
1%.
Fees: Borrower shall pay to the Administrative Agent, for the pro
rata account of the Line of Credit Lenders, an Arrangement
Fee in the aggregate amount of $1 million in cash, which
amount shall be due and payable in full upon the execution
and delivery of this Letter Agreement (the Closing).
Borrower shall pay to the Administrative Agent, for its own
account, an Administrative Fee in the aggregate amount of
$100,000 in cash, which amount shall be due and payable in
full upon the Closing.
Borrower shall pay to the Administrative Agent, for the pro
rata account of the Line of Credit Lenders, a line letter fee
in an amount in cash equal to 0.50% per annum of the daily
average Differential, which amount shall be due and payable
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in arrears on the last day of each month after the Closing
and on the date this Letter Agreement is terminated or
expires and shall accrue from the date of the Closing.
Borrower shall pay to the Administrative Agent, for the pro
rata account of the Line of Credit Lenders, a fee in respect
of each Letter of Credit (the Letter of Credit Fees) in an
amount in cash equal to the greater of (a) 0.40% (flat) of
the stated amount of such Letter of Credit and (b) $400.
Each such Letter of Credit Fee shall be due and payable
monthly in arrears. Ten days after the earlier of the date
upon which the Letter of Credit is canceled (undrawn) or
the date the underlying obligation with respect to a Letter of
Credit is paid in full in respect of such Letter of Credit (such
earlier date being referred to as the Determination Date),
the Borrower shall multiply 2.50% by the face amount of
the Letter of Credit multiplied by the quotient obtained by
dividing the number of days beginning on the date such
Letter of Credit was issued and ending on the Determination
Date in respect of such Letter of Credit by 360. If such
amount is higher than the Letter of Credit Fee paid,
Borrower shall promptly pay in cash the shortfall amount to
the Administrative Agent, for the pro rata account of the
Line of Credit Lenders.
Borrower shall pay to the Issuing Lender, for its own
account, in respect of each Letter of Credit, a Facing Fee in
an amount in cash equal to 0.25% per annum of the
undrawn stated amount of such Letter of Credit, which
amount shall accrue through and including the
Determination Date in respect of such Letter of Credit and
shall be due and payable in arrears on the last day of each
month after the issuance of such Letter of Credit.
For purposes hereof, Differential means, at any time, $30
million minus (a) the aggregate principal amount of Loans
then outstanding (the Loan Usage) minus (b) the
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aggregate undrawn stated amount of all Letters of Credit
then outstanding and the aggregate amount of unreimbursed
drawings under all Letters of Credit at such time (the
Letter of Credit Usage).
Computation of Interest
and Fees; Payment
of Amounts by Agent: Interest and, when applicable, fees shall be computed on the
basis of a 360-day year and for the actual number of days
elapsed. Reasonably promptly upon its receipt of any
amount for the account of a Line of Credit Lender or the
Issuing Lender (and at least weekly in the case of principal),
the Administrative Agent shall remit such amount to or
credit the account of such Line of Credit Lender or the
Issuing Lender, as the case may be, in respect thereof.
Mandatory Repayments: Borrower shall immediately repay Loans to the extent the
Loan Usage at any time exceeds the Loan Sublimit then in
effect. Borrower shall immediately repay Loans and
thereafter Adequately Collateralize (as defined below)
Letters of Credit to the extent the Loan Usage plus Letter
of Credit Usage at any time exceeds the lesser of the Total
Facility and the Borrowing Base then in effect. Borrower
shall immediately reimburse the Issuing Lender for a draw
on any Letter of Credit. Borrower directs the
Administrative Agent to make Loans, subject to availability
under the Loan Sublimit and the Borrowing Base (but not
subject to the discretion of the Line of Credit Lenders), for
any such reimbursements in accordance with the terms
hereof.
The Loan Account (as defined in Annex 1 hereto) shall be
credited and charged as provided in said Annex 1.
