UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1994
OR
Transition Report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from . . . . to . . . .
Commission file number 1-7627
WAINOCO OIL CORPORATION
(Exact name of registrant as specified in its charter)
Wyoming 74-1895085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Smith Street, Suite 2100 77002-4367
Houston, Texas (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (713) 658-9900
Not Applicable
-------------------------
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No . . .
Registrant's number of common shares outstanding as of July 29, 1994:
27,239,392
WAINOCO OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1994
INDEX
Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Part II - Other Information
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands except per share)
Six Months Ended Three Months Ended
June 30 June 30
1994 1993 1994 1993
------------------ ------------------
<S> <C> <C> <C> <C>
Revenues:
Refined products $142,046 $153,090 $ 79,748 $ 80,700
Oil and gas sales 19,820 19,480 10,422 9,588
Other 930 1,769 420 416
-------- -------- -------- --------
162,796 174,339 90,590 90,704
-------- -------- -------- --------
Costs and Expenses:
Refining operating costs 124,654 146,495 70,990 75,927
Oil and gas operating costs 6,375 6,226 3,142 3,159
Selling and general expenses 5,848 5,515 2,861 2,631
Depreciation, depletion and
amortization 12,590 11,588 6,632 5,722
-------- -------- -------- --------
149,467 169,824 83,625 87,439
-------- -------- -------- --------
Operating Income 13,329 4,515 6,965 3,265
Interest Expense, Net 10,241 10,199 5,180 4,982
-------- -------- -------- --------
Income (Loss) Before Income Taxes 3,088 (5,684) 1,785 (1,717)
Provision (Benefit) for Income Taxes (388) (156) (216) (84)
-------- -------- -------- --------
Net Income (Loss) $ 3,476 $ (5,528) $ 2,001 $ (1,633)
======== ======== ======== ========
Income (Loss) Per Share $ .13 $ (.25) $ .07 $ (.07)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except shares)
June 30, 1994 and December 31, 1993 1994 1993
- ----------------------------------- -------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash, including cash equivalents of
$2,105 in 1994 and $2,078 in 1993 $ 3,868 $ 3,770
Trade receivables 22,771 16,281
Joint operators and other receivables 1,973 2,790
Inventory of crude oil, products and other 25,713 21,086
Other current assets 1,588 2,331
-------- --------
Total current assets 55,913 46,258
-------- --------
Property and Equipment, at cost:
Oil and gas properties, on a full-cost basis 448,414 448,649
Refinery and pipeline 130,313 124,705
Furniture, fixtures and other equipment 5,926 5,820
-------- --------
584,653 579,174
Less - Accumulated depreciation, depletion
and amortization 343,793 334,905
-------- --------
240,860 244,269
Other Assets 6,085 6,284
-------- --------
$302,858 $296,811
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 35,426 $ 30,514
Oil and gas proceeds payable 4,565 4,095
Accrued interest 5,698 5,681
Accrued turnaround cost 942 3,741
Accrued liabilities and other 3,598 4,132
-------- --------
Total current liabilities 50,229 48,163
-------- --------
Long-Term Debt
Revolving credit facilities 22,300 18,700
12% Senior Notes 100,000 100,000
7 3/4% Convertible Subordinated Debentures 46,000 46,000
10 3/4% Subordinated Debentures 12,242 12,200
-------- --------
180,542 176,900
-------- --------
Deferred Income Taxes 2,358 2,298
Other Deferred Credits 3,254 3,410
Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $100 par value,
500,000 shares authorized, no shares issued - -
Common stock, no par, 50,000,000 shares authorized,
27,299,392 shares and 27,122,177 shares issued in
1994 and 1993, respectively 7,171 57,153
Paid-in capital 81,715 80,855
Retained earnings (deficit) (62,821) (66,297)
Cumulative translation adjustment (9,309) (6,233)
Treasury stock, 60,000 shares (270) (270)
Other (11) (832)
-------- --------
Total Shareholders' Equity 66,475 66,040
-------- --------
$302,858 $296,811
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
<CAPTION>
WAINOCO OIL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
For the six months ended June 30, 1994 1993
- --------------------------------- -------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 3,476 $ (5,528)
Depreciation, depletion and amortization 12,590 11,588
Deferred credits and other (960) (747)
-------- --------
15,106 5,313
Change in working capital from operations (5,108) (357)
Net cash provided by operating activities 9,998 4,956
INVESTING ACTIVITIES
Additions to property and equipment (13,919) (20,177)
Sales of oil and gas properties 810 1,189
Other (247) (303)
-------- --------
Net cash used in investing activities (13,356) (19,291)
FINANCING ACTIVITIES
Long-term bank borrowings 11,264 15,200
Payments of long-term bank debt (7,664) (700)
Other (144) (333)
-------- --------
Net cash provided by financing activities 3,456 14,167
Effect of exchange rate changes on cash - (66)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents 98 (234)
Cash and Cash Equivalents, beginning of period 3,770 3,710
-------- --------
Cash and Cash Equivalents, end of period $ 3,868 $ 3,476
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
WAINOCO OIL CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM FINANCIAL STATEMENTS
June 30, 1994
(Unaudited)
1. Financial statement presentation
The condensed consolidated financial statements include the accounts
of Wainoco Oil Corporation, a Wyoming Corporation, and its wholly owned
subsidiaries, including Wainoco Oil & Gas Company and Frontier Holdings
Inc. ("Frontier" or the "Refinery"), collectively referred to as Wainoco or
the Company. These financial statements have been prepared by the
registrant without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC) and include all adjustments
(comprised of only normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
Wainoco believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that the financial statements
included herein be read in conjunction with the financial statements and
the notes thereto included in Wainoco's annual report on Form 10-K for the
year ended December 31, 1993.
2. Accounting policy for oil and gas properties
Wainoco follows the accounting policy (commonly referred to as "full-
cost" accounting) of capitalizing costs incurred in the acquisition,
exploration and development of oil and gas reserves. No gains or losses
are recognized upon the sale or disposition of oil and gas properties,
except for significant transactions.
Wainoco computes the provision for depreciation, depletion and
amortization of oil and gas properties, by country, on a quarterly basis
using the composite unit-of-production method based on future gross revenue
attributable to proved reserves.
3. Earnings per share
Primary and fully diluted earnings per share have been computed on the
weighted average number of common shares outstanding and assume the
exercise of stock option shares for the three months and six months ended
June 30, 1994. The effect of dilution for the fully diluted computation
was immaterial. No effect was given for the addition of dilutive stock
options for the three months and six months ended June 30, 1993 as losses
were incurred. The primary and fully diluted average shares outstanding
for the three months and six months ended June 30, 1994 were 27,404,724 and
27,367,539, respectively, and in 1993 were 22,062,177 for both periods.
4. Nonrecurring transactions
During the first quarter of 1993, the Company received payments of
insurance proceeds, as reimbursement for losses incurred, resulting in
nonrecurring income of $1.0 million, which has been classified as other
income in the consolidated statement of operations.
5. Schedule of major components of inventory
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
-------- --------
(in thousands)
<S> <C> <C>
Crude oil $ 7,113 $ 2,803
Unfinished products 4,843 4,487
Finished products 7,636 7,435
Chemicals and in-transit inventory 1,317 1,589
Repairs and maintenance supplies and other 4,804 4,772
-------- --------
$ 25,713 $ 21,086
======== ========
</TABLE>
6. Long-term debt
Wainoco has renegotiated and extended its two oil and gas long-term
credit facilities. The interest rates for both facilities are based, at
the Company's option, on 1) the bank's prime rate plus from one-half to
three-quarters percent, or 2) LIBOR plus from one and one-half percent to
one and three-quarters percent. The loan covenants for both facilities
include net worth and minimum cash flow coverage of interest requirements.
Commitments under the Company's United States oil and gas credit
facility, secured by substantially all of its United States oil and gas
properties, were reduced to $18 million from $22 million as of June 30,
1994 and the revolving period was extended from December 31, 1994 to
December 31, 1995 with payments commencing on March 31, 1996.
Commitments under the Company's Canadian oil and gas credit facility,
secured by substantially all of its Canadian oil and gas properties, were
reduced to Canadian $34 million from Canadian $37.5 million as of June 30,
1994 and the revolving period was extended to December 31, 1995 with
payments commencing on March 31, 1996.
In a recent amendment to Frontier's working capital facility, the
revolving period has been extended from April 2, 1995 to April 2, 1996.
Additionally, the commitment fee for the facility was decreased from one-
half of 1% to .425 of 1%. The prime rate margin was narrowed from one and
three-quarters percent to one and one-quarter percent and the reserve-
adjusted LIBOR margin was reduced from three percent to two and one-quarter
percent.
7. Securities offering
In July, 1993, the Company sold five million shares of common stock
through a public offering. The net proceeds of $20.8 million were used to
pay down borrowings under its revolving credit facilities and to retire $5
million principal amount of its 10 % Subordinated Debentures which were
applied to its 1993 and 1994 sinking fund requirements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Six months ended June 30, 1994 compared with the same period in 1993
The Company had net income for the six months ended June 30, 1994 of
$3,476,000, or $.13 per share, compared to a net loss of $5,528,000, or
$.25 per share, for the same period in 1993.
Revenues decreased 7% as compared to the same period in 1993,
primarily the result of refined products revenues decreasing 7%. The
decrease in refined product revenues results from the 9% decrease in
average product sales prices, primarily reflecting a decrease in the price
of crude oil.
Oil and gas revenues increased 2%, as a result of increased natural
gas prices in the United States and Canada, offset somewhat by 22% lower
oil prices. The average price for natural gas increased 29% in Canada and
4% in the United States. The average price for Canadian natural gas in
Canadian dollars actually rose 39%, to C$1.93/mcf from C$1.39/mcf, but the
Canadian/United States dollar exchange rate fell from last year's first six
months average of .7903 to .7342, resulting in the smaller 29% price
increase in United States dollars.
Natural gas production decreased 5% during the first six months.
During the first quarter of 1994, natural gas production was down 13%, as a
result of compressor repairs at two large fields in Canada and the impact
of reduced drilling in 1992 and 1993 due to the large capital requirements
at the Refinery. This decline was reduced during the second quarter 1994
as the impact of mechanical problems decreased and successful exploration
wells in the United States and Canada began production.
Refining operating costs decreased 15% in 1994 due to the price of
feedstocks, primarily crude oil, declining 19%.
The Refinery had improved operations on a comparative basis. Yields
increased 6%, and more gasoline and distillates were produced on a
comparative basis as the refinery conversion rate improved in response to
newly installed advanced controls on the crude unit and a change in the
composition of crude oil runs. Operating margins increased from $.56/bbl
during the first six months of 1993 to $2.02/bbl in the six months ended
June 30, 1994.
Depreciation, depletion and amortization increased 9% in the 1994 six-
month period as compared to the same period in 1993. The increase results
primarily from refining DD&A increasing 28% in the period as a result of
the Refinery capital plant improvement program completed in late 1993. As
a percentage of oil and gas sales, the DD&A rate increased to 44% in the
1994 six-month period from 43% in the same period in 1993.
The benefit for income taxes increased $232,000 in the first six
months of 1994 as compared to the same period in 1993 primarily
attributable to a $223,000 increase in the Alberta Royalty Tax Credit
(ARTC) earned on the increased Canadian natural gas revenues resulting from
the strong natural gas price increase discussed above.
Three months ended June 30, 1994 compared with the same period in 1993
The Company had net income for the three-months ended June 30, 1994 of
$2,001,000, or $.07 per share, compared to a net loss of $1,633,000, or
$.07 per share, for the same period in 1993.
Overall, revenues for the 1994 three-month period remained relatively
the same as in 1993. Oil and gas revenues increased 9% principally as a
result of a 19% increased natural gas prices. However, oil prices
decreased an average of 15% partially offsetting the natural gas price
increase. Natural gas and oil production increased 3% and 6% in 1994 as a
result of production from successful exploration wells in Canada and the
United States. The natural gas price increase in the second quarter
compared to the prior year quarter was primarily the result of Canadian gas
rising 34%, to C$1.92/mcf from C$1.43/mcf, but the Canadian/United States
dollar exchange rate fell from last year's second quarter average of .7875
to .7235, resulting in a smaller 24% price increase in United States
dollars.
Refining operating costs decreased 7% in 1994 due to the price of
feedstocks, primarily crude oil, declining 12%.
The Refinery had improved operations on a comparative basis, as noted
in the six-month period discussion, as yields increased 8%. Operating
margins increased $.94/bbl in the quarter ended June 30, 1994, as compared
to the same period in 1993.
Depreciation, depletion and amortization increased 16% in the 1994
three-month period as compared to the same period in 1993. Refining DD&A
increased 24% in the three-month period ended June 30, 1994, and oil and
gas operations DD&A increased 17% primarily the result of higher oil and
gas sales. As a percentage of oil and gas sales, the DD&A rate increased
to 45% in the 1994 three-month period from 43% in the same period in 1993.
The benefit for income taxes increased $132,000 in the three-months
ended June 30, 1994 as compared to the same period in 1993 primarily
attributable to an $87,000 increase in the ARTC earned on the increased
Canadian natural gas revenues resulting from the strong natural gas price
increase discussed above.
OPERATING EARNINGS BY SEGMENT
The following (in thousands) presents the operating income (loss) by
operating segment, by country for the six months and three months ended
June 30, 1994 and 1993. Operating income (loss) is income (loss) before
net interest expense and provision for income taxes and does not include
unallocated net corporate expense of $1,312,000 and $1,442,000 in the six
months ended June 30, 1994 and 1993, respectively, and $651,000 and
$738,000 in the three months ended June 30, 1994 and 1993, respectively.
<TABLE>
<CAPTION>
Oil and Gas
Exploration and Production
-----------------------------
United
States
Refining and Other Canada Total
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Six Months Ended June 30,
1994 - Operating margin $ 17,681 $ 4,246 $ 9,840 $ 14,086
Selling and general expenses 2,248 1,077 1,211 2,288
Depreciation, depletion
and amortization 3,699 3,983 4,908 8,891
-------- -------- -------- --------
Operating income (loss) $ 11,734 $ (814) $ 3,721 $ 2,907
======== ======== ======== ========
1993 - Operating margin $ 7,945 $ 5,252 $ 8,409 $ 13,661
Selling and general expenses 2,230 1,039 1,068 2,107
Depreciation, depletion
and amortization 2,891 3,843 4,578 8,421
-------- -------- -------- --------
Operating income $ 2,824 $ 370 $ 2,763 $ 3,133
======== ======== ======== ========
Oil and Gas
Exploration and Production
----------------------------
United
States
Refining and Other Canada Total
-------- -------- -------- --------
Three Months Ended June 30,
1994 - Operating margin $ 8,902 $ 2,613 $ 4,943 $ 7,556
Selling and general expenses 1,120 484 606 1,090
Depreciation, depletion
and amortization 1,864 2,330 2,438 4,768
-------- -------- -------- --------
Operating income (loss) $ 5,918 $ (201) $ 1,899 $ 1,698
======== ======== ======== ========
1993 - Operating margin $ 4,862 $ 2,675 $ 4,053 $ 6,728
Selling and general expenses 1,017 511 476 987
Depreciation, depletion
and amortization 1,503 1,897 2,183 4,080
-------- -------- -------- --------
Operating income $ 2,342 $ 267 $ 1,394 $ 1,661
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
REFINING OPERATING STATISTICAL INFORMATION
Six Months Ended Three Months Ended
June 30 June 30
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Raw material input (bpd)
Sweet crude 6,815 6,446 6,746 5,768
Sour crude 25,941 24,780 26,967 24,595
Other feed and blend stocks 3,530 3,059 2,420 3,015
-------- -------- -------- --------
Total 36,286 34,285 36,133 33,378
Manufactured product yields (bpd)
Gasoline 15,875 14,163 15,723 13,871
Distillates 13,094 11,420 13,325 10,582
Asphalt and other 5,812 7,261 5,418 7,406
-------- -------- -------- --------
Total 34,781 32,844 34,466 31,859
Total product sales (bpd)
Gasoline 19,017 18,636 19,457 19,012
Distillates 12,783 11,701 13,302 11,249
Asphalt and other 6,137 6,689 7,307 7,629
-------- -------- -------- --------
Total 37,937 37,026 40,066 37,890
Operating margin information (per sales bbl)
Average sales price $ 20.69 $ 22.84 $ 21.87 $ 23.40
Material costs
(under FIFO inventory accounting) 14.62 18.16 16.23 18.48
-------- -------- -------- --------
Product spread 6.07 4.68 5.64 4.92
Operating expenses
excluding depreciation 3.53 3.70 3.24 3.54
Depreciation .52 .42 .50 .42
-------- -------- -------- --------
Operating margin $ 2.02 $ .56 $ 1.90 $ .96
Manufactured product margin
before depreciation (per bbl) $ 2.54 $ 1.04 $ 2.42 $ 1.48
Purchase product margin
(per purchased product bbl) $ 1.58 $ (.25) $ 1.58 $ (.06)
Sweet/sour spread (per bbl) $ 3.79 $ 4.56 $ 3.59 $ 4.35
Average sales price (per sales bbl)
Gasoline $ 23.09 $ 26.28 $ 24.38 $ 27.27
Distillates 22.06 24.40 23.11 24.79
Asphalts and other 10.38 10.56 12.94 11.74
</TABLE>
<TABLE>
<CAPTION>
OIL AND GAS EXPLORATION AND PRODUCTION STATISTICAL INFORMATION
Six Months Ended Three Months Ended
June 30 June 30
------------------ ------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue (in thousands)
Net oil and condensate sales
Canada $ 1,364 $ 1,591 $ 740 $ 775
United States 5,060 6,535 2,909 3,321
-------- -------- -------- --------
6,424 8,126 3,649 4,096
Net gas sales
Canada 10,557 8,851 5,256 4,260
United States 2,839 2,503 1,517 1,232
-------- -------- -------- --------
13,396 11,354 6,773 5,492
$ 19,820 $ 19,480 $ 10,422 $ 9,588
======== ======== ======== ========
Production
Net oil and condensate (bbls)
Canada 116,000 111,000 56,000 53,000
United States 362,000 359,000 190,000 180,000
-------- -------- -------- --------
478,000 470,000 246,000 233,000
======== ======== ======== ========
Net gas (mmcf)
Canada 7,454 8,056 3,777 3,787
United States 1,370 1,256 763 606
-------- -------- -------- --------
8,824 9,312 4,540 4,393
Price
Average oil and condensate sales (per bbl)
before deduction for production taxes
Canada $ 11.78 $ 14.32 $ 13.33 $ 14.52
United States 13.98 18.18 15.31 18.46
Weighted average 13.45 17.27 14.86 17.56
Average gas sales (per mcf) before
deduction for production taxes
Canada $ 1.42 $ 1.10 $ 1.39 $ 1.12
United States 2.07 1.99 1.99 2.03
Weighted average 1.52 1.22 1.49 1.25
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $9,998,000 and $4,956,000 for
the six months ended June 30, 1994 and 1993, respectively. Cash from financing
activities in the six months ended June 30, 1994 and 1993 was provided primarily
by the Company's bank lines of credit of $3,600,000 and $14,500,000 net of
repayments of bank debt of $7,664,000 and $700,000, respectively.
In July 1993, the Company raised $21,346,000, before offering expenses of
approximately $500,000, from a 5,000,000 share equity offering which was used to
make long-term debt repayments against its bank lines of credit. Subsequently,
the Company reborrowed $5,000,000 to retire an equal principal amount of its 10
3/4% Subordinated Debentures.
The Company renegotiated and extended its United States credit agreement
providing a bank line of credit of $18,000,000 which converts to a five-year
term loan on December 31, 1995 with payments commencing on March 31, 1996. The
Company amended its Canadian credit facility providing a bank line of credit of
C$34,000,000, which converts to a five-year term loan on December 31, 1995 with
payments commencing March 31, 1996. The Company also amended its Frontier
working capital facility, which extended its revolving period to April 2, 1996.
At June 30, 1994, the Company had $22,975,000 available under its oil and gas
lines of credit and $14,300,000 under the Frontier line of credit. The
estimated five-year maturities of long-term debt are $2,500,000 in 1995, 1996
and 1997 and $5,000,000 in 1998 assuming that the oil and gas reserved-based
credit facilities are extended.
Net cash used in investing activities was $13,356,000 and $19,291,000 for
the six months ended June 30, 1994 and 1993, respectively. Capital expenditures
of approximately $23,200,000 are currently budgeted for 1994, of which
$12,981,000 had been incurred as of June 30, 1994. The Company was engaged in a
capital improvement program for the Refinery which commenced in 1992 and was
completed in September 1993. This program, among other things, enables the
Company to produce new products required under the Clean Air Act Amendments of
1990, increases the amount of sour crude processed, increases the amount of
diesel produced, all of which can be low sulfur, and improves operating
reliability.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings -
None, which in the opinion of management would have a material impact
on the registrant.
Matters Concerning Protection of the Environment -
Toxic Substances Control Act Matter - On June 27, 1994, the U.S.
Environmental Protection Agency Region VIII served an administrative Complaint
and Notice of Opportunity for Hearing on Frontier Refining Inc. alleging
violations of the Toxic Substances Control Act ("TSCA"), and proposing a penalty
of $150,000. The Complaint alleges that, pursuant to Section 8(a) of TSCA,
Frontier filed required updates to the TSCA Chemical Inventory after the
regulatory filing deadline. Frontier will contest this matter but plans to
explore settlement of this action.
National Pollution Discharge Elimination System Matters - On May 18,
1994, the United States Environmental Protection Agency issued to Frontier a
Notice of Violation, which alleged multiple violations of the Clean Water Act
due to exceedances of the effluent limitations in Frontier's National Pollution
Discharge Elimination System ("NPDES") permit. The Wyoming Department of
Environmental Quality ("DEQ"), which has federal delegation of the NPDES
permitting program in Wyoming, has indicated that it will pursue enforcement
action for these alleged violations. Although Frontier contests liability, it
is currently exploring settlement options with DEQ to resolve this
matter.
ITEM 2. Changes in Securities -
There have been no changes in the constituent instruments defining the
rights of the holders of any class of registered securities during the current
quarter.
ITEM 3. Defaults Upon Senior Securities -
None.
ITEM 4. Submission of Matters to a Vote of Security Holders -
The annual meeting of the registrant was held May 10, 1994 with no
significant proposals brought to a vote of the shareholders.
ITEM 5. Other Information -
None.
ITEM 6. Exhibits and Reports on Form 8-K -
10.01 - Amended and Restated Credit Agreement dated June 29, 1994 to
Loan Agreement dated October 2, 1991 with certain banks and Morgan Bank of
Canada.
10.02 - Amended and Restated Credit and Guaranty Agreement dated May
31, 1994 to Loan Agreement dated October 4, 1991 with certain banks and Morgan
Guaranty Trust Company of New York.
10.03 - Fourth Amendment dated July 6, 1994 to Loan Agreement dated
August 10, 1992 with certain banks and Union Bank.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WAINOCO OIL CORPORATION
By: /s/ George E. Aldrich
Vice President - Controller
Date: August 3, 1994
Cdn. $34,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
June 29, 1994
among
Wainoco Oil Corporation
as Borrower
The Banks Listed Herein
and
Morgan Bank of Canada
as Agent
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
1.1 Definitions
1.2 Accounting Terms and Determinations
1.3 Headings and Agreement References
1.4 Number and Gender
1.5 Per Annum Calculations; Currency; Time;
"Including"
1.6 Exhibits
ARTICLE 2 THE CREDITS
2.1 Commitments to Lend
2.2 Method of Borrowing
2.3 Notes
2.4 Maturity of Loans; Mandatory Prepayments
2.5 Interest Rates
2.6 Fees
2.7 Optional Termination or Reduction of Commitments
2.8 Method of Electing Interest Rates
2.9 Optional Prepayments
2.10 Contingent Prepayments
2.11 General Provisions as to Payments
2.12 Funding Losses
2.13 General Provisions as to Interest;
Overdue Interest; and Fees
ARTICLE 3 CONDITIONS
3.1 Effectiveness
3.2 Indebtedness under the Original Credit Agreement
3.3 Borrowings
3.4 Security
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
4.1 Corporate Existence and Power
4.2 Corporate and Governmental Authorization;
No Contravention
4.3 Binding Effect
4.4 Financial Information
4.5 Litigation
4.6 Compliance with ERISA
4.7 Environmental Matters
4.8 Taxes
4.9 Subsidiaries
4.10 Regulation
4.11 Full Disclosure
4.12 Mortgaged Properties
4.13 Liens of the Security Documents
4.14 Reserve Data and Projections
4.15 Production Penalties
4.16 Conversion
4.17 Operations
ARTICLE 5 COVENANTS
5.1 Information
5.2 Payment of Obligations
5.3 Maintenance and Development of Borrower
Engineered Properties and Other Property;
Insurance
5.4 Conduct of Business and Maintenance of Existence
5.5 Compliance with Laws
5.6 Inspection of Property, Books and Records
5.7 Debt
5.8 Restricted Payments
5.9 Investments
5.10 Negative Pledge
5.11 Consolidations, Mergers and Sales of Assets
5.12 Use of Proceeds
5.13 Value of Mortgaged Properties
5.14 Engineer's Reports
5.15 Disposition of Borrower Engineered Properties
5.16 Transactions with Affiliates
5.17 Minimum Fixed Charge Coverage
5.18 Minimum Consolidated Net Worth
5.19 Interest Coverage Ratio
5.20 Amendments to Other Agreements
ARTICLE 6 DEFAULTS
6.1 Events of Default
6.2 Notice of Default
6.3 Conversions to Domestic Loans
ARTICLE 7 THE AGENT
7.1 Appointment Authorization
7.2 Agent and Affiliates
7.3 Action by Agent
7.4 Consultation with Experts
7.5 Liability of Agent
7.6 Indemnification
7.7 Credit Decision
7.8 Successor Agent
7.9 Agent's Fees
ARTICLE 8 CHANGE IN CIRCUMSTANCES
8.1 Basis for Determining Interest Rate
Inadequate or Unfair
8.2 Illegality
8.3 Increased Cost and Reduced Return
8.4 Taxes
8.5 Domestic Loans Substituted for
Affected Euro-Dollar Loans
ARTICLE 9 MISCELLANEOUS
9.1 Notices
9.2 No Waivers
9.3 Expenses; Indemnification
9.4 Sharing of Set-Offs
9.5 Amendments and Waivers
9.6 Successors and Assigns
9.7 Collateral
9.8 Further Assurances
9.9 Conflicting Provisions
9.10 Section 426 Waiver
9.11 Governing Law
9.12 Submission to Jurisdiction
9.13 Counterparts; Integration
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AGREEMENT dated as of June 29, 1994.
AMONG:
WAINOCO OIL CORPORATION, a body corporate having an office in the
City of Houston, in the State of Texas (the "Borrower")
- - and -
MORGAN BANK OF CANADA, a Canadian chartered bank with offices in
the City of Toronto, in the Province of Ontario (in its own
capacity referred to as "Morgan" and in its capacity as agent
referred to as the "Agent")
- - and -
PARIBAS BANK OF CANADA, a Canadian chartered bank with offices in
the City of Toronto, in the Province of Ontario ("Paribas")
- - and -
THE BANK OF TOKYO CANADA, a Canadian chartered bank with offices
in the City of Vancouver, in the Province of British Columbia
("BTC")
WITNESSETH:
WHEREAS, the Borrower, Bank of Montreal and Morgan have
heretofore entered into an Amended and Restated Loan Agreement
dated as of October 2, 1991 (as amended to the Effective Date,
the "Original Credit Agreement"); and
WHEREAS, the Bank of Montreal desires to sell its entire right,
title and interest in and to the Original Credit Agreement to
Morgan, Paribas and BTC; and
WHEREAS, the parties hereto wish to amend and restate the
Original Credit Agreement in its entirety to read as set forth
herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
- -----------
1.1 Definitions
The following terms, as used herein, have the following
meanings:
"Adjusted London Interbank Offered Rate" has the meaning
set forth in Section 2.5(b).
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in the form
prepared by the Agent and submitted to the Agent (with a
copy to the Borrower) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls
the Borrower (a "Controlling Person") or (ii) any Person
which is controlled by or is under common control with a
Controlling Person. As used herein, the term "control"
means possession, directly or indirectly, of the power to
direct or cause the direction of the management or
policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agent" means Morgan Bank of Canada in its capacity as
agent for the Banks under the Financing Documents, and
its successors in such capacity.
"Agreement" means the Original Credit Agreement, as
amended and restated by this Amended Agreement, as the
same may be further amended from time to time.
"Amended Agreement" means this Amended and Restated
Credit Agreement dated as of June 29, 1994.
"Applicable Lending Office" means, with respect to any
Bank, (i) in the case of its Domestic Loans, its Domestic
Lending Office and (ii) in the case of its Euro-Dollar
Loans, its Euro-Dollar Lending Office.
"Assignee" has the meaning set forth in Section 9.6(c).
"Bank" means each of Morgan, Paribas and BTC, each
Assignee which becomes a Bank pursuant to Section 9.6(c),
and their respective successors.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA
which is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of
the ERISA Group.
"Borrower" means Wainoco Oil Corporation, a Wyoming
corporation, and its successors.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks
pursuant to Article 2. A Borrowing is a "Domestic
Borrowing" if such Loans are Domestic Loans or a "Euro-
Dollar Borrowing" if such Loans are Euro-Dollar Loans.
"Borrowing Base" means Cdn. $34,000,000 or the amount
notified to the Borrower by the Agent pursuant to
Section 2.1(b) as the amount of the Borrowing Base; less,
in either case, the Net Sales Proceeds of any of the
Engineered Properties covered by the then most recent
Engineer's Report sold, leased or transferred on or after
the date of such Engineer's Report (unless such sale,
lease or transfer is otherwise taken into account in the
determination of the Borrowing Base for such date), but
only if and to the extent the aggregate amount of such
Net Sales Proceeds in any calendar year exceeds Cdn.
$1,000,000. The Borrower will promptly notify the Agent
of any sale, lease or other transfer of Engineered
Properties which requires a reduction in the Borrowing
Base.
A "Borrowing Base Excession" exists at any date if and to
the extent that the aggregate outstanding principal
amount of the Loans at such date exceeds the Borrowing
Base at such date.
"Canadian Dollars" and "Cdn. $" means lawful money of
Canada for the payment of public and private debts.
"Canadian Equivalent" means, at any time, (i) in relation
to any amount in U.S. Dollars, the amount obtained by
converting such amount into Canadian Dollars at the Spot
Rate and, (ii) in relation to any amount in Canadian
Dollars, such amount.
"Capital Costs" means, with respect to any oil and gas
property, all capital expenditures incurred in connection
with the conversion or attempted conversion of such
property from "proved undeveloped" to "proved developed"
as classified in accordance with the regulations of the
Securities and Exchange Commission (United States of
America) as in effect on the date hereof and the
maintenance of such property as "proved developed" as
classified in accordance with the regulations of the
Securities and Exchange Commission (United States of
America) as in effect on the date hereof.
"Commitment" means, with respect to each Bank, the amount
set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to
time pursuant to Section 2.7.
"Consolidated Debt" means, at any date, the Debt of the
Borrower and its Consolidated Subsidiaries, determined on
a consolidated basis as of such date.
"Consolidated EBITDA" means, for any fiscal period,
consolidated net income of the Borrower and its
Consolidated Subsidiaries for such period plus, to the
extent deducted in determining such consolidated net
income for such period, the aggregate amount of (i)
interest expense, (ii) provision for income taxes and
(iii) depletion, depreciation, amortization and other
similar non-cash charges.
"Consolidated Operating Cash Flow" means, for any fiscal
period, consolidated net income of the Borrower and its
Consolidated Subsidiaries for such period plus, to the
extent deducted in determining such consolidated net
income for such period, the aggregate amount of (i) the
deferred portion of the provision for income taxes and
(ii) depletion, depreciation, amortization and other
similar non-cash charges.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with the Borrower in its consolidated
financial statements if such statements were prepared as
of such date.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its
Consolidated Subsidiaries less their consolidated
Intangible Assets, all determined as of such date. For
purposes of this definition "Intangible Assets" means the
amount (to the extent reflected in determining such
consolidated stockholders' equity) of (i) all write-ups
(other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern
business made within twelve months after the acquisition
of such business) subsequent to December 31, 1993 in the
book value of any asset owned by the Borrower or a
Consolidated Subsidiary, (ii) all Investments in
unconsolidated Subsidiaries and all equity investments in
Persons which are not Subsidiaries and (iii) all
unamortized debt discount and expense, unamortized
deferred charges, goodwill, patents, trademarks, service
marks, trade names, anticipated future benefit of tax
loss carry-forwards, copyrights, organization or
developmental expenses and other intangible assets.
"Continuing Bank" means Morgan.
"Convertible Debentures" means the 7 3/4% Convertible
Subordinated Debentures of the Borrower due 2014.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person
evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay
the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person
as lessee which are capitalized in accordance with
generally accepted accounting principles, (v) all
non-contingent obligations (and, for purposes of Section
5.7 and the definitions of Material Debt and Material
Financial Obligations, all contingent obligations) of
such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or
similar instrument, (vi) all Debt secured by a Lien on
any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (vii) all
Debt of others Guaranteed by such Person.
