UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 16, 1999
FRONTIER OIL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WYOMING 001-07627 74-1895085
(STATE OR OTHER (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
10000 MEMORIAL DRIVE, SUITE 600
HOUSTON, TEXAS 77024-3411
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 688-9600
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 16, 1999 Frontier El Dorado Refining Company ("FEDRC"), an
indirect wholly-owned subsidiary of Frontier Oil Corporation (the "Company"),
acquired the 110,000 barrel per day refinery in El Dorado, Kansas from Equilon
Enterprises LLC ("Equilon"). The acquired assets were used by Equilon to refine
crude oil. The Company intends to continue such use. The Company also
purchased the crude oil, intermediate product and finished product inventories
at the refinery at closing.
Total consideration for the acquisition of the refinery consisted of
$170 million cash. In addition, the Company will make contingent earn-out
payments for the next eight years equal to one-half of the excess over $60
million per year of the El Dorado refinery's revenues less its material costs
and operating costs, other than depreciation. The total amount of these
contingent payments is capped at $40 million, with an annual cap of $7.5
million. Total consideration for the acquisition of the inventory of the
refinery at closing consisted of approximately $50.8 million cash. The
acquisition will be accounted for under the purchase method of accounting for
financial reporting purposes.
The sources of financing for the cash portion of the acquisition
consideration were (i) approximately $180 million of net proceeds from the
issuance of the $190 million aggregate principal amount of the Company's 11-3/4%
Senior Notes due 2009 on November 5, 1999 and (ii) approximately $40 million
under a new credit facility established by Frontier Oil and Refining Company
("FORC"), an indirect wholly-owned subsidiary of the Company, with Union Bank of
California, N.A., as administrative agent, documentation agent and lead
arranger, and Paribas, as syndication agent and lead arranger.
Attached as Exhibit 10.1 is the Asset Purchase and Sale Agreement among
FEDRC, as buyer, the Company, as Guarantor, and Equilon, as seller, dated as of
October 19, 1999.
Attached as Exhibit 10.2 is the Revolving Credit Agreement dated as of
November 16, 1999 among FORC, as borrower, the lenders named therein, Union Bank
of California, N.A., as administrative agent, documentation agent and lead
arranger, and Paribas, as syndication agent and lead arranger.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a-b) Financial statements of the business acquired and pro forma financial
information.
If the Company determines that Rule 3-05 of Regulation S-X is applicable to
the transaction described in Item 2, the required financial statements and pro
forma financial information will be filed by amendment hereto within the time
period required by Item 7 of Form 8-K.
(c) Exhibits
10.1 Asset Purchase and Sale Agreement among Frontier El Dorado Refining
Company, as buyer, Frontier Oil Corporation, as Guarantor and Equilon
Enterprises LLC, as seller, dated as of October 19, 1999.
10.2 Revolving Credit Agreement dated as of November 16, 1999 among Frontier
Oil and Refining Company, as borrower, the lenders named therein, Union
Bank of California, N.A., as administrative agent, documentation agent
and lead arranger, and Paribas, as syndication agent and lead arranger.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRONTIER OIL CORPORATION
By: /s/ Julie Edwards
----------------------------------
Julie H. Edwards
Senior Vice President Finance and
Chief Financial Officer
Date: December 1, 1999
ASSET PURCHASE AND SALE AGREEMENT
AMONG
FRONTIER EL DORADO REFINING COMPANY,
AS BUYER,
FRONTIER OIL CORPORATION,
AS GUARANTOR,
AND
EQUILON ENTERPRISES LLC,
AS SELLER
DATED AS OF
October 19, 1999
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATIONS . . . . . . . . . . . . . . . 2
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Acquired Employee. . . . . . . . . . . . . . . . . . . . . . . . . .2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Affiliate Employer . . . . . . . . . . . . . . . . . . . . . . . . .2
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Base Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Claim Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Collective Bargaining Agreement. . . . . . . . . . . . . . . . . . .3
Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Contingency Earn-Up Payments . . . . . . . . . . . . . . . . . . . .3
Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Deliverables . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Due Diligence. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Electing Party . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Employment Commencement Date . . . . . . . . . . . . . . . . . . . .5
Environmental Liability. . . . . . . . . . . . . . . . . . . . . . .5
Equilon Feedstock Inventory. . . . . . . . . . . . . . . . . . . . .6
Equilon Other Assets . . . . . . . . . . . . . . . . . . . . . . . .6
Equilon Other Inventory. . . . . . . . . . . . . . . . . . . . . . .6
Equilon Product Inventory. . . . . . . . . . . . . . . . . . . . . .6
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Fair Market Value. . . . . . . . . . . . . . . . . . . . . . . . . .7
Force Majeure Event. . . . . . . . . . . . . . . . . . . . . . . . .7
Fundamental Agreements . . . . . . . . . . . . . . . . . . . . . . .8
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Hazardous Substance. . . . . . . . . . . . . . . . . . . . . . . . .8
Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Indemnified Party. . . . . . . . . . . . . . . . . . . . . . . . . .8
Information Technology . . . . . . . . . . . . . . . . . . . . . . .8
Indemnifying Party . . . . . . . . . . . . . . . . . . . . . . . . .8
Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . .9
Judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Known, or Knowledge or To the knowledge of or Within the knowledge
of a Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Late Payment Rate. . . . . . . . . . . . . . . . . . . . . . . . . .9
Leases and Easements . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . 10
License Period . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Licensed Technology Rights . . . . . . . . . . . . . . . . . . . . 10
Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loaned Employee(s) . . . . . . . . . . . . . . . . . . . . . . . . 11
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . 11
Net Working Capital Adjustment . . . . . . . . . . . . . . . . . . 11
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Net Working Capital Estimate . . . . . . . . . . . . . . . . . . . 11
Non-Represented Loaned Employee. . . . . . . . . . . . . . . . . . 11
Notice of Disposition. . . . . . . . . . . . . . . . . . . . . . . 11
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Option Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Party and Parties. . . . . . . . . . . . . . . . . . . . . . . . . 11
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Permitted Debts. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Permitted Encumbrances . . . . . . . . . . . . . . . . . . . . . . 12
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Prepaid Expenses and Deposits. . . . . . . . . . . . . . . . . . . 13
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Refinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Refinery Land. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Refinery Records . . . . . . . . . . . . . . . . . . . . . . . . . 13
Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . 14
Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Represented Loaned Employee. . . . . . . . . . . . . . . . . . . . 14
SH&E Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SH&E Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Surplus Refinery Property. . . . . . . . . . . . . . . . . . . . . 15
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Testing Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . 15
Third Party Property . . . . . . . . . . . . . . . . . . . . . . . 15
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Union. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Year 2000 Ready. . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.02 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 2 SALE AND PURCHASE; PURCHASE PRICE; METHOD OF PAYMENT;
LIMITED ASSUMPTION AND RETENTION OF LIABILITIES. . . . . . 17
2.01 Sale and Purchase . . . . . . . . . . . . . . . . . . . . . . . 17
2.02 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . 17
2.03 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . 19
2.04 Limited Assumption and Retention of Liabilities . . . . . . . . 19
ARTICLE 3 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.01 Place and Time. . . . . . . . . . . . . . . . . . . . . . . . . 20
3.02 Transactions and Deliveries at or Prior to Closing. . . . . . . 20
3.03 Adjustments as of Closing . . . . . . . . . . . . . . . . . . . 25
ARTICLE 4 EMPLOYEES LOANED TO SELLER, EMPLOYMENT AND EMPLOYEE
BENEFITS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.01 Employees in General. . . . . . . . . . . . . . . . . . . . . . 27
4.02 Represented Loaned Employees. . . . . . . . . . . . . . . . . . 28
4.03 Offers of Employment. . . . . . . . . . . . . . . . . . . . . . 28
4.04 Employee Benefits for Acquired Employees. . . . . . . . . . . . 29
4.05 Liabilities and Indemnities . . . . . . . . . . . . . . . . . . 32
ARTICLE 5 SELLER'S REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . 33
5.01 Organization and Standing . . . . . . . . . . . . . . . . . . . 33
5.02 Authority and Binding Obligations . . . . . . . . . . . . . . . 33
5.03 Consent; Non-Contravention. . . . . . . . . . . . . . . . . . . 34
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5.04 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.05 Contracts and Commitments . . . . . . . . . . . . . . . . . . . 35
5.06 Leases and Easements. . . . . . . . . . . . . . . . . . . . . . 37
5.07 Condition of Improvements and Equipment . . . . . . . . . . . . 37
5.08 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . 38
5.09 Due Diligence . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.10 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 39
5.13 No Knowledge of Breaches. . . . . . . . . . . . . . . . . . . . 39
5.14 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.15 Good and Marketable Title . . . . . . . . . . . . . . . . . . . 41
5.16 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.17 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.18 Transferred Assets. . . . . . . . . . . . . . . . . . . . . . . 43
5.19 Certain Environmental Matters . . . . . . . . . . . . . . . . . 43
ARTICLE 6 BUYER'S AND GUARANTOR'S REPRESENTATIONS AND WARRANTIES . . . 44
6.01 Buyer's Representations and Warranties. . . . . . . . . . . . . 44
(a) Organization and Standing . . . . . . . . . . . . . . . . . . 44
(b) Authority and Binding Obligations . . . . . . . . . . . . . . 45
(c) No Consent Required; Non-Contravention. . . . . . . . . . . . 45
(d) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 46
(e) No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(f) Actions and Proceedings . . . . . . . . . . . . . . . . . . . 47
(g) Independent Decision. . . . . . . . . . . . . . . . . . . . . 47
(h) No Knowledge of Breaches. . . . . . . . . . . . . . . . . . . 48
(i) Financial Capacity; Future Performance. . . . . . . . . . . . 48
6.02 Guarantor's Representations and Warranties. . . . . . . . . . . 48
(a) Organization and Standing . . . . . . . . . . . . . . . . . . 48
(b) Authority and Binding Obligations . . . . . . . . . . . . . . 49
(c) No Consent Required; Non-Contravention. . . . . . . . . . . . 49
(d) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 50
(e) No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(f) Actions and Proceedings . . . . . . . . . . . . . . . . . . . 51
(g) Independent Decision. . . . . . . . . . . . . . . . . . . . . 51
(h) No Knowledge of Breaches. . . . . . . . . . . . . . . . . . . 51
(i) Financial Capacity; Future Performance. . . . . . . . . . . . 51
ARTICLE 7 CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. . . . . 52
7.01 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . 52
7.02 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.03 Required Consents and Authorizations. . . . . . . . . . . . . . 53
7.04 Taking of Assets. . . . . . . . . . . . . . . . . . . . . . . . 53
7.05 Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . 53
7.06 Representations and Warranties True; Covenants and
Agreements Performed . . . . . . . . . . . . . . . . . . . . . 54
7.07 Closing of Senior Note Offering . . . . . . . . . . . . . . . . 54
ARTICLE 8 CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE . . . . 55
8.01 Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
8.02 Representations and Warranties True; Covenants and
Agreements Performed . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE 9 JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS. . . . . . 56
9.01 Governmental Consents . . . . . . . . . . . . . . . . . . . . . 56
9.02 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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9.03 Related Agreements Finalized. . . . . . . . . . . . . . . . . . 56
ARTICLE 10 COVENANTS AND AGREEMENTS OF SELLER. . . . . . . . . . . . . 57
10.01 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 57
10.02 Access; Records . . . . . . . . . . . . . . . . . . . . . . . . 57
10.03 Consents to Assignment. . . . . . . . . . . . . . . . . . . . . 58
10.04 Intellectual Property . . . . . . . . . . . . . . . . . . . . . 59
10.05 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.06 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 11 COVENANTS AND AGREEMENTS OF BUYER . . . . . . . . . . . . . 60
11.01 Access; Records . . . . . . . . . . . . . . . . . . . . . . . . 60
11.02 Performance of Assumed Obligations. . . . . . . . . . . . . . . 60
11.03 Qualifications, Approvals, Licenses and Permits . . . . . . . . 61
11.04 No Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.05 Right of First Refusal. . . . . . . . . . . . . . . . . . . . . 61
11.06 Third Party Property. . . . . . . . . . . . . . . . . . . . . . 63
11.07 No Liens or Encumbrances. . . . . . . . . . . . . . . . . . . . 64
11.08 Insurance and Financial Compliance Requirements . . . . . . . . 64
ARTICLE 12 COVENANTS OF BUYER AND SELLER . . . . . . . . . . . . . . . 65
12.01 Antitrust Compliance. . . . . . . . . . . . . . . . . . . . . . 65
12.02 Purchase Price Allocations. . . . . . . . . . . . . . . . . . . 66
12.03 Tax Election. . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.04 Collection of Amounts Owed to a Party . . . . . . . . . . . . . 66
12.05 Payment of Transfer Taxes; Recording Fees . . . . . . . . . . . 67
12.06 Payment of Certain Expenses Due and Payable After
the Effective Time; Cooperation. . . . . . . . . . . . . . . . 68
12.07 Contracts, Leases and Easements or Permits Not Assigned
at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 69
12.08 Casualty Repair . . . . . . . . . . . . . . . . . . . . . . . . 70
12.09 Relationship of the Parties . . . . . . . . . . . . . . . . . . 70
12.10 Pursue Insurance Benefits.. . . . . . . . . . . . . . . . . . . 72
ARTICLE 13 ENVIRONMENTAL LIABILITIES. . . . . . . . . . . . . . . . . . 72
13.01 Environmental Liabilities . . . . . . . . . . . . . . . . . . . 72
13.02 Environmental Investigations. . . . . . . . . . . . . . . . . . 76
13.03 Waste Sites . . . . . . . . . . . . . . . . . . . . . . . . . . 77
13.04 Environmental Coordination Committee. . . . . . . . . . . . . . 78
13.05 Environmental Cooperation.. . . . . . . . . . . . . . . . . . . 78
13.06 Remediation by Buyer. . . . . . . . . . . . . . . . . . . . . . 79
13.07 Remediation by Seller.. . . . . . . . . . . . . . . . . . . . . 79
13.08 Payments and Reimbursements . . . . . . . . . . . . . . . . . . 80
13.09 Environmental Insurance . . . . . . . . . . . . . . . . . . . . 80
13.10 Insurance Recoveries. . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 13 ENVIRONMENTAL LIABILITIES . . . . . . . . . . . . . . . . . 81
ARTICLE 14 INDEMNIFICATION; SURVIVAL . . . . . . . . . . . . . . . . . 81
14.01 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 81
14.02 Notification and Third Party Claims . . . . . . . . . . . . . . 85
14.03 Limitation on Indemnification . . . . . . . . . . . . . . . . . 87
14.04 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