In addition, (a) the aggregate amounts outstanding
hereunder from time to time shall be payable ON DEMAND
by either Line of Credit Lender in its sole discretion
(notwithstanding compliance by Borrower with all of the
terms hereof and all of the terms of the documents entered
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into in connection herewith (collectively, the "Line
Documents")) and, upon such demand, all outstanding
Letters of Credit shall be cash collateralized in an amount at
least equal to 103% of the stated amount thereof (or
supported with a "back-to-back" letter of credit reasonably
satisfactory to each Line of Credit Lender and the Issuing
Lender) (Adequately Collateralized) and (b) if no prior
demand is made by either Line of Credit Lender, all
amounts outstanding hereunder shall be repaid in full and all
outstanding Letters of Credit shall be Adequately
Collateralized on the earliest of (i) the date of execution,
delivery, closing and funding of definitive financing
agreements in an amount sufficient to pay the Lenders in full
(the Permanent Financing), including, without limitation,
pursuant to the proposed credit facility under which
revolving loans and letters of credit in an aggregate
principal amount and/or stated amount of up to $125 million
are to be made available to CORE Refining Corporation
(CORE) by BTCC or any of its affiliates and other
financial institutions as contemplated by the Commitment
Letter dated May 25, 1995 among CORE and BTCC, (ii)
the date on which there is a change of control in a
controlling interest in the record or beneficial ownership of
Indian Refining Limited Partnership, an Illinois Limited
Partnership (IRLP) (including the sale of all or
substantially all its assets) and (iii) the Scheduled
Termination Date, provided that any Letter of Credit issued
to support the August 1995 shipment of Caroline
Condensate pursuant to IRLP s Long-Term Supply
Agreement shall be permitted to be outstanding and be
subject to the terms hereof until September 30, 1995 so
long as it is Adequately Collateralized. Upon and after the
occurrence of any of the events described in the preceding
sentence, none of the Lender Parties shall make any
Extension of Credit hereunder.
Notwithstanding the foregoing, in the event of a demand by
either Line of Credit Lender for payment hereunder or
under any note evidencing the indebtedness hereunder (the
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Notes) prior to the Scheduled Termination Date, the Line
of Credit Lenders or the Administrative Agent shall inform
(a Demand Notice) Borrower of the reason (if any) for
the making of such demand and, if (a) there is no reason or
(b) the reason is unrelated to (i) Borrower or any
Guarantor, (ii) Borrower s or any Guarantor s business,
operations, properties, assets (including the Collateral),
prospects or condition (financial or other), or (iii) a Line of
Credit Lender having otherwise determined, in its sole
discretion, that it has become after the date hereof less
secure as to the likelihood of being repaid in full all amounts
owing to it under the Line Documents when due or (iv) the
breach by Borrower or any Guarantor of any of its
obligations under any of the Line Documents, then
Borrower shall not be required to honor such demand for
payment until the passage of ten calendar days. The
obligation, if any, of any Lender Party under applicable law
to provide notice of foreclosure actions or remedies may be
given with any Demand Notice.
Upon the occurrence of an Insolvency Event in respect of
Borrower, any Guarantor or IRLP (collectively, the
Relevant Parties), all amounts owing hereunder (whether
principal, interest, fees or otherwise) shall automatically,
without any action on the part of any Lender Party, be and
become immediately due and payable and Borrower shall
thereupon be required to cause all outstanding Letters of
Credit to be Adequately Collateralized.
For purposes hereof, Insolvency Event shall mean, in
respect of any Relevant Party, the occurrence of any of the
following: such Relevant Party shall make an assignment
for the benefit of, or composition with, creditors or shall
become insolvent or be unable, or generally fail, to pay its
debts when due; or any bankruptcy, insolvency or other
proceeding for the relief of financially distressed debtors
shall be commenced with respect to such Relevant Party, or
a receiver, liquidator, custodian or trustee shall be appointed
for such Relevant Party or a substantial part of its assets,
and, if any of the same shall occur involuntarily as to such
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Relevant Party, it shall not be dismissed, stayed or
discharged within 60 days; or if any order for relief shall be
entered against such Relevant Party under Title 11 of the
United States Code entitled Bankruptcy ; or such Relevant
Party shall take any action to effect, or which indicates its
acquiescence in, any of the foregoing.
The making of a demand for payment by either Line of
Credit Lender, the occurrence of the Scheduled Termination
Date, and the automatic acceleration of all amounts owing
under the Line Documents described in the fifth paragraph
of this section Mandatory Payments, are each a Demand
Event for purposes of the Line Documents.
