<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Period Ended February 29, 2000
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ______________________
Commission File No. 333-35083
---------
UNITED REFINING COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1411751
- ------------------------------------ -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 Bradley Street
- --------------------
Warren, Pennsylvania 16365
- -------------------- -----
(address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code 814-726-4674
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---------- ----------
Number of shares outstanding of Registrant's Common Stock as of April 14, 2000:
100.
<PAGE> 2
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
TABLE OF ADDITIONAL REGISTRANTS
- -----------------------------------------------------------------------------------------------------------------------------
State of Other Primary Standard IRS Employer
Jurisdiction of Industrial Identification Commission File
Name Incorporation Classification Number Number Number
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Kiantone Pipeline Corporation New York 4612 25-1211902 333-35083-01
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Kiantone Pipeline Company Pennsylvania 4600 25-1416278 333-35083-03
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
United Refining Company of Pennsylvania 5541 25-0850960 333-35083-02
Pennsylvania
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
United Jet Center, Inc. Delaware 4500 52-1623169 333-35083-06
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Kwik-Fill, Inc. Pennsylvania 5541 25-1525543 333-35083-05
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Independent Gas and Oil Company of New York 5170 06-1217388 333-35083-11
Rochester, Inc.
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Bell Oil Corp. Michigan 5541 38-1884781 333-35083-07
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
PPC, Inc. Ohio 5541 31-0821706 333-35083-08
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Super Test Petroleum, Inc. Michigan 5541 38-1901439 333-35083-09
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Kwik-Fil, Inc. New York 5541 25-1525615 333-35083-04
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
Vulcan Asphalt Refining Corporation Delaware 2911 23-2486891 333-35083-10
- ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION PAGE(S)
- --------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets -
February 29, 2000 and August 31, 1999 4
Consolidated Statements of Operations -
Six Months and Quarters Ended February 29, 2000 5
and February 28, 1999
Consolidated Statements of Cash Flows -
Six Months Ended February 29, 2000 6
and February 28, 1999
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-14
PART II. OTHER INFORMATION 15
- -----------------------------
3
<PAGE> 4
UNITED REFINING COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
FEBRUARY 29,
2000 AUGUST 31,
(UNAUDITED) 1999
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT:
Cash and cash equivalents $ 6,255 $ 8,925
Accounts receivable, net 35,965 33,239
Inventories 76,813 70,728
Prepaid expenses and other assets 9,079 10,146
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 128,112 123,038
----------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Cost 283,195 279,895
Less: accumulated depreciation 71,629 66,473
----------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT AND EQUIPMENT 211,566 213,422
----------------------------------------------------------------------------------------------------------
DEFERRED FINANCING COSTS 5,972 6,370
OTHER ASSETS 5,602 6,410
----------------------------------------------------------------------------------------------------------
$ 351,252 $ 349,240
----------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT:
Revolving credit facility $ 21,000 $ 5,000
Current installments of long-term debt 174 217
Accounts payable 24,914 34,727
Accrued liabilities 10,270 12,374
Sales, use and fuel taxes payable 12,636 16,856
Deferred income taxes 661 661
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 69,655 69,835
LONG TERM DEBT: LESS CURRENT INSTALLMENTS 201,013 200,956
DEFERRED INCOME TAXES 14,134 13,515
DEFERRED GAIN ON SETTLEMENT OF PENSION PLAN OBLIGATIONS 1,882 1,990
DEFERRED RETIREMENT BENEFITS 15,503 14,055
OTHER NONCURRENT LIABILITIES 373 468
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 302,560 300,819
----------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $.10 par value per share - shares authorized
100; issued and outstanding 100 - -
Additional paid-in capital 7,150 7,150
Retained earnings 41,542 41,271
----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 48,692 48,421
----------------------------------------------------------------------------------------------------------
$ 351,252 $ 349,240
----------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
UNITED REFINING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED)
-------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY, FEBRUARY,
----------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
NET SALES $ 250,676 $ 144,662 $ 495,760 $ 331,754
COSTS OF GOODS SOLD 221,572 127,708 438,567 289,591
----------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 29,104 16,954 57,193 42,163
----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Selling, general and administrative expenses 19,920 19,570 39,856 39,194
Depreciation and amortization expenses 2,587 2,356 5,176 4,712
----------------------------------------------------------------------------------------------------------------------
TOTAL OPERATING EXPENSES 22,507 21,926 45,032 43,906
----------------------------------------------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 6,597 (4,972) 12,161 (1,743)
----------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE):
Interest income 50 228 114 743
Interest expense (5,699) (5,456) (11,271) (10,891)
Other, net (468) (421) (417) 536
----------------------------------------------------------------------------------------------------------------------
(6,117) (5,649) (11,574) (9,612)
----------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE 480 (10,621) 587 (11,355)
INCOME TAX EXPENSE (BENEFIT) 274 (4,186) 316 (4,470)
----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 206 $ (6,435) $ 271 $ (6,885)
----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 6
UNITED REFINING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
-------------------------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY,
---------------------------
2000 1999
--------------------------------------------------------------------------------------------------------
(RESTATED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 271 $ (6,885)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 6,704 6,194
Post-retirement benefits 1,448 624
Change in deferred income taxes 619 (2,588)
Gain on asset dispositions (64) (918)
Cash used in working capital items (23,881) (25,217)
Other, net (474) (19)
--------------------------------------------------------------------------------------------------------
TOTAL ADJUSTMENTS (15,648) (21,924)
--------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (15,377) (28,809)
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,361) (11,189)
Proceeds from asset dispositions 104 2,140
Decrease in restricted cash, cash equivalents
and investments - 5,397
--------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (3,257) (3,652)
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on revolving credit facility 16,000 14,000
Proceeds from issuance of long term debt 152 -
Deferred financing costs (50) -
Principal reductions of long term debt (138) (183)
--------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,964 13,817
--------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (2,670) (18,644)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,925 26,400
--------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,255 $ 7,756
--------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) WORKING CAPITAL ITEMS:
Accounts receivable, net $ (2,726) $ 6,016
Inventories (6,085) (6,267)
Prepaid expenses and other assets 1,067 (3,645)
Accounts payable (9,813) (5,698)
Accrued liabilities (2,104) (1,245)
Sales, use and fuel taxes payable (4,220) (14,378)
--------------------------------------------------------------------------------------------------------
TOTAL CHANGE $ (23,881) $ (25,217)
--------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION The accompanying unaudited consolidated
financial statements have been prepared in
accordance with generally accepted
accounting principles for interim financial
information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the
information and footnotes required by
generally accepted accounting principles for
complete financial statements. In the
opinion of management, all adjustments
(consisting of only normal recurring
accruals) considered necessary for a fair
presentation have been included. Operating
results for the three and six month periods
ended February 29, 2000 are not necessarily
indicative of the results that may be
expected for the year ending August 31,
2000. For further information, refer to the
consolidated financial statements and
footnotes thereto incorporated by reference
in the Company's Form 10-K filing dated
November 29, 1999.
2. DERIVATIVE INSTRUMENTS AND In June 1998, the Financial Accounting
HEDGING ACTIVITIES Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 133
("Statement 133"), "Accounting for
Derivative Instruments and Hedging
Activities". Statement 133 establishes
accounting and reporting standards for
derivative instruments, including certain
derivative instruments embedded in other
contracts, and for hedging activities. It
requires that an entity recognize all
derivatives as either assets or liabilities
in the statement of financial position and
measure these instruments at fair value. The
accounting for changes in the fair value of
a derivative, that is, gains and losses,
depends on the intended use of the
derivative and its resulting designation.
Statement 133 is effective for all fiscal
quarters of fiscal years beginning after
June 15, 2000. Management believes that the
adoption of Statement 133 will not have a
material effect on the Company's financial
position or results of operations.
3. CREDIT FACILITY During February, 2000 the Company
renegotiated its secured revolving credit
facility to provide for a temporary increase
in its revolving credit commitment up to
$45,000,000. The commitment increase shall
remain in effect through December 31, 2000,
at which time it will revert to its prior
maximum level of $35,000,000. The interest
rate on borrowings varies with the Company's
earnings and is based on the higher of the
bank's prime rate or federal funds rate plus
up to .75% for base rate borrowings and the
LIBOR rate plus 1.25% to 2.5% for Euro-Rate
borrowings.
4. RESTATEMENT Effective September 1, 1998, the Company
changed its method of accounting for major
maintenance turnarounds. Accordingly, the
Company has restated its financial
statements for the three and six months
ended February 28, 1999 to reflect this
change as follows (in thousands):
7
<PAGE> 8
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 28, 1999 FEBRUARY 28, 1999
------------------ ---------------- ----------------- -----------------
AS REPORTED AS RESTATED AS REPORTED AS RESTATED
- -------------------------------------- ---------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Loss before income tax benefit $ (10,908) $ (10,621) $ (11,801) $ (11,355)
Net Loss $ ( 6,609) $ ( 6,435) $ ( 7,155) $ ( 6,885)
- -------------------------------------- ---------------- ------------------ ----------------- -----------------
</TABLE>
5. SUBSIDIARY GUARANTORS Summarized financial information for the
Company's wholly owned subsidiary guarantors
is as follows (in thousands):
<TABLE>
<CAPTION>
FEBRUARY 29, 2000
(UNAUDITED) AUGUST 31, 1999
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 47,437 $ 45,027
Noncurrent assets 87,937 88,431
Current liabilities 131,753 125,789
Noncurrent liabilities 9,218 10,312
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY FEBRUARY
(UNAUDITED) (UNAUDITED)
-----------------------------------------------------------------------------
2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 133,834 $ 96,516 $ 268,793 $ 201,686
Gross profit 16,621 17,528 35,396 34,129
Operating loss (1,574) (125) (890) (1,314)
Net loss (2,295) (1,134) (2,954) (2,006)
- -------------------------------------------------------------------------------------------------
</TABLE>
6. SEGMENTS OF BUSINESS
The Company is a petroleum refiner and marketer in its primary market
area of Western New York and Northwestern Pennsylvania. Operations are organized
into two business segments: wholesale and retail.
The wholesale segment is responsible for the acquisition of crude oil,
petroleum refining, and the marketing of petroleum products to wholesale and
industrial customers. The retail segment sells petroleum products and
convenience and grocery items through company owned gasoline stations and
convenience stores under the Kwik Fill(R) and Red Apple Food Mart(R) brand
names.
8
<PAGE> 9
UNITED REFINING COMPANY
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Intersegment revenues are calculated using estimated market prices and
are eliminated upon consolidation. Summarized financial information regarding
the Company's reportable segments is presented in the following tables (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
FEBRUARY FEBRUARY
(UNAUDITED) (UNAUDITED)
------------------ ------------------ --------------------- --------------------
2000 1999 2000 1999
- ------------------------------------- ------------------ ------------------ --------------------- --------------------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Net Sales
Retail $ 132,689 $ 95,314 $ 266,459 $ 199,233
Wholesale 117,987 49,348 229,301 132,521
--------- --------- --------- ---------
$ 250,676 $ 144,662 $ 495,760 $ 331,754
--------- --------- --------- ---------
Intersegment Sales
Wholesale $ 44,251 $ 24,935 $ 113,227 $ 58,269
--------- --------- --------- ---------
Operating Income (Loss)
Retail $ (2,252) $ (395) $ (2,153) $ (1,897)
Wholesale 8,849 (4,577) 14,314 154
--------- --------- --------- ---------
$ 6,597 $ (4,972) $ 12,161 $ (1,743)
--------- --------- --------- ---------
Depreciation and Amortization
Retail $ 721 $ 660 $ 1,444 $ 1,320
Wholesale 1,866 1,696 3,732 3,392
--------- --------- --------- ---------
$ 2,587 $ 2,356 $ 5,176 $ 4,712
--------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 29, 2000
(UNAUDITED) AUGUST 31, 1999
---------------------------------------------------------------
<S> <C> <C>
Total Assets
Retail $115,793 $113,599
Wholesale 235,459 235,641
-------- --------
$351,252 $349,240
-------- --------
Capital Expenditures
Retail $ 1,044 $ 18,698
Wholesale 2,317 7,526
-------- --------
$ 3,361 $ 26,224
-------- --------
</TABLE>
9
<PAGE> 10
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Recent Developments
The Company's results in the first six months of fiscal 2000 were
significantly affected by the rapid rise in worldwide crude oil prices which
began in February 1999 and continued through the Company's second fiscal quarter
ended February 29, 2000. The rise in prices increased the Company's wholesale
margins, but reduced the Company's retail petroleum margins. The increase in
crude oil prices was in large part due to crude oil production restraints
imposed on its members by the Organization of Petroleum Exporting Countries
(OPEC). Worldwide crude oil prices, as indicated by crude oil futures contracts
traded on the New York Mercantile Exchange (NYMEX) reached a peak of over $34
per barrel in early March trading, having increased approximately $22 per barrel
from prices one year earlier. NYMEX prices have since declined to less than $26
per barrel. The decline is largely the result of action taken by OPEC at a late
March meeting to relax their production restraints. The price decline will tend
to reduce the Company's wholesale gasoline and distillate margins but increase
asphalt and retail gasoline margins.