"Debt Ratio" means, as of the last day of any fiscal
quarter of the Borrower, the ratio of (i) the
Consolidated Operating Cash Flow for the four consecutive
fiscal quarters ended at such date to (ii) the
Consolidated Debt at such date.
"Default" means any condition or event which constitutes
an Event of Default or which with the giving of notice or
lapse of time or both would, unless cured or waived,
become an Event of Default.
"Departing Bank" means Bank of Montreal.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index
swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar
transaction (including any option with respect to any of
the foregoing transactions) or any combination of the
foregoing transactions.
"Determination Date" means each date on which the Agent
shall notify the Borrower of the amount of the Borrowing
Base pursuant to Section 2.1(b).
"Discounted Present Value of Future Net Revenue" means,
with respect to any Engineered Property and as of any
specified date, an amount equal to the present value of
Future Net Revenue from such Engineered Property,
determined by discounting the stated amount of such
Future Net Revenue from the date on which such amount is
expected to be realized to such specified date at
(i) prior to the first Determination Date, the applicable
discount rate used for the purposes of the computations
contained in the Initial Engineer's Report covering such
Engineered Property, computed on a simple interest basis
for years of 365 days (or 366 days in a leap year), and
(ii) on or after the first Determination Date, the rate
specified by the Agent pursuant to Section 5.14(b),
computed on a simple interest basis for years of 365 days
(or 366 days in a leap year).
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in Toronto,
Ontario are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its
office in Canada located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Canadian Domestic
Lending Office) or such other office in Canada as such
Bank may hereafter designate as its Domestic Lending
Office by notice to the Borrower and the Agent.
"Domestic Loan" means (i) a Loan which bears interest at
the Prime Rate pursuant to the applicable Notice of
Borrowing or Notice of Interest Rate Election or Article
8 or (ii) an overdue amount which was a Domestic Loan
immediately before it became overdue.
"Effective Date" means the date this Amended Agreement
becomes effective in accordance with Section 3.1.
"Engineered Properties" means all the Canadian oil and
gas properties of the Borrower in respect of which proven
and producing Hydrocarbon reserves have been attributed
in the then most recent Engineer's Report.
"Engineer's Report" means (a) the Initial Engineer's
Report, and (b) each report delivered by the Borrower
pursuant to Sections 5.14 (a) or (c) that (i) is based on
evaluations by the Independent Petroleum Engineers with
respect to Engineered Properties having a minimum of 80%
of the Value of all the Engineered Properties and based
on evaluations by the Borrower with respect to Engineered
Properties having a maximum of 20% of the Value of all
the Engineered Properties, provided that all fields with
a value in excess of 10% of the Value of all the
Engineered Properties shall be evaluated by the
Independent Petroleum Engineers in such report, (ii) is
certified by the Independent Petroleum Engineers, except
for the internally evaluated Engineered Properties,
(iii) is prepared in accordance with established criteria
generally accepted in the oil and gas industry and
standards customarily used by such Independent Petroleum
Engineers in making any determinations or appraisals,
(iv) is based upon the assumptions determined in
accordance with Sections 5.14 (a) or (c), as the case may
be, and such other assumptions, estimates and projections
as are fully disclosed in such Engineer's Report, (v)
sets forth the matters specified in Sections 5.14 (a) and
(vi) is, except to the extent that any of the
requirements of clauses (i) to (v) hereof would cause its
form to differ from the form of the Initial Engineer's
Report, substantially in the form of the Initial
Engineer's Report.
"Environmental Laws" means any and all federal,
provincial, local and foreign statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits,
concessions, grants, franchises, licenses, agreements and
other governmental restrictions relating to the
environment, the effect of the environment on human
health or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes
into the environment including, without limitation,
ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants,
Hazardous Substances or wastes or the clean-up or other
remediation thereof.
"ERISA" means the U.S. Employee Retirement Income
Security Act of 1974, as amended, or any successor
statute.
"ERISA Group" means the Borrower, any Subsidiary and all
members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under
Section 414 of the U.S. Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business
Day on which commercial banks are open for international
business (including dealings in dollar deposits) in
London, England and New York, New York.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set
forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or affiliate
of such Bank as it may hereafter designate as its
Euro-Dollar Lending Office by notice to the Borrower and
the Agent.
"Euro-Dollar Loan" means (i) a Loan which bears interest
at a Euro-Dollar Rate pursuant to the applicable Notice
of Borrowing or Notice of Interest Rate Election or (ii)
an overdue amount which was a Euro-Dollar Loan
immediately before it became overdue.
"Euro-Dollar Rate" means a rate of interest determined
pursuant to Section 2.5(b) on the basis of an Adjusted
London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.5(b).
"Event of Default" has the meaning set forth in Section
6.1.
"Existing Security Documents" means (i) a Fixed Charge
Demand Debenture dated October 2, 1991 by the Borrower
deposited pursuant to a Deposit Agreement dated October
2, 1991, (ii) a General Security Agreement dated October
2, 1991 by the Borrower, (iii) all Assignments under
Section 177 (now Section 426) of the Bank Act (Canada)
previously provided by the Borrower or any predecessor
and (iv) all Assignments of Proceeds previously provided
by the Borrower or any predecessor.
"FHI" means Frontier Holdings Inc., a Delaware
corporation.
"FHI Credit Agreement" means a bank credit facility
providing for loan availability and/or letter of credit
availability, provided that the aggregate outstanding
principal amount of loans (excluding letters of credit)
thereunder may at no time exceed U.S. $15,000,000.
"FHI EBITDA" means, for any fiscal period, consolidated
net income of FHI and its Consolidated Subsidiaries for
such period plus, to the extent deducted in determining
such consolidated net income for such period, the
aggregate amount of (i) interest expense, (ii) provision
for income taxes and (iii) depletion, depreciation,
amortization and other similar non-cash charges.
"FHI Subsidiary" means any corporation or other entity of
which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions
are directly or indirectly owned by FHI.
"Financing Documents" means this Agreement, the Notes and
the Security Documents.
"Fixed Charges" means, for any fiscal year, the sum of
(i) interest payments required to be made on Debt of the
Borrower or any Subsidiary during such fiscal year,
determined as follows: (A) if the rate of interest
applicable to any Debt is at the date of determination an
unknown or variable rate, then the rate to be used for
the purpose of such determination shall be the rate per
annum equal to the weighted average applicable rate of
interest paid by such Person on such Debt during the then
most recently ended calendar month, (B) except as
provided in clause (C), the principal amount of Debt
outstanding during such fiscal year shall be assumed to
be the amount outstanding at the last day of the fiscal
quarter of the Borrower most recently ended on or prior
to the date of determination, reduced as contemplated by
clauses (ii) and (iii) below and (C) FHI shall be assumed
to have constant outstanding bank borrowings of U.S.
$15,000,000; (ii) assumed principal payments hereunder
and under the Wainoco Credit Agreement, in each case so
as to reduce the aggregate outstanding principal amount
at the last day of the fiscal quarter of the Borrower
most recently ended on or prior to the date of
determination in 20 quarterly instalments commencing
three months after the Termination Date and (iii) any
other scheduled payments of principal required to be made
on Debt of the Borrower or any Subsidiary during such
fiscal year.
"Future Net Revenue" means, with respect to any
Engineered Property and for any period, the future gross
revenue from such Engineered Property for such period as
determined in the then most recent Engineer's Report
less, without duplication, the sum of (i) any royalties
payable in connection with such property during such
period, (ii) any overriding royalties payable in
connection with such property during such period, (iii)
all production, ad valorem and severance taxes relating
to such property and payable during such period and (iv)
Capital Costs and Production Expenses during such period
necessary to provide such future gross revenue.
"Group of Loans" means at any time a group of Loans
consisting of (i) all Loans which are Domestic Loans at
such time or (ii) all Loans which are Euro-Dollar Loans
having the same Interest Period at such time; provided
that, if Loans of any particular Bank are converted to or
made as Domestic Loans pursuant to Section 8.2 or 8.5,
such Loans shall be included in the same Group or Groups
of Loans from time to time as they would have been in if
they had not been so converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or
indirectly guaranteeing any Debt or other obligation of
any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person, (i) to purchase
or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by
agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other
manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against
loss in respect thereof (in whole or in part); provided
that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a
corresponding meaning.
"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance, including
petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Hydrocarbons" means oil, gas, casinghead gas, condensate
and other liquid and gaseous hydrocarbons and all other
minerals produced in connection therewith.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Independent Petroleum Engineers" means Ryder Scott
Company or other petroleum engineers not regularly
employed by or otherwise affiliated with the Borrower
selected by the Borrower and approved by the Required
Banks.
"Initial Engineer's Report" means the report of Ryder
Scott Company dated January 1, 1994, covering the
Engineered Properties, a copy of which has been delivered
to each of the Banks.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date
of Borrowing specified in the applicable Notice of
Borrowing or on the date specified in the applicable
Notice of Interest Rate Election and ending one, two,
three or six months thereafter, as the Borrower may elect
in the applicable Notice; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall
be extended to the next succeeding Euro-Dollar
Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case
such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or
on a day for which there is no numerically
corresponding day in the calendar month at the end
of such Interest Period) shall, subject to clause
(c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) if any Interest Period includes a date on which a
payment of principal of the Loans is required to
be made under Section 2.4 but does not end on such
date, then (i) the principal amount (if any) of
each Euro-Dollar Loan required to be repaid on
such date shall have an Interest Period ending on
such date and (ii) the remainder (if any) of each
such Euro-Dollar Loan shall have an Interest
Period determined as set forth above,
(2) with respect to each Domestic Borrowing, the
period commencing on the date of Borrowing specified in
the applicable Notice of Borrowing or on the date
specified in the applicable Notice of Interest Rate
Election and ending on the last Domestic Business Day of
each calendar month.
"Investment" means any investment in any Person, whether
by means of share purchase, capital contribution, loan,
time deposit or otherwise.
"Lien" means any mortgage, lien, pledge, charge,
hypothec, assignment by way of security, security
interest or encumbrance of any kind (whether statutory,
equitable or at common law) including, without
limitation, the rights of a vendor, lessor or similar
party under any conditional sale agreement or other title
retention agreement or lease substantially equivalent
thereto, and the rights of the holder of any production
payment, advance payment or similar interests.
"Loan" means a loan made by a Bank pursuant to Section
2.1; provided that if any such loan or loans (or portions
thereof) are combined or subdivided pursuant to a Notice
of Interest Rate Election, the term "Loan" shall refer to
the combined principal amount resulting from such
combination or to each of the separate principal amounts
resulting from such subdivision, as the case may be.
"Loan Limit" means
(a) during the Revolving Credit Period, the lesser of
(i) the aggregate of each Bank's Commitment as
reduced pursuant to Section 2.7 and (ii) the
Borrowing Base, and
(b) after the Termination Date, the lesser of (i) the
Canadian Equivalent of the aggregate principal
amount of the Loans outstanding on the Termination
Date as reduced pursuant to Sections 2.4(a), 2.9
and 2.10(b) and (ii) the Borrowing Base.
"London Interbank Offered Rate" has the meaning set forth
in Section 2.5(b).
"Margin" has the meaning set forth in Section 2.5(b).
"Material Debt" means Debt (other than the Notes) of the
Borrower and/or one or more of its Subsidiaries, arising
in one or more related or unrelated transactions, in an
aggregate principal or face amount exceeding U.S.
$500,000.
"Material Financial Obligations" means a principal or
face amount of Debt and/or payment obligations in respect
of Derivatives Obligations of the Borrower and/or one or
more of its Subsidiaries, arising in one or more related
or unrelated transactions, exceeding in the aggregate
U.S. $500,000.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of U.S.
$500,000.
"Maturity Date" means the Quarterly Date falling in
December, 2000.
"Mortgaged Properties" means all property and assets of
the Borrower in Canada subject or purported to be subject
to the Lien of the Security Documents.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of
Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to
make contributions or has within the preceding five plan
years made contributions, including for these purposes
any Person which ceased to be a member of the ERISA Group
during such five year period.
"Net Proceeds from Petroleum Operations" means, for any
quarter, the gross revenues of the Borrower from the sale
of Hydrocarbons produced and saved from the Borrower's
Canadian oil, gas, and mineral properties, rights or
interests less the sum of (i) any Crown or lessor
royalties paid by the Borrower in connection with such
properties during such period, (ii) any overriding
royalties paid by the Borrower in connection with such
properties during such period, (iii) all production, ad
valorem and severance taxes relating to such properties
paid by the Borrower during such period, and (iv) Capital
Costs and Production Expenses necessary to produce such
revenues paid by the Borrower during such period.
"Net Sales Proceeds" means, in respect of any sale, lease
or transfer of any Engineered Property, the gross cash
proceeds of such sale, lease or transfer less expenses
incurred in connection thereto including any commissions,
broker's fees and sales taxes.
"New Bank" means each of Paribas and BTC.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in
Section 2.2.
"Notice of Interest Rate Election" has the meaning set
forth in Section 2.8.
"Original Credit Agreement" has the meaning set forth in
the recitals hereto.
"Outstandings" means the aggregate, at any time, of (i)
all outstanding Loans, (ii) all accrued and unpaid
interest, including interest on overdue and unpaid
interest, payable by the Borrower hereunder and (iii) all
fees, indemnities and other amounts payable by the
Borrower hereunder or under the Notes or the Security
Documents.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in
Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions
under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity
or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by
Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the U.S. Internal Revenue
Code and either (i) is maintained, or contributed to, by
any member of the ERISA Group for employees of any member
of the ERISA Group or (ii) has at any time within the
preceding five years been maintained, or contributed to,
by any Person which was at such time a member of the
ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
"Prime Rate" means the variable rate of interest
(expressed as a rate per annum) which the Agent
establishes from time to time as the reference rate of
interest which it employs in order to determine the
interest rate it will charge for loans in Canadian
Dollars to its customers in Canada and which it
designates as its prime rate.
"Principal Repayment Date" means each Quarterly Date
falling after the Termination Date and on or prior to the
Maturity Date.
"Production Expenses" means, with respect to any oil and
gas property, all cash costs and expenses (excluding
general and administrative expenses) incurred for or
payable in connection with the lifting, producing,
gathering, separating, treating, compressing, storing,
processing, marketing, transporting or otherwise handling
Hydrocarbons from such property, or developing,
equipping, operating or maintaining such property.
"Projected Cash Flow Available for Fixed Charges" means,
for any fiscal year, the amount determined pursuant to
Section 5.17(c) as (A) the projected Future Net Revenues
from Engineered Properties for such fiscal year minus
(B) general and administrative expenses payable by the
Borrower or any Subsidiary during such fiscal year (as
forecast by the Borrower and satisfactory to the Required
Banks) plus (C) the FHI EBITDA for the period of eight
consecutive quarters then most recently ended divided by
two minus (D) U.S. $5,000,000 (representing a notional
allowance for capital costs of FHI for such fiscal year).
"Quarterly Date" means the last Euro-Dollar Business Day
of each March, June, September and December.
"Reference Banks" means the principal London offices of
Morgan Guaranty Trust Company of New York, Banque Paribas
and The Bank of Tokyo, Limited.
"Regulation X" means Regulation X of the Board of
Governors of the U.S. Federal Reserve System, as in
effect from time to time.
"Required Banks" means at any time Banks having at least
66 2/3% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes
evidencing at least 66 2/3% of the aggregate unpaid
principal amount of the Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Borrower's capital
stock (except dividends payable solely in shares of its
capital stock) or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of (a)
any shares of the Borrower's capital stock or (b) any
option, warrant or other right to acquire shares of the
Borrower's capital stock.
"Revolving Credit Period" means the period from and
including the Effective Date to and including the
Termination Date.
"Security Amending Documents" means the additional
security documents to be provided pursuant to Section
3.4.
"Security Documents" means (i) the Existing Security
Documents, (ii) the Security Amending Documents and (iii)
any other documents delivered to or for the benefit of
the Banks and intended to secure or assure payment or
performance of all or any part of the obligation and
liabilities of the Borrower under this Agreement,
including liability for all Outstandings; all as the same
may be amended, supplemented, replaced, substituted or
renewed from time to time.
"Senior Notes" means the 12% Senior Notes of the Borrower
due 2002.
"Spot Rate" means, in relation to the conversion of one
currency into another currency, the noon spot rate of
exchange for such conversion as quoted by the Bank of
Canada on the Domestic Business Day immediately preceding
the date that such conversion is to be made.
"Subordinated Debentures" means the 10 3/4% Subordinated
Debentures of the Borrower due 1998.
"Subsidiary" means, as to any Person, any corporation or
other entity of which securities or other ownership
interests having ordinary voting power to elect a
majority of the board of directors or other persons
performing similar functions are at the time directly or
indirectly owned by such Person; unless otherwise
specified, "Subsidiary" means a Subsidiary of the
Borrower.
"Temporary Cash Investment" means any Investment in (i)
direct obligations of the United States of America or
Canada, or any agency thereof, or obligations guaranteed
by the United States of America or Canada, or any agency
thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Corporation and P-1 by Moody's
Investors Service, Inc., (iii) commercial paper issued by
Union Commercial Funding Corp. (a subsidiary of Union
Bank) guaranteed by Union Bank and rated at least A-1 by
Standard & Poor's Corporation and P-2 by Moody's
Investors Services, Inc. not in the aggregate at any time
greater than U.S. $10,000,000, (iv) time deposits
(including overnight deposits accruing interest at rates
based on the London interbank market) with, including
certificates of deposit issued by, any office of any bank
or trust company which is organized under the laws of the
United States of America or any state thereof, or under
the laws of Canada or any province thereof, and has
capital, surplus and undivided profits aggregating at
least U.S. $500,000,000 or Cdn. $500,000,000, as the case
may be, or (v) repurchase agreements with respect to
securities described in clause (i) above entered into
with an office of a bank or trust company meeting the
criteria specified in clause (iii) above, provided in
each case that such Investment matures within one year
from the date of acquisition thereof by the Borrower or a
Subsidiary.
"Termination Date" means the Quarterly Date falling in
December, 1995.
"Transferred Property" has the meaning set forth in
Section 3.1.
"Transferees" means the Continuing Bank and the New
Banks.
"U.S. Dollar" and "U.S. $" mean lawful money of the
United States of America.
"U.S. Equivalent" means, at any time, (i) in relation to
any amount in Canadian Dollars, the amount obtained by
converting such amount into U.S. Dollars at the Spot Rate
and, (ii) in relation to any amount in U.S. Dollars, that
amount.
"Unfunded Liabilities" means, with respect to any Plan at
any time, the amount (if any) by which (i) the present
value of all benefits under such Plan exceeds (ii) the
fair market value of all Plan assets allocable to such
benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member
of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Value" means, with respect to any Engineered Property
(including, without limitation, a Mortgaged Property),
the Discounted Present Value of Future Net Revenue from
such Engineered Property as set forth in the then most
recent Engineer's Report.
"Wainoco" means Wainoco Oil & Gas Company, a Delaware
Corporation, and its successors.
"Wainoco Credit Agreement" means that certain Amended and
Restated Credit and Guaranty Agreement dated as of May
31, 1994 and made among Wainoco, the Borrower, Morgan
Guaranty Trust Company of New York and the financial
institutions set forth therein, as the same may be
amended from time to time.
"1993 Form 10-K" means the Borrower's annual report on
Form 10-K for 1993, as filed with the Securities and
Exchange Commission (United States of America) pursuant
to the Securities Exchange Act of 1934.
1.2 Accounting Terms and Determinations
Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all
accounting determinations hereunder shall be made,
and all financial statements required to be
delivered hereunder shall be prepared in
accordance with U.S. generally accepted accounting
principles as in effect from time to time, applied
on a basis consistent (except for changes
concurred in by the Borrower's independent public
accountants) with the most recent audited
consolidated financial statements of the Borrower
and its Consolidated Subsidiaries delivered to the
Banks; provided that, if the Borrower notifies the
Agent that the Borrower wishes to amend any
covenant in Article 5 to eliminate the effect of
any change in generally accepted accounting
principles on the operation of such covenant (or
if the Agent notifies the Borrower that the
Required Banks wish to amend Article 5 for such
purpose), then the Borrower's compliance with such
covenant shall be determined on the basis of
generally accepted accounting principles in effect
immediately before the relevant change in
generally accepted accounting principles became
effective, until either such notice is withdrawn
or such covenant is amended in a manner
satisfactory to the Borrower and the Required
Banks.
1.3 Headings and Agreement References
(a) The division of this Agreement into Articles and
Sections, the inclusion of a table of contents and
the insertion of headings is for convenience of
reference only and shall not affect the
construction or interpretation of this Agreement.
(b) The term "this Agreement", "hereof", "hereunder"
and similar expressions refer to this Agreement
and not to any particular Article, Section or
other portion hereof and includes any amendments
or supplements hereto. Unless otherwise stated,
references herein to Articles and Sections are to
Articles and Sections of this Agreement.
1.4 Number and Gender
Words importing the singular number shall include
the plural and vice versa, and words importing gender shall
include the masculine, feminine and neuter genders.
1.5 Per Annum Calculations; Currency; Time;
"Including"
(a) Unless otherwise stated, interest specified as a
rate "per annum" shall be calculated using the
nominal rate method, and not the effective rate
method, on the basis of a calendar year of 365
days or 366 days, as the case may be.
(b) Unless otherwise stated, references in this
Agreement to dollar amounts or $ shall be deemed
to be references to Canadian Dollars.
(c) Unless otherwise stated, references to time shall
mean local time in Toronto, Ontario.
(d) The word "including" shall not be construed to
limit or restrict the generality of the matter
that precedes it.
1.6 Exhibits
The following are the Exhibits annexed hereto:
Exhibit A - Form of Note
Exhibit B - Opinion of U.S. counsel for
the Borrower
Exhibit C - Opinion of Burnet, Duckworth &
Palmer, Alberta counsel for the
Borrower
Exhibit D - Opinion of Macleod Dixon, counsel
for the Agent
Exhibit E - Form of Assignment and Assumption
Exhibit F - Form of Security Amending Documents
ARTICLE 2
THE CREDITS
2.1 Commitments to Lend
(a) During the Revolving Credit Period each Bank
severally agrees, on the terms and conditions set
forth in this Agreement, to lend to the Borrower
from time to time amounts not to exceed in the
aggregate at any one time outstanding the amount
of its Commitment; provided, that the Borrower may
borrow on any date during the Revolving Credit
Period only the Canadian Equivalent of an amount
which, together with the aggregate principal
amount of the outstanding Loans, does not exceed
the Loan Limit. Each Borrowing under this
subsection (a) shall be in an aggregate principal
amount of Cdn. $1,000,000 for Domestic Advances
and U.S. $1,000,000 for Euro-Dollar Advances, or
any larger multiple of Cdn. or U.S. $100,000, as
the case may be (except that the Canadian
Equivalent of any such Borrowing may be in the
aggregate amount of the unused Commitments), and
shall be made from the Banks severally and ratably
in proportion to their respective Commitments.
Within the foregoing limits, the Borrower may
borrow under this subsection (a), repay, or to the
extent permitted by Section 2.9, prepay Loans and
reborrow at any time during the Revolving Credit
Period under this subsection (a). The Commitments
shall terminate at the close of business on the
Termination Date.
(b) On or as promptly as practicable after each date
on which the Agent shall receive (i) an Engineer's
Report pursuant to Sections 5.14 (a) or (c), (ii)
a request by the Borrower for a redetermination of
the Borrowing Base in conjunction with a proposed
sale, lease or other transfer of Engineered
Properties in lieu of a reduction otherwise
required by the provisions of the definition of
Borrowing Base or (iii) a request by the Borrower
to increase the Borrowing Base through the
addition of incremental Engineered Properties,
which request shall be accompanied by an
Engineer's Report covering the properties proposed
to be added and such other information relating
thereto as the Agent or any Bank may reasonably
request, the Agent shall determine the proposed
amount of the Borrowing Base and notify the Banks
of its determination. If each of the Banks shall
approve such determination, the Agent shall
promptly after receiving such approval notify the
Borrower of the amount of the Borrowing Base so
determined whereupon the Borrowing Base shall
equal the amount so notified. If any Bank shall
object to such determination, then the Banks shall
consult among themselves to determine a mutually
acceptable Borrowing Base, and the amount so
agreed upon by all Banks shall be the Borrowing
Base and the Agent shall promptly notify the
Borrower thereof. In any event, the determination
of the Borrowing Base in accordance with this
Section 2.1(b) shall be accomplished within 45
days of the delivery of the related Engineer's
Report or request for redetermination. The
determination of the amount of the Borrowing Base
shall be based on the information relating to the
Engineered Properties set forth in the Engineer's
Report but subject to the customary practices and
standards of each Bank in determining the maximum
amount that it is willing to lend to a borrower on
the basis of the future net revenues of the
hydrocarbon producing properties of such borrower.
In the determination of the Borrowing Base, the
Banks will have full discretion to determine which
(if any) non-producing and undeveloped Hydrocarbon
reserves will be included. The Banks may also
make such adjustment as they deem appropriate for
the Debt of the Borrower (other than the Debt of
the Borrower hereunder) and its Subsidiaries,
including without limitation the Senior Notes.
2.2 Method of Borrowing
(a) The Borrower shall give the Agent notice (a
"Notice of Borrowing") no later than 12:00 Noon on
the date of each Domestic Borrowing and at least
three Euro-Dollar Business Days before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be
a Domestic Business Day in the case of a
Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar
Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such
Borrowing are to bear interest initially
at the Prime Rate as adjusted herein or
the Euro-Dollar Rate, and
(iv) in the case of a Euro-Dollar Borrowing,
the duration of the initial Interest
Period applicable thereto, subject to the
provisions of the definition of Interest
Period.
(b) Upon receipt of a Notice of Borrowing, the Agent
shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such
Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.
(c) Not later than 11:00 A.M. on the date of each
Euro-Dollar Borrowing and not later than 1:00 P.M.
on the date of each Domestic Borrowing, each Bank
shall make available its ratable share of such
Borrowing, in Canadian or U.S. Dollars, as the
case may be, available in Toronto, Ontario, to the
Agent at its address specified in or pursuant to
Section 9.1. Unless the Agent determines that any
applicable condition specified in Article 3 has
not been satisfied, the Agent will make the funds
so received from the Banks available to the
Borrower at the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such
Bank will not make available to the Agent such
Bank's share of such Borrowing, the Agent may
assume that such Bank has made such share
available to the Agent on the date of such
Borrowing in accordance with subsection (c) of
this Section 2.2 and the Agent may, in reliance
upon such assumption, make available to the
Borrower on such date a corresponding amount. If
and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank
and the Borrower severally agree to repay to the
Agent forthwith on demand such corresponding
amount together with interest thereon, for each
day from the date such amount is made available to
the Borrower until the date such amount is repaid
to the Agent, at a rate determined by the Agent
(such rate to be conclusive and binding on such
Bank or the Borrower, as the case may be) in
accordance with the Agent's usual banking practice
for advances to financial institutions of like
standing to such Bank. If such Bank shall repay
to the Agent such corresponding amount, such
amount so repaid shall constitute such Bank's Loan
included in such Borrowing for purposes of this
Agreement. If the Borrower shall repay to the
Agent such corresponding amount, nothing in this
Section 2.2(d) shall limit or affect any rights
the Borrower may have against such Bank.
2.3 Notes
(a) The Loans of each Bank shall be evidenced by a
single Note payable to the order of such Bank for
the account of its Applicable Lending Office in an
amount equal to the aggregate unpaid principal
amount of such Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Agent, request that its Domestic Loans and
Euro-Dollar Loans be evidenced by separate Notes.
Each such Note shall be in substantially the form
of Exhibit A hereto with appropriate modifications
to reflect the fact that it evidences solely
Domestic Loans or Euro-Dollar Loans, as the case
may be. Each reference in this Agreement to the
"Note" of such Bank shall be deemed to refer to
and include either or both of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.1(b), the Agent shall forward such Note
to such Bank. Each Bank shall record in its
records the date, amount and type of each Loan
made by it and the date and amount of each payment
of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in
connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the
foregoing information with respect to each such
Loan then outstanding; provided that the failure
of any Bank to make any such recordation or
endorsement shall not affect the obligations of
the Borrower hereunder or under the Notes. Each
Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to
and make a part of its Note a continuation of any
such schedule as and when required.
2.4 Maturity of Loans; Mandatory Prepayments
(a) The Borrower shall repay, and there shall become
due and payable, on each Principal Repayment Date,
an aggregate principal amount of the Loans equal
to the greater of (a) one-twentieth (1/20th) of
the aggregate principal amount of the Loans
outstanding at the end of the Revolving Credit
Period, and (b) 80% of the Net Proceeds from
Petroleum Operations for the quarter then ended,
and such amount shall constitute a reduction in
the Loan Limit; provided that in any event the
outstanding Loans shall be repaid in full not
later than the Maturity Date. Each such payment
shall be applied to such Group or Groups of Loans
as the Borrower may designate in the applicable
Notice of Borrowing or Notice of Interest Rate
Election (or, failing such designation, as
determined by the Agent), and shall be applied to
repay ratably the Loans of the Banks included in
such Group or Groups. If the amount of such
payment is greater than the amount referred to in
clause (a) of this Section 2.4, then the amount of
the excess shall not reduce the amount of any
subsequent prepayment required by this Section
until the Loans have been paid in full or result
in an increase in the Loan Limit. No optional
prepayment made pursuant to Section 2.9 after the
end of the Revolving Credit Period or contingent
prepayment made pursuant to Section 2.10 after the
end of the Revolving Credit Period shall reduce
the amount of any subsequent prepayment required
by this Section.
(b) If, due solely to exchange rate fluctuations, the
Canadian Equivalent of the aggregate principal
amount of the Loans is, for a period of five
consecutive Domestic Business Days, in excess of
the Loan Limit by an amount which is 5% or more of
the Loan Limit, the Borrower shall, if requested
by the Agent (and approved by the Required Banks),
forthwith repay on demand the Loans to the extent
of the amount by which the Loans are in excess of
the Loan Limit together with accrued interest
thereon to the date of such repayment, such that
the Canadian Equivalent of the aggregate principal
amount of the Loans, after such payment, is not in
excess of the Loan Limit.
(c) Subject to Sections 2.4(b) and 2.10(a), if at any
time the Canadian Equivalent of the aggregate
principal amount of the Loans exceeds the Loan
Limit, the Borrower shall immediately repay the
amount of such excess together with accrued
interest thereon to the date of such repayment,
such that the Canadian Equivalent of the aggregate
principal amount of the Loans, after such payment,
no longer exceeds the Loan Limit.
2.5 Interest Rates
(a) Each Domestic Loan shall bear interest on the
outstanding principal amount thereof, for each day
from the date such Loan is made until it becomes
due, at a rate per annum equal to the sum of 3/4
of 1% plus the Prime Rate for such day; provided
that if the Debt Ratio at the last day of any
fiscal quarter of the Borrower ending on or after
December 31, 1993 and on or prior to June 30, 1995
is greater than 15%, then, for each day during the
second succeeding fiscal quarter of the Borrower,
the above interest rate shall be reduced by 1/4 of
1% (e.g., if the Debt Ratio at December 31, 1994
is greater than 15%, as reflected in the
certificate required to be delivered pursuant to
Section 5.1(c) not later than March 31, 1995, then
a 1/4 of 1% reduction shall apply for the period
April 1, 1995 through June 30, 1995). Such
interest shall be payable monthly in arrears for
each Interest Period on the last day thereof and
on each date a Domestic Loan is converted to a
Euro-Dollar Loan, and shall be calculated on the
principal amount of each Domestic Loan and on the
basis of the actual number of days each such
Domestic Loan is outstanding in a year of 365 or
366 days, as the case may be. Changes in the
Prime Rate shall cause an immediate adjustment of
the interest rate applicable to each Domestic Loan
without necessity of any notice to the Borrower.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per
annum equal to the sum of the Margin plus the
applicable Adjusted London Interbank Offered Rate.
Such interest shall accrue on the principal amount
of each Euro-Dollar Loan and shall be payable in
arrears for each Interest Period on the last day
thereof and, if such Interest Period is longer
than three months, at intervals of three months
after the first day thereof, and shall be
calculated on the principal amount of each Euro-
Dollar Loan and on the basis of the actual number
of days each such Euro-Dollar Loan is outstanding
in a year of 360 days.
"Margin" means 1 3/4%; provided that if the Debt
Ratio at the last day of any fiscal quarter of the
Borrower ending on or after December 31, 1993 and
on or prior to June 30, 1995 is greater than 15%,
then, for each day during the second succeeding
fiscal quarter of the Borrower, the above
percentage shall be reduced by 1/4 of 1% (e.g., if
the Debt Ratio at December 31, 1994 is greater
than 15%, as reflected in the certificate required
to be delivered pursuant to Section 5.1(c) not
later than March 31, 1995, then a 1/4 of 1%
reduction shall apply for the period April 1, 1995
through June 30, 1995.)