14.05 Coordination of Indemnification Rights. . . . . . . . . . . . . 88
14.06 Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . 90
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ARTICLE 15 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . 90
15.01 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . 90
15.02 Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.03 Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.04 Statute of Limitations. . . . . . . . . . . . . . . . . . . . . 91
15.05 Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
15.06 Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.07 Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
15.08 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . 93
ARTICLE 16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
16.01 Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
16.02 Exclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
16.03 Licensed Technology Rights . . . . . . . . . . . . . . . . . . . 94
16.04 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 96
16.05 Term and Termination . . . . . . . . . . . . . . . . . . . . . . 98
16.06 Representations and Warranties . . . . . . . . . . . . . . . . . 98
16.07 Access and Support . . . . . . . . . . . . . . . . . . . . . . .100
16.08 Export Control . . . . . . . . . . . . . . . . . . . . . . . . .100
16.09 Source Codes . . . . . . . . . . . . . . . . . . . . . . . . . .100
16.10 Transfer of Intellectual Property. . . . . . . . . . . . . . . .101
ARTICLE 17 RISK OF LOSS. . . . . . . . . . . . . . . . . . . . . . . .101
ARTICLE 18 COMMISSIONS AND FINDER'S FEES . . . . . . . . . . . . . . .102
ARTICLE 19 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .102
19.01 Entire Agreement; Amendments. . . . . . . . . . . . . . . . . .102
19.02 Invalidity. . . . . . . . . . . . . . . . . . . . . . . . . . .103
19.03 Effect of Waiver or Consent . . . . . . . . . . . . . . . . . .103
19.04 Limitation on Benefits of this Agreement. . . . . . . . . . . .103
19.05 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . .104
19.06 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . .106
19.07 Additional Actions and Documents. . . . . . . . . . . . . . . .106
19.08 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . .106
19.09 Place of Transfer of Title and Possession . . . . . . . . . . .107
19.10 Execution in Counterparts . . . . . . . . . . . . . . . . . . .107
19.11 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . .107
19.12 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . .107
19.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . .108
19.14 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . .110
19.15 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . .111
19.16 Exclusivity.. . . . . . . . . . . . . . . . . . . . . . . . . .111
- v -
<PAGE>
SCHEDULES
Schedule 1.01A - Contracts
Schedule 1.01B - Excluded Assets
Schedule 1.01C - Persons with Knowledge
Schedule 1.01D - Leases and Easements
Schedule 1.01E - Permitted Encumbrances
Schedule 1.01F - Prepaid Expenses and the Deposits
Schedule 1.01G - Refinery Land
Schedule 3.03(a)(i) - Inventory Values
Schedule 3.03(a)(ii) - Net Working Capital Adjustment
Schedule 4.01 Loaned Employees
Schedule 4.02 - Collective Bargaining Agreement
Schedule 4.03 - Continuing Employment Offers by Seller
Schedule 4.04 - Transition Benefits
Schedule 5.03(a) - Consents - Seller
Schedule 5.03(b) - Non-Contravention - Seller
Schedule 5.04 - Litigation - Seller
Schedule 5.05 Excluded Contracts
Schedule 5.08 - Compliance with Laws
Schedule 5.10 - Permits
Schedule 5.12 - Infringement
Schedule 5.14 Labor Matters
Schedule 5.15 - Good and Marketable Title
Schedule 5.17 - Y2K
Schedule 6.01(c)(i) - Consents - Buyer
Schedule 6.01(c)(ii) - Non-Contravention - Buyer
Schedule 6.01(d) - Litigation - Buyer
Schedule 6.01(e) - No Breach
Schedule 6.01(f) - Actions and Proceedings - Buyer
Schedule 6.02(c)(i) - Consents Guarantor [no reference in 6.02(c)(i)]
Schedule 6.02(c)(ii) - Non-Contravention - Guarantor
Schedule 6.02(d) - Litigation - Guarantor
Schedule 6.02(e) - No Breach - Guarantor
Schedule 6.02(f) - Actions and Proceedings - Guarantor
Schedule 12.02 - Purchase Price Allocations
Schedule 13.01(a) Seller Environmental Liabilities
Schedule 16.01 - Technology Transfer Agreement
Schedule 16.03(a) - Assignable Licensed Technology
Schedule 16.03(b) - Nonassignable or Nontransferable Licensed
Technology
Schedule 16.09 - Source Code Escrow
- vi -
<PAGE>
EXHIBITS
EXHIBIT A - Contingency Earn Up Payments
EXHIBIT B - Special Warranty Deed(s)
EXHIBIT C - Seller's Legal Opinion
EXHIBIT D - Buyer's Legal Opinion
EXHIBIT E - Guaranty
EXHIBIT F - Guarantor's Legal Opinion
EXHIBIT G - Frontier Products Offtake Agreement
EXHIBIT H - Intentionally Left Blank
EXHIBIT I - Terminal Agreement (El Dorado Tank Farm)
EXHIBIT J - Transition Services Agreement
EXHIBIT K - Foreign Crude Supply Agreement
EXHIBIT L - Cogeneration Sub-Sublease
EXHIBIT M - Hydrotreater Sublease
EXHIBIT N - Measurements Services Agreement
EXHIBIT O - Terminal Agreement (Jet Fuel - Boyer Terminal)
EXHIBIT P - Real Property Agreement
- vii -
<PAGE>
ASSET PURCHASE AND SALE AGREEMENT
(EL DORADO REFINERY)
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered
into as of the 19 day of October, 1999, by and among EQUILON ENTERPRISES
LLC, a Delaware limited liability company, hereinafter referred to as
"Seller," FRONTIER EL DORADO REFINING COMPANY, a Delaware corporation,
hereinafter referred to as "Buyer," and FRONTIER OIL CORPORATION, a Wyoming
corporation, hereinafter referred to as "Guarantor".
W I T N E S S E T H:
WHEREAS, Seller is the owner of a refinery commonly known as the El Dorado
Refinery in Butler County, Kansas (the "Refinery");
WHEREAS, Seller desires to sell the Assets, as hereinafter defined; and
WHEREAS, Buyer desires to buy the Assets on the terms and conditions
contained in this Agreement; and
WHEREAS, Guarantor agrees to guaranty Buyer's obligations under the
Fundamental Agreements.
NOW, THEREFORE, in consideration of Ten Dollars U.S. ($10), the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS AND INTERPRETATIONS
1.01 Definitions.
Terms which are defined in Sections other than Article 1 of this Agreement,
shall have the meanings attributed to them where defined. As used in this
Agreement, the following terms shall have the meanings set forth below, unless
the context otherwise requires:
"Acquired Employee" shall have the meaning specified in Section 4.03(c).
"Affiliate" shall, with respect to Seller, mean any of its members or
owners, and their respective parents, subsidiaries, affiliates, or joint
venturers, or any other Person directly or indirectly controlling, controlled
by, or under common control with, Seller; with respect to Buyer, the term shall
mean any Person directly or indirectly controlling, controlled by, or under
common control with, Buyer. For purposes of this definition, "control" shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of an entity, whether through the
ownership of voting securities or interests or otherwise.
"Affiliate Employer" shall have the meaning specified in Section 4.01(b).
"Applicable Law" means any applicable federal, state, local and foreign
statute, law (including, without limitation, any judicial or common law, or
strict liability), ordinance, rule or regulation.
"Assets" shall mean the Improvements, the Equipment, the Refinery Land, the
Equilon Feedstock Inventory, the Equilon Product Inventory, the Equilon Other
Inventory, Prepaid Expenses and Deposits, Surplus Refinery Property, Refinery
Records and the Equilon Other Assets, but shall exclude (i) the Excluded Assets
and (ii) all of those assets now owned by Seller or hereafter acquired by Seller
and which are transferred, used or otherwise disposed of prior to Closing (x)
with the consent of Buyer, or (y) in the ordinary course of business in
accordance with the procedures set forth in Section 10.01.
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<PAGE>
"Base Rate" shall mean the lesser of (i) the per annum rate of interest
calculated on a daily basis using the 3-month Treasury Bill rate published in
the Wall Street Journal for the applicable day (with the rate for any day for
which such rate is not published being the rate most recently published) plus
two hundred (200) basis points; and (ii) the maximum non-usurious rate of
interest permitted by Applicable Law, such Base Rate to be adjusted
automatically as and to the extent that either (i) or (ii) immediately above
changes from time to time.
"Claim" shall have the meaning specified in Section 15.01.
"Claim Notice" shall have the meaning specified in Section 14.02.
"Closing" means the closing of the purchase and sale contemplated
hereunder.
"Closing Date" means the time and date established for the Closing pursuant
to Section 3.01 hereof.
"Collective Bargaining Agreement" shall have the meaning specified in
Section 4.02.
"Commitments" for purposes of Section 5.05, shall have the meaning
specified in Section 5.05.
"Committee" shall have the meaning specified in Section 13.04.
"Contingency Earn-Up Payments" shall have the meaning specified in Section
2.02(b).
"Contracts" means those contracts and agreements listed on Schedule 1.01A
hereto.
- 3 -
<PAGE>
"Damages" shall mean (a) any and all obligations, liabilities, damages (but
excluding any indirect, special, punitive, exemplary and consequential damages
other than such damages as may be awarded to a third party against an
Indemnified Party), fines, natural resource damages, penalties, deficiencies,
losses (but excluding lost profits), Judgments, settlements, costs and
reasonably incurred expenses, interest, bonding and appellate costs and
attorneys', accountants', engineers', consultants' and investigators' reasonable
fees and disbursements, in each case after the application of any and all
amounts actually recovered (net of costs of recovery) under insurance contracts
or similar arrangements (but excluding self-insurance arrangements) and from
third parties by the Person claiming indemnity and (b) interest on such
aforesaid items consistent with the Applicable Law at (i) the Base Rate
beginning thirty (30) days after the date on which the Indemnified Party makes a
payment in respect of a claim or demand asserted by a third party against the
Indemnified Party for which the Indemnified Party is entitled to indemnification
hereunder or (ii) at the Base Rate beginning thirty (30) days after the date on
which the Indemnified Party submits the claim to the Indemnifying Party, if such
claim does not arise out of a claim or demand asserted by a third party against
the Indemnified Party and (iii) the Late Payment Rate beginning on the date a
Judgment is entered in favor of the Indemnified Party, if such claim does not
arise out of a claim or demand asserted by a third party against the Indemnified
Party, in such case net of interest awarded in any Judgment in favor of the
Indemnified Party.
"Deliverables" means design manuals, operation manuals, blue prints,
engineering studies and engineering reports and with respect to computer
software, object code; user operations and system documentation; job control
information; job control language; system engineering and design information;
and all associated data files and data bases to the extent such systems exist
for the operations of the Refinery and can be delivered by a Party.
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<PAGE>
"Due Diligence" for purposes of Section 5.17, shall have the meaning
specified in Section 5.17(c).
"Effective Time" shall mean 12:01 A.M. Central Time on the day following
the Closing Date.
"Electing Party" shall have the meaning specified in Section 12.03.
"Employment Commencement Date" shall mean the Effective Time. Depending on
the Closing Date and for ease of transition, Buyer and Seller agree, (despite
the fact Seller's employees who accept employment offers with Buyer will become
Acquired Employees at the Effective Time), that (i) Buyer may need the Acquired
Employees to remain on Seller's payroll and in Seller's benefit plans for a
short period of time or (ii) Seller may have already paid the Acquired Employees
or made benefit deductions for time they will be working for Buyer or (iii) the
Buyer may pay the Acquired Employees and provide benefits for time actually
worked for Seller. Buyer and Seller agree to cooperate on these issues to
provide a smooth transition and to true up any amount paid on the other Party's
behalf.
"Environmental Liability" shall mean any fines and penalties or reasonable
direct cost or expense of any nature whatsoever (but excluding any indirect,
special, punitive, exemplary and consequential damages other than such damages
as may be awarded to a third party against a Party) required by any third party
(including, but not limited to, any federal, state or local administrative or
governmental authority) under any SH&E Law or related Legal Requirement to
remedy any noncompliance or to contain, remove, remedy, respond to, clean up or
abate any known or unknown on-site Release or off-site migration of a Release of
Hazardous Substances, an SH&E Condition, or other contamination of surface
water, groundwater, land surface or subsurface strata arising out of, resulting
from, or relating to the Operations or any activities involving the Assets.
Environmental Liability includes, without limitation, any Damage reasonably
incurred with respect to (a) any investigation, study, assessment, legal
representation, cost recovery by governmental agency, or monitoring or testing
in connection therewith (but excluding cost of oversight of remedies performed
by other Parties or general corporate overhead); (b) any of the Assets as a
result of actions or measures necessary to implement or effectuate any such
containment, removal, remediation, response, cleanup or abatement of any
Hazardous Substance; and (c) the resolution of such liabilities.
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<PAGE>
"Equilon Feedstock Inventory" shall mean that crude oil, feedstock and
intermediate petroleum product, including tank bottoms and line fill as
applicable but less water and sludge, owned by the Seller or Equiva Trading
Company and located at the Refinery Land or in terminals belonging to Seller or
third parties and specified to be sold.
"Equilon Other Assets" shall mean any and all Contracts, Leases, Easements,
and Permits, which are transferred to Buyer hereunder and Intellectual Property
or license therefor and all other assets owned by Seller and located in or on
the Refinery Land and not an Excluded Asset.
"Equilon Other Inventory" shall mean the catalysts, chemicals, additives,
spare parts, store stocks, supplies and personal property owned by Seller that
may be used and consumed in the Operations and that is located on the Refinery
Land (which for purposes of this definition shall include any such property
which is temporarily offsite for repairs) and not an Excluded Asset.
"Equilon Product Inventory" shall mean that certain refined and chemical
products including tank bottoms and line fill as applicable owned by the Seller
or Equiva Trading Company and located at the Refinery or in tank cars or trucks
in transit to the customers as per shipping records.
- 6 -
<PAGE>
"Equipment" shall mean all furnishings, furniture, computer equipment and
hardware, fittings, equipment, machinery, refining process units, testing
equipment, tools, apparatus, tanks, pipelines, pumping stations, booster pumps,
sewers, appliances, trucks, automobiles, other vehicles, signs and other
articles of personal property of every kind whatsoever which in the normal
course of business is located on the Refinery Land.
"Excluded Assets" means (i) all of Seller's cash, deposits and bank
accounts; (ii) all accounts receivable or exchange balances owed to Seller by
reason of deliveries made by Seller or on account of the Assets prior to the
Effective Time; (iii) the financial books and records of Seller or its
Affiliates and the personnel, employment and other records of Seller as to their
former employees other than the Refinery Records; (iv) any claims or other
rights to receive monies arising prior to or after the date of execution hereof
which Seller has or may have which are attributable to its ownership of the
Assets prior to the Effective Time; (v) all company minute books and similar
materials related to maintenance of company records other than the Refinery
Records; (vi) all excess insurance proceeds under Section 12.08 of this
Agreement; (vii) all Intellectual Property and Trademarks not conveyed by
Article 16 of this Agreement; and (viii) those assets described on Schedule
1.01B or listed as Excluded Contracts on Schedule 5.05 hereto.
