EXHIBIT 10.16
BORROWER SECURITY AGREEMENT
This BORROWER SECURITY AGREEMENT is made and entered into as
of May 25, 1995 by INDIAN OIL COMPANY, an Illinois corporation (the "Borrower"),
having its chief executive office at South Seventh Street, Lawrenceville,
Illinois 62439, in favor of BT COMMERCIAL CORPORATION ("BTCC"), as collateral
agent (in such capacity and together with any successors in such capacity, the
"Agent"), for each of the Line of Credit Lenders (BTCC and MeesPierson N.V., New
York Agency) and Bankers Trust Company, as Issuing Lender (collectively, and
together with any assignees of such lenders, the "Lender Parties") parties to
the Letter Agreement (as hereafter defined).
W I T N E S S E T H:
WHEREAS, the Borrower is entering into a line of credit letter
agreement dated as of even date herewith (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Letter Agreement";
capitalized terms which are used herein and not otherwise defined shall have the
meanings given to them in the Letter Agreement) with the Lender Parties and the
Agent, as administrative and collateral agent, pursuant to which the Lender
Parties have agreed, subject to the terms and conditions therein, to extend in
their sole discretion certain financial accommodations to the Borrower; and
WHEREAS, it is a condition precedent to the obligations of the
Lender Parties under the Letter Agreement that the Borrower execute and deliver
to the Agent this Agreement.
NOW THEREFORE, in consideration of the premises and in order
to induce the Lender Parties to extend financial accommodations to the Borrower
under the Letter Agreement, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the Borrower hereby
agrees as follows:
SECTION Creation of Security Interest. The Borrower hereby
pledges, assigns and grants to the Agent, for the equal and ratable benefit of
itself and the Lender Parties (collectively, the "Secured Parties"), a
continuing perfected lien on and security interest in all of the right, title
and interest of the Borrower in and to the Collateral (as such term is defined
in Section 2 hereof) in order to secure the prompt and complete payment and
performance when due (whether upon demand or otherwise) of all the Secured
Obligations (as such term is defined in Section 3 hereof).
SECTION Collateral. For purposes hereof, the "Collateral"
shall mean:
(a) Accounts. All of the Borrower's accounts, including,
without limitation, (i) all accounts receivable, (ii) all unpaid seller's rights
(including rescission, replevin, reclamation and stoppage in transit) relating
to the foregoing or arising therefrom, (iii) all rights to any goods represented
by any of the foregoing, including returned or repossessed goods, (iv) all
reserves and credit balances held by the Borrower with respect to any such
accounts receivable or account debtors and (v) all guarantees or collateral for
any of the foregoing (all of the foregoing property and similar property being
hereinafter referred to as "Accounts");
(b) Inventory. All of the Borrower's inventory in all of its
forms, whether in the possession of the Borrower, of Indian Refining Limited
Partnership ("IRLP") pursuant to the Processing Agreement of even date herewith
between the Borrower and IRLP (the "Processing Agreement") or of any other
individual, corporation, partnership or other legal entity ("Persons"),
including, without limitation, (i) all elements, catalysts (including platinum),
or other chemicals used in connection with the processing and/or manufacture of
petroleum and petroleum by-products, all hydrocarbons, crude oil, other refining
feedstocks and blend feedstocks, petroleum and petroleum by-products used,
consumed or produced in or by Pledgor's business, and all other raw materials,
work in process, parts, components, assemblies, supplies and materials used or
consumed in the Borrower's business, (ii) all goods, wares and merchandise,
finished or unfinished, held for sale or lease or leased or furnished or to be
furnished under contracts of service, (iii) all goods returned to or repossessed
by the Borrower; and (iv) all accessions thereto and products thereof and
documents therefor (all of the foregoing property being hereinafter referred to
as "Inventory");
(c) Equipment. All of the equipment owned or leased by the
Borrower in all of its forms, including, without limitation, all machinery,
office equipment and supplies, computers and related hardware, central
processing units, terminals, drives, memory units, printers, keyboards, screens,
peripherals and input and output devises, furniture, furnishings, tools,
tooling, jigs, dies, fixtures, manufacturing implements, fork lifts, trucks,
trailers, motor vehicles, and other equipment and all parts thereof and all
accessions thereto (all of the foregoing property being hereinafter referred to
as "Equipment");
(d) Intangibles. All of the Borrower's general intangibles,
instruments, securities (including, without limitation, United States of America
Treasury Bills), credits, claims, demands, documents, letters of credit for
which the Borrower is a beneficiary and letter of credit proceeds, chattel
paper, documents of title, certificates of title, certificates of deposit,
drafts, trusts, warehouse receipts, bills of lading, leases and leasehold
interests which are permitted to be assigned or pledged, deposit accounts,
money, tax refund claims, contract rights, rights of setoff, rights of
contribution, indemnity rights and all other rights (including all rights to the
payment of money) which are permitted to be assigned or pledged, other
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obligations of any kind and interest on any of the foregoing (all of the
foregoing property and similar property being hereinafter referred to as
"Intangibles");