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per
annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of
1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the
Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to
any Interest Period means the average (rounded
upward, if necessary, to the next higher 1/16 of
1%) of the respective rates per annum at which
deposits in U.S. Dollars are offered to each of
the Reference Banks in the London interbank market
at approximately 11:00 A.M. (London time) two
Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately
equal to the principal amount of the Euro-Dollar
Loan to be made by the Bank to which such Interest
Period is to apply and for a period of time
comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is
in effect on such day, as prescribed by the
applicable regulatory body for determining the
maximum reserve requirement (including any
supplemental and emergency reserves) applicable to
the Banks in respect of Eurocurrency funding
(currently referred to as "Eurocurrency
liabilities"). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on
and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
(c) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent
shall give prompt notice to the Borrower and the
Banks of each rate of interest so determined, and
its determination thereof shall be conclusive in
the absence of manifest error.
(d) If the Agent does not receive a timely quotation,
the Agent shall determine the relevant interest
rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or Banks
or, if none of such quotations is available on a
timely basis, the provisions of Section 8.1 shall
apply.
2.6 Fees
(a) Participation Fee. The Borrower shall pay on the
Effective Date to each Bank or at its direction
any unpaid portion of its participation fee in the
amount of 1% of the amount of its Commitment.
(b) Commitment Fee. During the Revolving Credit
Period, the Borrower shall pay to the Agent for
the accounts of the Banks ratably in proportion to
their Commitments a commitment fee at the rate of
1/2 of 1% per annum on the daily average amount by
which the aggregate amount of the Commitments
exceeds the Canadian Equivalent of the aggregate
outstanding principal amount of the Loans. Such
commitment fee shall accrue from and including the
Effective Date to but excluding the Termination
Date and shall be calculated on the basis of a 360
day year.
(c) Payments. Accrued commitment fees under this
Section shall be payable quarterly on each
Quarterly Date, and upon the date of termination
of the Commitments in their entirety and, if
later, the date the Loans shall be repaid in their
entirety.
2.7 Optional Termination or Reduction of Commitments
During the Revolving Credit Period, the Borrower
may, upon at least three Domestic Business Days' notice to the
Agent, (i) terminate the Commitments at any time, if no Loans are
outstanding at such time or (ii) ratably reduce from time to time
by an aggregate amount of Cdn. $3,000,000 or any larger multiple
thereof, the aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans.
2.8 Method of Electing Interest Rates
(a) The Loans included in each Borrowing shall bear
interest initially at the type of rate specified
by the Borrower in the applicable Notice of
Borrowing. Thereafter, the Borrower may from time
to time elect to change or continue the type of
interest rate borne by each Group of Loans
(subject in each case to the provisions of Article
8), as follows:
(i) if such Loans are Domestic Loans, the
Borrower may elect to convert such Loans
to Euro-Dollar Loans as of any Euro-Dollar
Business Day; or
(ii) if such Loans are Euro-Dollar Loans, the
Borrower may elect to convert such Loans
to Domestic Loans or elect to continue
such Loans as Euro-Dollar Loans for an
additional Interest Period, in each case
effective on the last day of the then
current Interest Period applicable to such
Loans;
provided that if the conversion of the whole or
any part of any type of existing Loan into another
type of Loan involves a change in currency, the
principal amount of the new Loan shall be the
Canadian Equivalent or U.S. Equivalent, as the
case may be, of the existing Loan or relevant part
thereof.
Each such election shall be made by delivering a
notice (a "Notice of Interest Rate Election") to
the Agent at least three Euro-Dollar Business Days
before the conversion or continuation selected in
such notice is to be effective. A Notice of
Interest Rate Election may, if it so specifies,
apply to only a portion of the aggregate principal
amount of the relevant Group of Loans; provided
that (i) such portion is allocated ratably among
the Loans comprising such Group, (ii) the portion
to which such Notice applies is Cdn. or U.S.
$1,000,000 or any larger multiple of Cdn. or U.S.
$500,000, as the case may be, and (iii) the
remaining portion to which it does not apply, is
at least Cdn. or U.S. $1,000,000, as the case may
be.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to
which such notice applies;
(ii) the date on which the conversion or
continuation selected in such notice is to
be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to
be converted, the new type of Loans and,
if such new Loans are Euro-Dollar Loans,
the duration of the initial Interest
Period applicable thereto; and
(iv) if such Loans are to be continued as
Euro-Dollar Loans for an additional
Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of
Interest Rate Election shall comply with the
provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election
from the Borrower pursuant to Section 2.8(a), the
Agent shall promptly notify each Bank of the
contents thereof and such notice shall not
thereafter be revocable by the Borrower. If the
Borrower fails to deliver a timely Notice of
Interest Rate Election to the Agent for any Group
of Euro-Dollar Loans, such Loans shall be
converted to a Domestic Loan on the last day of
the then current Interest Period applicable
thereto.
2.9 Optional Prepayments
(a) The Borrower may, upon at least one Domestic
Business Day's notice to the Agent, prepay
Domestic Loans in whole at any time, or from time
to time in part in amounts aggregating Cdn.
$1,000,000 or any larger multiple of Cdn.
$500,000, by paying the principal amount to be
prepaid together with accrued interest thereon to
the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the
Domestic Loans of the Banks.
(b) The Borrower may, upon at least three Euro-Dollar
Business Days' notice to the Agent prepay the
Loans comprising a Group of Euro-Dollar Loans on
the last day of any Interest Period applicable to
such Group, in whole at any time, or from time to
time in part in amounts aggregating U.S.
$1,000,000 or any larger multiple of U.S.
$500,000, by paying the principal amount to be
prepaid together with accrued interest thereon to
the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the
Loans of the several Banks included in such Group.
(c) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each
Bank of the contents thereof and of such Bank's
ratable share of such prepayment and such notice
shall not thereafter be revocable by the Borrower,
and the principal amount of each prepayment made
after the Termination Date shall constitute a
reduction in the Loan Limit.
2.10 Contingent Prepayments
(a) If at any time a Borrowing Base Excession exists,
the Borrower shall forthwith notify the Agent and
the Banks. On or before the date falling 90 days
after the date of inception of such Borrowing Base
Excession, the Borrower shall remedy such
Borrowing Base Excession through (i) prepaying
together with accrued interest thereon to the date
of prepayment such principal amount of the Loans
as may be necessary to reduce the outstanding
principal amount thereof to the Borrowing Base at
the date of prepayment, (ii) increasing the
Borrowing Base through the addition of incremental
Engineered Properties in accordance with Section
2.1(b)(iii), or (iii) by a combination of clauses
(i) and (ii) above.
(b) If at any time the Borrower receives insurance
proceeds in an amount greater than U.S. $500,000
pursuant to insurance effected in accordance with
Section 5.3(e), the Borrower shall forthwith
notify the Agent of such receipt. If within 15
days after receipt the Borrower shall not have
expended such proceeds or committed to expend an
amount equivalent thereto for the restoration or
replacement of the asset in respect of which such
payment was made, then the Borrower shall
forthwith prepay together with accrued interest
thereon to the date of prepayment an aggregate
principal amount of the Loans equal to the amount
of such proceeds, and the principal amount of each
prepayment made after the Termination Date shall
constitute a reduction in the Loan Limit.
2.11 General Provisions as to Payments
(a) The Borrower shall make each payment of principal
of, and interest on, the Loans and of commitment
fees and other amounts payable hereunder, not
later than 11:00 A.M. on the date when due, in
U.S. Dollars if payable in respect of a
Euro-Dollar Loan, or in Canadian Dollars if
payable in respect of all other amounts hereunder,
to the Agent at its address referred to in Section
9.1. The Agent will promptly distribute to each
Bank its proper share (if any) of each such
payment received by the Agent for the account of
any or all of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans
or of commitment fees shall be due on a day which
is not a Domestic Business Day, the date for
payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the
Euro-Dollar Loans shall be due on a day which is
not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar
month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business
Day. If the date for any payment of principal is
extended by operation of law or otherwise,
interest thereon shall be payable for such
extended time.
(b) Unless the Agent shall have received notice from
the Borrower prior to the date on which any
payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the
Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause
to be distributed to each Bank on such due date an
amount equal to the amount then due such Bank. If
and to the extent that the Borrower shall not have
so made such payment, each Bank shall repay to the
Agent forthwith on demand such amount distributed
to such Bank together with interest thereon, for
each day from the date such amount is distributed
to such Bank until the date such Bank repays such
amount to the Agent, at a rate determined by such
Bank in accordance with its usual banking practice
in respect of deposits of amounts comparable to
the amount of such payment at the time such
payment is to be made.
(c) To the maximum extent permitted by law, the
Borrower shall make all payments required
hereunder, whether by way of principal, interest
or otherwise, without regard to any defense,
counterclaim or right of set-off available to the
Borrower.
2.12 Funding Losses
If the Borrower makes any payment of principal
with respect to any Euro-Dollar Loan or any Euro-Dollar Loan is
converted to a Domestic Loan (pursuant to Article 6 or 8 or
otherwise) on any day other than the last day of the Interest
Period applicable thereto, or if the Borrower fails to borrow or
prepay any Euro-Dollar Loans after notice has been given to any
Bank in accordance with Section 2.2(b) or 2.9(c), the Borrower
shall reimburse each Bank within 15 days after demand for any
resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without
limitation) any loss incurred in obtaining, liquidating or
employing deposits from third parties, but excluding loss of
Margin for the period after any such payment or failure to
borrow, provided that such Bank shall have delivered to the
Borrower a certificate as to the amount of such loss or expense,
which certificate shall be conclusive in the absence of manifest
error.
2.13 General Provisions as to Interest; Overdue
Interest; and Fees
(a) Whenever interest is to be calculated on the basis
of a year of 360 or 365 days, the yearly rate of
interest to which the rate determined pursuant to
such calculation is equivalent is the rate so
determined multiplied by the actual number of days
in the twelve month period commencing on the first
day of the period for which such calculation is
made and divided by 360 or 365, as applicable.
(b) Notwithstanding any other provision hereof, in the
event that any amount due hereunder (including,
without limitation, any interest payment) is not
paid when due (whether by acceleration or
otherwise), the Borrower shall and hereby agrees
to pay interest on such unpaid amount (including,
without limitation, interest on interest), if and
to the fullest extent permitted by law, from the
date that such amount is due until the date that
such amount is paid in full (but excluding the
date of such payment if the payment is made before
11:00 A.M. at the place of payment on the date of
such payment), and such interest shall accrue
daily, be calculated and compounded on the last
Domestic Business Day of each calendar month and
be payable in the currency of the relevant Loan or
other amount on demand, after as well as before
maturity, default and judgment, at a rate per
annum that is equal to:
(i) if such amount relates to a Domestic Loan,
the interest rate applicable to Domestic
Loans from time to time;
(ii) if such amount relates to a Euro-Dollar
Loan and the relevant time is
(A) during the Interest Period of the
Euro-Dollar Loan, the interest rate
applicable to such Euro-Dollar Loan
during such Interest Period; and
(B) after the Interest Period of the
Euro-Dollar Loan, the interest rate
applicable to a Domestic Loan; and
(iii) in all other cases, the interest rate
applicable to Domestic Loans from time to
time.
(c) All interest, fees and other amounts payable by
the Borrower hereunder shall accrue daily, be
computed as described herein, and be payable both
before and after demand, maturity, default and
judgement.
(d) In no event shall any interest, fees or other
amounts payable hereunder exceed the maximum rate
permitted by law. In the event any such interest,
fee or other amount exceeds such maximum rate,
such interest, fee or other amount shall be
reduced to the maximum rate recoverable under law
assuming the parties had agreed to such amount by
contract.
ARTICLE 3.
CONDITIONS AND SECURITY
3.1 Effectiveness
This Amended Agreement shall become effective on
the date that each of the following conditions shall have been
satisfied:
(a) receipt by the Agent of counterparts hereof signed
by each of the parties hereto (or, in the case of
any party as to which an executed counterpart
shall not have been received, receipt by the Agent
in form satisfactory to it of telegraphic, telex
or other written confirmation from such party of
execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Bank
of a duly executed Note dated on or before the
Effective Date complying with the provisions of
Section 2.3;
(c) receipt by the Agent of an opinion of U.S. counsel
for the Borrower, substantially in the form of
Exhibit B hereto and covering such additional
matters relating to the transactions contemplated
hereby as the Required Banks may reasonably
request;
(d) receipt by the Agent of an opinion of Burnet,
Duckworth & Palmer, Alberta counsel for the
Borrower, substantially in the form of Exhibit C
hereto and covering such additional matters
relating to the transactions contemplated hereby
as the Required Banks may reasonably request;
(e) receipt by the Agent of an opinion of Macleod
Dixon, counsel for the Agent, substantially in the
form of Exhibit D hereto and covering such
additional matters relating to the transactions
contemplated hereby as the Required Banks may
reasonably request;
(f) receipt by the Agent of a duly executed copy of
each of the Security Amending Documents;
(g) receipt by the Agent of all documents or opinions
it may reasonably request relating to the
existence of the Borrower, the corporate authority
for and the validity of the Financing Documents,
the Borrower's title to the Mortgaged Properties,
and any other matters relevant hereto, all in form
and substance satisfactory to the Agent;
(h) receipt by the Agent of title opinions previously
delivered to the Departing Bank and the Agent
redirected to the New Banks; and
(i) receipt by the Agent of transfers of caveats and
security notices, financing change statements and
U.C.C. Form 3 statements executed by the Departing
Bank and such other documentation reasonably
requested by the Agent to reflect the assignment
by the Departing Bank of its interest in this
Agreement and all registrations and filings made
at public agencies and registries in Canada and
the United States in respect thereof;
On the Effective Date, the Departing Bank shall
assign and sell, and by its execution and delivery hereof the
Departing Bank does, subject to the effectiveness hereof, hereby
assign and sell its entire right, title and interest in and to
(i) the Original Credit Agreement, (ii) all loans and commitments
outstanding under the Original Credit Agreement, (iii) all notes
held by the Departing Bank pursuant to the Original Credit
Agreement, (iv) the Existing Security Documents and (v) all
rights and benefits to be derived from any of the foregoing (the
"Transferred Property"), to the Transferees severally in such
proportions as may be necessary in order that, after giving
effect thereto, the Transferred Property shall be held by the
Transferees in proportion to their respective Commitments set
forth on the signature pages of this Amended Agreement; and the
Transferees, severally as aforesaid, shall accept, and by its
execution and delivery hereof each Transferee hereby does,
subject to the effectiveness hereof, accept, such assignment and
in consideration thereof each Transferee shall pay to the Agent
for the account of the Departing Bank on the Effective Date an
amount equal to its several share of the aggregate principal
amount of the loans of the Departing Bank outstanding on the
Effective Date.
The Departing Bank hereby represents and warrants
to and in favour of the New Banks that:
(i) it has not assigned, sold, transferred,
mortgaged, charged or encumbered the
Transferred Property; and
(ii) all necessary action has been taken by it
to authorize the execution and delivery of
this Amended Agreement.
Subject to the foregoing, the assignment herein contained shall
be without any representation or warranty on the part of and
without recourse to the Departing Bank:
The Departing Bank shall not have any
responsibility with respect to the solvency, financial condition,
or statements of the Borrower, or the validity and enforceability
of the obligations of the Borrower in respect of this Amended
Agreement or any Note. Each Bank acknowledges that it has,
independently and without reliance on the Departing Bank, and
based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Amended Agreement and will continue to be responsible
for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
On the Effective Date, the following transactions
shall occur simultaneously:
(i) the Borrower shall pay to the Departing
Bank in its capacity as agent under the
Original Credit Agreement, interest and
fees accrued to the Effective Date and any
other amounts payable by it under the
Original Credit Agreement to be
distributed by the Departing Bank in
accordance therewith;
(ii) the Original Credit Agreement shall be
automatically amended and restated in its
entirety to read as set forth herein; and
(iii) the New Banks shall become parties to the
Agreement with Commitments as set forth on
the signature pages of this Amended
Agreement and the Departing Bank shall
cease to be a party to this Agreement and
its commitment under the Original Credit
Agreement shall terminate.
On and after the Effective Date, the rights and
obligations of the parties hereto shall be governed by this
Amended Agreement; provided the rights and obligations of the
parties to the Original Credit Agreement with respect to the
period prior to the Effective Date shall continue to be governed
by the provisions of the Original Credit Agreement. The note
delivered to each bank under the Original Credit Agreement shall
be replaced and the Notes under this Amended Agreement shall be
given in substitution therefor. Each Continuing Bank and
Departing Bank shall deliver to the Agent the note delivered to
it under the Original Credit Agreement, which the Agent shall
mark "Renewed" and shall hold as additional evidence of the
indebtedness of the Borrower hereunder. The Agent shall promptly
notify the Borrower and the Banks of the Effective Date, and such
notice shall be conclusive and binding on all parties hereto.
3.2 Indebtedness under the Original Credit Agreement
On the Effective Date but subject to the
conditions set forth in Section 3.1 hereof, the Libor Loans and
Floating Rate Loans, as such terms are defined under the Original
Credit Agreement, outstanding thereunder shall be deemed to be
Euro-Dollar Loans or Domestic Loans, respectively, under this
Amended Agreement, it being the intention of the parties hereto
that (i) all indebtedness evidenced by the notes under the
Original Credit Agreement on the Effective Date shall thereafter
be solely evidenced by the Notes, and (ii) the loans outstanding
under the Original Credit Agreement on the Effective Date shall
be deemed to be outstanding under this Agreement, having Interest
Periods identical to the corresponding interest periods under the
Original Credit Agreement and bearing interest as provided for
herein.
3.3 Borrowings
The obligation of any Bank to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.2;
(b) the fact that, immediately after such Borrowing,
the Canadian Equivalent of the aggregate
outstanding principal amount of the Loans will not
exceed the Loan Limit;
(c) the fact that with respect to each Bank,
immediately after such Borrowing, the Canadian
Equivalent of the aggregate outstanding principal
amount of the Loans owing to such Bank will not
exceed its Commitment;
(d) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be
continuing; and
(e) the fact that the representations and warranties
of the Borrower contained in the Financing
Documents shall be true on and as of the date of
such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of such
Borrowing as to the facts specified in clauses (b), (c), (d) and
(e) of this Section.
3.4 Security
(a) As continuing collateral security for the
Outstandings, the Borrower has previously
delivered the Existing Security Documents and will
execute and deliver to and in favour of the Agent,
to and for the benefit of the Banks, the following
additional security documents:
(i) Debenture Amending Agreement amending that
certain Fixed Charge Demand Debenture
dated October 2, 1991;
(ii) Deposit Amending Agreement amending that
certain Deposit Agreement dated October 2,
1991; and
(iii) General Security Amending Agreement
amending that certain General Security
Agreement dated October 2, 1991;
all in the form attached as Exhibit F hereto.
(b) The parties acknowledge that the Existing Security
Documents are and shall continue to be outstanding
and are and shall form security for all
Outstandings under this Agreement.
(c) Each of the Security Documents has been or shall
be registered or perfected in all such
jurisdictions as may be required, in the
reasonable opinion of the Agent or its counsel, to
preserve and protect the priority of the Security
Documents.
(d) Forthwith upon request of the Agent or any Bank,
the Borrower shall promptly provide all such
documents and information and perform all such
acts as the Agent or any Bank or its counsel may
reasonably request in order to establish or
maintain the validity, perfection or priority of
the Security Documents including the creation of
further fixed charge security over any Mortgaged
Properties hereafter acquired or not specifically
described in the Security Documents or
misdescribed in the Security Documents.
(e) Each of the Security Documents shall for all
purposes be treated as a separate and continuing
collateral security and shall be deemed to have
been given in addition to and not in place of any
other Security Document or any other Liens now or
hereafter acquired by the Agent or any Bank.
(f) Subject to Article 7, the Agent may grant
extensions of time or other indulgences, acquire
and release the Security Documents, accept
compromises, grant releases and discharges and
otherwise deal with the Borrower and other Persons
and with the Security Documents as the Agent may
see fit, without prejudice to any other rights or
recourse the Agent may have under this Agreement
or any of the Security Documents against the
Borrower.
(g) The Security Documents shall be effective, and the
undertakings as to the Security Documents herein
or in any document hereunder shall be continuing,
whether the monies hereby or thereby secured or
any part thereof shall be advanced before or after
or at the same time as the creation of any such
Security Documents or before or after or upon the
date of execution of any amendments to or
restatements of this Agreement, and shall not be
affected by any payments or by any indebtedness
fluctuating from time to time.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
4.1 Corporate Existence and Power
The Borrower is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and is duly registered to carry on
business in each jurisdiction in which it owns property or
carries on business, and the Borrower has all corporate powers
and all material governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted.
4.2 Corporate and Governmental Authorization; No
Contravention
The execution, delivery and performance by the
Borrower of this Agreement, the Security Documents and the Notes
are within its corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official
(except such filings as may be necessary to perfect the Liens of
the Security Documents) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or
of the certificate of incorporation or by-laws of the Borrower or
of any agreement, judgment, injunction, order, decree or other
instrument binding upon it or any Subsidiary, or result in the
creation or imposition of any Lien on any asset of the Borrower
or any of its Subsidiaries (other than the Liens created by the
Security Documents).
4.3 Binding Effect
This Agreement, the Security Documents and the
Notes constitute or, when executed and delivered in accordance
with this Agreement will constitute, valid and binding
obligations of the Borrower, in each case enforceable against it
in accordance with their respective terms except (i) as the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally, (ii) as
rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability,
(iii) that certain of the remedial provisions of the Security
Documents may be limited by applicable law, although such
limitations do not in the opinion of the Borrower make the
remedies provided for therein (taken as a whole) inadequate for
the practical realization of the benefits intended to be afforded
thereby.
4.4 Financial Information
(a) The consolidated financial statements of the
Borrower and its Consolidated Subsidiaries as of
December 31, 1993 which shall include the related
consolidated statements of income, shareholders'
equity and cash flows for the fiscal year then
ended, reported on by Arthur Andersen & Co. and
set forth in the Borrower's 1993 Form 10-K, a copy
of which has been delivered to each of the Banks,
fairly present, in conformity with generally
accepted accounting principles, the consolidated
financial position of the Borrower and its
Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash
flows for such fiscal year.
(b) Since December 31, 1993 there has been no material
adverse change in the business, financial
position, results of operations or prospects of
the Borrower and its Consolidated Subsidiaries,
considered as a whole.
4.5 Litigation
There is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against
or affecting, the Borrower or any of its Subsidiaries before any
court or arbitrator or any governmental body, agency or official
in which there is a reasonable possibility of an adverse decision
which could materially adversely affect the business,
consolidated financial position or consolidated results of
operations of the Borrower and its Consolidated Subsidiaries or
which in any manner draws into question the validity of any of
the Financing Documents.
4.6 Compliance with ERISA
Each member of the ERISA Group has fulfilled its
obligations under the minimum funding standards of ERISA and the
U.S. Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable
provisions of ERISA and the U.S. Internal Revenue Code with
respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412
of the U.S. Internal Revenue Code in respect of any Plan, (ii)
failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has
resulted or could result in the imposition of a Lien or the
posting of a bond or other security under ERISA or the U.S.
Internal Revenue Code or (iii) incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA.
4.7 Environmental Matters
In the ordinary course of its business, the
Borrower conducts an ongoing review of the effect of
Environmental Laws on the business, operations and properties of
the Borrower and its Subsidiaries, in the course of which it
identifies and evaluates associated liabilities and costs
(including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of
or change in the nature of operations conducted thereat, any
costs or liabilities in connection with off-site disposal of
wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review, the
Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with
Environmental Laws, are unlikely to have a material adverse
effect on the business, financial condition, results of
operations or prospects of the Borrower and its Consolidated
Subsidiaries, considered as a whole.
4.8 Taxes
The Borrower and its Subsidiaries have filed all
Canadian federal and provincial, U.S. federal and state and all
other income tax returns and all other material tax returns which
are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received
by the Borrower or any Subsidiary. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
4.9 Subsidiaries
Each of the Borrower's corporate Subsidiaries is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and
has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted.
4.10 Regulation
The Borrower is not subject to regulation under
the U.S. Public Utility Holding Company Act of 1935, as amended,
the U.S. Investment Company Act of 1940, as amended, or any other
federal, state or provincial law or regulation that limits the
incurrence by the Borrower or any Subsidiary of Debt, including,
without limitation, laws relating to common or contract carriers
or the sale of electricity, gas, steam or other public utility
services.
4.11 Full Disclosure
All information heretofore furnished by the
Borrower to the Agent or any Bank for purposes of or in
connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by the
Borrower to the Agent or any Bank will be, true and accurate in
all material respects on the date as of which such information is
stated or certified. The Borrower has disclosed to the Banks in
writing any and all facts which materially and adversely affect
or may affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the
Borrower and its Consolidated Subsidiaries, taken as a whole, or
the ability of the Borrower to perform its obligations under any
of the Financing Documents.
4.12 Mortgaged Properties
The Borrower has good and marketable title to all
Mortgaged Properties subject to no prior or equal Liens except
Liens permitted under Section 5.10.
4.13 Liens of the Security Documents
The Security Documents create valid Liens against
the Mortgaged Properties purported to be subjected thereto
securing the payment of the obligations of the Borrower under the
Financing Documents and all other obligations purported to be
secured thereby subject to no prior or equal Liens except Liens
permitted under Section 5.10
4.14 Reserve Data and Projections
The statements and conclusions as to oil and gas
reserves and forecast results included in the Initial Engineer's
Reports are, and all such information included in any future
Engineer's Report will be, based upon the best information
available to the Borrower at the time such statements were or are
made and take or will take into consideration all information
which, in the reasonable judgment of the Borrower, was or is
believed to be material at the time (determined in accordance
with standards customarily applicable to professionals in the oil
and gas industry), it being understood that such statements and
conclusions are necessarily based upon professional opinions,
estimates and projections, and the Borrower does not warrant that
such opinions, estimates and projections will ultimately prove to
have been accurate.
4.15 Production Penalties
Except as considered in the Initial's Engineer's
Report, none of the wells on the Engineered Properties are
subject to a production penalty of any nature, and it has
received no notice of, and is not otherwise aware of, any
impending change in statutorily imposed or sanctioned production
allowables currently applicable to any of the wells, and (except
as advised by the Borrower with respect to the Initial Engineer's
Report prior to the Banks' determination of the Borrowing Base
with reference thereto) neither it nor any party acting on its
behalf is obligated to deliver petroleum or natural gas allocable
to the Engineered Properties to any party having a value in
excess of U.S. $500,000 in aggregate without in due course
thereafter receiving and being entitled to retain full payment at
current market prices therefore.
4.16 Conversion
Except as considered in the Initial Engineer's
Report, none of the interests of the Borrower in the Engineered
Properties are subject to reduction by virtue of the conversion
or other alteration of any third party interest relating thereto.
4.17 Operations
The Mortgaged Property has been and will at all
times be operated in accordance with good oil and gas industry
practice and in accordance with all applicable laws and
regulations, and in accordance with the terms and conditions of
all material agreements relating thereto; all wells on the lands
which should, in accordance with good oil and gas industry
practice or applicable laws, have been abandoned, have been
properly plugged and abandoned in accordance with good industry
practices and all applicable laws.
ARTICLE 5.
COVENANTS
The Borrower hereby covenants and agrees, so long
as any Bank has any Commitment hereunder or any amount payable
hereunder or under any Note remains unpaid:
5.1 Information
The Borrower will deliver to each of the Banks:
(a) as soon as available and in any event within 90
days after the end of each fiscal year,
consolidated financial statements of the Borrower
and its Consolidated Subsidiaries as of the end of
such fiscal year prepared in accordance with
generally accepted accounting principles which
shall include the related consolidated statements
of income, shareholders' equity and cash flows for
such fiscal year, setting forth in each case in
comparative form the figures for the previous
fiscal year, such consolidated financial
statements of the Borrower shall be audited by
Arthur Andersen & Co. or other independent public
accountants of nationally recognized standing and
such consolidated financial statements of the
Borrower shall be certified as to fairness of
presentation, generally accepted accounting
principles and consistency by the chief financial
officer or the chief accounting officer of the
Borrower;
(b) as soon as available and in any event within 45
days after the end of each of the first three
quarters of each fiscal year, consolidated
financial statements of the Borrower and its
Consolidated Subsidiaries as of the end of such
quarter prepared in accordance with generally
accepted accounting principles which shall include
the related consolidated statements of income and
cash flows for such quarter and for the portion of
the fiscal year ended at the end of such quarter,
setting forth in each case in comparative form the
figures for the corresponding quarter and the
corresponding portion of the previous fiscal year,
all certified (subject to normal year-end
adjustments) as to fairness of presentation,
generally accepted accounting principles and
consistency by the chief financial officer or the
chief accounting officer of the Borrower;
(c) simultaneously with the delivery of each set of
financial statements referred to in Sections
5.1(a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer
of the Borrower (i) setting forth in reasonable
detail the calculations required to establish
whether the Borrower was in compliance with the
requirements of Sections 5.13, 5.17, 5.18 and 5.19
on the date of such financial statements, (ii)
stating whether any Default exists on the date of
such certificate and, if any Default then exists,
setting forth the details thereof and the action
which it is taking or proposes to take with
respect thereto and (iii) setting forth a
calculation of the Debt Ratio as of the date of
such financial statements;
(d) simultaneously with the delivery of the Borrower's
financial statements referred to in Section 5.1(a)
above, a statement of the firm of independent
public accountants which reported on such
statements (i) as to whether anything has come to
their attention to cause them to believe that any
Default existed on the date of such statements and
(ii) confirming the calculations set forth in the
officer's certificate delivered simultaneously
therewith pursuant to clause (c) above, except
with respect to Section 5.17;
(e) within five days after any officer of the Borrower
obtains knowledge of any Default, if such Default
is then continuing, a certificate of the chief
financial officer or the chief accounting officer
of the Borrower setting forth the details thereof
and the action which it is taking or proposes to
take with respect thereto;
(f) promptly upon the mailing thereof to the
shareholders of the Borrower generally, copies of
all financial statements, reports and proxy
statements so mailed;
(g) promptly upon filing or receipt thereof, each
regular or periodic report and any registration
statement, prospectus or written communication
(other than transmittal letters) in respect
thereof filed or received by the Borrower with or
from any securities exchange or the Securities and
Exchange Commission (United States of America) or
any successor agency;
(h) if and when any member of the ERISA Group
(i) gives or is required to give notice to the
PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given
or is required to give notice of any such
reportable event, a copy of the notice of such
reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under
Section 412 of the U.S. Internal Revenue Code, a
copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c)
of ERISA, a copy of such notice and other
information filed with the PBGC; (vi) gives notice
of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or
(vii) fails to make any payment or contribution to
any Plan or Multiemployer Plan or in respect of
any Benefit Arrangement or makes any amendment to
any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the
posting of a bond or other security, a certificate
of the chief financial officer or the chief
accounting officer of the Borrower setting forth
details as to such occurrence and action, if any,
which Borrower or applicable member of the ERISA
Group is required or proposes to take;
(i) simultaneously with each delivery of an Engineer's
Report pursuant to Section 5.14(a), but no more
than once a year, a forecast of general and
administrative expenses and FHI EBITDA and such
other information as the Agent may require in
order to confirm the Borrower's calculation of
Projected Cash Flow Available for Fixed Charges
pursuant to Section 5.17(c); and
(j) from time to time such additional information
regarding the financial position or business of
the Borrower and its Subsidiaries as the Agent, at
the request of any Bank, may reasonably request.
5.2 Payment of Obligations
The Borrower will pay and discharge, and will
cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and
liabilities, including, without limitation, tax liabilities,
except where the same may be contested in good faith by
appropriate proceedings, and will maintain, and will cause each
Subsidiary to maintain, in accordance with generally accepted
accounting principles, appropriate reserves for the accrual of
any of the same.
5.3 Maintenance and Development of Borrower Engineered
Properties and Other Property; Insurance
(a) The Borrower will, and will cause each Subsidiary
to, maintain the Engineered Properties operated by
such Person and related facilities and equipment
in good repair and condition, and from time to
time make all necessary and proper repairs,
replacements and renewals; and operate the same in
accordance with good oil field practice; and take
all necessary and advisable action to maintain,
protect and defend all the rights, titles and
interests of the Borrower or such Subsidiary to
the Engineered Properties.
(b) The Borrower will, and will cause each Subsidiary
to, take all actions available to such Person with
respect to any of the Engineered Properties which
are operated by operators other than the Borrower
or any Subsidiary, under applicable operating
agreements or arrangements or otherwise, which are
reasonably necessary to cause such operators to
operate prudently in accordance with good oil
field practice and to perform any such
undertakings required to be performed by such
operators; and perform its obligations (including,
without limitation, payment of its share of all
operating expenses) with respect thereto.
(c) The Borrower will keep, and will cause each
Subsidiary to keep, all property otherwise not
subject to Section 5.3(a) useful and necessary in
its business in good working order and condition,
ordinary wear and tear excepted.
(d) The Borrower will, and will cause each of its
Subsidiaries to, use all necessary and reasonable
efforts to cause each Engineered Property to be
developed in such manner, and will devote such
funds to such purpose, as would a reasonably
prudent Person similarly situated and (subject to
the foregoing) on a basis consistent with the most
recent Engineer's Report covering such Engineered
Property.