"Fair Market Value" shall have the meaning specified in Section 11.05(d).
"Force Majeure Event" means any (i) fire, explosion, strike, lock-out,
casualty or accident; (ii) act of God, including, without limitation, epidemic,
hurricane, typhoon, earthquake, cyclone or flood; (iii) war, revolution, civil
commotion, act of enemies, blockade, or embargo; or (iv) other similar
occurrences or acts beyond the reasonable control of a Party hereto, which act
or occurrence shall make it impossible for the Party concerned to carry out the
obligations of such Party under this Agreement (but lack of financial ability
shall not be a Force Majeure Event). Those provisions in this Agreement
regarding Force Majeure Event shall only be applicable in the specific
situation(s) in which this Agreement expressly provides they shall apply and in
no other situations.
- 7 -
<PAGE>
"Fundamental Agreements" shall mean the Agreement, the Frontier Products
Offtake Agreement, the Cogeneration Sub-Sublease, and the Foreign Crude Supply
Agreement.
"Guaranty" shall mean the Guaranty by Guarantor with Seller and Equiva
Trading Company as beneficiaries dated as of the date of this Agreement as
specified in Exhibit E.
"Hazardous Substance" is defined as the terms "Hazardous Substance,"
"Regulated Substance," and "Oil and Hazardous Substance" are respectively
defined as of the Effective Time in the U.S. Federal Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, and the Federal Water Pollution Control
Act, as amended.
"Improvements" shall mean any and all buildings, structures, fixtures or
other improvements attached or affixed to the Refinery Land.
"Indemnified Party" shall refer to the Person or Persons indemnified, or
entitled, or claiming to be entitled to be indemnified, pursuant to this
Agreement.
"Information Technology" shall have the meaning specified in Section
5.17(c).
"Indemnifying Party" shall refer to the Person having the obligation to
indemnify pursuant to this Agreement.
"Insurance" shall have the meaning specified in Section 11.08(a).
- 8 -
<PAGE>
"Intellectual Property" means intellectual and similar property of every
kind and nature that was licensed by Texaco Inc. and certain of its affiliates
or Shell Oil Company and certain of its affiliates to Seller on a non-exclusive
basis for Seller's Use and for which Seller enjoys a right to grant a sublicense
to certain purchasers of its assets or that which is owned by Seller and which
Seller has a right to grant a non-exclusive license to Use including, without
limitation patents, patent applications, inventions, invention disclosures,
copyrights, including registrations and applications to register copyrights,
formulae, processes, engineering data, designs, know- how, show-how,
confidential or proprietary technical information and trade secrets or other
similar data or information and computer software, but excluding Trademarks.
"Judgments" shall mean all judgments, orders, decisions, injunctions,
decrees or awards of any federal, state, local or foreign court, arbitrator or
administrative or governmental authority, bureau or agency.
"Known", or "Knowledge" or "To the knowledge of" or "Within the knowledge
of a Party" shall mean those facts, events or circumstances, if actually known
to an officer, a manager or any supervisory employee of a Party to whom such
phrase is applied; provided, however, that in applying the preceding clause to
Seller on the one hand, or Buyer or Guarantor, on the other hand, the Parties
agree that the only officers, managers or supervising employees of Seller or
Buyer and Guarantor, who shall be considered or to whom any such knowledge
standard applies are the Persons identified on Schedule 1.01C.
"Late Payment Rate" shall mean the lesser of (i) the Base Rate, plus five
hundred (500) basis points per annum, or (ii) the maximum rate of interest
permitted by Applicable Law, such rate to be adjusted automatically as and to
the extent that either (i) or (ii) immediately above changes from time to time.
- 9 -
<PAGE>
"Leases and Easements" shall mean, collectively, those real property leases
and easements described on Schedule 1.01D.
"Legal Requirements" shall mean any and all (i) Applicable Laws; (ii)
applicable Judgments; (iii) contracts with any federal, state, local or foreign
court, arbitrator or administrative or governmental authority, bureau or agency
relating to compliance with matters described in (i) or (ii) above, and (iv)
applicable Permits; and as any of the foregoing matters described in (i) through
(iv) above may have been waived, amended, varied or otherwise modified by any
Permit or Permit-related proceedings or other applicable proceedings.
"License Period" means the period of time beginning at the Effective Time.
"Licensed Technology Rights" means intellectual and similar property of
every kind and nature, except Intellectual Property, licensed by third parties
to Seller before the Effective Time, including without limitation patents,
patent applications, inventions, invention disclosures, copyrights, including
registrations and applications to register copyrights, formulae, processes,
engineering data, designs, know-how, show-how, confidential or proprietary
technical information and trade secrets or other similar data or information and
computer software but excluding all Trademarks.
"Liens" shall mean any and all liens, mortgages, charges, debentures,
pledges, security interests, burdens, easements, rights of way, zoning
ordinances, mineral exceptions, conditional sale contracts, rights of first
refusal and options or other encumbrances of any nature whatsoever, including,
but not limited to, such as may arise under any Contracts or Judgments.
- 10 -
<PAGE>
"Loaned Employee(s)" shall have the meaning specified in Section 4.01(b).
"Material Adverse Effect" shall mean the result of any act(s), omission(s),
conduct, occurrence(s), condition(s) or situation(s), or any combination thereof
if the same have or could reasonably be expected to result (either individually
or in the aggregate) in an adverse effect in excess of Two Million Dollars
($2,000,000) annually with respect to cash flow before Taxes derived from the
operation of the Refinery on a recurring basis for a period of at least three
(3) years; or Five Million Dollars ($5,000,000) with respect to the value of any
of the Assets (for the types of purposes to which the same have been or could
lawfully have been devoted at any time during the 6-month period immediately
prior to the date of this Agreement);
"Net Working Capital Adjustment" shall have the meaning specified in
Section 3.03(a).
"Net Working Capital Estimate" shall have the meaning specified in Section
3.03(c).
"Non-Represented Loaned Employee" shall have the meaning specified in
Section 4.01(b).
"Notice of Disposition" shall have the meaning specified in Section
11.05(a).
"Operations" shall mean those activities conducted by Seller prior to the
Effective Time utilizing the Assets.
"Option Price" shall have the meaning specified in Section 11.05(c).
"Party" and "Parties" means each of Seller, Buyer and Guarantor and
collectively Seller, Buyer and Guarantor.
"Permits" shall mean any and all permits, temporary permits to construct or
operate, authorizations, approvals, registrations, rights of way, orders,
waivers, variances or other licenses issued or granted by any federal, state or
local administrative or governmental authority, bureau or agency (i) under any
Legal Requirement, including, but not limited to, SH&E Law; or (ii) under or
pursuant to any Judgment or any Contract with any such administrative or
governmental authority, bureau or agency relating in each case to compliance
with any Legal Requirement.
- 11 -
<PAGE>
"Permitted Debts" shall mean (i) indebtedness which may, from time to
time, be incurred by Buyer under the Amended and Restated Revolving Credit
Agreement and Letter of Credit Agreement dated on or before the Closing Date
among Frontier Oil and Refining Company, certain banks and Union Bank of
California, N.A. ("Revolving Credit Agreement"), including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case as amended, restated, modified, supplemented,
extended, renewed, replaced, refinanced or restructured from time to time,
whether by the same or any other agent or lender, whether represented by one or
more agreement; provided that the aggregate principal amount at any one time
outstanding shall not exceed the Buyer's borrowing base under the Revolving
Credit Agreement; and (ii) short term intercompany advances for working capital
purposes.
"Permitted Encumbrances" shall mean any Liens that (i) are listed on
Schedule 1.01E; (ii) liens not securing monetary obligations and which do not
interfere in any material respect with Buyer's use of, or ownership of the
Assets; (iii) are reflected in the title policy or are shown on the survey
subject to Seller's obligations under the Real Property Agreement; (iv) are of
record as of the date hereof in Butler County, Kansas, or (v) are caused or
created by Buyer; provided, however, that unless Buyer has expressly agreed
herein to assume liability for a specific indebtedness, Permitted Encumbrances
shall not include any indebtedness, whether or not of record.
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<PAGE>
"Permitted Liens" shall mean liens and encumbrances permitted under the
Revolving Credit Agreement including without limitation Permitted Liens under
the Revolving Credit Agreement (as defined within the Permitted Debt
definition).
"Person" means an individual, corporation, partnership, association, trust,
limited liability company or any other entity or organization, including a
government or political subdivision or agency, unit or instrumentality thereof.
"Prepaid Expenses and Deposits" shall mean those expenses and deposits
listed on Schedule 1.01F.
"Purchase Price" shall have the meaning specified in Section 2.02.
"Refinery" shall have the meaning specified in the first recital.
"Refinery Land" shall mean the tract (or parcel) of land described in
Schedule 1.01G, together with easements, appurtenances and other hereditaments
appurtenant to the Refinery Land and all the estates and rights of Seller in and
to said Refinery Land, subject to Permitted Encumbrances and excluding mineral
rights thereon.
"Refinery Records" means Seller's operational and technical records located
at the Refinery or maintained by Seller or its Affiliates and exclusively used
by or for the Refinery relating to the Operations or the Assets up to the
Effective Time including, without limitation, specifications, plats, surveys,
engineering statements, maintenance and production records, process diagrams and
studies, personnel and labor records relating to Acquired Employees (except that
medical records will only be given to Buyer after Seller receives the Acquired
Employee's written consent to the release of such records) environmental records
and reports, toxicological and ecological data technical reports and property
tax files. For the avoidance of doubt, Refinery Records specifically excludes
(i) any of the Seller's business plans, strategies and financial records which
address or reflect activities outside of the Refinery; and (ii) any of Seller's
or its Affiliates company minute books and records, tax returns or other
materials which do not pertain to the Assets or ongoing day to day operation of
the Operations.
- 13 -
<PAGE>
"Related Agreements" shall mean the Guaranty, the agreements listed in
Section 3.02(d) and any other agreements or documents executed in connection
with or required under this Agreement.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing of
any kind whatsoever of any Hazardous Substances into the environment (including
the abandonment or discarding of barrels, containers, tanks or other receptacles
containing or previously containing any Hazardous Substance).
"Represented Loaned Employee" shall have the meaning specified in Section
4.01(a).
"SH&E Condition" means a condition or circumstance resulting from one or
more related actions, omissions, or events with respect to a single facility or
location that exists or is alleged by a Person other than a Party or its
Affiliates to exist with respect to air, land, groundwater, or surface water or
plant facilities, procedures, practices, or equipment (whether occurring on-site
or off-site or having off-site effects, including off-site waste disposal,
spills, surface water discharge, migration of groundwater contamination, and
release to the air) which is not or is alleged to be not in compliance with or
which is subject to corrective action, remedy or other response action under
SH&E Law or related Legal Requirements. Soil, surface water, or groundwater
contamination arising from several sources, pieces of equipment, or events (for
example, one or more spills or leaks from a tank or product loading or unloading
apparatus) shall be considered a single SH&E Condition only if such
contamination is commingled. Contamination of more than one environmental media
(e.g., soil and groundwater) caused by the same actions, omissions or events
shall be considered a single SH&E Condition.
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<PAGE>
"SH&E Law" means any Applicable Law relating to pollution, the protection
of the environment or worker safety and health, release, emission, discharge, or
disposal of any material or substance, noise or odor control, safety, health, or
without limitation, environmental aspects of property transfer, natural resource
damage, pipeline operations and closure or product registration, or hazard
communication.
"Surplus Refinery Property" shall mean the real property and Equipment
retired in place or not currently used in connection with the Operations.
"Taxes" shall mean all taxes, charges, fees, imposts, duties, levies,
withholdings or other assessments imposed by any governmental entity, including
environmental taxes imposed pursuant to Chapter 38 of the Internal Revenue Code
of 1986, as amended, and similar state laws, excise taxes, customs duties,
utility, property, sales, use, value added, transfer and fuel taxes, and any
interest, fines, penalties or additions to tax attributable to or imposed on or
with respect to any such assessment, including all applicable sales, use,
excise, business, occupation or other tax, if any, relating to this or any other
service, supply or operating agreement.
"Testing Agents" shall have the meaning specified in Section 3.03 (b)(i).
"Third Party Claims" shall have the meaning specified in Section 14.02.
"Third Party Property" shall mean Improvements, Equipment and inventory
located on the Refinery Land owned by Persons not a Party, that are not owned by
or leased to Seller.
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"Trademarks" shall mean with regard to Seller (i) any and all trademarks,
trademark registrations, trademark applications, service marks, service mark
registrations, service mark applications, trade dress, word marks, word mark
registrations, word mark applications and trade names, including, without
limitation, the names Shell, Texaco, Equilon Enterprises LLC, Equiva Trading
Company, Equiva Services LLC and the Pecten and Star logos respectively, of
Shell Oil Company and Texaco Inc., used or licensed to Seller in connection with
any of the Operations; and (ii) the goodwill of the Operations in connection
with which such Trademarks have been used.
"Union" shall have the meaning specified in Section 4.02.
"Use" or its derivative words means make, use, have made and sell, import
and reproduce, distribute, publicly perform, publicly display and make a
derivative work.
"Year 2000 Ready" shall have the meaning specified in Section 5.17(c).
1.02 Interpretations.
(a) All references herein to Sections, Exhibits and Schedules are to
Sections of and Exhibits and Schedules attached to and forming part of this
Agreement, unless the contrary is specifically stated.
(b) Unless the context requires otherwise in this Agreement, the
singular shall include the plural and vice versa.
(c) The headings of the Sections and subsections of this Agreement
and the headings contained in the Exhibits and Schedules hereto are inserted for
convenience of reference only and shall not in any way define or affect the
meaning, construction, or scope of any of the provisions hereof or thereof.
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(d) Except for (i) the Cogeneration Sub-Sublease; and (ii) the
Hydrotreater Sublease, to the extent any of the Related Agreements conflict with
the specific terms of this Agreement in relation to the specific terms of this
Agreement, the terms of the Agreement shall control.
(e) Except where specifically stated otherwise, any reference to
any statute, regulation, rule, or agreement shall be a reference to the same as
amended, supplemented or re-enacted from time to time.