(e) Agreement Collateral. All of the agreements listed in
Schedule 2(e) hereto (the "Basic Agreements") and all other agreements
(including without limitation all Hedging Contracts or Positions) to which the
Borrower is now or may hereafter become a party or of which the Borrower is now
or hereafter an assignee, and all letters of credit for which the Borrower is a
beneficiary, in each case, as such agreements may be amended or otherwise
modified from time to time (collectively, the "Assigned Agreements"), including,
without limitation, (i) all rights of the Borrower to receive moneys due and to
become due under or pursuant to the Assigned Agreements, (ii) all rights of the
Borrower to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Assigned Agreements, (iii) claims of the Borrower for
damages arising out of or for breach of or default under the Assigned
Agreements, (iv) all rights of the Borrower under any liens or security
interests granted under the Assigned Agreements, and (v) the right of the
Borrower to amend, modify or terminate the Assigned Agreements, to perform
thereunder and to compel performance and otherwise exercise all remedies
thereunder (all of the foregoing being the "Agreement Collateral");
(f) Chattel Paper. All of the Borrower's chattel paper,
including, without limitation, any writing or writings which evidence both a
monetary obligation and a security interest in or a lease of specific goods;
(g) Other Property. All other tangible and intangible personal
property of the Borrower of whatsoever nature and description, and in
whomsoever's possession, including, without limitation all rights, assets and
property purchased by the Borrower from IRLP pursuant to the Asset Purchase
Agreement of even date herewith between IRLP, as seller, and the Borrower, as
buyer (the "Purchase Agreement"); and
(h) After-acquired Collateral and Proceeds. The Collateral
shall include all of the kinds and types of property described in this Section
2, whether now owned or hereafter at any time arising, acquired or created by
the Borrower and wherever located and in whomsoever's possession, and includes
all replacements, additions, accessions, substitutions, repairs, proceeds and
products relating thereto or therefrom, and all documents, books, records,
ledger sheets, print-outs, computer discs, computer software and other paper
containing information relating to the Collateral and files of the Borrower
relating thereto. Proceeds hereunder include (i) whatever is now or hereafter
received by the Borrower upon the sale, exchange, collection or other
disposition of any item of Collateral, whether such proceeds constitute
inventory, accounts, accounts receivable, general intangibles, instruments,
securities (including, without limitation, United States of America Treasury
Bills), credits, claims, demands, documents, letters of credit and letter of
credit proceeds, chattel paper, documents of title, certificates of title,
certificates of deposit, warehouse receipts, bills of lading, leases, deposit
accounts, money, tax refund claims, contract rights, goods or equipment
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or otherwise, (ii) any such items which are now or hereafter acquired by the
Borrower with any proceeds of Collateral hereunder and (iii) cash.
SECTION 3. Secured Obligations. For purposes hereof, "Secured
Obligations" shall mean all obligations and liabilities of the Borrower of any
kind owing to the Agent or any Lender Party, whether now or hereafter owing or
required to be paid to the Agent or any Lender Party, in respect of or under the
Letter Agreement, the Notes, the Collateral Documents or any other document,
instrument or certificate delivered by the Borrower in connection with the
Letter Agreement and the line of credit granted thereunder (collectively,
including the Guaranty and the Guarantors Pledge Agreement and related
documents, the "Line Documents"). Without limiting the generality of the
foregoing, the Secured Obligations include the obligation of the Borrower to pay
principal, interest (including interest accruing on or after any assignment for
the benefit of creditors, the issuing of a notice of intention to make a
proposal or the making of a proposal under the United States Bankruptcy Code,
the filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to the Borrower, whether or not a
claim for such post-filing or post-petition interest is allowed), reimbursement
obligations, letter of credit fees or commissions, charges, expenses, fees,
reasonable attorneys' fees and disbursements, indemnities and other present and
future amounts payable by the Borrower to the Agent or any Lender Party in
respect of or under any Line Document.
SECTION 4. The Borrower's Representations and Warranties.
(a) Place of Business. The Borrower's only places of business
and warehouses in which it leases space are listed on Schedule 4(a) hereto.
(b) Location of Collateral. All of the Collateral is located
at the Borrower's chief executive office or other places of business or
warehouses listed on Schedule 4(a) hereto, or at the Refinery (as such term is
defined in the Processing Agreement) and other facilities maintained or used by
IRLP listed on Schedule 4(b) hereto, or in transit between any such locations
or, in the case of Inventory, in transit from suppliers or to customers, and
not at any other location.
(c) No Restrictions on Collateral Disposition. Except insofar
as Inventory is obligated to be sold to Louis Dreyfus Energy Corp. pursuant to
its Agreement dated as of May 1, 1995 with the Borrower (as assignee of IRLP)
(the "Dreyfus Agreement") none of the Collateral is subject to contractual
obligations that may restrict or inhibit the Agent's rights or ability to sell
or dispose of the Collateral or any part thereof after the occurrence of a
Demand Event.