Voluntary Repayments: The amount outstanding from time to time hereunder may
be repaid in whole or in part from time to time on one
business day's notice from Borrower to the Line of Credit
Lenders and the Borrower to Administrative Agent, with
accrued interest to the date of prepayment on the amount
repaid.
Order of Payments: All payments received following maturity of the Notes (by
demand, acceleration or otherwise), including charges
against the Loan Account, shall be applied first to pay
unpaid fees, expenses and other amounts owing to the
Collateral Agent under the Line Documents, second to pay
unpaid fees, expenses and other amounts to the
Administrative Agent under the Line Documents, third to
pay unpaid fees, expenses and other amounts (excluding
unreimbursed draws on Letters of Credit) to the Issuing
Lender, fourth to pay (ratably) fees, expenses and other
amounts to the Line of Credit Lenders, fifth to pay (ratably)
unreimbursed draws on Letters of Credit and interest
thereon, with interest paid first, sixth to pay (ratably) unpaid
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interest on the Loans, seventh to pay (ratably) unpaid
principal of the Loans, eighth to cash collateralize undrawn
Letters of Credit outstanding and ninth to pay such other
obligations or be deposited to the account of such party or
parties as Borrower shall direct.
Capital Adequacy: If either Line of Credit Lender shall have reasonably
determined in good faith that the adoption or effectiveness
after the date hereof of any applicable law, rule or
regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or
administration thereof, or compliance by such Line of Credit
Lender or its holding company with any request or directive
regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable
agency has or would have the effect in such Line of Credit
Lender's reasonable opinion of reducing the rate of return
on its or its holding company s capital or assets as a
consequence of this line of credit to a level below that which
it could have achieved but for such adoption, effectiveness,
change or compliance (taking into consideration its then
current policies with respect to capital adequacy), such Line
of Credit Lender will notify Borrower of such reduction
and, if Borrower does not prepay the amount then
outstanding hereunder in full (which payment may be made
at the option of Borrower), including such additional
amount or amounts, if any, as will compensate such Line of
Credit Lender for such reduction) upon receipt of such
notice from such Line of Credit Lender, then from time to
time, within 10 days of demand by such Line of Credit
Lender, Borrower shall pay to such Line of Credit Lender
such additional amount or amounts as will compensate such
Line of Credit Lender for such reduction (after such Line of
Credit Lender shall have allocated the same fairly and
equitably among all of its customers of any class generally
affected thereby). A certificate as to the amount of such
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cost, submitted to Borrower and the Administrative Agent
by such Line of Credit Lender, shall, absent manifest error,
be final, conclusive and binding for all purposes.
Payments Free and
Clear of Taxes, Etc.: (a) Any and all payments made by Borrower hereunder to
or for the benefit of any Lender Party shall be made free and
clear of and without deduction for any and all present or
future taxes (other than any taxes imposed on the gross
receipts or income of any Lender Party). If Borrower shall
be required by law to deduct any such taxes from or in
respect of any sum payable hereunder, to or for the benefit
of any Lender Party (i) the sum payable shall be increased as
may be necessary so that after making all required
deductions of such taxes (including deductions of taxes
applicable to additional sums payable under this Section)
such Lender Party, as the case may be, receives an amount
equal to the sum it would have received had no such
deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount so
deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any present or
future stamp, documentary, excise, privilege, intangible or
similar levies that arise at any time or from time to time
(i) from any payment made under any and all Line
Documents, (ii) from the transfer of the rights of any Lender
Party under any Line Documents to any transferee, or
(iii) from the execution or delivery by Borrower of, or from
the filing or recording or maintenance of, or otherwise with
respect to the exercise by the Lender Parties of their rights
under, any and all Line Documents (hereinafter referred to
as "Other Taxes").
(c) Borrower hereby indemnifies each Lender Party and the
Agent with respect to any taxes referred to in clauses (a)
and (b) above paid by such Lender Party or the Agent, as
the case may be, and any liability (including penalties,
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interest and expenses) arising solely therefrom or with
respect thereto. Payment of this indemnification shall be
made within 30 days from the date such Lender Party
certifies and sets forth in reasonable detail the calculation
thereof as to the amount and type of such taxes. Any such
certificate submitted by the Lender Party in good faith to
the Borrower shall, absent manifest error, be final,
conclusive and binding on all parties.