ARTICLE 2
SALE AND PURCHASE; PURCHASE PRICE; METHOD OF PAYMENT; LIMITED
ASSUMPTION AND RETENTION OF LIABILITIES
2.01 Sale and Purchase.
Subject to the conditions hereof, Seller agrees to sell, assign,
transfer, convey and deliver to Buyer, and Buyer agrees to purchase and accept
from Seller, the Assets at the Closing.
2.02 Purchase Price.
For and in consideration of the respective conveyances, assignments,
representations, warranties and covenants described herein Buyer or Guarantor
agrees to pay to Seller, and Seller agrees to accept from Buyer or Guarantor the
purchase price (the "Purchase Price") and other consideration, as follows:
(a) ONE HUNDRED SEVENTY MILLION DOLLARS ($170,000,000), to be
paid at the Closing, plus or minus the Net Working Capital Adjustment provided
for in Section 3.03; and
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(b)
(i) Contingency Earn-Up Payments, as described herein and
as further set forth and illustrated in Exhibit A. "Contingency Earn-Up
Payments" shall mean annual payments by Buyer to Seller of fifty percent
(50%) of the amount by which the net margin from Buyer's previous year's
operation of the Refinery exceeds a base net margin of Sixty Million
Dollars ($60,000,000). Net margin as used herein shall mean gross product
margin minus refinery operating costs. Buyer shall provide Seller with an
annual calculation pursuant to Exhibit A no later than March 31st of each
year. Payments hereunder, if any, shall be made on March 31 of each year,
with the first payment being due no later than March 31, 2001 plus interest
at the Base Rate from January 1, and for a period of up to eight (8) years
from January 1, 2000; provided, however, that Buyer shall have the right to
make an estimated Contingency-Earn Up Payment before March 31st and
interest thereon shall cease to accrue from the date such payment is
received by Seller. If an estimated Contingency Earn-Up Payment is made,
Buyer shall calculate a true up on March 15th and the under or over payment
shall be paid by the appropriate Party no later than March 31st, plus
interest on the true up amount, at the Base Rate from January 1. Each
annual payment shall be a separate calculation, no annual payment made
hereunder shall exceed Seven Million Five Hundred Thousand Dollars
($7,500,000), and the aggregate of all payments hereunder shall not exceed
Forty Million Dollars ($40,000,000);
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(ii) Seller shall have the right at reasonable hours to
examine the books, records, and charts of Buyer to verify the accuracy of
any statement, payment, calculation or determination made pursuant to
Section 2.02(b)(i); provided, however, that Seller shall adequately protect
the confidentiality of proprietary information. If any such examination
shall reveal, or if Seller shall discover, any error or inaccuracy in
Buyer's statement, payment, calculation or determination, then proper
adjustment and correction thereof shall be made as promptly as practicable
after discovery thereof and in any event within fourteen (14) days after
Seller gives Buyer notice of error or inaccuracy; provided, that no
adjustment or correction shall be made and all records and payments shall
be conclusively presumed to be final unless notice of any such error or
inaccuracy is given within six (6) months from the end of the calendar year
during which such error or inaccuracy occurred; provided, however, that
such six (6) month period shall not preclude the correction of any error or
inaccuracy discovered in any governmental audit of Buyer or its Affiliates;
and
(c) Guarantor's executed Guaranty.
2.03 Method of Payment.
All amounts to be disbursed at or, pursuant to the terms of this
Agreement, prior to the Closing or paid after Closing, shall be made in
immediately available U.S. funds, by wire transfer to a U.S. bank account
designated by Seller (or Buyer, as the case may be) or by any other means agreed
to by Seller (or Buyer, as the case may be).
2.04 Limited Assumption and Retention of Liabilities.
(a) Upon the condition that the Closing shall occur, and subject to
the provisions of Article 13 hereof, Buyer shall assume and agrees to discharge
all liabilities relating to the ownership or operation of the Assets from and
after the Effective Time or arising from the ownership or operation of the
Assets from and after the Effective Time.
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(b) Seller shall retain and be liable for liabilities and obligations
of Seller and its Affiliates related to the ownership or operation of the Assets
prior to the Effective Time or arising from the ownership or operation of the
Assets prior to the Effective Time except:
(i) Damages for Environmental Liability expressly
assumed by Buyer pursuant to Section 13.01.
(ii) Taxes payable and other current liabilities which
are included in the Net Working Capital Adjustment; and
(iii) Obligations arising from and after the
Effective Time to be performed after the Effective Time under the
Contracts, Leases, Easements and Permits which are transferred to
Buyer.
(c) Seller acknowledges and agrees that Buyer is not assuming any
liabilities with respect to the Assets or Operations other than those
liabilities expressly assumed by Buyer pursuant to this Agreement and the
respective Related Agreements.
ARTICLE 3
CLOSING
3.01 Place and Time.
The Closing shall take place at the offices of Equilon Enterprises
LLC, 1100 Louisiana, Suite 2200, Houston, Texas 77002, on the earlier of (i)
five (5) days following satisfaction of all of the conditions to close contained
herein or (ii) December 1, 1999, or on such other date as Buyer and Seller may
mutually agree.
3.02 Transactions and Deliveries at or Prior to Closing.
(a) At or prior to the Closing, Seller shall deliver to Buyer:
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(i) a properly executed and acknowledged special warranty deed
or deeds to the Refinery Land, the Improvements thereon, and the
appurtenances thereto, each such deed to be in the form of Exhibit B and
will contain (x) reservations of existing and future pipeline easements
with rights of reasonable access for maintenance and removal and (y),
reservation of easement for the cogeneration facility with rights of
reasonable access;
(ii) a properly executed and acknowledged assignment or
assignments of the Contracts, the Leases and Easements, and the Permits for
which no consent to assignment is required or for which any required
consent to assignment has been obtained or waived by the third party.
Additionally the Parties agree to execute and deliver such other forms of
conveyance as may be required by any governmental authority;
(iii) a properly executed and acknowledged general conveyance
of all of the Assets for which no specific conveyance is clearly
applicable;
(iv) copies of Seller's and its Affiliate which is a party to a
Related Agreement resolutions, certified as being correct and complete and
then in full force and effect, authorizing the execution of this Agreement
and the Related Agreements to which it is a party, and the consummation of
the transactions contemplated under this Agreement and the Related
Agreements to which it is a party;
(v) certificates of incumbency and specimen signatures of the
signatory officers of Seller and its Affiliate which is a party to a
Related Agreement;
(vi) a certificate of formation and good standing by the State of
Delaware, and copies of Seller's or its Affiliate which is a party to a
Related Agreement certificate of registration to do business in the State
of Kansas as a foreign company;
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(vii) the properly executed purchase price allocation
schedule described in Section 12.02 hereof;
(viii) written opinion of counsel to Seller, covering, in the
aggregate, Seller's and its Affiliate which is a party to a Related
Agreement due organization, valid existence and good standing as a limited
liability company or partnership in Delaware, registration and good
standing in Kansas, and the due authorization, execution and delivery by
Seller or its Affiliates as the case may be of this Agreement and the
Related Agreements, and the validity and binding effect of this Agreement
and the Related Agreements, which opinion shall be in the form attached
hereto as Exhibit C; and
(ix) copies of consents of third parties required to be obtained
prior to the assignment of the Leases and Easements, Permits and the
Contracts to be assigned pursuant to Section 3.02(a)(ii).
(b) At or prior to the Closing, Buyer shall deliver to Seller:
(i) that portion of the purchase price specified in Section 2.02(a),
adjusted as provided in Section 3.03 for the Net Working Capital Estimate;
(ii) copies of Buyer's and its Affiliate which is a party to a Related
Agreement resolutions certified as being correct and complete and then in
full force and effect, authorizing the execution of this Agreement and the
Related Agreements to which it is a party, and the consummation of the
transactions contemplated under this Agreement and the Related Agreements
to which it is a party;
(iii) certificates of incumbency and specimen signatures of the
signatory officers of Buyer and its Affiliate which is a party to a Related
Agreement;
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(iv) a written opinion of counsel to Buyer, as to Buyer's and its
Affiliate which is a party to a Related Agreement due organization, valid
existence and good standing as a corporation in Delaware, registration and
good standing in Kansas, and the due authorization, execution and delivery
by Buyer or its Affiliates as the case may be of this Agreement and the
Related Agreements and the validity and binding effect of this Agreement
and the Related Agreements, which opinion shall be in the form attached
hereto as Exhibit D;
(v) a certificate of existence and good standing issued by the State
of Delaware and a copy of Buyer's or its Affiliate which is a party to a
Related Agreement certificate of registration to do business in the State
of Kansas as a foreign company;
(vi) the properly executed purchase price allocation schedule
described in Section 12.02 hereof;
(vii) proof of insurance required pursuant to Section 11.08 with
copies of the policy to be provided by Buyer to Seller as soon as
available;
(viii) proof of environmental insurance required pursuant to Section
13.09 with copies of the policy to be provided by Buyer to Seller as soon
as available; and
(ix) the surety bond in accordance with Article 16 of the Cogeneration
Sub-Sublease.
(c) At or prior to the Closing, Guarantor shall deliver to Seller:
(i) copies of resolutions of Guarantor's board of directors certified
as being correct and complete and then in full force and effect,
authorizing the execution of this Agreement, the Guaranty; and the
consummation of the transactions contemplated under this Agreement, and the
Guaranty;
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(ii) certificates of incumbency and specimen signatures of the
signatory officers of Guarantor;
(iii) a written opinion of counsel to Guarantor, as to Guarantor's
due organization, valid existence and good standing as a corporation in
Wyoming, registration and good standing in Kansas, the due authorization,
execution and delivery by Guarantor of this Agreement, and the Guaranty and
the validity and binding effect of this Agreement, and the Guaranty which
opinion shall be in the form attached hereto as Exhibit F;
(iv) a certificate of existence and good standing issued by the State
of Wyoming and a copy of Guarantor's certificate of registration to do
business in the State of Kansas as a foreign company; and
(v) the Guaranty as specified in Exhibit E.
(d) At the Closing, Buyer or Buyer's Affiliates and Seller or Seller's
Affiliates shall enter into the following agreements:
(i) the Frontier Products Offtake Agreement, as specified in Exhibit
G;
(ii) the Terminal Agreement, (El Dorado Tank Farm), as specified in
Exhibit I;
(iii) the Transition Services Agreements under which the Seller or
its Affiliates may provide services to Buyer, as specified in Exhibit J;
(iv) the Foreign Crude Supply Agreement, as specified in Exhibit K;
(v) the Cogeneration Sub-Sublease, as specified in Exhibit L;
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(vi) the Hydrotreater Sublease, as specified in Exhibit M;
(vii) the Measurements Services Agreement, as specified in Exhibit N;
(viii) the Terminal Agreement (Jet Fuel-Boyer Terminal), as specified
in Exhibit O; and
(ix) the Real Property Agreement, as specified in Exhibit P.
3.03 Adjustments as of Closing.
(a) Calculation. The Net Working Capital Adjustment ("Net Working
Capital Adjustment") to the purchase price shall be calculated as follows:
(i) The value of Equilon Feedstock Inventory and Equilon Product
Inventory, calculated by multiplying the quantities or volumes thereof
determined as of the Effective Time using the method of determination
described in Section 3.03(b) by the values determined as described on
Schedule 3.03(a)(i); plus
(ii) The net balances as of the Effective Time in the accounts
marked as "Include in Net WC Adj" on Schedule 3.03(a)(ii).
(b) Method of Inventory Determination.
(i) For purposes of this Agreement, any required
determination of volumes of Equilon Feedstock Inventory and Equilon Product
Inventory shall be made by two independent inspectors ("Testing Agents")
appointed by Buyer and Seller and mutually acceptable to both Parties. The
volumes determined by the Testing Agents shall be adjusted in accordance
with normal industry practice, based upon testing by the Testing Agents,
for water, contaminants and sediment using standard industry guidelines,
including ones relating to temperature, pressure and specific gravity. The
Testing Agents shall issue a joint written report within twenty (20) days
after the Effective Time, setting forth the volumes and quantities. In the
event the Testing Agents initially are unable to agree upon any volumes of
any inventory, then the Testing Agents shall retest and re-measure until
the Testing Agents are in agreement;
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(ii) Presence at Inventory Determination. In addition to
the presence of such employees as is normal to the Operations, and subject
to the right of Seller to conduct the Operations, each Party shall be
entitled, at its own expense, to have any employee, agent, consultant or
other authorized representative present for any inventory determination so
long as such employee, agent, consultant or other authorized representative
does not interfere with the tasks or responsibilities of the Testing
Agents; and
(iii) Estimate of Inventories. At least five (5) business
days in advance of the Closing Date, Seller shall make a good faith
estimate of the Seller's inventories and provide a copy thereof to Buyer
setting forth the ownership, types, characteristics and volumes, on a tank,
vessel or location basis, of Equilon Feedstock Inventory and Equilon
Product Inventory.
(c) Estimate of Net Working Capital Adjustment. The amount of the Net
Working Capital Adjustment to be included in the purchase price paid at the
Closing Date ("Net Working Capital Estimate") shall be estimated by Seller and
provided to Buyer at least five (5) business days in advance of the Closing Date
using the inventory estimates described in Section 3.03(b)(iii) applied to the
most currently available values calculated in accordance with Schedule
3.03(a)(i) and the amounts in accordance with Section 3.03(a)(ii) above.
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(d) Post Closing Adjustments. Seller and/or Buyer shall make
adjustment payments with respect to the Net Working Capital Adjustment as
follows:
(i) not later than thirty (30) days after the Closing
Date, an adjustment payment shall be made based on the differences between
the inventory estimates described in Section 3.03(b)(iii) and the amounts
of inventory determined by the Testing Agents as described in Section
3.03(b)(i) and any differences in value based on actual data for the
Closing Date calculated in accordance with Schedule 3.03(a)(i); and
(ii) each adjustment payment shall be paid in
immediately available funds. Any amount not paid when due shall bear
interest at the Late Payment Rate for the period past due.
ARTICLE 4
EMPLOYEES LOANED TO SELLER, EMPLOYMENT
AND EMPLOYEE BENEFITS
4.01 Employees in General.
Schedule 4.01 contains a true and complete list of:
(a) Each represented employee working at the Refinery as of the date
of this Agreement (each, a "Represented Loaned Employee"); and
(b) Each regular, full-time and regular, part-time non- represented
employee working at the Refinery as of the date of this Agreement (each, a
"Non-Represented Loaned Employee");
which employees are employees of Seller's Affiliate, Equiva Services LLC,
and who are currently on loan to Seller under a services agreement (collectively
the "Loaned Employees"). Equiva Services LLC shall be referred to in this
Article as "Affiliate Employer."
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4.02 Represented Loaned Employees.