(d) Status of Accounts and Inventory. Each Account is based on
an actual and bona fide sale and delivery of goods or rendition of services to
customers, made by the Borrower or (in the case of Accounts sold to the Borrower
pursuant to the Purchase Agreement) IRLP in the ordinary course of its business.
The Borrower's and IRLP's customers have accepted the goods or services in
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respect of the Accounts, and owe and are obligated to pay the full amounts
stated in the invoices according to their terms, without any dispute, offset,
defense, or counterclaim. When included in the Borrowing Base Certificate and
the schedules attached thereto, each Account and item of Inventory conforms to
the representations and warranties contained in this paragraph (d), and the
standards for eligibility set forth in the definition of Eligible Accounts
Receivable and Eligible Inventory, respectively.
(e) Possession and Control of Equipment and Inventory. The
Borrower has exclusive possession and control of all Inventory, except only as
IRLP has possession thereof in accordance with and for purposes of the
Processing Agreement.
(f) Assigned Agreements. The Assigned Agreements have been
duly authorized, executed and delivered by the Borrower and, to the best
knowledge of the Borrower, by each other party thereto, have not been amended
or otherwise modified, are in full force and effect and, to the best knowledge
of the Borrower, are binding upon and enforceable against all parties thereto
in accordance with their terms. There exists no default under any Assigned
Agreement by the Borrower and, to the best knowledge of the Borrower, any other
party thereto.
(g) Ownership; No Liens. The Borrower is, or will be at the
time of acquisition thereof, the legal and beneficial owner of all of the
Collateral, free and clear of any Lien other than the Lien created hereunder and
Permitted Liens. No effective financing statement or other similar document used
to perfect and preserve a security interest under the laws of any jurisdiction
covering all or any part of the Collateral is on file in any recording office,
except such as may have been filed by the Agent for the benefit of the Secured
Parties and except such as for which UCC-3 termination statements or other
similar documents terminating such financing statements have been executed by
the secured parties named thereon and delivered to the Agent for filing in the
appropriate recording office. No filing, of a financing statement or any other
document, with any U.S., state or local governmental agency or authority is
necessary, except as described in Schedule 4(g) hereto, to preserve or protect
the Borrower's interest in and rights to, as contemplated by the Line Documents
and the Purchase Agreement and the Processing Agreement, all of the Collateral
from and against the claims and demands of any and all persons claiming the same
or any interest therein (other than Permitted Liens against the Borrower),
including without limitation IRLP and creditors of IRLP. This Agreement creates
a valid and, immediately upon the filing of the documents listed in Schedule
4(g) hereto in the corresponding governmental offices listed therein, perfected
first priority security interest in all of the Collateral securing the payment
of the Secured Obligations, except to the extent that under the Uniform
Commercial Code as enacted in applicable jurisdictions possession of an item of
Collateral by the secured party is the exclusive means of perfecting a security
interest therein.
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SECTION 5. Covenants of the Borrower.
(a) Defend Against Claims. The Borrower shall defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest therein, other than Permitted Liens, unless the Agent
otherwise agrees in writing. The Borrower shall not permit any Lien notices with
respect to the Collateral or any portion thereof to exist or be on file in any
public office, other than Permitted Liens.
(b) Change in Collateral Location. The Borrower shall not (i)
change its legal name or do business under any name other than its legal name,
(ii) change the location of its chief executive office or establish any place of
business other than those specified in Schedule 4(a) hereto, (iii) move or
permit movement of the Collateral from the locations specified in Schedules 4(a)
and 4(b) hereto except from one such location to another such location, or (iv)
keep its records concerning the Collateral at any location other than the
location designated as its chief executive office in Schedule 4(a) hereto.
(c) Additional Financing Statements, Etc. Promptly upon the
reasonable request of the Agent, at the expense of the Borrower, the Borrower
shall execute and deliver or use its best efforts to procure any document, give
any notices, execute and file any financing statements, mortgages or other
documents, all in form and substance satisfactory to the Agent, mark any chattel
paper, deliver any chattel paper or instruments to the Agent and take any other
actions that are necessary or, in the opinion of the Agent, desirable to perfect
or continue the perfection and the first priority of the Agent's security
interest in the Collateral and the Borrower's ownership or other interests in
the Collateral, to protect the Collateral against the rights, claims, or
interests of third persons (including IRLP and creditors of IRLP), other than
holders of Permitted Liens, to enable the Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral, or to effect the
purposes and intent of this Agreement. Without limiting the generality of the
foregoing, the Borrower shall: (i) mark conspicuously each chattel paper
included in the Collateral and, at the request of the Agent, each of its records
pertaining to the chattel paper with a legend, in form and substance
satisfactory to the Agent, indicating that such chattel paper is subject to the
security interest granted hereby; (ii) if any other Collateral shall be
evidenced by a promissory note with a term of more than 90 days or other
instrument or chattel paper, deliver and pledge to the Agent such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Agent; (iii) take such actions, or cause IRLP or any other third party to
take such actions, including without limitation filing financing statements and
posting signs at the third party's premises, as the Agent may require to protect
the Borrower's ownership of or other interest in any Collateral in such third
party's possession and the Agent's Lien hereunder thereon; (iv) only enter into
Hedging Contracts or Positions or any similar contract or arrangement upon prior
notice to the Agent and on terms and conditions (A) providing that any amounts
which may become owing thereunder to the Borrower shall only be paid to the
Agent or as it may otherwise direct and (B) otherwise acceptable to the Agent
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and the Line of Credit Lenders in their sole discretion; and (v) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as the Agent
may reasonably request, to perfect or continue the perfection and the first
priority of the Agent's Lien granted or purported to be granted hereby.