(e) The Borrower will, and will cause each of its
Subsidiaries to, maintain (either in the name of
the Borrower or in such Subsidiary's own name)
with financially sound and responsible insurance
companies, insurance on all their respective
properties in at least such amounts and against at
least such risks (and with such risk retention) as
are usually insured against by companies of
established repute engaged in the same or a
similar business in the jurisdiction in which the
Borrower or any Subsidiary operates, including
property insurance, public liability insurance for
bodily injury and property damage, well-control
coverage, automobile liability insurance, worker's
compensation coverage as required by law and
insurance against loss or damage by employee
dishonesty, theft, fire, lightning, hail,
windstorm, explosion, hazards, casualties and
other contingencies; and will furnish to the
Banks, upon request from the Agent, information
presented in reasonable detail as to the insurance
so carried.
5.4 Conduct of Business and Maintenance of Existence
The Borrower will continue, and will cause each
Subsidiary to continue, to engage in business of the same general
type as now conducted by the Borrower and its Subsidiaries, and
will preserve, renew and keep in full force and effect, and will
cause each Subsidiary to preserve, renew and keep in full force
and effect their respective corporate existence and their
respective rights, privileges and franchises necessary or
desirable in the normal conduct of business; provided that
nothing in this Section 5.4 shall prohibit (i) the merger of a
Subsidiary (other than the Borrower) with or into another Person
(other than the Borrower) if the corporation surviving such
consolidation or merger is a Subsidiary and if, in each case,
after giving effect thereto, no Default shall have occurred and
be continuing or (ii) the termination of the corporate existence
of any Subsidiary (other than the Borrower) if the Borrower in
good faith determines that such termination is in the best
interest of the Borrower and is not materially disadvantageous to
the Banks.
5.5 Compliance with Laws
The Borrower will comply, and cause each
Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements
of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations
thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
5.6 Inspection of Property, Books and Records
The Borrower will keep, and will cause each
Subsidiary to keep, proper books of record and account in which
full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives
of any Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
5.7 Debt
Neither the Borrower nor any Subsidiary will,
after the date hereof, create, incur or assume any Debt other
than (i) under the Financing Documents, (ii) in the case of the
Borrower and Wainoco, not to exceed U.S.$20,000,000 under the
Wainoco Credit Agreement, (iii) in the case of FHI and FHI
Subsidiaries, Debt not to exceed U.S.$50,000,000 under the FHI
Credit Agreement, (iv) in the case of the Borrower, loans or
advances by any Person (not being a Subsidiary) to it for working
capital purposes in an aggregate amount not exceeding U.S.
$2,500,000 at any one time, (v) loans or advances by the Borrower
to a Subsidiary or by a Subsidiary to the Borrower, (vi) in the
case of the Borrower, not to exceed U.S.$100,000,000 under the
Senior Notes, (vii) in the case of the Borrower, not to exceed
U.S.$46,000,000 under the Convertible Debentures, and (viii) in
the case of the Borrower, not to exceed U.S.$12,500,000 under the
Subordinated Debentures.
5.8 Restricted Payments
Neither the Borrower nor any Subsidiary will
declare or make any Restricted Payment other than, in the case of
the Borrower, any interest or sinking fund payment on or in
respect of the Convertible Debentures.
5.9 Investments
Neither the Borrower nor any Consolidated
Subsidiary will make or acquire any Investment in any Person
other than:
(a) present and future Investments in existing
Subsidiaries on the date hereof; or
(b) Temporary Cash Investments.
5.10 Negative Pledge
Neither the Borrower nor any Subsidiary will
create, assume or suffer to exist any Lien on any asset now owned
or hereafter acquired by it, except:
(a) any Lien arising pursuant to the Security
Documents;
(b) any Lien on any asset of the Borrower or Wainoco
securing Debt of the Borrower and Wainoco under
the Wainoco Credit Agreement;
(c) any Lien on any asset of FHI or any FHI Subsidiary
securing Debt of FHI or an FHI Subsidiary;
(d) Liens for taxes not yet due or the validity of
which is being contested in good faith by the
Borrower; provided that if so requested by the
Agent with the consent of the Required Banks,
there shall have been deposited with the Agent, a
court or the assessing authority security
satisfactory to the Agent and the Required Banks
for the payment of such amount;
(e) Liens arising in the ordinary course of its
business which (i) do not secure Debt or
Derivatives Obligations, (ii) do not secure any
payment obligation in an amount exceeding U.S.
$1,000,000 and (iii) do not in the aggregate
materially detract from the value of its assets or
materially impair the use thereof in the operation
of its business; and
(f) Liens on cash and cash equivalents securing
Derivatives Obligations, provided that the
aggregate amount of cash and cash equivalents
subject to such Liens may at no time exceed U.S.
$3,000,000.
5.11 Consolidations, Mergers and Sales of Assets
The Borrower will not (i) consolidate or merge
with or into any other Person or (ii) sell, lease or otherwise
transfer, directly or indirectly, all or any substantial part of
the assets of the Borrower and its Subsidiaries, taken as a
whole, to any other Person.
5.12 Use of Proceeds
The proceeds of the Loans made under this
Agreement will be used by the Borrower for its general corporate
purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any "margin stock" within the
meaning of Regulation X.
5.13 Value of Mortgaged Properties
If the aggregate Value of the Mortgaged Properties
at any time is less than 80% of the aggregate Value of the
Engineered Properties, the Borrower shall forthwith notify the
Agent. On or before the date falling 30 days after the date on
which the Borrower receives from the Independent Petroleum
Engineers the Engineer's Report indicating the aggregate Value of
the Mortgaged Properties has fallen below 80% of the aggregate
Value of the Engineered Properties, the Borrower shall execute
such further security, mortgages or charges as are necessary to
ensure that the aggregate Value of the Mortgaged Properties at
all times is greater than or equal to 80% of the aggregate Value
of the Engineered Properties.
5.14 Engineer's Reports
(a) Within 60 days after the end of each fiscal year
of the Borrower, the Borrower shall deliver to the
Agent and each of the Banks an Engineer's Report
for all Engineered Properties (separately
identifying each Engineered Property) prepared by
the Independent Petroleum Engineers, and setting
forth, with respect to each property covered, as
of the last date of such fiscal year:
(i) the projected gross and net volumes of
Hydrocarbons reasonably expected to be
produced from such Engineered Property, by
years, for each succeeding year during the
expected period of production from such
Engineered Property,
(ii) the Future Net Revenue and the Discounted
Present Value of Future Net Revenue from
such Engineered Property, by years, for
each succeeding year during the expected
period of production from such Engineered
Property, and
(iii) the aggregate amounts covered in items
(i) and (ii) above for all Engineered
Properties,
in each case showing in reasonable detail all
computations in connection therewith.
(b) At least 30 days before the end of each fiscal
year of the Borrower, the Agent will specify to
the Borrower the assumptions to be made by the
Independent Petroleum Engineers in preparing the
Engineer's Report with respect to such fiscal
year. Each such Engineer's Report should be based
upon (i) such specified assumptions, and (ii) such
other assumptions, not inconsistent with the
assumptions specified by the Agent, proposed by
the Borrower to the Banks within 30 days before
the end of such fiscal year and not disapproved by
the Required Banks within 15 days after the end of
such fiscal year.
(c) As promptly as practicable, and in any event,
within 90 days, after a request therefor by Banks
having 50% or more of the aggregate amount of the
Commitments (which request shall be made not more
than twice during any fiscal year), the Borrower
shall deliver to the Agent and each of the Banks a
Engineer's Report for all Engineered Properties,
prepared by the Independent Petroleum Engineers,
and setting forth, with respect to the properties
covered, as of the last day preceding such
request, the information described in items (i)
through (iii) of Section 5.14(a) above. At the
time of any request by the Required Banks under
this Section 5.14(c), the Agent will specify to
the Borrower the assumptions to be made by the
Independent Petroleum Engineers in preparing such
Engineer's Report.
5.15 Disposition of Borrower Engineered Properties
(a) The Borrower will not sell, lease or otherwise
transfer any of the Engineered Properties unless
(i) such transaction is on an arm's length basis
and for fair market value, (ii) such transaction
is permitted under Section 5.11, (iii) after such
transaction, no Default shall have occurred and be
continuing and (iv) such transaction and any
resulting reduction in the Borrowing Base shall
neither cause a Borrowing Base Excession to exist
nor increase the amount of an existing Borrowing
Base Excession.
(b) If the Borrower shall deliver to the Agent a
certificate certifying that any Mortgaged Property
has been sold or transferred in accordance with
Section 5.15(a), the Agent shall execute and
deliver all instruments reasonably requested by
the Borrower to effect and record a release of
such Mortgaged Property; provided that no such
release shall affect the Lien of any Security
Document on any other Mortgaged Property or the
rights and obligations of the parties with respect
thereto.
5.16 Transactions with Affiliates
The Borrower will not, and will not permit any
Subsidiary to, directly or indirectly, pay any funds to or for
the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service,
directly or indirectly, any Debt, or otherwise) in, lease, sell,
transfer or otherwise dispose of any assets, tangible or
intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement
with, any Affiliate; provided, however, that the foregoing
provisions of this Section shall not prohibit (a) the Borrower
from declaring or paying any lawful dividend so long as, after
giving effect thereto, no Default shall have occurred and be
continuing, (b) the Borrower or any Subsidiary from making sales
to or purchases from any Affiliate and, in connection therewith,
extending credit or making payments, or from making payments for
services rendered by any Affiliate, if such sales or purchases
are made or such services are rendered in the ordinary course of
business and on terms and conditions at least as favourable to
the Borrower or such Subsidiary as the terms and conditions which
would apply in a similar transaction with a Person not an
Affiliate, (c) the Borrower or any Subsidiary from making
payments of principal, interest and premium on any Debt of the
Borrower or any Subsidiary held by an Affiliate if the terms of
such Debt are substantially as favourable to the Borrower or such
Subsidiary as the terms which could have been obtained at the
time of the creation of such Debt from a lender which was not an
Affiliate, (d) the Borrower or any Subsidiary from participating
in, or effecting any transaction in connection with, any joint
enterprise or other joint arrangement with any Affiliate if the
Borrower or such Subsidiary participates in the ordinary course
of its business and on a basis no less advantageous than the
basis on which such Affiliate participates and (e) any creation,
incurrence of assumption of Debt permitted under subsection (vi)
of Section 5.7.
5.17 Minimum Fixed Charge Coverage
(a) At all times during each fiscal year of the
Borrower, the Projected Cash Flow Available for
Fixed Charges for such current fiscal year and
each of the succeeding two fiscal years will be
greater than 130% of the related Fixed Charges for
each such fiscal year.
(b) Within 15 days after delivery of a notice from the
Agent pursuant to Section 5.17(c), and
simultaneously with the delivery of each set of
financial statements referred to in Section
5.1(b), Wainoco will deliver to each of the Banks
a certificate of the chief financial officer or
the chief accounting officer of Wainoco setting
forth in reasonable detail the calculations
required to establish whether Wainoco was in
compliance with the requirements of
Section 5.17(a) at the date of delivery of such
certificate. Such certificate shall set forth a
calculation of Fixed Charges for the then current
fiscal year and each of the succeeding two fiscal
years determined as of the last day of the then
most recent ended fiscal year of the Borrower, in
the case of the first such certificate delivered
during any fiscal year, and as of the then most
recently ended fiscal quarter, in the case of each
subsequent certificate delivered during any fiscal
year, and shall be based upon the Projected Cash
Flow Available for Fixed Charges as determined
pursuant to Section 5.17(c), adjusted in the case
of such subsequently delivered certificates to
reflect FHI EBITDA for the eight consecutive
fiscal quarters then most recently ended and, if
either the Borrower or the Agent so elects by
notice to the other, to reflect changes in
currency exchange rates since the end of the most
recently ended fiscal year.
(c) On or as promptly as practicable after each date
on which the Agent shall receive an Engineer's
Report pursuant to Section 5.14(a) and the
information called for by Section 5.1(h), the
Borrower shall determine the Projected Cash Flow
Available for Fixed Charges for the then current
fiscal year and each of the succeeding two fiscal
years and notify the Agent and the Banks of its
determination. The determination by the Borrower
of the Projected Cash Flow Available for Fixed
Charges for each fiscal year shall be based on the
information relating to the Engineered Properties
set forth in the applicable Engineer's Report, but
subject to the factors referred to in
Section 2.1(b).
(d) In determining Fixed Charges and Projected Cash
Flow Available for Fixed Charges, all currencies
other than U.S. Dollars shall be converted into
U.S. Dollars at a rate of exchange equal to the
average Spot Rate for the calendar month ending on
the date as of which such determination is being
made. Therefore, in accordance with Section
5.17(b), the applicable currency conversion rate
for purposes of determining Fixed Charges will be
recalculated quarterly while the applicable
currency conversion rate for purposes of
determining Projected Cash Flow Available for
Fixed Charges will be recalculated annually and,
if the Borrower shall so elect, as of any quarter.
5.18 Minimum Consolidated Net Worth
Consolidated Tangible Net Worth will at no time be
less than U.S. $40,000,000.
5.19 Interest Coverage Ratio
Consolidated EBITDA will not, for any period of
four consecutive fiscal quarters, be less than 180% of the
consolidated interest expense of the Borrower and its
Consolidated Subsidiaries for such period.
5.20 Amendments to Other Agreements
If the Wainoco Credit Agreement or the FHI Credit
Agreement is proposed to be amended in any manner that may affect
the Banks in relation to this Agreement, the Borrower will
consult with the Banks on the proposed amendment and negotiate in
good faith with the Banks to agree prior to the effectiveness any
such proposed amendment to such amendments to the Financing
Documents as may be requested by the Banks in consideration of
such proposed amendment.
ARTICLE 6
DEFAULTS
6.1 Events of Default
If one or more of the following events ("Events of
Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan, or shall fail to pay within
five days after the due date thereof any interest
on any Loan, any fees or any other amount payable
hereunder;
(b) the Borrower shall fail to observe or perform any
covenant contained in Sections 5.7 to 5.13,
inclusive, and 5.15 to 5.20, inclusive;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained (i) in this
Agreement (other than those covered by clause (a)
or (b) above) for 30 days after written notice
thereof has been given to it by the Agent at the
request of any Bank, or (ii) in any Security
Document for 10 days after written notice thereof
has been given to it by the Agent at the request
of any Bank;
(d) any representation, warranty, certification or
statement made by the Borrower in any Financing
Document or in any certificate, financial
statement or other document delivered pursuant to
any Financing Document shall prove to have been
incorrect in any material respect when made (or
deemed made);
(e) the Borrower or any Subsidiary shall fail to make
any payment in respect of any Material Financial
Obligations when due or within any applicable
grace period;
(f) any event or condition shall occur which results
in the acceleration of the maturity of any
Material Debt or enables (or, with the giving of
notice or lapse of time or both, would enable) the
holder of such Material Debt or any Person acting
on such holder's behalf to accelerate the maturity
thereof;
(g) the Borrower or any Subsidiary shall commence a
voluntary case or other proceeding in any
jurisdiction seeking liquidation, reorganization
or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other
similar law in any jurisdiction now or hereafter
in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its
property, or shall consent to any such relief or
to the appointment of or taking possession by any
such official in an involuntary case or other
proceeding commenced against it, or shall make a
general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they
become due, or shall take any corporate action to
authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced in any jurisdiction against the Borrower
or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency or
other similar law in any jurisdiction now or
hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial
part of its property, and such involuntary case or
other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or
any Subsidiary under any bankruptcy laws as now or
hereafter in effect in any jurisdiction;
(i) any member of the ERISA Group shall fail to pay
when due an amount or amounts aggregating in
excess of U.S. $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or
notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator
or any combination of the foregoing; or the PBGC
shall institute proceedings under Title IV of
ERISA to terminate, to impose liability (other
than for premiums under Section 4007 of ERISA) in
respect of, or to cause a trustee to be appointed
to administer any Material Plan; or a condition
shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more
members of the ERISA Group to incur a current
payment obligation in excess of U.S. $5,000,000;
(j) a judgment or order for the payment of money in
excess of U.S. $1,000,000 shall be rendered
against the Borrower or any Subsidiary and such
judgment or order shall continue unsatisfied and
unstayed for a period of 10 days;
(k) any person or group of persons (within the meaning
of Section 13 or 14 of the U.S. Securities
Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and
Exchange Commission (United States of America)
under said Act) of 50% or more of the outstanding
shares of common stock of the Borrower; or, during
any period of 12 consecutive calendar months,
individuals who were directors of the Borrower on
the first day of such period shall cease to
constitute a majority of the board of directors of
the Borrower; or
(l) the Liens on the Mortgaged Properties shall at any
time not constitute valid Liens subject to no
prior or equal Liens (other than Liens permitted
under Section 5.10) for any reason whatsoever,
including as a result of the non-perfection or
loss of perfection of the Lien of the Security
Documents;
then, and in every such event, the Agent shall (i) if requested
by Banks having 50% or more in aggregate amount of the
Commitments, by notice to the Borrower terminate the Commitments
and they shall thereupon terminate, and (ii) if requested by
Banks holding Notes evidencing 50% or more of the Canadian
Equivalent of the aggregate principal amount of the Loans, by
notice to the Borrower declare all Loans outstanding hereunder to
be immediately due and payable, and declare the Notes (together
with accrued interest thereon) to be, and the Notes shall
thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower, whereupon all Security
Documents shall become immediately enforceable and the Banks
shall be entitled to all rights and remedies set forth herein and
therein; provided that in the case of any of the Events of
Default specified in clause (g) or (h) above with respect to the
Borrower, without any notice to the Borrower or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate
and the Notes (together with accrued interest thereon) shall
become immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower, and all Security Documents shall become
immediately enforceable and the Banks shall be entitled to all
rights and remedies set forth herein and therein.
6.2 Notice of Default
The Agent shall give notice to the Borrower under
Section 6.1(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
6.3 Conversions to Domestic Loans
At any time after the occurrence of an Event of
Default, the Agent may with the consent of the Required Banks
convert any amount outstanding hereunder as a Euro-Dollar Loan,
together with any accrued and unpaid interest thereon, to a
Domestic Loan in respect of which interest shall accrue and be
payable by the Borrower at the rate herein provided in respect of
Domestic Loans.
ARTICLE 7
THE AGENT
7.1 Appointment Authorization
Subject to the following, each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Financing
Documents as are delegated to the Agent by the terms thereof,
together with all such powers as are reasonably incidental
thereto:
(a) except as otherwise provided for in this Agreement
or in paragraph (b) below, where the terms of the
Financing Documents refer to any action to be
taken thereunder which is not delegated to the
Agent by the terms thereof or to any such action
that requires the consent, approval, satisfaction,
agreement or other determination of the Banks, the
action taken by and the consent, approval,
satisfaction, agreement or other determination
given or made by the Required Banks shall
constitute the action or consent, approval,
agreement or other determination of all the Banks
herein or therein referred to; and
(b) the following actions and matters shall require
the approval of all the Banks:
(i) any amendment to the Financing Documents
or any of them;
(ii) any waiver or extension which relates to
the rate or dates of payment of interest
payable hereunder, the amount or dates of
payment of fees payable hereunder, the
dates and amounts of repayment of
principal required hereunder or the
conditions precedent contained herein;
(iii) except as contemplated in Section 5.15(b),
the release, discharge or compromise of
any of the Security Documents or the Lien
thereof;
(iv) the taking of any steps in relation to the
enforcement of, or realization with
respect to, the Security Documents; and
(v) any assignment or transfer by the Borrower
of any of its rights and obligations under
this Agreement.
7.2 Agent and Affiliates
Morgan Bank of Canada shall have the same rights
and powers under the Financing Documents as any other Bank and
may exercise or refrain from exercising the same as though it
were not the Agent, and Morgan Bank of Canada and its affiliates
may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower, or any Subsidiary or
Affiliate as if it were not the Agent under the Financing
Documents.
7.3 Action by Agent
The obligations of the Agent under the Financing
Documents are only those expressly set forth therein. Without
limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default, except
as expressly provided in the Financing Documents.
7.4 Consultation with Experts
The Agent may consult with legal counsel (who may
be counsel for the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
7.5 Liability of Agent
Neither the Agent nor any of its affiliates nor
any of their respective directors, officers, agents or employees
shall be liable for any action taken or not taken by it in
connection with the Financing Documents (i) with the consent or
at the request of the Required Banks or (ii) in the absence of
its own gross negligence or wilful misconduct. Neither the Agent
nor any of its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or have
any duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with the Financing
Documents or any borrowing hereunder; (ii) the performance or
observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article 3,
except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of the Financing
Documents or any other instrument or writing furnished in
connection therewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex,
telecopy or similar writing) believed by it to be genuine or to
be signed by the proper party or parties.
7.6 Indemnification
Each Bank shall, ratably in accordance with its
Commitment, indemnify the Agent, its affiliates and their
respective directors, officers, agents and employees (to the
extent not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand,
action, loss or liability (except such as result from such
indemnitee's gross negligence or wilful misconduct) that such
indemnitee may suffer or incur in connection with any of the
Financing Documents or any action taken or omitted by such
indemnitee thereunder.
7.7 Credit Decision
Each Bank acknowledges that it has, independently
and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
decisions in taking or not taking any action under this Agreement
or any other Financing Document.
7.8 Successor Agent
The Agent may resign at any time by giving notice
thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent gives notice
of resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a Canadian
chartered bank under the Bank Act (Canada) and having a combined
capital and surplus of at least Cdn. $50,000,000. Upon the
acceptance of its appointment as Agent under the Financing
Documents by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Financing
Documents. After any retiring Agent's resignation under the
Financing Documents as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent.
7.9 Agent's Fees
The Borrower shall pay to the Agent for its own
account arrangement, agency and engineering fees in the amounts
and at the times previously agreed upon between the Borrower and
the Agent.
ARTICLE 8
CHANGE IN CIRCUMSTANCES
8.1 Basis for Determining Interest Rate Inadequate or
Unfair
If on or prior to the first day of any Interest
Period for any Euro-Dollar Borrowing:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts)
are not being offered to the Reference Banks in
the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount
of the Commitments advise the Agent that the
Adjusted London Interbank Offered Rate as
determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding
their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make Euro-Dollar Loans or to
convert outstanding Domestic Loans into Euro-Dollar Loans shall
be suspended and (ii) each outstanding Euro-Dollar Loan shall be
converted into a Domestic Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a Domestic
Borrowing.
8.2 Illegality
If on or after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof,
or compliance by any Bank (or its Euro-Dollar Lending Office)
with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency
shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans and such Bank shall so notify the Agent, the
Agent shall forthwith give notice thereof to the other Banks and
the Borrower, whereupon until such Bank notifies the Borrower and
the Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar
Loans, or to convert outstanding Domestic Loans into Euro-Dollar
Loans, shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different
Euro-Dollar Lending Office if such designation will avoid the
need for giving such notice and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If such notice
is given, each Euro-Dollar Loan of such Bank then outstanding
shall be converted to a Domestic Loan either (a) on the last day
of the then current Interest Period applicable to such
Euro-Dollar Loan if such Bank may lawfully continue to maintain
and fund such Loan to such day or (b) immediately if such Bank
shall determine that it may not lawfully continue to maintain and
fund such Loan to such day.
8.3 Increased Cost and Reduced Return
(a) If on or after the date hereof, the adoption of
any applicable law, rule or regulation, or any
change in any applicable law, rule or regulation,
or any change in the interpretation or
administration thereof by any governmental
authority, central bank or comparable agency
charged with the interpretation or administration
thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or
directive (whether or not having the force of law)
of any such authority, central bank or comparable
agency shall impose, modify or deem applicable any
reserve, special deposit, insurance assessment or
similar requirement against assets of, deposits
with or for the account of, or credit extended by,
any Bank (or its Applicable Lending Office) or
shall impose on any Bank (or its Applicable
Lending Office) or on the London interbank market
any other condition affecting its Euro-Dollar
Loans, its Note or its obligation to make Euro-
Dollar Loans and the result of any of the
foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or
maintaining any Euro-Dollar Loan, or to reduce the
amount of any sum received or receivable by such
Bank (or its Applicable Lending Office) under this
Agreement or under its Note with respect thereto,
by an amount deemed by such Bank to be material,
then, within 15 days after demand by such Bank
(with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as
will compensate such Bank for such increased cost
or reduction.
(b) If any Bank shall have determined that, after the
date hereof, the adoption of any applicable law,
rule or regulation regarding capital adequacy, or
any change in any such law, rule or regulation, or
any change in the interpretation or administration
thereof by any governmental authority, central
bank or comparable agency charged with the
interpretation or administration thereof, or any
request or directive regarding capital adequacy
(whether or not having the force of law) of any
such authority, central bank or comparable agency,
has or would have the effect of reducing the rate
of return on capital of such Bank (or its Parent)
as a consequence of such Bank's obligations
hereunder to a level below that which such Bank
(or its Parent) could have achieved but for such
adoption, change, request or directive (taking
into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank
to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate
such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge,
occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this
Section and will designate a different Applicable
Lending Office if such designation will avoid the
need for, or reduce the amount of, such
compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank.
A certificate of any Bank claiming compensation
under this Section and setting forth the
additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such
Bank may use any reasonable averaging and
attribution methods.
8.4 Taxes
(a) For purposes of this Section 8.4, the following
terms have the following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or
withholdings with respect to any payment by the
Borrower pursuant to this Agreement or under any
Note, and all liabilities with respect thereto,
excluding in the case of each Bank and the Agent,
taxes imposed on its income, and franchise or
similar taxes (including penalties and interest)
imposed on it, by a jurisdiction under the laws of
which such Bank or the Agent (as the case may be)
is organized or in which its principal executive
office is located or, in the case of each Bank, in
which its Applicable Lending Office is located.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property
taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement
or under any Note or from the execution or
delivery of, or otherwise with respect to, this
Agreement or any Note.
(b) Any and all payments by the Borrower to or for the
account of any Bank or the Agent hereunder or
under any Note shall be made without deduction for
any Taxes or Other Taxes; provided that, if the
Borrower shall be required by law to deduct any
Taxes or Other Taxes from any such payments,
(i) the sum payable shall be increased as
necessary so that after making all required
deductions (including deductions applicable to
additional sums payable under this Section 8.4)
such Bank or the Agent (as the case may be)
receives an amount equal to the sum it would have
received had no such deductions been made,
(ii) the Borrower shall make such deductions,
(iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or
other authority in accordance with applicable law
and (iv) the Borrower shall furnish to the Agent,
at its address referred to in Section 9.1, the
original or a certified copy of a receipt
evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the
Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other
Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.4) paid by
such Bank or the Agent (as the case may be) and
any liability (including penalties, interest and
expenses) arising therefrom or with respect
thereto. This indemnification shall be paid
within 30 days after such Bank or the Agent (as
the case may be) makes written demand therefor.
If a Bank or the Agent shall become aware that it
is entitled to receive a refund in respect of
Taxes or Other Taxes, it shall promptly notify the
Borrower of the availability of such refund and
shall, within 30 days thereafter, apply for such
refund at the Borrower's expense. If any Bank or
the Agent receives a refund in respect of any
Taxes or Other Taxes for which such Bank or the
Agent has received payment from the Borrower
hereunder, it shall promptly notify the Borrower
of such refund and shall, within 30 days after
receipt of such refund, repay such refund to the
Borrower with interest if any interest is received
thereon by such Bank or the Agent.
(d) Each Bank on or prior to the date of its execution
and delivery of this Agreement in the case of each
Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank
pursuant to Section 9.6 in the case of each other
Bank, and from time to time thereafter if
requested in writing by the Borrower (but only so
long as such Bank remains lawfully able to do so),
shall provide the Borrower evidence that it is not
a non-resident of Canada for the purposes of The
Income Tax Act (Canada) and provide the Agent with
U.S. Internal Revenue Service form W-8 or any
successor form certifying that such Bank is not a
U.S. citizen or resident.
(e) For any period in respect of which a Bank is a
non-resident of Canada for the purposes of The
Income Tax Act (Canada) (unless as a result of a
change in law or regulation occurring subsequent
to the date on which evidence of residency was
provided by such Bank as specified by and in
accordance with Section 8.4(d)), such Bank shall
not be entitled to indemnification under Section
8.4(b) or (c) with respect to Taxes imposed by
Canada; provided that if a Bank, which is
otherwise exempt from or subject to a reduced rate
of withholding tax, becomes subject to Taxes
because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as
such Bank shall reasonably request to assist such
Bank to recover such Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Bank pursuant
to this Section 8.4, then such Bank will change
the jurisdiction of its Applicable Lending Office
if, in the judgment of such Bank, such change (i)
will eliminate or reduce any such additional
payment which may thereafter accrue and (ii) is
not otherwise disadvantageous to such Bank.
(g) In the event that the Borrower shall be required
to pay to any Bank material amounts pursuant to
this Section 8.4, the Borrower may give notice to
such Bank (with copies to the Agent) that it
wishes to seek one or more assignees (which may be
one or more of the Banks) to assume the Commitment
of such Bank and to purchase its outstanding Loans
and Note and the Agent will use its best efforts
to assist the Borrower in obtaining an
assignee(s). If an assignee(s) cannot be obtained
for such affected Bank(s) and provided that no
Default shall have occurred and be continuing, the
Borrower may, with the consent of each other Bank,
prepay immediately all Loans of such affected Bank
and terminate such affected Bank's entire
Commitment hereunder. Each Bank requesting
compensation pursuant to this Section 8.4 agrees
to sell its Commitment, Loans, Note and interest
in this Agreement in accordance with Section 9.6
to an assignee(s) for an amount equal to the sum
of the outstanding unpaid principal of and accrued
interest on such Loans and Note plus all other
fees and amounts (including, without limitation,
any compensation claimed by such Bank under
Section 2.12 or this Section 8.4) due such Bank
hereunder calculated, in each case, to the date
such Commitment, Loans, Note and interest are
purchased. Upon such sale or prepayment, said
Bank shall have no further Commitment or other
obligation to the Borrower hereunder or under any
Note.
8.5 Domestic Loans Substituted for Affected
Euro-Dollar
Loans
If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.2 or (ii) any Bank has demanded compensation under Section
8.3(a) or 8.4 with respect to its Euro-Dollar Loans and the
Borrower shall, by at least five Euro-Dollar Business Days prior
notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made by such
Bank as (or continued or converted into)
Euro-Dollar Loans shall be made instead as
Domestic Loans (on which interest and principal
shall be payable contemporaneously with the
related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been
repaid (or converted to a Domestic Loan), all
payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be
applied to repay its Domestic Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such Domestic Loan shall be converted into a Euro-Dollar Loan on
the first day of the next succeeding Interest Period applicable
to the related Euro-Dollar Loans of the other Banks.
ARTICLE 9
MISCELLANEOUS
9.1 Notices
All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire,
telex, telecopy or similar writing) and shall be given to such
party: (x) in the case of the Borrower or the Agent, at its
address, telex or telecopy number set forth on the signature
pages hereof, (y) in the case of any Bank, at its address, telex
or telecopy number set forth in its Administrative Questionnaire
or (z) in the case of any party, such other address or telex or
telecopy number as such party may hereafter specify for the
purpose by notice to the Agent and the Borrower. Each such
notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answerback
is received, (ii) if given by telecopy, when such telecopy is
transmitted to the telecopy number specified in this Section and
telephonic confirmation of receipt thereof is received, (iii) if
given by mail, 72 hours after such communication is deposited in
the mails with first class postage prepaid, addressed as
aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; provided that notices to
the Agent under Article 2 or Article 8 shall not be effective
until received.
9.2 No Waivers
No failure or delay by the Agent or any Bank in
exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided
by law.
9.3 Expenses; Indemnification
(a) The Borrower shall pay (i) all out-of-pocket
expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in
connection with the preparation of the Financing
Documents, any waiver or consent thereunder or any
amendment thereof or any Default or alleged
Default thereunder or any release pursuant to
Section 5.15(b) and (ii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the
Agent and each Bank, including fees and
disbursements of counsel, in connection with such
Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings
resulting therefrom.
(b) The Borrower agrees to indemnify the Agent, each
Bank and the Departing Bank, their respective
affiliates and the respective directors, officers,
agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless
from and against any and all liabilities, losses,
damages, costs and expenses of any kind,
including, without limitation, the reasonable fees
and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any
investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall
be designated a party thereto) relating to or
arising out of (i) any actual or proposed use of
proceeds of Loans hereunder, (ii) the breach by
the Borrower of any covenant in this Agreement or
the untruth or inaccuracy of any representation or
warranty made by the Borrower in this Agreement or
(iii) a transaction which is (or may be) subject
to the provisions of Section 6.1(k); provided that
no Indemnitee shall have the right to be
indemnified hereunder for its own gross negligence
or wilful misconduct as determined by a court of
competent jurisdiction.