The Buyer acknowledges that Seller and the Affiliate Employer are bound by
the Collective Bargaining Agreement and all existing Memoranda of Agreement or
Understanding, which are listed on Schedule 4.02 ("Collective Bargaining
Agreement"), between Seller and the Affiliate Employer and Local 5-241 of the
Paper, Allied Industrial, Chemical & Energy Workers International Union (the
"Union"). Buyer agrees to recognize the Union as the exclusive representative
for the bargaining unit covered by the Collective Bargaining Agreement. Buyer
shall adopt the Collective Bargaining Agreement in accordance with its terms.
4.03 Offers of Employment.
(a) Offers of Employment by Buyer.
(i) Buyer shall offer regular, full-time or regular, part-time
employment to each Represented Loaned Employee in accordance with the terms
of the Collective Bargaining Agreement; and
(ii) Buyer shall offer regular, full-time or regular, part-time
employment to each Non-Represented Loaned Employee. Seller may, at its
option, make offers of continuing employment with Seller or its Affiliates
to the Non-Represented Loaned Employees listed on Schedule 4.03.
Any such offer of employment by Buyer shall be at a base pay rate that
is at least equivalent at the Employment Commencement Date to that the Loaned
Employee had with the Affiliate Employer as of the last regularly scheduled
workday immediately prior to the Employment Commencement Date. Within three (3)
business days of signing this Agreement, Seller shall provide, and cause its
Affiliates, as appropriate, to provide, Buyer with the title, employment
history, and current salary of each Loaned Employee.
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(b) Notice of Offers. Buyer shall notify Seller of the acceptance of
any employment offer made by Buyer, within two (2) business days of the
acceptance of such offer.
(c) Orderly Transition. Buyer shall employ each Loaned Employee who
accepts Buyer's offer of employment. Seller agrees to use its reasonable
efforts to assist Buyer in the orderly transition to Buyer of any such Loaned
Employees. Each such accepting employee shall, from the Employment Commencement
Date, be known as an "Acquired Employee".
(d) Employment Assurances. For a period of one year following the
Employment Commencement Date of each Acquired Employee, Buyer shall not reduce
the Acquired Employee's base pay, and shall not terminate such Acquired
Employee's employment except for "cause". Further, Buyer shall provide
non-represented Acquired Employees with an opportunity for incentive
compensation offered to Buyer's similarly situated employees. For represented
Acquired Employees, Buyer shall provide gainsharing as set forth in the
Collective Bargaining Agreement. The fourth quarter 1999 gainsharing payment
will be shared proportionately by Buyer and Seller based on the number of days
in the quarter that the recipients were Seller's employees or Acquired
Employees.
4.04 Employee Benefits for Acquired Employees.
(a) Benefits Plans in General. As set forth in Schedule 4.04
(subject to collective bargaining), Buyer shall permit the Acquired
Employees to participate in all of the Buyer's employee pension
benefit plans (as that term is defined by Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA")), employee welfare benefit plans (as that term is defined
by Section 3(1) of ERISA), and other benefit programs, policies, and
practices that are or will be generally available to Buyer's
similarly situated employees. Further, as set forth in Schedule
4.04 (subject to collective bargaining), Buyer shall provide each
Acquired Employee with transition benefits.
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(b) Welfare Plan Coverage. With respect to each Acquired
Employee who elects to participate in Buyer's employee welfare
benefit plans, Buyer shall waive any pre-existing condition
exclusions to coverage, any evidence of insurability provisions, and
any waiting period requirements under its employee welfare benefit
plans that had been waived or otherwise satisfied under comparable
employee welfare benefit plans sponsored by the Affiliate Employer,
provided the Acquired Employee enrolls within thirty-one (31) days
of his or her Employment Commencement Date. For each Acquired
Employee, Buyer shall also apply towards any deductible requirements
and out-of-pocket maximum limits under its employee welfare benefit
plans applicable to the year of such Acquired Employee's Employment
Commencement Date, any amounts paid by such Acquired Employee toward
such requirements and limits under the Affiliate Employer's employee
welfare benefit plans in which he or she participated during such
year. Buyer shall notify Seller if an Acquired Employee fails to
enroll in one of Buyer's health plans. If an Acquired Employee
enrolls in one of Buyer's health plans within eighteen (18) months
of the Employment Commencement Date, Buyer shall notify Seller or
cause the Acquired Employee to notify Seller as soon as reasonably
practicable after such enrollment.
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(c) Past Service Credit. Buyer shall cause all those employee
welfare benefit plans, programs, policies, and practices in which
the Acquired Employees participate, including Buyer's vacation and
sick leave programs, to recognize past service as recognized by the
Affiliate Employer's employee welfare benefit plans, for purposes of
eligibility to participate, eligibility for enrollment, eligibility
for the commencement of benefits, and eligibility for the levels of
benefits where there are service-related benefit schedules. Buyer
shall cause its employee pension benefit plans (whether defined
contribution plans, as defined in Section 3(34) of ERISA, or defined
benefit plans, as defined in Section 3(35) of ERISA) to recognize
past service as recognized by the Affiliate Employer's employee
pension benefit plans for purposes of eligibility to participate,
eligibility for enrollment, eligibility for vesting, eligibility for
the commencement of benefits, eligibility for the forms of benefits,
and eligibility for the levels of benefits where contributions to
the plan or payments from the plan depend in whole or in part on
service. Buyer shall be required to recognize or cause its employee
pension benefit plan to recognize service recognized by the
Affiliate Employer's employee pension benefit plans for purposes of
benefit accruals.
(d) Vacation. On or before the Effective Time, vacation liabilities
will be calculated and trued up in accordance with the following:
the days during 1999 that Seller owned the Refinery will be
calculated as will the number of days Buyer will own the Refinery. A
fraction will be calculated. This fraction will be multiplied by the
number of 1999 annual eligibility hours for Refinery employees at the
Effective Time, whether already taken or not. This procedure will be
applied separately to hourly and staff vacations. The resulting
calculation will yield the number of hours of vacation attributable
to the account of both the Buyer and the Seller. Actual remaining
hours of vacation will be calculated separately for staff and hourly.
To the extent the remaining vacation differs from the amount of
vacation attributable to the Parties, the total hours will be
multiplied by the average hourly rate (based on a group rate and not
an individual-by-individual rate analysis) or the average staff
employee rate (based on a group rate and not an individual-by-
individual rate analysis). The resulting dollar amount will be
included in the true up process. All deferred vacation from previous
years will be paid by the Seller to the Acquired Employees as soon as
practicable after the Effective Time. All vacation for the year 2000
will be paid by the Buyer.
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4.05 Liabilities and Indemnities.
(a) WARN Act Indemnification. Buyer shall indemnify Seller and its
Affiliates against all liabilities arising out of the notification or other
requirements of the Worker Adjustment and Retraining Notification Act of 1988,
as amended (the "WARN Act"), with respect to the Acquired Employees in
connection with actions taken by Buyer at or after the Effective Time. Seller
shall indemnify Buyer against all liabilities under the WARN Act with respect to
Loaned Employees who do not become Acquired Employees in connection with actions
taken by Seller and/or the Affiliate Employer prior to the Effective Time.
(b) Workers' Compensation. The Affiliate Employer shall be
responsible for workers' compensation claims with respect to any Acquired
Employee if the incident or alleged incident giving rise to the claim occurred
on or prior to the Effective Time. Buyer shall be responsible for any workers'
compensation claims with respect to any Acquired Employee if the incident or
alleged incident giving rise to the claim occurs after the Effective Time. In
the event of doubt as to the date of the occurrence of the incident or alleged
incident, Buyer shall process the claim.
(c) Indemnities.
(i) To the maximum extent permitted by Applicable Law, Seller
shall defend, indemnify, and hold harmless Buyer from and against any
Damages, and any fines, penalties and assessments, arising out of (A)
claims by Loaned Employees (other than Acquired Employees) that arise prior
to, on, or after the Effective Time and relate to their employment with, or
the termination of their employment from, the Affiliate Employer; and (B)
claims by Acquired Employees that arise prior to the Effective Time which
relate to their employment with, or the termination of their employment
from, the Affiliate Employer; and
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(ii) To the maximum extent permitted by Applicable Law, Buyer
shall defend, indemnify, and hold harmless Seller and its Affiliates from
and against any Damages, and any fines, penalties and assessments, arising
out of claims by the Acquired Employees that arise on or after the
Effective Time and relate to their employment with, or the termination of
their employment from, the Buyer.
ARTICLE 5
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer to the Knowledge of Seller, except
with respect to Sections 5.01, 5.02 and 5.15 which shall not be limited to the
Knowledge of Seller, as follows:
5.01 Organization and Standing.
Seller or its Affiliate which is a party to a Related Agreement is a
limited liability company or a partnership duly formed and is validly existing,
in good standing under the laws of the State of Delaware and is in good standing
as a limited liability company or a partnership in all jurisdictions where the
nature of its properties or business requires it.
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5.02 Authority and Binding Obligations.
Seller or its Affiliate which is a party has the power and authority
to execute, deliver and perform its obligations under this Agreement and the
Related Agreements. The execution, delivery, and performance of this Agreement
and of the Related Agreements by Seller or its Affiliate which is a party (i)
have been duly authorized by requisite company action; (ii) do not conflict or
result in a violation or breach of the organizational documents of the Seller or
the Affiliate which is a party; and (iii) do not conflict or result in a
violation or breach of any agreement, instrument, statute, regulation, rule,
order, writ, judgment or decree to which the Seller or Equiva Trading Company
are directly or indirectly a party. Each of this Agreement and the Related
Agreements constitutes a legal, valid and binding obligation of Seller or its
Affiliate which is a party, enforceable against Seller or its Affiliate which is
a party in accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).
5.03 Consent; Non-Contravention .
(a) Except as otherwise specified in Schedule 5.03(a), no consent,
waiver, approval, order, authorization or other action by or filings with any
governmental authority or other Person is required in connection with the
execution, delivery and performance by Seller, or its Affiliate which is a
party, of this Agreement or the Related Agreements.
(b) Except as specified in Schedule 5.03(b), neither the execution
and delivery of this Agreement or the Related Agreements by Seller, or its
Affiliate which is a party, nor the consummation of the transactions
contemplated hereby will violate or conflict with or result in the acceleration
of rights, or benefits or payments under any agreement, instrument, statute,
regulation, rule, order, writ, Judgment or decree to which the Seller or its
Affiliates are directly or indirectly a Party or are directly or indirectly
subject, except for such violations and conflicts which will not (i) prevent or
materially delay consummation of the transactions contemplated by this Agreement
or the Related Agreements, (ii) prevent Seller or its Affiliate which is a party
from performing its obligations under this Agreement or the Related Agreements;
or (iii) result in a Material Adverse Effect.
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5.04 Litigation.
Except as specified in Schedule 5.04, there are no lawsuits, actions,
arbitrations or other proceedings pending or to the knowledge of the Seller
threatened by any Person against or affecting the Seller, the Operations or any
of the Assets by or before any court, arbitrator or governmental authority which
(i) would prohibit any of the transactions contemplated by this Agreement or
(ii) if adversely determined would have an adverse determination (individually
or in the aggregate) that would have a Material Adverse Effect.
5.05 Contracts and Commitments.
Schedule 1.01A contains an accurate and complete list of each
contract, agreement or commitment relating to the Assets of the Seller or its
Affiliates not otherwise listed in Schedule 1.01D or Schedule 5.05:
(a) to which the Seller or its Affiliates are a party and which
requires total payments to or by the Seller of at least Two Hundred Fifty
Thousand Dollars ($250,000) annually (other than spot crude contracts, spot
product contracts, transportation contracts, and crude supply contracts not
fully dedicated to the Refinery);
(b) to which the Seller or its Affiliates are a party which has a
remaining term longer than one (1) year, which requires total payments by the
Seller of at least Two Hundred Fifty Thousand Dollars ($250,000) during such
term and which is not terminable on thirty (30) or fewer days' notice without
penalty;
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(c) to which the Seller or its Affiliates are a party relating to
indebtedness for borrowed money, including capital leases, security agreements
relating thereto and any amendment or waiver thereof;
(d) to provide capital or funds by way of a loan or guaranty of a
loan or any other form of guaranty, assurance, funding agreement or other
arrangement intended to assure the payment or performance of any obligation by a
third party in excess of Two Hundred Fifty Thousand Dollars ($250,000); and
(e) involving any rights to throughput, process, refine
feedstocks or products at or from the Refinery;
(collectively items (a) through (e), other than contracts, agreements or
commitments of the Seller or any Affiliate of Seller which have expired or have
terminated at or prior to the Effective Time in accordance with the procedures
set forth in Section 10.01, the "Commitments"). Each Commitment is a legal,
valid and binding obligation of the Seller, or its Affiliates enforceable
against the Seller or its Affiliates in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity). Except as specified in
Schedule 1.01A, the Seller or its Affiliates are not, nor is any other party
thereto, in default under any of the Commitments where such defaults would
result, in the aggregate, in a Material Adverse Effect. Except as specified in
Schedule 1.01A since the date of this Agreement, the Seller or its Affiliates
have not received written notice of cancellation or termination of any
Commitment from any party thereto.
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5.06 Leases and Easements.
(a) Except for Leases and Easements, the failure of which to possess
or hold would not in the aggregate have a Material Adverse Effect, Schedule
1.01D contains an accurate and complete list of Leases and Easements held by
Seller or its Affiliates that are related to the Refinery. All Leases and
Easements are legal, valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or inequity), and are in full force and effect. Except
for matters that do not materially interfere with the Seller's rights, the
Seller enjoys peaceful and undisturbed possession under the Easements and
Leases.
(b) All pipelines, pipeline easements, utility lines, utility
easements and other easements, leaseholds and rights of way burdening any of the
Refinery Land, except for such which would not in the aggregate have a Material
Adverse Effect, are set forth on Schedule 1.01D. The Refinery Land is also
encumbered by the items set forth on Schedule 1.01E.
5.07 Condition of Improvements and Equipment.
Except as set forth in the following sentence, the Improvements,
Equipment, Equilon Other Inventory and Surplus Refinery Property are being sold
"AS IS", WHERE IS, WITHOUT WARRANTY OF ANY KIND (EXCEPT AS TO TITLE) EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, CONDITION OR FITNESS, AND ALL
SUCH WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED. BUYER WAIVES THE UNIFORM
COMMERCIAL CODE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE WITH RESPECT TO SUCH IMPROVEMENTS AND EQUIPMENT. The Improvements and
Equipment which comprise a part of the Assets other than the Surplus Refinery
Property, are in substantially the same condition and repair, ordinary wear and
tear excepted, as of October 7, 1999.
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5.08 Compliance with Laws.