(d) Additional Liens; Transfers. Without the prior written
consent of the Agent, the Borrower shall not in any way (i) hypothecate or
create or permit to exist any Lien, security interest, charge or encumbrance on
or other interest in the Collateral, except for the Liens created hereunder and
Permitted Liens, or (ii) sell, transfer, assign (by operation of law or
otherwise), pledge, collaterally assign, exchange or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except that the
Borrower may sell Inventory to its customers pursuant to the Dreyfus Agreement
or otherwise in the ordinary course of business, provided, that Inventory
consisting of platinum catalyst may be sold by the Borrower only on prior
written notice to the Agent and only on such price and other terms as are
acceptable to the Line of Credit Lenders in their sole discretion. Upon any such
permitted sale of Collateral the Agent shall release its Lien in favor of the
Secured Parties thereon, provided that the proceeds of such sale shall be
directly deposited in the Loan Account for application in accordance with the
Letter Agreement. If the proceeds of any sale of Inventory or any other
permitted sale of Collateral consist of notes, instruments, documents of title,
letters of credit or chattel paper (collectively "Non-cash Proceeds"), such
Non-cash Proceeds shall be promptly delivered to the Agent to be held as
Collateral hereunder. If the Collateral, or any part thereof, is sold,
transferred, assigned, exchanged, or otherwise disposed of in violation of these
provisions, the security interest of the Agent shall continue in such Collateral
or part thereof notwithstanding such sale, transfer, assignment, exchange or
other disposition. At any time as Collateral, or any part thereof, is sold,
transferred, assigned, exchanged or otherwise disposed of, whether as permitted
hereunder or in violation of the provisions hereof, the Borrower shall hold the
proceeds thereof for the benefit of the Agent, and promptly transfer such
proceeds to the Agent in kind in accordance with the Letter Agreement.
(e) Contractual Obligations. The Borrower shall not enter into
any contractual obligations which may restrict or inhibit the Agent's rights or
ability to sell or otherwise dispose of the Collateral or any part thereof after
the occurrence of a Demand Event.
(f) Further Obligations With Respect to Accounts. In
furtherance of the continuing assignment of and security interest in the
Accounts of the Borrower granted pursuant to this Agreement, upon the creation
of Accounts, the Borrower shall execute and deliver to the Agent in such form
and manner as the Agent may require, solely for its convenience in maintaining
records of Collateral, such confirmatory schedules of Accounts, and other
appropriate reports designating, identifying and describing the Accounts as the
Agent may reasonably require. In addition, upon the Agent's request, the
Borrower shall provide the Agent with copies of agreements with, or purchase
orders from, the customers of the Borrower and copies of invoices to customers,
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proof of shipment or delivery and such other documentation and information
relating to said Accounts and other Collateral as the Agent may reasonably
require. Furthermore, promptly after its receipt thereof, the Borrower shall
deliver to the Agent any documents or certificates of title issued with respect
to any property included in the Collateral, any promissory note, letter of
credit, document or instrument related to or otherwise in connection with any
property included in the Collateral, which in any such case shall come into the
possession of the Borrower, or shall cause the issuer thereof to deliver any of
the same directly to the Agent, in each case with any necessary endorsements in
favor of the Agent. Failure to provide the Agent with any of the foregoing shall
in no way affect, diminish, modify or otherwise limit the security interests
granted herein. The Borrower hereby authorizes the Agent to regard the
Borrower's printed name or rubber stamp signature on assignment schedules or
invoices as the equivalent of a manual signature by the Borrower's authorized
officers or agents.