(c) Any payment made to or for the account of the
Agent, each Bank or the Departing Bank in respect
of any amount payable by the Borrower in a
currency (the "Tendered Currency") other than the
currency in which such payment is due (the
"Required Currency"), whether pursuant to any
judgment or order of a court or tribunal or
otherwise, shall constitute a discharge of the
Borrower only to the extent of the amount of the
Required Currency which may be purchased with such
Tendered Currency at the time of payment at the
Spot Rate at such time. The Borrower covenants
and agrees to and in favour of the Agent, each
Bank and the Departing Bank that it shall, as a
separate and independent obligation which shall
not be merged in any such judgment or order, pay
or cause to be paid the amount not so discharged
in accordance with the foregoing and indemnify and
hold harmless the Agent, each Bank and the
Departing Bank against any loss or damage arising
as a result of any such amount being paid in such
Tendered Currency. A certificate of the Agent,
any Bank or the Departing Bank, as applicable, as
to any such loss or damage shall be conclusive
evidence of the amount thereof in the absence of
manifest error.
9.4 Sharing of Set-Offs
Each Bank agrees that if it shall, by exercising
any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and
interest due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of the
aggregate amount of principal and interest due with respect to
any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such
other adjustments shall be made, as may be required so that all
such payments of principal and interest with respect to the Notes
held by the Banks shall be shared by the Banks pro rata; provided
that nothing in this Section shall impair the right of any Bank
to exercise any right of set-off or counterclaim it may have and
to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under
the Notes. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct
creditor of the Borrower in the amount of such participation.
9.5 Amendments and Waivers
Any provision of the Financing Documents may be
amended or waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Agent with the
consent of the Banks or any of them as required pursuant to
Section 7.1.
9.6 Successors and Assigns
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties
hereto and their respective successors and
assigns, except that the Borrower may not assign
or otherwise transfer any of its rights under this
Agreement without the prior written consent of all
Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any
or all of its Loans. In the event of any such
grant by a Bank of a participating interest to a
Participant, whether or not upon notice to the
Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such
Bank in connection with such Bank's rights and
obligations under this Agreement. Any agreement
pursuant to which any Bank may grant such a
participating interest shall provide that such
Bank shall retain the sole right and
responsibility to enforce the obligations of the
Borrower hereunder including, without limitation,
the right to approve any amendment, modification
or waiver of any provision of this Agreement;
provided that such participation agreement may
provide that such Bank will not agree to any
modification, amendment or waiver of this
Agreement or any other action described in Section
7.1 without the consent of the Participant. The
Borrower agrees that each Participant shall, to
the extent provided in its participation
agreement, be entitled to the benefits of Article
8 and Sections 2.12 and 9.3 with respect to its
participating interest as if directly a party
hereto, provided that if such a Participant is a
non-resident of Canada for the purposes of The
Income Tax Act (Canada) then such Participant
shall not be entitled to the benefit of the
indemnities contained in Section 8.4 for any
amount greater than that which the Bank from which
such Participant acquired its participation would
have been entitled to be indemnified for under
Section 8.4. An assignment or other transfer
which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this
Agreement only to the extent of a participating
interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to an affiliate of
such transferor Bank or another Bank which is not
a non-resident of Canada for the purposes of The
Income Tax Act (Canada) (each an "Assignee") all
of its rights and obligations under this Agreement
and the Notes in respect of a portion of its
Commitment and a proportionate share or its
outstanding Loans in an amount not less than Cdn.
$5,000,000, and such Assignee shall assume such
rights and obligations, pursuant to an Assignment
and Assumption Agreement in substantially the form
of Exhibit E hereto executed by such Assignee and
such transferor Bank, with notice to the Borrower
and the Agent. Upon execution and delivery of
such instrument and payment by such Assignee to
such transferor Bank of an amount equal to the
purchase price agreed between such transferor Bank
and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the
rights and obligations of a Bank with a Commitment
as set forth in such instrument of assumption, and
the transferor Bank shall be released from its
obligations hereunder to a corresponding extent,
and no further consent or action by any party
shall be required. Upon the consummation of any
assignment pursuant to this subsection (c), the
transferor Bank, the Agent and the Borrower shall
make appropriate arrangements so that, if
required, a new Note is issued to the Assignee.
In connection with any such assignment, the
transferor Bank shall pay to the Agent an
administrative fee for processing such assignment
in the amount of Cdn. $2,000. The Assignee shall,
prior to the first date on which interest or fees
are payable hereunder for its account, deliver to
the Borrower and the Agent the forms and evidence
regarding residency specified by and in accordance
with Section 8.4.
(d) Subject to the Section 9.6(b), except for any
assignment of all or any portion of its rights
under this Agreement and its Note to a Canadian
chartered bank under the Bank Act (Canada), a Bank
shall not be entitled to assign all or any portion
of its rights under this Agreement and its Note
without the consent of the Borrower not to be
unreasonably withheld.
(e) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any
greater payment under Section 8.3 than such Bank
would have been entitled to receive with respect
to the rights transferred, unless such transfer is
made with the Borrower's prior written consent or
by reason of the provisions of Section 8.2 or 8.3
requiring such Bank to designate a different
Applicable Lending Office under certain
circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
9.7 Collateral
Each of the Banks represents to the Agent and each
of the other Banks that it in good faith is not relying upon any
"margin stock" (as defined in Regulation X) as collateral in the
extension or maintenance of the credit provided for in this
Agreement.
9.8 Further Assurances
Each party hereto shall, at the request of the
other (but at the expense of the Borrower), perform all such
further acts and execute and deliver all such further documents
as may, in the reasonable opinion of the other, be necessary or
desirable in order to fully perform and carry out the purpose and
intent of the Financing Documents.
9.9 Conflicting Provisions
In the event of (but to the extent only of) a
conflict or inconsistency between the terms of this Agreement and
any of the other Financing Documents, the terms of this Agreement
shall govern.
9.10 Section 426 Waiver
Without restriction upon the rights, remedies,
powers and authorities available to the Banks in relation to
security granted to it under Section 426 of the Bank Act
(Canada), the Borrower does hereby waive all rights, benefits and
protections available to the Borrower pursuant to Subsection
426(6) of the Bank Act (Canada). The Borrower does hereby
acknowledge and agree that the Banks may, notwithstanding the
provisions of Subsection 426(6) of the Bank Act (Canada), without
advertisement or public notice of sale or intention to sell, and
without any other formality whatsoever, conduct and complete any
sale of all or any of the assets assigned to the Banks pursuant
to such Section 426 security, at such times, in such manner and
upon such terms, including without limitation terms regarding the
form, amount and time for payment of sale proceeds, as the Banks
may in their sole and absolute discretion deem fit.
9.11 Governing Law
THIS AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE PROVINCE OF
ALBERTA AND THE LAWS OF CANADA APPLICABLE THEREIN AND SHALL BE
TREATED AS ALBERTA CONTRACTS.
9.12 Submission to Jurisdiction
The Borrower hereby submits to the nonexclusive
jurisdiction of the Courts of Alberta for purposes of all legal
proceedings arising out of or relating to this Agreement and each
Note or the transactions contemplated hereby. The Borrower
irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
9.13 Counterparts; Integration
This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to
the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
WAINOCO OIL CORPORATION
By: /s/ Julie H. Edwards
Title: Vice President - Secretary & Treasurer
2100 Citicorp Center
1200 Smith Street
Houston, Texas 77002-4367
Telecopy number: (713) 655-7530
MORGAN BANK OF CANADA, as Agent
By: /s/ Stephen King
Title: Vice President
Royal Bank Plaza, South Tower
Suite 2200, P.O. Box 80
Toronto, Ontario
M5J 2J2
Telecopy number: (416) 865-1641
Commitments New Banks
Cdn. $17,000,000 MORGAN BANK OF CANADA
By: /s/ Stephen King
Title: Vice President
Cdn. $8,500,000 PARIBAS BANK OF CANADA
By: /s/ James Goodall
Title: Group Vice President
Cdn. $8,500,000 THE BANK OF TOKYO CANADA
By: /s/ Ivan J. Hopkins
Title: Vice President
Total Commitments
Cdn. $34,000,000
Departing Bank
For the limited purposes of Sections 3.1 and 9.3 of this Amended
Agreement
BANK OF MONTREAL
By: /s/ E. J. D. Pinder
Title: Account Manager
$20,000,000
AMENDED AND RESTATED
CREDIT AND GUARANTY AGREEMENT
dated as of
May 31, 1994
among
Wainoco Oil & Gas Company,
as Borrower
Wainoco Oil Corporation,
as Guarantor
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Agent
TABLE OF CONTENTS
1. The Table of Contents is not a part of this Agreement.
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions
1.02 Accounting Terms and Determinations
ARTICLE II
THE CREDITS
SECTION 2.01 Commitments to Lend
2.02 Method of Borrowing
2.03 Notes
2.04 Maturity of Loans; Mandatory Prepayments
2.05 Interest Rates
2.06 Fees
2.07 Termination or Reduction of Commitments
2.08 Method of Electing Interest Rates
2.09 Optional Prepayments
2.10 Contingent Prepayments
2.11 General Provisions as to Payments
2.12 Funding Losses
2.13 Computation of Interest and Fees
ARTICLE III
CONDITIONS
SECTION 3.01 Effectiveness
3.02 Indebtedness under the Original Credit Agreement
3.03 Borrowings
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01 Corporate Existence and Power
4.02 Corporate and Governmental Authorization;
No Contravention Authorization;
No Contravention
4.03 Binding Effect
4.04 Financial Information
4.05 Litigation
4.06 Compliance with ERISA
4.07 Environmental Matters
4.08 Taxes
4.09 Subsidiaries
4.10 Regulation
4.11 Full Disclosure
4.12 Mortgaged Properties
4.13 Mortgage Liens
4.14 Reserve Data and Projections
4.15 Gas Imbalances
ARTICLE V
COVENANTS
SECTION 5.01 Information
5.02 Payment of Obligations
5.03 Maintenance and Development of
Borrower Engineered Properties
and Other Property; Insurance
5.04 Conduct of Business and Maintenance of Existence
5.05 Compliance with Laws
5.06 Inspection of Property, Books and Records
5.07 Debt
5.08 Restricted Payments
5.09 Investments
5.10 Negative Pledge
5.11 Consolidations, Mergers and Sales of Assets
5.12 Use of Proceeds
5.13 Value of Mortgaged Properties
5.14 Engineer's Reports
5.15 Disposition of Borrower Engineered Properties
5.16 Transactions with Affiliates
5.17 Minimum Fixed Charge Coverage
5.18 Minimum Consolidated Net Worth
5.19 Interest Coverage Ratio
5.20 Amendment to other Agreements
ARTICLE VI
DEFAULTS
SECTION 6.01 Events of Default
6.02 Notice of Default
ARTICLE VII
THE AGENT
SECTION 7.01 Appointment and Authorization
7.02 Agent and Affiliates
7.03 Action by Agent
7.04 Consultation with Experts
7.05 Liability of Agent
7.06 Indemnification
7.07 Credit Decision
7.08 Successor Agent
7.09 Agent's Fees
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01 Basis for Determining Interest
Rate Inadequate or Unfair
8.02 Illegality
8.03 Increased Cost and Reduced Return
8.04 Taxes
8.05 Domestic Loans Substituted for
Affected Euro-Dollar Loans
ARTICLE IX
GUARANTY
SECTION 9.01 The Guaranty
9.02 Guaranty Unconditional
9.03 Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances
9.04 Waiver by Wainoco
9.05 Subrogation
9.06 Stay of Acceleration
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Notices
10.02 No Waivers
10.03 Expenses; Indemnification
10.04 Sharing of Set-Offs
10.05 Non-exercise of Set-Off; Waiver
of Enforcement Without Consent
10.06 Amendments and Waivers
10.07 Successors and Assigns
10.08 Collateral
10.09 GOVERNING LAW
10.10 Submission to Jurisdiction
10.11 Counterparts; Integration
10.12 WAIVER OF JURY TRIAL
Exhibit A - Note
Exhibit B - Opinion of Gardere & Wynne, L.L.P.
Exhibit C - Opinion of Andrews & Kurth L.L.P.
Exhibit D - Opinion of Special Louisiana Counsel
for the Borrower
Exhibit E - Opinion of Special Mississippi Counsel
for the Borrower
Exhibit F - Opinion of Special Counsel for the
Agent
Exhibit G - Assignment and Assumption Agreement
AMENDED AND RESTATED
CREDIT AND GUARANTY AGREEMENT
AGREEMENT dated as of May 31, 1994 among WAINOCO
OIL & GAS COMPANY, WAINOCO OIL CORPORATION, the BANKS listed
on the signature pages hereof and MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent.
WITNESSETH:
WHEREAS, the Borrower and Wainoco have heretofore
entered into a Credit and Guaranty Agreement dated as of
October 4, 1991 with the banks listed therein and the Agent
(as amended to the Effective Date, the "Original Credit
Agreement"); and
WHEREAS, the parties hereto wish to amend and
restate the Original Credit Agreement in its entirety to
read as set forth herein;
NOW, THEREFORE, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as
used herein, have the following meanings:
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.05(b).
"Administrative Questionnaire" means, with respect to
each Bank, an administrative questionnaire in the form prepared
by the Agent and submitted to the Agent (with a copy to the
Borrower) duly completed by such Bank.
"Affiliate" means (i) any Person that directly, or
indirectly through one or more intermediaries, controls Wainoco
(a "Controlling Person") or (ii) any Person which is controlled
by or is under common control with a Controlling Person. As used
herein, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership
of voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York
in its capacity as agent for the Banks under the Financing
Documents, and its successors in such capacity.
"Agreement" means the Original Credit Agreement, as
amended by this Amended Agreement, and as the same may be further
amended from time to time.
"Amended Agreement" means this Amended and Restated
Credit and Guaranty Agreement dated as of May 31, 1994.
"Applicable Lending Office" means, with respect to any
Bank, (i) in the case of its Domestic Loans, its Domestic Lending
Office and (ii) in the case of its Euro-Dollar Loans, its
Euro-Dollar Lending Office.
"Assignee" has the meaning set forth in Section
10.07(c).
"Bank" means each bank listed on the signature pages
hereof, each Assignee which becomes a Bank pursuant to Section
10.07(c), and their respective successors.
"Base Rate" means, for any day, a rate per annum equal
to the higher of (i) the Prime Rate for such day and (ii) the sum
of 1/2 of 1% plus Federal Funds Rate for such day.
"Benefit Arrangement" means at any time an employee
benefit plan within the meaning of Section 3(3) of ERISA which is
not a Plan or a Multiemployer Plan and which is maintained or
otherwise contributed to by any member of the ERISA Group.
"Borrower" means Wainoco Oil & Gas Company, a Delaware
corporation, and its successors.
"Borrower Engineered Properties" means all interests
owned by the Borrower in oil and gas properties in the United
States of America which are classified "proved developed" or
"proved undeveloped" in accordance with the regulations of the
Securities and Exchange Commission as in effect on the date
hereof.
"Borrower Engineer's Report" means (a) the Initial
Borrower Engineer's Report, and (b) each report delivered by the
Borrower pursuant to Section 5.14(a) or 5.14(e) that (i) is
certified by the Independent Petroleum Engineers, (ii) is
prepared in accordance with established criteria generally
accepted in the oil and gas industry and standards customarily
used by such Independent Petroleum Engineers in making any
determinations or appraisals, (iii) is based upon the assumptions
determined in accordance with Section 5.14(b) or 5.14(e), as the
case may be, and such other assumptions, estimates and
projections as are fully disclosed in such Borrower Engineer's
Report, (iv) sets forth the matters specified in Section 5.14(a)
and (v) is, except to the extent that any of the requirements of
clauses (i) to (iv) hereof would cause its form to differ from
the form of the Initial Borrower Engineer's Report, substantially
in the form of the Initial Borrower Engineer's Report.
"Borrowing" means a borrowing hereunder consisting of
Loans made to the Borrower at the same time by the Banks pursuant
to Article II. A Borrowing is a "Domestic Borrowing" if such
Loans are Domestic Loans or a "Euro-Dollar Borrowing" if such
Loans are Euro-Dollar Loans.
"Borrowing Base" means (i) on any date prior to both
(x) July 15, 1994 and (y) the first Determination Date,
$20,000,000 and (ii) on any date on or after July 15, 1994,
18,000,000, or if after such Determination Date, the amount
notified to the Borrower by the Agent pursuant to Section 2.01(b)
as the amount of the Borrowing Base on the most recent
Determination Date falling on or prior to such date, less, in
either case, the Net Sales Proceeds of any of the Borrower
Engineered Properties covered by the then most recent Borrower
Engineer's Report sold, leased or transferred on or after the
date of such Engineer's Report (unless such sale, lease or
transfer is otherwise taken into account in the determination of
the Borrowing Base for such date), but only if and to the extent
the aggregate amount of such Net Sales Proceeds in any calendar
year exceeds $1,000,000. The Borrower will promptly notify the
Agent of any sale, lease or other transfer of Borrower Engineered
Properties which requires a reduction in the Borrowing Base
pursuant to this Section.
A "Borrowing Base Excession" exists at any date if and
to the extent that the aggregate outstanding principal amount of
the Loans at such date exceeds the Borrowing Base at such date.
"California Mortgage" means the Mortgage, Deed of
Trust, Assignment, Security Agreement, Financing Statement and
Fixture Filing dated as of October 4, 1991 purporting to mortgage
in favor of Peter Rugg, as trustee and the Agent the property
interests described or referred to in the Initial Borrower
Engineer's Report in the Beverly Hills Field situated in the
State of California, as amended by the Mortgage, Deed of Trust,
Assignment, Security Agreement, Financing Statement and Fixture
Filing Amendment and Extension dated as of June 30, 1992, the
Second Mortgage, Deed of Trust, Assignment, Security Agreement,
Financing Statement and Fixture Filing Amendment and Extension
dated as of March 31, 1993 and the Mortgage, Deed of Trust,
Assignment, Security Agreement, Financing Statement and Fixture
Filing Amendment and Extension dated as of the date hereof, and
as the same may be further amended from time to time.
"Capital Costs" means, with respect to any oil and gas
property, all capital expenditures incurred in connection with
the conversion or attempted conversion of such property from
"proved undeveloped" to "proved developed" as classified in
accordance with the regulations of the Securities and Exchange
Commission as in effect on the date hereof and the maintenance of
such property as "proved developed" as classified in accordance
with the regulations of the Securities and Exchange Commission as
in effect on the date hereof.
"Commitment" means, with respect to each Bank, the
amount set forth opposite the name of such Bank on the signature
pages hereof, as such amount may be reduced from time to time
pursuant to Section 2.07.
"Consolidated Debt" means, at any date, the Debt of
Wainoco and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date.
"Consolidated EBITDA" means, for any fiscal period,
consolidated net income of Wainoco and its Consolidated
Subsidiaries for such period plus, to the extent deducted in
determining such consolidated net income for such period, the
aggregate amount of (i) interest expense, (ii) provision for
income taxes and (iii) depletion, depreciation, amortization and
other similar non- cash charges.
"Consolidated Operating Cash Flow" means, for any
fiscal period, consolidated net income of Wainoco and its
Consolidated Subsidiaries for such period plus, to the extent
deducted in determining such consolidated net income for such
period, the aggregate amount of (i) the deferred portion of the
provision for income taxes and (ii) depletion, depreciation,
amortization and other similar non-cash charges.
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of Wainoco in its consolidated financial
statements if such statements were prepared as of such date.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of Wainoco and its Consolidated
Subsidiaries less their consolidated Intangible Assets, all
determined as of such date. For purposes of this definition
"Intangible Assets" means the amount (to the extent reflected in
determining such consolidated stockholders' equity) of (i) all
write-ups (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business
made within twelve months after the acquisition of such business)
subsequent to December 31, 1993 in the book value of any asset
owned by Wainoco or a Consolidated Subsidiary, (ii) all
Investments in unconsolidated Subsidiaries and all equity
investments in Persons which are not Subsidiaries and (iii) all
unamortized debt discount and expense, unamortized deferred
charges, goodwill, patents, trademarks, service marks, trade
names, anticipated future benefit of tax loss carry-forwards,
copyrights, organization or developmental expenses and other
intangible assets.
"Continuing Bank" means each Bank party to the Original
Credit Agreement other than a Departing Bank.
"Debt" of any Person means at any date, without
duplication, (i) all obligations of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in
the ordinary course of business, (iv) all obligations of such
Person as lessee which are capitalized in accordance with
generally accepted accounting principles, (v) all non-contingent
obligations (and, for purposes of Section 5.10 and the
definitions of Material Debt and Material Financial Obligations,
all contingent obligations) of such Person to reimburse any bank
or other Person in respect of amounts paid under a letter of
credit or similar instrument, (vi) all Debt secured by a Lien on
any asset of such Person, whether or not such Debt is otherwise
an obligation of such Person, and (vii) all Debt of others
Guaranteed by such Person.
"Debt Ratio" means, as of the last day of any fiscal
quarter of Wainoco, the ratio of (i) the Consolidated Operating
Cash Flow for the four consecutive fiscal quarters ended at such
date to (ii) the Consolidated Debt at such date.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or waived,
become an Event of Default.
"Departing Bank" means each party listed on the
signature pages hereof as a "Departing Bank".
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or
equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar
transaction, currency swap transaction, cross-currency rate swap
transaction, currency option or any other similar transaction
(including any option with respect to any of the foregoing
transactions) or any combination of the foregoing transactions.
"Determination Date" means each date on which the Agent
shall notify the Borrower of the amount of the Borrowing Base
pursuant to Section 2.01(b).
"Discounted Present Value of Future Net Revenue" means,
with respect to any Engineered Property and as of any specified
date, an amount equal to the present value of Future Net Revenue
from such Engineered Property, determined by discounting the
stated amount of such Future Net Revenue from the date on which
such amount is expected to be realized to such specified date at
(i) prior to the first Determination Date, the applicable
discount rate used for the purposes of the computations contained
in the Initial Engineer's Report covering such Engineered
Property, computed on a simple interest basis for years of 365
days (or 366 days in a leap year), and (ii) on or after the first
Determination Date, the rate specified by the Agent pursuant to
Section 5.14(b) or 5.14(d), as the case may be, computed on a
simple interest basis for years of 365 days (or 366 days in a
leap year).
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in New
York City are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its
office located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire
as its Domestic Lending Office) or such other office as such Bank
may hereafter designate as its Domestic Lending Office by notice
to the Borrower and the Agent.
"Domestic Loan" means (i) a Loan which bears interest
at the Base Rate pursuant to the applicable Notice of Borrowing
or Notice of Interest Rate Election or Article VIII or (ii) an
overdue amount which was a Domestic Loan immediately before it
became overdue.
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 3.01.
"Engineered Properties" means the Borrower Engineered
Properties and the Wainoco Engineered Properties.
"Engineer's Report" means a Borrower Engineer's Report
or a Wainoco Engineer's Report.
"Environmental Laws" means any and all federal, state,
local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees,
plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health
or to emissions, discharges or releases of pollutants,
contaminants, Hazardous Substances or wastes into the environment
including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, or any successor statute.
"ERISA Group" means Wainoco, any Subsidiary and all
members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control
which, together with Wainoco or any Subsidiary, are treated as a
single employer under Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business
Day on which commercial banks are open for international business
(including dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank,
its office, branch or affiliate located at its address set forth
in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Euro-Dollar Lending Office)
or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Agent.
"Euro-Dollar Loan" means (i) a Loan which bears
interest at a Euro-Dollar Rate pursuant to the applicable Notice
of Borrowing or Notice of Interest Rate Election or(ii) an
overdue amount which was a Euro-Dollar Loan immediately before it
became overdue.
"Euro-Dollar Rate" means a rate of interest determined
pursuant to Section 2.05(b) on the basis of an Adjusted London
Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set
forth in Section 2.05(b).
"Event of Default" has the meaning set forth in Section
6.01.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of
1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such
day is not a Domestic Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next
preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted
to Morgan Guaranty Trust Company of New York on such day on such
transactions as determined by the Agent.
"FHI" means Frontier Holdings Inc., a Delaware
corporation.
"FHI Credit Agreement" means a bank credit facility
providing for loan availability and/or letter of credit
availability, provided that the aggregate outstanding principal
amount of loans thereunder may at no time exceed $15,000,000.
"FHI EBITDA" means, for any fiscal period,
consolidated net income of FHI and its Consolidated Subsidiaries
for such period plus, to the extent deducted in determining such
consolidated net income for such period, the aggregate amount of
(i) interest expense, (ii) provision for income taxes and (iii)
depletion, depreciation, amortization and other similar non-cash
charges.
"FHI Subsidiary" means any corporation or other entity
of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or
indirectly owned by FHI.
"Financing Documents" means this Agreement, the Notes
and the Mortgages.
"Fixed Charges" means, for any fiscal year, the sum of
(i) interest payments required to be made on Debt of Wainoco or
any Subsidiary during such fiscal year, determined as follows:
(A) if the rate of interest applicable to any Debt is at the date
of determination an unknown or variable rate, then the rate to be
used for the purpose of such determination shall be the rate per
annum equal to the weighted average applicable rate of interest
paid by such Person on such Debt during the then most recently
ended calendar month, (B) except as provided in clause (C), the
principal amount of Debt outstanding during such fiscal year
shall be assumed to be the amount outstanding at the last day of
the fiscal quarter of Wainoco most recently ended on or prior to
the date of determination, reduced as contemplated by clauses
(ii) and (iii) below and (C) FHI shall be assumed to have
constant outstanding bank borrowings of $15,000,000; (ii) assumed
principal payments hereunder and under the Wainoco Credit
Agreement, in each case so as to reduce the aggregate outstanding
principal amount at the last day of the fiscal quarter of Wainoco
most recently ended on or prior to the date of determination in
20 quarterly installments commencing three months after the
Termination Date and (iii) any other scheduled payments of
principal required to be made on Debt of Wainoco or any
Subsidiary during such fiscal year.
"Further Mortgage" means any mortgage (other than any
Initial Mortgage) substantially in the form of the applicable
Initial Mortgage or otherwise satisfactory in form and substance
to the Required Banks (i) pursuant to which the Borrower shall
mortgage any Borrower Engineered Property (other than a Borrower
Engineered Property that is already a Mortgaged Property) to the
Trustee as security for the obligations of the Borrower under the
Financing Documents, and (ii) with respect to which the Agent
shall have received such legal opinions from such Persons and
relating to such matters as the Required Banks may require in
their sole and absolute discretion.
"Future Net Revenue" means, with respect to any
Engineered Property and for any period, the future gross revenue
from such Engineered Property for such period as determined in
the then most recent Engineer's Report less the sum of (i) any
royalties payable in connection with such property during such
period, (ii) any overriding royalties payable in connection with
such property during such period, (iii) all production, ad
valorem and severance taxes relating to such property and payable
during such period and (iv) Capital Costs and Production Expenses
during such period necessary to provide such future gross
revenue.
"Group of Loans" means at any time a group of Loans
consisting of (i) all Loans which are Domestic Loans at such time
or (ii) all Loans which are Euro-Dollar Loans having the same
Interest Period at such time; provided that, if Loans of any
particular Bank are converted to or made as Domestic Loans
pursuant to Section 8.02 or 8.05, such Loans shall be included in
the same Group or Groups of Loans from time to time as they would
have been in if they had not been so converted or made.
"Guarantee" by any Person means any obligation,
contingent or otherwise, of such Person directly or indirectly
guaranteeing any Debt or other obligation of any other Person
and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether
arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Debt or other obligation of
the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hazardous Substances" means any toxic, radioactive,
caustic or otherwise hazardous substance, including petroleum,
its derivatives, by-products and other hydrocarbons, or any
substance having any constituent elements displaying any of the
foregoing characteristics.
"Hydrocarbons" means oil, gas, casinghead gas,
condensate and other liquid and gaseous hydrocarbons and all
other minerals produced in connection therewith.
"Indemnitee" has the meaning set forth in Section
10.03(b).
"Independent Petroleum Engineers" means Ryder Scott
Company or other petroleum engineers not regularly employed by or
otherwise affiliated with the Borrower or Wainoco selected by the
Borrower and Wainoco and approved by the Required Banks.
"Initial Borrower Engineer's Report" means the report
of Ryder Scott Company dated January 1, 1994, covering the
Borrower Engineered Properties, a copy of which has been
delivered to each of the Banks.
"Initial Engineer's Report" means the Initial Borrower
Engineer's Report or the Initial Wainoco Engineer's Report.
"Initial Mortgages" means the California Mortgage, the
Louisiana Mortgage, the Mississippi Mortgage and the Texas
Mortgages.
"Initial Wainoco Engineer's Report" means the report of
Ryder Scott Company dated January 1, 1994, covering the Wainoco
Engineered Properties, a copy of which has been delivered to each
of the Banks.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
Borrowing specified in the applicable Notice of Borrowing or on
the date specified in the applicable Notice of Interest Rate
Election and ending one, two, three or six months thereafter, as
the Borrower may elect in the applicable Notice; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar
Business Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) if any Interest Period includes a date on which a
payment of principal of the Loans is required to be made under
Section 2.04 but does not end on such date, then (i) the
principal amount (if any) of each Euro-Dollar Loan required to be
repaid on such date shall have an Interest Period ending on such
date and (ii) the remainder (if any) of each such Euro-Dollar
Loan shall have an Interest Period determined as set forth above.
(2) with respect to each Domestic Borrowing, the
period commencing on the date of Borrowing specified in the
applicable Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending 30 days
thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b)(i) below) which would otherwise
end on a day which is not a Euro-Dollar Business Day shall be
extended to the next succeeding Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a
payment of principal of the Loans is required to be made under
Section 2.04 but does not end on such date, then (i) the
principal amount (if any) of each Domestic Loan required to be
repaid on such date shall have an Interest Period ending on such
date and (ii) the remainder (if any) of each such Domestic Loan
shall have an Interest Period determined as set forth above.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended, or any successor statute.
"Investment" means any investment in any Person,
whether by means of share purchase, capital contribution, loan,
time deposit or otherwise.
"Lien" means any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind including, without
limitation, the rights of a vendor, lessor or similar party under
any conditional sale agreement or other title retention agreement
or lease substantially equivalent thereto, and the rights of the
holder of any production payment, advance payment or similar
interests.
"Loan" means a loan made by a Bank pursuant to Section
2.01; provided that if any such loan or loans (or portions
thereof) are combined or subdivided pursuant to a Notice of
Interest Rate Election, the term "Loan" shall refer to the
combined principal amount resulting from such combination or to
each of the separate principal amounts resulting from such
subdivision, as the case may be.
"London Interbank Offered Rate" has the meaning set
forth in Section 2.05(b).
"Louisiana Mortgage" means the Act of Collateral
Mortgage, Collateral Mortgage Note in the amount of $45,000,000,
Security Agreement and Act of Pledge of Collateral Mortgage Note
and Assignment of Production, Security Agreement and Financing
Statement entered into by the Borrower in connection with the
Original Credit Agreement and purporting to mortgage the property
interests described or referred to in the Initial Borrower
Engineer's Report in the Abbeville, Andrew, Fordoche, Grand
Marais, Murphy Lake, West Delta 20 and Larto Lake Fields situated
in or offshore of the State of Louisiana, as amended from time to
time.
"Margin" has the meaning set forth in Section 2.05(b).
"Material Debt" means Debt (other than the Notes) of
Wainoco and/or one or more of its Subsidiaries, arising in one or
more related or unrelated transactions, in an aggregate principal
or face amount exceeding $500,000.
"Material Financial Obligations" means a principal or
face amount of Debt and/or payment obligations in respect of
Derivatives Obligations of the Borrower and/or one or more of its
Subsidiaries, arising in one or more related or unrelated
transactions, exceeding in the aggregate $500,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of $500,000.
"Maturity Date" means the Quarterly Date falling in
December, 2000.
"Mississippi Mortgage" means the Mortgage, Deed of
Trust, Assignment, Security Agreement and Financing Statement
dated October 4, 1991 by the Borrower purporting to mortgage in
favor of Peter Rugg, as trustee and the Agent the property
interests described or referred to in the Initial Borrower
Engineer's Report in the Overton Field situated in the State of
Mississippi, as amended by the Modification and Extension
Agreement dated June 30, 1992, the Second Modification and
Extension Agreement dated March 31, 1993 and the Third
Modification and Extension Agreement dated the date hereof, and
as the same may be further amended from time to time.
"Mortgage Amendments" means (i) the Mortgage, Deed of
Trust, Assignment, Security Agreement, Financing Statement and
Fixture Filing Amendment and Extension Agreement of the
California Mortgage dated as of the date hereof, (ii) the Third
Modification and Extension Agreement of the Mississippi Mortgage
dated the date hereof and (iii) the Mortgage, Deed of Trust,
Assignment, Security Agreement and Financing Statement Amendment
and Extension of each of the Texas Mortgages, dated as of the
date hereof.
"Mortgaged Properties" means the property interests
described in the Initial Borrower Engineer's Report purported to
be mortgaged by the Borrower to the Trustee pursuant to the
Initial Mortgages and any other Borrower Engineered Properties
purported to be mortgaged by the Borrower to the Trustee pursuant
to any Further Mortgage, excluding any property interest or
Borrower Engineered Properties which have been released from a
Mortgage pursuant to Section 5.15(b).
"Mortgages" means the Initial Mortgages and any Further
Mortgages.
"Multiemployer Plan" means at any time an employee
pension benefit plan within the meaning of Section 4001(a)(3) of
ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the
preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"Net Proceeds from Petroleum Operations" means, for any
quarter, the gross revenues of the Borrower from the sale of
Hydrocarbons produced and saved from the Borrower Engineered
Properties less the sum of (i) any royalties paid by the Borrower
in connection with such properties during such period, (ii) any
overriding royalties paid by the Borrower in connection with such
properties during such period, (iii) all production, ad valorem
and severance taxes relating to such properties paid by the
Borrower during such period, and (iv) Capital Costs and
Production Expenses necessary to produce such revenues paid by
the Borrower during such period.
"Net Sales Proceeds" means, in respect of any sale,
lease or transfer of any Borrower Engineered Property, the gross
cash proceeds of such sale, lease or transfer less expenses
incurred in connection thereto including any commissions and
sales or transfer taxes.
"New Bank" means each party listed on the signature
pages hereof as a "New Bank".
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the
obligation of the Borrower to repay the Loans, and "Note" means
any one of such promissory notes issued hereunder.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
"Notice of Interest Rate Election" has the meaning set
forth in Section 2.08.
"Original Credit Agreement" has the meaning set forth
in the recitals hereto.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section
10.07(b).
"PBGC" means the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under
ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit
plan (other than a Multiemployer Plan) which is covered by Title
IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code and either (i) is
maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any
time within the preceding five years been maintained, or
contributed to, by any Person which was at such time a member of
the ERISA Group for employees of any Person which was at such
time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in New
York City from time to time as its Prime Rate.
"Principal Repayment Date" means each Quarterly Date
falling after the Termination Date and on or prior to the
Maturity Date.
"Production Expenses" means, with respect to any oil
and gas property, all cash costs and expenses (excluding general
and administrative expenses) incurred for or payable in
connection with the lifting, producing, gathering, separating,
treating, compressing, storing, processing, marketing,
transporting or otherwise handling Hydrocarbons from such
property, or developing, equipping, operating or maintaining such
property.
"Projected Cash Flow Available for Fixed Charges"
means, for any fiscal year, the amount determined pursuant to
Section 5.17(c) as (A) the projected Future Net Revenues from
Borrower Engineered Properties and the Wainoco Engineered
Properties for such fiscal year minus (B) general and
administrative expenses payable by Wainoco or any Subsidiary
during such fiscal year (as forecast by Wainoco and satisfactory
to the Required Banks) plus (C) the FHI EBITDA for the period of
eight consecutive quarters then most recently ended divided by
two minus (D) $5,000,000 (representing a notional allowance for
capital costs of FHI for such fiscal year).
"Quarterly Date" means the last Euro-Dollar Business
Day of each March, June, September and December.
"Reference Banks" means the principal London offices of
Banque Paribas and Morgan Guaranty Trust Company of New York.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from time
to time.
"Required Banks" means at any time Banks having at
least 66 2/3% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes
evidencing at least 66 2/3% of the aggregate unpaid principal
amount of the Loans.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of Wainoco's capital stock (except
dividends payable solely in shares of its capital stock) or (ii)
any payment on account of the purchase, redemption, retirement or
acquisition of (a) any shares of Wainoco's capital stock or (b)
any option, warrant or other right to acquire shares of Wainoco's
capital stock.
"Revolving Credit Period" means the period from and
including the Effective Date to and including the Termination
Date.
"Subsidiary" means, as to any Person, any corporation
or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person; unless
otherwise specified, "Subsidiary" means a Subsidiary of Wainoco.
"Temporary Cash Investment" means any Investment
in (i) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any
agency thereof, (ii) commercial paper rated at least A-1 by
Standard & Poor's Corporation and P-1 by Moody's Investors
Service, Inc., (iii) time deposits with, including certificates
of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of
the United States or any state thereof and has capital, surplus
and undivided profits aggregating at least $500,000,000 or (iv)
repurchase agreements with respect to securities described in
clause (i) above entered into with an office of a bank or trust
company meeting the criteria specified in clause (iii) above,
provided in each case that such Investment matures within one
year from the date of acquisition thereof by Wainoco or a
Subsidiary.
"Termination Date" means the Quarterly Date falling in
December, 1995.
"Texas Mortgages" means (i) the Mortgage, Deed of
Trust, Assignment, Security Agreement and Financing Statement
dated as of October 4, 1991 by the Borrower purporting to
mortgage in favor of Peter Rugg, as trustee and the Agent the
property interests described or referred to in the Initial
Borrower Engineer's Report in the Bartell Pass, Conroe, Oakhurst,
Seabrook, Personville, Smiley and Pearsall Fields situated in or
offshore of the State of Texas, as amended by the Mortgage, Deed
of Trust, Assignment, Security Agreement and Financing Statement
Extension Agreement dated as of June 30, 1992, the Second
Mortgage, Deed of Trust, Assignment, Security Agreement and
Financing Statement Extension Agreement dated as of March 31,
1993 and the Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement Amendment and Extension dated
as of the date hereof, as the same may be further amended from
time to time and (ii) the Mortgage, Deed of Trust, Assignment,
Security Agreement and Financing Statement dated as of March 24,
1994 by the Borrower purporting to mortgage in favor of the
Trustee and the Agent certain property interests in Kleberg
County, Texas and block 93 of the High Island Area, Texas, as
amended by the Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement Amendment and Extension dated
as of the date hereof, as the same may be further amended from
time to time.
"Transferees" means the Continuing Banks and the New
Banks.
"Trustee" means Philip W. McNeal in his capacity as
trustee under the Initial Mortgages, and his successors in such
capacity.
"Unfunded Liabilities" means, with respect to any Plan
at any time, the amount (if any) by which (i) the present value
of all benefits under such Plan exceeds (ii) the fair market
value of all Plan assets allocable to such benefits (excluding
any accrued but unpaid contributions), all determined as of the
then most recent valuation date for such Plan, but only to the
extent that such excess represents a potential liability of a
member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA.
"Value" means, with respect to any Engineered Property
(including, without limitation, a Mortgaged Property), the
Discounted Present Value of Future Net Revenue from such
Engineered Property as set forth in the then most recent
Engineer's Report.
"Wainoco" means Wainoco Oil Corporation, a Wyoming
corporation, and its successors.
"Wainoco Convertible Debentures" means the 7 3/4%
Convertible Subordinated Debentures of Wainoco due 2014.
"Wainoco Credit Agreement" means the Credit Agreement
dated as of October 7, 1991 among Wainoco, the banks listed on
the signature pages thereof and Morgan Bank Canada, as agent, as
amended from time to time.
"Wainoco Engineered Properties" means all interests
owned by Wainoco in oil and gas properties which are classified
"proved developed" or "proved undeveloped" in accordance with the
regulations of the Securities and Exchange Commission as in
effect on the date hereof.
"Wainoco Engineer's Report" means (a) the Initial
Wainoco Engineer's Report and (b) each report delivered by
Wainoco pursuant to Section 5.14(c) that (i) is certified by the
Independent Petroleum Engineers, (ii) is prepared in accordance
with established criteria generally accepted in the oil and gas
industry and standards customarily used by such Independent
Petroleum Engineers in making any determinations or appraisals,
(iii) is based upon the assumptions determined in accordance with
Section 5.14(d) and such other assumptions, estimates and
projections as are fully disclosed in such Wainoco Engineer's
Report, (iv) sets forth the matters specified in Section 5.14(c)
and (v) is satisfactory in form and substance to the Required
Banks.
"Wainoco's 1993 Form 10-K" means Wainoco's annual
report on Form 10-K for 1993, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934.
"Wainoco Senior Notes" means the 12% Senior Notes of
Wainoco due 2002.
"Wainoco Subordinated Debentures" means the 10 3/4%
Subordinated Debentures of Wainoco due 1998.
SECTION 1.02. Accounting Terms and Determinations.
Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes
concurred in by Wainoco's independent public accountants) with
the most recent audited consolidated financial statements of
Wainoco and its Consolidated Subsidiaries delivered to the Banks;
provided that, if Wainoco notifies the Agent that Wainoco wishes
to amend any covenant in Article V to eliminate the effect of any
change in generally accepted accounting principles on the
operation of such covenant (or if the Agent notifies Wainoco that
the Required Banks wish to amend Article V for such purpose),
then Wainoco's compliance with such covenant shall be determined
on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally
accepted accounting principles became effective, until either
such notice is withdrawn or such covenant is amended in a manner
satisfactory to Wainoco and the Required Banks.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. (a) During the
Revolving Credit Period each Bank severally agrees, on the terms
and conditions set forth in this Agreement, to lend to the
Borrower from time to time amounts not to exceed in the aggregate
at any one time outstanding the amount of its Commitment;
provided, that the Borrower may borrow on any date during the
Revolving Credit Period only an amount which, together with the
aggregate principal amount of the outstanding Loans, does not
exceed the Borrowing Base as of such date. Each Borrowing under
this subsection (a) shall be in an aggregate principal amount of
$1,000,000 or any larger multiple of $100,000 (except that any
such Borrowing may be in the aggregate amount of the unused
Commitments) and shall be made from the several Banks ratably
in proportion to their respective Commitments. Within the
foregoing limits, the Borrower may borrow under this subsection
(a), repay, or to the extent permitted by Section 2.09, prepay
Loans and reborrow at any time during the Revolving Credit Period
under this subsection (a). The Commitments shall terminate at
the close of business on the Termination Date.
(b) On or as promptly as practicable after each date
on which the Agent shall receive (i) a Borrower Engineer's Report
pursuant to Section 5.14(a) or 5.14(e), (ii) a request by the
Borrower for a redetermination of the Borrowing Base in
conjunction with a proposed sale, lease or other transfer of
Borrower Engineered Properties in lieu of a reduction otherwise
required by the provisions of the definition of Borrowing Base or
(iii) a request by the Borrower to increase the Borrowing Base
through the addition of incremental Borrower Engineered
Properties, which request shall be accompanied by a Borrower
Engineer's Report covering the properties proposed to be added
and such other information relating thereto as the Agent or any
Bank may reasonably request, the Agent shall determine the
proposed amount of the Borrowing Base and notify the Banks of its
determination. If each of the Banks shall approve such
determination, the Agent shall promptly after receiving such
approval notify the Borrower of the amount of the Borrowing Base
so determined whereupon the Borrowing Base shall equal the amount
so notified. If any Bank shall object to such determination,
then the Banks shall consult among themselves to determine a
mutually acceptable Borrowing Base, and the amount so agreed upon
by all Banks shall be the Borrowing Base and the Agent shall
promptly notify the Borrower thereof. In any event, the
determination of the Borrowing Base in accordance with this
Section 2.01(b) shall be accomplished within 45 days of the
delivery of the related Borrower Engineer's Report or request for
redetermination. The determination of the amount of the
Borrowing Base shall be based on the information relating to the
Borrower Engineered Properties set forth in the Borrower
Engineer's Report but subject to the customary practices and
standards of each Bank in determining the maximum amount that it
is willing to lend to a borrower on the basis of the future net
revenues of the hydrocarbon producing properties of such
borrower. In the determination of the Borrowing Base, the Banks
will have full discretion to determine which (if any)
non-producing and undeveloped Hydrocarbon reserves will be
included. The Banks may also make such adjustment as they deem
appropriate for other Debt of Wainoco and its Subsidiaries,
including without limitation the Wainoco Senior Notes.
SECTION 2.02. Method of Borrowing. (a) The Borrower
shall give the Agent notice (a "Notice of Borrowing") no later
than 12:00 Noon (New York City time) on the date of each Domestic
Borrowing and at least three Euro-Dollar Business Days before
each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to
bear interest initially at the Base Rate or the Euro-Dollar Rate,
and
(iv) in the case of a Euro-Dollar Borrowing, the duration
of the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the Agent
shall promptly notify each Bank of the contents thereof and of
such Bank's ratable share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 11:00 A.M. (New York City time) on
the date of each Euro-Dollar Borrowing and not later than 1:00
P.M. (New York City time) on the date of each Domestic Borrowing,
each Bank shall make available its ratable share of such
Borrowing, in Federal or other funds immediately available in New
York City, to the Agent at its address specified in or pursuant
to Section 10.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from the
Banks available to the Borrower at the Agent's aforesaid address.
(d) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not
make available to the Agent such Bank's share of such Borrowing,
the Agent may assume that such Bank has made such share available
to the Agent on the date of such Borrowing in accordance with
subsection (c) of this Section 2.02 and the Agent may, in
reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent that such
Bank shall not have so made such share available to the Agent,
such Bank and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to
the Agent, at (i) in the case of the Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest
rate applicable thereto pursuant to Section 2.05 and (ii) in the
case of such Bank, the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.03. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of such
Bank for the account of its Applicable Lending Office in an
amount equal to the aggregate unpaid principal amount of such
Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the
Agent, request that its Domestic Loans and Euro-Dollar Loans be
evidenced by separate Notes. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely
Domestic Loans or Euro-Dollar Loans, as the case may be. Each
reference in this Agreement to the "Note" of such Bank shall be
deemed to refer to and include either or both of such Notes, as
the context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall forward such Note to such Bank.
Each Bank shall record in its records the date, amount and type
of each Loan made by it and the date and amount of each payment
of principal made by the Borrower with respect thereto, and may,
if such Bank so elects in connection with any transfer or
enforcement of its Note, endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding;
provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligations of
the Borrower hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Note and
to attach to and make a part of its Note a continuation of any
such schedule as and when required.
SECTION 2.04. Maturity of Loans; Mandatory
Prepayments. The Borrower shall repay, and there shall become
due and payable, on each Principal Repayment Date, an aggregate
principal amount of the Loans equal to the greater of (a)
one-twentieth (1/20th) of the aggregate principal amount of the
Loans outstanding at the end of the Revolving Credit Period, and
(b) 80% of the Net Proceeds from Petroleum Operations for the
quarter then ended; provided that in any event the outstanding
Loans shall be repaid in full not later than the Maturity Date.
Each such payment shall be applied to such Group or Groups of
Loans as the Borrower may designate in the applicable Notice of
Borrowing or Notice of Interest Rate Election (or, failing such
designation, as determined by the Agent), and shall be applied to
repay ratably the Loans of the several Banks included in such
Group or Groups. If the amount of such payment is greater than
the amount referred to in clause (a) of this Section 2.04, then
the amount of the excess shall not reduce the amount of any
subsequent prepayment required by this Section until the Loans
have been paid in full. No optional prepayment made pursuant to
Section 2.09 after the end of the Revolving Credit Period or
contingent prepayment made pursuant to Section 2.10 after the end
of the Revolving Credit Period shall reduce the amount of any
subsequent prepayment required by this Section until the Loans
have been paid in full.
SECTION 2.05. Interest Rates. (a) Each Domestic Loan
shall bear interest on the outstanding principal amount thereof,
for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the sum of 3/4% of 1% plus the
Base Rate for such day; provided that if the Debt Ratio at the
last day of any fiscal quarter of the Borrower ending on or after
December 31, 1993 and on or prior to June 30, 1995 is greater
than 15%, then, for each day during the second succeeding fiscal
quarter of the Borrower, each of the above percentage amounts
shall be reduced by 1/4 of 1% (e.g., if the Debt Ratio at
December 31, 1994 is greater than 15%, as reflected in the
certificate required to be delivered pursuant to Section 5.01(c)
not later than March 31, 1995, then a 1/4 of 1% reduction shall
apply for the period April 1, 1995 through June 30, 1995). Such
interest shall be payable for each Interest Period on the last
day thereof and on each date a Domestic Loan is converted to a
Euro-Dollar Loan. Any overdue principal of or interest on any
Domestic Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 2% plus
the rate otherwise applicable to Domestic Loans for such day.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the
Margin plus the applicable Adjusted London Interbank Offered
Rate. Such interest shall be payable for each Interest Period on
the last day thereof and, if such Interest Period is longer than
three months, at intervals of three months after the first day
thereof.
"Margin" means 1 3/4%; provided that if the Debt Ratio
at the last day of any fiscal quarter of the Borrower ending on
or after December 31, 1993 and on or prior to June 30, 1995 is
greater than 15%, then, for each day during the second succeeding
fiscal quarter of the Borrower, each of the above percentage
amounts shall be reduced by 1/4 of 1% (e.g., if the Debt Ratio at
December 31, 1994 is greater than 15%, as reflected in the
certificate required to be delivered pursuant to Section 5.01(c)
not later than March 31, 1995, then a 1/4 of 1% reduction shall
apply for the period April 1, 1995 through June 30, 1995.
The "Adjusted London Interbank Offered Rate" applicable
to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upward, if necessary, to the next
higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage.
The "London Interbank Offered Rate" applicable to any
Interest Period means the average (rounded upward, if necessary,
to the next higher 1/16 of 1%) of the respective rates per annum
at which deposits in dollars are offered to each of the Reference
Banks in the London interbank market at approximately 11:00 A.M.
(London time) two Euro-Dollar Business Days before the first day
of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Reference Bank
to which such Interest Period is to apply and for a period of
time comparable to such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect
of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any
Bank to United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve
Percentage.
(c) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each
day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal
to the sum of 2% plus the higher of (i) the sum of the Margin
plus the Adjusted London Interbank Offered Rate applicable to
such Loan and (ii) the Margin plus the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing
(x) the average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which one day
(or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not
longer than six months as the Agent may select) deposits in
dollars in an amount approximately equal to such overdue payment
due to each of the Reference Banks are offered to such Reference
Bank in the London interbank market for the applicable period
determined as provided above by (y) 1.00 minus the Euro-Dollar
Reserve Percentage (or, if the circumstances described in clause
(a) or (b) of Section 8.01 shall exist, at a rate per annum equal
to the sum of 2% plus the rate applicable to Domestic Loans for
such day).
(d) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt
notice to the Borrower and the Banks of each rate of interest so
determined, and its determination thereof shall be conclusive in
the absence of manifest error.
(e) Each Reference Bank agrees to use its best efforts
to furnish quotations to the Agent as contemplated hereby. If
any Reference Bank does not furnish a timely quotation, the Agent
shall determine the relevant interest ate on the basis of the
quotation or quotations furnished y the remaining Reference Bank
or Banks or, if none of such quotations is available on a timely
basis, the provisions of Section 8.01 shall apply.
SECTION 2.06. Fees. (a) Participation Fee. The
borrower shall pay on the Effective Date to each Bank any unpaid
portion of its participation fee in the amount of 1% f the amount
of its Commitment.
(b) Commitment Fee. During he Revolving Credit
period, the Borrower shall pay to the Agent for the accounts f
the Banks ratably in proportion to their Commitments a commitment
fee at the rate of 1/2 of 1% per annum on the daily average
amount by which the aggregate amount of the commitments exceeds
the aggregate outstanding principal mount of the Loans. Such
commitment fee shall accrue from and including the Effective Date
to but
excluding the termination Date.
(c) Payments. Accrued commitment fees under this
Section shall be payable quarterly on each Quarterly Date and
upon the date of termination of the Commitments in their entirety
and, if later, the date the Loans shall be repaid n their
entirety.
SECTION 2.07. Termination or reduction of Commitments.
(a) During the Revolving Credit Period, the Borrower may, upon
at least three Domestic Business Days' notice to the Agent, (i)
terminate the Commitments at any time, if no Loans are
outstanding at such time or (ii) ratably reduce from time to time
by an aggregate amount of $3,000,000 or any larger multiple
thereof, the aggregate amount of the Commitments in excess of the
aggregate outstanding principal amount of the Loans.
(b) If the aggregate amount of the Commitments on July
15, 1994 is greater than $18,000,000, the Commitments shall be
ratably reduced effective on such date as necessary in order
that, after such reduction, the aggregate amount of the
Commitments is $18,000,000.
SECTION 2.08. Method of Electing Interest Rates. (a)
The Loans included in each Borrowing shall bear interest
initially at the type of rate specified by the Borrower in the
applicable Notice of Borrowing. Thereafter, the Borrower may
from time to time elect to change or continue the type of
interest rate borne by each Group of Loans (subject in each case
to the provisions of Article VIII), as follows:
(i) if such Loans are Domestic Loans, the Borrower may
elect to convert such Loans to Euro-Dollar Loans as of any
Euro-Dollar Business Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Domestic Loans or elect to
continue such Loans as Euro-Dollar Loans for an additional
Interest Period, in each case effective on the last day of the
then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a
"Notice of Interest Rate Election") to the Agent at least three
Euro-Dollar Business Days before the conversion or continuation
selected in such notice is to be effective. A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of
the aggregate principal amount of the relevant Group of Loans;
provided that (i) such portion is allocated ratably among the
Loans comprising such Group and (ii) the portion to which such
Notice applies, and the remaining portion to which it does not
apply, are each $1,000,000 or any larger multiple of $500,000.
(b) Each Notice of Interest Rate Election shall
specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply
with the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans are
Euro-Dollar Loans, the duration of the initial Interest Period
applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans
for an additional Interest Period, the duration of such
additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate
Election shall comply with the provisions of the definition of
Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election
from the Borrower pursuant to subsection (a) above, the Agent
shall promptly notify each Bank of the contents thereof and such
notice shall not thereafter be revocable by the Borrower. If the
Borrower fails to deliver a timely Notice of Interest Rate
Election to the Agent for any Group of Euro-Dollar Loans, such
Loans shall be converted into Domestic Loans on the last day of
the then current Interest Period applicable thereto.
SECTION 2.09. Optional Prepayments. (a) The Borrower
may, upon at least one Domestic Business Day's notice to the
Agent, prepay Domestic Loans in whole at any time, or from time
to time in part in amounts aggregating $1,000,000 or any larger
multiple of $500,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to
prepay ratably the Domestic Loans of the several Banks.
(b) The Borrower may, upon at least three Euro-Dollar
Business Days' notice to the Agent prepay the Loans comprising a
Group of Euro-Dollar Loans on the last day of any Interest Period
applicable to such group, in whole at any time, or from time to
time in part in amounts aggregating $1,000,000 or any larger
multiple of $500,000, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of
prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such
Group.
(c) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share of such
prepayment and such notice shall not thereafter be revocable by
the Borrower.
SECTION 2.10. Contingent Prepayments. (a) If on July
15, 1994, a Borrowing Base Excession exists, the Borrower shall
remedy on such date such Borrowing Base Excession by prepaying
together with accrued interest thereon to the date of prepayment
such principal amount of the Loans as may be necessary to reduce
the outstanding principal amount thereof to the Borrowing Base at
the date of prepayment. If at any other time a Borrowing Base
Excession exists, the Borrower shall forthwith notify the Agent
and the Banks and shall remedy such Borrowing Base Excession
through (i) prepaying together with accrued interest thereon to
the date of prepayment such principal amount of the Loans as may
be necessary to reduce the outstanding principal amount thereof
to the Borrowing Base at the date of prepayment, (ii) increasing
the Borrowing Base through the addition of incremental Borrower
Engineered Properties in accordance with Section 2.01(b)(iii) or
(iii) a combination of (i) and (ii) on or before the date falling
90 days after the date of inception of such Borrowing Base
Excession.
(b) If at any time the Borrower receives insurance
proceeds in an amount greater than $500,000 pursuant to insurance
effected in accordance with Section 5.03(d), the Borrower shall
forthwith notify the Agent of such receipt. If within 15 days
after receipt the Borrower shall not have expended such proceeds
or committed to expend an amount equivalent thereto for the
restoration or replacement of the asset in respect of which such
payment was made, then the Borrower shall forthwith prepay
together with accrued interest thereon to the date of prepayment
an aggregate principal amount of the Loans equal to the amount of
such proceeds.
SECTION 2.11. General Provisions as to Payments. (a)
The Borrower shall make each payment of principal of, and
interest on, the Loans, of commitment fees and of all other
amounts payable hereunder, not later than 11:00 A.M. (New York
City time) on the date when due, in Federal or other funds
immediately available in New York City, to the Agent at its
address referred to in Section 10.01. The Agent will promptly
distribute to each Bank its proper share (if any) of each such
payment received by the Agent for the account of any or all of
the Banks. Whenever any payment of principal of, or interest on,
the Domestic Loans or of commitment fees shall be due on a day
which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic
Business Day. Whenever any payment of principal of, or interest
on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless
such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any payment
of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Banks hereunder that the Borrower will not make such payment in
full, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such
Bank. If and to the extent that the Borrower shall not have so
made such payment, each Bank shall repay to the Agent forthwith
on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such
amount to the Agent, at the Federal Funds Rate.
SECTION 2.12. Funding Losses. If the Borrower makes
any payment of principal with respect to any Euro-Dollar Loan or
any Euro-Dollar Loan is converted to a Domestic Loan (pursuant to
Article VI or VIII or otherwise) on any day other than the last
day of the Interest Period applicable thereto, or the end of an
applicable period fixed pursuant to Section 2.05(c), or if the
Borrower fails to borrow or prepay any Euro-Dollar Loans after
notice has been given to any Bank in accordance with Section
2.02(b) or 2.09(c), the Borrower shall reimburse each Bank within
15 days after demand for any resulting loss or expense incurred
by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred
in obtaining, liquidating or employing deposits from third
parties, but excluding loss of Margin for the period after any
such payment or failure to borrow, provided that such Bank shall
have delivered to the Borrower a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in
the absence of manifest error.
SECTION 2.13. Computation of Interest and Fees.
Interest based on Prime Rate hereunder shall be computed on the
basis of a year of 365 days (or 366 days in a leap year) and paid
for the actual number of days elapsed (including the first day
but excluding the last day). All other interest and fees shall
be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but
excluding the last day).
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Amended Agreement
shall become effective on the date that each of the following
conditions shall have been satisfied:
(a) receipt by the Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received,
receipt by the Agent in form satisfactory to it of telegraphic,
telex or other written confirmation from such party of execution
of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Bank of a
duly executed Note dated on or before the Effective Date
complying with the provisions of Section 2.03;
(c) receipt by the Agent of an opinion of Gardere & Wynne,
L.L.P., counsel for the Borrower and Wainoco, substantially in
the form of Exhibit B hereto and covering such additional matters
relating to the transactions contemplated hereby as the Required
Banks may reasonably request;
(d) receipt by the Agent of an opinion of Andrews & Kurth
L.L.P., special Texas and California counsel for the Borrower,
substantially in the form of Exhibit C hereto and covering such
additional matters relating to the transactions contemplated
hereby as the Required Banks may reasonably request;
(e) receipt by the Agent of an opinion of Gordon, Arata,
McCollam & Duplantis, L.L.P., special Louisiana counsel for the
Borrower, substantially in the form of Exhibit D hereto and
covering such additional matters relating to the transactions
contemplated hereby as the Required Banks may reasonably request;
(f) receipt by the Agent of an opinion of Eaton & Cottrell,
P.A., special Mississippi counsel for the Borrower, substantially
in the form of Exhibit E hereto and covering such additional
matters relating to the transactions contemplated hereby as the
Required Banks may reasonably request;
(g) receipt by the Agent of an opinion of Davis Polk &
Wardwell, special counsel for the Agent, substantially in the
form of Exhibit F hereto and covering such additional matters
relating to the transactions contemplated hereby as the Required
Banks may reasonably request;
(h) receipt by the Agent of a duly executed copy of each of
the Mortgage Amendments;
(i) receipt by the Agent of all documents or opinions it
may reasonably request relating to the existence of the Borrower
and Wainoco, the corporate authority for and the validity of the
Financing Documents, the Borrower's title to the Mortgaged
Properties, and any other matters relevant hereto, all in form
and substance satisfactory to the Agent;
Provided that this Agreement shall not become effective or be
binding on any party hereto unless all of the foregoing
conditions are satisfied not later than June 10, 1994.
On the Effective Date, each Departing Bank shall assign
and sell, and by its execution and delivery hereof each Departing
Bank does, subject to the effectiveness hereof, hereby assign and
sell all of the loans held by such Departing Bank and all of the
notes in favor of such Departing Bank outstanding under the
Original Credit Agreement and all of the rights of such Departing
Bank under the Original Credit Agreement to the Transferees
severally in such proportions as may be necessary in order that,
after giving effect thereto, the loans and notes so transferred
shall be held by the Transferees in proportion to their
respective Commitments set forth on the signature pages of this
Amended Agreement, and the Transferees, severally as aforesaid,
shall accept, and by its execution and delivery hereof each
Transferee hereby does, subject to the effectiveness hereof,
accept such assignment and in consideration thereof each
Transferee shall pay to the Agent for the account of each
Departing Bank on the Effective Date an amount equal to its
several share of the aggregate principal amount of the loans of
such Departing Bank outstanding on the Effective Date. The
foregoing assignment shall be without any representation or
warranty on the part of and without recourse to the Departing
Banks.
None of the Departing Banks shall have any
responsibility with respect to the solvency, financial condition,
or statements of the Borrower or Wainoco, or the validity and
enforceability of the obligations of the Borrower and Wainoco in
respect of this Amended Agreement or any Note. Each Bank
acknowledges that it has, independently and without reliance on
any of the Departing Banks, and based on such documents and
information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Amended Agreement and
will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the
Borrower and Wainoco.
On the Effective Date, the following transactions shall
occur simultaneously:
(i) the Borrower shall pay to the Agent for the account of
each Departing Bank, interest and fees accrued to the Effective
Date and any other amounts payable by it hereunder or under the
Original Credit Agreement for the account of such Departing Bank;
(ii) the Original Credit Agreement shall be automatically
amended and restated in its entirety to read as set forth herein;
and
(iii) the New Banks shall become Banks parties to this
Agreement with Commitments as set forth on the signature pages of
this Amended Agreement and the Departing Banks shall cease to be
Banks parties to this Agreement and their Commitments under the
Original Credit Agreement shall terminate.
On and after the Effective Date, the rights and obligations of
the parties hereto shall be governed by this Amended Agreement;
provided the rights and obligations of the parties to the
Original Credit Agreement with respect to the period prior to the
Effective Date shall continue to be governed by the provisions of
the Original Credit Agreement. The Note delivered to each Bank
under the Original Credit Agreement shall be replaced and the
Notes under this Agreement shall be given in substitution
therefor. Each Continuing Bank and Departing Bank shall deliver
to the Agent the Note delivered to such Bank under the Original
Credit Agreement, which the Agent shall mark "Renewed" and shall
hold as additional evidence of the indebtedness of the Borrower
hereunder. The Agent shall promptly notify the Borrower and the
Banks of the Effective Date, and such notice shall be conclusive
and binding on all parties hereto.
SECTION 3.02. Indebtedness under the Original Credit
Agreement. On the Effective Date but subject to the conditions
set forth in Section 3.01 hereof, the Euro-Dollar Loans and
Domestic Loans, as such terms are defined under the Original
Credit Agreement, due to each Bank shall be deemed to be the
initial Euro-Dollar Loans or Domestic Loans, as the case may be,
made by such Bank, it being the intention of the parties hereto
that (i) all indebtedness evidenced by the notes under the
Original Credit Agreement on the Effective Date shall thereafter
be solely evidenced by the Notes, (ii) the loans outstanding
under the Original Credit Agreement on the Effective Date shall
be automatically converted on such date into Domestic Loans
and/or Euro-Dollar Loans, as appropriate, having Interest Periods
identical to the corresponding interest periods under the
Original Credit Agreement and bearing interest as provided with
respect to Loans in Article II hereof the same as if such loans
were originally requested and made under this Amended Agreement
instead of the Original Credit Agreement and (iii) the liens
created by the Initial Mortgages on the properties described
therein shall be carried forward and continued in full force and
effect for the purpose of securing the Notes.
SECTION 3.03. Borrowings. The obligation of any Bank
to make a Loan on the occasion of any Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.02;
(b) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not
exceed the aggregate amount of the Commitments;
(c) the fact that, immediately after such Borrowing, the
aggregate outstanding principal amount of the Loans will not
exceed the Borrowing Base at such time;
(d) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing; and
(e) the fact that the representations and warranties of the
Borrower and Wainoco contained in the Financing Documents shall
be true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation
and warranty by the Borrower and Wainoco on the date of such
Borrowing as to the facts specified in clauses (b), (c), (d) and
(e) of this Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower and Wainoco jointly and severally
represent and warrant that:
SECTION 4.01. Corporate Existence and Power. Each of
the Borrower and Wainoco is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery and
performance by the Borrower and Wainoco of this Agreement and by
the Borrower of the Mortgages and the Notes are within their
respective corporate powers, have been duly authorized by all
necessary corporate action, require no action by or in respect
of, or filing with, any governmental body, agency or official
(except such filings as may be necessary to perfect the Liens of
the Mortgages) and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or
Wainoco or of any agreement, judgment, injunction, order, decree
or other instrument binding upon the Borrower or Wainoco or any
Subsidiary or result in the creation or imposition of any Lien on
any asset of the Borrower or Wainoco or any of its Subsidiaries
(other than the Liens created by the Mortgages).
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower and
Wainoco, the Initial Mortgages constitute valid and binding
agreements of the Borrower and the Notes and Further Mortgages,
when executed and delivered in accordance with this Agreement,
will constitute valid and binding obligations of the Borrower, in
each case enforceable against such party in accordance with their
respective terms except (i) as the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (ii) as rights of acceleration and
the availability of equitable remedies may be limited by
equitable principles of general applicability, (iii) that certain
of the remedial provisions of the Mortgages may be limited by
applicable law, although such limitations do not in the opinion
of the Borrower or Wainoco make the remedies provided for therein
(taken as a whole) inadequate for the practical realization of
the benefits intended to be afforded thereby and (iv) to the
extent any Further Mortgage may be considered a transfer or
assignment in relation to a State of Louisiana lease, such
document must be approved by the Louisiana State Mineral Board.
SECTION 4.04. Financial Information. (a) The
consolidated balance sheet of Wainoco and its Consolidated
Subsidiaries as of December 31, 1993 and the related consolidated
statements of income, shareholders' equity and cash flows for the
fiscal year then ended, reported on by Arthur Andersen & Co. and
set forth in Wainoco's 1993 Form 10-K, a copy of which has been
delivered to each of the Banks, fairly present, in conformity
with generally accepted accounting principles, the consolidated
financial position of Wainoco and its Consolidated Subsidiaries
as of such date and their consolidated results of operations and
cash flows for such fiscal year.
(b) Since December 31, 1993 there has been no material
adverse change in the business, financial position, results of
operations or prospects of Wainoco and its Consolidated
Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Borrower
or Wainoco threatened against or affecting, the Borrower, Wainoco
or any of its Subsidiaries before any court or arbitrator or any
governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated financial
position or consolidated results of operations of Wainoco and its
Consolidated Subsidiaries or which in any manner draws into
question the validity of any of the Financing Documents.
SECTION 4.06. Compliance with ERISA. Each member of
the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with
respect to each Plan and is in compliance in all material
respects with the presently applicable provisions of ERISA and
the Internal Revenue Code with respect to each Plan. No member
of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in
respect of any Plan, (ii) failed to make any contribution or
payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit
Arrangement, which has resulted or could result in the imposition
of a Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary
course of its business, Wainoco conducts an ongoing review of the
effect of Environmental Laws on the business, operations and
properties of Wainoco and its Subsidiaries, in the course of
which it identifies and evaluates associated liabilities and
costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties
presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a
condition of any license, permit or contract, any related
constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of
or change in the nature of operations conducted thereat, any
costs or liabilities in connection with off-site disposal of
wastes or Hazardous Substances, and any actual or potential
liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review,
Wainoco has reasonably concluded that such associated liabilities
and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a material adverse effect on the
business, financial condition, results of operations or prospects
of Wainoco and its Consolidated Subsidiaries, considered as a
whole.
SECTION 4.08. Taxes. Wainoco and its Subsidiaries
have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them
and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by Wainoco or any Subsidiary. The
charges, accruals and reserves on the books of Wainoco and its
Subsidiaries in respect of taxes or other governmental charges
are, in the opinion of Wainoco, adequate.
SECTION 4.09. Subsidiaries. Each of Wainoco's
corporate Subsidiaries is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers and
all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted.
SECTION 4.10. Regulation. Neither the Borrower nor
Wainoco is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the Investment Company Act of
1940, as amended, or any other law or regulation that limits the
incurrence by Wainoco or any Subsidiary of Debt, including,
without limitation, laws relating to common or contract carriers
or the sale of electricity, gas, steam or other public utility
services.
SECTION 4.11. Full Disclosure. All information
heretofore furnished by the Borrower or Wainoco to the Agent or
any Bank for purposes of or in connection with this Agreement or
any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower or Wainoco to the Agent or
any Bank will be, true and accurate in all material respects on
the date as of which such information is stated or certified.
The Borrower and Wainoco have disclosed to the Banks in writing
any and all facts which materially and adversely affect or may
affect (to the extent the Borrower and Wainoco can now reasonably
foresee), the business, operations or financial condition of
Wainoco and its Consolidated Subsidiaries, taken as a whole, or
the ability of the Borrower or Wainoco to perform its obligations
under any of the Financing Documents to which it is a party.
SECTION 4.12. Mortgaged Properties. The Borrower has
good and marketable title to all Mortgaged Properties subject to
no prior or equal Liens except Liens permitted under Section
5.10.
SECTION 4.13. Mortgage Liens. The Mortgages create
valid and perfected Liens against the Mortgaged Properties
purported to be subjected thereto securing the payment of the
obligations of the Borrower under the Financing Documents and all
other obligations purported to be secured thereby subject to no
prior or equal Liens except Liens permitted under Section 5.10
SECTION 4.14. Reserve Data and Projections. The
statements and conclusions as to oil and gas reserves and
forecast results included in the Initial Engineer's Reports are,
and all such information included in any future Engineer's Report
will be, based upon the best information available to the
Borrower and Wainoco at the time such statements were or are made
and take or will take into consideration all information which,
in the reasonable judgment of the Borrower and Wainoco, was or is
believed to be material at the time (determined in accordance
with standards customarily applicable to professionals in the oil
and gas industry), it being understood that such statements and
conclusions are necessarily based upon professional opinions,
estimates and projections, and neither the Borrower nor Wainoco
warrants that such opinions, estimates and projections will
ultimately prove to have been accurate.
SECTION 4.15. Gas Imbalances. Except as specifically
disclosed in a Borrower Engineer's Report, there are no gas
imbalances, take or pay or other prepayments with respect to any
Borrower Engineered Properties which would require the Borrower
to deliver Hydrocarbons produced from any of the Borrower
Engineered Properties at some future time without then or
thereafter receiving full payment therefor, which exceed $500,000
in the aggregate.
ARTICLE V
COVENANTS
The Borrower and Wainoco jointly and severally agree
that, so long as any Bank has any Commitment hereunder or any
amount payable under any Note remains unpaid:
SECTION 5.01. Information. Wainoco will deliver to
each of the Banks:
(a) as soon as available and in any event within 90 days
after the end of each fiscal year, a consolidated balance sheet
of each of the Borrower and Wainoco and their respective
Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, shareholders'
equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal
year, such consolidated financial statements of Wainoco to be
reported on in a manner acceptable to the Securities and Exchange
Commission by Arthur Andersen & Co. or other independent public
accountants of nationally recognized standing and such
consolidated financial statements of the Borrower to be certified
as to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the
chief accounting officer of Wainoco;
(b) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each fiscal
year, a consolidated balance sheet of each of the Borrower and
Wainoco and their respective Consolidated Subsidiaries as of the
end of such quarter and the related consolidated statements of
income and cash flows for such quarter and for the portion of the
fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding
quarter and the corresponding portion of the previous fiscal
year, all certified (subject to normal year-end adjustments) as
to fairness of presentation, generally accepted accounting
principles and consistency by the chief financial officer or the
chief accounting officer of Wainoco;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer or the chief
accounting officer of Wainoco (i) setting forth in reasonable
detail the calculations required to establish whether the
Borrower and Wainoco were in compliance with the requirements of
Sections 5.13, 5.18 and 5.19 on the date of such financial
statements, (ii) stating whether any Default exists on the date
of such certificate and, if any Default then exists, setting
forth the details thereof and the action which it is taking or
proposes to take with respect thereto and (iii) setting forth a
calculation of the Debt Ratio as of the date of such financial
statements;
(d) simultaneously with the delivery of each set of
Wainoco's financial statements referred to in clause (a) above, a
statement of the firm of independent public accountants which
reported on such statements (i) whether anything has come to
their attention to cause them to believe that any Default existed
on the date of such statements and (ii) confirming the
calculations set forth in the officer's certificate delivered
simultaneously therewith pursuant to clause (c) above;
(e) within five days after any officer of the Borrower or
Wainoco obtains knowledge of any Default, if such Default is then
continuing, a certificate of the chief financial officer or the
chief accounting officer of Wainoco setting forth the details
thereof and the action which it is taking or proposes to take
with respect thereto;
(f) promptly upon the mailing thereof to the shareholders
of Wainoco generally, copies of all financial statements, reports
and proxy statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and
reports on Forms 10-K, 10-Q and 8-K (or their equivalents) which
Wainoco shall have filed with the Securities and Exchange
Commission;
(h) if and when any member of the ERISA Group (i) gives or
is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event
given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in reorganization,
is insolvent or has been terminated, a copy of such notice; (iii)
receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee
to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii) fails to
make any payment or contribution to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted
or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial
officer or the chief accounting officer of Wainoco setting forth
details as to such occurrence and action, if any, which Wainoco
or applicable member of the ERISA Group is required or proposes
to take;
(i) simultaneously with each delivery of a Wainoco
Engineer's Report pursuant to Section 5.14(c), but no more than
once a year, a forecast of general and administrative expenses
and FHI EBITDA and such other information as the Agent may
require in order to confirm Wainoco's calculation of Projected
Cash Flow Available for Fixed Charges pursuant to Section
5.17(c);
(j) within ten days after the Effective Date, a certificate
of an officer of the Borrower stating that each of the Mortgage
Amendments has been duly filed under the laws of each State in
which the Mortgaged Properties described in Exhibit A to the
Initial Mortgages are situated and such other evidence of such
filings as the Agent shall reasonably request; and
(k) from time to time such additional information regarding
the financial position or business of the Borrower, Wainoco and
its Subsidiaries as the Agent, at the request of any Bank, may
reasonably request.
SECTION 5.02. Payment of Obligations. The Borrower
and Wainoco will pay and discharge, and Wainoco will cause each
Subsidiary to pay and discharge, at or before maturity, all their
respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be
contested in good faith by appropriate proceedings, and will
maintain, and Wainoco will cause each Subsidiary to maintain, in
accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
SECTION 5.03. Maintenance and Development of Borrower
Engineered Properties and Other Property; Insurance. (a) The
Borrower and Wainoco will, and Wainoco will cause each Subsidiary
to, maintain the Borrower Engineered Properties operated by such
Person and related facilities and equipment in good repair and
condition, and from time to time make all necessary and proper
repairs, replacements and renewals; and operate the same in
accordance with good oil field practice; and take all necessary
and advisable action to maintain, protect and defend all the
rights, titles and interests of the Borrower, Wainoco or such
Subsidiary to the Borrower Engineered Properties.
(b) The Borrower and Wainoco will, and Wainoco will
cause each Subsidiary to, take all actions available to such
Person with respect to any of the Borrower Engineered Properties
which are operated by operators other than the Borrower, Wainoco
or any Subsidiary, under applicable operating arrangements or
otherwise, which are reasonably necessary to cause such operators
to operate prudently in accordance with good oil field practice
and to perform any such undertakings required to be performed by
such operators; and perform its obligations (including, without
limitation, payment of its share of all operating expenses) with
respect thereto.
(c) The Borrower and Wainoco will keep, and Wainoco
will cause each Subsidiary to keep, all property otherwise not
subject to Section 5.03(a) useful and necessary in its business
in good working order and condition, ordinary wear and tear
excepted.
(d) The Borrower and Wainoco will, and Wainoco will
cause each of its Subsidiaries to, use all necessary and
reasonable efforts to cause each Borrower Engineered Property to
be developed in such manner, and will devote such funds to such
purpose, as would a reasonably prudent Person similarly situated
and (subject to the foregoing) on a basis consistent with the
most recent Borrower Engineer's Report covering such Borrower
Engineered Property.
(e) The Borrower and Wainoco will, and Wainoco will
cause each of its Subsidiaries to, maintain (either in the name
of the Borrower, Wainoco or in such Subsidiary's own name) with
financially sound and responsible insurance companies, insurance
on all their respective properties in at least such amounts and
against at least such risks (and with such risk retention) as are
usually insured against in the same general area by companies of
established repute engaged in the same or a similar business
including property insurance, public liability insurance for
bodily injury and property damage, well-control coverage
insurance, workmen's compensation insurance and insurance against
loss or damage by employee dishonesty, theft, fire, lightning,
hail, windstorm, explosion, hazards, casualties and other
contingencies; and will furnish to the Banks, upon request from
the Agent, information presented in reasonable detail as to the
insurance so carried.
SECTION 5.04. Conduct of Business and Maintenance of
Existence. The Borrower and Wainoco will continue, and Wainoco
will cause each Subsidiary to continue, to engage in business of
the same general type as now conducted by the Borrower, FHI,
Wainoco and its Subsidiaries, and will preserve, renew and keep
in full force and effect, and Wainoco will cause each Subsidiary
to preserve, renew and keep in full force and effect their
respective corporate existence and their respective rights,
privileges and franchises necessary or desirable in the normal
conduct of business; provided that nothing in this Section 5.04
shall prohibit (i) the merger of a Subsidiary (other than the
Borrower) with or into another Person (other than the Borrower or
Wainoco) if the corporation surviving such consolidation or
merger is a Subsidiary and if, in each case, after giving effect
thereto, no Default shall have occurred and be continuing or (ii)
the termination of the corporate existence of any Subsidiary
(other than the Borrower) if Wainoco in good faith determines
that such termination is in the best interest of the Borrower and
Wainoco and is not materially disadvantageous to the Banks.
SECTION 5.05. Compliance with Laws. Wainoco will
comply, and cause each Subsidiary to comply, in all material
respects with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws and ERISA and
the rules and regulations thereunder) except where the necessity
of compliance therewith is contested in good faith by appropriate
proceedings.
SECTION 5.06. Inspection of Property, Books and
Records. Wainoco will keep, and will cause each Subsidiary
to keep, proper books of record and account in which full, true
and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will
permit, and will cause each Subsidiary to permit, representatives
of any Bank at such Bank's expense to visit and inspect any of
their respective properties, to examine and make abstracts from
any of their respective books and records and to discuss their
respective affairs, finances and accounts with their respective
officers, employees and independent public accountants, all at
such reasonable times and as often as may reasonably be desired.
SECTION 5.07. Debt. Neither Wainoco nor any
Subsidiary will, after the date hereof, create, incur or assume
any Debt other than (i) under the Financing Documents, (ii) in
the case of Wainoco, not to exceed Cnd.$37,500,000 under the
Wainoco Credit Agreement, (iii) in the case of FHI, Debt not to
exceed U.S.$50,000,000 under the FHI Credit Agreement, (iv) in
the case of Wainoco, loans or advances by any Person (not being a
Subsidiary) to it for working capital purposes in an aggregate
amount not exceeding $2,500,000 at any one time, (v) loans or
advances by Wainoco to a Subsidiary or by a Subsidiary to
Wainoco, (vi) in the case of Wainoco, the Wainoco Senior Notes
not to exceed $100,000,000, (vii) in the case of Wainoco, not to
exceed $46,000,000 under the Wainoco Convertible Debentures, and
(viii) in the case of Wainoco, not to exceed $12,500,000 under
the Wainoco Subordinated Debentures.
SECTION 5.08. Restricted Payments. Neither Wainoco
nor any Subsidiary will declare or make any Restricted Payment
other than, in the case of Wainoco, any interest or sinking fund
payment on or in respect of the Wainoco Convertible Debentures.
SECTION 5.09. Investments. Neither Wainoco nor any
Consolidated Subsidiary will make or acquire any Investment in
any Person other than:
(a) Investments in Subsidiaries existing on the date
hereof; and
(b) Temporary Cash Investments.
SECTION 5.10. Negative Pledge. Neither Wainoco nor
any Subsidiary will create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, except:
(a) any Lien arising pursuant to the Mortgages;
(b) any Lien on any asset of Wainoco securing Debt of
Wainoco under the Wainoco Credit Agreement;
(c) any Lien on any asset of FHI or any FHI Subsidiary
securing Debt of FHI or an FHI Subsidiary;
(d) Liens arising in the ordinary course of its business
which (i) do not secure Debt or Derivatives Obligations, (ii) do
not secure any payment obligation in an amount exceeding
$1,000,000 and (iii) do not in the aggregate materially detract
from the value of its assets or materially impair the use thereof
in the operation of its business; and
(e) Liens on cash and cash equivalents securing Derivatives
Obligations, provided that the aggregate amount of cash and cash
equivalents of Wainoco and its Subsidiaries subject to such Liens
may at no time exceed $3,000,000.
SECTION 5.11. Consolidations, Mergers and Sales of
Assets. Neither the Borrower nor Wainoco will (i) consolidate or
merge with or into any other Person or (ii) sell, lease or
otherwise transfer, directly or indirectly, all or any
substantial part of the assets of Wainoco and its Subsidiaries,
taken as a whole, to any other Person.
SECTION 5.12. Use of Proceeds. The proceeds of the
Loans made under this Agreement will be used by the Borrower for
its general corporate purposes. None of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any "margin stock"
within the meaning of Regulation U.
SECTION 5.13. Value of Mortgaged Properties. If the
aggregate Value of the Mortgaged Properties at any time is less
than 80% of the aggregate Value of the Borrower Engineered
Properties, the Borrower shall forthwith notify the Agent. On or
before the date falling 30 days after the date on which the
Borrower receives from the Independent Petroleum Engineers the
Borrower Engineer's Report indicating the aggregate Value of the
Mortgaged Properties has fallen below 80% of the aggregate Value
of the Borrower Engineered Properties, the Borrower shall execute
such Further Mortgages as are necessary to ensure that the
aggregate Value of the Mortgaged Properties at all times is
greater than or equal to 80% of the aggregate Value of the
Borrower Engineered Properties.
SECTION 5.14. Engineer's Reports. (a) Within 60 days
after the end of each fiscal year of the Borrower, the Borrower
shall deliver to the Agent and each of the Banks a Borrower
Engineer's Report for all Borrower Engineered Properties
(separately identifying each Borrower Engineered Property)
prepared by the Independent Petroleum Engineers, and setting
forth, with respect to each property covered, as of the last date
of such fiscal year:
(i) the projected gross and net volumes of Hydrocarbons
reasonably expected to be produced from such Borrower Engineered
Property, by years, for each succeeding year during the expected
period of production from such Borrower Engineered Property,
(ii) the Future Net Revenue and the Discounted Present
Value of Future Net Revenue from such Borrower Engineered
Property, by years, for each succeeding year during the expected
period of production from such Borrower Engineered Property, and
(iii) the aggregate amounts covered in items (i) and (ii)
above for all Borrower Engineered Properties,
in each case showing in reasonable detail all computations in
connection therewith.
(b) Within 30 days before the end of each fiscal year
of the Borrower, the Agent will specify to the Borrower the
assumptions to be made by the Independent Petroleum Engineers in
preparing the Borrower Engineer's Report with respect to such
fiscal year. Each such Borrower Engineer's Report should be
based upon (i) such specified assumptions, and (ii) such other
assumptions, not inconsistent with the assumptions specified by
the Agent, proposed by the Borrower to the Banks within 30 days
before the end of such fiscal year and not disapproved by the
Required Banks within 15 days after the end of such fiscal year.
(c) Within 60 days after the end of each fiscal year
of Wainoco, Wainoco shall deliver to the Agent and each of the
Banks a Wainoco Engineer's Report for all Wainoco Engineered
Properties (separately identifying each Wainoco Engineered
Property) prepared by the Independent Petroleum Engineers, and
setting forth, with respect to each property covered, as of the
last date of such fiscal year:
(i) the projected gross and net volumes of Hydrocarbons
reasonably expected to be produced from such Wainoco Engineered
Property, by years, for each succeeding year during the expected
period of production from such Wainoco Engineered Property,
(ii) the Future Net Revenue and the Discounted Present
Value of Future Net Revenue from such Wainoco Engineered
Property, by years, for each succeeding year during the expected
period of production from such Wainoco Engineered Property, and
(iii) the aggregate amounts covered in items (i) and (ii)
above for all Wainoco Engineered Properties,
in each case showing in reasonable detail all computations in
connection herewith.
(d) Within 30 days before the end of each fiscal year
of Wainoco, the Agent will specify to Wainoco the assumptions to
be made by the Independent Petroleum Engineers in preparing the
Wainoco Engineer's Report with respect to such fiscal year. Each
such Wainoco Engineer's Report should be based upon (i) such
specified assumptions, and (ii) such other assumptions, not
inconsistent with the assumptions specified by the Agent,
proposed by Wainoco to the Banks within 30 days before the end of
such fiscal year and not disapproved by the Required Banks within
15 days after the end of such fiscal year.
(e) As promptly as practicable, and in any event,
within 90 days, after a request therefor by Banks having 50% or
more of the aggregate amount of the Commitments (which request
shall be made not more than twice during any fiscal year), the
Borrower shall deliver to the Agent and each of the Banks a
Borrower Engineer's Report for all Borrower Engineered
Properties, prepared by the Independent Petroleum Engineers, and
setting forth, with respect to the properties covered, as of the
last day preceding such request, the information described in
items (i) through (iii) of subsection (a) above. At the time of
any request by the Required Banks under this Section 5.14(e), the
Agent will specify to the Borrower the assumptions to be made by
the Independent Petroleum Engineers in preparing such Borrower
Engineer's Report.
SECTION 5.15. Disposition of Borrower Engineered
Properties. (a) The Borrower will not sell, lease or otherwise
transfer any of the Borrower Engineered Properties unless (i)
such transaction is on an arm's length basis and for fair market
value, (ii) such transaction is permitted under Section 5.11,
(iii) after such transaction, no Default shall have occurred and
be continuing and (iv) such transaction and any resulting
reduction in the Borrowing Base shall neither cause a Borrowing
Base Excession to exist nor increase the amount of an existing
Borrowing Base Excession.
(b) If the Borrower shall deliver to the Agent a
certificate certifying that any Mortgaged Property has been sold
or transferred in accordance with Section 5.15(a), the Agent
shall, and shall cause the Trustee to, execute and deliver all
instruments reasonably requested by the Borrower to effect and
record a release of such Mortgaged Property; provided that no
such release shall affect the Lien of any Mortgage on any other
Mortgaged Property or the rights and obligations of the parties
with respect thereto.
SECTION 5.16. Transactions with Affiliates. The
Borrower and Wainoco will not, and Wainoco will not permit any
Subsidiary to, directly or indirectly, pay any funds to or for
the account of, make any investment (whether by acquisition of
stock or indebtedness, by loan, advance, transfer of property,
guarantee or other agreement to pay, purchase or service,
directly or indirectly, any Debt, or otherwise) in, lease, sell,
transfer or otherwise dispose of any assets, tangible or
intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement
with, any Affiliate; provided, however, that the foregoing
provisions of this Section shall not prohibit (a) the Borrower or
Wainoco from declaring or paying any lawful dividend so long as,
after giving effect thereto, no Default shall have occurred and
be continuing, (b) the Borrower, Wainoco or any Subsidiary from
making sales to or purchases from any Affiliate and, in
connection therewith, extending credit or making payments, or
from making payments for services rendered by any Affiliate, if
such sales or purchases are made or such services are rendered in
the ordinary course of business and on terms and conditions at
least as favorable to the Borrower, Wainoco or such Subsidiary as
the terms and conditions which would apply in a similar
transaction with a Person not an Affiliate, (c) the Borrower,
Wainoco or any Subsidiary from making payments of principal,
interest and premium on any Debt of the Borrower, Wainoco or any
Subsidiary held by an Affiliate if the terms of such Debt are
substantially as favorable to the Borrower, Wainoco or such
Subsidiary as the terms which could have been obtained at the
time of the creation of such Debt from a lender which was not an
Affiliate, (d) the Borrower, Wainoco or any Subsidiary from
participating in, or effecting any transaction in connection
with, any joint enterprise or other joint arrangement with any
Affiliate if the Borrower, Wainoco or such Subsidiary
participates in the ordinary course of its business and on a
basis no less advantageous than the basis on which such Affiliate
participates and (e) any creation, incurrence of assumption of
Debt permitted under subsection (vi) of Section 5.07.
SECTION 5.17. Minimum Fixed Charge Coverage. (a) At
all times during each fiscal year of Wainoco, the Projected Cash
Flow Available for Fixed Charges for such current fiscal year and
each of the succeeding two fiscal years will be greater than 130%
of the related Fixed Charges for each such fiscal year.
(b) Within 15 days after delivery of a notice from the
Agent pursuant to Section 5.17(c), and simultaneously with the
delivery of each set of financial statements referred to in
Section 5.01(b), Wainoco will deliver to each of the Banks a
certificate of the chief financial officer or the chief
accounting officer of Wainoco setting forth in reasonable detail
the calculations required to establish whether Wainoco was in
compliance with the requirements of Section 5.17(a) at the date
of delivery of such certificate. Such certificate shall set
forth a calculation of Fixed Charges for the then current fiscal
year and each of the succeeding two fiscal years determined as of
the last day of the then most recent ended fiscal year of
Wainoco, in the case of the first such certificate delivered
during any fiscal year, and as of the then most recently ended
fiscal quarter, in the case of each subsequent certificate
delivered during any fiscal year, and shall be based upon the
Projected Cash Flow Available for Fixed Charges as determined
pursuant to Section 5.17(c), adjusted in the case of such
subsequently delivered certificates to reflect FHI EBITDA for the
eight consecutive fiscal quarters then most recently ended and,
if either Wainoco or the Agent so elects by notice to the other,
to reflect changes in currency exchange rates since the end of
the most recently ended fiscal year.
(c) On or as promptly as practicable after each date
on which the Agent shall receive a Borrower Engineer's Report
pursuant to Section 5.14(a), a Wainoco Engineer's Report pursuant
to Section 5.14(c) and the information called for by Section
5.01(i), Wainoco shall determine the Projected Cash Flow
Available for Fixed Charges for the then current fiscal year and
each of the succeeding two fiscal years and notify the Agent and
the Banks of its determination. The determination by Wainoco of
the Projected Cash Flow Available for Fixed Charges for each
fiscal year shall be based on the information relating to the
Borrower Engineered Properties set forth in the applicable
Borrower Engineer's Report or the information relating to the
Wainoco Engineered Properties set forth in the applicable Wainoco
Engineer's Report, as the case may be, but subject to the factors
referred to in Section 2.01(b).
(d) In determining Fixed Charges and Projected Cash
Flow Available for Fixed Charges, all currencies other than U.S.
dollars shall be converted into U.S. dollars at a rate of
exchange equal to the average spot rate of exchange for the
calendar month ending on the date as of which such determination
is being made. Therefore, in accordance with Section 5.17(b),
the applicable currency conversion rate for purposes of
determining Fixed Charges will be recalculated quarterly while
the applicable currency conversion rate for purposes of
determining Projected Cash Flow Available for Fixed Charges will
be recalculated annually and, if either Wainoco or Agent shall so
elects, as of any quarter.
SECTION 5.18. Minimum Consolidated Net Worth.
Consolidated Tangible Net Worth will at no time be less than
$40,000,000.
SECTION 5.19. Interest Coverage Ratio. Consolidated
EBITDA will not, for any period of four consecutive fiscal
quarters, be less than 180% of the consolidated interest expense
of Wainoco and its Consolidated Subsidiaries for such period.
SECTION 5.20. Amendments to Other Agreements. If the
Wainoco Credit Agreement or the FHI Credit Agreement is proposed
to be amended in any manner that may affect the Banks in relation
to this Agreement, the Borrower and Wainoco will consult with the
Banks on the proposed amendment and negotiate in good faith with
the Banks to agree prior to the effectiveness any such proposed
amendment to such amendments to the Financing Documents as may be
requested by the Banks in consideration of such proposed
amendment.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of
the following events ("Events of Default") shall have occurred
and be continuing:
(a) the Borrower shall fail to pay when due any principal
of any Loan, or shall fail to pay within five days after the due
date thereof any interest on any Loan, any fees or any other
amount payable hereunder;
(b) the Borrower or Wainoco shall fail to observe or
perform any covenant contained in Sections 5.07 to 5.20,
inclusive;
(c) the Borrower or Wainoco shall fail to observe or
perform any covenant or agreement contained (i) in this Agreement
(other than those covered by clause (a) or (b) above) for 30 days
after written notice thereof has been given to it by the Agent at
the request of any Bank, or (ii) in any Mortgage for 10 days
after written notice thereof has been given to it by the Agent at
the request of any Bank;
(d) any representation, warranty, certification or
statement made by the Borrower or Wainoco in any Financing
Document or in any certificate, financial statement or other
document delivered pursuant to any Financing Document shall prove
to have been incorrect in any material respect when made (or
deemed made);
(e) the Borrower, Wainoco or any Subsidiary shall fail to
make any payment in respect of any Material Financial Obligations
when due or within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt or enables (or,
with the giving of notice or lapse of time or both, would enable)
the holder of such Material Debt or any Person acting on such
holder's behalf to accelerate the maturity thereof;
(g) the Borrower, Wainoco or any Subsidiary shall commence
a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to authorize
any of the foregoing;
(h) an involuntary case or other proceeding shall be
commenced against the Borrower, Wainoco or any Subsidiary seeking
liquidation, reorganization or other relief with respect to it or
its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be
entered against the Borrower, Wainoco or any Subsidiary under the
federal bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $1,000,000
which it shall have become liable to pay under Title IV of ERISA;
or notice of intent to terminate a Material Plan shall be filed
under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the
PBGC shall institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed to administer any Material Plan; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated; or
there shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of ERISA, with
respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $5,000,000;
(j) a judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against the Borrower, Wainoco or
any Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 10 days;
(k) any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act) of 50% or more of the outstanding
shares of common stock of the Borrower or Wainoco; or, during any
period of 12 consecutive calendar months, individuals who were
directors of the Borrower or Wainoco on the first day of such
period shall cease to constitute a majority of the board of
directors of the Borrower or Wainoco, as the case may be; or
(l) the Liens on the Mortgaged Properties shall at any time
and for any reason not constitute valid and perfected Liens
subject to no prior or equal Liens (other than Liens permitted
under Section 5.10);
then, and in every such event, the Agent shall (i) if requested
by Banks having 50% or more in aggregate amount of the
Commitments, by notice to the Borrower terminate the Commitments
and they shall thereupon terminate, and (ii) if requested by
Banks holding Notes evidencing 50% or more in aggregate principal
amount of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower; provided that in the
case of any of the Events of Default specified in clause (g) or
(h) above with respect to the Borrower or Wainoco, without any
notice to the Borrower or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become immediately
due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
Borrower.
SECTION 6.02. Notice of Default. The Agent shall give
notice to the Borrower under Section 6.01(c) promptly upon being
requested to do so by any Bank and shall thereupon notify all the
Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each
Bank irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
the Financing Documents as are delegated to the Agent by the
terms thereof, together with all such powers as are reasonably
incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan Guaranty
Trust Company of New York shall have the same rights and powers
under the Financing Documents as any other Bank and may exercise
or refrain from exercising the same as though it were not the
Agent, and Morgan Guaranty Trust Company of New York and its
affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower, Wainoco or any
Subsidiary or Affiliate as if it were not the Agent under the
Financing Documents.
SECTION 7.03. Action by Agent. The obligations of the
Agent under the Financing Documents are only those expressly set
forth therein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with respect
to any Default, except as expressly provided in the Financing
Documents.
SECTION 7.04. Consultation with Experts. The Agent
may consult with legal counsel (who may be counsel for the
Borrower or Wainoco), independent public accountants and other
experts selected by it and shall not be liable for any action
taken or omitted to be taken by it in good faith in accordance
with the advice of such counsel, accountants or experts.
SECTION 7.05. Liability of Agent. Neither the Agent
nor any of its affiliates nor any of their respective directors,
officers, agents or employees shall be liable for any action
taken or not taken by it in connection with the Financing
Documents (i) with the consent or at the request of the Required
Banks or (ii) in the absence of its own gross negligence or
willful misconduct. Neither the Agent nor any of its affiliates
nor any of their respective directors, officers, agents or
employees shall be responsible for or have any duty to ascertain,
inquire into or verify (i) any statement, warranty or
representation made in connection with the Financing Documents or
any borrowing hereunder; (ii) the performance or observance of
any of the covenants or agreements of the Borrower or Wainoco;
(iii) the satisfaction of any condition specified in Article III,
except receipt of items required to be delivered to the Agent; or
(iv) the validity, effectiveness or genuineness of the Financing
Documents or any other instrument or writing furnished in
connection therewith. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex,
telecopy or similar writing) believed by it to be genuine or to
be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall,
ratably in accordance with its Commitment, indemnify the Agent,
its affiliates and their respective directors, officers, agents
and employees (to the extent not reimbursed by the Borrower or
Wainoco) against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except
such as result from such indemnitee's gross negligence or willful
misconduct) that such indemnitee may suffer or incur in
connection with any of the Financing Documents or any action
taken or omitted by such indemnitee thereunder.
SECTION 7.07. Credit Decision. Each Bank acknowledges
that it has, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Bank also acknowledges that
it will, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking any action under this
Agreement or any other Financing Document.
SECTION 7.08. Successor Agent. The Agent may resign
at any time by giving notice thereof to the Banks and the
Borrower. Upon any such resignation, the Required Banks shall
have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Required Banks, and
shall have accepted such appointment, within 30 days after the
retiring Agent gives notice of resignation, then the retiring
Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under the
laws of the United States of America or of any State thereof and
having a combined capital and surplus of at least $50,000,000.
Upon the acceptance of its appointment as Agent under the
Financing Documents by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under the Financing
Documents. After any retiring Agent's resignation under the
Financing Documents as Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent.