As of the date of this Agreement, Seller is in compliance with all
Applicable Laws relating to the Assets or the Operations, except as specified on
Schedule 5.08 or where the noncompliance with which would not, in the aggregate,
result in a Material Adverse Effect.
5.09 Due Diligence.
(a) Seller has:
(i) made available to Buyer all books, records, financial statements,
business plans, management appraisals, documents, Contracts, Leases and
Easements, Permits and other material information requested in writing by
Buyer;
(ii) instructed its and its Affiliates employees, counsel, advisors
and auditors to respond in writing to all written inquiries from Buyer
(subject to any confidentiality agreements, applicable legal restrictions
and any applicable privileges); and
(iii) to the extent requested in writing, provided full access to the
Assets, except, with respect to (i), (ii) and (iii) above where Seller has
expressly declined in writing to comply with any such request with respect
to identified items or categories of information.
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(b) No books, records, financial statements, documents, Contracts, Leases
and Easements, Permits or other material information requested in writing by
Buyer which Seller failed to fully disclose when so requested would have a
Material Adverse Effect provided that Seller shall have no liability to Buyer
for the breach of this representation or warranty to the extent that the facts
or circumstances that give rise to such breach were actually known to Buyer on
or prior to the Effective Time.
5.10 Permits.
Schedule 5.10 contains a true and complete list of Seller's material
Permits used in connection with the Assets, the Operations, or the sale of
refined product and identifies the material Permits which are not transferable
to Buyer.
5.11 Taxes.
There are no tax liens open, pending against or, to the Knowledge of
Seller, threatened against the Assets.
5.12 Intellectual Property.
All Intellectual Property transferred to Buyer from Seller shall be
made in accordance with the grant clauses of Sections 16.01 and 16.03.
5.13 No Knowledge of Breaches.
Except for any breaches of representations or covenants, the
consequences of which have been waived by Seller, Seller has no knowledge of any
breaches of any representation or covenant herein by Buyer.
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5.14 Labor Matters
(a) Seller is a Party to and bound by a Collective Bargaining
Agreement affecting approximately sixty-eight percent (68%) of Loaned Employees.
Except as set forth on Schedule 5.14, Seller has not received any notification
of any unfair labor practice charges or complaints pending before any agency
having jurisdiction thereof nor are there any current union representation
claims involving any of the Loaned Employees. Further, Seller is not aware of
any such threatened charges or claims by any of the Loaned Employees.
(b) Seller is not aware of any strikes, work stoppages, work
slowdowns or lockouts or of any threats thereof, except for routine grievance
matters, by or with respect to any of the Loaned Employees. Since January 1,
1998, there have been no significant labor disputes, strikes, slowdowns, work
stoppages, lockouts or similar matters except for routine grievance matters
involving Loaned Employees.
(c) Except as set forth in Schedule 5.14, there are no pending
grievances filed by Represented Loaned Employees. Further, there are no
arbitration decisions, settlement agreements, injunctions, consent decrees or
conciliation agreements which affect the Operations or Assets other than those
specifically listed in Schedule 5.14.
(d) Except as set forth in Schedule 5.14, there exists (i) no charge
of discrimination or lawsuit involving any alleged violation of any fair
employment law, wage payment law, occupational safety and health law, and (ii)
no pending or, to Seller's Knowledge, threatened litigation arising out of any
employment relationship, or other employment-related law, whether federal, state
or local, and (iii) no pending or, to Seller's Knowledge, threatened litigation
arising out of any employment relationship, by any Loaned Employee or any
representative of any such Person or Persons. No charge or claim involving any
of the Refinery or Loaned Employees is pending before any administrative agency,
local, state or federal, and no lawsuit involving any of the Refinery or Loaned
Employees is pending or, to Seller's Knowledge, threatened with respect to equal
employment opportunity, age discrimination, occupational safety, or any other
form of alleged employment practice or unfair labor practice.
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5.15 Good and Marketable Title.
(a) Schedule 1.01G contains a true and complete description of the
Refinery Land owned by Seller or its Affiliates and used in the Operations, and
such Refinery Land is described by metes and bounds.
(b) Except as specified in Schedule 5.15, Seller has good and
marketable title to all of the Assets, except for Assets sold, consumed or
otherwise disposed of in the ordinary course of business in accordance with the
procedures set forth in Section 10.01 and consistent with past practices, free
and clear of any Liens, other than Permitted Encumbrances.
5.16 Condemnation.
There are no pending or, to the Knowledge of Seller, threatened
condemnation or eminent domain proceedings or contemplated sales in lieu
thereof, involving a partial or total taking of any of the Assets.
5.17 Year 2000.
(a) Except as set forth on Schedule 5.17, the Information Technology
(as defined herein) is Year 2000 Ready (to the extent that any other Information
Technology, used in combination with such Information Technology, properly
exchanges date/time data with it).
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(b) Seller has undertaken the investigation of critical business
partners to review whether critical Information Technology, purchased, leased,
licensed or used by or in connection with the Operations or Assets, is Year 2000
Ready. Seller has demonstrated "Due Diligence" through the efforts expended in
executing the Year 2000 processes. Factors which could affect the ability to be
Year 2000 Ready by the end of 1999 include, but are not limited to the
following: (i) failure to identify critical systems which will experience
failures; (ii) errors in software; (iii) efforts to correct problems; (iv)
unexpected failures by key business partners; (v) extended failures by public
and private utility companies or common carriers supplying services to the
Refinery; (vi) failures in global banking systems and capital markets; and (vii)
other circumstances beyond the Refinery's control. While there can be no
assurance that all such modifications and plans will be successful, including
contingency plans for the Refinery's major business partners, it is not expected
that any material disruptions in operations will occur which adversely affect
the Refinery's overall financial position or results of operation. Excluding
items listed on Schedule 5.17, Seller is not aware of any areas in which the
Information Technology is not Year 2000 Ready which have not been remedied as of
the date hereof.
(c) For the purpose of this Agreement, "Year 2000 Ready", means that
Information Technology performance has been sufficiently tested and documented
to correctly process dates into and beyond January 1, 2000 or performs its
necessary functions without relying upon dates. For purposes of this Section
5.17, "Information Technology", includes applications, personal computers,
servers, telecommunications, embedded chips and control systems and software
system(s) that are used or relied on by Seller in the normal conduct of the
Operations. For this section, "Due Diligence", is what an ordinary reasonable
person would do given the same set of circumstances. In the case of Year 2000
Ready, this process would include: (i) identifying pieces of hardware/software
that might contain the problem; (ii) accessing the criticality of the
hardware/software items in the inventory; (iii) evaluating/testing the
hardware/software items in the inventory, (iv) remediating the critical items;
(v) determining and taking corrective actions/workarounds for the non-critical
items.
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5.18 Transferred Assets.
Except the Excluded Assets, Excluded Contracts, and for assets which
are not assigned due to failure to obtain third party consent, not material or
are disposed of in the ordinary course of business in accordance with the
procedures set forth in Section 10.01, as of the day before Closing the Assets
being transferred to Buyer constitute the assets and properties being used in
the Operations.
5.19 Certain Environmental Matters
(a) The Assets are in material compliance with SH&E Laws and
related Legal Requirements relating to asbestos-containing materials.
(b) All notices, disclosure and reports regarding the existence
of hazardous waste or solid waste management facilities, including without
limitation, underground storage tank systems, required to be filed or recorded
in connection with any of the Assets or their respective ownership or operation
have been filed or recorded with all appropriate governmental agencies,
including, but not limited to, recordation in deed records of appropriate
jurisdiction.
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(c) Exclusive of the waste water treatment plant considerations
including those addressed in Sections 13.01(a) and 13.01(c) and the High
Production Volume chemical testing program testing costs to be shared in
accordance with the provisions of Section 13.01(d), there are no material
obligations, undertakings or liabilities arising out of or relating to SH&E Laws
or related Legal Requirements which Seller has agreed to assume or retain, by
contract or otherwise, which would adversely impact Buyer or the Assets
following the Closing. For purposes of this Section 5.19(c), noncompliance with
SH&E Laws and related Legal Requirements, shall not be deemed to be an
obligation, undertaking or liability.
NOTWITHSTANDING ANY OF THE FOREGOING REPRESENTATIONS, IN NO EVENT SHALL ANY
PROJECTION AS TO THE FINANCIAL CONDITION, FINANCIAL RESULTS, STATUS OF ASSETS,
PROJECTS, AVAILABILITY OF FEEDSTOCK OR MARKETS OR ANY OTHER PROJECTIONS MADE BY
SELLER TO BUYER BE RELIED UPON BY BUYER, AND SELLER MAKES NO REPRESENTATION OR
WARRANTY AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY WITH REGARD
TO SAME.
ARTICLE 6
BUYER'S AND GUARANTOR'S REPRESENTATIONS AND WARRANTIES
6.01 Buyer's Representations and Warranties.
Buyer represents and warrants to Seller to the Knowledge of Buyer,
except with respect to Sections 6.01(a), 6.01(b) and 6.01(h) which shall not be
limited to the Knowledge of Buyer, as follows:
(a) Organization and Standing.
Buyer or its Affiliate which is a party to a Related Agreement is a
corporation duly organized, validly existing in good standing under the laws of
the State of Delaware and is in good standing as a corporation in all
jurisdictions where the nature of its properties or business requires it.
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(b) Authority and Binding Obligations.
Buyer or its Affiliate which is a party has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the Related Agreements. The execution, delivery, and performance
of this Agreement and the Related Agreements by Buyer or its Affiliate which is
a party have been duly and validly authorized by all necessary corporate action
and do not conflict or result in a violation or breach of the articles of
incorporation and by-laws of the Buyer or its Affiliate which is a party. Each
of this Agreement and the Related Agreements, constitutes a legal, valid and
binding obligation of Buyer or its Affiliate which is a party enforceable
against Buyer or its Affiliate which is a party, in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(c) No Consent Required; Non-Contravention.
(i) Except as otherwise specified in Schedule 6.01(c)(i),
no consent, waiver, approval, order, authorization or other action by or
filings with any governmental authority or other Person is required in
connection with the execution, delivery and performance by Buyer or its
Affiliate which is a party of this Agreement or the Related Agreements.
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(ii) Except as specified in Schedule 6.01(c)(ii), neither
the execution and delivery of this Agreement or the Related Agreements by
Buyer or its Affiliate which is a party nor the consummation of the
transactions contemplated hereby will violate or conflict with or result in
the acceleration of rights, or benefits or payments under any agreement,
instrument, statute, regulation, rule, order, writ, Judgment or decree to
which the Buyer or its Affiliate is directly or indirectly a Party or is
directly or indirectly subject, except for such violations and conflicts
which will not (x) prevent or materially delay consummation of the
transactions contemplated by this Agreement or the Related Agreements, (y)
prevent Buyer or its Affiliate which is a party from performing its
obligations under this Agreement or (z) result in a Material Adverse
Effect.
(d) Litigation.
Except as specified in Schedule 6.01(d), there are no lawsuits,
actions, arbitrations or other proceedings pending or to the knowledge of the
Buyer threatened by any Person against or affecting the Buyer by or before any
court, arbitrator or governmental authority which (i) would prohibit any of the
transactions contemplated by this Agreement or (ii) if adversely determined
would have an adverse determination (individually or in the aggregate) that
would have a Material Adverse Effect.
(e) No Breach.
Except as specified in Schedule 6.01(e), neither the execution
and delivery of this Agreement by Buyer, nor the consummation of the
transactions contemplated hereby will violate or conflict with, or result in the
acceleration of rights, benefits or payments under: (i) any provision of the
Buyer's articles of incorporation or bylaws; (ii) any statute, law, regulation
or governmental order to which the Buyer or the assets and properties of any
thereof are bound or subject; (iii) any commitment to which the Buyer is a Party
or by which it or any of its properties may be bound or subject; and (iv) any
agreement, contract or commitment of the Buyer or to which it is a Party or by
which it or any of its properties may be bound or subject, except, with respect
to clauses (ii), (iii) and (iv), for such violations and conflicts which will
not (x) prevent or materially delay consummation of the transactions
contemplated by this Agreement and other Related Agreements; (y) prevent Buyer
or its Affiliate which is a party from performing its obligations under this
Agreement and other Related Agreements; or (z) result in a Material Adverse
Effect.
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(f) Actions and Proceedings.
Except as specified in Schedule 6.01(f), no proceeding or
investigation is pending or threatened before any court, arbitrator or
administrator or governmental authority, bureau or agency to restrain or
prohibit, or to obtain damages, a discovery order or other relief in connection
with this Agreement or any of the Related Agreements or any material part of the
transactions contemplated hereby or thereby.
(g) Independent Decision.
Buyer has made its own independent analysis and judgment of the
commercial potential, condition and usefulness of the Assets, and is not relying
upon any projections from Seller regarding prospective operations of the Assets
in the future. Buyer has such knowledge and experience in business and
financial affairs in general as to be capable of evaluating the merits and risks
of purchasing the Assets.
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(h) No Knowledge of Breaches.
Except for any breaches of representations or covenants, the
consequences of which have been waived by Buyer, Buyer has no knowledge of any
breaches of any representation or covenant herein by Seller.
(i) Financial Capacity; Future Performance.
Upon closing of the senior notes offering referenced in Section
7.07 below, Buyer will have the financial capacity to consummate the purchase
and, to the knowledge of Buyer, to operate the Assets after the purchase. Buyer
is, as of the date hereof, not aware of any facts or circumstances that now or
in the future would have a Material Adverse Effect on its financial condition,
results of operations, business, properties, assets, or liabilities. Buyer is
solvent, is not in the hands of a receiver, nor is any receivership pending, and
no proceedings are pending by or against it for bankruptcy or reorganization in
any state or federal court.
6.02 Guarantor's Representations and Warranties.
Guarantor represents and warrants to Seller to the Knowledge of Guarantor,
except with respect to Sections 6.02(a), 6.02(b) and 6.02(h) which shall not be
limited to the Knowledge of Guarantor as follows:
(a) Organization and Standing.
Guarantor is a corporation duly organized, validly existing in
good standing under the laws of the State of Wyoming and is in good standing as
a corporation in all jurisdictions where the nature of its properties or
business requires it.
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(b) Authority and Binding Obligations.
Guarantor has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement and the Guaranty. The
execution, delivery, and performance of this Agreement and the Guaranty by
Guarantor have been duly and validly authorized by all necessary corporate
action and do not conflict or result in a violation or breach of the articles of
incorporation and by-laws of the Guarantor. This Agreement and the Guaranty
constitute legal, valid and binding obligations of the Guarantor enforceable
against Guarantor in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general principles
of equity (regardless of whether enforceability is considered in a proceeding at
law or equity).