(g) Turnover of Collections. Unless a Demand Event has
occurred and is continuing, the Borrower may and shall enforce, collect and
receive, at its own expense, all amounts owing on the Accounts, for the benefit
of and on behalf of the Secured Parties. In connection with such collections,
the Borrower may take (and, at the Agent's direction, upon the occurrence and
during continuance of a Demand Event the Borrower shall take) such action as the
Borrower or the Agent may deem necessary or advisable to enforce collection of
the Accounts owing to the Borrower. Such privilege shall terminate
automatically, however, upon the occurrence of a Demand Event which has not
otherwise been waived by the Line of Credit Lenders. Whether or not a Demand
Event has occurred, the Borrower shall direct all of its account debtors to make
all payments with respect to Accounts directly to such lockbox or lockboxes as
may from time to time be established pursuant to agreements entered into by the
Agent ("Lockboxes") including without limitation the Lockbox established
pursuant to the Lockbox Processing Agreement between the Agent and Texas
Commerce Bank National Association, a copy of which is attached hereto as
Schedule 5(g), and shall, except to the extent otherwise permitted by the Agent,
notify all account debtors that (i) the Borrower has assigned to the Agent all
of its rights to such payments and (ii) direct that the Agent shall be the payee
of all such payments. Account debtors who make payment via wire transfer shall
be directed to make their payment to such deposit account of the Agent as the
Agent shall specify. Any checks, cash, notes or other instruments or property
received by the Borrower shall be held by the Borrower in trust for the benefit
of the Secured Parties, separate from the Borrower's own property and funds, and
immediately (i) if received with respect to Accounts (A) transmitted to a
Lockbox or (B) if such property is not suitable for deposit, turned over
directly to the Agent with proper assignments or endorsements, or (ii) if
received as insurance proceeds or with respect to any other source, turned over
directly to the Agent (with proper assignments or endorsements, as necessary).
No checks, drafts or other instruments received by the Agent shall constitute
final payment unless and until such instruments have actually been collected.
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(h) Notification of Disputes. The Borrower agrees to notify
the Agent promptly of any matters materially affecting the value, enforceability
or collectibility of any Account, and of all material customer disputes,
offsets, defenses, counterclaims, returns and rejections, and all reclaimed or
repossessed merchandise or goods; provided, that such notice shall only be
required as to any such matter that affects Accounts outstanding at one time
from any account debtor having a value greater than $250,000. The Borrower
agrees to issue credit memos promptly (with duplicates to the Agent upon its
request for same) upon accepting returns or granting allowances, and may
continue to do so until the occurrence and continuance of a Demand Event. After
the occurrence and during the continuance of a Demand Event, the Borrower agrees
that, if the Agent so requests, all returned, reclaimed or repossessed goods
shall be set aside by the Borrower, marked (to the extent practicable) with the
Agent's name and held by the Borrower for the Agent's account as owner and
assignee, or, at the election of the Agent, sold by the Borrower in the ordinary
course of business.
(i) The Assigned Agreements. The Borrower shall, at its
expense: (A) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, and maintain the Assigned
Agreements in full force and effect, enforce the Assigned Agreements in
accordance with their terms and take all such action to such end as may be from
time to time reasonably requested by the Agent, provided, that the Borrower
shall maintain in full force and effect and enforce in accordance with their
terms all Basic Agreements except as may otherwise be consented to in writing by
the Line of Credit Lenders in their sole discretion; and (B) furnish to the
Agent for inspection, upon the reasonable request of the Agent, copies of all
notices, requests and other documents received by the Borrower under or pursuant
to the Assigned Agreements, and upon the reasonable request of the Agent, make
to each other party to any Assigned Agreement such requests for information and
reports or such demands for action as the Borrower is entitled to make
thereunder.
(j) Capital Stock. The Borrower shall not hold any capital
stock of, or otherwise make or hold any equity investments in, any Person.
(k) Bank Accounts. The Borrower shall not open or establish
any banking or other account with any financial institution, or deposit any
remittance or payments received in respect of any Accounts or Assigned
Agreements in any such account, without the prior written consent of the Agent.
(l) Insurance. The Borrower shall provide at its own expense,
or shall cause IRLP or an affiliate to procure at its expense pursuant to the
Processing Agreement, and maintain in full force and effect at all times with
insurance carriers acceptable to the Line of Credit Lenders in their sole
discretion, insurance covering such risks and in such amounts as the Line of
Credit Lenders in their sole discretion may require. All such policies shall
provide that (i) there shall be no recourse against the Agent or the Secured
Parties for payment of premiums or other amounts with respect to such policies,
(ii) the insurer is required to provide the Agent with at least 30 days prior
written notice of reduction of coverage or amount or of cancellation or non-
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renewal, and (iii) the proceeds of all policies shall be payable to the Agent.
All such policies shall insure the interests of the Secured Parties, as their
interests may appear. The Borrower shall provide to the Agent such evidence of
the maintenance of insurance in accordance with this paragraph (l) as the Agent
may from time to time require.
SECTION 6. Remedies.
(a) Obtaining the Collateral Upon Default. If any Demand Event
shall have occurred and be continuing, then and in every such case, subject to
any mandatory requirements of applicable law then in effect, the Agent, in
addition to other rights and remedies provided for herein and any rights now or
hereafter existing under applicable law, shall have all rights and remedies as a
secured creditor under the Uniform Commercial Code in all relevant jurisdictions
and may (and shall, if directed by a Line of Credit Lender):
(i) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from the Borrower or any
other Person who then has possession of any part thereof, with or without
notice or process of law, and for that purpose may enter upon the
Borrower's premises where any of the Collateral is located and remove the
same and use in connection with such removal any and all services,
supplies, aids and other facilities of the Borrower;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation (including, without limitation, the
Accounts) constituting the Collateral to make any payment required by the
terms of such instrument or agreement directly to the Agent;
(iii) withdraw, for application to the Secured Obligations,
all monies, securities and instruments held in any deposit account
maintained by of for the benefit of the Borrower;
(iv) sell, assign or otherwise liquidate, or direct the
Borrower to sell, assign or otherwise liquidate, any or all of the
Collateral or any part thereof, and take possession of the proceeds of any
such sale or liquidation;
(v) take possession of the Collateral or any part thereof, by
directing the Borrower in writing to deliver the same to the Agent at any
place or places designated by the Agent, in which event Borrower shall at
its own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Agent and delivered to the Agent,
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(B) store and keep any Collateral so delivered to the Agent
at such place or places pending further action by the Agent as
provided in Section 6(b) hereof, and
(C) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be necessary to
protect the same and to preserve and maintain them in good condition;
it being understood that the Borrower's obligation to so deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Agent shall be
entitled to a decree requiring specific performance by the Borrower of said
obligation.
(b) Disposition of the Collateral. Any collateral repossessed by
the Agent under or pursuant to Section 6(a) hereof and any other Collateral
whether or not so repossessed by the Agent, may be sold, assigned, leased or
otherwise disposed of under one or more contracts or as an entirety, and without
the necessity of gathering at the place of sale the property to be sold, and in
general in such manner, at such time or times, at such place or places and on
such terms as the Agent may, in compliance with any mandatory requirements of
applicable law, determine to be commercially reasonable. Any of the Collateral
may be sold, leased or otherwise disposed of, in the condition in which the same
existed when taken by the Agent or after any overhaul or repair which the Agent
shall determine to be commercially reasonable. The Borrower acknowledges and
agrees that, to the extent notice of sale shall be required by law, five days'
notice (which may overlap in whole or in part with the ten-day period referred
to in the fourth paragraph under "Mandatory Repayments" in the Letter Agreement)
to the Borrower of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. To the
extent permitted by any such requirement of law, the Agent may bid for and
become the purchaser of the Collateral, or any item thereof, offered for sale in
accordance with this Section without accountability to the Borrower (except to
the extent of surplus money received). If, under mandatory requirements of
applicable law, the Agent shall be required to make disposition of the
Collateral within a period of time which does not permit the giving of notice to
the Borrower as hereinabove specified, the Agent need give the Borrower only
such notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. The Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given. The
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Borrower hereby
waives any claims against the Agent arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if the Agent
accepts the first offer received and does not offer such Collateral to more than
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one offeree. The Borrower acknowledges that any disposition of the Collateral
which takes place substantially in accordance with this Section 6 shall be
deemed to be commercially reasonable.
(c) Agent's Right to Protect Collateral. Upon the occurrence and
continuance of a Demand Event, the Agent shall have the right at any time to
make any payments and do any other acts the Agent may deem necessary to protect
its security interests in the Collateral, including, without limitation, the
rights to pay, purchase, contest or compromise any encumbrance, charge or Lien
which, in the reasonable judgment of the Agent, appears to be prior to or
superior to the security interests granted hereunder, and appear in and defend
any action or proceeding purporting to affect its security interests in, and/or
the value of, the Collateral. The Borrower hereby agrees to reimburse the Agent
for all payments made and expenses incurred under this Agreement including
reasonable fees, expenses and disbursements of attorneys and paralegals acting
for the Agent, including any of the foregoing payments under, or acts taken to
protect its security interests in, the Collateral, which amounts shall be
secured under this Agreement and which shall bear interest at the highest rate
than in effect under the Letter Agreement during the period from and including
the date on which such funds were so expended to the date of repayment, and
agrees it shall be bound by any payment made or act taken by the Agent hereunder
absent the Agent's gross negligence or willful misconduct. The Agent shall have
no obligation to make any of the foregoing payments or perform any of the
foregoing acts.
(d) Power of Attorney. The Borrower hereby irrevocably authorizes
and appoints the Agent, or any Person or agent the Agent may designate, as the
Borrower's attorney-in-fact, with full authority in the place and stead of the
Borrower and in the name of the Borrower or otherwise, at the Borrower's cost
and expense, in the Agent's discretion, to take any action and to execute any
instrument that the Agent may deem necessary or advisable to accomplish the
purposes and intent of this Agreement and to exercise all of the following
powers upon and at any time after the occurrence and during the continuance of a
Demand Event, which powers, being coupled with an interest, shall be irrevocable
until all of the Obligations shall have been paid and satisfied in full:
(i) ask for, demand, collect, bring suit, recover,
compromise, administer, accelerate or extend the time of payment, issue
credits, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Collateral;
(ii) obtain and adjust insurance required to be paid to the
Agent;
(iii) receive, take, endorse, negotiate, sign, assign and
deliver and collect any checks, notes, drafts or other instruments,
documents and chattel paper, in connection with clause (i) or (ii) above;
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(iv) receive, open and dispose of all mail addressed to the
Borrower and notify postal authorities to change the address for delivery
thereof to such address as the Agent may designate;
(v) give customers indebted on Accounts notice of the Agent's
interest therein, and/or to instruct such customers to make payment
directly to the Agent for the Borrower's account and/or to request, at any
time from customers indebted on Accounts, verification of information
concerning the Accounts and the amounts owing thereon;
(vi) convey any item of Collateral to any purchaser thereof;
(vii) give any notices or record any Liens under Section 5(c)
hereof;
(viii) make any payments or take any acts under Section 6(c)
hereof; and
(ix) ile any claims or take any action or institute any
proceedings that the Agent may reasonably deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce compliance
with the terms and conditions of any Assigned Agreement or the rights of
the Agent with respect to any of the Collateral.
