1
EXHIBIT 10.22
SUPPORT AGREEMENT
This Support Agreement (this "Agreement") dated as of September 21,
1998 is by and among Enron Corp., an Oregon corporation ("Enron"), EOTT Energy
Partners, L.P., a Delaware limited partnership (the "Partnership"), and EOTT
Energy Operating Limited Partnership, a Delaware limited partnership (the
"Operating Partnership"). Any capitalized terms used but not defined herein
shall have the meaning given to such term in the Ancillary Agreement dated as of
March 25, 1994, as amended, among each of the parties hereto (the "Ancillary
Agreement") or in the Amended and Restated Agreement of Limited Partnership of
EOTT Energy Partners, L.P. dated as of March 25, 1994, as amended (the
"Partnership Agreement"). The term "Closing" shall mean the Closing as defined
in the Purchase and Sale Agreement (the "Purchase Agreement") dated the date
hereof among the Partnership, the Operating Partnership, Xxxx Pipeline Company,
L.P. and Xxxx Oil Company, a division of Xxxx Industries, Inc.
RECITALS
WHEREAS, simultaneously with the execution of this Agreement, the
Partnership and the Operating Partnership have entered into the Purchase
Agreement with Xxxx Pipeline Company, L.P. and Xxxx Oil Company, a division of
Xxxx Industries, Inc. (collectively, "Xxxx") providing for the purchase by the
Partnership or its designee of certain assets of Xxxx in exchange for cash and
Common Units and Subordinated Units of the Partnership; and
WHEREAS, in order to effect the Closing, the Partnership or its
designee must obtain funds for the cash portion of the purchase price; and in
order to own and operate the assets to be acquired pursuant to the Purchase
Agreement, the Partnership or its designee must arrange for a new credit
facility that provides for more credit support than is available under the
existing credit facility with Enron; and
WHEREAS, pursuant to the Ancillary Agreement, Enron undertook, among
other things, to purchase from the Partnership up to $29 million in APIs at any
one time Outstanding in order to support distributions of Available Cash to
holders of Common Units through the end of the first quarter of 1999; and
pursuant to such undertaking Enron has purchased approximately $21.9 million in
APIs, all of which remain Outstanding; and
WHEREAS, the parties hereto believe that an increase and extension of
Enron's distribution support commitment will have a positive impact on the value
of the Common Units and Subordinated Units to be issued to Xxxx at the Closing;
and
WHEREAS, this Agreement is a material inducement to Xxxx to enter
into the Purchase Agreement; and
WHEREAS, in consideration of the agreements of the Partnership herein,
Enron is willing (a) to provide financing to enable the Partnership or its
designee to effect the Closing; (b) to enter into a new credit facility that
provides for increased credit support for the Partnership
1
2
or its designee; and (c) if certain proposals are approved by the requisite vote
of Unitholders at a special meeting of Unitholder (the "Special Meeting") to be
held following the Closing, to extend its distribution support through the
quarter ending December 31, 2001 and to increase the unused portion of such
commitment to $29 million;
NOW THEREFORE, for and in consideration of the premises and mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. BRIDGE LOAN, SENIOR LOAN AND CREDIT FACILITY.
(a) Enron and the Operating Partnership hereby agree that as soon as
practical they will enter into a loan agreement providing for a $100,000,000
bridge loan on the terms and conditions set forth in Exhibit A to this Agreement
and that they will effect the funding of such bridge loan simultaneously with
the Closing.
(b) Enron and the Operating Partnership hereby agree that as soon as
practical they will enter into a loan agreement providing for a $175,000,000
senior loan on the terms and conditions set forth in Exhibit B to this Agreement
and that they will effect the funding of such senior loan simultaneously with
the Closing.
(c) Enron and the Operating Partnership hereby agree that as soon as
practical they will enter into a $1,000,000,000 revolving credit facility on the
terms and conditions set forth in Exhibit C to this Agreement and that such
credit facility shall become effective simultaneously with the Closing.
2. ISSUANCE OF ADDITIONAL SPECIAL UNITS AT THE CLOSING. Enron hereby
agrees to cancel $21,927,641 in APIs now outstanding upon the earlier to occur
of (i) the approval of the Proposals (as defined in this Agreement) or (ii) May
17, 1999. Simultaneously with the Closing, and in consideration of Enron's
binding commitment to cancel $21,927,641 in APIs now outstanding, the
Partnership will issue to Enron 1,150,000 Special Units, having rights and
privileges identical to the existing Special Units.
3. THE SPECIAL MEETING. The Partnership agrees that, as soon as
practical following the Closing, it will call the Special Meeting for the
purpose of considering and voting upon the following proposals (collectively,
the "Proposals"):
(a) A proposal (the "Common Units Proposal") that, if approved by the
requisite vote of the holders of at least 2/3 of the outstanding Common Units
and Special Units, voting at the Special Meeting together as a single class,
will permit the Partnership to issue up to 10,000,000 additional Common Units
for any Partnership purpose, including issuance in a public offering in order to
repay indebtedness and for future acquisitions; and
2
3
(b) A proposal (the "Listing Proposal") that, if approved by the
requisite vote of the holders of a majority of the outstanding Common Units,
will permit the listing on the New York Stock Exchange of Common Units to be
issued by the Partnership in exchange for the Special Units; in accordance with
the terms of the Special Units, the Listing Proposal, if so approved, will
result in a change in the terms of the Special Units to provide that each
Special Unit is convertible into one Common Unit at the option of the holder of
such Special Units.
4. EVENTS OCCURRING UPON APPROVAL OF PROPOSALS. If each of the
Proposals is approved by the requisite vote of Unitholders entitled to vote
thereon, then immediately following the receipt of such approvals:
(a) Enron will convert all Special Units into Common Units;
(b) If additional APIs have been issued between the date hereof and the
date of such vote, the Partnership will issue to Enron additional Common Units
in exchange for such additional APIs, on the basis of one Common Unit for each
$19.00 of additional APIs, so that immediately following such issuance there
will be no APIs outstanding; and
(c) The Ancillary Agreement will be amended (without any further action
on the part of the parties thereto) as follows:
The definition of the term "Support Period" is hereby amended in
its entirety to read as follows:
"SUPPORT PERIOD" shall mean the period commencing upon the Closing Date
and ending upon the earliest to occur of (a) the Liquidation Date, (b)
December 31, 2001, and (c) the removal of EOTT (or other Person that is
an affiliate of Enron (ignoring for this purpose the proviso in the
definition of "Affiliate")) as General Partner of the MLP pursuant to
Section 13.2 of the MLP Agreement under circumstances where Cause does
not exist.
5. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors,
legal representatives and assigns.
(c) The obligations of the parties hereunder are
conditioned upon the satisfaction (or waiver
acceptable to the parties hereto) of the conditions
to the obligations of Buyer (as such term is defined
in the Purchase Agreement) to effect the Closing and
the occurrence of the Closing.
3
4
EXECUTED by each of the parties hereto as of the date written above.
ENRON CORP.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Title: Vice President, Corporate Development
------------------------------------------
EOTT ENERGY PARTNERS, L.P.
By: EOTT Energy Corp., General Partner
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------------
Title: Chief Executive Officer and President
------------------------------------------
EOTT ENERGY OPERATING LIMITED PARTNERSHIP
By: EOTT Energy Corp., General Partner
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxx
------------------------------------------
Title: Chief Executive Officer and President
------------------------------------------
4
5
EXHIBIT A
BRIDGE LOAN TERM SHEET
BORROWER: EOTT Energy Operating Limited Partnership ("EOTT").
LENDER: Enron Capital Management ("ECM"), a division of and
on behalf of Enron Corp., ("Enron") an Oregon
corporation.
FACILITY: A $100,000,000 term loan.
USE OF FUNDS: To finance the acquisition of certain assets from
Xxxx Industries, Inc.
LIBOR: Interest determined for periods ("Interest Periods")
of one, two, three or six months (as selected by the
Borrower) at an annual rate equal to London Interbank
Offered Rate ("LIBOR") for corresponding deposits of
U.S. dollars, plus appropriate margin. LIBOR to be
determined two business days prior to first day of
each Interest Period as the rate for the
corresponding maturity on Telerate page 3750..
Interest shall be payable at the end of each Interest
Period or quarterly, whichever is earlier, and
calculated on the basis of actual number of days
elapsed in a year of 360 days.
BASE RATE: Defined as the higher of (i) Federal Funds Rate, as
published by the Federal Reserve Bank of New York one
business day in arrears, plus 1/2 of 1%, or (ii)
Prime Commercial Lending Rate published from time to
time in the Wall Street Journal, calculated on the
basis of actual number of days elapsed in a year of
365/366 days.
SPREAD OVER LIBOR: Initially, 400 basis points. At the end of each
three month period, the spread will increase by 25
basis points.
DEFAULT INTEREST RATE: Any amount of the principal and interest which is not
paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from
the date on which such amount is due until such
amount is paid in full, at a rate per anum equal to
the Base Rate plus [200] basis points.
INTEREST PAYMENT DATES: Quarterly in arrears.
MATURITY DATE: December 31, 1999.
REPAYMENT: All outstanding principal under the Facility is due
on the Maturity Date.
LOAN CONVERSION: The Lender has the option at maturity to convert any
funded amount under the Facility, including any
accrued interest, into EOTT common units at the
Conversion Price. Upon Conversion, the Lender will
have demand registration rights.
CONVERSION PRICE: 95% of the then publicly traded price per EOTT common
unit.
COSTS AND TAXATION: All payments will be made free and clear of any
taxes. If necessary, the Borrower will reimburse the
Lender for any taxes paid.
RANKING: The Facility shall rank parri passu with all other
senior indebtedness of the Borrower.
COLLATERAL: Unsecured.
5
6
EXHIBIT B
SENIOR LOAN TERM SHEET
BORROWER: EOTT Energy Operating Limited Partnership ("EOTT").
LENDER: Enron Capital Management ("ECM"), a division of and
on behalf of Enron Corp., ("Enron") an Oregon
corporation.
FACILITY: Up to $175,000,000 (single draw) term loan.
USE OF FUNDS: To finance the acquisition of certain assets
from Xxxx Industries, Inc.
LIBOR: Interest determined for periods ("Interest Periods")
of one, two, three or six months (as selected by the
Borrower) at an annual rate equal to London Interbank
Offered Rate ("LIBOR") for corresponding deposits of
U.S. dollars, plus appropriate margin. LIBOR to be
determined two business days prior to first day of
each Interest Period as the rate for the
corresponding maturity on Telerate page 3750..
Interest shall be payable at the end of each Interest
Period or quarterly, whichever is earlier, and
calculated on the basis of actual number of days
elapsed in a year of 360 days.
BASE RATE: Defined as the higher of (i) Federal Funds Rate, as
published by the Federal Reserve Bank of New York one
business day in arrears, plus 1/2 of 1%, or (ii)
Prime Commercial Lending Rate published from time to
time in the Wall Street Journal, calculated on the
basis of actual number of days elapsed in a year of
365/366 days.
SPREAD OVER LIBOR: 300 basis points.
DEFAULT INTEREST RATE: Any amount of the principal and interest which is not
paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from
the date on which such amount is due until such
amount is paid in full, at a rate per anum equal to
the Base Rate plus 200 basis points.
INTEREST PAYMENT DATES: Quarterly in arrears.
MATURITY DATE: December 31, 1999.
REPAYMENT: All outstanding principal under the Facility is due
on the Maturity Date.
COSTS AND TAXATION: All payments will be made free and clear of any
taxes. If necessary, the Borrower will reimburse the
Lender for any taxes paid.
RANKING: The Facility shall rank parri passu with all other
senior indebtedness of the Borrower.
COLLATERAL: A 1st lien on all of the Borrower's assets.
6
7
EXHIBIT C
TRADING FACILITIES TERM SHEET
BORROWER: EOTT Energy Operating Limited Partnership ("EOTT").
LENDER: Enron Capital Management ("ECM"), a division of and
on behalf of Enron Corp., ("Enron") an Oregon
corporation.
FACILITY: A $1.0 billion three-year revolving borrowing base
credit facility.
FACILITY SUB-LIMITS: Credit Instrument(s) Amount*
-------------------- --------
Letters of Credit and Enron Corp. Guarantees $900 million
Advances $100 million
*Total outstandings at any time not to exceed $1.0 billion.
USE OF FUNDS: Letters of Credit and Guarantees are to facilitate
the purchase of crude oil for resale, and advances
are for working capital requirements related to the
purchase and resale of crude oil.