(c) No Consent Required; Non-Contravention.
(i) Except as specified in Schedule 6.02(c)(i), no consent,
waiver, approval, order, authorization or other action by or filings with
any governmental authority or other entity is required in connection with
the execution, delivery and performance by Guarantor of this Agreement or
the Guaranty.
(ii) Except as specified in Schedule 6.02(c)(ii), neither
the execution and delivery of this Agreement or the Guaranty by Guarantor,
nor the consummation of the transactions contemplated hereby will violate
or conflict with or result in the acceleration of rights, or benefits or
payments under any agreement, instrument, statute, regulation, rule, order,
writ, judgment or decree to which the Guarantor is directly or indirectly a
party or is directly or indirectly subject, except for such violations and
conflicts which will not (x) prevent or materially delay consummation of
the transaction contemplated by this Agreement or the Guaranty; (y) prevent
Guarantor from performing its obligations under this Agreement or the
Guaranty; or (z) result in a Material Adverse Effect.
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(d) Litigation.
Except as specified in Schedule 6.02(d), there are no lawsuits,
actions, arbitrations or other proceedings pending or to the knowledge of the
Guarantor threatened by any Person against or affecting the Guarantor by or
before any court, arbitrator or governmental authority which (i) would prohibit
any of the transactions contemplated by this Agreement or the Guaranty, (ii) if
adversely determined would have an adverse determination (individually or in the
aggregate) that would have a Material Adverse Effect.
(e) No Breach.
Except as specified in Schedule 6.02(e), neither the execution
and delivery of this Agreement or the Guaranty by Guarantor, nor the
consummation of the transactions contemplated hereby or thereby will violate or
conflict with, or result in the acceleration of rights, benefits or payments
under; (i) any provision of the Guarantor's articles of incorporation or bylaws;
(ii) any statute, law, regulation or governmental order to which the Guarantor
or the assets and properties of any thereof are bound or subject; (iii) any
commitment to which the Guarantor is a party or by which it or any of its
properties may be bound or subject; and (iv) any agreement, contract or
commitment of the Guarantor or to which it is a party or by which it or any of
its properties may be bound or subject, except, with respect to clauses (ii),
(iii) and (iv), for such violations and conflicts which will not (x) prevent or
materially delay consummation of the transactions contemplated by this
Agreement, and the Guaranty (y) prevent Guarantor from performing its
obligations under this Agreement, and the Guaranty, or (z) result in a Material
Adverse Effect.
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(f) Actions and Proceedings.
Except as specified in Schedule 6.02(f), no proceeding or
investigation is pending or threatened before any court, arbitrator or
administrator or governmental authority, bureau or agency to restrain or
prohibit, or to obtain damages, a discovery order or other relief in connection
with this Agreement, or the Guaranty or any material part of the transactions
contemplated hereby or thereby.
(g) Independent Decision.
Guarantor has made its own analysis and independent judgment of
the commercial potential, condition and usefulness of the Assets, and is not
relying upon any projections from Seller regarding prospective operations of the
Assets in the future. Guarantor has such knowledge and experience in business
and financial affairs in general as to be capable of evaluating the merits and
risks of guaranteeing the purchase of the Assets.
(h) No Knowledge of Breaches.
Except for any breaches of representations or covenants, the
consequences of which have been waived by Guarantor, Guarantor has no knowledge
of any breaches of any representation or covenant herein by Seller.
(i) Financial Capacity; Future Performance.
Upon closing of the senior notes offering referenced in Section
7.07 below, Guarantor will have the financial capacity to guaranty the purchase,
to the knowledge of the Guarantor, and operation of the Assets. Guarantor is,
not aware of any facts or circumstances that now or in the future would have a
Material Adverse Effect on its financial condition, results of operations,
business, properties, assets, or liabilities. Guarantor is solvent, is not in
the hands of a receiver, nor is any receivership pending, and no proceedings are
pending by or against it for bankruptcy or reorganization in any state or
federal court.
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ARTICLE 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets are subject to the
satisfaction on or prior to the Closing Date, unless waived, of the conditions
specified in this Article 7. If Buyer actually knows at the time of Closing of
facts that in and of themselves cause a failure of a condition to be satisfied,
to such an extent that Buyer is not obligated to close, and if Buyer
nevertheless elects to close the transactions contemplated hereby, then Buyer
shall be deemed to have waived such unsatisfied condition and shall not be
entitled to make a claim against Seller based on such unsatisfied condition.
The conditions precedent to Buyer's obligation to close are as follows:
7.01 Regulatory Approvals.
Buyer shall have received all material Permits as required to operate
the Refinery or Buyer shall have received written notification from the
appropriate governmental authorities that it may operate temporarily under the
material Permits until similar Permits are issued to Buyer; provided, however,
that Buyer shall use its best efforts to obtain such Permits.
7.02 Deliveries.
Seller shall have delivered to Buyer all of the documents required to
be delivered pursuant to Section 3.02(a) and the Related Agreements.
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7.03 Required Consents and Authorizations.
Seller shall have received (and shall have furnished copies thereof to
Buyer) all consents and authorizations of third parties required to transfer the
Contracts, Leases and Easements and Permits for which consent is required, and
which if not obtained would result in a Material Adverse Effect to Buyer's
operations of the Refinery or the Assets; provided, however, if such consents
are not obtained, Seller and Buyer may agree to an arrangement where Seller
provides to Buyer the economic benefits of such Contracts, Leases and Easements
and Permits until Buyer obtains the consents.
7.04 Taking of Assets.
In the event that prior to Closing there shall be instituted or
threatened any proceeding or other action, including, without limitation,
eminent domain, condemnation or other governmental proceeding, that there is a
reasonable probability of Seller or Buyer (after Closing) losing any portion of
or interest in the Assets, Seller shall immediately notify Buyer, and Buyer, if
such proceeding or other action has or there is a reasonable probability of a
taking of property with a value in excess of Twenty-Five Million Dollars
($25,000,000), shall have the right to terminate this Agreement within ten (10)
days from the date of such notice, by giving notice to Seller of its election to
terminate. If Buyer is not entitled to or, if entitled, does not timely
terminate this Agreement, then Seller shall assign to Buyer at Closing any
rights Seller may have to receive any payments (net of any expenses) as a result
of any such proceeding or other action.
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7.05 Adverse Change.
Prior to the Closing, there shall not have been any change, other than
changes affecting the economy generally or affecting the petroleum industry
(refining, marketing, transportation, terminalling and trading) generally or
regionally, in the Assets or Operations that has or there is a reasonable
probability of having a value in excess of Twenty-Five Million Dollars
($25,000,000) (the Parties agreeing, however, that Seller shall have the right,
but not the obligation, to correct or cure any such change at its sole option
and cost prior to Closing), including, but not limited to, changes due to a
Force Majeure Event. Seller shall have the right, but not the obligation, to
extend the Closing Date for up to thirty (30) days but in no event later than
December 31, 1999 within which to use reasonable business efforts to cure or
correct any such adverse change. If Seller after the date of execution hereof
becomes entitled to receive any insurance proceeds with respect to changes in
the Assets that Seller has not corrected or cured to the same or a better
condition as prior to such change, Seller at Closing shall assign such insurance
proceeds to Buyer less the amount, if any, that Seller has incurred to correct
or cure the change in the Assets.
7.06 Representations and Warranties True; Covenants and Agreements
Performed.
The representations and warranties of Seller shall have been true and
correct in all material respects as of the date of this Agreement and shall be
true and correct in all material respects on the Closing Date as if made on such
date, and Seller shall have performed and complied in all material respects with
all covenants and agreements by Seller hereunder required to be performed or
complied with on or prior to the Closing Date.
7.07 Closing of Senior Note Offering.
Buyer shall have completed its contemplated issuance and sale of
senior notes pursuant to a private placement or registered offering in an amount
sufficient to meet the obligation of Buyer set forth in Section 3.02(b)(i).
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ARTICLE 8
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller to sell, transfer, convey, and deliver the Assets
are subject to the satisfaction on or prior to the Closing Date, unless waived,
of the conditions specified in this Article 8. If Seller actually knows at the
time of Closing of facts that in and of themselves cause a failure of a
condition to be satisfied, to such an extent that Seller is not obligated to
close, and if Seller nevertheless elects to close the transactions contemplated
hereby, then Seller shall be deemed to have waived such unsatisfied condition
and shall not be entitled to make a claim against Buyer based on such
unsatisfied conditions.
The conditions precedent to Seller's obligation to close are as follows:
8.01 Deliveries.
Buyer and Guarantor shall have made the payments and delivered to
Seller all of the documents and instruments required pursuant to Sections
3.02(b) and (c) and the Related Agreements.
8.02 Representations and Warranties True; Covenants and Agreements
Performed.
The representations and warranties of Buyer and Guarantor shall have
been true and correct in all material respects as of the date of this Agreement
and shall be true and correct in all material respects on the Effective Time as
if made on such date, and Buyer and Guarantor shall have performed and complied
in all material respects with all covenants and agreements by Buyer and
Guarantor hereunder required to be performed or complied with on or prior to the
Effective Time.
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ARTICLE 9
JOINT CONDITIONS PRECEDENT TO CLOSING OBLIGATIONS
The obligations of Buyer and Seller to close shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:
9.01 Governmental Consents.
The applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act and any extension thereof shall have expired without a
challenge to the transaction, or early termination of such waiting period shall
have been granted. The approvals of Butler County, Kansas in connection with
the Hydrotreater Sublease and the Cogeneration Sub-Sublease shall have been
received.
9.02 Litigation.
No order of any court or order or action of any government agency
purporting to restrain or prohibit the transactions contemplated hereby shall be
threatened or in effect, and no action, suit, claim, arbitration, or proceeding
shall be pending by any government agency or other governmental authority, and
no new Applicable Law or regulation shall have been enacted or taken effect
which seeks to restrain or prohibit the transactions contemplated hereby, or
which has or reasonably could have a Material Adverse Effect upon the right of
Buyer to own, conduct or operate the Assets or the Operations, or which seeks to
subject Buyer or Seller to any penalty or material liability in connection with
this Agreement or the transactions contemplated hereby.
9.03 Related Agreements Finalized.
The Related Agreements shall have been executed and delivered by the
parties thereto.
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ARTICLE 10
COVENANTS AND AGREEMENTS OF SELLER
Seller covenants and agrees as follows:
10.01 Conduct of Business.
Prior to the Closing, unless the prior written consent of Buyer to a
contrary action is obtained (which consent shall not be unreasonably delayed or
withheld), and except as expressly permitted under this Agreement:
(a) Seller shall operate the Operations in its usual, regular
and ordinary manner and substantially in the same manner as
heretofore conducted and under the authorities granted to the
Refinery manager dated June 16, 1998 as supplemented on October
13, 1998.
(b) Seller shall use commercially reasonable efforts to
(i) preserve the Operations; and
(ii) maintain the Assets in their current state of repair,
order and condition, usual and ordinary wear and tear excepted
and subject to requirements in the ordinary course of business.
(c) Seller shall promptly notify Buyer of any emergency relating to
the Operations.
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10.02 Access; Records.
(a) Access. Seller has permitted Buyer's consultants to make a
preliminary engineering inspection and investigation of the Assets. Seller will
continue to afford Buyer and its agents, consultants, and other authorized
representatives full access to the Assets, to Seller's records relating to the
Assets or the operation thereof, and to Seller's personnel, and Seller will
cause its officers and other agents to furnish or make available to Buyer such
operating data and other information with respect to the Assets and the
Operations as Buyer may from time to time reasonably request; provided, however,
that any inspection or investigation conducted by Buyer, its agents,
consultants, or other authorized representatives (a) shall be conducted in such
manner as not to interfere unreasonably with the Operations or the Assets; or
(b) shall not entitle Buyer to drill or penetrate the surface of the ground to
investigate the condition of soil contamination or ground water contamination;
Buyer being limited to the review of Seller's records with regard to these
matters. Buyer bears the risk of injury to any of its employees or
representatives conducting an inspection or investigation of the Assets and
Operations and shall indemnify Seller for all Damages resulting from Buyer's
inspection or investigation other than Damages caused by or resulting from the
gross negligence or willful misconduct of Seller, Seller's Affiliates, employees
or agents.
(b) Delivery of Documents. Seller shall deliver to Buyer (in the manner
reasonably directed by Buyer in writing) on the Closing Date originals where
available or copies of all Leases and Easements (unless the original is on file
with the State of Kansas or County of Butler, Kansas) and of all Contracts
assigned to Buyer at the Closing. Seller also shall deliver to Buyer (in the
manner reasonably directed by Buyer in writing) originals or copies of all
Refinery Records.
10.03 Consents to Assignment.
Seller and Buyer agree to use reasonable business efforts to obtain
prior to Closing all consents to assignment of the Contracts, the Leases and
Easements and the Permits that are required to be obtained under this Agreement,
even though failure to obtain certain of the consents is not a condition
precedent to the Closing; provided, that neither Party shall be obligated to
make payments or incur obligations to third parties or governmental agencies to
obtain such consents except to pay such Party's reasonable expenses or to pay
normal fees to governmental agencies.
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10.04 Intellectual Property.
With respect to any Intellectual Property which exists and is owned by
Seller and which Seller has a right to license or sublicense and which is being
Used in the Operations as of the Effective Time or which is needed to be Used in
the operations of the Refinery after the Effective Time (in substantially the
same manner as used in the Operations) pursuant to Article 16, Seller shall
grant Buyer a non-exclusive, royalty-free, irrevocable, non-assignable, non-
transferable, and non-sublicensable license for Use of any such Intellectual
Property but only limited to the operation of the Refinery. With respect to any
Licensed Technology Rights licensed to Seller by third parties which is being
Used in the Operations of the Refinery as of the Effective Time, and which is
set forth in Article 16, Seller shall make a good faith attempt to secure the
transfer of such Licensed Technology Rights to Buyer, at no transfer cost to
Buyer except administrative cost of said attempt.
10.05 Inventories.
Prior to the Closing, Seller will maintain product and feedstock
inventories at reasonable levels sufficient to conduct the Operations in the
ordinary course of business.
10.06 Taxes.
Seller will file all tax returns and reports relating to the
Operations and Assets which are required to be filed with respect to all periods
ending on or prior to the Effective Time. Subject to the provisions of Section
3.03, Seller will pay when due all taxes relating to the Operations and Assets,
which accrue on or prior to or related to the period prior to the Effective
Time.