(d) Within thirty days after having received a receipt of
taxes, Borrower will furnish to the applicable Lender Party,
at its address on the signature pages hereof, the original or a
certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other
agreement of Borrower hereunder, the agreements and
obligations of Borrower contained in this section shall
survive the termination of this Letter Agreement.
Borrowing Base
Certificate, Notice
and Inspection
Requirements: Borrower shall deliver to the Line of Credit Lenders and the
Administrative Agent by 5:00 p.m. New York City time on
(i) the day before the initial advance hereunder and (ii) each
day thereafter a Borrowing Base Certificate in the form
attached hereto as Exhibit B (a "Borrowing Base
Certificate"), reporting the Borrowing Base as of the close
of business on the business day prior to such day of
delivery, together with such financial and other information
regarding Borrower as the Line of Credit Lenders or the
Administrative Agent may reasonably request.
Borrower shall deliver to the Line of Credit Lenders and the
Administrative Agent the following financial information:
(a) unaudited quarterly financial statements of Parent within
45 days of the end of each of its fiscal quarters, prepared in
accordance with generally accepted accounting principles
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(GAAP) and on a basis consistent with its audited
financial statements for the most recently completed fiscal
year (the Annual Financial Statements), certified by its
President or Chief Financial Officer as true and complete;
(b) unaudited monthly financial statements of each of
Borrower and Parent within 45 days of each month-end,
prepared in accordance with GAAP (except as to the
absence of footnote disclosure and other year-end audit
adjustments as disclosed therein) and on a basis consistent
with the Annual Financial Statements, certified by such
entity s President or Chief Financial Officer as true and
complete; and (c) such other reports, documents and
financial statements as the Line of Credit Lenders or the
Administrative Agent may request from time to time,
including, without limitation, relating to inventory, accounts
receivable and hedging positions.
In addition, and without limiting the discretion of either
Line of Credit Lender to demand payment hereunder of all
obligations owing from time to time under the Line
Documents, Borrower shall promptly notify the
Administrative Agent of (i) any condition or event (a) which
has had or is reasonably likely to have a material adverse
effect on the business, operations, properties, assets,
prospects or condition (financial or other) of Borrower or
any Guarantor, or (b) which is reasonably likely to result in
a material diminution in the value of the Collateral, (ii) any
default or alleged default with respect to any instrument of
indebtedness of Borrower or any Guarantor, (iii) any
litigation, proceeding, inquiry or other action seeking an
injunction or other restraining order, damages or other relief
by any governmental authority or other person or entity or
investigation by any governmental authority or judgment,
order, injunction or other restraint pending or existing with
respect to or known to Borrower to be threatened with
respect to Borrower or any Guarantor or any of their
respective assets or any of the transactions contemplated
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hereby which is reasonably likely to have a material adverse
effect on the business, operations, properties, assets,
prospects or condition (financial or other) of Borrower or
any Guarantor; (iv) (a) the Collateral Agent s security
interests in the Collateral for any reason not constituting
valid, perfected and enforceable first priority security
interests subject to no other security interest in favor of any
other person or entity, other than Permitted Liens (as
defined in the Collateral Documents), and (v) the
occurrence of a Change of Control with respect to
Borrower or IRLP. For purposes hereof, "Change of
Control" shall mean any of (i) the failure of Parent to own
directly 100% of the common stock of Borrower or directly
or indirectly 100% of the limited and general partnership
interests of IRLP, (ii) the failure of Parent or its immediate
assignee to own directly 100% of the preferred stock (or the
right to acquire the preferred stock) of Borrower, (iii) the
failure of Parent to maintain, at all times, the ability, directly
or indirectly, to elect all of the members of the Board of
Directors of Borrower or IRLP s general partner or (iv) the
death, adjudicated incompetency, bankruptcy or insolvency
of Mr. William S. Sudhaus.
The Eligible Inventory will be subject to inspection at least
monthly by an independent inspector acceptable to the Line
of Credit Lenders, at the expense of Borrower. A copy of
the inspector s report of each such inspection shall be
delivered promptly after compilation thereof to the Line of
Credit Lenders and the Administrative Agent.
The Line of Credit Lenders or their designee shall be
permitted to perform an audit of the Borrowing Base at
least quarterly, at Borrower s expense.