Results of Operations
Comparison of Fiscal Quarters ended February 29, 2000 and February 28,
1999
Net Sales. Net sales increased $106.0 million or 73.3% from $144.7
million for the fiscal quarter ended February 28, 1999 to $250.7 million for the
fiscal quarter ended February 29, 2000. Retail sales increased $37.4 million, or
39.2% from $95.3 million to $132.7 million, while wholesale sales increased
$68.6 million or 138.9% from $49.4 million to $118.0 million. The retail sales
increase was due to a 4.2% increase in retail petroleum volume, a 40.8% increase
in retail petroleum prices, and a 14.8% increase in retail merchandise sales.
The wholesale sales increase was due to an 11.6% increase in wholesale volume
and a 114.3% increase in wholesale prices. The higher retail and wholesale
prices were primarily the result of a 111.4% increase in worldwide crude oil
prices as indicated by prices of NYMEX crude oil contracts for the fiscal
quarter ended February 29, 2000 compared to contracts for the prior year
quarter. The higher retail sales volumes were primarily the result of the
performance of retail locations upgraded under the Company's Capital Improvement
Plan. The higher wholesale volume was partially the result of higher product
demand, most notably the demand for home heating oil in February 2000. The
Company met this demand primarily by reducing product inventory volumes to
levels significantly below those of the prior year quarter.
Costs of Goods Sold. Costs of goods sold increased $93.9 million or
73.5% from $127.7 million for the fiscal quarter ended February 28, 1999 to
$221.6 million for the fiscal quarter ended February 29, 2000. Retail costs of
goods sold increased $38.6 million or 49.3% from $78.3 million to $116.9
million, while wholesale costs of goods sold increased $55.3 million or 111.9%
from $49.4 million to $104.7 million. The increase in consolidated costs of
goods sold was primarily the result of the increase in worldwide crude oil
prices, partially offset by increased discounts for heavy sour grades of crude
oil and by the beneficial impact on costs of goods sold of increases in the
value of the Company's working inventories. The value of the working inventories
increased approximately $5.9 million in the fiscal quarter ended February 29,
2000, which reduced costs of goods sold. In the fiscal quarter ended February
28, 1999, the value of working inventories decreased approximately $1.2 million,
which increased costs of goods sold.
10
<PAGE> 11
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Gross Profit. Gross profit increased $12.1 million from $17.0 for the
fiscal quarter ended February 28, 1999 to $29.1 million for the fiscal quarter
ended February 29, 2000. Gross profit as a percentage of sales, declined from
11.7% for the fiscal quarter ended February 28, 1999 to 11.6% for the fiscal
quarter ended February 29, 2000.
Operating Expenses. Operating expenses increased $0.6 million or 2.7%
from $21.9 million for the fiscal quarter ended February 28, 1999 to $22.5
million for the fiscal quarter ended February 29, 2000. This increase was
primarily due to increased depreciation on new capital equipment installed under
the Company's Capital Improvement Plan, and to increased retail expenses for
sales promotions and for credit card processing, partially offset by lower
retail maintenance expenses. Increased retail promotions expenses were primarily
in connection with a "frequent fueler" program. Increased credit card processing
expenses were primarily due to increased customer use of credit cards at
stations offering recently installed "Pay at the Pump" service and to the higher
retail petroleum prices, which increased the average fee per credit card
transaction. Reduced retail maintenance expenses were primarily due to the
substantial completion in December 1998 of the Federally mandated program of
replacing or upgrading underground storage tanks.
Operating Income. As a result of the above, operating income increased
$11.6 million from a $5.0 million operating loss for the fiscal quarter ended
February 28, 1999 to $6.6 million operating income for the fiscal quarter ended
February 29, 2000.
Interest Expense. Net interest expense (interest expense less interest
income) increased $0.4 million from $5.2 million for the fiscal quarter ended
February 28, 1999 to $5.6 million for the fiscal quarter ended February 29,
2000. The increased net interest expense was due to a decrease in interest
income earned, as a result of lower balances of restricted cash and investments
and to increased use of the Company's revolving credit facility to finance crude
oil and product inventories at much higher worldwide petroleum prices than in
the prior year quarter.
Income Taxes. The Company's effective tax rate for the fiscal quarter
ended February 29, 2000 was approximately 57.1% compared to a rate of 39.4% for
the fiscal quarter ended February 28, 1999. The increase in the current quarter
rate is primarily due to nondeductable permanent differences, which did not
exist in the prior year.
Comparison of the Six Months ended February 29, 2000 and February 28,
1999
Net Sales. Net sales increased $164.0 million or 49.4% from $331.8
million for the six months ended February 28, 1999 to $495.8 million for the six
months ended February 29, 2000. Retail sales increased $67.3 million or 33.8%
from $199.2 million to $266.5 million, while wholesale sales increased $96.7
million or 72.9% from $132.6 million to $229.3 million. The retail sales
increase was due to a 4.5% increase in retail petroleum volume, a 31.7% increase
in retail petroleum prices, and a 20.2% increase in retail merchandise sales.
The wholesale sales increase was due to a 1.3% increase in wholesale volume and
a 70.8% increase in wholesale prices. The higher retail and wholesale prices
were primarily the result of an 82.9% increase in worldwide crude oil prices as
indicated by prices of NYMEX crude oil contracts for the six months ended
February 29, 2000 compared to contracts for the prior year period. The higher
retail sales volumes were primarily the result of the performance of retail
locations upgraded under the Company's Capital Improvement Plan.
11
<PAGE> 12
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
The Company supplied the increased wholesale volume by reducing ending product
inventory volumes to levels significantly below those of the prior year period.
Costs of Goods Sold. Costs of goods sold increased $149.0 million to
51.5% from $289.6 million for the six months ended February 28, 1999 to $438.6
million for the six months ended February 29, 2000. Retail costs of goods sold
increased $66.5 million or 40.0% from $166.1 million to $232.6 million, while
wholesale costs of goods sold increased $82.5 million or 66.8% from $123.5
million to $206.0 million. The increase in consolidated costs of goods sold was
primarily the result of the increase in worldwide crude oil prices, partially
offset by the beneficial impact on costs of goods sold of increases in the value
of the Company's working inventories. The value of the working inventories
increased approximately $10.2 million in the six months ended February 29, 2000
which reduced costs of goods sold. In the six months ended February 28, 1999,
the value of working inventories decreased approximately $2.8 million, which
increased costs of goods sold.