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ARTICLE 11
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees as follows:
11.01 Access; Records.
From and after the Effective Time, Buyer will afford to Seller and its
authorized representatives reasonable access during normal business hours to
personnel and to such properties and records which were transferred to Buyer
and, if requested, will furnish to Seller such additional information and
cooperate with Seller in such other respects, including the making of employees
available to Seller at Seller's expense as witnesses or deponents as Seller may
request for: (a) financial reporting; (b) tax or similar purposes; or (c)
purposes of investigating claims, or conducting litigation or administrative
proceedings with third parties or government agencies provided such access shall
not unduly interfere with the duties and responsibilities of such personnel to
Buyer. Buyer will keep and maintain the records to which Seller or its
representatives may request access pursuant to this Section 11.01, such records
to be maintained (i) for a period of six (6) years from the Effective Time; (ii)
such longer period as may be required by law; or (iii) such period as may be
requested by Seller provided that Buyer may at its option elect to at the end of
the six (6) year period deliver such records to Seller.
11.02 Performance of Assumed Obligations.
Buyer will cause all of the liabilities and obligations assumed by
Buyer in writing to be paid or performed or otherwise fully satisfied in a
timely manner.
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11.03 Qualifications, Approvals, Licenses and Permits.
Buyer shall proceed diligently and in good faith and shall use
reasonable business efforts at Buyer's expense to obtain all necessary United
States and State of Kansas Permits.
11.04 No Trademarks.
No license to any Trademarks is granted by this Agreement or by the
transfer of the Assets to Buyer, and Buyer is precluded from any use and agrees
not to make any use of Trademarks on or in connection with the sale of any of
its products or services as a means of identity or in any of its communications
or in connection with Buyer's operation of the Assets. Buyer acknowledges and
agrees with Seller that Seller and its Affiliates have the absolute and
exclusive right to the Trademarks, and all rights to which, and the goodwill
represented thereby and pertaining thereto, are being retained by Seller and its
Affiliates. Within sixty (60) days after the Effective Time, Buyer shall cease
using any Trademark and shall remove all Trademarks and refrain from further use
of all Trademarks. In the event that Buyer breaches this Section 11.04, Seller
shall be entitled to specific performance of this Section 11.04 and to
injunctive relief against further violations, as well as any other remedies at
law or in equity available to Seller.
11.05 Right of First Refusal.
Should Buyer in future propose or elect to sell the Assets (whether
offered as a package of assets, or offered as separate assets either
simultaneously or sequentially), Seller shall have a right of first refusal as
to any bona fide offer for the purchase of such Assets, except that, Seller
shall not have a right of first refusal, if Buyer forms a joint venture and
contributes, sells or otherwise transfers such Assets to the joint venture; and
(i) Buyer retains more than fifty percent (50%) of the outstanding voting
securities or other voting rights in the joint venture; or (ii) Buyer retains
more than twenty-five percent (25%) of the outstanding voting securities or
other voting rights in the joint venture and Buyer is designated as the
operator, general partner or managing member (as the case may be) of the joint
venture, as follows:
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(a) prior to the disposition of the Assets, Buyer shall give written
notice to Seller (hereinafter sometimes referred to as "Notice of Disposition")
which notice shall set forth;
(i) a general description of the Assets which Buyer desires
to sell;
(ii) the bona fide cash price or consideration, if any, to
be received by the Buyer in connection with such sale; and
(iii) a copy of the offer and the purchase and sale
agreement, if any, which include the terms upon which such sale is to be
made and the name of the Person or Persons to whom such sale is to be made.
In said notice Buyer shall irrevocably offer to sell and transfer all
of such Assets to Seller.
(b) Upon receipt by Seller of any such Notice of Disposition the
right to purchase the Assets covered by the Notice of Disposition shall be
exercisable for a period of sixty (60) days commencing on the date the Notice of
Disposition was received by Seller. Each sale and purchase in accordance with
the purchase rights so exercised shall be thereafter completed without avoidable
delay on such date as the purchasing party shall specify but in no event later
than the sixtieth (60th) day following exercise of the right to purchase.
(c) The "Option Price" as such term is used in this Section 11.05
shall be the bona fide cash price payable upon the terms, at the times and in
the manner, if any, specified in the Notice of Disposition, provided if no cash
purchase price is specified, the Option Price shall be a price mutually agreed
upon by Seller and Buyer, or, if agreement as to an Option Price is not made
within thirty (30) days after the event giving rise to the right of purchase
occurs, at the Fair Market Value (as defined below) of the Assets determined
pursuant to the procedures set forth in subsection (d) below.
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(d) "Fair Market Value" for purposes of this Section 11.05 shall be
determined by an independent appraisal conducted by a mutually agreed upon
professional firm.
(e) The rights of Seller to purchase Assets as provided in this
Section 11.05 may not be assigned by Seller, in whole or in part to any other
Person except to an Affiliate of Seller.
11.06 Third Party Property.
Buyer shall grant or continue to grant such rights-of-way, easements
or other rights of ingress or egress necessary to allow:
(a) Any third party which holds any Third Party Property on the
Refinery Land to have access to such Third Party Property for the purposes of
repairing, maintaining or otherwise utilizing such property, for so long as the
Third Party Property remains on the Refinery Land; and
(b) Seller or its Affiliates which hold any assets described on
Schedule 1.01B to have access to such assets for the purposes of operating,
repairing, maintaining or otherwise utilizing such assets.
(c) Furthermore, in the event that all or any portion of the Refinery
Land or any interest therein is hereinafter transferred to any Person, Buyer
shall as a condition precedent to such transfer, cause such Person to grant
Seller (for its benefit and the benefit of its Affiliates, successors and
assigns) an easement relating to the cogeneration facility as set out in the
Special Warranty Deed.
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11.07 No Liens or Encumbrances.
Until the expiration of eight years from the Effective Time, Buyer
shall (i) not create, assume or suffer to exist any Lien on the Assets other
than (a) artisans' or mechanics' Liens arising in the ordinary course of
business, (b) Liens securing indebtedness incurred pursuant to the definition of
Permitted Debts, (c) Permitted Encumbrances, or (d) Permitted Liens; (ii) not
contract for, create, incur or assume any debt, other than Permitted Debts; or
(iii) not enter into any agreement containing any provision which would be
violated or breached by the performance of Buyer's obligations under the
Agreement and the Cogeneration Sub-Sublease, or which would prohibit or
materially impair the ability of Buyer to perform its obligations under the
Agreement and the Cogeneration Sub-Sublease.
11.08 Insurance and Financial Compliance Requirements.
(a) Guarantor will maintain and cause Buyer to maintain, at its sole
cost and at all times, insurance with responsible and reputable insurance
companies satisfactory to Seller in such amounts and covering such risks as is
usually carried by companies engaged in similar businesses and owning similar
properties in the same general areas in which Guarantor or Buyer operates;
provided, however, that such insurance shall include at least the following
types and limits (the "Insurance"):
(i) General and Excess Liability Insurance with limits of
not less than Three Hundred Million Dollars ($300,000,000);
(ii) Aviation Product Liability Insurance with limits of not
less than One Hundred Million Dollars ($100,000,000);
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(iii) All Risk Property and Business Interruption Insurance,
to include Boiler and Machinery, on a replacement cost basis with limits of
not less than Five Hundred Million Dollars ($500,000,000).
(b) The Insurance required in this Section 11.08 shall schedule
Seller and each certificate evidencing the Insurance issued to Buyer shall name
Seller (and its Affiliates) as an additional insured without regard to the
allocation of liability provisions contained in this Agreement, to the extent of
(i) any claim, loss or liability within the scope of the required Insurance;
(ii) allowable by law; and (iii) as it relates to or arises out of continued
operation of the Refinery. Buyer shall provide to Seller: (i) proof of all
insurance required in this Section 11.08 at the inception of this Agreement,
with copies of the insurance policy to be provided to Seller as soon as
available; and (ii) copies of each renewal thereof during the term of the
Agreement.
ARTICLE 12
COVENANTS OF BUYER AND SELLER
Buyer and Seller each covenant as follows:
12.01 Antitrust Compliance.
Notwithstanding any other provision of this Agreement, either Party at
any time may terminate this Agreement upon notice to the other, without
liability to the other Party, if the Federal Trade Commission, State of Kansas,
or the Department of Justice advises Seller of its disapproval of the
transactions contemplated by this Agreement. Buyer shall cooperate with Seller
and shall promptly take all such reasonable action as may be required to
complete and submit any filing or supplemental information required by the
Hart-Scott-Rodino Antitrust Improvements Act.
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12.02 Purchase Price Allocations.
Schedule 12.02 is an allocation of the Purchase Price among the
Parties pursuant to the provisions of Section 1060 of the Internal Revenue Code
of 1986, as amended. Buyer and Seller shall not take any position on their
respective income tax returns that is inconsistent with the allocation of the
Purchase Price as specified in Schedule 12.02. Buyer and Seller shall duly
prepare and timely file such reports and information returns as may be required
under Section 1060 of the Internal Revenue Code of 1986, as amended, to report
the allocation of the Purchase Price among the Assets as specified in such
Schedule 12.02.
12.03 Tax Election.
Either Party may elect to structure the conveyance, transfer and/or
assignment of all or an applicable portion of the Assets as a tax-free exchange
pursuant to Section 1031 of the Internal Revenue Code of 1986 (a "1031
exchange"), provided that such Party gives notice of such election to the other
Party at least fifteen (15) days prior to the Effective Time, and provided that
Buyer shall not be required to take title to any other property or incur any
out-of-pocket expense in so doing. If such an exchange is elected by such Party
(the "Electing Party"), the Parties will execute all necessary 1031 exchange
documents, which shall be in a form mutually acceptable to the Parties. The
Electing Party will indemnify the other Party and its Affiliates, employees and
agents against any and all Damages which may be sustained by them on account of
or in connection with such election to structure the transaction as a 1031
exchange.
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12.04 Collection of Amounts Owed to a Party.
It is the intention of the Parties that, as between the Parties,
Seller shall be entitled to all income attributable to the operations conducted
prior to and including the Effective Time and Buyer shall be entitled to all
income attributable to the operations conducted after the Effective Time. Each
Party shall pay to the other Party, promptly after receipt thereof, any amount
received by said Party from any third party with respect to:
(a) rentals, fees or other revenues relating to the operations of the
Refinery and attributable to the ownership period of the other Party; and
(b) products delivered, services performed or other obligations performed
by the other Party and attributable to the ownership period of such other Party.
12.05 Payment of Transfer Taxes; Recording Fees.
Buyer and Seller shall each pay one-half of (or if paid or required to be
paid by Seller, reimburse Seller for one-half of) all Taxes which are assessed
or imposed on the transfer of the Assets from Seller to Buyer. By way of
example, but not exclusion, Buyer and Seller shall each pay one-half of all
real estate transfer taxes, or other excise taxes on real estate sales, all
sales taxes, business occupation taxes, applicable motor fuel taxes and
applicable environmental taxes and fees on all petroleum products transferred,
as well as any other Taxes assessed or imposed on the transfer or sale of the
assets, personal property or inventory included herein, and all costs to record
any deeds. Each Party shall cooperate with the other to take advantage of all
applicable tax exemptions and provide applicable tax exemption certificates.
Buyer and Seller shall each pay one-half of any title insurance premium due for
any title insurance policies obtained by Buyer or Seller and one half of the
costs of any required surveys.
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12.06 Payment of Certain Expenses Due and Payable After the Effective
Time; Cooperation.
(a) Buyer shall pay, as and when due, all emissions fees, permit fees
and utility bills due and payable after the Effective Time, and Seller shall
reimburse Buyer within thirty (30) days after invoice for any amounts under such
bills attributable to any period prior to the Effective Time. Buyer shall pay,
and be entitled to collect, any rents due subsequent to the Effective Time under
leases which are assumed Leases, and Seller shall either pay, or be entitled to
receive from Buyer, as the case may be, within thirty (30) days after invoice or
notice, any amounts attributable to any period prior to and including the
Effective Time.
(b) Buyer shall file, or cause to be filed, all required reports and
returns incident to all ad valorem taxes, real property taxes, personal property
taxes and similar obligations, which reports and returns are due on or after the
Effective Time and shall pay or cause to be paid to the taxing authorities all
such taxes reflected on such reports or returns even if same are for periods
prior to the Effective Time and Seller shall reimburse Buyer within thirty (30)
days after invoice for any such taxes and similar obligations which are
attributable to any period prior to the Effective Time.
(c) Seller and Buyer agree to cooperate with the other in the event
one of them is involved in a tax controversy concerning the Assets and the other
has either records or personnel which may be of assistance to the Party engaged
in the controversy. Seller and Buyer further agree that if, in such Party's
view, such cooperation becomes an unreasonable financial burden, they will agree
upon a reasonable method of reimbursement to the burdened Party.
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(d) Buyer shall pay the transfer tax or registration fee for all
vehicles transferred to Buyer as part of the Assets.
(e) If a Party hereto makes or has made any payment to a third party
pursuant to any assigned contract, lease, agreement or commitment; and (i) such
payment is made in respect of work performed, services provided or goods
delivered during a period of time which includes the Effective Time; or (ii) the
Effective Time intervenes between the making of such payment and the performance
of the work or services or delivery of goods, the Parties will allocate the
burden of such payment in a manner which reflects the relative benefit of such
work performed, services provided or goods delivered to each Party; provided,
however, it shall be presumed that any work performed, services provided or
goods delivered prior to and including the Effective Time are for the benefit of
Seller and any work performed, services provided or goods delivered after the
Effective Time are for the benefit of Buyer.
12.07 Contracts, Leases and Easements or Permits Not Assigned at Closing.
Except as set forth on Schedule 5.05, to the extent that any
Contracts, Leases and Easements or Permits that would otherwise be assigned
under this Agreement, as contemplated by Section 3.02(a)(ii), are not capable of
being assigned, transferred, subleased or sublicensed without the consent of, or
waiver by, any other party thereto or any other Person, or if such assignment,
transfer, sublease or sublicense or attempted assignment, transfer, sublease or
sublicense would constitute a breach thereof or a violation of any Legal
Requirement, this Agreement shall not constitute an assignment, transfer,
sublease or sublicense, or an attempted assignment, transfer, sublease or
sublicense of any such Contract, Lease or Easement or Permit. For a period of
ninety (90) days after Closing, Seller shall continue to use its reasonable
efforts to obtain a consent to an assignment from Seller to Buyer of each
Contract, each of the Leases and Easements and Permits that, but for the first
sentence of this Section 12.07, would be assigned; provided, however, that
Seller shall not be required to pay any consideration or suffer any financial
disadvantages to obtain such assignment.
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12.08 Casualty Repair.
Seller agrees that if any Assets are destroyed or damaged, in whole or
in part, by fire or other casualty prior to or on the Effective Time, Seller
shall repair or replace such Assets with reasonable promptness, