<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1998
REGISTRATION NO. 333-45093
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
HUNTWAY REFINING COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 2911 95-4680045
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification No.) Identification No.)
incorporation or
organization)
</TABLE>
25129 THE OLD ROAD, SUITE 322
NEWHALL, CALIFORNIA 91381
(805) 286-1582
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
Juan Y. Forster
President and Chief Executive Officer
25129 The Old Road, Suite 322
Newhall, California 91381
(805) 286-1582
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO
WILLIAM S. KIRSCH, P.C.
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement and the
satisfaction of the condition to the merger of Huntway Partners, L.P. (the
"Partnership") with and into the Registrant pursuant to an Agreement and Plan of
Merger between the Registrant and the Partnership described in the enclosed
Proxy Statement/Prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION
8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
NEWHALL, CALIFORNIA
APRIL , 1998
------------------------
NOTICE OF SPECIAL MEETING OF LIMITED PARTNERS
TO BE HELD
ON MAY 15, 1998
------------------------
To the Limited Partners of Huntway Partners, L.P.:
NOTICE IS HEREBY GIVEN that a Special Meeting of the limited partners of
Huntway Partners, L.P., a Delaware limited partnership (the "Partnership"), will
be held at 25129 The Old Road, Suite 322, Newhall, California on May 15, 1998 at
10:00 a.m., local time for the following purposes:
1. To vote on a proposal (the "Conversion Proposal") that, if
approved, will result in the conversion of the Partnership to corporate
form (the "Conversion"). The Conversion will be accomplished through the
merger of the Partnership with and into Huntway Refining Company, a
newly-formed Delaware corporation that is a wholly-owned subsidiary of the
Partnership (the "Corporation"). Upon consummation of such merger: (i) each
of the Partnership's outstanding limited partnership interests ("Common
Units") will be converted into one share of the Corporation's common stock
and (ii) the Partnership's outstanding general partnership interests (to
which 1% of each item of the Partnership's taxable income, gain, loss or
deduction is allocated) will be converted into 1% of the Corporation's
common stock to be outstanding immediately after such merger. As a result
of the Conversion, the Partnership will cease to exist and the Corporation
will receive all of the assets and become subject to all of the liabilities
of the Partnership. The Conversion Proposal and related matters are more
fully described in the attached Proxy Statement/Prospectus, which, together
with the exhibits thereto and the documents incorporated by reference
therein, forms a part of this Notice and is incorporated herein by
reference.
2. To vote on the adoption of a stock incentive plan for the
Corporation (the "1998 Stock Plan").
Only limited partners of the Partnership of record at the close of business
on April 13, 1998 are entitled to notice of and to vote at the Special Meeting.
The Conversion will require the affirmative vote of limited partners
holding at least 66 2/3% of the outstanding Common Units. Failure to forward a
proxy or to vote in person at the Special Meeting will have the same effect as
if a limited partner had voted against the Conversion Proposal. Approval of the
1998 Stock Plan will require the affirmative vote of a majority of the limited
partners voting at the Special Meeting, in person or by proxy.
You are cordially invited to attend the Special Meeting. If you cannot
attend, please sign and date the accompanying form of proxy and return it
promptly in the enclosed envelope. If you attend the meeting, you may vote in
person regardless of whether you have given your proxy. Any proxy may be revoked
at any time before it is exercised, as indicated herein.
By Order of the Managing General Partner
Warren J. Nelson,
Secretary
Huntway Partners, L.P.
Your vote is important. Accordingly, you are asked to complete, sign and
return the accompanying proxy card in the envelope provided, which requires no
postage if mailed in the United States.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 14, 1998
PROXY STATEMENT/PROSPECTUS
14,731,271 SHARES
HUNTWAY REFINING COMPANY
COMMON STOCK
-------------------------
This Proxy Statement (which is also a Prospectus) relates to the merger
(the "Merger") of Huntway Partners, L.P., a Delaware limited partnership (the
"Partnership"), with and into Huntway Refining Company, a newly-formed Delaware
corporation that is a wholly-owned subsidiary of the Partnership (the
"Corporation"), and the issuance of an aggregate of 14,731,271 shares of Common
Stock, par value $.01 per share ("Common Stock"), of the Corporation in
connection therewith.
This Proxy Statement/Prospectus is being sent by the Partnership on or
about April , 1998 to the holders of its limited partnership interests
("Common Units") in connection with the solicitation by Huntway Managing
Partner, L.P., a Delaware limited partnership that is the managing general
partner of the Partnership (the "Managing General Partner"), of proxies to be
voted at a special meeting of the Partnership's limited partners (the "Special
Meeting") in Newhall, California on May 15, 1998. At the Special Meeting, the
limited partners will vote on (i) a proposal (the "Conversion Proposal") that,
if approved, will result in the conversion of the Partnership to corporate form
(the "Conversion") and (ii) the adoption of a stock incentive plan for the
Corporation (the "1998 Stock Plan").
The Conversion will be accomplished through the Merger. Upon consummation
of the Merger: (i) each Common Unit will be converted into one share of Common
Stock and (ii) the general partnership interests of the Managing General Partner
and of Huntway Holdings, L.P., a Delaware limited partnership that is the
special general partner of the Partnership (the "Special General Partner" and,
together with the Managing General Partner, the "General Partners") (to which 1%
of each item of the Partnership's taxable income, gain, loss or deduction is
allocated) will be converted into 1% of the Common Stock to be outstanding
immediately after the Merger. As a result of the Conversion, the Partnership
will cease to exist and the Corporation will receive all of the assets and
become subject to all of the liabilities of the Partnership.
Approval of the Conversion, if granted, will bind all limited partners
regardless of whether they vote against the Conversion.
SEE "RISK FACTORS AND OTHER IMPORTANT CONSIDERATIONS" ON PAGE 8 FOR CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY LIMITED PARTNERS VOTING AT THE SPECIAL
MEETING.
The Conversion will require the approval of limited partners holding at
least 66 2/3% of the outstanding Common Units. Failure to forward a proxy or to
vote in person at the Special Meeting will have the same effect as if a limited
partner had voted against the Conversion Proposal. Approval of the 1998 Stock
Plan will require the affirmative vote of a majority of the limited partners
voting at the Special Meeting, in person or by proxy.
The officers of the Partnership and certain affiliates of the General
Partners, who own approximately 40.9% of the Common Units, have advised the
Partnership that they will vote in favor of the Conversion Proposal and for
adoption of the 1998 Stock Plan.
-------------------------
NEITHER THIS TRANSACTION NOR THESE SECURITIES HAVE BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION OR THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/ PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-------------------------
No person is authorized to give any information or to make any representation
not contained in this Proxy Statement/Prospectus, and any information or
representation not contained herein must not be relied upon as having been
authorized by the Partnership, the General Partners or the Corporation. This
Proxy Statement/Prospectus does not constitute an offer of any securities other
than the registered securities to which it relates or an offer to any person in
any jurisdiction where such offer would be unlawful. Neither the delivery of
this Proxy Statement/Prospectus nor any sales made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Partnership or the Corporation since the date hereof.
-------------------------
The Common Stock has been approved for listing on the New York Stock Exchange,
subject to official notice of issuance.
-------------------------
The date of this Proxy Statement/Prospectus is April , 1998.
<PAGE> 4
AVAILABLE INFORMATION
The Partnership is (and following the Conversion, the Corporation will be)
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files (and
will file) reports and other information with the Securities and Exchange
Commission (the "SEC"). Such reports and other information may be inspected and
copied at the public reference facilities maintained by the SEC, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's Regional Offices at Seven
World Trade Center, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of this
material should also be available on-line through EDGAR and may be obtained at
prescribed rates from the Public Reference Section of the SEC at its principal
office in Washington, D.C. The SEC also maintains a Web site
(http://www.sec.gov) that contains reports and other information regarding the
Partnership. Such reports and other information concerning the Partnership can
also be inspected at the office of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005, the exchange on which the Common Units are listed (and
on which application will be made to list the Common Stock).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement/Prospectus incorporates certain documents by
reference. These documents are being delivered herewith and are also available
without charge to each person to whom a copy of this Proxy Statement/ Prospectus
is delivered, upon written or oral request addressed to Huntway Partners, L.P.,
25129 The Old Road, Suite 322, Newhall, California 91381, Attention: Secretary,
telephone number (805) 286-1582. In order to ensure timely delivery of the
documents, any request should be made by May , 1998.
The Partnership's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 has been filed with the SEC and is incorporated herein by
reference.
All documents filed by the Partnership pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference into this Proxy Statement/Prospectus and
to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed document
which also is incorporated herein) modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part hereof except as so modified or superseded.
ii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY..................................................... 1
General................................................... 1
The Conversion............................................ 2
The 1998 Stock Plan....................................... 5
Voting at the Special Meeting............................. 5
Summary Historical Financial Information.................. 6
RISK FACTORS AND OTHER IMPORTANT CONSIDERATIONS............. 7
GENERAL..................................................... 8
THE CONVERSION.............................................. 8
Reasons to Convert to Corporate Form...................... 8
Alternatives to the Conversion............................ 9
Terms of the Conversion; Merger Agreement................. 10
Accounting Treatment...................................... 10
Fees and Expenses......................................... 10
No Dissenters' Rights..................................... 11
Exchange of Depositary Receipts........................... 11
Related Transaction....................................... 11
COMPARISON OF COMMON UNITS AND COMMON STOCK................. 12
FEDERAL INCOME TAX CONSIDERATIONS........................... 16
Introduction.............................................. 16
Differences between Common Units and Common Stock in
General................................................. 16
Merger of the Partnership and the Corporation............. 17
Post-Merger Treatment of the Corporation and its
Shareholders............................................ 19
ADOPTION OF 1998 STOCK PLAN................................. 20
General................................................... 20
Shares Subject to the 1998 Stock Plan..................... 20
Administration............................................ 20
Eligibility............................................... 20
Awards.................................................... 20
Amendments and Termination................................ 21
Federal Income Tax Consequences........................... 21
1998 Stock Plan Benefits.................................. 22
VOTING AND PROXY INFORMATION................................ 23
Voting Procedures......................................... 23
Revocation of Proxies..................................... 23
Vote Required; Quorum..................................... 23
Solicitation of Proxies................................... 23
Independent Auditors...................................... 24
Shareholder Proposals..................................... 24
MANAGEMENT.................................................. 25
Operating Committee....................................... 25
Officers.................................................. 25
Board of Directors........................................ 26
Compensation of Directors................................. 26
SECURITY OWNERSHIP OF CERTAIN SECURITYHOLDERS............... 27
DESCRIPTION OF CAPITAL STOCK................................ 29
General................................................... 29
Common Stock.............................................. 29
Serial Preferred Stock.................................... 29
Certain Provisions of the Certificate of Incorporation and
By-laws................................................. 30
Certain Provisions of Delaware Law........................ 30
Limitations on Liability and Indemnification of Officers
and Directors........................................... 31
Transfer Agent and Registrar.............................. 31
RESALE OF SECURITIES........................................ 31
Securities Act Restrictions............................... 31
Registration Rights Agreement............................. 31
LEGAL MATTERS............................................... 31
EXPERTS..................................................... 32
PRO FORMA CONDENSED FINANCIAL STATEMENTS.................... 33
</TABLE>
iii
<PAGE> 6
SUMMARY
The following summary is not intended to be complete and is qualified in
all respects by the more detailed information set forth elsewhere in this Proxy
Statement/Prospectus and in the documents incorporated by reference herein.
Limited partners are urged to carefully review the entire Proxy
Statement/Prospectus and the documents incorporated by reference herein. In this
Proxy Statement/Prospectus, the term "Huntway" means the Partnership prior to
the Conversion and/or the Corporation after the Conversion, in each case
including its subsidiary, Sunbelt Refining Company, L.P., a Delaware limited
partnership ("Sunbelt").
This Proxy Statement/Prospectus contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended
("Securities Act"). Such forward-looking statements are based on the beliefs of
the Partnership as well as on assumptions made by and information currently
available to the Partnership at the time such statements were made. When used in
this Proxy Statement/Prospectus, the words "anticipate," "believe," "estimate,"
"expect," "intend" and similar expressions, as they relate to Huntway and the
Conversion are intended to identify forward-looking statements, which include
statements relating to, among other things, the anticipated benefits to Huntway
of the Conversion. Actual results could differ materially from those projected
in the forward-looking statements as a result of the matters discussed under
"Risk Factors and Other Important Considerations" or in this Proxy
Statement/Prospectus generally, as well as other factors.
GENERAL
THE PARTNERSHIP
The Partnership owns two crude oil refineries located in California.
Sunbelt owns a crude oil refinery located in Arizona. The Partnership is
currently operating the two California refineries. The Arizona refinery has been
shut down since August 1993 due to adverse market conditions.
In December of 1996, pursuant to a prepackaged plan of reorganization
approved by the United States Bankruptcy Court for the District of Delaware, the
Partnership completed a debt restructuring with its then-existing senior and
junior lenders (the "1996 Restructuring"). As a result of the 1996
Restructuring, debt and accrued interest declined $71,748,000 to $27,924,000
from $99,672,000 as measured at November 30, 1996. In exchange for this
reduction in debt and accrued interest, 13,786,404 Common Units were issued to
the Partnership's senior and junior lenders raising total Common Units
outstanding to 25,342,654.
On October 31, 1997, the Partnership issued $21,750,000 of 9 1/4% Senior
Subordinated Secured Convertible Notes due 2007 (the "Convertible Notes"),
retired $11,707,000 of 12% senior debt, and redeemed 10,758,696 Common Units
(the "1997 Refinancing"). The 1997 Refinancing also reduced the effective
interest rate on the Partnership's $8,600,000 Industrial Development Bond from
12% to approximately 6% and provided the Partnership with $2,500,000 of
additional working capital. The Partnership also extended through 2005 its
letter of credit arrangement with its existing bank to continue to collateralize
its Industrial Development Bond.
The Convertible Notes are convertible into equity at $1.50 per Common Unit
(subject to adjustment) at any time after May 15, 1998. The Partnership can
force conversion after October 15, 2000 assuming certain trading criteria are
met. The Merger will result in the Convertible Notes becoming convertible into
shares of Common Stock at $1.50 per share (subject to adjustment), which shares,
if then issued, would constitute 49.4% of the outstanding Common Stock.
See "Pro Forma Condensed Financial Statements" for financial information of
the Partnership for the year ended December 31, 1997 after giving effect to the
1997 Refinancing and the Conversion.
The principal executive offices of the Partnership are located at 25129 The
Old Road, Suite 322, Newhall, California 91381 and its telephone number is (805)
286-1582.
1
<PAGE> 7
THE CORPORATION
The Corporation is a Delaware corporation which has been newly formed to
accomplish the Conversion. The outstanding shares of the Corporation are
presently owned by the Partnership. Its address and telephone number are the
same as those of the Partnership.
See "General."
THE CONVERSION
OVERVIEW
The Conversion will be accomplished through the Merger. Upon consummation
of the Merger: (i) each Common Unit will be converted into one share of Common
Stock and (ii) the general partnership interests of the General Partners (to
which 1% of each item of the Partnership's taxable income, gain, loss or
deduction is allocated) will be converted into 1% of the Common Stock to be
outstanding immediately after the Merger. As a result of the Conversion, the
Partnership will cease to exist and the Corporation will receive all of the
assets and become subject to all of the liabilities of the Partnership.
Each option to purchase Common Units outstanding under the Partnership's
1996 Huntway Employee Incentive Option Plan (the "Existing Equity Plan") or
otherwise will be automatically converted into an option to purchase the same
number of shares of Common Stock. In addition, the Partnership's Convertible
Notes, which are currently convertible into Common Units, will automatically
become convertible into the same numbers of shares of Common Stock.
The General Partners, the Board of Directors of the Corporation and the
Partnership as of the sole stockholder of the Corporation have approved the
Conversion. Consummation of the Conversion is subject only to the approval of
the limited partners sought hereby and the filing of appropriate documents with
the Delaware Secretary of State. The Managing General Partner may decide not to
pursue the Conversion at any time before the Conversion becomes effective,
whether before or after approval by the Partnership's limited partners, for any
reason. Reasons that the Managing General Partner may decide not to pursue the
Conversion include, but are not limited to, the following: (i) the withdrawal of
the tax opinion received by the Partnership regarding certain federal income tax
effects of the Conversion and (ii) a change in applicable law relating to the
Conversion or the anticipated treatment, tax or otherwise, of the Corporation
after the Conversion. In the event the tax opinion received by the Partnership
were to be withdrawn, the Managing General Partner would not pursue the
Conversion without the resolicitation of proxies from the Partnership's limited
partners.
See "The Conversion -- Terms of the Conversion; Merger Agreement."
Transaction costs of approximately $300,000 will be paid by the
Partnership, whether or not the Conversion is completed. See "The
Conversion -- Fees and Expenses."
In a related transaction, immediately preceding (and contingent upon) the
consummation of the Merger, the Corporation will sell to twelve individuals,
including certain directors and officers of the Corporation, 150,000 shares of
Common Stock. See "The Conversion -- Related Transaction."
RISK FACTORS AND OTHER IMPORTANT CONSIDERATIONS
In evaluating the Conversion, limited partners should take into account the
following risk factors and other important considerations, which are discussed
at greater length in "Risk Factors and Other Important Considerations."
Tax Implications. Because of the Conversion, the Partnership and the
limited partners will forego the potential future income tax benefits associated
with operating in partnership form. A corporation pays taxes on its taxable
income and its stockholders generally pay taxes on any dividends received from
the corporation, whereas a partnership pays no income tax and its partners are
subject to tax on their share of partnership taxable net income.
2
<PAGE> 8
No Dissenters' Rights. Limited partners have no dissenters', appraisal or
similar rights in the Conversion. Therefore, limited partners will not be
entitled to receive cash payments from Huntway for the fair value of their
Common Units if they dissent and the Conversion is approved and consummated.
Potential Reduction of Fiduciary Duties and Reduction of Other
Obligations. The fiduciary duties owed by the directors of the Corporation
under Delaware law after the Conversion may be less than those owed by the
General Partners of the Partnership under Delaware law before the Conversion.
The General Partners and their affiliates (including certain officers of the
Partnership) are potentially responsible, directly or indirectly, for
obligations and liabilities of the Partnership that arise prior to the
Conversion. Neither the General Partners, their affiliates nor the directors of
the Corporation will be responsible for the liabilities and obligations of the
Corporation that arise after the Conversion. See "Comparison of Common Units and
Common Stock."
Uncertainty Regarding Market Price of Common Stock. The Common Stock
received by the holders of the Common Units may trade at prices below the
historical trading levels of the Common Units. If, as a result of the perceived
additional liquidity afforded by the Conversion, a number of holders of Common
Stock were to offer their securities for sale following consummation of the
Conversion, the market price of the Common Stock could decline.
Limited partners should note that an investment in the Corporation involves
the same risks associated with operating conditions, competitive factors,
economic conditions, industry conditions and equity market conditions as an
investment in the Partnership.
REASONS TO CONVERT TO CORPORATE FORM
The Managing General Partner believes that there are four principal reasons
for converting to corporate form at this time.
Expansion of Potential Investor Base. The Managing General Partner believes
that the Conversion may expand Huntway's potential investor base to include
institutional and other investors who do not typically invest in limited
partnership securities because of various tax and administrative reasons. In
addition, the Managing General Partner believes that the Common Stock (as
compared to Common Units) may receive additional investor interest through
increased review and evaluation by research analysts.
Greater Access to Equity Markets. The Managing General Partner believes
that the Corporation may have greater access to the public and private equity
capital markets than the Partnership, potentially enabling it to raise capital
on more favorable terms than are now available to the Partnership. This greater
access may be of particular benefit if Huntway proposes to issue equity
securities to reduce existing debt or to seek additional funds for capital
expenditures or to otherwise expand its business.
Avoidance of Additional Interest Expense. Under the terms of the
Partnership's Convertible Notes issued in the 1997 Refinancing, if the
Partnership is not converted to a corporation on or before May 15, 1998, the
interest rate on the Convertible Notes will automatically increase to 12% for
the period of time thereafter until such conversion -- the cost of which, on an
annualized basis, would be $598,125 in additional interest.
Avoidance of Unfunded Tax Liability and Reporting. Although the Partnership
has never recognized any taxable income, limited partners are subject to income
tax on their share of any taxable income of the Partnership, whether or not
distributions are made. Under the terms of the Partnership's loan agreements,
the Partnership is not currently, and is not expected to be for the foreseeable
future, permitted to make distributions to its limited partners, for tax
liabilities or otherwise. In addition, the complexities of tax reporting
associated with partnership investments are generally regarded as burdensome for
most limited partners. The ownership of Common Stock rather than Common Units
will greatly simplify tax reporting with respect to an investment in Huntway on
each limited partner's individual federal and state income tax returns for
future years.
The Taxpayer Relief Act of 1997 (the "Taxpayer Relief Act") amended certain
rules applicable to the tax treatment of limited partnerships. However, these
amendments have not changed the general tax treatment of the Partnership (as
discussed above). Accordingly, the adoption of the Taxpayer Relief Act is not
one of the reasons for converting the Partnership to corporate form.
3
<PAGE> 9
See "The Conversion -- Reasons to Convert to Corporate Form."
ALTERNATIVES TO THE CONVERSION
As alternatives to the Conversion, the Managing General Partner considered
(i) continuing the existence of the Partnership in partnership form and (ii)
liquidating the Partnership. The Managing General Partner believes that these
alternatives would not be more advantageous to limited partners than the
Conversion. The Managing General Partner did not retain the assistance of any
outside party in its determination and evaluation of the available alternatives
to the Conversion.
The Managing General Partner believes that the Conversion is in the best
interests of Huntway and the limited partners and that other long-term
strategies available to Huntway, such as diversification, disposition of assets
and acquisition of assets, are not materially adversely affected by the
Conversion.
If the Conversion is not approved by the limited partners, or if the
Conversion is not consummated for any other reason, the Partnership presently
intends to continue to operate as an ongoing business in its current form. No
other transaction is currently being considered by the Partnership as an
alternative to the Conversion, although the Partnership may from time to time
explore other alternatives.
See "The Conversion -- Alternatives to the Conversion."
COMPARATIVE RIGHTS OF THE COMMON UNITS AND THE COMMON STOCK
If the Conversion is approved, the rights and limitations of holders of
Common Stock will be similar in some respects and will differ in other respects
from those to which they are subject as holders of Common Units. These rights
and limitations are discussed under "Comparison of Common Units and Common
Stock."
SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, the Merger should be treated as a transfer
by the Partnership of its assets and liabilities to the Corporation in exchange
for stock of the Corporation, followed by a distribution of such stock by the
Partnership to the General Partners and to the holders of Common Units
("Unitholders") in redemption of the General Partners' general partnership
interests and the Unitholders' Common Units, respectively. Accordingly, the
Merger should generally be tax-free to the Partnership, the General Partners and
the Unitholders, subject to the following two exceptions. First, to the extent
that the liabilities of the Partnership exceed the tax basis of the Partnership
in its assets, such excess would generally be recognized as gain by the
Partnership, which gain in turn would be allocated to the General Partners and
the Unitholders. As in the case of other income of the Partnership, any such
gain allocated to a General Partner or to a Unitholder would increase the basis
of the General Partner's general partnership interest or the basis of such
Unitholder's Common Units. As of December 31, 1997, the liabilities of the
Partnership did not exceed the tax basis of the Partnership in its assets.
Second, each General Partner and Unitholder will be deemed to receive a cash
distribution from the Partnership in an amount equal to the amount of
liabilities allocated to such General Partner or Unitholder prior to the Merger.
Such deemed cash distribution will reduce the tax basis of such General
Partner's general partnership interest and such Unitholder's Common Units and,
to the extent that such deemed cash distribution exceeds such tax basis, such
General Partner or Unitholder will recognize gain. As of December 31, 1997, the
aggregate amount of liabilities allocated to the Unitholders was $37.967
million.
The foregoing is not intended to be a complete discussion of the federal
income tax consequences of the Merger with respect to either the Partnership or
any specific Unitholder. In particular, a given Unitholder's federal income tax
consequences may depend on a variety of facts and circumstances unique to such
Unitholder, including, among others, how such Unitholder has previously
characterized and treated its ownership of Common Units for federal income tax
purposes.
See "Federal Income Tax Consequences."
NO DISSENTERS' RIGHTS
Limited partners who object to the Conversion will have no appraisal,
dissenters' or similar rights. Therefore, limited partners will not be entitled
to receive cash payments from Huntway for the fair value of
4
<PAGE> 10
their Common Units if they dissent and the Conversion is approved and
consummated. See "Voting and Proxy Information -- No Dissenters' Rights."
EXCHANGE OF DEPOSITARY RECEIPTS
Promptly after the Effective Time (as defined below), the Corporation will
cause to be mailed to all limited partners of record at the Effective Time a
letter of transmittal containing instructions with respect to the surrender of
Depositary Receipts for Common Units in exchange for certificates representing
shares of Common Stock. Upon surrender of one or more Depositary Receipts,
together with a properly completed letter of transmittal, there will be issued
and mailed to such a limited partner a certificate or certificates representing
the number of shares of Common Stock to which such limited partner is entitled.
From and after the Effective Time, each such Depositary Receipt will evidence
only the right to receive shares of Common Stock. Limited partners should not
send any Depositary Receipts with the enclosed proxy. They should retain such
Depositary Receipts until they receive further instructions after the Merger is
consummated. See "The Conversion -- Exchange of Depositary Receipts."
THE 1998 STOCK PLAN
The Board of Directors of the Corporation has adopted the 1998 Stock Plan
and reserved 2,000,000 shares of Common Stock for issuance thereunder. The 1998
Stock Plan was adopted by the Board as a post-Conversion replacement for the
Existing Equity Plan. Options issued and outstanding at the time of the
Conversion under the Existing Equity Plan will convert into options to purchase
Common Stock automatically as a result of the Conversion. Approval of the 1998
Stock Plan will require the affirmative vote of a majority of the limited
partners voting at the Special Meeting in person or by proxy. See "Adoption of
1998 Stock Plan."
VOTING AT THE SPECIAL MEETING
The Special Meeting........... The Special Meeting will be held at 21529 The
Old Road, Suite 322, Newhall, California on May
15, 1998 at 10:00 a.m., local time.
Voting........................ Each Common Unit entitles the holder thereof on
the record date to one vote on each matter to
be voted on at the Special Meeting. Only
limited partners of the Partnership on the
record date are entitled to vote at the Special
Meeting. April 13, 1998 is the record date for
the determination of limited partners entitled
to vote at the Special Meeting.
Common Units Outstanding...... On the record date, 14,583,958 Common Units
were outstanding.
Vote Required................. The Conversion will require the approval of
limited partners holding at least 66 2/3% of
the outstanding Common Units. Failure to
forward a proxy or to vote in person at the
Special Meeting will have the same effect as if
a limited partner had voted against the
Conversion Proposal.
Approval of the 1998 Stock Plan will require
the affirmative vote of a majority of the
limited partners voting at the Special Meeting,
in person or by proxy.
The officers of the Partnership and certain
affiliates of the General Partners, who own
approximately 40.9% of the Common Units, have
advised the Partnership that they will vote in
favor of the Conversion Proposal and the
adoption of the 1998 Stock Plan.
See "Voting and Proxy Information."
5
<PAGE> 11
SUMMARY HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER UNIT AND PER BARREL DATA)
The following historical summary financial data as of and for each of the
years in the five-year period ended December 31, 1997 are derived from the
financial statements of Huntway Partners, L.P. The financial statements for
1995, 1996 and 1997 have been audited by Deloitte & Touche, LLP, independent
auditors, and are incorporated herein by reference. The financial statements for
1993 and 1994 have also been audited but are not incorporated herein by
reference. All of the selected information should be read in conjunction with
the financial statements and notes thereto.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING DATA
Revenues.......................................... $102,678 $ 79,139 $ 83,069 $99,021 $96,715
Materials, processing, selling and administrative
costs and expenses.............................. 94,249 (a) 74,803 80,462 91,980 89,677
Interest expense.................................. 7,280 4,984 5,177 4,916 3,492
Plant closure and write down...................... 16,013 (b) -- 9,492(c) -- --
Depreciation and amortization..................... 3,806 (d) 2,356 2,399 2,219 2,414
Net income (loss) from operations................. (18,670)(a)(b)(d) (3,004) (14,461) (94) 1,132
Extraordinary gain on refinancing................. -- -- -- 58,668 --
Related costs of refinancing...................... -- -- -- 2,180 --
-------- -------- -------- ------- -------
Net income (loss)................................. $(18,670) $ (3,004) $(14,461) $56,394 $ 1,132
======== ======== ======== ======= =======
Basic earnings per unit(e):
Income (loss) per unit from operations.......... $ (1.60) $ (0.26) $ (1.24) $ (0.01) $ 0.05
Extraordinary items............................. -- -- -- 4.37 --
-------- -------- -------- ------- -------
Net income (loss) per unit...................... $ (1.60) $ (0.26) $ (1.24) $ 4.36 $ 0.05
======== ======== ======== ======= =======
Diluted earnings per unit(e):
Income (loss) per unit from operations.......... $ (1.60) $ (0.26) $ (1.24) $ (0.01) $ 0.04
Extraordinary items............................. -- -- -- 4.37 --
-------- -------- -------- ------- -------
Net income (loss) per unit...................... $ (1.60) $ (0.26) $ (1.24) $ 4.36 $ 0.04
======== ======== ======== ======= =======
Barrels sold...................................... 5,466 4,584 4,400 4,566 4,547
Revenues per barrel............................... 18.78 17.26 18.88 21.69 21.27
BALANCE SHEET DATA
Working capital(f)................................ $ 2,289 $ 2,725 $(91,437) $ 5,798(g) 8,375
Total assets(f)................................... 90,745 85,795 74,393 75,891 80,243
Long-term obligations............................. 89,570 91,312 350 28,174(g) 36,668
Partners' Capital/(Deficiency)(f)(h).............. (13,049)(a)(b)(d) (16,053) (30,154) 39,041(g) 33,779
</TABLE>
- -------------------------
(a) Includes $2,078 of non-recurring charges relating to professional fees
incurred relating to the restructuring of indebtedness completed in 1993.
(b) Non-recurring charges recorded in June 1993 relating to the Sunbelt refinery
which was shut down in August 1993.
(c) Write down of Sunbelt refinery assets to reflect expected operations as a
crude or product terminal in the future rather than as a petroleum refinery.
(d) Includes $778 of non-recurring charges relating to amortization of loan
acquisition costs.
(e) Earnings per unit is calculated based upon the weighted average number of
Common Unit equivalents outstanding. Common Unit equivalents are calculated
by adding to actual Common Units outstanding a general partnership interest
representing an overall 1% interest. For purposes of computing basic
earnings per unit, the weighted average Common Unit equivalents outstanding
for the years ended December 31, 1993, 1994, 1995, 1996 and 1997 were
11,672,979, 11,672,979, 11,672,979, 12,871,000 and 23,787,462, respectively.
On a diluted basis, the weighted average Common Unit equivalents outstanding
for such years were 11,672,979, 11,672,979, 11,672,979, 12,871,000 and
26,500,000, respectively.
(f) After the cumulative LIFO reserve of $36, $1,203, $1,170, $2,192, and $1,028
at December 31, 1993, 1994, 1995, 1996 and 1997, respectively.
(g) Reflects impact of 1996 Restructuring decreasing debt and accrued interest
by $71,748 as measured at November 30, 1996.
(h) The Partnership has made no distributions to Unitholders since 1990.
6
<PAGE> 12
RISK FACTORS AND OTHER IMPORTANT CONSIDERATIONS
Before completing the enclosed form of proxy, each limited partner should
carefully read this entire Proxy Statement/Prospectus, including the exhibits
hereto, and the Partnership's Form 10-K for the year ended December 31, 1996 and
other documents incorporated herein by reference, and should give particular
attention to the following considerations.
Tax Implications. Because of the Conversion, the Partnership and the
limited partners will forego the potential future income tax benefits associated
with operating in partnership form. A corporation pays taxes on its taxable
income and its stockholders generally pay taxes on any dividends received from
the corporation, whereas a partnership pays no income tax and its partners are
subject to tax on their share of partnership taxable net income.
No Dissenters' Rights. If the limited partners approve the Conversion, all
holders of Common Units will be bound by such approval even though they,
individually, may have voted against the Conversion. Under applicable state law
and the terms of the Partnership's partnership agreement (the "Partnership
Agreement"), limited partners will have no dissenters', appraisal or similar
rights in connection with the Conversion, nor will such rights be voluntarily
accorded to limited partners by the Partnership or the Corporation. Therefore,
limited partners will not be entitled to receive cash payments from Huntway for
the fair value of their Common Units if they dissent and the Conversion is
approved and consummated. See "Voting and Proxy Information -- No Dissenters'
Rights."
Potential Reduction of Fiduciary Duties and Reduction of Other
Obligations. The fiduciary duties owed by the directors of the Corporation under
Delaware law after the Conversion may be less than those owed by the General
Partners of the Partnership under Delaware law before the Conversion. The
General Partners and their affiliates (including certain officers of the
Partnership) are potentially responsible, directly or indirectly, for
obligations and liabilities of the Partnership that arise prior to the
Conversion. Neither the General Partners, their affiliates nor the directors of
the Corporation will be responsible for the liabilities and obligations of the
Corporation that arise after the Conversion. See "Comparison of Common Units and
Common Stock."
Uncertainty Regarding Market Price for Common Stock. The Common Stock
received by the holders of the Common Units may trade at prices below the
historical trading levels of the Common Units. If, as a result of the perceived
additional liquidity afforded by the Conversion, a number of holders of Common
Stock were to offer their securities for sale following consummation of the
Conversion, the market price of the Common Stock could decline.
Other Important Considerations. Limited partners should note that an
investment in the Corporation involves the same risks associated with operating
conditions, competitive factors, economic conditions, industry conditions and
equity market conditions as an investment in the Partnership.
7
<PAGE> 13
GENERAL
THE PARTNERSHIP
The Partnership owns two crude oil refineries located in California.
Sunbelt owns a crude oil refinery located in Arizona. The Partnership is
currently operating the two California refineries. The Arizona refinery has been
shut down since August 1993 due to adverse market conditions.
In December of 1996, pursuant to a prepackaged plan of reorganization
approved by the United States Bankruptcy Court for the District of Delaware, the
Partnership completed a debt restructuring with its then-existing senior and
junior lenders. As a result of the 1996 Restructuring, debt and accrued interest
declined $71,748,000 to $27,924,000 from $99,672,000 as measured at November 30,
1996. In exchange for this reduction in debt and accrued interest, 13,786,404
Common Units were issued to the Partnership's senior and junior lenders raising
total Common Units outstanding to 25,342,654.
On October 31, 1997, the Partnership consummated a refinancing that
provided it with additional near-term liquidity. In the 1997 Refinancing, the
Partnership issued $21,750,000 of 9 1/4% Convertible Notes to Lighthouse
Investors, LLC, B III Capital Partners, L.P. (an affiliate of DDJ Capital
Management, LLC), Contrarian Capital Fund I, L.P. and Contrarian Capital Fund
II, L.P. (affiliates of Contrarian Capital Advisors, L.L.C.) and six other
investment entities, retired $11,707,000 of 12% senior debt previously held by
two lenders and redeemed 10,758,696 Common Units (42% of the Common Units
outstanding) previously held by such lenders. The change in borrowings reduced
minimum required cash principal payments in 1998 by $2,480,000, in each of 1999
and 2000 by $2,475,000 and in each of 2001 and 2002 by $1,475,000. The 1997
Refinancing also reduced the effective interest rate on the Partnership's
$8,600,000 Industrial Development Bond from 12% to approximately 6%.
Notwithstanding the $10,043,000 increase in debt payable, interest expense
remained essentially unchanged due to the lower interest rate on the new
borrowings and the reduction in the effective interest rate on the Industrial
Development Bond. In the 1997 Refinancing, the Partnership also obtained
$2,500,000 of additional working capital and extended through 2005 its letter of
credit arrangement with its existing bank, one of the previous holders of the
retired senior debt.
The Convertible Notes are convertible into equity at $1.50 per Common Unit
(subject to adjustment) at any time after May 15, 1998. Although the 1997
Refinancing reduced total Common Units outstanding by 10,758,696, if the
Convertible Notes are fully converted at the current conversion rate total
Common Units will increase by 14,500,000, a net increase of 3,241,304. The
Partnership can force conversion of the Convertible Notes after October 15, 2000
assuming certain trading criteria are met.
The Merger will result in the Convertible Notes becoming convertible into
14,500,000 shares of Common Stock (subject to adjustment), which shares, if then
issued, would constitute 49.4% of the outstanding Common Stock. Information
regarding the beneficial ownership of Huntway equity by Lighthouse Investors,
LLC, DDJ Capital Management, LLC and Contrarian Capital Advisors, L.L.C. is set
forth under "Security Ownership of Certain Securityholders."
See "Pro Forma Condensed Financial Statements" for financial information of
the Partnership for the year ended December 31, 1997 after giving effect to the
1997 Refinancing and the Conversion.
THE CORPORATION
The Corporation is a Delaware corporation which has been newly formed to
accomplish the Conversion. The outstanding shares of the Corporation are
presently owned by the Partnership.
THE CONVERSION
REASONS TO CONVERT TO CORPORATE FORM
The Managing General Partner believes that there are four principal reasons
for converting to corporate form at this time.
8
<PAGE> 14
Expansion of Potential Investor Base. The Managing General Partner
believes that the Conversion may expand Huntway's potential investor base to
include institutional and other investors who do not typically invest in limited
partnership securities because of various tax and administrative reasons. In
addition, the Managing General Partner believes that the Common Stock (as
compared to Common Units) may receive additional investor interest through
increased review and evaluation by research analysts.
Greater Access to Equity Markets. The Managing General Partner believes
that the Corporation may have greater access to the public and private equity
capital markets than the Partnership, potentially enabling it to raise capital
on more favorable terms than are now available to the Partnership. This greater
access may be of particular benefit if Huntway proposes to issue equity
securities to reduce existing debt or to seek additional funds for capital
expenditures or to otherwise expand its business.
Avoidance of Additional Interest Expense. Under the terms of the
Partnership's Convertible Notes issued in the 1997 Refinancing, if the
Partnership is not converted to a corporation on or before May 15, 1998, the
interest rate on the Convertible Notes will automatically increase to 12% for
the period of time thereafter until such conversion -- the cost of which, on an
annualized basis, would be $598,125 in additional interest.
Avoidance of Unfunded Tax Liability and Reporting. Although the
Partnership has never recognized any taxable income, limited partners are
subject to income tax on their share of any taxable income of the Partnership,
whether or not distributions are made. Under the terms of the Partnership's loan
agreements, the Partnership is not currently, and is not expected to be for the
foreseeable future, permitted to make distributions to its limited partners, for
tax liabilities or otherwise. In addition, the complexities of tax reporting
associated with partnership investments are generally regarded as burdensome for
most limited partners. The ownership of Common Stock rather than Common Units
will greatly simplify tax reporting with respect to an investment in Huntway on
each limited partner's individual federal and state income tax returns for
future years.
The Taxpayer Relief Act amended certain rules applicable to the tax
treatment of limited partnerships. However, these amendments have not changed
the general tax treatment of the Partnership (as discussed above). Accordingly,
the adoption of the Taxpayer Relief Act is not one of the reasons for converting
the Partnership to corporate form.
ALTERNATIVES TO THE CONVERSION
As alternatives to the Conversion, the Managing General Partner considered
(i) continuing the existence of the Partnership in partnership form and (ii)
liquidating the Partnership. The Managing General Partner believes that these
alternatives would not be more advantageous to limited partners than the
Conversion. The Managing General Partner did not retain the assistance of any
outside party in its determination and evaluation of the available alternatives
to the Conversion.
Continuing the existence of the Partnership in partnership form would
result in additional interest expense and in potential unfunded tax liabilities
to limited partners. See "-- Reasons to Convert to Corporate Form."
Liquidating the Partnership at this time would only be beneficial to the
limited partners if the currently realizable value of the Partnership's net
assets would exceed the value of Huntway as a continuing business. The Managing
General Partner does not believe this to be the case, considering the
Partnership's outstanding debt and the costs and expenses of liquidating and
winding up the Partnership, including taxes on the sale of the assets.
The Managing General Partner believes that the Conversion is in the best
interests of Huntway and the limited partners and that other long-term
strategies available to Huntway, such as diversification, disposition of assets
and acquisition of assets, are not materially adversely affected by the
Conversion.
If the Conversion is not approved by the limited partners, or if the
Conversion is not consummated for any other reason, the Partnership presently
intends to continue to operate as an ongoing business in its current
9
<PAGE> 15
form. No other transaction is currently being considered by the Partnership as
an alternative to the Conversion, although the Partnership may from time to time
explore other alternatives.
TERMS OF THE CONVERSION; MERGER AGREEMENT
The Conversion is proposed to be effected pursuant to an Agreement and Plan
of Merger, in the form attached as Exhibit A, between the Corporation and the
Partnership (the "Merger Agreement"). The terms of the Conversion were
determined by the Managing General Partner without the assistance of any outside
party and were approved by the Board of Directors of the Corporation. If the
Merger Agreement is approved by the holders of Common Units, the Conversion will
be effected as follows:
Structure of the Conversion. The Conversion will be accomplished through
the merger of the Partnership with and into the Corporation. Upon consummation
of the Merger: (i) each Common Unit will be converted into one share of Common
Stock and (ii) the general partnership interests of the General Partners (to
which 1% of each item of the Partnership's taxable income, gain, loss or
deduction is allocated) will be converted into 1% of the Common Stock to be
outstanding immediately after the Merger (147,313 shares). Each option to
purchase Common Units outstanding under the Existing Equity Plan or otherwise
will be automatically converted into an option to purchase the same number of
shares of Common Stock. In addition, the Partnership's Convertible Notes, which
are currently convertible into Common Units, will automatically become
convertible into the same numbers of shares of Common Stock.
Effect of the Conversion. As a result of the Conversion, the Partnership
will cease to exist and the Corporation will receive all of the assets and
become subject to all of the liabilities of the Partnership.
Effective Time. If approved at the Special Meeting, the Conversion is
expected to become effective on May 15, 1998 (the "Effective Time").
Condition to the Conversion. Consummation of the Conversion is subject only
to the approval of the limited partners sought hereby and the filing of
appropriate documents with the Delaware Secretary of State.
Termination. The General Partners, the Board of Directors of the
Corporation and the Partnership as the sole stockholder of the Corporation have
approved the Conversion. The Managing General Partner may decide not to pursue
the Conversion at any time before the Conversion becomes effective, whether
before or after approval by the Partnership's limited partners, for any reason.
Reasons that the Managing General Partner may decide not to pursue the
Conversion include, but are not limited to, the following: (i) the withdrawal of
the tax opinion received by the Partnership regarding certain federal income tax
effects of the Conversion and (ii) a change in applicable law relating to the
Conversion or the anticipated treatment, tax or otherwise, of the Corporation
after the Conversion. In the event the tax opinion received by the Partnership
were to be withdrawn, the Managing General Partner would not pursue the
Conversion without the resolicitation of proxies from the Partnership's limited
partners.
Indemnification. Pursuant to the terms of the Merger Agreement, the
Corporation will indemnify the General Partners and their affiliates for
liabilities and obligations of the Partnership that arose prior to the Effective
Time to the same extent as the Partnership currently indemnifies them in respect
of such liabilities and obligations.
ACCOUNTING TREATMENT
For financial accounting purposes, the Conversion will be treated as a
recapitalization. Therefore, the assets and liabilities of the Partnership will
be recorded by the Corporation at their historical cost basis, except that the
Corporation will also record incremental deferred tax assets in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"), relating to temporary differences for certain assets and
liabilities of the Partnership at the date of conversion to corporate form. The
existing values of the tax basis in assets and liabilities of the Partnership at
the date of conversion will carry over to the Corporation, which will also
record a provision for U.S. federal and state income taxes on its taxable
earnings.
FEES AND EXPENSES
All legal and other costs and expenses incurred by the Corporation or the
Partnership in connection with the Conversion will be paid by the Partnership,
whether or not the Conversion is consummated. The following
10
<PAGE> 16
is a statement of certain estimated fees and expenses incurred by the
Corporation and the Partnership in connection with the Conversion:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 10,321
New York Stock Exchange Listing Fee......................... 5,300
Legal Fees and Expenses..................................... 175,000
Accounting Fees and Expenses................................ 65,000
Printing and Engraving Expenses............................. 35,000
Miscellaneous............................................... 9,279
--------
Total.................................................. $300,000
========
</TABLE>
NO DISSENTERS' RIGHTS
Limited partners who object to the Conversion will have no appraisal,
dissenters' or similar rights (i.e., the right, instead of receiving Common
Stock, to seek a judicial determination of the "fair value" of their Common
Units and to compel Huntway to purchase their Common Units for cash in that
amount) under state law or the Partnership Agreement, nor will such rights be
voluntarily accorded to limited partners by Huntway. Thus, approval of the
Conversion by the requisite vote of limited partners will bind all limited
partners, and objecting limited partners will have no alternative to receipt of
Common Stock other than selling their Common Units in the open market.
EXCHANGE OF DEPOSITARY RECEIPTS
Limited partners should not send any Depositary Receipts with the enclosed
proxy. They should retain such Depositary Receipts until they receive further
instructions after the Conversion is consummated.
Promptly after the Effective Time, the Corporation will cause to be mailed
to all former limited partners of record a letter of transmittal containing
instructions with respect to the surrender of Depositary Receipts for Common
Units in exchange for certificates representing shares of Common Stock. Upon
surrender of one or more Depositary Receipts, together with a properly completed
letter of transmittal, there will be issued and mailed to a former limited
partner of record at the Effective Time a certificate or certificates
representing the number of shares of Common Stock to which such former limited
partner is entitled. From and after the Effective Time, each Depositary Receipt
will evidence only the right to receive shares of Common Stock.
If any certificate representing Common Stock is to be issued in a name
other than that in which the Depositary Receipt surrendered in exchange therefor
is registered on the books of the Partnership as of the Effective Time, it will
be a condition of such issuance that (i) the Depositary Receipt so surrendered
be properly endorsed and otherwise in proper form for transfer and (ii) the
person requesting such exchange pay to the Corporation any transfer or other
taxes required by reason of the issuance of a certificate representing Common
Stock in any name other than that of the registered owner of the Depositary
Receipt surrendered, or the person requesting such exchange establish to the
satisfaction of the Corporation that such tax has been paid or is not
applicable.
After the Effective Time, there will be no further registration of
transfers of Depositary Units that were issued and outstanding immediately
before such time. If, after the Effective Time, Depositary Receipts representing
Common Units are presented for transfer, they will be canceled and exchanged for
one or more certificates representing shares of Common Stock.
RELATED TRANSACTION
Pursuant to a Stock Purchase Agreement dated as of March 31, 1998,
immediately preceding (and contingent upon) the Effective Time, twelve
individuals will purchase from the Corporation, for $1.75 per share (the closing
price of the Common Units on the New York Stock Exchange on March 30, 1998), an
aggregate of 150,000 shares of Common Stock (the "Related Transaction"). The
individuals include Juan Y. Forster, J.C. MacFarland and Warren J. Nelson,
directors (and in the case of Messrs. Forster and Nelson, executive officers) of
the Corporation, William G. Darnell, Lucian A. Nawrocki and Terrance L.
Stringer, executive officers of the Corporation, and one other officer of the
Corporation. Information regarding the number of shares to be purchased by each
of the Corporation's directors and executive officers is set forth under
"Security Ownership of Certain Securityholders." The purchased shares will not
be registered under the Securities Act nor will the purchasers have any
registration rights with respect to such shares. The $262,500 of proceeds from
the sale will be used by the Corporation for working capital purposes.
11
<PAGE> 17
COMPARISON OF COMMON UNITS AND COMMON STOCK
The following summary describes a number of differences between ownership
of Common Units and ownership of shares of Common Stock and the effects relating
thereto.
<TABLE>
<CAPTION>
COMMON UNITS COMMON STOCK
------------ ------------
<S> <C>
ISSUER
The Partnership The Corporation
TAXATION
Under current law, the Partnership is not an The Corporation will pay income tax with respect
income tax paying entity. Rather, each holder of to its taxable income after allowable deductions
Common Units includes the holder's share of the and credits. Stockholders will have taxable
taxable income and gain and, subject to certain income from the Corporation's operations only to
limitations, the losses, deductions and credits the extent that taxable dividends and other
of the Partnership in computing taxable income, distributions are declared and paid on the
without regard to the cash distributed to the Common Stock. See "Certain Federal Income Tax
limited partner. Generally, cash distributions Consequences"
to holders of Common Units are not taxable,
unless distributions exceed the limited
partner's basis in the Common Units. See
"Certain Federal Income Tax Consequences."
A tax-exempt limited partner's share of the No portion of the earnings of, or any dividends
Partnership's taxable income constitutes received from, the Corporation will constitute
unrelated business taxable income to it. See unrelated business taxable income to tax-exempt
"Federal Income Tax Considerations." stockholders, except to the extent their
investment in stock of the Corporation is
considered debt-financed. See "Federal Income
Tax Considerations."
DISTRIBUTIONS AND DIVIDENDS
Under the terms of the Partnership Agreement, Subject to the limitations of Delaware corporate
the Partnership is obligated to distribute all law and any contractual restrictions, the Board
Available Cash (as defined therein) to limited of Directors of the Corporation has the
partners on a quarterly basis to the extent discretion to determine whether or not and when
permitted under any contractual restrictions. to declare and pay dividends and the amount of
The Managing General Partner has the authority any dividend. Holders of Common Stock will have
to make additional distributions, subject to no contractual right to receive dividends. Under
such restrictions. Under the terms of the the terms of Huntway's loan agreements, the
Partnership's loan agreements, the Partnership Corporation is not expected to be in the
is not currently, and is not expected to be in foreseeable future permitted to pay dividends to
the foreseeable future, permitted to make its stockholders. In any event, the Board of
distributions to its limited partners. Directors anticipates that any income of the
Corporation in the foreseeable future will be
retained for the development and expansion of
its business.
MANAGEMENT
The business and affairs of the Partnership are The business and affairs of the Corporation are
managed by the Managing General Partner with the managed by or under the direction of the Board
advice and consultation of the Operating of Directors of the Corporation. The Board of
Committee (as defined below). Limited partners Directors is divided into three classes, as
have no say in the composition of the Operating nearly equal in number as possible, serving
Committee. staggered terms. Approximately 0ne-third of the
Board of Directors is elected each year. The
current membership of the Board of Directors of
the Corporation is described under "Management."
The removal of the General Partners requires the The holders of Common Stock have the ability to
affirmative vote of at least 66 2/3% of the elect members of the Board of Directors with a
limited partners. plurality of the votes cast for such election,
but may only remove directors for cause.
</TABLE>
12
<PAGE> 18
<TABLE>
<CAPTION>
COMMON UNITS COMMON STOCK
------------ ------------
<S> <C>
VOTING RIGHTS
Limited partners do not vote annually to elect Shareholders will elect members of the
the Managing General Partner or at all to elect Corporation's Board of Directors at annual
members of the Operating Committee; therefore, meetings, beginning at the Corporation's annual
the Partnership does not conduct annual meetings meeting to be held in 1999. The Corporation will
of limited partners or distribute proxy distribute proxy materials in connection
materials in connection therewith. therewith in accordance with the requirements of
the Exchange Act.
Under Delaware law and the Partnership Stockholders of the Corporation have the right
Agreement, limited partners have voting rights to vote on all matters on which stockholders
with respect to (i) the removal and replacement must be permitted to vote under Delaware
of the Managing General Partner, (ii) the merger corporate law, including, as a general matter,
of the Partnership, (iii) the sale of all or election of directors, mergers, the sale of all
substantially all of the assets owned, directly or substantially all of the assets of the
or indirectly, by the Partnership, (iv) the Corporation and amendments to the Corporation's
dissolution of the Partnership and (v) material certificate of incorporation.
amendments to the Partnership Agreement.
Each Common Unit entitles each holder thereof Each share of Common Stock entitles its holder
who is admitted as a limited partner to the to cast one vote on each matter presented to
Partnership to cast one vote on all matters stockholders.
presented to limited partners.
Approval of any matter required to be submitted Approval of any matter required to be submitted
to limited partners generally requires the to stockholders generally requires the
affirmative vote of limited partners holding affirmative vote of holders of more than 50% of
more than 50% of the Common Units then the Common Stock outstanding and entitled to
outstanding. vote.
Holders of 10% of the Common Units held by Amendment of the certificate of incorporation or
limited partners may propose amendments to the bylaws requires approval of a majority of the
Partnership Agreement. The approval of members of the Board of Directors and,
amendments to the Partnership Agreement requires generally, approval by the stockholders. The
the approval of the Managing General Partner and amendment of certain provisions of the
at least 66 2/3% of the limited partners. Corporation's organizational documents requires
Approval of at least 90% of a class of limited the vote of holders of at least 66 2/3% of the
partners is required if such amendment Common Stock.
materially and adversely affects the interests
of such class.
Any action that may be taken at a meeting of Stockholders may not act by written consent in
limited Stockholders may not act by written lieu of a meeting.
consent in lieu partners may be taken by written
consent in lieu of a meeting executed by limited
partners sufficient to authorize such action at
a meeting of limited partners.
SPECIAL MEETINGS
Special meetings of Limited Partners may be The Corporation's Certificate of Incorporation
called by the Managing General Partner or by and By- laws provide that, except as otherwise
Limited Partners holding at least 10% of the required by law, special meetings of the
outstanding Common Units. stockholders can only be called pursuant to a
resolution adopted by a majority of the Board of
Directors or by the Chief Executive Officer of
the Corporation. Stockholders will not be
permitted to call a special meeting or to
require the Board to call a special meeting.
CONVERSION RIGHTS
The Common Units are not convertible into any The Common Stock is not convertible into any
other securities. other securities.
</TABLE>
13
<PAGE> 19
<TABLE>
<CAPTION>
COMMON UNITS COMMON STOCK
------------ ------------
<S> <C>
REDEMPTION
Common Units are subject to redemption at the The Common Stock is not subject to mandatory or
option of the Managing General Partner under optional redemption.
certain circumstances at their then current fair
value plus accumulated distributions in arrears.
LIQUIDATION RIGHTS
In the event of a liquidation of the In the event of a liquidation of the
Partnership, limited partners would be entitled Corporation, the holders of Common Stock would
to share ratably in any assets remaining after be entitled to share ratably in any assets
satisfaction of obligations to creditors and the remaining after satisfaction of obligations to
return of any amounts in partners' capital creditors and any liquidation preferences on any
accounts. series of preferred stock of the Corporation
that may then be outstanding.
RIGHT TO COMPEL DISSOLUTION
Limited partners may only compel dissolution of Holders of Common Stock may compel dissolution
the Partnership with the affirmative vote of the of the Corporation, absent prior action by the
holders of at least 50% of the outstanding Board of Directors, only if all holders consent
Common Units and the approval of the Managing in writing. A plan of dissolution adopted by the
General Partner. Board of Directors must be approved by a
majority of the Common Stock outstanding and
entitled to vote.
LIMITED LIABILITY
In general, holders of Common Units do not have Shares of Common Stock issued in the Conversion
personal liability for obligations of the will be fully paid and nonassessable. In
Partnership. general, stockholders do not have personal
liability for obligations of the Corporation.
LIQUIDITY AND MARKETABILITY
Depositary Receipts for the Common Units are The Common Stock issued in the Merger will
generally freely transferable and are currently generally be freely transferable and application
listed and traded on the New York Stock will be made for listing the Common Stock on the
Exchange. After the Effective Time, the New York Stock Exchange. See "Resale of
Depositary Receipts will ceased to be traded. Securities."
CONTINUITY OF EXISTENCE
The Partnership Agreement provides for the The Corporation's Certificate of Incorporation
Partnership to continue in existence until provides for perpetual existence, subject to
December 3, 2083, unless earlier terminated in Delaware law.
accordance with the Partnership Agreement.
FINANCIAL REPORTING
The Partnership is subject to the reporting The Corporation will be subject to the reporting
requirements of the Exchange Act and files requirements of the Exchange Act and will file
annual and quarterly reports thereunder. The annual and quarterly reports thereunder.
Partnership also provides annual and quarterly Corporation also will provide annual and
reports to its limited partners. quarterly reports to its stockholders.
</TABLE>
14
<PAGE> 20
<TABLE>
<CAPTION>
COMMON UNITS COMMON STOCK
------------ ------------
<S> <C>
CERTAIN LEGAL RIGHTS
Delaware law allows a limited partner to Delaware law affords stockholders of a
institute legal action on behalf of the corporation similar rights to bring stockholder
Partnership (a partnership derivative action) to derivative actions when the board of directors
recover damages from a third party or a general has failed to institute an action against third
partner where the general partner has failed to parties or directors of the corporation, and
institute the action. In addition, a limited class actions to recover damages from directors
partner may have rights to institute legal for violations of their fiduciary duties.
action on behalf of the limited partner or all Stockholders may also have rights to bring
other similarly situated limited partners (a actions in federal courts to enforce federal
class action) to recover damages from a general rights. These rights are comparable to the
partner for violations of fiduciary duties to rights of the limited partners in the
the limited partners. Limited partners may also Partnership.
have rights to bring actions in federal courts
to enforce federal rights.
RIGHT TO LIST OF HOLDERS; INSPECTION OF BOOKS AND RECORDS
Upon reasonable demand, at the limited partner's Upon written request, at reasonable times and
own expense and for a purpose reasonably related for a proper purpose related to a stockholder's
to his interest in the Partnership, a limited interest as a stockholder, any stockholder of
partner may have access, at reasonable times, to record has the right to examine and copy the
certain information regarding the status of the Corporation's stock ledger, a list of its
business and financial condition of the stockholders and its other books and records. In
Partnership, tax returns, governing instruments certain circumstances, stockholders may not have
of the Partnership and a current list of the the same right to information regarding the
partners of the Partnership, provided that the Corporation that they currently have under the
General Partners may keep confidential any trade Partnership Agreement with respect to
secrets or any other information the disclosure information regarding the Partnership.
of which could damage the Partnership or violate
any agreement or applicable law.
SUBORDINATION
Subordinated to claims of creditors of the Subordinated to claims of creditors of the
Partnership. Corporation.
</TABLE>
POTENTIAL REDUCTION OF FIDUCIARY DUTIES AND REDUCTION OF OTHER OBLIGATIONS
Until the Conversion, the business and affairs of the Partnership will
continue to be managed by the General Partners in accordance with the Delaware
Revised Uniform Limited Partnership Act (the "DRULPA") and the Partnership
Agreement. The Partnership Agreement limits the liability of the General
Partners to the fullest extent permitted by the DRULPA. Following the
Conversion, the business and affairs of the Corporation will be managed by the
directors of the Corporation in accordance with the Delaware General Corporation
Law ("DGCL"). The Corporation's Certificate of Incorporation limits the
liability of directors to the fullest extent permitted by the DGCL. While at
least one Delaware court has stated that the fiduciary duties of a general
partner to limited partners are comparable to those of a director to
stockholders, other Delaware courts have indicated that the fiduciary duties of
a general partner are greater than those of a director to stockholders.
Therefore, although it is unclear whether or to what extent there are any
differences in such fiduciary duties, it is possible that the fiduciary duties
of directors of the Corporation to its stockholders could be less than those of
the General Partners to the limited partners.
The General Partners and their affiliates (including certain officers of
the Partnership) are potentially responsible, directly or indirectly, for
obligations and liabilities of the Partnership that arise prior to the
Conversion. The Partnership Agreement requires the Partnership to indemnify the
General Partners and their affiliates for such obligations and liabilities,
subject to certain limitations. Pursuant to the Merger Agreement, the
Corporation will similarly indemnify such persons with respect to such
liabilities and obligations. Neither the General Partners, their affiliates nor
the directors of the Corporation will be responsible for liabilities and
obligations of the Corporation that arise after the Conversion.
15
<PAGE> 21
FEDERAL INCOME TAX CONSIDERATIONS
INTRODUCTION
The following description sets out all material federal income tax
consequences of general application to the Partnership and Unitholders
associated with the Merger and to the Corporation and holders of Common Stock
("Shareholders") after the Merger. This description does not comment on all tax
matters that may affect the Partnership, Unitholders, the Corporation or
Shareholders, including any state, local, foreign or other matters, and does not
consider various facts or limitations applicable to any particular Unitholder or
Shareholder, or special tax rules that may apply to certain Unitholders and
Shareholders and may modify or alter the results described herein.
Except as otherwise indicated, the following description of tax
consequences is based on the Internal Revenue Code and applicable regulations
thereunder, each as amended and in effect on the date hereof, and on reported
judicial decisions and published positions of the Internal Revenue Service
("IRS"). No rulings have been requested from the IRS concerning any of the
matters described in this Proxy Statement/Prospectus. In some cases, there is a
risk that the IRS will disagree with the description contained herein. In
addition, the laws, regulations, administrative rulings and judicial decisions
that form the basis for this description of the tax consequences of the Merger
are very complex and are subject to change at any time, including possibly with
retroactive effect.
Unitholders and Shareholders should be aware that there is no direct
authority of general applicability governing certain aspects of the federal
income tax treatment of a transaction such as the Merger that is structured as a
merger of a partnership with and into a corporation, because this structure is
an approach made available by recent developments in business organization law.
Therefore, the description contained herein is based on authorities addressing
the consequences of analogous transactions that used similar structures.
Accordingly, although there appears to be no controlling authority contrary to
the description contained herein, it is possible that the IRS would take a
position with respect to one or more aspects of the tax consequences of the
Merger that is different than that described below.
DIFFERENCES BETWEEN COMMON UNITS AND COMMON STOCK IN GENERAL
A partnership is a pass-through entity for federal income tax purposes.
This means that a partnership is not liable for federal income tax on its
taxable income. Rather, a partnership passes its taxable income (or loss)
through to its owners (i.e., its limited and general partners) in proportion to
their relative ownership interests. This is known as allocating a partnership's
income and loss. Many items of income, gain, loss, and deduction are allocated
separately to each partner in proportion to such partner's interest. The
character of each item allocated separately to a partner is determined as if
such item were realized or incurred directly from the source from which realized
or incurred by the partnership. When income (or loss) is allocated to a partner,
such partner is taxed on that income (or, subject to certain limitations, may
deduct that loss). This tax is imposed on the partner regardless of whether the
partnership actually distributes any cash or property to the partner. Thus,
generally it is the allocation, not the distribution, of income (or loss) to a
partner that results in tax (or a deduction) for that partner.
A partner has a basis in the partnership interest that partner holds which
is generally equal to either the cost of the partnership interest if purchased,
or if not purchased, the amount of any cash or basis of any other property that
partner transferred to the partnership, increased (or decreased) by that
partner's share of the partnership's income (or loss) and decreased by the
amount of any cash (or the basis of any property) distributed to that partner.
Upon sale of the partnership interest, the partner realizes gain (or loss) equal
to the excess (or deficit) of the amount received for the partnership interest
less the partner's basis in the partnership interest. The partner's gain (or
loss) upon sale is generally capital gain, but may be characterized as ordinary
income to the extent of the partner's share of certain assets held by the
partnership.
Because a partnership does not pay tax on income it earns (but rather its
partners are subject to tax on such income), partners of a partnership are
subject to only one level of federal income tax on income earned in the business
of such partnership.
16
<PAGE> 22
As owners of the Partnership through their Common Units, Unitholders
receive the federal income tax treatment just described. The amount of Common
Units owned by a Unitholder will determine the amount of income or loss
allocated to such Unitholder by the Partnership.
The Taxpayer Relief Act amended certain rules applicable to the tax
treatment of limited partnerships. However, these amendments have not changed
the general tax treatment of the Partnership (as discussed above). Accordingly,
the adoption of the Taxpayer Relief Act is not one of the reasons for converting
the Partnership to corporate form.
A corporation is a taxable entity and pays federal income tax at a maximum
rate of 35% on its taxable income. A shareholder of a corporation generally is
not taxed on any income earned by a corporation until the corporation
distributes either cash or property (other than its stock) to the shareholder or
the shareholder sells or exchanges stock at a gain. When cash or property is
distributed, each portion of the distribution will be characterized in one of
the following three ways: (i) as a dividend, (ii) as a capital gain, or (iii) as
a return of capital. The portion of a distribution treated as a dividend is
taxed at ordinary federal income tax rates, which for individuals range up to
39.6%. The portion treated as capital gain is generally currently taxed at a
maximum rate of 20% in the case of stock held for more than 18 months and a
maximum rate of 28% in the case of stock held for more than 12 months but not
more than 18 months. Capital gains recognized with respect to stock held for not
more than 12 months are taxed at ordinary income rates (i.e., a graduated rate
up to a maximum of 39.6%). The portion treated as return of capital is not
taxed.
The amount of any distribution treated in any of the three alternative ways
may differ for each shareholder, and may depend upon the value of the cash and
property received, the percentage interest in the corporation owned by the
shareholder receiving the distribution, and each shareholder's basis in such
shareholder's shares. A shareholder's basis is generally equal to the cost of
the stock (if purchased), or the amount of any cash and basis of other property
contributed to the corporation (if not purchased), decreased by the amount of
any distributions treated as a return of capital under the rules discussed
above.
Because corporations are taxed on their own taxable income, and because
shareholders may be taxed again on that same income if it is distributed to them
in the form of cash or property or realized through the sale or exchange of
shares of stock at a gain, there are two levels of potential tax upon income
earned by a corporation. Upon a sale of stock, a shareholder's gain (or loss)
will be equal to the excess (or deficit) of the amount received for the stock
less the shareholder's basis in that stock. The character of such gain (or loss)
generally will be capital in nature.
As holders of interests in a corporation, the owners of Common Stock will
be subject to the tax treatment just described.
Special rules apply to entities that are ordinarily exempt from federal
income tax. In general, a tax-exempt limited partner's share of a partnership's
taxable income constitutes "unrelated business taxable income" ("UBTI") and
therefore a tax-exempt limited partner must pay federal income tax on its share
of the partnership's taxable income at the income tax rates that apply to
taxable entities. However, a tax-exempt entity that owns shares of stock of a
corporation is not subject to tax on any of the corporation's taxable income
(because such income does not flow through to the shareholders of the
corporation). In addition, any dividends received from, and any gain
attributable to the sale of shares of stock of, the corporation by a tax-exempt
entity will not constitute UBTI (and therefore will not be taxable to the
tax-exempt entity) except to the extent such tax-exempt entity's investment in
the stock is considered debt-financed.
MERGER OF THE PARTNERSHIP AND THE CORPORATION
Although there is no direct authority of general applicability, as referred
to above in "-- Introduction," for federal income tax purposes the Merger should
be treated as follows. The Partnership should be deemed to have transferred all
its assets and liabilities to the Corporation and to have received shares of the
Corporation in exchange, and then to have distributed those shares to the
General Partners and the Unitholders in complete liquidation. If the tax basis
of the Partnership in the assets transferred to the Corporation exceeds the
amount of liabilities assumed by the Corporation in the transfer, no gain or
loss should be recognized by
17
<PAGE> 23
the Partnership as a result of the Merger. If the liabilities assumed exceed the
tax basis of the assets transferred, the Partnership would recognize gain in the
amount of such excess, which gain would be allocated to the General Partners and
the Unitholders. If no gain or loss is recognized by the Partnership as a result
of the Merger, the assets of the Partnership will retain the same tax basis in
the hands of the Corporation as they had prior to the Merger. If gain is
recognized by the Partnership, the amount of such gain would be added to the
basis of the assets in the hands of the Corporation. As of December 31, 1997,
the tax basis of the Partnership in its assets exceeded the amount of the
Partnership's liabilities. The Corporation will not recognize any gain or loss
as a result of the Merger.
The foregoing conclusions are based on the assumption that the General
Partners and the Unitholders will own, in the aggregate, at least 80% of the
shares of Common Stock outstanding immediately after the Merger, excluding from
the numerator any shares received in the Merger that are sold after the Merger
pursuant to a plan or arrangement established before the Merger (the "Control
Assumption"). The Control Assumption should be correct unless, contrary to the
best knowledge of the Partnership, Unitholders holding a significant percentage
of the Common Units agree prior to the Merger to sell the shares they receive in
the Merger. If the Control Assumption is not correct, the Merger will be treated
as if the Partnership (a) sold all of its assets to the Corporation for an
amount equal to the value of the shares of Common Stock received in the Merger,
plus the liabilities of the Partnership assumed in the Merger, and (b)
distributed the shares of Common Stock received in the Merger to the General
Partners and the Unitholders. Accordingly, the Partnership would recognize gain
(or loss) on the Merger in an amount equal to the amount by which the value of
the shares of Common Stock received plus the amount of the Partnership's
liabilities assumed exceeds (or is less than) its basis in the assets
transferred and all such gain or loss would be allocated to the General Partners
and the Unitholders.
If the Control Assumption is not correct, the Corporation would still not
recognize gain or loss on the Merger, but the Corporation's tax basis in the
assets acquired from the Partnership would equal the value of the shares of
Common Stock issued in the Merger plus the amount of the Partnership's
liabilities assumed in the Merger, and the Corporation's holding period in the
assets would begin the day after the Merger takes effect.
Provided that the Partnership recognizes no gain or loss on the Merger
(which gain or loss would be allocated to the General Partners and the
Unitholders as discussed above), a General Partner or Unitholder will recognize
no gain or loss except as follows: a General Partner or Unitholder may recognize
gain as a result of the Merger to the extent that the liabilities of the
Partnership allocated to such General Partner or Unitholder for federal income
tax purposes prior to the Merger and assumed by the Corporation exceed such
General Partner's or Unitholder's tax basis in his, her or its general
partnership interest or Common Units, since for federal income tax purposes such
General Partner's or Unitholder's relief from such share of the Partnership's
liabilities will be treated as if such General Partner or Unitholder received a
cash distribution from the Partnership in the amount of the liabilities assumed
by the Corporation. As of December 31, 1997, the aggregate amount of liabilities
of the Partnership allocated to the Unitholders was $38.203 million.
The aggregate basis of any shares of Common Stock received in the Merger by
a Unitholder in exchange for Common Units will equal the aggregate basis in such
Common Units immediately before the Merger, increased by such Unitholder's share
of the gain (if any) recognized by the Partnership as a result of the Merger.
Such basis will be prorated among all shares of Common Stock received for such
Common Units.
Unitholders will have a split holding period in each share of Common Stock
received. A share of Common Stock received in exchange for a Common Unit will
have a holding period that begins on the day following the Merger to the extent
that the value of such share on such date is attributable to certain of the
Partnership's assets (essentially its assets that would generate ordinary income
or loss when sold), and to the extent of the balance, will have a holding period
that includes the period the Common Unit was held by the Unitholder.
18
<PAGE> 24
POST-MERGER TREATMENT OF THE CORPORATION AND ITS SHAREHOLDERS
A Unitholder who subsequently sells shares of Common Stock received in the
Merger will recognize gain or loss measured by the difference between the amount
realized on such sale and the Unitholder's tax basis in the shares of Common
Stock sold. Each Unitholder who receives shares in the Merger will be required
to file with the Unitholder's federal income tax return for the year in which
the Merger is completed a statement that provides details relating to the
Unitholder's Common Units (which will be considered to be property transferred),
the shares of Common Stock, and the Unitholder's share of any liabilities
assumed by the Corporation in the Merger. The Corporation will provide
shareholders with information to assist them in preparing such statement.
After the Merger, the income and deductions attributable to the assets and
liabilities of the Corporation will not be allocated to the Corporation's
shareholders. A shareholder will be taxed only on cash dividends and other
distributions of property received from the Corporation, if any. Such
distributions generally will be taxable as dividends to the extent of any
current or accumulated earnings and profits of the Corporation. Any other
distributions will be treated as a nontaxable return of capital to the extent of
the shareholder's basis in his, her or its shares of Common Stock and as capital
gain to the extent of the balance.
THE FOREGOING DESCRIPTION ADDRESSES ONLY THE FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER APPLICABLE TO UNITHOLDERS AND SHAREHOLDERS GENERALLY. EACH UNITHOLDER
AND SHAREHOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR CONCERNING THE
PARTICULAR FEDERAL, STATE, LOCAL AND OTHER TAX CONSEQUENCES OF THE MERGER TO
HIM, HER OR IT.
19
<PAGE> 25
ADOPTION OF 1998 STOCK PLAN
The following is a summary of the 1998 Stock Plan and is qualified in its
entirety by reference to the full 1998 Stock Plan, a copy of which is attached
hereto as Exhibit B.
GENERAL
The purpose of the 1998 Stock Plan is (i) to compensate certain directors
of the Corporation and certain officers and employees of the Corporation and its
subsidiaries for services rendered by such persons after the date of adoption of
the 1998 Stock Plan to the Corporation or any subsidiary; (ii) to provide
certain directors of the Corporation and certain officers and employees of the
Corporation or its subsidiaries with significant additional incentive to promote
the financial success of the Corporation; and (iii) to provide an incentive
which may be used to induce able persons to become or remain directors of the
Corporation or enter into or remain in the employment of the Corporation or any
of its subsidiaries. Awards granted pursuant to the 1998 Stock Plan ("Awards")
will be in the form of options to purchase shares of Common Stock.
SHARES SUBJECT TO THE 1998 STOCK PLAN
An aggregate of 2,000,000 shares of Common Stock ("Shares") are subject to
the 1998 Stock Plan. Awards are limited so that the sum of the following shall
not as of any given time exceed 2,000,000 Shares: (i) all Shares subject to
Awards outstanding under the 1998 Stock Plan at the given time and (ii) all
Shares which shall have been issued by the Corporation by reason of the exercise
at or prior to the given time of any of the Awards. In the event any Award shall
expire or be terminated before it is fully exercised, then all Shares formerly
subject to such Award as to which such Award was not exercised shall be
available for any Award subsequently granted in accordance with the provisions
of the 1998 Stock Plan. No fractional Shares will be eligible to be issued under
this Plan.
ADMINISTRATION
The 1998 Stock Plan is administered by the Compensation Committee of the
Board of Directors of the Corporation (the "Board"), which Committee (the
"Committee") is composed of members who are "Non-Employee Directors" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the "1934 Act")
and "Outside Directors" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"). However, option grants to members
of the Committee must be approved by a majority of the directors who are not
members of the Committee.
ELIGIBILITY
A person shall be eligible to be granted an Award only if on the proposed
Granting Date for such Award such person is a director of the Corporation or a
full-time, salaried employee of the Corporation or any Subsidiary. A person
eligible to be granted an Award is herein called a "Grantee." No Grantee is
permitted to receive, during any calendar year, awards which would permit the
Grantee to acquire more than 250,000 shares.
AWARDS
Awards under the 1998 Stock Plan shall take the form of options to purchase
shares of Common Stock. The Committee has broad discretion under the 1998 Stock
Plan in determining Awards, including but not limited to the number of Shares
covered thereby and provisions regarding grant price, expiration date,
exercisability, vesting, forfeiture, transfer restrictions, payment and the
impact, if any, of termination of employment on the foregoing. However, options
intended to qualify for the performance-based exception to the $1 million
deduction limit imposed by Section 162(m) of the Code may not have an exercise
price that is less than the fair market value (determined on the option grant
date) of the stock that would be acquired upon exercise of the option.
20
<PAGE> 26
Under the 1998 Stock Plan, the Committee may grant incentive stock options
(each an "Incentive Stock Option" or "ISO"), non-qualified stock options (each a
"Non-Qualified Stock Option" or "NQSO") or both types of options ("Option", as
used herein, refers to any Incentive Stock Option or Non-Qualified Stock
Option). In the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to, and comply with, the requirements of Section
422 of the Code, as from time to time amended, and any regulations implementing
such statute. Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify in
the applicable Award agreement or thereafter.
AMENDMENTS AND TERMINATION
Except as provided in the following two sentences, the Board has complete
power and authority to amend the 1998 Stock Plan at any time and no approval by
the Corporation's stockholders or by any other person, committee or other entity
of any kind shall be required to make any amendment approved by the Board
effective. So long as the Common Stock is eligible for trading on the New York
Stock Exchange, the Board shall obtain stockholder approval for those amendments
of this Plan required to be so approved pursuant to the New York Stock Exchange
Rules. The Board shall not, without the affirmative approval of the
Corporation's stockholders, amend the 1998 Stock Plan in any manner which would
cause any outstanding Incentive Stock Options to no longer qualify as Incentive
Stock Options. No termination or amendment of the 1998 Stock Plan may, without
the consent of the holder of any Award obtained prior to such termination or the
adoption of such amendment, materially and adversely affect the rights of such
holder under such Award.
The Board has the right and the power to terminate the 1998 Stock Plan at
any time, provided that no Incentive Stock Options may be granted after the
tenth anniversary of the adoption of the 1998 Stock Plan. No Award shall be
granted under the 1998 Stock Plan after the termination of the 1998 Stock Plan,
but the termination of the 1998 Stock Plan shall not have any other effect. Any
Award outstanding at the time of the termination of the 1998 Stock Plan may be
exercised after termination of the 1998 Stock Plan at any time prior to the
expiration date of such Award to the same extent such Award would have been
exercisable had the 1998 Stock Plan not terminated.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax treatment of Options granted under the 1998 Stock
Plan under present tax law is described generally below. Local and state tax
authorities may also tax incentive compensation awarded under the 1998 Stock
Plan.
Non-Qualified Stock Options. There are no federal income tax consequences
to a recipient or to the Corporation upon the grant of an NQSO under the 1998
Stock Plan. Upon the exercise of an NQSO, a recipient thereof will recognize
ordinary compensation income in an amount equal to the excess of the fair market
value of the shares of Common Stock at the time of exercise over the exercise
price of the NQSO, and the Corporation generally will be entitled to a
corresponding federal income tax deduction. Upon the sale of shares of Common
Stock acquired by the exercise of an NQSO, a recipient will have a capital gain
or loss (long-term, mid-term or short-term depending upon the length of time the
shares were held) in an amount equal to the difference between the amount
realized upon the sale and the recipient's adjusted tax basis in such shares
(the exercise price plus the amount of ordinary income recognized by the
recipient at the time of exercise of the NQSO).
Incentive Stock Options. A recipient of an ISO will not recognize taxable
income for purposes of the regular income tax, upon either the grant or exercise
of the ISO. However, for purposes of the alternative minimum tax imposed under
the Code, in the year in which an ISO is exercised, the amount by which the fair
market value of the shares of Common Stock acquired upon exercise exceeds the
option price will be treated as an item of adjustment and included in the
computation of the recipient's alternative minimum taxable income. An ISO
recipient who disposes of the shares of Common Stock acquired upon exercise of
an ISO more than two years from the date the ISO was granted and more than one
year from the date such shares were transferred to him or her will recognize
mid-term or long-term capital gain or loss in the amount of the
21
<PAGE> 27
difference between the amount realized on the sale and the option price, and the
Corporation will not be entitled to any tax deduction by reason of the grant or
exercise of the ISO. As a general rule, if an ISO recipient disposes of the
shares of Common Stock acquired upon exercise of an ISO before satisfying both
holding period requirements (a "disqualifying disposition"), his or her gain
recognized on such a disposition will be taxed as ordinary income to the extent
of lesser of (i) the difference between the fair market value of such shares on
the date of exercise and the option price and (ii) the difference between the
amount received in the disposition and the option price, and the Corporation
will be entitled to a deduction in that amount. The gain, if any, in excess of
the amount recognized as ordinary income on such a disqualifying disposition
will be long-term, mid-term or short-term capital gain, depending upon the
length of time the recipient held his or her shares prior to the disposition.
Section 162(m). Under section 162(m) of the Code, the Corporation may be
precluded from claiming a federal income tax deduction for total remuneration in
excess of $1,000,000 paid to the chief executive officer or to any of the other
four most highly compensated officers in any one year. Total remuneration would,
subject to the exception described below, include amounts taxable to such
officer upon the exercise of an NQSO, or upon the disqualifying disposition of
shares acquired upon exercise of an ISO, granted under the 1998 Stock Plan. An
exception does exist, however, for "performance-based compensation," including
amounts taxable upon the exercise of an NQSO, or upon the disqualifying
disposition of shares acquired upon exercise of an ISO, granted under a plan
approved by stockholders that meets certain requirements. The 1998 Stock Plan is
intended to permit granted under Options thereunder to meet the requirements of
"performance-based compensation."
1998 STOCK PLAN BENEFITS
Benefits to accrue to the Corporation's executive officers under the 1998
Stock Plan cannot be determined at this time. Option grants under the 1998 Stock
Plan will be made at the discretion of the Compensation Committee.
22
<PAGE> 28
VOTING AND PROXY INFORMATION
VOTING PROCEDURES
Under the Partnership Agreement, a holder of a Common Unit may vote only if
the holder has been admitted as a limited partner of the Partnership on or
before the record date for the Special Meeting. Each Common Unit entitles the
holder thereof to one vote with respect to each matter to be voted on at the
Special Meeting. The Managing General Partner has set the close of business on
April 13, 1998 as the record date (the "Record Date") for the determination of
limited partners entitled to vote at the Special Meeting.
The Partnership will accept proxies relating to a matter to be voted on at
the Special Meeting at any time before such matter is voted on at the Special
Meeting. The enclosed form of proxy, when properly completed and returned, will
constitute a limited partner's vote for or against, or abstention on, each such
matter. If a limited partner returns a form of proxy duly signed without voting,
the limited partner will be deemed to have voted for the Conversion and for the
1998 Stock Plan.
REVOCATION OF PROXIES
A limited partner may revoke a proxy any time during the solicitation
period before its exercise by (i) delivering written notice of revocation to the
Partnership, (ii) executing and delivering to the Partnership a later dated form
of proxy or (iii) voting in person at the Special Meeting. Any such written
notice or later dated proxy should be sent to Huntway Partners, L.P., 25129 The
Old Road, Suite 322, Newhall, California 91381, Attention: Warren J. Nelson,
Corporate Secretary.
VOTE REQUIRED; QUORUM
Approval of the Conversion will require the affirmative vote of limited
partners holding at least 66 2/3% of the outstanding Common Units. As of the
Record Date, there were 14,583,958 Common Units outstanding. The presence, in
person or by proxy, of limited partners holding more than 50% of the Common
Units will constitute a quorum at the Special Meeting. Abstentions and broker
non-votes will be treated as present for the purpose of determining a quorum but
will have the effect of votes against the Conversion Proposal.
The Conversion may be deemed to result in a "change of control" for
purposes of New York Stock Exchange Shareholder Approval Policy 312.03. Prior to
the Conversion, the Managing General Partner generally controls the business and
affairs of the Partnership and may only be removed by the affirmative vote of
the 66 2/3% of the limited partners. Subsequent to the Conversion, the Board of
Directors of the Corporation, as elected by the holders of Common Stock, will
generally control the business and affairs of the Corporation. Approval of the
Conversion by the limited partners will constitute approval of such "change of
control."
Approval of the 1998 Stock Plan will require the affirmative vote of a
majority of the limited partners voting at the Special Meeting, in person or by
proxy.
The officers of the Partnership and certain affiliates of the General
Partners own 40.9% of the outstanding Common Units. They have advised the
Partnership that they will vote their Common Units in favor of the Conversion
and the adoption of the 1998 Stock Plan.
SOLICITATION OF PROXIES
This solicitation is being made by the Managing General Partner on behalf
of the Partnership. The Partnership will pay the cost of soliciting proxies. The
Partnership will reimburse brokerage houses and other nominees for their
reasonable expenses of forwarding proxy materials to beneficial owners of Common
Units. Representatives of Huntway may meet with brokers, research analysts and
other members of the investment community to discuss the Conversion and the 1998
Stock Plan. Representatives of Huntway may also contact limited partners in
person or by telephone, or arrange meetings with limited partners, to discuss
the Conversion and the 1998 Stock Plan.
23
<PAGE> 29
INDEPENDENT AUDITORS
Representatives of Deloitte & Touche LLP, the Partnership's independent
accountants, are expected to be present at the Special Meeting.
SHAREHOLDER PROPOSALS
The first annual meeting of the Corporation subsequent to the Conversion is
expected to be held in May of 1999. To be considered for presentation at such
meeting, any matter that a stockholder may wish to propose for consideration
must be submitted to the Corporation no later than December 31, 1998.
24
<PAGE> 30
MANAGEMENT
OPERATING COMMITTEE
The Partnership's business and affairs are managed by the Managing General
Partner rather than a board of directors. The Managing General Partner is itself
a partnership and its business and affairs are managed by its general partner,
Reprise Holdings, Inc. ("Reprise Holdings"), rather than a board of directors.
Reprise Holdings is owned 90% by First Chicago Equity Corporation ("FCEC") and
10% by Madison Dearborn Partners III ("MDP III"). Reprise Holdings, as sole
general partner of the Managing General Partner, has established an operating
committee (the "Operating Committee") to consult with the sole director of
Reprise Holdings with respect to the management of the Managing General Partner
and the Partnership, and has elected the following individuals (each of whom has
served since 1988) as members of the Operating Committee:
Juan Y. Forster, age 61, has been principally employed as the President and
Chief Executive Officer of Huntway for the past eight years.
Samuel M. Mencoff, age 41, has been principally employed as a Vice
President of Madison Dearborn Partners, Inc. ("MDP"), a private equity
investment firm and an affiliate of MDP III, since January, 1993. Prior to
January, 1993, Mr. Mencoff served as Vice President of First Chicago Venture
Capital ("FCVC"), a private equity investment firm and an affiliate of FCEC. Mr.
Mencoff is sole director, President and Treasurer of Reprise Holdings and is a
general partner of MDP III. Mr. Mencoff also serves as a director of Buckeye
Technologies, Inc. and Riverwood International Corp., forest products companies.
Justin S. Huscher, age 44, has been principally employed as a Vice
President of MDP since January, 1993. Prior to January, 1993, Mr. Huscher served
as a Senior Investment Manager of First Chicago Investment Corporation, a
private equity investment firm and an affiliate of FCEC. Mr. Huscher is Vice
President and Secretary of Reprise Holdings and is a general partner of MDP III.
Mr. Huscher also serves as a director of Homeside, Inc., a residential mortgage
company.
Raymond M. O'Keefe, age 72, has been principally employed for the last six
years as President and Chief Executive Officer of Rokmanage, Inc., a management
services firm.
OFFICERS
The following list sets forth: (i) the name and age of each officer of the
Partnership; (ii) the year in which each such person first joined the
Partnership; and (iii) all positions with the Partnership presently held by each
such person.
<TABLE>
<CAPTION>
YEAR
JOINED
NAME AGE HUNTWAY OFFICE
---- --- ------- ------
<S> <C> <C> <C>
Juan Y. Forster........ 61 1979 President and Chief Executive Officer
Lucian A. Nawrocki..... 52 1982 Executive Vice President, Asphalt Sales
Warren J. Nelson....... 47 1993 Executive Vice President and Chief Financial Officer
Terrance L. Stringer... 56 1992 Executive Vice President
Guy K. Young........... 40 1998 Manager of Operations/Benicia
William G. Darnell..... 61 1982 Vice President and General Manager/Benicia
Earl G. Fleisher....... 47 1991 Controller and Tax Manager
Michael W. Miller...... 39 1979 Manager of Operations/Wilmington
Stephen P. Piatek...... 41 1989 Vice President and General Counsel
</TABLE>
Each of the persons named above has held the position with Huntway set
forth above for at least the past five years, with the exception of Mr. Young.
Mr. Young was elected to his position with Huntway in March, 1998, after having
served as Huntway's Assistant Manager of Operations/Benicia since January, 1998.
Prior thereto, Mr. Young was Complex Manager of the East Refinery of the Hess
Oil Virgin Islands Corporation from July, 1997 to December, 1997, and Operations
Manager of Pacific Refining Company from January, 1993 to June, 1997. Each of
the persons named above also holds a similar position with the Corporation and
will continue to act in such capacity immediately following the Conversion. Each
of the above-named officers (other than Mr. Young) and members of the Operating
Committee was acting in such capacity at the time of the 1996 Restructuring.
25
<PAGE> 31
BOARD OF DIRECTORS
Immediately following the Conversion, the business and affairs of Huntway
will be managed by the Board of Directors of the Corporation. Immediately
following the Conversion, the Board of Directors will consist of Messrs.
Forster, Mencoff, Huscher and Nelson and the following additional persons:
Harris Kaplan, 47, currently serves as President of Eastgate Management
Corporation, an offshore and domestic money management firm, and has served in
such capacity since 1996. Mr. Kaplan served as a member of the management team
of Nabors Industries, an oil service company, from 1988 to 1996.
J.C. "Mac" McFarland, 51, currently acts as a consultant, having served as
Chairman and Chief Executive Officer of McFarland Energy, Inc., an exploration
and production company, from 1992 to 1997.
Richard Spencer, 45, currently serves as a Manager of Westcliff Management,
LLC, a money management firm, and has served in such capacity since 1993.
The Board of Directors is divided into three classes, as nearly equal in
number as possible, serving staggered terms. Approximately one-third of the
Board of Directors is elected each year. The Corporation's 1998 annual meeting
of stockholders has been held. Messrs. Huscher and Mencoff are in the class to
be re-elected in 1999, Messrs. Kaplan, McFarland and Spencer are in the class to
be re-elected in 2000 and Messrs. Forster and Nelson are in the class to be
re-elected in 2001. In connection with the 1997 Refinancing, Huntway agreed to
use its best efforts to nominate and cause to be elected as a director of the
Corporation one individual selected by B III Capital Partners, L.P. ("B III")
and one individual selected by Lighthouse Investors, L.L.C. ("Lighthouse") at
all times after the Conversion. This agreement will expire with respect to B III
or Lighthouse when such person no longer owns Convertible Notes with a principal
amount of at least $3.5 million or shares of Common Stock issued on conversion
of Convertible Notes with a principal amount of at least $3.5 million or a
combination of the two.
The Board of Directors has established an Audit Committee and a
Compensation Committee. Neither Committee has not conducted any meetings to
date. The Corporation does not have a Nominating Committee.
The Audit Committee reviews and, as it deems appropriate, recommends to the
Board internal accounting and financial controls for the Corporation and
accounting principles and auditing practices and procedures to be employed in
the preparation and review of the Corporation's financial statements. The
Committee also makes recommendations to the Board concerning the engagement of
independent public accountants to audit the Corporation's annual financial
statements and the scope of such audits. The Committee currently consists of
Messrs. Kaplan, McFarland and Mencoff.
The Compensation Committee reviews and, as it deems appropriate, recommends
to the Board policies, practices and procedures relating to the compensation of
managerial employees and the establishment and administration of employee
benefit plans. The Committee determines the compensation of executive officers
and will (if the 1988 Stock Plan is approved at the Special Meeting) administer
the 1988 Stock Plan. The Committee currently consists of Messrs. Huscher and
Spencer.
COMPENSATION OF DIRECTORS
The Corporation does not currently intend to pay any of its salaried
employees any additional compensation for service on the Board of Directors, and
does not currently anticipate paying any fee for participation on, or for
attending meetings of, the Board to those members of the Board who are not its
salaried employees. The Corporation currently intends to compensate non-employee
Directors for service on the Board by granting such persons options under the
1998 Stock Plan. The nature and amount of such options has not yet been
determined. The Corporation also intends to reimburse Board members for
out-of-pocket costs associated with attending meetings (such as travel costs,
food and lodging).
26
<PAGE> 32
SECURITY OWNERSHIP OF CERTAIN SECURITYHOLDERS
The following table sets forth information regarding the Common Stock
projected to be beneficially owned immediately after the Conversion and the
Related Transaction by (i) each person projected by the Corporation to be the
beneficial owner of more than five percent of all Common Stock outstanding, (ii)
the Partnership's chief executive officer and four other most highly compensated
executive officers, (iii) each person who is a member of the Operating Committee
or a director of the Corporation and (iv) all executive officers, Operating
Committee members and directors of the Corporation as a group. To the knowledge
of the Corporation, each of the persons named in the table will have sole voting
and investment power with respect to the securities to be beneficially owned by
it or him as set forth opposite its or his name unless otherwise noted and
subject to community property laws where applicable. The projections are based
upon the numbers of Common Units held on April , 1998 (to the extent known to
the Corporation), as adjusted to reflect the Conversion and the Related
Transaction.
<TABLE>
<CAPTION>
COMMON UNITS
BENEFICIALLY OWNED
-------------------------
NUMBER PERCENT
------ -------
<S> <C> <C>
5% HOLDERS:
First Chicago Equity Corporation............................ 5,320,518(1) 35.8
One First National Plaza
Chicago, IL 60670
Lighthouse Investors, LLC................................... 8,257,433(2) 37.2
200 Seventh Avenue, Suite 105
Santa Cruz, CA 95062
DDJ Capital Management, LLC................................. 5,333,333(3) 26.4
141 Linden Street, Suite S-4
Wellesley, MA 02181
Contrarian Capital Advisors, L.L.C. ........................ 2,790,931(4) 16.7
411 West Putnam Avenue, Suite 225
Greenwich, CT 06830
Mr. Andre Danesh............................................ 2,060,059(5) 12.9
Allied Financial Corp.
1583 Beacon Street Brookline, MA 02146
EXECUTIVE OFFICERS, OPERATING COMMITTEE MEMBERS AND
DIRECTORS(6):
Juan Y. Forster............................................. 541,306(7) 3.6
Lucian A. Nawrocki.......................................... 69,754(8) .5
Warren J. Nelson............................................ 181,400(9) 1.2
Terrance L. Stringer........................................ 57,000(10) .4
William G. Darnell.......................................... 87,030(11) .6
Samuel M. Mencoff........................................... 68,351 .5
Justin S. Huscher........................................... 8,218 .1
Raymond M. O'Keefe.......................................... 129,489 .9
Harris Kaplan............................................... -- --
J.C. McFarland.............................................. 57,000(12) .4
Richard Spencer............................................. 8,381,833(2)(13) 37.7
All executive officers, Operating Committee members and
directors as a group (11 persons)......................... 9,581,381(14) 42.5
</TABLE>
- -------------------------
(1) Includes shares of Common Stock to be issued in the Conversion with respect
to 147,313 Common Unit equivalents corresponding to the general partnership
interests of the General Partners (to which 1% of each item of the
Partnership's taxable income, gain, loss or deduction is allocated).
27
<PAGE> 33
(2) Includes 7,333,333 shares of Common Stock which Westcliff Capital
Management, LLC, Westcliff, LLC, Lighthouse Investors, LLC, Lighthouse
Capital, LLC and Lighthouse LLC will have the right to acquire after May
15, 1998 through the conversion of Convertible Notes.
(3) Consists of Common Stock which DDJ Capital Management, LLC and DDJ Capital
III, LLC will have the right to acquire after May 15, 1998 through the
conversion of Convertible Notes.
(4) Includes 1,833,333 shares of Common Stock which Contrarian Capital
Advisors, L.L.C. and Contrarian Capital Management, L.L.C. will have the
right to acquire after May 15, 1998 through the conversion of Convertible
Notes.
(5) Includes 1,146,059 shares of Common Stock which Mr. Danesh will have the
right to acquire within 60 days through the exercise of options currently
outstanding.
(6) The address of each person set forth below is c/o Huntway Refining Company,
25129 The Old Road, Suite 322, Newhall, California 91381.
(7) Includes 78,750 shares of Common Stock which Mr. Forster will have the
right to acquire within 60 days through the exercise of options currently
outstanding under the Huntway 1996 Employee Incentive Option Plan (the
"Existing Plan") and 15,000 shares of Common Stock to be purchased in the
Related Transaction.
(8) Includes 27,500 shares of Common Stock which Mr. Nawrocki will have the
right to acquire within 60 days through the exercise of options currently
outstanding under the Existing Plan and 5,000 shares of Common Stock to be
purchased in the Related Transaction.
(9) Includes 125,000 shares of Common Stock which Mr. Nelson will have the
right to acquire within 60 days through the exercise of options currently
outstanding under the Existing Plan and 12,000 shares of Common Stock to be
purchased in the Related Transaction.
(10) Consists of 50,000 shares of Common Stock which Mr. Stringer will have the
right to acquire within 60 days through the exercise of options currently
outstanding under the Existing Plan and 7,000 shares of Common Stock to be
purchased in the Related Transaction.
(11) Includes 22,500 shares of Common Stock which Mr. Darnell will have the
right to acquire within 60 days through the exercise of options currently
outstanding under the Existing Plan and 15,000 shares of Common Stock to be
purchased in the Related Transaction.
(12) Consists of Common Stock to be purchased in the Related Transaction.
(13) Includes Common Stock shown above as beneficially owned by Lighthouse
Investors, L.P.
(14) Includes 7,637,083 shares of Common Stock which executive officers,
Operating Committee Members and directors will have the right to acquire
within 60 days and 111,000 shares of Common Stock to be purchased in the
Related Transaction.
28
<PAGE> 34
DESCRIPTION OF CAPITAL STOCK
GENERAL
The following summary describes the Corporation's capital stock and the
Corporation's certificate of incorporation (the "Certificate") and by-laws (the
"By-laws"). This summary does not purport to be complete and is subject to, and
qualified in its entirety by, the Certificate and By-laws, which are included as
exhibits to the Registration Statement of which this Proxy Statement/Prospectus
forms a part, and by the provisions of applicable law.
The Certificate and By-laws contain certain provisions that are intended to
enhance the likelihood of continuity and stability in the composition of the
Board of Directors of the Corporation and which may have the effect of delaying,
deferring or preventing a future takeover or change in control of the
Corporation unless such takeover or change in control is approved by the Board
of Directors. In addition, under the terms of the Convertible Notes issued in
connection with the 1997 Refinancing, if Huntway undergoes a "change of
control," Huntway will be required to (i) make an offer to purchase all
outstanding Convertible Notes for the outstanding principal amount thereof plus
accrued interest and (ii) either (A) obtain the consent thereto of the lenders
under Huntway's senior credit facilities or (B) repay all indebtedness
outstanding (including letters of credit) under Huntway's senior credit
facilities.
COMMON STOCK
The shares of Common Stock to be issued by the Corporation in connection
with the Conversion will be validly issued, fully paid and nonassessable.
Subject to the prior rights of the holders of any shares of the Corporation's
serial preferred stock (the "Serial Preferred Stock"), the holders of
outstanding shares of Common Stock are entitled to receive dividends out of
assets legally available therefor at such times and in such amounts as the Board
of Directors may from time to time determine. The shares of Common Stock are not
convertible and the holders thereof, as such, have no preemptive or subscription
rights to purchase any securities of the Corporation. Upon liquidation,
dissolution or winding up of the Corporation, the holders of Common Stock are
entitled to receive pro rata the assets of the Corporation which are legally
available for distribution, after payment of all debts and other liabilities and
subject to the prior rights of any holders of Serial Preferred Stock then
outstanding. Each outstanding share of Common Stock is entitled to one vote on
all matters submitted to a vote of stockholders. There is no cumulative voting.
The Common Stock has been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
SERIAL PREFERRED STOCK
The Corporation's Board of Directors may, without further action by the
Corporation's stockholders, from time to time direct the issuance of shares of
Serial Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. Any dividend preferences of
outstanding shares of Serial Preferred Stock would reduce the amount of funds
available for the payment of dividends on shares of Common Stock. Holders of
shares of Serial Preferred Stock may be entitled to receive a preference payment
in the event of any liquidation, dissolution or winding-up of the Corporation
before any payment is made to the holders of shares of Common Stock. Under
certain circumstances, the issuance of shares of Serial Preferred Stock may
render more difficult or tend to discourage a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of the
Corporation's securities or the removal of incumbent management. Upon the
affirmative vote of a majority of the total number of Directors then in office,
the Board of Directors of the Corporation, without stockholder approval, may
issue shares of Serial Preferred Stock with voting and conversion rights which
could adversely affect the holders of shares of Common Stock. There are no
shares of Serial Preferred Stock outstanding, and the Corporation has no present
intention to issue any shares of Serial Preferred Stock.
29
<PAGE> 35
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS
The Certificate provides for the Board to be divided into three classes, as
nearly equal in number as possible, serving staggered terms. Approximately
one-third of the Board will be elected each year. See "Management." Under the
Delaware General Corporation Law, directors serving on a classified board can
only be removed for cause. The provision for a classified board could prevent a
party who acquires control of a majority of the outstanding voting stock from
obtaining control of the Board until the second annual stockholders meeting
following the date the acquiror obtains the controlling stock interest. The
classified board provision could have the effect of discouraging a potential
acquiror from making a tender offer or otherwise attempting to obtain control of
the Corporation and could increase the likelihood that incumbent directors will
retain their positions.
The Certificate provides that stockholder action can be taken only at an
annual or special meeting of stockholders and cannot be taken by written consent
in lieu of a meeting. The Certificate and the By-laws provide that, except as
otherwise required by law, special meetings of the stockholders can only be
called pursuant to a resolution adopted by a majority of the Board of Directors
or by the Chief Executive Officer of the Corporation. Stockholders are not
permitted to call a special meeting or to require the Board to call a special
meeting.
The By-laws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of stockholders of the Corporation,
including proposed nominations of persons for election to the Board.
Stockholders at an annual meeting may only consider proposals or
nominations specified in the notice of meeting or brought before the meeting by
or at the direction of the Board or by a stockholder who was a stockholder of
record on the record date for the meeting, who is entitled to vote at the
meeting and who has given to the Corporation's Secretary timely written notice,
in proper form, of the stockholder's intention to bring that business before the
meeting. Although the By-laws do not give the Board the power to approve or
disapprove stockholder nominations of candidates or proposals regarding other
business to be conducted at a special or annual meeting, the By-laws may have
the effect of precluding the conduct of certain business at a meeting if the
proper procedures are not followed or may discourage or defer a potential
acquiror from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of the Corporation .
The Certificate and By-laws provide that the affirmative vote of holders of
at least 66 2/3% of the total votes eligible to be cast in the election of
directors is required to amend, alter, change or repeal certain of their
provisions. This requirement of a super-majority vote to approve amendments to
the Certificate and By-laws could enable a minority of the Corporation's
stockholders to exercise veto power over any such amendments.
CERTAIN PROVISIONS OF DELAWARE LAW
The Corporation is subject to the "Business Combination" provisions of the
Delaware General Corporation Law. In general, such provisions prohibit a
publicly-held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) the transaction is approved by the Board of
Directors prior to the date the "interested stockholder" obtained such status;
(ii) upon consummation of the transaction which resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder" owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by (a) persons who are directors and also
officers and (b) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or (iii) on or subsequent to
such date the "business combination" is approved by the Board of Directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" is defined to include
mergers, asset sales and other transactions resulting in financial benefit to a
stockholder. In general, an "interested stockholder" is
30
<PAGE> 36
a Person who, together with affiliates and associates, owns (or within three
years, did own) 15% or more of a corporation's voting stock. The statute could
prohibit or delay mergers or other takeover or change in control attempts with
respect to the Corporation and, accordingly, may discourage attempts to acquire
the Corporation.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Certificate limits the liability of Directors to the fullest extent
permitted by the Delaware General Corporation Law. In addition, the Certificate
provides that the Corporation shall indemnify Directors and officers of the
Corporation to the fullest extent permitted by such law.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock will be Boston
Equiserve Trust Company, N.A.
RESALE OF SECURITIES
SECURITIES ACT RESTRICTIONS
Shares of Common Stock received in the Conversion by persons who are not
affiliates of the Corporation will be freely transferable. Shares of Common
Stock received in the Conversion by affiliates of the Corporation may only be
sold in accordance with the provisions of Rule 145 under the Securities Act,
pursuant to an effective registration under the Securities Act or in
transactions that are exempt from registration under the Securities Act. Rule
145 provides, in general, that such shares may be sold by an "affiliate" if (i)
there is available adequate current public information with respect to the
Corporation and (ii) the number of shares of Common Stock (whether or not
received in the Conversion) sold by such "affiliate" within any three month
period does not exceed the greater of 1% of the total number of outstanding
shares of Common Stock or the average weekly trading volume of the Common Stock
during the four calendar weeks immediately preceding the date of receipt of the
order to execute the transaction by a broker or the date of execution of the
transaction directly with a market maker and (iii) the securities are sold in
transactions directly with a "market maker" or in "brokers' transactions" within
the meaning of Rule 144 under the Securities Act.
REGISTRATION RIGHTS AGREEMENT
Pursuant to an Amended and Restated Registration Rights Agreement, certain
Unitholders have the right, subject to certain terms and conditions, to require
the Partnership to register under the Securities Act for offer and sale to the
public (including by way of underwritten public offering) certain of the
Partnership's outstanding securities, including Common Units, and will have the
right to require the Corporation to register certain of the Corporation's
outstanding securities, including Common Stock, under similar circumstances.
Such Unitholders may require Huntway to accomplish a maximum of two
registrations on Form S-1, a maximum of eight registrations on Form S-3 and an
unlimited number of "piggyback" registrations. Such registration rights expire
at such time as the securities held by such Unitholders may be transferred free
of any restriction (including any volume limitations imposed by Rule 144). The
exercise by such Unitholders of their rights under such Agreement could result
in the distribution of substantial amounts of Common Stock, including
distributions in underwritten public offerings, and could adversely affect the
market price of the Common Stock.
LEGAL MATTERS
The validity of the securities offered hereby, and certain federal income
tax matters set forth under "Certain Federal Income Tax Consequences," will be
passed upon for the Partnership by Kirkland & Ellis (a partnership that includes
professional corporations), Chicago, Illinois.
31
<PAGE> 37
EXPERTS
The consolidated financial statements of the Partnership as of December 31,
1997 and 1996 and for each of the three years in the period ended December 31,
1997 incorporated herein by reference from the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
32
<PAGE> 38
HUNTWAY PARTNERS, L.P.
PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma condensed statement of operations of the
Partnership is derived from the historical financial statements of the
Partnership and gives effect to the 1997 Refinancing and the Conversion as if
such transactions had occurred on January 1, 1997. The following unaudited pro
forma condensed balance sheet of the Partnership is derived from the historical
balance sheet of the Partnership and gives effect to the Conversion as if such
transaction had occurred on December 31, 1997.
33
<PAGE> 39
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA FOR
1997 PRO FORMA THE CONVERSION
REFINANCING FOR THE CONVERSION AND THE
HISTORICAL ADJUSTMENTS 1997 REFINANCING ADJUSTMENTS 1997 REFINANCING
---------- ----------- ---------------- ----------- ----------------
(IN THOUSANDS, EXCEPT PER UNIT, PER SHARE AND MARKET PRICE DATA)
<S> <C> <C> <C> <C> <C>
Revenues........................... $96,715 $96,715 $96,715
------- ------- -------
Costs and expenses:
Materials and processing costs... 85,201 85,201 85,201
Selling and administrative
expenses...................... 4,476 4,476 4,476
Interest expense................. 3,492 3,492(a) 3,492
Depreciation and amortization.... 2,414 40(b) 2,454 2,454
------- ------ ------- -------
Total costs and expenses........... 95,583 40 95,623 95,623
------- ------ ------- -------
Income from operations before
income taxes..................... 1,132 40 1,092 1,092
Income tax provision............... -- -- 437(c) 437
Net income (loss).................. $ 1,132 $ 40 $ 1,092 $(437) $ 655
======= ====== ======= ===== =======
Diluted net income (loss) per unit
or share......................... $ .04 .02 $ .06 $(.02) $ .04
Average diluted Common Unit
equivalents or shares
outstanding...................... 26,481 9,055 17,426(d) 17,426
</TABLE>
- -------------------------
(a) Notwithstanding the $10,043 increase in debt payable as a result of the 1997
Refinancing, interest expense remains essentially unchanged due to the lower
interest rate on the new borrowings and the reduction in the effective
interest rate on the Partnership's Industrial Development Bond.
(b) Gives effect to the amortization related to approximately $500 in costs
associated with the 1997 Refinancing as though it had occurred on January 1,
1997.
(c) Provides for federal and state taxes on income payable by a corporation but
not by a partnership, at an estimated rate of 40%.
(d) Consists of the total of the Common Unit equivalents outstanding immediately
after the 1997 Refinancing plus 2,695 additional Common Units that would be
issued upon the exercise of outstanding options using the treasury stock
method. The effect of the Convertible Notes is antidilutive.
34
<PAGE> 40
PRO FORMA CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CONVERSION PRO FORMA FOR
HISTORICAL ADJUSTMENTS THE CONVERSION
---------- ----------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current assets:
Cash............................................... $ 9,406 $ 263(a) $ 9,669
Accounts receivable................................ 4,066 4,066
Inventories........................................ 4,112 4,112
Prepaid expenses................................... 587 587
------- -------- -------
Total current assets................................. 18,171 263 18,434
------- -------- -------
Property, net........................................ 59,346 59,346
Other assets......................................... 1,025 1,025
Goodwill............................................. 1,701 1,701
------- -------- -------
Total assets......................................... $80,243 $ 263 $80,506
======= ======== =======
Current liabilities:
Accounts payable................................... $ 6,730 $ 300(b) $ 7,030
Current portion of long-term obligations........... 1,449 1,449
Accrued interest................................... 571 571
Other accrued liabilities.......................... 1,046 1,046
------- -------- -------
Total current liabilities............................ 9,796 300 10,096
------- -------- -------
Long-term obligations................................ 36,668 36,668
------- -------- -------
Partners' capital.................................... 33,779 (33,779)(b)(c) --
------- -------- -------
Shareholders' equity................................. -- 33,742(a)(b)(c) 33,742
------- -------- -------
Total equity capital................................. 33,779
Total liabilities and capital........................ $80,243 $ 263 $80,506
======= ======== =======
</TABLE>
- -------------------------
(a) To reflect the Related Transaction described under "The
Conversion -- Related Transaction."
(b) An increase in accounts payable and reduction of equity capital of $300 to
reflect the estimated transaction costs associated with the Conversion.
(c) To reflect the conversion from partnership to corporate form.
35
<PAGE> 41
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger dated as of January 26, 1998 (the "Merger
Agreement"), by and between Huntway Refining Company, a Delaware corporation
(the "Corporation"), and Huntway Partners, L.P., a Delaware limited partnership
(the "Merging Partnership").
WITNESSETH:
WHEREAS, the Corporation is a corporation duly organized and validly
existing under and by virtue of the laws of the State of Delaware, having
authorized capital stock consisting of (i) 1,000,000 shares of Preferred Stock,
par value $.01 per share ("Preferred Stock"); and (ii) 75,000,000 shares of
Common Stock, par value $.01 per share ("Common Stock"), of which no shares of
Preferred Stock are outstanding and 1,000 shares of Common Stock are outstanding
and owned by the Merging Partnership;
WHEREAS, the Merging Partnership is a limited partnership duly organized
and validly existing under the laws of the State of Delaware, having outstanding
(i) limited partnership interests representing Common Units (as defined in the
Merging Partnership's Amended and Restated Agreement of Limited Partnership
dated as of November 9, 1988, as amended (the "Partnership Agreement")) (the
"Merging Common Units") of which 14,583,958 are outstanding as of the date
hereof, (ii) a general partnership interest representing the Managing General
Partner's Percentage Interest (as defined in the Partnership Agreement) (the
"MGP's Units") and (iii) a general partnership interest representing the Special
General Partner's Percentage Interest (as defined in the Partnership Agreement)
(the "SGP's Units");
WHEREAS, the Board of Directors of the Corporation and the general partners
of the Merging Partnership deem it advisable that the Merging Partnership merge
with and into the Corporation, upon the terms and subject to the conditions set
forth herein and in accordance with the laws of the State of Delaware (the
"Merger"), and that the Merging Common Units, the MGP's Units and the SGP's
Units be converted into Common Stock upon consummation of the Merger as set
forth herein;
WHEREAS, the parties hereto intend that the Merger qualify as tax-free
reorganization for federal income tax purposes; and
WHEREAS, (i) the Board of Directors of the Corporation has, by resolution,
duly approved and adopted the provisions of this Merger Agreement as the
agreement of merger required by Section 263 of the General Corporation Law of
the State of Delaware (the "General Corporation Law"), (ii) the general partners
of the Merging Partnership have, by resolutions, duly approved and adopted the
provisions of this Merger Agreement as the agreement of merger required by
Section 17-211 of the Delaware Revised Uniform Limited Partnership Act ("RULPA")
and (iii) the Merging Partnership, as the sole owner of the outstanding stock of
the Corporation entitled to vote for the adoption of the Merger Agreement, has
duly approved and adopted the provisions of this Merger Agreement as the
agreement of merger required by Section 263 of the General Corporation Law;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1. EFFECT OF THE MERGER; MANNER AND BASIS OF CONVERSION.
1.1 At the Effective Time (as hereinafter defined), (i) the Merging
Partnership shall be merged with and into the Corporation and the separate
partnership existence of the Merging Partnership (except as may be continued by
operation of law) shall cease and (ii) the Corporation shall continue as the
surviving corporation, all with the effects provided by Section 259 of the
General Corporation Law and Section 17-211 of RULPA. The Corporation, in its
capacity as the surviving corporation of the Merger, is hereinafter sometimes
referred to as the "Surviving Corporation."
A-1
<PAGE> 42
1.2 Without limiting the provisions of Section 1.1, at the Effective Time:
(a) the Corporation shall assume all obligations of the Merging
Partnership under the Amended and Restated Collateralized Note Indenture
dated as of December 12, 1996, as amended, between the Merging Partnership
and Fleet National Bank, as trustee (the "Senior Trustee");
(b) the Corporation shall assume all obligations of the Merging
Partnership under the 9 1/4% Senior Subordinated Secured Convertible Note
Indenture dated as of October 15, 1997, as amended, between the Merging
Partnership and State Street Bank and Trust Company, as trustee (the
"Senior Subordinated Trustee");
(c) the Corporation shall assume all obligations of the Merging
Partnership under the Amended and Restated Junior Subordinated Debenture
Indenture dated as of December 12, 1996, as amended, between the Merging
Partnership and IBJ Schroder Bank & Trust Company, as trustee; and
(d) the Corporation shall assume all obligations of the Merging
Partnership under the Collateral Documents (as defined in the Amended and
Restated Intercreditor and Collateral Trust Agreement dated as of December
12, 1996, as amended, among Bankers Trust Company, as issuer of letters of
credit, Mellon Bank, N.A., as trustee for First Plaza Group Trust,
Oppenheimer & Company, Inc. ("Oppenheimer"), as agent for itself and
certain affiliated entities, Lindner Growth Fund, the Senior Trustee,
United States Trust Company of New York, as collateral agent, the Senior
Subordinated Trustee, Lighthouse Investors, L.L.C., B III Capital Partners,
L.P., Contrarian Capital Fund I, L.P., Contrarian Capital Fund II, L.P, The
IBM Retirement Plan Trust, and Oppenheimer as agent for itself and as agent
for Oppenheimer Horizon Partners, L.P., Oppenheimer Institutional Horizon
Partners, L.P., Oppenheimer International Horizon Fund II Ltd., and The &
Trust).
1.3 At the Effective Time, (i) each Merging Common Unit issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action by the Merging Partnership, the partners of the
Merging Partnership, the Corporation or any other person, be converted into one
share of Common Stock, (ii) the MGP's Units issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action by the Merging Partnership, the partners of the Merging Partnership, the
Corporation or any other person, be converted into the number of shares of
Common Stock equal to .9% of the Merger Common Stock, rounded to the next lower
whole number of shares and (iii) the SGP's Units issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action by the Merging Partnership, the partners of the Merging
Partnership, the Corporation or any other person, be converted into the number
of shares of Common Stock equal to .1% of the Merger Common Stock. "Merger
Common Stock" means the total number of shares of Common Stock referred to in
clauses (i), (ii) and (iii) of the preceding sentence.
1.4 The authority of the officers of the Merging Partnership shall continue
with respect to the due execution in the name of the Merging Partnership of tax
returns, instruments of transfer or conveyance and other documents where the
execution thereof is required or convenient to comply with any provision of
applicable law, any contract to which the Merging Partnership is or was a party
or this Merger Agreement.
1.5 The name of the Surviving Corporation shall be Huntway Refining
Company.
ARTICLE 2. EFFECTIVE TIME.
2.1 Upon the fulfillment or waiver of the condition specified in Article 5
hereof and provided that this Merger Agreement has not been terminated and
abandoned pursuant to Section 6.2 hereof, the Corporation and the Merging
Partnership shall cause a Certificate of Merger with respect to the Merger to be
executed, acknowledged and filed with the Secretary of State of the State of
Delaware, all as provided for in and in accordance with Section 263 of the
General Corporation Law and Section 17-211 of RULPA.
2.2 The Merger shall become effective at the time and date as provided by
applicable law (the "Effective Time").
A-2
<PAGE> 43
ARTICLE 3. ADDITIONAL AGREEMENTS.
3.1 Each of the parties hereto shall (subject to any qualifications
specified in this Article 3, the conditions specified in Article 5 and the
fiduciary obligations of its board of directors or its general partners)
diligently use its best efforts to cause the Merger to be consummated and to be
consummated at the earliest practicable date. Such best efforts shall include
the vigorous defense of any suit or proceeding instituted against it in
connection with the transactions contemplated by this Merger Agreement.
3.2 The Merging Partnership shall submit this Merger Agreement and the
Merger to its limited partners for adoption and approval and shall take all
other action necessary or helpful to secure a vote of its limited partners in
favor of the Merger.
3.3 Prior to the Effective Time, each party hereto shall use its best
efforts to obtain the consent of all private third parties and governmental
authorities necessary to its consummation of the Merger.
3.4 Each party hereto shall give prompt notice to the other party hereto of
the occurrence or failure to occur of any event, which occurrence or failure
would cause or would be likely to cause the condition to the obligations of the
parties hereto to effect the Merger not to be satisfied.
ARTICLE 4. CERTIFICATE OF INCORPORATION AND BY-LAWS; BOARD OF DIRECTORS.
4.1 The Certificate of Incorporation and By-laws of the Corporation as in
effect at the Effective Time shall govern the Surviving Corporation until such
certificate or by-laws are amended in accordance with the terms thereof.
4.2 The members of the Board of Directors and the officers of the
Corporation holding office immediately prior to the Effective Time shall be the
members of the Board of Directors and the officers (holding the same positions
as they held with the Corporation immediately prior to the Effective Time) of
the Surviving Corporation and shall hold such offices until the expiration of
their current terms, or until their earlier death, resignation or removal.
ARTICLE 5. CONDITION.
5.1 The respective obligations of the Merging Partnership and the
Corporation to consummate the Merger under this Merger Agreement are subject to
the fulfillment of the condition that adoption of this Merger Agreement shall
have been approved by the affirmative vote of limited partners of the Merging
Partnership holding at least 66 2/33% of the outstanding Merging Common Units.
ARTICLE 6. AMENDMENT AND TERMINATION.
6.1 The Merging Partnership and the Corporation, by mutual consent of the
general partners of the Merging Partnership and the Board of Directors of the
Corporation, may amend, modify or supplement this Merger Agreement in such
manner as may be agreed upon by them in writing.
6.2 This Merger Agreement may be terminated and the Merger may be abandoned
for any reason by the general partners of the Merging Partnership or the Board
of Directors of the Corporation at any time prior to the Effective Time. In the
event of the termination of this Merger Agreement as provided herein, this
Merger Agreement shall forthwith become void and there shall be no liability
hereunder on the part of the parties hereto or their respective partners,
officers and directors.
ARTICLE 7. INDEMNIFICATION OF MERGING PARTNERSHIP'S GENERAL PARTNERS.
7.1 From and after the Effective Time, to the fullest extent permitted by
law, each Indemnitee (as defined in the Partnership Agreement) shall be
indemnified and held harmless by the Corporation from and against any and all
losses, claims, damages, liabilities (joint or several), expenses (including
legal fees and expenses), judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits or proceedings, civil,
criminal, administrative or investigative, in which the Indemnitee may be
involved, or threatened to be involved, as a party or otherwise, by reason of
any actions or failure to act by such
A-3
<PAGE> 44
Indemnitee (or any other Indemnitee) relating in any way to the Merging
Partnership or a subsidiary of the Merging Partnership (a "Subsidiary"), or
which relate to or arise out of the Merging Partnership, or any Subsidiary, or
the property, business or affairs of the Merging Partnership or any Subsidiary,
or such person's services with any other entity at the request of the Managing
General Partner (as defined in the Partnership Agreement) or other
representative of the Merging Partnership or such Indemnitee's status as a
general partner of the Merging Partnership or an affiliate thereof, or a
registration statement or any document filed with or submitted to the Securities
and Exchange Commission relating to the Merging Partnership or any
indemnification of underwriters given in connection therewith, regardless of
whether the Indemnitee serves as a general partner of the Merging Partnership,
an affiliate thereof or a partner, director, officer or employee thereof or in
any other capacity at the time any such liability or expense is paid or
incurred, and regardless that the liability or expense accrued at or relates to,
in whole or in part, any time before the Effective Time, if the Indemnitee acted
in good faith and in a manner which such Indemnitee believed to be in, or not
opposed to, the best interests of the Merging Partnership, and, with respect to
any criminal proceeding, had no reasonable cause to believe its conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the Indemnitee is not entitled
to indemnification hereunder. Any indemnification pursuant to this Article 7
shall be made only out of the assets of the Surviving Corporation and to the
extent provided by the first sentence of this Section 7.1.
7.2 The Surviving Corporation shall promptly reimburse any Indemnitee on
demand for costs incurred by the Indemnitee to evaluate, defend against, settle,
satisfy or otherwise deal with any claim (including all such costs incurred
prior to the final disposition of such claim), upon receipt by the Surviving
Corporation of an undertaking by or on behalf of the Indemnitee to repay such
amount to the extent it shall be finally determined that the Indemnitee is not
entitled to payment from the Surviving Corporation for such costs. If the
Surviving Corporation shall deny any claim for indemnification in whole or in
part, then the Indemnitee shall have the right to have such issue determined by
a court in Delaware and in such proceeding the Indemnitee shall be presumed to
be entitled to the indemnification sought unless the Surviving Corporation is
able to establish by clear and convincing evidence that the standards necessary
to entitle such Indemnitee to indemnification have not been satisfied. The
Indemnitee shall also be entitled to reimbursement from the Surviving
Corporation for attorneys' fees and other expenses the Indemnitee incurs in
connection with any such court action except to the extent the court finds such
claims were so clearly without merit that prosecuting such claims amounted to
bad faith on the part of the Indemnitee. The Surviving Corporation shall also
pay the Indemnitee interest at a rate 200 basis points in excess of the prime
rate (as published in The Wall Street Journal) on any amount owed by the
Surviving Corporation to the Indemnitee under this Article 7 from the time
payment of such amount shall be requested by such Indemnitee until such amount
shall actually be paid to the Indemnitee.
7.3 The indemnification provided by this Article 7 shall be in addition to
any other rights to which an Indemnitee may be entitled under any agreement,
certificate of incorporation or bylaw of the Surviving Corporation or as a
matter of law or otherwise, both as to action in the Indemnitee's capacity as a
general partner of the Merging Partnership, an affiliate thereof or a partner,
director, officer or employee thereof and to action in any other capacity, shall
continue as to an Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns and administrators of an
Indemnitee.
7.4 For purposes of this Article 7, the Merging Partnership shall be deemed
to have requested an Indemnitee to serve as a fiduciary of an employee benefit
plan whenever the performance by him of his duties to the Merging Partnership
also imposes duties on, or otherwise involves services by, him to the plan or
participants or beneficiaries of the plan. Excess taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall be deemed "fines" within the meaning of Section 7.1.
7.5 An Indemnitee shall not be denied indemnification in whole or in part
under this Article 7 because the Indemnitee had an interest in the transaction
with respect to which the indemnification applies if the transaction was
otherwise permitted by the terms of the Partnership Agreement.
A-4
<PAGE> 45
7.6 The provisions of this Article 7 are for the benefit of the Indemnitees
and their heirs, successors, assigns, administrator and personal representatives
and shall not be deemed to create any rights for the benefit of any other
persons. The provisions of this Article 7 shall not be amended in any way that
would adversely affect an Indemnitee without the consent of such Indemnitee.
ARTICLE 8. MISCELLANEOUS.
8.1 This Merger Agreement may be executed in two counterparts, both of
which taken together shall constitute one and the same instrument.
8.2 The internal law and not the law of conflicts of the State of Delaware
will govern all questions concerning the construction, validity and
interpretation of this Merger Agreement.
8.3 This Merger Agreement is not intended to confer upon any person (other
than the parties hereto and their respective successors and assigns) any rights
or remedies hereunder or by reason hereof.
* * * * *
A-5
<PAGE> 46
EXHIBIT B
HUNTWAY REFINING COMPANY
1998 STOCK INCENTIVE PLAN
ARTICLE 1
IDENTIFICATION OF THIS PLAN
1.1 Title. The plan described herein shall be known as the 1998 Stock
Incentive Plan (this "Plan").
1.2 Purpose. The purpose of this Plan is (i) to compensate certain
directors of Huntway Refining Company (the "Company") and certain officers and
employees of the Company and its Subsidiaries for services rendered by such
persons after the date of adoption of this Plan to the Company or any
Subsidiary; (ii) to provide certain directors of the Company and certain
officers and employees of the Company and its Subsidiaries with significant
additional incentive to promote the financial success of the Company; and (iii)
to provide an incentive which may be used to induce able persons to become or
remain directors of the Company or to enter into or remain in the employment of
the Company or any Subsidiary.
1.3 Effective Date. The Plan shall become effective upon its approval by
the Board of Directors and by the general partners and limited partners of
Huntway Partners, L.P., the Company's current parent (the "Effective Date").
1.4 Defined Terms. Certain capitalized terms used herein have the meanings
as set forth in Section 10.1 of this Plan.
ARTICLE 2
ADMINISTRATION OF THIS PLAN
2.1 Initial Administration. This Plan shall be administered by a
Compensation Committee (the "Committee") of the Board of Directors comprised of
persons appointed by the Board of Directors of the Company in accordance with
the provisions of Section 2.3.
2.2 Committee's Powers. The Committee shall have full power and authority
to prescribe, amend and rescind rules and procedures governing administration of
this Plan. The Committee shall have full power and authority (i) to interpret
the terms of this Plan, the terms of the Awards and the rules and procedures
established by the Committee and (ii) to determine the meaning of or
requirements imposed by or rights of any person under this Plan, any Award or
any rule or procedure established by the Committee. Each action of the Committee
which is within the scope of the authority delegated to the Committee by this
Plan or by the Board shall be binding on all persons.
2.3 Committee Membership. The Committee shall be composed of two or more
members of the Board, each of whom is an "outside director" as defined in
Section 162(m) of the Code and a "Non-Employee Director," as defined in
Securities and Exchange Commission Rule 16b-3, as amended ("Rule 16b-3"), or any
successor rules or government pronouncements. Subject to the preceding sentence,
the Board shall have the power to determine the number of members which the
Committee shall have and to change the number of membership positions on the
Committee from time to time. The Board shall appoint all members of the
Committee. The Board may from time to time appoint members to the Committee in
substitution for, or in addition to, members previously appointed and may fill
vacancies, however caused, on the Committee. Any member of the Committee may be
removed from the Committee by the Board at any time with or without cause.
2.4 Committee Procedures. The Committee shall hold its meetings at such
times and places as it may determine. The Committee may make such rules and
regulations for the conduct of its business as it shall deem advisable. Unless
the Board or the Committee expressly decides to the contrary, a majority of the
members of the Committee shall constitute a quorum and any action taken by a
majority of the Committee
B-1
<PAGE> 47
members in attendance at a meeting at which a quorum of Committee members are
present shall be deemed an act of the Committee.
2.5 Indemnification. No member of the Committee shall be liable, in the
absence of bad faith, for any act or omission with respect to his or her service
on the Committee under this Plan. Service on the Committee shall constitute
service as a director of the Company so that the members of the Committee shall
be entitled to indemnification and reimbursement as directors of the Company for
any action or any failure to act in connection with service on the Committee to
the full extent provided for at any time in the Company's Certificate of
Incorporation and By-Laws, or in any insurance policy or other agreement
intended for the benefit of the Company's directors.
2.6 Approval Required for Awards to Committee Members. Notwithstanding any
other provision of this Plan, the Committee may not issue an Option to any
member of the Committee without the prior approval of a majority of those
members of the Board of Directors who are not members of the Committee.
ARTICLE 3
PERSONS ELIGIBLE TO RECEIVE AWARDS
A person shall be eligible to be granted an Award only if on the proposed
Granting Date for such Award such person is a director of the Company or a
full-time, salaried employee of the Company or any Subsidiary. A person eligible
to be granted an Award is herein called a "Grantee."
ARTICLE 4
GRANT OF AWARDS
4.1 Power to Grant Awards. The Committee is authorized under this Plan to
issue options (each, an "Option") to purchase shares of Common Stock, par value
$.01 per share, of the Company ("Common Stock"). The entering into of any such
arrangement is referred to herein as the grant of an "Award."
4.2 Granting Date. An Award shall be deemed to have been granted under
this Plan on the date (the "Granting Date") which the Committee designates as
the Granting Date at the time it approves such Award, provided that the
Committee may not designate a Granting Date with respect to any Award which is
earlier than the date on which the granting of such Award is approved by the
Committee.
4.3 Award Terms Which the Committee May Determine. Subject to the terms of
this Plan, the Committee shall have the power to determine the Grantee to whom
Awards are granted, the number of Shares subject to each Award, the number of
Awards granted to each Grantee and the time at which each Award is granted.
Except as otherwise expressly provided in this Plan, the Committee shall also
have the power to determine, at the time of the grant of each Award, all terms
and conditions governing the rights and obligations of the holder with respect
to such Award. The Committee shall have the power to determine: (a) the exercise
price per Share or the method by which the exercise price per Share will be
determined; provided that the exercise price per Share shall not be less than
50% of the fair market value of the Common Stock on the date of grant or less
than the par value of a Share; (b) the length of the period during which the
Option may be exercised and any limitations on the number of Shares purchasable
with the Option at any given time during such period; (c) the times at which the
Option may be exercised; (d) any conditions precedent to be satisfied before the
Option may be exercised, such as vesting period; (e) any restrictions on resale
of any Shares purchased upon exercise of the Option; (f) the extent to which the
Option may be transferable; and (g) whether the Option will constitute an
Incentive Stock Option.
4.4 Award Agreement. No person shall have any rights under any Award
unless and until the Company and the person to whom such Award is granted have
executed and delivered an agreement expressly granting the Award to such person
and containing provisions setting forth the terms of the Award (an "Award
Agreement").
B-2
<PAGE> 48
4.5 Limitation on Shares Issuable to any Grantee. The aggregate number of
Shares that may relate to Awards granted to a Grantee during any calendar year
(including Awards already exercised by the Grantee) shall not exceed 250,000
shares, as adjusted pursuant to Article 8 of this Plan.
ARTICLE 5
AWARD TERMS
5.1 Plan Provisions Control Terms. The terms of this Plan shall govern all
Awards. In the event any provision of any Award Agreement conflicts with any
term in this Plan as constituted on the Granting Date of such Award, the term in
this Plan as constituted on the Granting Date of the Award shall control. Except
as provided in Article 8, the terms of any Award may not be changed after the
Granting Date of such Award without the express approval of the Committee and
the Award Holder.
5.2 Term Limitation. No Incentive Stock Option may be granted under this
Plan which is exercisable more than ten years after its Granting Date. This
Section 5.2 shall not be deemed to limit the term which the Committee may
specify for any Awards (including Options) granted under this Plan which are not
intended to be Incentive Stock Options.
5.3 Transfer of Awards. An Award granted pursuant to this Plan may be
transferable as provided in the Award Agreement. It shall be a condition
precedent to any transfer of any Award that the transferee executes and delivers
an agreement acknowledging such Award has been acquired for investment and not
for distribution and is and shall remain subject to this Plan and the Award
Agreement. The "Holder" of any Award shall mean (i) the initial grantee of such
Award or (ii) any permitted transferee.
5.4 $100,000 Per Year Limit on Incentive Stock Options. No Grantee may be
granted Incentive Stock Options if the value of the Shares subject to those
options which first become exercisable in any given calendar year (and the value
of the Shares subject to any other Incentive Stock Options issued to the Grantee
under this Plan or any other plan of the Company or its Subsidiaries which first
become exercisable in such year) exceeds $100,000. For this purpose, the values
of Shares shall be determined on the respective Granting Dates of the Options to
which they are subject. Any Incentive Stock Options issued in excess of the
$100,000 limit shall be treated as Options that are not Incentive Stock Options.
Incentive Stock Options shall be taken into account in the order in which they
were granted.
5.5 No Right to Continuing Service Conferred. Nothing in this Plan or (in
the absence of an express provision to the contrary) in any Award Agreement (i)
confers any right or obligation on any person to continue as a director of the
Company or in the employ of the Company or any Subsidiary or (ii) affects or
shall affect in any way any person's right or any right of the Company or any
Subsidiary to terminate such person's service as director of the Company or
employment with the Company or any Subsidiary at any time, for any reason, with
or without cause.
B-3
<PAGE> 49
ARTICLE 6
REGULATORY COMPLIANCE
6.1 Taxes. The Company or any Subsidiary shall be entitled, if the
Committee deems it necessary or desirable, to withhold from an Award Holder's
salary or other compensation (or to secure payment from the Award Holder in lieu
of withholding) all or any portion of any withholding or other tax due from the
Company or any Subsidiary with respect to any Shares deliverable under such
Holder's Award. The Company may defer delivery under a Holder's Award until
indemnified to its satisfaction with respect to such withholding or other taxes.
6.2 Securities Law Compliance. Each Award shall be subject to the condition
that such Award may not be exercised if and to the extent the Committee
determines that the sale of securities upon exercise of the Award may violate
the Securities Act or any other law or requirement of any governmental
authority. The Company shall not be deemed by any reason of the granting of any
Award to have any obligation to register the Shares subject to such Option under
the Securities Act or to maintain in effect any registration of such Shares
which may be made at any time under the Securities Act. An Award shall not be
exercisable if the Committee or the Board determines there is non-public
information material to the decision of the Holder to exercise such Award which
the Company cannot for any reason communicate to such Holder.
ARTICLE 7
SHARES SUBJECT TO THIS PLAN
Except as provided in Article 8, an aggregate of 2,000,000 Shares of Common
Stock shall be subject to this Plan. Except as provided in Article 8, the Awards
shall be limited so that the sum of the following shall not as of any given time
exceed 2,000,000 Shares: (i) all Shares subject to Awards outstanding under this
Plan at the given time and (ii) all Shares which shall have been issued by the
Company by reason of the exercise at or prior to the given time of any of the
Awards. The Common Stock issued under this Plan may be either authorized and
unissued shares, shares reacquired and held in the treasury of the Company, or
both, all as from time to time determined by the Board. In the event any Award
shall expire or be terminated before it is fully exercised, then all Shares
formerly subject to such Award as to which such Award was not exercised shall be
available for any Award subsequently granted in accordance with the provisions
of this Plan. No fractional Shares will be eligible to be issued under this
Plan.
In the event of a change in the Shares as presently constituted, which is
limited to a change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Plan.
ARTICLE 8
ADJUSTMENTS TO REFLECT ORGANIC CHANGES
The Board shall appropriately and proportionately adjust the number and
kind of Shares subject to outstanding Awards, the price for which Shares may be
purchased upon the exercise of outstanding Awards, and the number and kind of
Shares available for Awards subsequently granted under this Plan to reflect any
stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in the capitalization of the Company which the
Board determines to be similar, in its substantive effect upon this Plan or the
Awards, to any of the changes expressly indicated in this sentence. The Board
may (but shall not be required to) make any appropriate adjustment to the number
and kind of Shares subject to outstanding Awards, the price for which Shares may
be purchased upon the exercise of outstanding Awards, and the number and kind of
Shares available for Awards subsequently granted under this Plan to reflect any
spin-off, spin-out or other distribution of assets to stockholders or any
acquisition of the Company's stock or assets or other change which the Board
determines to be similar, in its substantive effect upon this Plan or the
Awards, to any of the changes expressly indicated in this sentence. The
Committee shall have the power to determine
B-4
<PAGE> 50
the amount of the adjustment to be made in each case described in the preceding
two sentences, but no adjustment approved by the Committee shall be effective
until and unless it is approved by the Board. In the event of any
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the Company's assets which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock, the Board may (but shall not be required to)
substitute the per share amount of such stock, securities or assets for Shares
upon any subsequent exercise of any Award.
ARTICLE 9
AMENDMENT AND TERMINATION OF THIS PLAN
9.1 Amendment. Except as provided in the following two sentences, the Board
shall have complete power and authority to amend this Plan at any time and no
approval by the Company's stockholders or by any other person, committee or
other entity of any kind shall be required to make any amendment approved by the
Board effective. So long as the Common Stock is eligible for trading on the New
York Stock Exchange, the Board shall obtain stockholder approval for those
amendments of this Plan required to be so approved pursuant to the New York
Stock Exchange Rules. The Board shall not, without the affirmative approval of
the Company's stockholders, amend this Plan in any manner which would cause any
outstanding Incentive Stock Options to no longer qualify as Incentive Stock
Options. No termination or amendment of this Plan may, without the consent of
the Holder of any Award obtained prior to termination or the adoption of such
amendment, materially and adversely affect the rights of such Holder under such
Award.
9.2 Termination. The Board shall have the right and the power to terminate
this Plan at any time, provided that no Incentive Stock Options may be granted
after the tenth anniversary of the adoption of this Plan. No Award shall be
granted under this Plan after the termination of this Plan, but the termination
of this Plan shall not have any other effect. Any Award outstanding at the time
of the termination of this Plan may be exercised after termination of this Plan
at any time prior to the Expiration Date of such Award to the same extent such
Award would have been exercisable had this Plan not terminated.
ARTICLE 10
DEFINITIONS AND OTHER PROVISIONS OF THIS PLAN
10.1 Definitions. Each term defined in this Section 10.1 has the meaning
indicated in this Section 10.1 whenever such term is used in this Plan:
"Award" has the meaning such term is given in Section 4.1 of this Plan.
"Award Agreement" has the meaning such term is given in Section 4.4 of this
Plan.
"Board of Directors" and "Board" both mean the Board of Directors of the
Company as constituted at the time the term is applied.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" has the meaning such term is given in Section 2.1 of this Plan.
"Common Stock" means the issued or issuable Common Stock, par value $.01
per share, of the Company.
"Company" as applied as of any given time shall mean Huntway Corporation, a
Delaware corporation, except that if prior to the given time any corporation or
other entity has acquired all or a substantial part of the assets of the Company
(as herein defined) and has agreed to assume the obligations of the Company
under this Plan, or is the survivor in a merger or consolidation to which the
Company was a party, such corporation or other entity shall be deemed to be the
Company at the given time.
B-5
<PAGE> 51
"Expiration Date" as applied to any Award means the date specified in the
Award Agreement between the Company and the Holder as the expiration date of
such Award. If no expiration date is specified in the Award Agreement relating
to any Award, then the Expiration Date of such Award shall be the day prior to
the tenth anniversary of the Granting Date of such Award. Notwithstanding the
preceding sentences, if the person to whom any Incentive Stock Option is granted
owns, on the Granting Date of such Option, stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Company (or of any parent or Subsidiary of the Company in existence on the
Granting Date of such Option), and if no expiration date is specified in the
Award Agreement relating to such Option, then the Expiration Date of such Option
shall be the day prior to the fifth anniversary of the Granting Date of such
Option.
"Grantee" has the meaning such term is given in Article 3 of this Plan.
"Granting Date" has the meaning such term is given in Section 4.2 of this
Plan.
"Holder" has the meaning such term is given in Section 5.3 of this Plan.
"Incentive Stock Option" means an incentive stock option, as defined in
Code Section 422, which is granted pursuant to this Plan.
"Option" has the meaning such term is given in Section 4.3 of this Plan.
"Plan" has the meaning such term is given in Section 1.1 of this Plan.
"Securities Act" at any given time shall consist of: (i) the Securities Act
of 1933 as constituted at the given time; (ii) any other law or laws promulgated
prior to the given time by the United States Government which are in effect at
the given time and which regulate or govern any matters at any time regulated or
governed by the Securities Act of 1933; (iii) all regulations, rules,
registration forms and other governmental pronouncements issued under the laws
specified in clauses (i) and (ii) of this sentence which are in effect at the
given time; and (iv) all interpretations by any governmental agency or authority
of the things specified in clause (i), (ii) or (iii) of this sentence which are
in effect at the given time. Whenever any provision of this Plan requires that
any action be taken in compliance with any provision of the Securities Act, such
provision shall be deemed to require compliance with the Securities Act as
constituted at the time such action takes place.
"Share" means a share of Common Stock.
"Subsidiary" means any corporation, partnership, limited liability company
or other business organization in which the Company owns, directly or
indirectly, 50% or more of the total combined voting power of all classes of
securities of such business organization.
10.2 Headings. Section headings used in this Plan are for convenience
only, do not constitute a part of this Plan and shall not be deemed to limit,
characterize or affect in any way any provisions of this Plan. All provisions in
this Plan shall be construed as if no headings had been used in this Plan.
10.3 Severability.
(a) General. Whenever possible, each provision in this Plan and in every
Award at any time granted under this Plan shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Plan or any Award at any time granted under this Plan is held to be prohibited
by or invalid under applicable law, then (i) such provision shall be deemed
amended to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this Plan
and every Award at any time granted under this Plan shall remain in full force
and effect.
(b) Incentive Stock Options. Whenever possible, each provision in this
Plan and in every Award at any time granted under this Plan which is evidenced
by an Award Agreement which expressly states such Option is intended to
constitute an Incentive Stock Option under Code Section 422 (an "intended ISO")
shall be interpreted in such manner as to entitle such intended ISO to the tax
treatment afforded by the Code to Options which do constitute Incentive Stock
Options under Code Section 422, but if any provision of this Plan or any
intended ISO at any time granted under this Plan is held to be contrary to the
requirements necessary
B-6
<PAGE> 52
to entitle such intended ISO to the tax treatment afforded by the Code to
Options which do constitute Incentive Stock Options under Code Section 422, then
(i) such provision shall be deemed to have contained from the outset such
language as shall be necessary to entitle such intended ISO to the tax treatment
afforded by the Code to Options which do constitute Incentive Stock Options
under Code Section 422, and (ii) all other provisions of this Plan and such
intended ISO shall remain in full force and effect. If any Award Agreement
covering an intended ISO granted under this Plan does not explicitly include any
terms required to entitle such intended ISO to the tax treatment afforded by the
Code to Options which do constitute Incentive Stock Options under Code Section
422, then all such terms shall be deemed implicit in the intention to afford
such treatment to such Option and such Option shall be deemed to have been
granted subject to all such terms.
10.4 No Strict Construction. No rule of strict construction shall be
applied against the Company, the Committee or any other person in the
interpretation of any of the terms of this Plan, any Award or any rule or
procedure established by the Committee.
10.5 Choice of Law. This Plan and all documents contemplated hereby, and
all remedies in connection therewith and all questions or transactions relating
thereto, shall be construed in accordance with and governed by the internal laws
of the State of Delaware.
10.6 Tax Consequences. Tax consequences from the purchase and sale of
Shares may differ among grantees under this Plan. Each grantee of an Award
should discuss specific tax questions regarding participation in this Plan with
his or her own tax advisor.
B-7
<PAGE> 53
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("Section 145") permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. The
Certificate limits the liability of Directors to the fullest extent permitted by
the Delaware General Corporation Law. In addition, the Certificate provides that
the Corporation shall indemnify Directors and officers of the Corporation to the
fullest extent permitted by such law. The Certificate further specifies
procedures for such indemnification. Section 145 also empowers the Registrant to
purchase and maintain insurance that protects its officers, directors, employees
and agents against any liabilities incurred in connection with their service in
such positions. The Partnership currently maintains such insurance and the
Corporation anticipates entering into such arrangements prior to the Conversion.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 26, 1998
between the Registrant and Huntway Partners, L.P. (the
"Partnership") (incorporated by reference to Exhibit A to
the Proxy Statement/Prospectus included in this Registration
Statement).
3.1 Certificate of Incorporation of the Registrant.**
3.2 By-laws of the Registrant.**
4.1 Deposit Agreement dated as of May 12, 1994 by and among the
Partnership, The First National Bank of Boston and Huntway
Managing Partner, L.P. (incorporated by reference to Exhibit
4 of the Partnership's Annual Report on Form 10-K, filed
March 31, 1998, Commission file No. 1-10091).
5.1 Opinion of Kirkland & Ellis regarding legality of the shares
of common stock being registered.**
8.1 Opinion of Kirkland & Ellis regarding certain tax matters.*
10.1 Amended and Restated Agreement of Limited Partnership of the
Partnership (incorporated by reference to Exhibit A to the
Prospectus included in the Partnership's Registration
Statement on Form S-1, filed September 26, 1988,
Registration No. 33-24445).
10.2 Bylaws of the Partnership (incorporated by reference to
Exhibit 3.2 of the Partnership's Registration Statement on
Form S-1, as amended by Amendment No. 2, filed November 2,
1988, Registration No. 33-24445).
10.3 Amendment of Agreement of Limited Partnership of the
Partnership dated as of December 20, 1989 (incorporated by
reference to Exhibit 3.3 of the Partnership's Annual Report
on Form 10-K, filed March 30, 1990, Commission file No.
1-10091)
10.4 Amendment of Agreement of Limited Partnership of the
Partnership dated as of December 12, 1996 (incorporated by
reference to Appendix E of the Partnership's Consent
Solicitation and Disclosure Statement on Schedule 14A, filed
October 15, 1996, Commission file No. 1-10091).
10.5 Amended and Restated Agreement of Limited Partnership of
Huntway Managing Partner, L.P. dated as of December 22, 1989
(incorporated by reference to Exhibit 10.1 of the
Partnership's Annual Report on Form 10-K, filed March 30,
1990, Commission file No. 1-10091).
10.6 Amended and Restated Agreement of Limited Partnership of
Huntway Holdings, L.P. dated as of December 22, 1989
(incorporated by reference to Exhibit 10.12 of the
Partnership's Annual Report on Form 10-K, filed March 30,
1990, Commission file No. 1-10091).
</TABLE>
II-1
<PAGE> 54
<TABLE>
<C> <S>
10.7 Second Amended and Restated Agreement of Limited Partnership
of Sunbelt Refining Company, L.P. ("Sunbelt") (incorporated
by reference to Exhibit 10.8 of the Partnership's Annual
Report on Form 10-K, filed March 30, 1990, Commission file
No. 1-10091).
10.8 Sequencing and Amendatory Agreement dated as of October 31,
1997 between the Partnership, Sunbelt and certain holders of
the Partnership's equity and debt securities (incorporated
by reference to Exhibit 10.1 to the Partnership's Current
Report on Form 8-K, filed November 14, 1997, Commission file
No. 1-10091).
10.9 Exchange and Purchase Agreement dated as of October 31, 1997
between the Partnership and certain holders of the
Partnership's equity and debt securities (incorporated by
reference to Exhibit 10.2 to the Partnership's Current
Report on Form 8-K, filed November 14, 1997, Commission file
No. 1-10091).
10.10 Amended and Restated Registration Rights Agreement dated as
of October 31, 1997 between the Partnership and certain
holders of the Partnership's equity and debt securities
(incorporated by reference to Exhibit 10.3 to the
Partnership's Current Report on Form 8-K, filed November 14,
1997, Commission file No. 1-10091).
10.11 Amended and Restated Ground Lease dated as of July 31, 1987
by and between Industrial Asphalt and Huntway Refining
Company (incorporated by reference to Exhibit 10.7 of the
Partnership's Registration Statement on Form S-1, filed
September 26, 1988, Registration No. 33-24445).
10.12 Amended and Restated Profit Sharing and Tax Deferred Savings
Plan of the Partnership (incorporated by reference to
Exhibit 10.2 of the Partnership's Annual Report on Form
10-K, filed March 29, 1989, Commission file No. 1-10091).
10.13 Money Purchase Pension Plan of the Partnership (incorporated
by reference to Exhibit 10.4 of the Partnership's
Registration Statement on Form S-1, filed September 26,
1988, Registration No. 33-24445).
10.14 Indenture dated as of December 12, 1996 between the
Partnership and Fleet National Bank, relating to the
Partnership's 12% Senior Secured Notes Due 2005, including
related security documents, guaranties and forms of
securities (incorporated by reference to Exhibit 4.1 of the
Partnership's Current Report on Form 8-K, filed December 27,
1996, Commission File No. 1-10091).
10.15 First Supplemental Indenture dated as of October 31, 1997
between the Partnership and Fleet National Bank, relating to
the Partnership's 12% Senior Secured Notes Due 2005
(incorporated by reference to Exhibit 10.1 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-10091).
10.16 Second Supplemental Indenture dated as of November 30, 1997
between the Partnership and Fleet National Bank, relating to
the Partnership's 12% Senior Secured Notes Due 2005
(incorporated by reference to Exhibit 10.2 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-10091).
10.17 Indenture dated as of December 12, 1996 between the
Partnership and IBJ Schroder Bank & Trust Company, relating
to the Partnership's Junior Subordinated Notes Due 2005,
including the forms of security (incorporated by reference
to Exhibit 4.2 of the Partnership's Current Report on Form
8-K filed December 27, 1996, Commission File No. 1-10091).
10.18 First Supplemental Indenture between the Partnership and IBJ
Schroder Bank & Trust Company dated as of October 31, 1997
relating to the Partnership's Junior Subordinated Notes Due
2005 (incorporated by reference to Exhibit 10.3 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-10091).
</TABLE>
II-2
<PAGE> 55
<TABLE>
<C> <S>
10.19 Indenture dated as of October 31, 1997 between the Partnership and State Street Bank and Trust Company,
as trustee ("State Street"), relating to the Partnership's 9 1/4% Senior Subordinated Secured
Convertible Notes due 2007 (incorporated by reference to Exhibit 4.1 to the Partnership's Current Report
on Form 8-K, filed November 14, 1997, Commission File No. 1-10091).
10.20 First Supplemental Indenture between the Partnership and State Street dated as of January 14, 1998
relating to the Partnership's Senior Subordinated Secured Convertible Notes Due 2007 (incorporated by
reference to Exhibit 10.4 of the Partnership's Current Report on Form 8-K, filed March 30, 1998,
Commission File No. 1-10091).
10.21 Letter of Credit and Reimbursement Agreement Dated as of June 22, 1993 between the Partnership, Sunbelt
and Bankers Trust Company (incorporated by reference to Exhibit 10.31 of the Partnership's Current
Report on Form 8-K, filed July 13, 1993, Commission file No. 1-10091).
10.22 First Amendment to Letter of Credit and Reimbursement Agreement dated as of December 12, 1996 between
the Partnership, Sunbelt and Bankers Trust Company. (incorporated by reference to Exhibit 10.17 of the
Partnership's Annual Report on Form 10-K, filed March 29, 1997, Commission file No. 1-10091).
10.23 Third Amendment to Letter of Credit and Reimbursement Agreement dated as of November 30, 1997 between
the Partnership, Sunbelt and Bankers Trust Company (incorporated by reference to Exhibit 10.5 of the
Partnership's Current Report on Form 8-K, filed March 30, 1998, Commission File No. 1-0091).
10.24 1996 Employee Incentive Option Plan of the Partnership dated as of December 12, 1996 (incorporated by
reference to Appendix C of the Partnership's Consent Solicitation and Disclosure Statement on Schedule
14A filed October 15, 1996, Commission file No. 1-10091).
10.25 Indemnification Agreement dated as of November 9, 1988 (incorporated by reference to Exhibit 10.12 of
the Partnership's Annual Report on Form 10-K, filed March 29, 1989, Commission file No. 1-10091).
10.26 Definitive Agreement between the Partnership and Reprise Holdings, L.P. dated as of May 3, 1990
(incorporated by reference to Exhibit 10.14 of the Partnership's Quarterly Report on Form 10-Q, filed
May 15, 1990, Commission file No. 1-10091).
10.27 Termination Agreement (incorporated by reference to Exhibit 10.41 of the Partnership's Current Report on
Form 8-K, filed July 13, 1993, Commission file No. 1-10091).
10.28 Huntway Refining Company 1998 Stock Incentive Plan (incorporated by reference to Exhibit B to the Proxy
Statement/Prospectus included in this Registration Statement).
10.29 Amendatory Agreement dated as of March 30, 1998 between the Partnership and certain holders of the
Partnership's debt securities.*
10.30 Second Supplemental Indenture dated as of March 30, 1998 relating to the Partnership's Senior
Subordinated Secured Convertible Notes due 2007.*
10.31 Stock Purchase Agreement dated as of March 31, 1998 among the Registrant and the Purchasers named
therein.*
23.1 Consent of Kirkland & Ellis (included in its opinions filed as Exhibits 5.1 and 8.1 hereto).
23.2 Consent of Deloitte & Touche LLP.*
24 Powers of Attorney (included on the signature page).
99.1 Form of Proxy.**
</TABLE>
- -------------------------
* Filed herewith.
** Previously filed.
II-3
<PAGE> 56
(b) Financial Statement Schedules:
Schedules are omitted because of the absence of conditions under which they
are required or because the required information is given in the financial
statements or notes thereto.
ITEM 22. UNDERTAKINGS
(1) The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(3) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(4) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnifica-
II-4
<PAGE> 57
tion by it is against public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
(6) The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 58
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in Newhall,
California on April 13, 1998.
Huntway Refining Company
By: *
------------------------------------
Juan Y. Forster
President and Chief Executive
Officer
* * * *
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities set forth below on April 13, 1998.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* President and Chief Executive Officer, Director
- ---------------------------------------------------
Juan Y. Forster
* Executive Vice President and Chief Financial
- --------------------------------------------------- and Accounting Officer
Warren J. Nelson
* Director
- ---------------------------------------------------
Justin J. Huscher
* Director
- ---------------------------------------------------
Harris Kaplan
* Director
- ---------------------------------------------------
Mac McFarland
* Director
- ---------------------------------------------------
Samuel M. Mencoff
* Director
- ---------------------------------------------------
Richard Spencer
*By /s/ WARREN J. NELSON
------------------------------------------------
Warren J. Nelson
Attorney-in-Fact
</TABLE>
<PAGE> 59
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of January 26, 1998
between the Registrant and Huntway Partners, L.P. (the
"Partnership") (incorporated by reference to Exhibit A to
the Proxy Statement/Prospectus included in this Registration
Statement).
3.1 Certificate of Incorporation of the Registrant.**
3.2 By-laws of the Registrant.**
4.1 Deposit Agreement dated as of May 12, 1994 by and among the
Partnership, The First National Bank of Boston and Huntway
Managing Partner, L.P. (incorporated by reference to Exhibit
4 of the Partnership's Annual Report on Form 10-K, filed
March 31, 1998, Commission file No. 1-10091).
5.1 Opinion of Kirkland & Ellis regarding legality of the shares
of common stock being registered.**
8.1 Opinion of Kirkland & Ellis regarding certain tax matters.*
10.1 Amended and Restated Agreement of Limited Partnership of the
Partnership (incorporated by reference to Exhibit A to the
Prospectus included in the Partnership's Registration
Statement on Form S-1, filed September 26, 1988,
Registration No. 33-24445).
10.2 Bylaws of the Partnership (incorporated by reference to
Exhibit 3.2 of the Partnership's Registration Statement on
Form S-1, as amended by Amendment No. 2, filed November 2,
1988, Registration No. 33-24445).
10.3 Amendment of Agreement of Limited Partnership of the
Partnership dated as of December 20, 1989 (incorporated by
reference to Exhibit 3.3 of the Partnership's Annual Report
on Form 10-K, filed March 30, 1990, Commission file No.
1-10091)
10.4 Amendment of Agreement of Limited Partnership of the
Partnership dated as of December 12, 1996 (incorporated by
reference to Appendix E of the Partnership's Consent
Solicitation and Disclosure Statement on Schedule 14A, filed
October 15, 1996, Commission file No. 1-10091).
10.5 Amended and Restated Agreement of Limited Partnership of
Huntway Managing Partner, L.P. dated as of December 22, 1989
(incorporated by reference to Exhibit 10.1 of the
Partnership's Annual Report on Form 10-K, filed March 30,
1990, Commission file No. 1-10091).
10.6 Amended and Restated Agreement of Limited Partnership of
Huntway Holdings, L.P. dated as of December 22, 1989
(incorporated by reference to Exhibit 10.12 of the
Partnership's Annual Report on Form 10-K, filed March 30,
1990, Commission file No. 1-10091).
10.7 Second Amended and Restated Agreement of Limited Partnership
of Sunbelt Refining Company, L.P. ("Sunbelt") (incorporated
by reference to Exhibit 10.8 of the Partnership's Annual
Report on Form 10-K, filed March 30, 1990, Commission file
No. 1-10091).
10.8 Sequencing and Amendatory Agreement dated as of October 31,
1997 between the Partnership, Sunbelt and certain holders of
the Partnership's equity and debt securities (incorporated
by reference to Exhibit 10.1 to the Partnership's Current
Report on Form 8-K, filed November 14, 1997, Commission file
No. 1-10091).
10.9 Exchange and Purchase Agreement dated as of October 31, 1997
between the Partnership and certain holders of the
Partnership's equity and debt securities (incorporated by
reference to Exhibit 10.2 to the Partnership's Current
Report on Form 8-K, filed November 14, 1997, Commission file
No. 1-10091).
10.10 Amended and Restated Registration Rights Agreement dated as
of October 31, 1997 between the Partnership and certain
holders of the Partnership's equity and debt securities
(incorporated by reference to Exhibit 10.3 to the
Partnership's Current Report on Form 8-K, filed November 14,
1997, Commission file No. 1-10091).
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.11 Amended and Restated Ground Lease dated as of July 31, 1987
by and between Industrial Asphalt and Huntway Refining
Company (incorporated by reference to Exhibit 10.7 of the
Partnership's Registration Statement on Form S-1, filed
September 26, 1988, Registration No. 33-24445).
10.12 Amended and Restated Profit Sharing and Tax Deferred Savings
Plan of the Partnership (incorporated by reference to
Exhibit 10.2 of the Partnership's Annual Report on Form
10-K, filed March 29, 1989, Commission file No. 1-10091).
10.13 Money Purchase Pension Plan of the Partnership (incorporated
by reference to Exhibit 10.4 of the Partnership's
Registration Statement on Form S-1, filed September 26,
1988, Registration No. 33-24445).
10.14 Indenture dated as of December 12, 1996 between the
Partnership and Fleet National Bank, relating to the
Partnership's 12% Senior Secured Notes Due 2005, including
related security documents, guaranties and forms of
securities (incorporated by reference to Exhibit 4.1 of the
Partnership's Current Report on Form 8-K, filed December 27,
1996, Commission File No. 1-10091).
10.15 First Supplemental Indenture dated as of October 31, 1997
between the Partnership and Fleet National Bank, relating to
the Partnership's 12% Senior Secured Notes Due 2005
(incorporated by reference to Exhibit 10.1 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-10091).
10.16 Second Supplemental Indenture dated as of November 30, 1997
between the Partnership and Fleet National Bank, relating to
the Partnership's 12% Senior Secured Notes Due 2005
(incorporated by reference to Exhibit 10.2 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-10091).
10.17 Indenture dated as of December 12, 1996 between the
Partnership and IBJ Schroder Bank & Trust Company, relating
to the Partnership's Junior Subordinated Notes Due 2005,
including the forms of security (incorporated by reference
to Exhibit 4.2 of the Partnership's Current Report on Form
8-K filed December 27, 1996, Commission File No. 1-10091).
10.18 First Supplemental Indenture between the Partnership and IBJ
Schroder Bank & Trust Company dated as of October 31, 1997
relating to the Partnership's Junior Subordinated Notes Due
2005 (incorporated by reference to Exhibit 10.3 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-0091).
10.19 Indenture dated as of October 31, 1997 between the
Partnership and State Street Bank and Trust Company, as
trustee ("State Street"), relating to the Partnership's
9 1/4% Senior Subordinated Secured Convertible Notes due
2007 (incorporated by reference to Exhibit 4.1 to the
Partnership's Current Report on Form 8-K, filed November 14,
1997, Commission file No. 1-10091).
10.20 First Supplemental Indenture between the Partnership and
State Street dated as of January 14, 1998 relating to the
Partnership's Senior Subordinated Secured Convertible Notes
Due 2007 (incorporated by reference to Exhibit 10.4 of the
Partnership's Current Report on Form 8-K, filed March 30,
1998, Commission File No. 1-10091).
10.21 Letter of Credit and Reimbursement Agreement Dated as of
June 22, 1993 between the Partnership, Sunbelt and Bankers
Trust Company (incorporated by reference to Exhibit 10.31 of
the Partnership's Current Report on Form 8-K, filed July 13,
1993, Commission file No. 1-10091).
10.22 First Amendment to Letter of Credit and Reimbursement
Agreement dated as of December 12, 1996 between the
Partnership, Sunbelt and Bankers Trust Company.
(incorporated by reference to Exhibit 10.17 of the
Partnership's Annual Report on Form 10-K, filed March 29,
1997, Commission file No. 1-10091).
10.23 Third Amendment to Letter of Credit and Reimbursement
Agreement dated as of November 30, 1997 between the
Partnership, Sunbelt and Bankers Trust Company (incorporated
by reference to Exhibit 10.5 of the Partnership's Current
Report on Form 8-K, filed March 30, 1998, Commission File
No. 1-10091).
</TABLE>
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
10.24 1996 Employee Incentive Option Plan of the Partnership dated
as of December 12, 1996 (incorporated by reference to
Appendix C of the Partnership's Consent Solicitation and
Disclosure Statement on Schedule 14A filed October 15, 1996.
Commission file No. 1-10091).
10.25 Indemnification Agreement dated as of November 9, 1988
(incorporated by reference to Exhibit 10.12 of the
Partnership's Annual Report on Form 10-K, filed March 29,
1989, Commission file No. 1-10091).
10.26 Definitive Agreement between the Partnership and Reprise
Holdings, L.P. dated as of May 3, 1990 (incorporated by
reference to Exhibit 10.14 of the Partnership's Quarterly
Report on Form 10-Q, filed May 15, 1990, Commission file No.
1-10091).
10.27 Termination Agreement (incorporated by reference to Exhibit
10.41 of the Partnership's Current Report on Form 8-K, filed
July 13, 1993, Commission file No. 1-10091).
10.28 Huntway Refining Company 1998 Stock Incentive Plan
(incorporated by reference to Exhibit B to the Proxy
Statement/Prospectus included in this Registration
Statement).
10.29 Amendatory Agreement dated as of March 30, 1998 between the
Partnership and certain holders of the Partnership's debt
securities.*
10.30 Second Supplemental Indenture dated as of March 30, 1998
relating to the Partnership's Senior Subordinated
Convertible Notes due 2007.*
10.31 Stock Purchase Agreement dated as of March 31, 1998 among
the Registrant and the Purchasers named therein.*
23.1 Consent of Kirkland & Ellis (included in its opinions filed
as Exhibits 5.1 and 8.1 hereto).
23.2 Consent of Deloitte & Touche LLP.*
24 Powers of Attorney (included on the signature page).
99.1 Form of Proxy.**
</TABLE>
- -------------------------
* Filed herewith.
** Previously filed.
<PAGE> 1
EXHIBIT 8.1
[KIRKLAND & ELLIS LETTERHEAD]
April 13, 1998
Huntway Managing Partner, L.P.
Huntway Holdings, L.P.
Board of Directors of Huntway Refining Company
25129 The Old Road, Suite 322
Newhall, California 91381
Gentlemen:
In connection with the proposed conversion of Huntway Partners, L.P., a
Delaware limited partnership (the "Partnership") to corporate form (the
"Conversion"), to be effected by a merger (the "Merger") of the Partnership into
Huntway Refining Company, a newly-formed Delaware corporation that is a wholly
owned subsidiary of the Partnership (the "Corporation"), you have requested our
opinion concerning certain United States Federal income tax consequences of the
Conversion and the ownership of shares of common stock of the Corporation to
holders of such shares of common stock following the Conversion. We have
examined Registration Statement No. 333-45093 of the Corporation on Form S-4,
as amended by Pre-Effective Amendment No. 1 thereto (the "Registration
Statement"), and such other documents and such legal authorities as we have
deemed relevant for purposes of expressing the opinions contained herein.
Except as otherwise provided, capitalized terms not defined herein have the
meanings set forth in the Registration Statement. All section references,
unless otherwise indicated, are to the Internal Revenue Code of 1986, as
amended (the "Code").
Our opinion is based upon the applicable provisions of the Code, as amended
through the date hereof, Treasury regulations promulgated and proposed
thereunder, current positions of the Internal Revenue Service (the "IRS")
contained in published Revenue Rulings and Revenue Procedures and existing
judicial decisions. No tax rulings have been or will be sought from the IRS with
respect to any of the matters discussed herein. In connection with rendering
this opinion, we have assumed (without any independent investigation or review
thereof) that:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there is (or
will be prior to the effective date of the Merger) due execution and delivery of
all documents where due execution and delivery are a prerequisite to the
effectiveness thereof; and
<PAGE> 2
2. The truth and accuracy, at all relevant times, of all statements made by
the Partnership, its management, employees, and officers, and the Corporation,
its management, employees, directors, and officers in connection with the
Conversion, including but not limited to those set forth in the Registration
Statement (including the exhibits); and that the Merger is performed without
waiver or breach of the conditions thereto.
Based on our examination of the foregoing items and subject to the
limitations, qualifications, assumptions and caveats set forth herein and in
the description contained in the Registration Statement under the heading
"Federal Income Tax Considerations" (the "Tax Discussion"), we confirm that the
Tax Discussion sets out all the material federal income tax consequences of
general application of (i) the Conversion to the Partnership, the Unitholders,
and the Corporation and (ii) the ownership of Common Stock following the
Conversion to the holders of shares of such Common Stock and the Tax Discussion
constitutes our opinion of those consequences, provided that we express no
opinion as to the truth or accuracy of any factual statements contained in the
Tax Discussion (including without limitation the statement on page 19 regarding
the aggregate amount of the Partnership's liabilities allocated to the
Unitholders).
This opinion does not address the various state, local or foreign tax
consequences that may result from the Conversion or the ownership of shares of
Common Stock. In addition, no opinion is expressed as to any federal income tax
consequence of the Conversion or the ownership of shares of Common Stock except
as specifically set forth in the Tax Discussion and this opinion may not be
relied upon except with respect to the consequences specifically discussed
therein. This opinion does not address any tax consequence that might result to
a Unitholder or a Shareholder in light of such Unitholder's or Shareholder's
particular circumstances, such as Unitholders or Shareholders who are dealers in
securities, who are subject to the alternative minimum tax provisions of the
Code, who are foreign persons or who acquired their Common Units (or acquire
their Common Stock) in connection with Common Unit (or Common Stock) option or
Common Unit (or Common Stock) purchase plans or in other compensatory
transactions.
No opinion is expressed as to any transaction other than the Conversion as
described in the Registration Statement or to the Conversion if it is not
consummated in the manner described therein. To the extent any of the statements
and assumptions material to our opinion and upon which we have relied are not
complete, correct, true and accurate in all material respects at all relevant
times, our opinion would be adversely affected and should not be relied upon.
This opinion only represents our best judgment as to the federal income tax
consequences of the Conversion and the ownership of shares of Common Stock and
is not binding on the Internal Revenue Service or the courts. The conclusions
are based on the Code, existing judicial decisions, administrative regulations
and published rulings. No assurance can be given that future legislative,
judicial or administrative changes would not adversely affect the accuracy of
the conclusions stated
<PAGE> 3
herein. Nevertheless, by rendering this opinion, we undertake no responsibility
to advise you of any new developments in the application or interpretation of
the federal income tax laws.
This opinion has been delivered to you in connection with your
consideration of the Conversion and for the purpose of inclusion as an Exhibit
to the Registration Statement. This opinion may not be distributed or otherwise
made available to any other person or entity without prior written consent.
However, we consent to the reference to this opinion under the heading "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE> 1
EXHIBIT 10.29
EXECUTION COPY
AMENDATORY AGREEMENT
Amendatory Agreement dated as of March 30, 1998 among Huntway Partners,
L.P., a Delaware limited partnership (the "Company"), and each of Lighthouse
Investors, L.L.C., a Delaware limited liability company ("Lighthouse"), B III
Capital Partners, L.P., a Delaware limited partnership ("B III"), Contrarian
Capital Fund I, L.P., a Delaware limited partnership ("Contrarian I"),
Contrarian Capital Fund II, L.P., a Delaware limited partnership ("Contrarian
II"), The & Trust, First Plaza Group Trust ("First Plaza"), The IBM Retirement
Plan Trust ("IBM") and Oppenheimer Horizon Partners, L.P., Oppenheimer
Institutional Horizon Partners, L.P., Oppenheimer International Horizon Fund
II, Ltd., and Oppenheimer & Co., Inc. (the "Oppenheimer Entities;" each of
Lighthouse, B III, Contrarian I, Contrarian II, The & Trust, First Plaza, IBM
and the Oppenheimer Entities being sometimes referred to individually as a
"Holder" and collectively as the "Holders").
RECITALS
The Company and the Holders are parties to an Exchange and Purchase
Agreement dated as of October 31, 1997 (the "Exchange Agreement").
In connection with the transactions contemplated by the Exchange
Agreement, the Company and State Street Bank and Trust Company, as trustee
(the "Trustee"), entered into an Indenture dated as of October 15, 1997, as
amended by a First Supplemental Indenture dated as of January 14, 1998 (the
"Existing Indenture").
In accordance with the understanding among the parties hereto, such
parties desire to amend and/or consent to deviations from the terms of the
Existing Indenture and the Exchange Agreement.
NOW THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
1. Amendment to Existing Indenture. The Existing Indenture is amended by
substituting the date "May 15, 1998" for the date "March 31, 1998" in Section
11.01 of the Existing Indenture.
2. Amendment to Exchange Agreement. The Exchange Agreement is amended by
substituting the date "May 15, 1998" for the date "March 31, 1998" both times
it appears in Section 6.18 of the Exchange Agreement.
3. Further Assurances. The parties hereto shall, from time to time,
execute and deliver to the Company or to such party or parties as the Company
may designate, any and all further instruments (in form and substance
reasonably satisfactory to the parties) as may be necessary or
<PAGE> 2
advisable to give full force and effect to the provisions of this Agreement
and the intent and purposes hereof. Without limiting the generality of the
foregoing, each of the parties hereto acknowledges and agrees that (a) the
signature of each of the Holders to this Agreement shall constitute a consent,
pursuant to Section 9.02 of the Existing Indenture, to amend the Existing
Indenture as specified herein; (b) the signature of the parties to this
Agreement taken as a whole shall constitute a consent pursuant to Section 11.2
of the Exchange Agreement to amend the Exchange Agreement as specified herein;
and (c) each of the parties will execute and deliver instruments or documents
evidencing such consents reasonably required in connection with the Company and
the Trustee entering into a supplemental indenture effecting the amendment of
the Existing Indenture.
4. Representations and Warranties. Each of the parties hereto hereby
represents and warrants to the other parties hereto that the execution,
delivery and performance by it of this Agreement are within its corporate or
partnership power, as applicable, and have been duly authorized by all
necessary corporate or partnership action, as applicable, on the part of such
party, and that this Agreement is the legal, valid and binding obligation of
such party, enforceable against it in accordance with its terms.
5. Effect on Documents. Except as specifically amended or modified
herein, the Existing Indenture and the Exchange Agreement shall remain in full
force and effect.
6. Miscellaneous.
(a) Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof (other than the letter
agreement of the Company dated March, 1998) and supersedes all other
understandings, oral or written, with respect to the subject matter hereof.
(b) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered (including by
facsimile transmission) shall be deemed an original, but all such counterparts
shall constitute one and the same instrument.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (as opposed to conflicts of law provisions)
of the State of New York.
(d) Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
(e) Successors and Assigns. This Agreement shall be binding upon each of
the parties hereto and its successors and assigns.
* * * * *
2
<PAGE> 3
IN WITNESS WHEREOF, this Agreement has been duly executed as of the 30th
day of March, 1998.
HUNTWAY PARTNERS, L.P.
By:____________________________________
Name:
Title:
LIGHTHOUSE INVESTORS, L.L.C.
By Lighthouse Capital, L.L.C., its Manager
By:____________________________________
Richard S. Spencer III:
Title:
B III CAPITAL PARTNERS, L.P.
By: DDJ Capital III, LLC, its General Partner
By: DDJ Capital Management, LLC, its Manager
By:____________________________________
Name:
Title: Member
CONTRARIAN CAPITAL FUND I, L.P.
By: Contrarian Capital Management, L.L.C.,
its general partner
By:____________________________________
Janice M. Stanton
Partner
3
<PAGE> 4
CONTRARIAN CAPITAL ADVISORS, L.L.C.,
as agent for the entities listed below its signature
attached hereto
By:____________________________________
Janice M. Stanton:
Partner
Oppenheimer Horizon Partners, L.P.
Oppenheimer Institutional Horizon Partners, L.P.
Oppenheimer International Horizon Fund II, Ltd.
Oppenheimer & Co., Inc.
The &Trust
CONTRARIAN CAPITAL FUND II, L.P.
By: Contrarian Capital Management L.L.C., its
general partner
By:____________________________________
Janice M. Stanton
Partner
MELLON BANK, N.A., solely in its capacity as
Trustee for First Plaza Group Trust (as directed
by Contrarian Capital Advisors, L.L.C.) and not
in its individual capacity
By:____________________________________
Name:
THE CHASE MANHATTAN BANK as Directed
Trustee for The IBM Retirement Plan Trust
By:_____________________________________
Michael Rolling, Vice President
The Chase Manhattan Bank as Directed
Trustee for The IBM Retirement Plan Trust
4
<PAGE> 1
EXHIBIT 10.30
EXECUTION COPY
(Senior Subordinated)
SECOND SUPPLEMENTAL INDENTURE
SECOND SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
March 30, 1998 between Huntway Partners, L.P., a Delaware limited partnership
(the "Company"), and State Street Bank and Trust Company, as trustee (the
"Trustee").
PRELIMINARY STATEMENT
The Company and the Trustee are parties to the Indenture dated as of
October 15, 1997 (as amended and/or supplemented, the "Existing Indenture"),
whereby the Company issued $21,750,000 of its 9 1/4% Senior Subordinated
Secured Convertible Notes.
Pursuant to an Amendatory Agreement dated as of the date hereof among the
Company and numerous other parties, the Company and all of the Holders under
the Existing Indenture have agreed to the amendment to the Existing Indenture
hereinafter set forth, and have acknowledged and agreed that the signatures of
such Holders thereto constitute a consent of such Holders pursuant to Section
9.02 of the Existing Indenture, to amend the Existing Indenture as hereinafter
set forth.
Pursuant to Section 9.06 of the Existing Indenture, the Trustee has
received an Opinion of Counsel and Officers' Certificate stating that the
execution of this Supplemental Indenture is authorized or permitted by the
Existing Indenture.
Accordingly, pursuant to Section 9.02 of the Existing Indenture, the
Company and the Trustee are entering into this Supplemental Indenture.
The Company and the Trustee hereby agree as follows:
1. Amendment to the Existing Indenture. The Existing Indenture is amended
by substituting the date "May 15, 1998" for the date "March 31, 1998" in
Section 11.01 of the Existing Indenture.
2. Effect on Existing Indenture. Except as expressly amended by this
Supplemental Indenture, the Existing Indenture shall remain in full force and
effect.
3. Counterparts. This Supplemental Indenture may be signed in
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Supplemental Indenture.
4. Trustee Disclaimer. The Trustee has accepted the amendment of the
Existing Indenture effected by this Supplemental Indenture and agrees to
execute the trust created by the Existing Indenture as hereby amended, but only
upon the terms and conditions set forth in the
<PAGE> 2
Existing Indenture, including the terms and provisions defining and limiting
the liabilities and responsibilities of the Trustee, and without limiting the
generality of the foregoing, the Trustee shall not be responsible in any manner
whatsoever for or with respect to any of the recitals of fact contained herein,
all of which recitals are made solely by the Company, or for or with respect to
the validity or sufficiency of this Supplemental Indenture or any of the terms
or provisions hereof and shall incur no liability or responsibility in respect
of the validity thereof.
* * * * *
2
<PAGE> 3
IN WITNESS WHEREOF, we have set our hands as of the day and year first
above written.
Dated as of March 30, 1998 HUNTWAY PARTNERS, L.P.,
a Delaware limited partnership, as Issuer
By: ________________________
By: ________________________
Dated as of March 30, 1998 STATE STREET BANK AND TRUST COMPANY, a
Massachusetts bank and trust company, as
Trustee
By:____________________________________
Name:
Title:
3
<PAGE> 1
EXHIBIT 10.31
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") dated as of March 31,
1998 is by and between Huntway Refining Company, a Delaware corporation (the
"Company"), on the one hand, and each of the persons named on Schedule I to
this Agreement (each a "Purchaser").
The Company is currently a wholly-owned subsidiary of Huntway Partners,
L.P., a Delaware limited partnership (the "Partnership"). The Company and the
Partnership are parties to an Agreement and Plan of Merger dated as of January
26, 1998 (the "Merger Agreement") pursuant to which, and subject to the terms
and conditions of which, the Partnership is to be merged with and into the
Company ("the Merger") and each outstanding Common Unit of the Partnership is
to be converted into one share of Common Stock, par value $.01 per share, of
the Company ("Common Stock"). Immediately prior to the Merger, and subject to
the terms of this Agreement, each of the Purchasers wishes to purchase Common
Stock from the Company and the Company wishes to sell Common Stock to each of
the Purchasers.
The Purchasers, each of whom is a director or officer of the Partnership
or the Company or otherwise has a pre-existing direct or indirect relationship
to the Partnership or the Company, desire to purchase Common Stock directly
from the Company, and not in the public market, for reasons which include,
inter alia, the potential effect that purchases in the public market of the
sizes contemplated by this Agreement might have on the trading price of the
Common Stock, given the historical trading volume of the Partnership's Common
Units, and, in the case of those purchasers whose purchases and sales of Common
Stock are subject to Section 16 of the 1934 Act, the advantages afforded
purchases directly from an issuer under such Section.
In consideration of the mutual covenants and conditions set forth in
this Agreement, the parties agree as follows (for purposes of which certain
capitalized terms are defined in section 5):
1. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions of
this Agreement, each Purchaser will purchase from the Company, and the Company
will sell to each Purchaser, as provided in section 2, the number of shares of
Common Stock set forth opposite such Purchaser's name on Schedule I, for a
price of $1.75 per share (the closing price of a Common Unit of the Partnership
on the New York Stock Exchange on March 30, 1998). The shares of Common Stock
to be purchased by each Purchaser are referred to herein as "such Purchaser's
Shares," and the shares of Common Stock to be purchased by all the Purchasers
are referred to herein as the "Shares."
<PAGE> 2
2. CLOSING. The sale to each Purchaser of such Purchaser's Shares
shall take place immediately prior to the effective time of the Merger through
the following arrangement: Not later than May 8, 1998, each Purchaser shall
deliver to the Company such Purchaser's check payable to the Company in the
amount of the purchase price for such Purchaser's Shares. Each Purchaser
agrees that at any time on or after May 8, 1998, the Company may cash such
Purchaser's check and, subject to the succeeding sentences of this section,
retain the proceeds thereof. If the Merger occurs on or before May 31, 1998,
and if by the effective time of the Merger the Shares are approved for listing
on the New York Stock Exchange subject to official notice of issuance, the
Company shall, immediately prior to the effective time of the Merger, issue to
each Purchaser a certificate for such Purchaser's Shares (which certificate
shall bear the legend described in section 4.4 below) and shall, promptly
thereafter, forward such certificate to such Purchaser at such Purchaser's
address set forth on Schedule I; provided that if it is subsequently determined
that the Merger did not occur as contemplated immediately after such issuance,
such Purchaser shall promptly return such certificate to the Company and the
Company shall promptly return to such Purchaser such Purchaser's check or, if
such Purchaser's check has been cashed, the amount received by the Company as a
result. If the Merger does not occur on or before May 31, 1998, or if by the
effective time of the Merger the Shares are not approved for listing on the New
York Stock Exchange subject to official notice of issuance, the Company shall
promptly return to each Purchaser, at such Purchaser's address set forth on
Schedule I, such Purchaser's check or, if such Purchaser's check has been
cashed, the amount received by the Company as a result. The Company agrees to
use its reasonable best efforts to cause the Shares to be approved for listing
on the New York Stock Exchange subject to official notice of issuance as soon
as practical.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each of the Purchasers as follows:
3.1 ORGANIZATION AND CORPORATE AUTHORITY. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to issue and sell the Shares.
3.2 EXECUTION AND BINDING EFFECT. The execution and delivery of this
Agreement and the issuance of the Shares have been duly authorized by all
necessary action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its terms.
3.3 AUTHORIZATION AND FILINGS. With the exception of the listing of
the Shares on the New York Stock Exchange, no authorization, consent, approval,
license, exemption or other action by, and no registration, qualification,
designation, declaration or filing with, any authority or any other Person is
required to be made or obtained by the Company in order to execute or deliver
this Agreement or to consummate the transactions contemplated hereby. The
representation and
-2-
<PAGE> 3
warranty made in the preceding sentence is made in reliance upon the
representations and warranties of the Purchasers in section 4.
3.4 ABSENCE OF CONFLICTS. Neither the execution and delivery of this
Agreement by the Company nor the consummation of the transactions on the part
of the Company contemplated hereby will (a) violate any Law; (b) conflict with
or result in a breach or violation of or a default or loss of benefit under or
permit the acceleration of any obligation under any provision of the
certificate of incorporation or bylaws of the Company, or any agreement or
instrument to which the Company is a party or by which the Company or any of
its properties is bound, or (c) result in the creation or imposition of any
Lien on any property or asset of the Company, in each case or in the aggregate
which would have a material adverse effect on the business, operations,
prospects or condition, financial or otherwise, of the Company.
3.5 SEC FILINGS. The Company has filed with the Securities and
Exchange Commission an Annual Report on Form 10-K for the year ended December
31, 1997 (the "Form 10-K") and a registration statement on Form S-4 (No.
333-45093) related to the Merger (the "Registration Statement") and is about to
file with the Securities and Exchange Commission Pre-effective Amendment No. 1
to the Registration Statement, the current draft of which (dated April 8,
1998), including the Exhibits thereto and the Form 10-K incorporated by
reference therein, is referred to herein as "Draft Amendment No. 1"). Draft
Amendment No.1 does not, and will not at the time it is filed, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
3.6 PRIVATE OFFERING. No form of general solicitation or general
advertising, including but not limited to advertisements, articles, notices or
other communications, published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising, was used
by the Company or any of the Company's representatives, or, to the knowledge of
the Company, any other authorized Person acting on behalf of the Company, in
connection with the transactions contemplated by this Agreement. Assuming the
accuracy of the representations of the Purchasers set forth in section 4,
neither the Company nor any authorized Person acting on the Company's behalf
has taken or will take any action that would subject the purchase of the Shares
by the Purchasers or the sale of the Shares to the Purchasers to the provisions
of section 5 of the 1933 Act.
3.7 BROKERS AND FINDERS. Neither the Company nor any authorized
Person acting on behalf of the Company has employed any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement that would be entitled to a broker's, finder's or similar fee or
commission in connection therewith.
-3-
<PAGE> 4
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. This Agreement
is made with each Purchaser in reliance upon such Purchaser's representations
and warranties to the Company, which by such Purchaser's execution and
delivery hereof such Purchaser represents and warrants severally as to itself,
but not jointly as to any other Purchaser, that:
4.1 GOOD FUNDS. Upon the Company's cashing of such Purchaser's check
as contemplated in section 2, the Company will promptly receive good funds in
the amount of such check.
4.2 INVESTMENT INTENT. Such Purchaser is acquiring such Purchaser's
Shares pursuant to this Agreement with such Purchaser's own funds for such
Purchaser's own account and not as a nominee or agent. Such Purchaser is not
obligated to transfer any Shares to anyone else nor does such Purchaser have
any agreements or understandings to do so. Such Purchaser is purchasing the
Shares for investment for an indefinite period and not with a view to the sale
or distribution of any Shares by public or private sale or other disposition
except in compliance with the 1933 Act and applicable state securities laws,
and such Purchaser has no intention of selling, granting any participation in
or otherwise distributing or disposing of any Shares except in compliance with
the 1933 Act and applicable state securities laws. Such Purchaser does not
intend to subdivide such Purchaser's purchase of Shares with anyone.
Notwithstanding the foregoing, such Purchaser's right to sell or otherwise
dispose of all or any part of such Purchaser's Shares pursuant to an effective
registration statement under the 1933 Act or under an exemption available from
such registration available under the 1933 Act shall not be prejudiced.
4.3 NO PUBLIC OFFERING. Such Purchaser is able to bear the economic
risk of such Purchaser's investment in such Purchaser's Shares. Such Purchaser
is aware that such Purchaser must be prepared to hold such Purchaser's Shares
for an indefinite period and that such Purchaser's Shares have not been
registered under the 1933 Act or registered or qualified under any state
securities law, on the ground, among others, that no distribution or public
offering of such Purchaser's Shares is to be effected and such Purchaser's
Shares are being issued by the Company without any public offering within the
meaning of section 4(2) of the 1993 Act. Such Purchaser has received and
reviewed the 10-K (excluding the Exhibits thereto) and Draft Amendment No. 1
(excluding the Exhibits thereto), including Exhibits A and B to the Prospectus
included therein. Such Purchaser has had an opportunity to discuss the
Partnership's business, management and financial affairs with its management.
Such Purchaser is not subscribing for such Purchaser's Shares as a result of or
subsequent to any advertisement, article, notice, or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or any solicitation of a subscription by a Person not
previously known to such Purchaser in connection with investments in securities
generally.
-4-
<PAGE> 5
4.4 CERTIFICATES TO BE LEGENDED. Such Purchaser understands that
each certificate evidencing any of such Purchaser's Shares will bear the
following legend on the reverse thereof:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, or under the securities laws of any state
or other jurisdiction (together, the "Securities Laws")
and may not be offered for sale, sold, transferred or
otherwise disposed of except after delivery to the
issuer of a written opinion reasonably satisfactory to
the issuer from counsel satisfactory to the issuer that
the proposed disposition will not require registration
under applicable Securities Laws"
4.5 SHARES WILL BE "RESTRICTED SECURITIES". Such Purchaser
understands that such Purchaser's Shares will be "restricted securities" as
that term is defined in Rule 144 under the 1933 Act and, accordingly, that such
Purchaser's Shares must be held indefinitely unless they are subsequently
registered under the 1933 Act or an exemption from such registration is
available under such Rule or otherwise.
4.6 NO REGISTRATION RIGHTS. Such Purchaser understands that the
Company has no obligation to such Purchaser to register any of such Purchaser's
Shares under the 1933 Act.
4.7 ACCREDITED INVESTOR. Such Purchaser has been advised or is aware
of the provisions of Regulation D under the 1933 Act relating to the
accreditation of investors, and such Purchaser is an "accredited investor" as
defined in Regulation D under the 1933 Act. Schedule 4.7 sets forth the basis
on which such Purchaser is relying to meet the definition of accredited
investor.
4.8 SOPHISTICATION OF THE PURCHASER. Such Purchaser has such
knowledge and experience in financial and business matters that such Purchaser
is capable of evaluating the merits and risks of such Purchaser's investment
contemplated by this Agreement and has the capacity to protect such Purchaser's
own interests.
4.9 BROKERS' FEES. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of such Purchaser.
4.10 EXISTING OWNERSHIP. Such Purchaser does not own 5% or more of the
outstanding Common Units of the Partnership.
4.11 INSIDER TRADING. Such Purchaser acknowledges that the Partnership
is an issuer with securities registered pursuant to the 1934 Act and that such
Purchaser's disclosure of
-5-
<PAGE> 6
nonpublic information regarding the Partnership or the Company or any
subsidiary of either or such Purchaser's trading in the securities of the
Partnership or the Company while in possession of such information may,
depending on the facts and circumstances, subject such Purchaser to liability
under the 1934 Act.
5. CERTAIN DEFINITIONS. For purposes of this Agreement:
"Business Day" shall mean any day other than a Saturday, Sunday,
statutory holiday, or other day on which banks in the State of California are
required by law to close or are customarily closed.
"Law" shall mean any judgment, decree, order, statute, law, ordinance,
rule or regulation of any governmental authority (including common law),
constitution, statute, treaty, regulation, rule, ordinance, judgement, order,
foreign injunction, writ, decree or award of any governmental authority.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment for
security, deposit arrangement, encumbrance, lien (statutory or other), or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement), any capital lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement (other than notice filings not perfecting a security
interest) under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing.
"1933 Act"shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Person" shall mean a natural person, corporation, partnership, trust,
unincorporated association, joint venture, joint-stock company, limited
liability company, governmental authority, or any other entity.
6. MISCELLANEOUS.
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company and the Purchasers contained in this Agreement
and in Schedule 4.7 hereto, and the liability of the party making such
representations and warranties for breaches thereof, shall survive the
consummation of the transactions contemplated hereby. The Company and the
Purchasers in executing and delivering and in carrying out the provisions of
this Agreement are relying solely on such representations, and warranties, and
not upon any representation, warranty,
-6-
<PAGE> 7
agreement, promise or information, written or oral, made by any Persons other
than as specifically set forth herein or therein.
6.2 POWERS AND RIGHTS NOT WAIVED; REMEDIES CUMULATIVE. No delay or
failure on any party's part in the exercise of any power or right shall operate
as a waiver thereof, nor shall any single or partial exercise of the same
preclude any other or further exercise thereof or the exercise of any other
power or right, and the parties' rights and remedies are cumulative to and are
not exclusive of any rights or remedies the parties would otherwise have, and
no waiver or consent given or extended pursuant hereto shall extend to or
affect any obligation or right not expressly waived or consented to.
6.3 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and each of the
Purchasers.
6.4 NOTICES. Any notice, consent, authorization or other
communication to be given hereunder shall be in writing and shall be deemed
duly given and received when delivered personally by facsimile transmission or
three days after being mailed by first class mail, or the next Business Day
after being deposited for next-day delivery with a nationally recognized
overnight delivery service, charges and postage prepaid, properly addressed to
the party to receive such notice at the following address for such party (or at
such other address as shall be specified by like notice):
(a) if to the Company, to:
Huntway Refining Company
25129 The Old Road 322
Newhall, CA 91381
Attention: Warren Nelson
Telephone: (805) 254-1220
Facsimile: (805) 286-1588
(b) if to a Purchaser, to the address of such Purchaser set
forth on Schedule I.
6.5 ENTIRE AGREEMENT. This Agreement (including the Schedules hereto)
contains the entire agreement of the parties and supersedes all prior
negotiations, correspondence, agreements and understandings, written and oral,
between or among the parties, regarding the subject matter hereof.
-7-
<PAGE> 8
6.6 SUCCESSORS AND ASSIGNS. The Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.
6.7 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any Person or circumstance, shall be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such provision to Persons or circumstances other than those to which it is
held to be invalid or unenforceable, shall not be affected thereby.
6.8 GOVERNING LAW. All corporate law issues arising under this
Agreement shall be governed by and construed and interpreted in accordance with
the General Corporation Law of the State of Delaware. All other issues arising
under this Agreement shall be governed by and construed and interpreted in
accordance with the Law of the State of California, without regard to that
state's conflict of laws principles.
6.9 FURTHER ASSURANCES. Each party shall execute such other and
further certificates, instruments and other documents as may be necessary and
proper to implement, complete and perfect the transactions contemplated by this
Agreement.
6.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, and all of which
together shall be considered one and the same agreement.
* * * *
-8-
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.
The Company:
HUNTWAY REFINING COMPANY
By__________________________________
Name:__________________________
Title:_________________________
The Purchasers:
- -------------------------------------- --------------------------------------
Name: J. C. "Mac" McFarland Name: Delton E. Crandell
- -------------------------------------- --------------------------------------
Name: Doris E. Fleisher Name: Warren J. Nelson
- -------------------------------------- --------------------------------------
Name: Terrance L. Stringer Name: William G. Darnell
- -------------------------------------- --------------------------------------
Name: Stephen P. Piatek Name: Juan Y. Forster
- -------------------------------------- --------------------------------------
Name: Margaret N. Rosegay Name: Mary Louise Nelson
- -------------------------------------- --------------------------------------
Name: Richard E. Becker Name: Lucian A. Nawrocki
-9-
<PAGE> 10
SCHEDULE I
PURCHASERS
<TABLE>
<CAPTION>
Social Number of
Security Shares Being
Name Address Number Purchased
<S> <C> <C> <C>
J. C. "Mac" McFarland 7021 Worsham Drive ###-##-#### 57,000
Whittier, CA 90602
Doris E. Fleisher Post Office Box 8 ###-##-#### 6,000
Santa Paula, CA 93061
Terrance L. Stringer 548 East Mondo Drive ###-##-#### 7,000
La Habra Heights, CA
90631
Stephen P. Piatek 758 West 22nd Street ###-##-#### 6,000
San Pedro, CA 90731
Margaret N. Rosegay 602 Funston Avenue ###-##-#### 6,000
San Francisco, CA 94118
Delton E. Crandell 3211 Las Faldas Drive ###-##-#### 12,000
Fullerton, CA 92835
Warren J. Nelson 11371 Glenside Lane ###-##-#### 12,000
Camarillo, CA 93012
William G. Darnell 342 Lori Drive ###-##-#### 15,000
Benicia, CA 94510
Juan Y. Forster 12245 Circula Panorama Dr. ###-##-#### 15,000
Santa Ana, CA 92705
Mary Louise Nelson 13201 Margate Street ###-##-#### 5,000
Sherman Oaks, CA 91401
Lucian A. Nawrocki 21281 Calle Gruta ###-##-#### 5,000
Lake Forest, CA 92630
Richard E. Becker Val Rock, Inc. ###-##-#### 4,000
P.O. Box 1028
Seely, CA 92273-1028
</TABLE>
-10-
<PAGE> 11
SCHEDULE 4.7
Each Purchaser severally, but not jointly, represents and warrants to the
Company that he or she is an accredited investor as defined in Regulation D
under the 1933 Act because, as set forth next to such Purchaser's name below,
either (a) such Purchaser has an individual net worth, or joint net worth with
his or her spouse, exceeding $1,000,000, or (b) such Purchaser had an
individual income in excess of $200,000 in each of 1996 and 1997 and has a
reasonable expectation of reaching the same income level in 1998, or (c) such
Purchaser had a joint income with his or her spouse in excess of $300,000 in
each of 1996 and 1997 and has a reasonable expectation of reaching the same
income level in 1998:
<TABLE>
<CAPTION>
NAME OF PURCHASER APPLICABLE CLAUSE
----------------- -----------------
<S> <C>
J. C. "Mac" McFarland (a)
Doris E. Fleisher (a)
Terrance L. Stringer (b)
Stephen P. Piatek (a)
Margaret N. Rosegay (b)
Delton E. Crandell (a)
Warren J. Nelson (a)
William G. Darnell (a)
Juan Y. Forster (a)
Mary Louise Nelson (a)
Lucian A. Nawrocki (b)
Richard E. Becker (a)
</TABLE>
-11-
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement of Huntway Refining Company on Form S-4 (File No.
333-45093) of our report dated January 30, 1998, appearing in the Annual Report
on Form 10-K of Huntway Partners L.P. for the year ended December 31, 1997 and
to the reference to us under the heading "Summary Historical Financial
Information" and "Experts" in the Prospectus, which is part of this
Registration Statement.
Deloitte & Touche, LLP
Woodland Hills, California
April 14, 1998