Gross Profit. Gross profit increased $15.0 million from $42.2 for the
six months ended February 28, 1999 to $57.2 million for the six months ended
February 29, 2000. Gross profit as a percentage of sales declined from 12.7% for
the six months ended February 28, 1999 to 11.5% for the six months ended
February 29, 2000, as the percentage increase in sales did not keep pace with
rapidly increasing worldwide petroleum prices.
Operating Expenses. Operating expenses increased $1.1 million or 2.5%
from $43.9 million for the six months ended February 28, 1999 to $45.0 million
for the six months ended February 29, 2000. This increase was primarily due to
increased depreciation on new capital equipment installed under the Company's
Capital Improvement Plan, and to increased retail expenses for sales promotions
and for credit card processing, partially offset by lower retail maintenance
expenses. Increased retail promotions expenses were primarily in connection with
a "frequent fueler" program. Increased credit card processing expenses were
primarily due to increased customer use of credit cards at stations offering
recently installed "Pay at the Pump" service and to the higher retail petroleum
prices, which increased the average fee per credit card transactions. Reduced
retail maintenance expenses were primarily due to the substantial completion in
December 1998 of the Federally mandated program of replacing or upgrading
underground storage tanks.
Operating Income. As a result of the above, operating income increased
$13.9 million from a $1.7 million operating loss for the six months ended
February 28, 1999 to $12.2 million operating income for the six months ended
February 29, 2000.
Interest Expense. Net interest expense (interest expense less interest
income) increased $1.1 million from $10.1 million for the six months ended
February 28, 1999 to $11.2 million for the six months ended February 29, 2000.
The increased net interest expense was due to a decrease in interest income
earned, as a result of lower balances of restricted cash and investments and to
increased use of the Company's revolving credit facility to finance crude oil
and product inventories at much higher worldwide petroleum prices than in the
prior year period.
12
<PAGE> 13
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
Income Taxes. The Company's effective tax rate for the six months ended
February 29, 2000 was approximately 53.8% compared to a rate of 39.4% for the
six months ended February 28, 1999. The increase in the current six month rate
is primarily due to nondeductible permanent differences, which did not exist in
the prior year.
Liquidity and Capital Resources
Working capital (current assets minus current liabilities) at February
29, 2000 was $58.5 million and at August 31, 1999 was $53.2 million. The
Company's current ratio (current assets divided by current liabilities) was
1.8:1 at February 29, 2000 and August 31, 1999 respectively.
Net cash used in operating activities totaled $15.4 million and $28.8
million for the six months ended February 29, 2000 and February 28, 1999.
Net cash used in investing activities for purchases of property, plant
and equipment totaled $3.4 million and $11.2 million for the six months ended
February 29, 2000 and February 28, 1999 respectively.
The Company reviews its capital expenditures on an ongoing basis. The
Company currently has budgeted approximately $5.0 million for capital
expenditures in fiscal 2000. Maintenance and non-discretionary capital
expenditures have averaged approximately $4 million annually over the last three
years excluding the Capital Improvement Plan for the refining and marketing
operations. Management does not foresee any increase in maintenance and
non-discretionary capital expenditures during fiscal 2000.
Future liquidity, both short and long-term, will continue to be
primarily dependent on realizing a refinery margin sufficient to cover fixed and
variable expenses, including planned capital expenditures. The Company expects
to be able to meet its working capital, capital expenditure and debt service
requirements out of cash flow from operations, cash on hand and borrowings under
the Company's bank credit facility with PNC Bank, N.A. as Agent Bank. During
February 2000, the Company renegotiated its revolving credit facility to provide
for a temporary increase in its revolving credit commitment up to $45,000,000 to
meet short term working capital needs. Although the Company is not aware of any
pending circumstances which would change its expectation, changes in the tax
laws, the imposition of and changes in federal and state clean air and clean
fuel requirements and other changes in environmental laws and regulations may
also increase future capital expenditure levels. Future capital expenditures are
also subject to business conditions affecting the industry. The Company
continues to investigate strategic acquisitions and capital improvements to its
existing facilities.
Federal, state and local laws and regulations relating to the
environment affect nearly all the operations of the Company. As is the case with
all companies engaged in similar industries, the Company faces significant
exposure from actual or potential claims and lawsuits involving environmental
matters. Future expenditures related to environmental matters cannot be
reasonably quantified in many circumstances due to uncertainties as to required
remediation methods and related clean-up cost estimates. The Company cannot
predict what additional environmental legislation or regulations will be
13
<PAGE> 14
UNITED REFINING COMPANY
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
enacted or become effective in the future or how existing or future laws or
regulations will be administered or interpreted with respect to products or
activities to which they have not been previously applied.
Seasonal Factors
Seasonal factors affecting the Company's business may cause variation
in the prices and margins of some of the Company's products. For example, demand
for gasoline tends to be highest in spring and summer months, while demand for
home heating oil and kerosene tends to be highest in the winter months. As a
result, the margin on gasoline prices versus crude oil costs generally tends to
increase in the spring and summer, while margins on home heating oil and
kerosene tend to increase in winter.
Also, because winter weather in the Company's market is not favorable
for paving activity, the Company's asphalt sales in winter months are composed
of a much lower percentage of paving asphalt and a correspondingly higher
percentage of roofing asphalt whose demand is much less seasonal. In addition,
the Company stores a significant portion of winter asphalt production for sale
the following spring and summer.
Year 2000 Computer Issues
In the past, the Company discussed its plan to ensure Year 2000 readiness,
including computer hardware and software applications testing and remediation.
In late 1999, the Company completed its examination and as a result of its
planning and implementation efforts, the Company experienced no significant
disruptions in either information technology ("IT") or non-information
technology systems. The Company believes these systems successfully responded to
the Year 2000 date change. The costs associated with remediating any Year 2000
problems have not been material to date. The Company is not aware of any
material problems resulting from Year 2000 issues, either with its products, its
internal systems, or the products and services of third parties. The Company
will continue to monitor its critical computer applications and those of its
suppliers and vendors throughout the Year 2000 to ensure that any latent Year
2000 matters that may arise are addressed promptly.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In 1995, the Pennsylvania Environmental Defense Foundation
("PEDF") commenced a lawsuit in the United States District Court
for the Western District of Pennsylvania under Section 505 of the
federal Water Pollution Control Act, 33 U.S.C. Section 1251, et.
Seq. The complaint alleges a series of discharges to the Allegheny
River at the Company's refining facility in Warren, Pennsylvania
exceeding the limits contained in the Company's waste water
discharge permits. PEDF seeks to enjoin future discharges in
excess of permitted limits, an assessment of civil penalties up to
$25,000 per day as provided in the Act, and an award of attorneys'
fees. Following trial and post-trial proceedings, the Court
entered judgment in the amount of $400,000 against the Company,
plus attorneys' fees as provided by the statute. The amount of
attorneys' fees remains to be determined. Either the Company or
PEDF may elect to appeal the judgment. Notwithstanding any appeal,
the Company believes that this action will not have any material
adverse effect upon its operations or consolidated financial
condition.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8K
(a) Exhibit 10.18 - Amendment to Credit
Agreement dated as of February 4, 2000 by
and among URC, URCP, KPC and the banks
party thereto and PNC Bank, National
Association, as agent.
Exhibit 27 - Financial Data Schedule
(b) No reports on Forms 8-K have been filed
for the quarter for which this report is
being filed.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
UNITED REFINING COMPANY
-----------------------
(Registrant)
/s/ Myron L. Turfitt
-----------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-----------------------
James E. Murphy
Chief Financial Officer
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
KIANTONE PIPELINE CORPORATION
-----------------------------
(Registrant)
/s/ Myron L. Turfitt
-----------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-----------------------------
James E. Murphy
Chief Financial Officer
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
UNITED REFINING COMPANY OF PENNSYLVANIA
---------------------------------------
(Registrant)
/s/ Myron L. Turfitt
---------------------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
---------------------------------------
James E. Murphy
Chief Financial Officer
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
KIANTONE PIPELINE COMPANY
-------------------------
(Registrant)
/s/ Myron L. Turfitt
-------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-------------------------
James E. Murphy
Chief Financial Officer
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
UNITED JET CENTER, INC.
-----------------------
(Registrant)
/s/ Myron L. Turfitt
-----------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-----------------------
James E. Murphy
Chief Financial Officer
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
KWIK-FILL, INC.
-------------------------
(Registrant)
/s/ Myron L. Turfitt
-------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-------------------------
James E. Murphy
Chief Financial Officer
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
INDEPENDENT GASOLINE AND OIL COMPANY OF
ROCHESTER, INC.
---------------------------------------
(Registrant)
/s/ Myron L. Turfitt
---------------------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
---------------------------------------
James E. Murphy
Chief Financial Officer
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
BELL OIL CORP.
------------------------
(Registrant)
/s/ Myron L. Turfitt
------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
------------------------
James E. Murphy
Chief Financial Officer
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
PPC, INC.
-----------------------------
(Registrant)
/s/ Myron L. Turfitt
-----------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-----------------------------
James E. Murphy
Chief Financial Officer
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
SUPER TEST PETROLEUM, INC.
--------------------------
(Registrant)
/s/ Myron L. Turfitt
---------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
---------------------------
James E. Murphy
Chief Financial Officer
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
KWIK-FIL, INC.
----------------------------
(Registrant)
/s/ Myron L. Turfitt
----------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
----------------------------
James E. Murphy
Chief Financial Officer
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: April 14, 2000
VULCAN ASPHALT REFINING CORPORATION
-----------------------------------
(Registrant)
/s/ Myron L. Turfitt
-----------------------------------
Myron L. Turfitt
President
/s/ James E. Murphy
-----------------------------------
James E. Murphy
Chief Financial Officer
27
<PAGE> 1
Exhibit 10.18
FOURTH AMENDMENT TO CREDIT AGREEMENT
This Fourth Amendment to Credit Agreement (the "Fourth Amendment") is
dated as of February 4, 2000 and is made by and among UNITED REFINING COMPANY, a
Pennsylvania corporation ("United Refining"), UNITED REFINING COMPANY OF
PENNSYLVANIA, a Pennsylvania Corporation ("United Refining PA"), KIANTONE
PIPELINE CORPORATION, a New York corporation ("Kiantone, and hereinafter
together with United Refining and United Refining PA sometimes collectively
referred to as the "Borrowers" and individually as a "Borrower") the BANKS under
the Credit Agreement (as hereinafter defined) and PNC BANK, NATIONAL
ASSOCIATION, in its capacity as agent for the Banks under the Credit Agreement
(hereinafter referred to in such capacity as the "Agent").
RECITALS:
WHEREAS, the Borrowers, the Banks, and the Agent are parties to that
certain Credit Agreement dated as of June 9, 1997 (as previously amended,
restated, supplemented or modified, the "Credit Agreement"); and
WHEREAS, unless otherwise defined herein, capitalized terms used herein
shall have the meanings given to them in the Credit Agreement; and
WHEREAS, the Borrowers, the Banks and the Agent desire to amend the
Credit Agreement as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound, the parties hereto agree as follows:
1. Amendment to Credit Agreement and Notes Temporary Increase in
Revolving Credit Commitments.
The Borrowers and the Banks hereby agree that the Revolving Credit
Commitments under the Credit Agreement be temporarily increased in an amount not
to exceed $10,000,000 (the "Commitments Increase") so that the total amount of
the Revolving Credit Commitments after giving effect to such increase shall not
exceed $45,000,000, subject to the following terms and conditions:
(a) Term of Increase; Automatic Reduction at End of Such Term.
The Commitments Increase shall become effective as of January
31, 2000 and shall remain in effect through December 31,2000 (the "Increased
Commitments Period"), after which the amount of the Revolving Credit Commitments
shall revert to the levels which existed immediately prior to January 31, 2000,
less the amount of any intervening reductions in the Revolving Credit
Commitments made pursuant to the terms of the Credit Agreement.
(b) Ratable Sharing in Increases and Decreases.
Each Bank shall share in the Commitments Increase and in the Revolving
Credit Commitments after the expiration of the Increased Commitments Period
according to its Ratable Share.
<PAGE> 2
(c) Repayment of Loans.
The Borrowers shall repay outstanding Loans prior to the expiration of
the Increased Commitments Period to the extent necessary to cause the amount of
Loans outstanding on January 1, 2001 to be equal to or less than the amount of
the Revolving Credit Commitments in effect as of such date, as provided in
clause (a) above. Any repayment pursuant to this clause (c) shall be subject to
Section 4.6.2 (Indemnity) of the Credit Agreement. Any failure by the Borrowers
to repay Loans required under this clause (c) on or before the date required for
such repayment shall constitute an Event of Default under the Credit Agreement.
(d) Commitment Fees.
It is acknowledged that during the Increased Commitments
Period, the amount of the Commitment Fees shall be computed on the amount of the
Revolving Credit Commitments as increased pursuant to this Section 1.
(e) Amendment to Revolving Credit Notes.
Exhibit 1.1(R) of the Credit Agreement [Form of Revolving
Credit Note] is hereby amended and restated in its entirety as set forth on the
exhibit titled as Exhibit 1.1(R) attached hereto.
(f) Amendment to Pricing Grid.
Schedule 1.1(A) of the Credit Agreement [Pricing Grid Variable
Pricing and Fees Based on Leverage Ratio] is hereby amended and restated in its
entirety as set forth on the schedule titled as Schedule 1.1(A) attached hereto.
2. Conditions to Effectiveness.
This Fourth Amendment shall become effective upon satisfaction of each
of the following conditions:
(a) Execution and Delivery of Documents.
The Borrowers, the Banks and the Agent shall have executed
this Fourth Amendment and the Borrowers shall have executed and delivered
Amended and Restated Revolving Credit Notes in the form of Exhibit 1.1(R) to
each Bank for such Bank's ratable share of the Revolving Credit Commitments.
(b) Secretary's Certificate.
There shall be delivered to the Agent a certificate dated the
date hereof and signed by the Secretary of each of the Loan Parties, certifying
as appropriate as to:
(i) all action taken by each Loan Party in
connection with this Fourth Amendment and
the documents related hereto;
(ii) the names of the officer or officers
authorized to sign this Fourth Amendment and
the documents related hereto and the true
signatures of such officer or officers and
specifying the Authorized Officers permitted
to act on behalf of each Loan Party for
purposes of this Fourth Amendment and the
true signatures of such officers, on which
the Agent may conclusively rely;
2
<PAGE> 3
(c) Opinion of Counsel.
Counsel for the Loan Parties shall deliver a written opinion
dated as of the date hereof in form and substance satisfactory to the Agent with
respect to (i) the due organization of the Borrowers, (ii) the corporate power
and authority of Borrowers to enter into this Fourth Amendment (iii) the
execution and delivery of this Fourth Amendment and the documents related hereto
not violating the organizational documents of the Borrowers and (iv) the
enforceability of the Credit Agreement and the other Loan Documents, as amended
hereby.
(d) Amendment Fees.
The Borrowers shall pay to the Agent for the ratable benefit
of the Banks a fee in the amount of $50,000.
3. Full Force and Effect. All provisions of the Credit Agreement remain
in full force and effect on and after the date hereof except as expressly
amended hereby. The Banks do not amend any provisions of the Credit Agreement
except as expressly amended hereby.
4. Counterparts Effective Date. This Fourth Amendment may be signed in
counterparts. This Fourth Amendment shall become effective as of the date first
above written when the conditions set forth in Section 2 hereof have been
satisfied.
5. No Novation. This Fourth Amendment amends the Credit Agreement and
the Revolving Credit Notes, but is not intended to constitute, and does not
constitute, a novation of the Obligations of the Loan Parties under the Credit
Agreement and the other Loan Documents.
[SIGNATURES BEGIN ON NEXT PAGE]
3
<PAGE> 4
[SIGNATURE PAGE 1 OF 2 TO FOURTH AMENDMENT TO CREDIT AGREEMENT]
The undersigned have executed this Fourth Amendment as of the date
first above written.
UNITED REFINING COMPANY, a Pennsylvania
corporation
By: /s/ Myron Turfitt
---------------------------------
Title: President
-----------------------------
UNITED REFINING COMPANY OF
PENNSYLVANIA, a Pennsylvania corporation
By: /s/ Myron Turfitt
---------------------------------
Title: President
-----------------------------
KIANTONE PIPELINE CORPORATION,
a New York corporation
By: /s/ Myron Turfitt
---------------------------------
Title: President
-----------------------------
4
<PAGE> 5
[SIGNATURE PAGE 2 OF 2 TO FOURTH AMENDMENT TO CREDIT AGREEMENT]
NATIONAL BANK OF CANADA
By: /s/ Eric Moore
---------------------------
Title: Vice President
------------------------
By: /s/ Donald Haddad
---------------------------
Title: Vice President
------------------------
PNC BANK, NATIONAL ASSOCIATION,
individually and as Agent
By: /s/ Robert J. Tiskus
---------------------------
Title: Assistant Vice President
------------------------
MANUFACTURERS AND
TRADERS TRUST COMPANY
By: /s/ C. Gregory Vogelsang
---------------------------
Title: Assistant Vice President
------------------------
5
<PAGE> 6
SCHEDULE 1.1(A)
PRICING GRID
VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO
<TABLE>
<CAPTION>
===================== ========================== ================= =================== ===============
REVOLVING LETTER OF LETTER OF
CREDIT BASE CREDIT EURO CREDIT
LEVEL LEVERAGE RATIO RATE SPREAD RATE SPREAD FEE
===================== ========================== ================= =================== ===============
<S> <C> <C> <C> <C>
Level I Less than 2.0 to 1.0 0 1.25% 1.25%
- --------------------- -------------------------- ----------------- ------------------- ---------------
Greater than or equal to
Level II 2.0 to 1.0 but less than 0 1.50% 1.50%
3.0 to 1.0
- --------------------- -------------------------- ----------------- ------------------- ---------------
Greater than or equal to
Level III 3.0 to 1.0 but less than .25% 1.75% 1.75%
3.5 to 1.0
- --------------------- -------------------------- ----------------- ------------------- ---------------
Greater than or equal to
Level IV 3.5 to 1.0 but less than .50% 2.00% 2.00%
4.0 to 1.0
- --------------------- -------------------------- ----------------- ------------------- ---------------
Greater than or equal to
Level V 4.0 to 1.0 but less than .75% 2.25% 2.25%
5.1 to 1.0
- --------------------- -------------------------- ----------------- ------------------- ---------------
Level VI Greater than or equal to .75% 2.50% 2.50%
5.1 to 1.0
===================== ========================== ================= =================== ===============
</TABLE>
For purposes of determining the Applicable Margin and the Letter of
Credit Fee:
(a) The Applicable Margin and the Letter of Credit Fee shall be
determined on the Closing Date based on the Leverage Ratio computed on such date
pursuant to a certificate in the form of Exhibit 1.1(A)(2) to be delivered on
the Closing Date.
(b) The Applicable Margin and the Letter of Credit Fee shall be
recomputed as of the end of each fiscal quarter ending after the Closing Date
based on the Leverage Ratio as of such quarter-end. Any increase or decrease in
the Applicable Margin or the Letter of Credit Fee computed as of a quarter end
shall be effective on the date on which the Compliance Certificate evidencing
such computation is due to be delivered under Section 8.3.4.
6
<PAGE> 7
EXHIBIT 1.1(R)
FORM OF
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$__________________________* January ___, 2000
*(Subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, [UNITED REFINING COMPANY, a
Pennsylvania corporation] [UNITED REFINING COMPANY OF PENNSYLVANIA, a
Pennsylvania corporation] [KIANTONE PIPELINE CORPORATION, a New York
corporation] (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of ___________________________________________________________________
(the "Bank") the principal amount of each Revolving Credit Loan made by the
Bank to the Borrower pursuant to the Credit Agreement referred to below, the
aggregate principal amount of which Revolving Credit Loans at any time
outstanding shall not exceed the U.S. dollar amount first above mentioned
(provided, however, that as of January 1, 2001 such U.S. dollar amount first
above mentioned shall be automatically reduced to $________ less the amount of
any intervening reductions in the Revolving Credit Commitments made pursuant to
the terms of the Credit Agreement), payable on the Expiration Date, subject to
mandatory prepayment as provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, [United Refining Company,] [United Refining
Company of Pennsylvania,] [Kiantone Pipeline Corporation], the Banks and PNC
Bank, National Association, as the Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
7
<PAGE> 8
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which arc hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
ATTEST: BORROWER:
[UNITED REFINING COMPANY]
[UNITED REFINING COMPANY OF
PENNSYLVANIA]
[KIANTONE PIPELINE CORPORATION]
By: _______________________________ By: ________________________________
Title: __________________________ Title: ___________________________
{SEAL}
8
<PAGE> 9
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,857,143* January 31, 2000
*(Subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY, a
Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO
PAY to the order of NATIONAL BANK OF CANADA (the "Bank") the principal amount
of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below, the aggregate principal amount of which
Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar
amount first above mentioned (provided, however, that as of January 1,2001 such
U.S. dollar amount first above mentioned shall be automatically reduced to
$10,000,000 less the amount of any intervening reductions in the Revolving
Credit Commitments made pursuant to the terms of the Credit Agreement), payable
on the Expiration Date, subject to mandatory prepayment as provided in the
Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company of Pennsylvania,
Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as
the Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower. Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
9
<PAGE> 10
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
10
<PAGE> 11
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
UNITED REFINING COMPANY
By: /s/ Myron Turfitt
----------------------------
Title: President
-------------------------
11
<PAGE> 12
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,857,143* January 31, 2000
* (Subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY OF
PENNSYLVANIA, a Pennsylvania corporation (the "Borrower"), HEREBY
UNCONDITIONALLY PROMISES TO PAY to the order of NATIONAL BANK OF CANADA (the
"Bank") the principal amount of each Revolving Credit Loan made by the Bank to
the Borrower pursuant to the Credit Agreement referred to below, the aggregate
principal amount of which Revolving Credit Loans at any time outstanding shall
not exceed the U.S. dollar amount first above mentioned provided, however, that
as of January 1, 2001 such U.S. dollar amount first above mentioned shall be
automatically reduced to $10,000,000 less the amount of any intervening
reductions in the Revolving Credit Commitments made pursuant to the terms of the
Credit Agreement), payable on the Expiration Date, subject to mandatory
prepayment as provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company, Kiantone Pipeline
Corporation, the Banks and PNC Bank, National Association, as the Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Banks failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
12
<PAGE> 13
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived)
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
13
<PAGE> 14
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
UNITED REFINING COMPANY
OF PENNSYLVANIA
By: /s/ Myron Turfitt
------------------------
Title: President
---------------------
14
<PAGE> 15
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,857,143* January 31, 2000
(Subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned) KIANTONE PIPELINE CORPORATION, a
New York corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to
the order of NATIONAL BANK OF CANADA (the "Bank") the principal amount of each
Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit
Agreement referred to below, the aggregate principal amount of which Revolving
Credit Loans at any time outstanding shall not exceed the U.S. dollar amount
first above mentioned (provided, however, that as of January 1,2001 such U.S.
dollar amount first above mentioned shall be automatically reduced to
$10,000,000 less the amount of any intervening reductions in the Revolving
Credit Commitments made pursuant to the terms of the Credit Agreement), payable
on the Expiration Date, subject to mandatory prepayment as provided in the
Credit Agreement.
The Borrower further promises to pay interest and fee on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company, United Refining
Company of Pennsylvania, the Banks and PNC Bank, National Association, as the
Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower. Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
15
<PAGE> 16
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
16
<PAGE> 17
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
KIANTONE PIPELINE CORPORATION
By: /s/ Myron Turfitt
----------------------------
Title: President
-------------------------
17
<PAGE> 18
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$19,285,714* January 31, 2000
*(Subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY) a
Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO
PAY to the order of PNC BANK, NATIONAL ASSOCIATION (the "Bank") the principal
amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant
to the Credit Agreement referred to below, the aggregate principal amount of
which Revolving Credit Loans at any time outstanding shall not exceed the U.S.
dollar amount first above mentioned (provided, however, that as of January 1,
2001 such U.S. dollar amount first above mentioned shall be automatically
reduced to $15,000,000 less the amount of any intervening reductions in the
Revolving Credit Commitments made pursuant to the terms of the Credit
Agreement), payable on the Expiration Date, subject to mandatory prepayment as
provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company of Pennsylvania,
Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as
the Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower. Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
18
<PAGE> 19
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
19
<PAGE> 20
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
UNITED REFINING COMPANY
By: /s/ Myron Turfitt
--------------------------
Title: President
-----------------------
20
<PAGE> 21
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$19,285,714* January 31, 2000
*(subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY OF
PENNSYLVANIA, a Pennsylvania corporation (the "Borrower"), HEREBY
UNCONDITIONALLY PROMISES TO PAY to the order of PNC BANK, NATIONAL ASSOCIATION
(the "Bank") the principal amount of each Revolving Credit Loan made by the Bank
to the Borrower pursuant to the Credit Agreement referred to below, the
aggregate principal amount of which Revolving Credit Loans at any time
outstanding shall not exceed the U.S. dollar amount first above mentioned
(provided, however, that as of January 1,2001 such U.S. dollar amount first
above mentioned shall be automatically reduced to $15,000,000 less the amount of
any intervening reductions in the Revolving Credit Commitments made pursuant to
the terms of the Credit Agreement), payable on the Expiration Date, subject to
mandatory prepayment as provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company of Pennsylvania,
Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as
the Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
21
<PAGE> 22
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
22
<PAGE> 23
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
UNITED REFINING COMPANY
OF PENNSYLVANIA
By: /s/ Myron Turfitt
--------------------------
Title: President
-----------------------
23
<PAGE> 24
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$19,285,714* January 31, 2000
*(Subject to automatic reduction as of
January 1, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, KIANTONE PIPELINE CORPORATION, a
New York corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to
the order of PNC BANK, NATIONAL ASSOCIATION (the "Bank") the principal amount of
each Revolving Credit Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below, the aggregate principal amount of which
Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar
amount first above mentioned (1) provided, however, that as of January 1, 2001
such U.S. dollar amount first above mentioned shall be automatically reduced to
$15,000,000 less the amount of any intervening reductions in the Revolving
Credit Commitments made pursuant to the terms of the Credit Agreement), payable
on the Expiration Date, subject to mandatory prepayment as provided in the
Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company, United Refining
Company of Pennsylvania, the Banks and PNC Bank, National Association, as the
Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower, Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
24
<PAGE> 25
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
25
<PAGE> 26
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
KIANTONE PIPELINE CORPORATION
By: /s/ Myron Turfitt
------------------------
Title: President
---------------------
26
<PAGE> 27
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,857,143* January 31,2000
*(Subject to automatic reduction as of
January I, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY, a
Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO
PAY to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank") the
principal amount of each Revolving Credit Loan made by the Bank to the Borrower
pursuant to the Credit Agreement referred to below, the aggregate principal
amount of which Revolving Credit Loans at any time outstanding shall not exceed
the U.S. dollar amount first above mentioned (1) provided, however, that as of
January 1, 2001 such U.S. dollar amount first above mentioned shall be
automatically reduced to $10,000,000 less the amount of any intervening
reductions in the Revolving Credit Commitments made pursuant to the terms of the
Credit Agreement), payable on the Expiration Date, subject to mandatory
prepayment as provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company, United Refining
Company of Pennsylvania, the Banks and PNC Bank, National Association, as the
Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower, Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
27
<PAGE> 28
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
28
<PAGE> 29
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
UNITED REFINING COMPANY
By: /s/ Myron Turfitt
------------------------
Title: President
---------------------
29
<PAGE> 30
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,857,143* January 31,2000
*(Subject to automatic reduction as of
January I, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY OF
PENNSYLVANIA, a Pennsylvania corporation (the "Borrower"), HEREBY
UNCONDITIONALLY PROMISES TO PAY to the order of MANUFACTURERS AND TRADERS TRUST
COMPANY (the "Bank") the principal amount of each Revolving Credit Loan made by
the Bank to the Borrower pursuant to the Credit Agreement referred to below, the
aggregate principal amount of which Revolving Credit Loans at any time
outstanding shall not exceed the U.S. dollar amount first above mentioned (1)
provided, however, that as of January 1, 2001 such U.S. dollar amount first
above mentioned shall be automatically reduced to $10,000,000 less the amount of
any intervening reductions in the Revolving Credit Commitments made pursuant to
the terms of the Credit Agreement), payable on the Expiration Date, subject to
mandatory prepayment as provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company, United Refining
Company of Pennsylvania, the Banks and PNC Bank, National Association, as the
Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower, Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
30
<PAGE> 31
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
31
<PAGE> 32
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
UNITED REFINING COMPANY
OF PENNSYLVANIA
By: /s/ Myron Turfitt
---------------------------
Title: President
------------------------
32
<PAGE> 33
AMENDED AND RESTATED REVOLVING CREDIT NOTE
$12,857,143* January 31,2000
*(Subject to automatic reduction as of
January I, 2001, as provided herein)
FOR VALUE RECEIVED, the undersigned, KIANTONE PIPELINE CORPORATION, a
New York corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to
the order of MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank") the principal
amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant
to the Credit Agreement referred to below, the aggregate principal amount of
which Revolving Credit Loans at any time outstanding shall not exceed the U.S.
dollar amount first above mentioned (1) provided, however, that as of January 1,
2001 such U.S. dollar amount first above mentioned shall be automatically
reduced to $10,000,000 less the amount of any intervening reductions in the
Revolving Credit Commitments made pursuant to the terms of the Credit
Agreement), payable on the Expiration Date, subject to mandatory prepayment as
provided in the Credit Agreement.
The Borrower further promises to pay interest and fees on the unpaid
principal amount of each Revolving Credit Loan from the date of such Revolving
Credit Loan until such principal amount is paid in full, at the rates and at the
times set forth in the Credit Agreement dated as of June 9, 1997, (as amended,
restated, modified or otherwise supplemented from time to time, the "Credit
Agreement"), among the Borrower, United Refining Company, United Refining
Company of Pennsylvania, the Banks and PNC Bank, National Association, as the
Agent.
All principal, interest, and fees are payable in lawful money of the
United States of America in immediately available funds to the Principal Office
of the Agent.
If an Event of Default has occurred and is continuing, then the
Borrower shall pay interest on: (i) the entire principal amount of the then
outstanding Revolving Credit Loans; and (ii) all other obligations due and
payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on
demand, at an interest rate per annum equal to the Base Rate plus two percent
(2%) per annum.
In the event the interest rate hereunder exceeds the maximum permitted
by law, then the Revolving Credit Loans shall automatically bear interest, in
accordance herewith at the maximum rate permitted by law.
The Bank is authorized but not required to record the date and amount
of each Revolving Credit Loan made, the date and amount of any principal and
interest payment, and the principal balance hereof on any schedule which may be
attached hereto and made a part hereof, and any such recordation shall, in the
absence of manifest error, constitute prima facie evidence of the accuracy of
the information so recorded; provided, however, that the Bank's failure to so
record shall not limit the obligations of the Borrower hereunder and under the
Credit Agreement to pay the principal of and fees and interest on the Revolving
Credit Loans.
This promissory note is one of the Revolving Credit Notes referred to
in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the
Borrower, Capitalized terms used herein but not otherwise defined herein shall
have the respective meanings assigned to them in the Credit Agreement.
This promissory note is secured by certain collateral more specifically
described in the Credit Agreement and the other Loan Documents.
33
<PAGE> 34
The Credit Agreement provides, among other things, for acceleration
(which in certain cases shall be automatic) of the maturity hereof upon the
occurrence of certain stated events, in each case without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived,
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
In accordance with the Credit Agreement, the Borrower agrees to pay all
costs, including reasonable attorneys' fees, incurred by the Agent or the Bank
in enforcing payment hereof.
This promissory note shall be binding upon, inure to the benefit of,
and be enforceable by the Borrower and the Bank and their respective successors
and assigns, except that the Borrower shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of the
Bank.
This promissory note shall be governed by the internal law of the
Commonwealth of Pennsylvania.
[SIGNATURES BEGIN ON NEXT PAGE]
<PAGE> 35
[SIGNATURE PAGE 1 OF 1 TO
AMENDED AND RESTATED REVOLVING CREDIT NOTE]
BORROWER:
KIANTONE PIPELINE CORPORATION
By: /s/ Myron Turfitt
---------------------------
Title: President
------------------------
34
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<CIK> 0000101462
<NAME> UNITED REFINING CO.
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0
0
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