Notwithstanding anything to the contrary in any of the Line
Documents, all notices, requests for loans or letters of
credit, requests for consents, requests for waivers or
amendments, financial statements, documents and
agreements that are delivered by the Borrower or any
17
Guarantor to any Lender Party pursuant to any of the Line
Documents shall also be furnished by the Borrower at the
same time to all of the Lender Parties.
Covenants: Without limiting the discretion of either Line of Credit
Lender to demand payment hereunder of all obligations
owing from time to time under the Line Documents,
Borrower covenants to and agrees with the Lender Parties
as follows:
Borrower shall not amend or consent to any amendment or
waiver of any provision of any of the agreements,
instruments or documents referred to in any of the items set
forth in Annex 2 hereto. All such agreements, instruments
or documents shall remain in full force and effect until all
amounts outstanding under any of the Line Documents are
paid in full and all outstanding Letters of Credit have
expired or are canceled (undrawn).
Borrower shall not engage in any line of business other than
that in which it shall be engaged in on the date hereof.
Borrower shall not incur any indebtedness for money
borrowed or grant a lien on any of its assets (other than
pursuant to the Line Documents) or guarantee or otherwise
support or be contingently liable for the obligations of a
third party.
Borrower shall not declare or pay any dividend or other
distribution on its capital stock.
Borrower shall not merge or consolidate with or into any
Person.
Conditions: This Letter Agreement shall not become effective until all of
the conditions set forth in Annex 2 hereto are satisfied or
waived in writing by the Line of Credit Lenders.
Expenses: Whether or not the transactions contemplated hereby are
consummated and regardless of whether or not any Loans
18
are made or Letters of Credit issued, Borrower agrees to
reimburse the Lender Parties, upon demand, for all rea-
sonable fees and disbursements of their special counsel,
Dorsey & Whitney and Sullivan & Worcester, any local
counsel retained by them, and all of their respective
reasonable travel and other expenses incurred in connection
with any of the Line Documents and, following the
occurrence of a Demand Event, all allocated costs and
expenses of internal counsel to any of the Lender Parties or
any of their respective affiliates.
Indemnity: Borrower shall indemnify and hold harmless each of the
Lender Parties and each of their respective present or future
directors, officers, employees, agents and affiliates (each an
"indemnified entity or person") in connection with any
losses, claims, damages, liabilities or other reasonable
expenses to which such indemnified entities or persons may
become subject, insofar as such losses, claims, damages,
liabilities (or actions or other proceedings commenced or
threatened in reaction thereto) or other expenses arise out
of or relate to or result from this Letter Agreement, the
making of the Extensions of Credit contemplated hereby or
any primary or secondary syndication thereof, or in any way
arising from any use or intended use of the proceeds of any
of the Extensions of Credit contemplated hereby (including,
without limitation, arising out of or relating to any
environmental matter), and to reimburse each indemnified
entity or person for any reasonable legal or other expenses
incurred in connection with (x) investigating, preparing to
defend, defending or participating in any such loss, claim,
damage, liability or action or other proceeding (whether or
not any such indemnified entity or person is a party to any
action or proceeding out of which any such expense arises)
or (y) any claim, action, suit, investigation or proceeding
relating to Borrower or any Guarantor or affiliate of any of
the foregoing, whether the indemnified person or entity is a
party thereto or target thereof or, if not, in which the
indemnified person or entity is subpoenaed or required to
19
produce documents; provided, however, that Borrower shall
not be liable for any such loss, claim, damage, liability or
other expense to any indemnified entity or person to the
extent that it has been determined by a final decision (after
all appeals and the expiration of time to appeal) by a court
of competent jurisdiction that such loss, claim, damage,
liability or other expense resulted from the gross negligence
or willful misconduct of such indemnified entity or person.
To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public
policy, Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law,
to the payment and satisfaction of all such losses, claims,
damages, liabilities or other expenses incurred by any
indemnified entity or person. Borrower's obligation to
indemnify such indemnified entities or persons and pay such
expenses and to provide such contribution shall remain
effective regardless of whether any Extensions of Credit are
made hereunder. None of the Lender Parties shall be
responsible or liable to any other person or entity for
special, indirect, consequential or punitive damages which
may be alleged as a result of this Letter Agreement.
Appointment and Duties
of Administrative
Agent and Collateral
Agent: BTCC is hereby appointed Administrative Agent and Collateral
Agent under each of the Line Documents, having such rights and
responsibilities and on such other terms as are set forth in
Annex 3 hereto.
Notices: Any notice or other communication required or permitted to
be given hereby or in connection herewith shall be in writing
and may be personally served, faxed, telexed or sent by
United States mail and shall be deemed to have been given
when delivered in person, upon receipt of fax or telex or
20
four business days after depositing it in the United States
mail, registered or certified, with postage prepaid and
properly addressed; provided that notices to the
Administrative Agent shall not be effective until received by
the Administrative Agent. For purposes hereof, the
addresses of the parties hereto (until notice of a change
thereof is delivered in writing by either party to the other)
shall be as set forth under each party's name on the
signature page hereto.
Assignments and
Participations: This Letter Agreement, the Notes, each other Line
Document, the Loan Usage and the Letter of Credit Usage
are assignable at any time by each of the Line of Credit
Lenders, with the prior written consent of the other Line of
Credit Lender and Borrower, which shall not be
unreasonably withheld or delayed; provided that any such
assignment shall be in a minimum amount of $5 million
(allocated pro rata between then outstanding Loan Usage
and Letter of Credit Usage). Any such assignment may be
made by a Line of Credit Lender without regard to amount
or consent if made to an affiliate of such Line of Credit
Lender or if made after the occurrence of a Demand Event.
The rights and obligations of Borrower and any Guarantor
or Pledgor under any Line Document are not assignable
without the prior written consent of each Line of Credit
Lender.
Any Line of Credit Lender may at any time sell
participations in its share of the Loan Usage, the Letter of
Credit Usage and any future Extension of Credit on such
terms as it shall desire, without consent of any other Person.
Miscellaneous: All payments hereunder and under the Note shall be made to
the Lender Parties in freely transferable U.S. dollars and in
same day funds without set-off or counterclaim.
No provision of any Line Document may be waived,
amended, supplemented or otherwise modified except by a
21
written instrument executed by Borrower and both Line of
Credit Lenders.
No failure by any Lender Party to exercise, and no delay in
exercising, any right hereunder or under any other Line
Document shall operate as a waiver thereof; nor shall any
exercise or partial exercise of any right hereunder or under
any other Line Document preclude any other further
exercise thereof or the exercise of any other right. The
remedies provided are cumulative and not exclusive of any
remedies provided by law.
In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such
rights, each Lender Party is hereby authorized at any time
and from time to time, without notice to Borrower or to any
other person or entity, any such notice being hereby
expressly waived by Borrower, to setoff and to appropriate
and apply any and all deposits (general or special) and any
other indebtedness at any time held or owing by such
Lender Party to or for the credit or the account of Borrower
against and on account of the obligations and liabilities of
Borrower to the Lender Parties under this Letter Agreement
or the Notes, irrespective of whether or not such Lender
Parties shall have made any demand hereunder or
thereunder and although said obligations, liabilities or
claims, or any of them, shall be contingent or unmatured.
For purposes hereof, "Expenses" shall mean all costs and
expenses of the Lender Parties incurred in connection with
the Line Documents and the transactions contemplated
therein, including, without limitation, (i) the costs of
conducting record searches, examining collateral, opening
bank accounts and lockboxes, depositing checks, receiving
and transferring funds (including charges for checks for
which there are insufficient funds), and other costs of
administration and enforcement of the rights of the Lender
Parties under the Line Documents, (ii) the reasonable fees
22
and expenses of legal counsel and paralegals (including the
allocated cost of internal counsel and paralegals),
accountants, appraisers and other consultants, experts or
advisors retained by the Lender Parties conducting reviews
or audits of the Borrowing Base, the Collateral and
applicable insurance or as mutually agreed, or, after the
occurrence of a Demand Event, for any reason,
(iii) reasonable fees and expenses incurred in connection
with the assignments of or sales of participations in the line
of credit granted under the Letter Agreement, (iv) fees and
taxes in connection with the filing of financing statements,
(v) the reasonable costs of preparing and recording
Collateral Documents, releases of Collateral, and waivers,
amendments, and terminations of any of the Line
Documents and (vi) all other fees and expenses set forth in
the Letter Agreement.
For purposes hereof, "Obligations" shall mean the unpaid
principal and interest hereunder and under the Notes
(including interest accruing on or after the occurrence of an
Insolvency Event, whether or not an allowed claim),
reimbursement obligations under Letters of Credit,
Expenses and all other obligations and liabilities of
Borrower to the Lender Parties under the Line Documents.
For purposes hereof, "Person" shall mean any individual,
sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation,
institution, entity, party or government (including any
division, agency or department thereof), and, as applicable,
the successors, heirs and assigns of each.
This Letter Agreement is solely for the benefit of Borrower
and may not be relied upon by any person or entity other
than Borrower.
The descriptive headings of this Letter Agreement are
inserted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Letter
Agreement.
23
THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS. ALL DISPUTES AMONG BORROWER ON THE ONE HAND AND ANY OF THE
LENDER PARTIES ON THE OTHER SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS
LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY
BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON BEHALF OF THE LINE OF CREDIT
LENDERS, AND EACH LINE OF CREDIT LENDER SHALL HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST BORROWER OR ITS PROPERTY IN ANY
LOCATION REASONABLY SELECTED BY THE AGENT OR SUCH LENDER IN GOOD FAITH TO ENABLE
THE AGENT OR SUCH LENDER TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT
OR OTHER COURT ORDER IN FAVOR OF THE AGENT OR SUCH LENDER. BORROWER WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT OR
SUCH LENDER HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS. EACH OF THE
PARTIES HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY WITH REGARD TO ANY
MATTER RELATING TO ANY LINE DOCUMENT OR OTHERWISE.
NONE OF THE LENDER PARTIES SHALL HAVE ANY LIABILITY TO BORROWER FOR LOSSES
SUFFERED BY THE BORROWER IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS LETTER
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER
BINDING ON SUCH PARTY, THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. BORROWER HEREBY WAIVES ALL
FUTURE CLAIMS AGAINST ANY OF THE LENDER PARTIES FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES.
Subject to any Adequately Collateralized Letters of Credit continuing to be
outstanding in accordance with their terms, this Letter Agreement and the line
of credit available hereunder will expire on the Scheduled Termination Date,
UNLESS EARLIER TERMINATED BY EITHER LINE OF CREDIT LENDER IN ITS SOLE
DISCRETION.
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Kindly indicate your agreement to the above by signing and returning to
each of the undersigned an enclosed copy of this letter.
Very truly yours,
BT COMMERCIAL CORPORATION, as Administrative
Agent, Collateral Agent and a Line of Credit Lender
By: /s/ J. Jeffcott Ogden
-------------------------------------------------
Name: J. Jeffcott Ogden
Title: Managing Director
Notice Address:
BT Commercial Corporation
14 Wall Street
New York, New York 10005
Attention: J. Jeffcott Ogden
Telephone No.: (212) 618-2609
Facsimile No.: (212) 618-2630
MEESPIERSON N.V., New York Agency, as a Line of
Credit Lender
By: /s/ Allan J. Lee
--------------------------------------------------
Name: Allan J. Lee
Title: Senior Vice President
By: /s/ Scott Samols
--------------------------------------------------
Name: Scott Samols
Title: Vice President
Notice Address:
MeesPierson N.V., New York Agency
445 Park Avenue
New York, New York 10022
Attention: Allan J. Lee
Telephone No.: (212) 801-0425
Facsimile No.: (212) 801-0435
25
BANKERS TRUST COMPANY, as Issuing Lender
By: /s/ J. Jeffcott Ogden
---------------------------------------------------
Name: J. Jeffcott Ogden
Title: Managing Director
Notice Address:
Bankers Trust Company
14 Wall Street
New York, New York 10005
Attention: J. Jeffcott Ogden
Telephone No.: (212) 618-2609
Facsimile No.: (212) 618-2630
ACKNOWLEDGED AND AGREED TO:
INDIAN OIL COMPANY, as Borrower
By: /s/ William S. Sudhaus
---------------------------------------
Name: William S. Sudhaus
Title: President
Notice Address:
Indian Oil Company
South Seventh Street
Lawrenceville, Illinois 62439
Attention: William S. Sudhaus
Telephone No.: 618-943-5555
Facsimile No.: 618-943-4180
26