SECTION 7.09. Agent's Fees. The Borrower shall pay to
the Agent for its own account arrangement, agency and engineering
fees in the amounts and at the times previously agreed upon
between the Borrower and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of any
Interest Period for any Euro-Dollar Borrowing:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being
offered to the Reference Banks in the relevant market for such
Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the Adjusted London Interbank
Offered Rate as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Borrower and
the Banks, whereupon until the Agent notifies the Borrower that
the circumstances giving rise to such suspension no longer exist,
(i) the obligations of the Banks to make Euro-Dollar Loans or to
convert outstanding Domestic Loans into Euro-Dollar Loans shall
be suspended and (ii) each outstanding Euro-Dollar Loan shall be
converted into a Domestic Loan on the last day of the then
current Interest Period applicable thereto. Unless the Borrower
notifies the Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing for which a Notice of Borrowing
has previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a Domestic
Borrowing.
SECTION 8.02. Illegality. If on or after the date of
this Agreement, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending
Office) to make, maintain or fund its Euro-Dollar Loans and such
Bank shall so notify the Agent, the Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or to convert
outstanding Domestic Loans into Euro-Dollar Loans, shall be
suspended. Before giving any notice to the Agent pursuant to
this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving
such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such notice is given,
each Euro-Dollar Loan of such Bank then outstanding shall be
converted to a Domestic Loan either (a) on the last day of the
then current Interest Period applicable to such Euro-Dollar Loan
if such Bank may lawfully continue to maintain and fund such Loan
to such day or (b) immediately if such Bank shall determine that
it may not lawfully continue to maintain and fund such Loan to
such day.
SECTION 8.03. Increased Cost and Reduced Return. (a)
If on or after the date hereof, the adoption of any applicable
law, rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central
bank or comparable agency shall impose, modify or deem applicable
any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System,
but excluding any such requirement included in an applicable
Euro-Dollar Reserve Percentage), special deposit, insurance
assessment or similar requirement against assets of, deposits
with or for the account of, or credit extended by, any Bank (or
its Applicable Lending Office) or shall impose on any Bank (or
its Applicable Lending Office) or on the London interbank market
any other condition affecting its Euro-Dollar Loans, its Note or
its obligation to make Euro-Dollar Loans and the result of any of
the foregoing is to increase the cost to such Bank (or its
Applicable Lending Office) of making or maintaining any
Euro-Dollar Loan, or to reduce the amount of any sum received or
receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost or
reduction.
(b) If any Bank shall have determined that, after the
date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any such
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on capital of such
Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or
directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be
material, then from time to time, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay to
such Bank such additional amount or amounts as will compensate
such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and
the Agent of any event of which it has knowledge, occurring after
the date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in
the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this
Section and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
SECTION 8.04. Taxes. (a) For purposes of this
Section 8.04, the following terms have the following meanings:
"Taxes" means any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings with
respect to any payment by the Borrower pursuant to this Agreement
or under any Note, and all liabilities with respect thereto,
excluding (i) in the case of each Bank and the Agent, taxes
imposed on its income, and franchise or similar taxes (including
penalties and interest) imposed on it, by a jurisdiction under
the laws of which such Bank or the Agent (as the case may be) is
organized or in which its principal executive office is located
or, in the case of each Bank, in which its Applicable Lending
Office is located and (ii) in the case of each Bank, any United
States withholding tax imposed on such payments but only to the
extent that such Bank is subject to United States withholding tax
at the time such Bank first becomes a party to this Agreement.
"Other Taxes" means any present or future stamp or
documentary taxes and any other excise or property taxes, or
similar charges or levies, which arise from any payment made
pursuant to this Agreement or under any Note or from the
execution or delivery of, or otherwise with respect to, this
Agreement or any Note.
(b) Any and all payments by the Borrower to or for the
account of any Bank or the Agent hereunder or under any Note
shall be made without deduction for any Taxes or Other Taxes;
provided that, if the Borrower shall be required by law to deduct
any Taxes or Other Taxes from any such payments, (i) the sum
payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 8.04) such Bank or the
Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay
the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the
Borrower shall furnish to the Agent, at its address referred to
in Section 10.01, the original or a certified copy of a receipt
evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the
Agent for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed or asserted
by any jurisdiction on amounts payable under this Section 8.04)
paid by such Bank or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be
paid within 30 days after such Bank or the Agent (as the case may
be) makes written demand therefor.
If a Bank or the Agent shall become aware that it is
entitled to receive a refund in respect of Taxes or Other Taxes,
it shall promptly notify the Borrower of the availability of such
refund and shall, within 30 days thereafter, apply for such
refund at the Borrower's expense. If any Bank or the Agent
receives a refund in respect of any Taxes or Other Taxes for
which such Bank or the Agent has received payment from the
Borrower hereunder, it shall promptly notify the Borrower of such
refund and shall, within 30 days after receipt of such refund,
repay such refund to the Borrower with interest if any interest
is received thereon by such Bank or the Agent.
(d) Each Bank organized under the laws of a
jurisdiction outside the United States, on or prior to the date
of its execution and delivery of this Agreement in the case of
each Bank listed on the signature pages hereof and on or prior to
the date on which it becomes a Bank pursuant to Section 10.07 in
the case of each other Bank, and from time to time thereafter if
requested in writing by the Borrower (but only so long as such
Bank remains lawfully able to do so), shall provide the Borrower
with Internal Revenue Service form 1001 or 4224, as appropriate,
or any successor form prescribed by the Internal Revenue Service,
certifying that such Bank is entitled to benefits under an income
tax treaty to which the United States is a party which exempts
the Bank from United States withholding tax or reduces the rate
of withholding tax on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to
this Agreement is not subject to withholding because such income
is effectively connected with the conduct of a trade or business
in the United States.
(e) For any period with respect to which a Bank has
failed to provide the Borrower with the appropriate form pursuant
to Section 8.04(d) (unless such failure is due to a change in
treaty, law or regulation occurring subsequent to the date on
which such form originally was required to be provided), such
Bank shall not be entitled to indemnification under Section
8.04(b) or (c) with respect to Taxes imposed by the United
States; provided that if a Bank, which is otherwise exempt from
or subject to a reduced rate of withholding tax, becomes subject
to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Bank shall
reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Bank pursuant to this
Section 8.04, then such Bank will change the jurisdiction of its
Applicable Lending Office if, in the judgment of such Bank, such
change (i) will eliminate or reduce any such additional payment
which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
(g) In the event that the Borrower shall be required
to pay to any Bank material amounts pursuant to this Section
8.04, the Borrower may give notice to such Bank (with copies to
the Agent) that it wishes to seek one or more assignees (which
may be one or more of the Banks) to assume the Commitment of such
Bank and to purchase its outstanding Loans and Note and the Agent
will use its best efforts to assist the Borrower in obtaining an
assignee(s). If an assignee(s) cannot be obtained for such
affected Bank(s) and provided that no Default shall have occurred
and be continuing, the Borrower may, with the consent of each
other Bank, prepay immediately all Loans of such affected Bank
and terminate such affected Bank's entire Commitment hereunder.
Each Bank requesting compensation pursuant to this Section 8.04
agrees to sell its Commitment, Loans, Note and interest in this
Agreement in accordance with Section 10.07 to an assignee(s) for
an amount equal to the sum of the outstanding unpaid principal of
and accrued interest on such Loans and Note plus all other fees
and amounts (including, without limitation, any compensation
claimed by such Bank under Section 2.12 or this Section 8.04) due
such Bank hereunder calculated, in each case, to the date such
Commitment, Loans, Note and interest are purchased. Upon such
sale or prepayment, said Bank shall have no further Commitment or
other obligation to the Borrower hereunder or under any Note.
SECTION 8.05. Domestic Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make or
maintain Euro-Dollar Loans has been suspended pursuant to Section
8.02 or (ii) any Bank has demanded compensation under Section
8.03(a) or 8.04 with respect to its Euro-Dollar Loans and the
Borrower shall, by at least five Euro-Dollar Business Days prior
notice to such Bank through the Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless
and until such Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made by such Bank as
(or continued or converted into) Euro-Dollar Loans shall be made
instead as Domestic Loans (on which interest and principal shall
be payable contemporaneously with the related Euro-Dollar Loans
of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid (or
converted to a Domestic Loan), all payments of principal which
would otherwise be applied to repay such Euro-Dollar Loans shall
be applied to repay its Domestic Loans instead.
If such Bank notifies the Borrower that the circumstances giving
rise to such notice no longer apply, the principal amount of each
such Domestic Loan shall be converted into a Euro-Dollar Loan on
the first day of the next succeeding Interest Period applicable
to the related Euro-Dollar Loans of the other Banks.
ARTICLE IX
GUARANTY
SECTION 9.01. The Guaranty. Wainoco hereby
unconditionally guarantees the full and punctual payment (whether
at stated maturity, upon acceleration or otherwise) of all
amounts payable by the Borrower under the Financing Documents
including, without limitation, the principal of and interest on
each Note issued by the Borrower pursuant to this Agreement.
Upon failure by the Borrower to pay punctually any such amount,
Wainoco shall forthwith on demand pay the amount not so paid at
the place and in the manner specified in this Agreement.
SECTION 9.02. Guaranty Unconditional. The obligations
of Wainoco hereunder shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be
released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver
or release in respect of any obligation of the Borrower under any
of the Financing Documents, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to any
of the Financing Documents;
(iii) any release, non-perfection or invalidity of any
direct or indirect security for any obligation of the Borrower
under any of the Financing Documents;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Borrower
or its assets or any resulting release or discharge of any
obligation of the Borrower contained in any of the Financing
Documents;
(v) the existence of any claim, set-off or other rights
which Wainoco may have at any time against the Borrower, the
Agent, any Bank or any other corporation or person, whether in
connection with any of the Financing Documents or any unrelated
transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or
against the Borrower for any reason of any of the Financing
Documents, or any provision of applicable law or regulation
purporting to prohibit the payment by the Borrower of the
principal of or interest on any Note or any other amount payable
by the Borrower under any of the Financing Documents; or
(vii) any other act or omission to act or delay of any kind
by the Borrower, the Agent, any Bank or any other corporation or
person or any other circumstance whatsoever which might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of or defense to Wainoco's obligations hereunder.
SECTION 9.03. Discharge Only Upon Payment In Full;
Reinstatement In Certain Circumstances. Wainoco's obligations
hereunder shall remain in full force and effect until the
Commitments shall have terminated and the principal of and
interest on the Notes and all other amounts payable by the
Borrower under the Financing Documents shall have been paid in
full. If at any time any payment of the principal of or interest
on any Note or any other amount payable by the Borrower under the
Financing Documents is rescinded or must be otherwise restored or
returned upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, Wainoco's obligations hereunder with
respect to such payment shall be reinstated as though such
payment had been due but not made at such time.
SECTION 9.04. Waiver by Wainoco. Wainoco irrevocably
waives acceptance hereof, presentment, demand, protest and any
notice not provided for herein, as well as any requirement that
at any time any action be taken by any corporation or person
against any Borrower or any other corporation or person.
SECTION 9.05. Subrogation. Wainoco irrevocably waives
any and all rights to which it may be entitled, by operation of
law or otherwise, upon making any payment hereunder to be
subrogated to the rights of the payee against the Borrower with
respect to such payment or otherwise to be reimbursed,
indemnified or exonerated by the Borrower in respect thereof.
SECTION 9.06. Stay of Acceleration. If acceleration
of the time for payment of any amount payable by the Borrower
under any of the Financing Documents is stayed upon the
insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of
this Agreement shall nonetheless be payable by Wainoco hereunder
forthwith on demand by the Agent made at the request of the
requisite proportion of the Banks specified in Article VI of this
Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar writing) and
shall be given to such party: (x) in the case of the Borrower,
Wainoco or the Agent, at its address, telex or telecopy number
set forth on the signature pages hereof, (y) in the case of any
Bank, at its address, telex or telecopy number set forth in its
Administrative Questionnaire or (z) in the case of any party,
such other address or telex or telecopy number as such party may
hereafter specify for the purpose by notice to the Agent and the
Borrower. Each such notice, request or other communication shall
be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the
appropriate answerback is received, (ii) if given by telecopy,
when such telecopy is transmitted to the telecopy number
specified in this Section and telephonic confirmation of receipt
thereof is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address specified in this Section;
provided that notices to the Agent under Article II or Article
VIII shall not be effective until received.
SECTION 10.02. No Waivers. No failure or delay by the
Agent or any Bank in exercising any right, power or privilege
under any Financing Document shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.03. Expenses; Indemnification. (a) The
Borrower shall pay (i) all out-of-pocket expenses of the Agent,
including fees and disbursements of special counsel for the
Agent, in connection with the preparation of the Financing
Documents, any waiver or consent thereunder or any amendment
thereof or any Default or alleged Default thereunder or any
release pursuant to Section 5.15(b) and (ii) if an Event of
Default occurs, all out-of-pocket expenses incurred by the Agent
and each Bank, including fees and disbursements of counsel, in
connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and
each Bank, their respective affiliates and the respective
directors, officers, agents and employees of the foregoing (each
an "Indemnitee") and hold each Indemnitee harmless from and
against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such
Indemnitee shall be designated a party thereto) relating to or
arising out of (i) any actual or proposed use of proceeds of
Loans hereunder, (ii) the breach by the Borrower or Wainoco of
any covenant in this Agreement or the untruth or inaccuracy of
any representation or warranty made by the Borrower or Wainoco in
this Agreement or (iii) a transaction which is (or may be)
subject to the provisions of Section 6.01(k); provided that no
Indemnitee shall have the right to be indemnified hereunder for
its own gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
SECTION 10.04. Sharing of Set-Offs. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the
aggregate amount of principal and interest due with respect to
any Note held by it which is greater than the proportion received
by any other Bank in respect of the aggregate amount of principal
and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other
Banks, and such other adjustments shall be made, as may be
required so that all such payments of principal and interest with
respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall
impair the right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to such
exercise to the payment of indebtedness of the Borrower other
than its indebtedness under the Notes. The Borrower and Wainoco
agree, to the fullest extent they may effectively do so under
applicable law, that any holder of a participation in a Note,
whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of
a participation were a direct creditor of each of the Borrower
and Wainoco in the amount of such participation.
SECTION 10.05. Non-exercise of Set-Off; Waiver of
Enforcement Without Consent. (a) Each Bank acknowledges that the
California Mortgage mortgages real property in the State of
California ("California Property") and that one or more Future
Mortgages also may mortgage California Property. Each Bank
further acknowledges that it has been advised that, under current
California law, the manner in which a Bank proceeds to exercise
its rights or enforce the remedies available to such party upon
the occurrence of a Default by the Borrower under any of the
Financing Documents could lead to the loss of the rights and
remedies which may otherwise be available to such a party
including the loss of California real property security and the
inability to recover a deficiency judgment against the Borrower
after foreclosure of any Mortgage.
(b) To avoid any unintentional loss of rights and
remedies by any Bank as referred to in subsection (a) above:
(i) Each Bank waives all rights to enforce any rights
hereunder, under the Notes or under the Mortgages without the
prior written consent of the Required Banks. Each Bank further
agrees that all rights under the Mortgages shall be exercised
only through the Agent.
(ii) Without limitation to paragraph (i) above, the Banks
agree among themselves that no Bank shall, except upon the
written consent of the Required Banks, exercise, with respect to
any Note, any right of set-off and shall not apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or account of the Borrower so
long as any Bank has any commitment hereunder or any amounts due
under any of the Financing Documents remain unpaid. If a Bank
willfully breaches its obligation hereunder, then such Bank shall
be deemed to have waived any right to the benefits of the
Mortgages, as against any other Bank.
(iii) Each Bank agrees that all Liens created for its benefit
by virtue of this Agreement and the Mortgages shall rank pari
passu with the Liens of each of the other Banks.
(c) This Section 10.05 is for the benefit of the Banks
only and does not constitute a waiver of any rights against the
Borrower or Wainoco or against any of the Mortgaged Properties.
SECTION 10.06. Amendments and Waivers. Any provision
of the Financing Documents may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the
Borrower and/or Wainoco (whichever may be a party to the
Financing Document in question) and the Agent with the consent of
the Required Banks; provided that (a) no such amendment or waiver
shall, unless consented to by all the Banks, (i) increase or
decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any Bank to
any additional obligation, (ii) reduce the principal of or rate
of interest on any Loan or any fees hereunder, (iii) postpone the
date fixed for any payment of principal of or interest on any
Loan or any fees hereunder or for any reduction or termination of
any Commitment or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of
them to take any action under this Section or any other provision
of the Financing Documents, and (b) any amendment or waiver of
Section 10.05 shall not require the signature of the Borrower or
Wainoco.
SECTION 10.07. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns, except that the Borrower may not assign or otherwise
transfer any of its rights under this Agreement without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant") participating
interests in its Commitment or any or all of its Loans. In the
event of any such grant by a Bank of a participating interest to
a Participant, whether or not upon notice to the Borrower and the
Agent, such Bank shall remain responsible for the performance of
its obligations hereunder, and the Borrower and the Agent shall
continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall retain
the sole right and responsibility to enforce the obligations of
the Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such participation agreement may
provide that such Bank will not agree to any modification,
amendment or waiver of this Agreement described in clause (i),
(ii), (iii) or (iv) of Section 10.06 without the consent of the
Participant. The Borrower agrees that each Participant shall, to
the extent provided in its participation agreement, be entitled
to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted
by subsection (c) or (d) below shall be given effect for purposes
of this Agreement only to the extent of a participating interest
granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to an affiliate of
such transferor Bank or another Bank (each an "Assignee") all of
its rights and obligations under this Agreement and the Notes in
respect of a portion of its Commitment or its outstanding Loans
or both in an amount not less than $5,000,000, and such Assignee
shall assume such rights and obligations, pursuant to an
Assignment and Assumption Agreement in substantially the form of
Exhibit G hereto executed by such Assignee and such transferor
Bank, with notice to the Borrower and the Agent. Upon execution
and delivery of such instrument and payment by such Assignee to
such transferor Bank of an amount equal to the purchase price
agreed between such transferor Bank and such Assignee, such
Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set
forth in such instrument of assumption, and the transferor Bank
shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any
party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent
and the Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. In connection
with any such assignment, the transferor Bank shall pay to the
Agent an administrative fee for processing such assignment in the
amount of $2,000. If the Assignee is not incorporated under the
laws of the United States of America or a state thereof, it
shall, prior to the first date on which interest or fees are
payable hereunder for its account, deliver to the Borrower and
the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in
accordance with Section 8.04.
(d) Any Bank may at any time assign all or any portion
of its rights under this Agreement and its Note to a Federal
Reserve Bank. No such assignment shall release the transferor
Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of
any Bank's rights shall be entitled to receive any greater
payment under Section 8.03 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable Lending
Office under certain circumstances or at a time when the
circumstances giving rise to such greater payment did not exist.
SECTION 10.08. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it in
good faith is not relying upon any "margin stock" (as defined in
Regulation U) as collateral in the extension or maintenance of
the credit provided for in this Agreement.
SECTION 10.09. GOVERNING LAW. THIS AGREEMENT AND EACH
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
SECTION 10.10. Submission to Jurisdiction. The
Borrower and Wainoco hereby submit to the nonexclusive
jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in
New York City for purposes of all legal proceedings arising out
of or relating to this Agreement or the transactions contemplated
hereby. Each of the Borrower and Wainoco irrevocably waives, to
the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 10.11. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the
subject matter hereof.
SECTION 10.12. WAIVER OF JURY TRIAL. EACH OF THE
BORROWER, WAINOCO, THE AGENT AND THE BANKS HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
WAINOCO OIL & GAS COMPANY
By /s/ Julie H. Edwards
Title: Vice President-Secretary
& Treasurer
2100 Citicorp Center
1200 Smith Street
Houston, Texas 77002-4367
Telecopy number: (713) 655-7530
WAINOCO OIL CORPORATION
By /s/ Julie H. Edwards
Title: Vice President-Secretary
& Treasurer
2100 Citicorp Center
1200 Smith Street
Houston, Texas 77002-4367
Telecopy number: (713) 655-7530
Commitments
$10,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Philip W. McNeal
Title: Vice President
New Banks
$5,000,000 BANQUE PARIBAS
By /s/ Patrick J. Milon
Title: Senior Vice President -
Deputy General Manager
$5,000,000 UNION BANK
By /s/ Richard P. DeGrey
Title: Vice President
By /s/ Walter M. Roth
Title: Vice President
Total Commitments
$20,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By /s/ Philip W. McNeal
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Telex number: 177615
Telecopy number: (212) 837-5335
Departing Banks
For the limited purposes of Section
3.01 of this Amended Agreement
BANK OF MONTREAL
By /s/ E.J. Pinder
Title: Account Manager
J.P. MORGAN DELAWARE
By /s/ Philip S. Detjens
Title: Vice President
FOURTH AMENDMENT
TO
REVOLVING CREDIT AND LETTER OF CREDIT AGREEMENT
This Amendment, dated as of July 6, 1994, is entered
into by (1) FRONTIER OIL AND REFINING COMPANY, a Delaware
corporation (the "Borrower"), (2) the banks parties to the
Credit Agreement referred to below (the "Banks") and
(3) UNION BANK, a California banking corporation, as agent
(the "Agent") for the Banks.
Recitals
A. The Borrower, the Banks and the Agent have
entered into a Revolving Credit and Letter of Credit
Agreement dated as of August 10, 1992, as amended by a
letter of waiver and amendment dated March 17, 1993, a
Second Amendment to Revolving Credit and Letter of Credit
Agreement dated as of April 30, 1993 and a Third Amendment
to Revolving Credit and Letter of Credit Agreement dated as
of December 31, 1993 (said Agreement, as so amended, herein
called the "Credit Agreement"). Terms defined in the Credit
Agreement and not otherwise defined herein have the same
respective meanings when used herein, and the rules of
interpretation set forth in Sections 1.2 and 1.3 of the
Credit Agreement are incorporated herein by reference.
B. The Borrower, the Banks and the Agent wish to
amend the Credit Agreement to, among other things, extend
the Commitment Termination Date and change some of the
pricing terms. Accordingly, the Borrower, the Banks and the
Agent agree as set forth below.
Section 1. Amendments to Credit Agreement.
Effective as of June 30, 1994 in the case of the amendments
set forth in Sections 1(a), (b), (e), (f), (g), (h), (i) and
(j), and effective as of July 1, 1994 in the case of the
amendments set forth in Sections 1(c) and (d), and subject
to satisfaction of the conditions precedent set forth in
Section 2, the Credit Agreement is hereby amended as
follows:
(a) The definition of "Commitment Termination
Date" in Section 1.1 of the Credit Agreement is amended in
full to read as follows:
"'Commitment Termination Date' means April 2,
1996; provided, however, that, upon (a) written request by
the Borrower not later than May 15, 1995 and (b) notice of
such extension by the Agent to the Borrower not later than
July 15, 1995, the Commitment Termination Date may be
extended by the Agent and the Banks, in their sole and
absolute discretion, for up to an additional year; and
further provided, however, that the Agent's failure to
notify the Borrower of any such extension by the applicable
date referred to above shall constitute a denial of such
extension."
(b) The definition of "LIBOR Rate" in Section
1.1 of the Credit Agreement is amended by deleting the words
"LIBOR Loan" in clause (a) thereof and substituting the word
"Borrowing."
(c) Section 2.2(a) of the Credit Agreement is
amended by deleting the words and figures "one-half percent
(.50%)" and substituting the words and figures "four hundred
twenty-five thousandths percent (.425%)."
(d) Section 2.6(a) of the Credit Agreement is
amended by deleting the words and figures "one and three-
quarters percent (1.75%)" in clause (i) thereof and "three
percent (3.00%)" in clause (ii) thereof and substituting the
words and figures "one and one-quarter percent (1.25%)" and
"two and one-quarter percent (2.25%)," respectively.
(e) Section 2.6(b) of the Credit Agreement is
amended by deleting the first parenthetical therein and
substituting the parenthetical "(whether at stated maturity,
by required prepayment, by acceleration or otherwise)."
(f) Section 2.10 of the Credit Agreement is
amended by deleting the two parentheticals therein and
substituting in each case the parenthetical "(without any
requirement of compliance with the conditions set forth in
Article 4 or with the limitations contained in Section
2.1(a), but subject to Sections 2.3 and 2.7(b))."
(g) Section 5.2 of the Credit Agreement is
amended by deleting the words "ability to the Borrower" in
clause (c) thereof and substituting the words "ability of
the Borrower."
(h) Section 6.1(a) of the Credit Agreement is
amended in full to read as follows:
"(a) by 2:00 p.m., Los Angeles time, on
the sixth day after (but excluding any weekday that is a
federal holiday observed in the State of Colorado) each
weekly date of calculation referred to below, an Accounts
aging schedule in form satisfactory to the Agent and a
Borrowing Base Certificate, both as of Wednesday of each
week or, if an Inventory Audit is conducted during such
week, as of the date of such Inventory Audit, together with,
in the case of each Borrowing Base Certificate that is the
first Borrowing Base Certificate with an effective date in a
calendar month following a calendar month in which an
Inventory Audit was not performed, a certification by the
Borrower's Chief Financial Officer or President to the
effect that the volume of Inventory contained in each tank
located at the Borrower's Cheyenne refinery, as determined
by the reading of tank sight gauges as of the last day of
the preceding calendar month and after any necessary
recalibration of such sight gauges, equals the volume of
Inventory (plus or minus 2%) contained in such tank that was
simultaneously determined by the Borrower's physical
measurement of such Inventory, using standard industry
practices and standard tank-gauging wire-line devices."
(i) Section 6.2 of the Credit Agreement is
amended in full to read as follows:
"Section 6.2 Audits. At any reasonable time and
from time to time, upon reasonable prior notice to the
Borrower, the Borrower will permit the Agent and its
consultants, agents and representatives to examine and make
copies of and abstracts from the records and books of
account of, and visit the properties and have access to the
assets of, the Borrower and to discuss the affairs, finances
and accounts of the Borrower with any of its officers,
directors and employees and with its independent certified
public accountants, including for the purpose of conducting
Inventory Audits (which shall be conducted at least once
each calendar quarter, as of the last day of such quarter)
and Asset-Based Audits (which shall be conducted at least
semiannually)."
(j) The parenthetical in Section 9.4(a) of the
Credit Agreement is amended in full to read as follows:
"(including for Asset-Based Audits (provided that
the Borrower shall not be required to pay for more than
three Asset-Based Audits conducted during any single
calendar year), Inventory Audits (provided that the Borrower
shall not be required to pay for more than six Inventory
Audits conducted during any single calendar year) and the
reports referred in Sections 4.1(a)(ix) and (x))."
Section 2. Conditions to Effectiveness. This
Amendment shall become effective as provided above when the
Agent has received a renewal fee of $160,000 for the account
of the Banks and all of the following documents, each dated
the date hereof, in form and substance satisfactory to the
Agent and in the number of originals requested by the Agent:
(a) this Amendment, duly executed by the
Borrower and the Banks;
(b) an amendment to the FOC Guaranty with
respect to the capital expenditure covenant contained in
Section 7.2(j) thereof, duly executed by FOC and the Banks,
together with the other documents required to be delivered
to the Agent as conditions precedent to the effectiveness of
such amendment;
(c) an amendment and restatement of the
Agent's Fee Letter;
(d) a consent to this Amendment, duly executed
by Wainoco and the Guarantors;
(e) copies of the resolutions of the Board of
Directors of the Borrower approving this Amendment and any
documents delivered by the Borrower pursuant hereto,
certified by the Secretary or an Assistant Secretary of the
Borrower to be correct and complete and in full force and
effect as of the date of execution, and as of the effective
date, of this Amendment;
(f) a certificate of the Secretary or an
Assistant Secretary of the Borrower as to the incumbency,
and setting forth a specimen signature, of each of the
persons who has signed this Amendment or any document
delivered by the Borrower pursuant hereto;
(g) a certificate of the Borrower, signed on
behalf of the Borrower by its President or a Vice President
and its Secretary or any Assistant Secretary, certifying as
to (A) the absence of any amendments to the charter
documents or bylaws of the Borrower on or after August 18,
1992, (B) the truthfulness in all material respects of the
representations and warranties contained in the Credit
Documents as though made on and as of the effective date of
this Amendment and (C) the absence of any event occurring
and continuing, or resulting from the effectiveness of this
Amendment, that constitutes a Default or an Event of
Default; and
(h) such other approvals, opinions and
documents as the Agent may reasonably request.
Section 3. Representations and Warranties of
Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) The execution, delivery and performance by
the Borrower of this Amendment and the Credit Documents, as
amended hereby, to which it is or is to be a party are
within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not
(i) contravene the Borrower's charter documents or bylaws,
(ii) contravene any Governmental Rule or contractual
restriction binding on or affecting the Borrower or
(iii) result in or require the creation or imposition of any
Lien or preferential arrangement of any nature (other than
any created by the Credit Documents) upon or with respect to
any of the properties now owned or hereafter acquired by the
Borrower.
(c) No Governmental Action is required for the
due execution, delivery or performance by the Borrower of
this Amendment or any of the Credit Documents, as amended
hereby, to which the Borrower is or is to be a party.
(d) This Amendment and each of the Credit
Documents, as amended hereby, to which the Borrower is a
party constitute legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their respective terms.
(e) The Security Agreement, the Account Pledge
Agreement and the Note Pledge Agreement constitute valid and
perfected first-priority Liens on the Collateral covered
thereby, enforceable against all third parties in all
jurisdictions, and secure the payment of all obligations of
the Borrower under the Credit Documents, as amended hereby;
and the execution, delivery and performance of this
Amendment do not adversely affect the Lien of the Security
Agreement, the Account Pledge Agreement or the Note Pledge
Agreement.
(f) The consolidated balance sheet of FOC and
its Subsidiaries as of December 31, 1993 and the related
consolidated statements of income, retained earnings and
cash flows of FOC and its Subsidiaries for the fiscal year
then ended, certified by Arthur Andersen & Co., independent
public accountants, and the report as of April 30, 1994
referred to in Section 7.1(j)(i) of the FOC Guaranty,
certified by the chief financial officer or chief accounting
officer of FOC, fairly present the consolidated financial
condition of FOC and its Subsidiaries as of such dates and
the consolidated results of the operations of FOC and its
Subsidiaries for the fiscal periods ended on such dates, all
in accordance with generally accepted accounting principles
applied on a consistent basis. Since April 30, 1994 there
has been no material adverse change in the business,
condition (financial or otherwise), operations, performance,
properties or prospects of FOC or any of its Subsidiaries.
FOC and its Subsidiaries have no material contingent
liabilities except as disclosed in such financial statements
or the notes thereto.
(g) There is no pending or, to the knowledge
of the Borrower, threatened action or proceeding affecting
FOC or any its Subsidiaries before any Governmental Person
or arbitrator that may materially and adversely affect the
financial condition or operations of FOC or any of its
Subsidiaries or that purports to affect the legality,
validity or enforceability of this Amendment or any of the
Credit Documents, as amended hereby.
Section 4. Reference to and Effect on Credit
Documents.
(a) On and after the effective date of this
Amendment, each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," "herein" or any other
expression of like import referring to the Credit Agreement,
and each reference in the other Credit Documents to "the
Credit Agreement," "thereunder," "thereof," "therein" or any
other expression of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit
Agreement as amended by this Amendment.
(b) Except as specifically amended or referred
to above, the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are
hereby ratified and confirmed. Without limiting the
generality of the foregoing, the Security Agreement, the
Account Pledge Agreement and the Note Pledge Agreement, and
all of the Collateral described therein, do and shall
continue to secure the payment of all obligations of the
Borrower under the Credit Documents, as amended hereby.
(c) The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided
herein, operate as a waiver of any right, power or remedy of
any Bank or the Agent under any of the Credit Documents or
constitute a waiver of any provision of any of the Credit
Documents.
Section 5. Costs, Expenses and Taxes. The
Borrower agrees to pay on demand all costs and expenses of
the Agent in connection with the preparation, execution and
delivery of this Amendment and the other instruments and
documents to be delivered hereunder, including the
reasonable fees and out-of-pocket expenses of counsel for
the Agent with respect thereto and with respect to advising
the Agent as to its rights and responsibilities hereunder
and thereunder. In addition, the Borrower shall pay any and
all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of
this Amendment and the other instruments and documents to be
delivered hereunder, and the Borrower agrees to save the
Agent and each Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes.
Section 6. Execution in Counterparts. This
Amendment may be executed in any number of counterparts and
by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute
one and the same instrument.
Section 7. Governing Law. THIS AMENDMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THE STATE OF CALIFORNIA.
FRONTIER OIL AND REFINING COMPANY
By: /s/ Jon D. Galvin
-------------------------
Jon D. Galvin
Vice President and
Chief Financial Officer
UNION BANK, as Agent and
as a Bank
By: /s/ Richard P. DeGrey, Jr.
--------------------------
Richard P. DeGrey, Jr.
Vice President
By: /s/ Walter M. Roth
--------------------------
Name: Walter M. Roth
Title: Vice President
BANQUE PARIBAS
By: /s/ Marian Livingston
--------------------------
Name: Marian Livingston
Title: Vice President
By: /s/ J. Wehner
--------------------------
Name: J. Wehner
Title: Senior Vice President
DEN NORSKE BANK AS
By: /s/ Theodore S. Jadick, Jr.
---------------------------
Name: Theodore S. Jadick, Jr.
Title: Senior Vice President
By: /s/ Jairo Jimenez
---------------------------
Name: Jairo Jimenez
Title: Assistant Treasurer