PRICING: Advances: LIBOR plus 250 basis points p.a.
payable monthly based on the
average daily balance.
Letters of Credit: Reimbursement of Lender's actual
cost charged by the issuing
Financial institution.
Guarantees: No charge for the first two
years, thereafter a 50 basis
points per annum charge on the
amount in excess of [$330
multiplied by the 20-day average
price of WTI crude divided by
$15].
LIBOR: Interest determined for periods ("Interest Periods")
of one, two, three or six months (as selected by the
Borrower) at an annual rate equal to London Interbank
Offered Rate ("LIBOR") for corresponding deposits of
U.S. dollars, plus appropriate margin. LIBOR to be
determined two business days prior to first day of
each Interest Period as the rate for the
corresponding maturity on Telerate page 3750.
Interest shall be payable at the end of each Interest
Period or quarterly, whichever is earlier, and
calculated on the basis of actual number of days
elapsed in a year of 360 days.
BASE RATE: Defined as the higher of (i) Federal Funds Rate, as
published by the Federal Reserve Bank of New York one
business day in arrears, plus 1/2 of 1%, or (ii)
Prime Commercial Lending Rate published from time to
time in the Wall Street Journal, calculated on the
basis of actual number of days elapsed in a year of
365/366 days.
DEFAULT INTEREST RATE: Any amount of the principal and interest which is not
paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from
the date on which such amount is due until such
amount is paid in full, at a rate per anum equal to
the Base Rate plus 200 basis points.
EXPIRATION DATE: Three (3) years.
REPAYMENT: All outstanding Loan Amounts under any Credit
Instrument are due on expiration date according to
the applicable Maximum Tenor.
7
8
AVAILABILITY: i) The availability of all credit extensions
will be subject to the following borrowing
base calculations (refer to ii below for
definition):
a) 100% of pledged cash and Marketable
Securities held by bank(s);
b) 100% of the Enron Corp. Subordinated
Debt commitment
c) 90% of pre-approved Qualified Accounts
receivables rated at least A3/A- or
non-approved receivables backed by
Letters of Credit issued by banks
acceptable to the Lender;
d) 87% of pre-approved Qualified Accounts
rated at least BBB;
e) 85% of pre-approved Qualified Accounts
not included in b. or c. above;
f) 80% of Eligible Margin Deposits (net
equity accounts with approved brokers
subject to a satisfactory three party
agreement;
g) 80% of inventory calculated on a Marked
to Market basis;
h) 80% of the cost of crude oil contracted
for but undelivered and covered by
Letters of Credit issued under this
facility;
i) 80% of qualified net exchange
receivables; and
j) 85%/82%/80% of product delivered under
sales contracts but not billed, based
upon value of sales contracts under b.,
c. and d. above, respectively (accrued
accounts receivable).
Less 100% of the amount of any unpaid accounts
payable due to interest owners in Texas, New
Mexico and other states where interest owners
maintain an automatic priority security
interest in oil sold and the proceeds of
such sale (this requirement shall be waived
during the period in which Enron Corp. is the
Lender.)
ii) EOTT will provide monthly Borrowing Base
certificates directly to the Lender within
ten (10) days of the reporting date that set
forth a computation of the required
collateral base and detailed back-up
information that includes: (a) a schedule of
qualified accounts and accrued accounts
receivable that show the aging of such
accounts; (b) a schedule of netted qualified
exchange balances; (c) a schedule of
qualified inventory; and (d) a schedule of
all contras applied against (a), (b) and (c);
Qualified Accounts and accrued accounts
receivable are limited to those pre-approved
by the Lender if over $250,000, which have
been reduced by the amount of any right of
reduction, counterclaim, offset or adjustment
by account debtors; accounts which are not
more than 30 days past due; and accounts
which are subject to a valid and duly
perfected first lien granted to Lender under
a Security Agreement;
Qualified exchange balances include the
amount of product valued at an independent
posting, to be delivered to EOTT pursuant to
valid and binding exchange contracts by
exchangers pre-approved by the Lender which
are subject to no other liens, encumbrances,
charges or claims; and
iii) Offshore Advances are subject to
availability, prepayment penalties,
reimbursement for reserves and minimum
advance amounts.
8