The Agent's authority under this section 6(d) shall include, without limitation,
the authority to execute and give receipt for any certificate of ownership or
any document, transfer title to any item of Collateral, sign the Borrower's name
on all financing statements or any other documents deemed necessary or
appropriate to preserve, protect or perfect the security interest in the
Collateral and to file the same, prepare, file and sign the Borrower's name on
any notice of Lien, assignment or satisfaction of Lien or similar document in
connection with any Account and prepare, file and sign the Borrower's name on a
proof of claim in bankruptcy or similar document against any customer of the
Borrower, and to take any other actions arising from or incident to the rights,
powers and remedies granted to the Agent in this Agreement. This power of
attorney is coupled with an interest and is irrevocable by the Borrower.
(e) Application of Proceeds. All cash proceeds received by the
Agent in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral shall be applied by the Agent against the
Obligations in such order as the Agent may determine in accordance with the
Letter Agreement.
(f) Waiver Of Claims. Except as otherwise provided in this
Agreement, THE BORROWER HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE AGENT'S TAKING
POSSESSION OF OR DISPOSING OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT
LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR
REMEDIES AND ANY SUCH RIGHT WHICH THE BORROWER WOULD OTHERWISE HAVE UNDER THE
CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and the
Borrower hereby further waives, to the extent permitted by law:
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(i) all damages occasioned by such taking of possession
except any damages which are the direct result of the Agent's gross
negligence or wilful misconduct;
(ii) l other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the Agent's
rights hereunder; and
(iii) all rights of redemption, appraisement, valuation,
stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this
Agreement or the absolute sale of the Collateral or any portion thereof,
and the Borrower, for itself and all who may claim under it, insofar as it
or they now or hereafter lawfully may, hereby waives the benefit of all
such laws.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Borrower therein and thereto, and
shall be a perpetual bar both at law and in equity against the Borrower and
against any and all persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Borrower.
(g) Remedies Cumulative. Each and every right, power and remedy
hereby specifically given to the Agent shall be in addition to every other
right, power and remedy specifically given under this Agreement or under the
other Line Documents or now or hereafter existing at law or in equity, or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by the Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise of any other or others. No delay or omission of the Agent in the
exercise of any such right, power or remedy and no renewal or extension of any
of the Obligations shall impair any such right, power or remedy or shall be
construed to be a waiver of any Demand Event or any acquiescence therein.
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SECTION 7. Miscellaneous Provisions.
(a) Notices. Any notice or other communication herein required
or permitted to be given shall be given in the manner set forth in the Letter
Agreement, if to the Borrower, addressed to it at the address set forth on the
signature page of this Agreement, and if to the Agent, addressed to it at the
address set forth on the signature page of this Agreement. All such notices and
other communications shall be deemed to have been given when delivered in
person, or received by facsimile or telex; or 4 Business Days after deposit in
the United States mail, registered or certified, with postage prepaid and
properly addressed; provided, that notices to the Agent shall not be effective
until received by the Agent.
(b) Headings. The headings in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
(c) Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect, in that jurisdiction only, such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
(d) Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement and any consent to any departure by the
Borrower from any provision of this Agreement shall not be effective unless the
same shall be in writing and signed by the Borrower, the Agent (with the consent
of the Lender Parties, as required by the Letter Agreement) and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of the Agent to exercise, and no
delay in exercising any right hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(e) Interpretation. Time is of the essence in each provision
of this Agreement of which time is an element. All terms not defined herein or
in the Letter Agreement shall have the meaning set forth in the Uniform
Commercial Code as in effect at the time of determination in the State of New
York, except where the context otherwise requires. Acceptance of or acquiescence
in a course of performance rendered under this Agreement shall not be relevant
in determining the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(f) Continuing Security Interest. This Agreement shall create
a continuing security interest in the Collateral and shall (i) remain in full
force and effect until the payment in full in cash of the Secured Obligations,
the termination of the Letter Agreement and the other Line Documents and the
expiry or cancellation (undrawn) of all Letters of Credit that are not
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Adequately Collateralized (the "Termination Date"), (ii) be binding upon the
Borrower, and its successors and assigns and (iii) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Secured
Parties and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any Secured Party may
assign or otherwise transfer all or any portion of any indebtedness secured by
this Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party
herein or otherwise, in each case as provided in the Letter Agreement.
(g) Reinstatement. To the extent permitted by law, this
Agreement shall continue to be effective or be reinstated if at any time any
amount received by any Secured Party in respect of the Secured Obligations is
rescinded or must otherwise be restored or returned by such or any other Secured
Party upon the occurrence or during the pendency of any bankruptcy,
reorganization or other similar proceeding applicable to the Borrower, or upon
or during the occurrence of any dissolution, liquidation or winding up of the
Borrower, all as though such payments had not been made.
(h) Survival of Provisions. All representations, warranties
and covenants of the Borrower contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only upon the occurrence of the
Termination Date.
(i) Agent May Perform. If the Borrower fails to perform any
agreement contained herein, the Agent may itself perform, or cause performance
of, such agreement, and the expenses of the Agent incurred in connection
therewith shall be payable by the Borrower and shall constitute Secured
Obligations secured by this Agreement.
(j) No Duty on Agent. The powers conferred on the Agent
hereunder are solely to protect the interest of the Secured Parties in the
Collateral and shall not impose any duty upon the Agent to exercise any such
powers. Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Agent shall have no
duty as to any Collateral, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Agent accords its
own property. To the extent the Collateral is held by a custodian, the Agent
shall be deemed to have exercised reasonable care if it has selected the
custodian with reasonable care.
(k) No Release of Obligations. Nothing set forth in this
Agreement shall relieve the Borrower from the performance of any term, covenant,
condition or agreement on the Borrower's part to be performed or observed under
or in respect of any of the Collateral or from any liability to any person under
or in respect of any of the Collateral or shall impose any obligation on the
Agent or any Secured Party to perform or observe any such term, covenant,
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condition or agreement on the Borrower's part to be so performed or observed or
shall impose any liability on the Agent or any Secured Party for any act or
omission on the part of the Borrower relating thereto or for any breach of any
representation or warranty on the part of the Borrower contained in this
Agreement or any other Line Document or under or in respect of the Collateral or
made in connection herewith or therewith. Without limiting the foregoing, the
Borrower shall remain liable under each Assigned Agreement to the extent set
forth therein to perform all of the duties and obligations thereunder to the
same extent as if this Agreement had not been executed, the Agent shall not have
any obligation or liability under any Assigned Agreement by reason of this
Agreement, and the exercise by the Agent of any of its rights hereunder shall
not release the Borrower from any of its duties or obligations under any
Assigned Agreement. In the event that the Agent on behalf of the Secured Parties
succeeds to the Borrower's interest in, to and under any Assigned Agreement,
whether by foreclosure or otherwise, the Agent shall not, either on behalf of
itself or the Secured Parties, assume any liabilities or obligations of the
Borrower relating to such Assigned Agreement.
(l) Delays; Partial Exercise of Remedies. No delay or omission
of the Agent to exercise any right or remedy hereunder, whether before or after
the happening of any Demand Event, shall impair any such right or shall operate
as a waiver thereof or as a waiver of any such Demand Event. No single or
partial exercise by the Agent of any right or remedy shall preclude any other or
further exercise thereof, or preclude any other right or remedy.
(m) Release of Lien. Upon the occurrence of the Termination
Date, the Agent shall, upon the request and at the sole cost and expense of the
Borrower, forthwith assign, transfer and deliver to the Borrower, against
receipt and without recourse to or warranty by the Agent, such of the Collateral
as may be in the possession of the Agent and as shall not have been sold or
otherwise applied pursuant to the terms hereof, on the order of and at the sole
cost and expense of the Borrower, and proper instruments (including UCC
termination statements on Form UCC-3) acknowledging the termination of this
Agreement and/or the release of such Collateral. Except as provided in this
Section 7(m), none of the Collateral may be released from the Lien hereof by the
Agent without the written consent of each Line of Credit Lender.
(n) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.
(o) GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES.
(p) SUBMISSION TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
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(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER LINE DOCUMENTS TO
WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 7(a) HEREOF OR
AT SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT
THERETO;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT TO SUE IN ANY OTHER JURISDICTION; AND
(v) WAIVES THE RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR
CROSS-CLAIM IN RESPECT OF, AND ALL STATUTES OF LIMITATIONS WHICH MAY BE
RELEVANT TO, SUCH ACTION OR PROCEEDING.
(q) WAIVER OF JURY TRIAL. THE BORROWER AND THE AGENT EACH
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING
OUT OF THIS AGREEMENT, ANY OF THE OTHER LINE DOCUMENTS, OR ANY OTHER AGREEMENTS
OR TRANSACTIONS RELATED HERETO OR THERETO.
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IN WITNESS WHEREOF, the Borrower has caused this Agreement to
be duly executed and delivered as of the day and year first above written.
INDIAN OIL COMPANY
By: /s/ William S. Sudhaus
------------------------------------
Name: William S. Sudhaus
Title: CEO
Facsimile No.: (610) 995-2477
Accepted and Agreed as of the date first above written:
BT COMMERCIAL CORPORATION,
as Agent
By: /s/ J. Jeffcott Ogden
-----------------------------------
J. Jeffcott Ogden, SVP
14 Wall Street
New York, New York 10005
Fasimile No.: (212) 618-2630
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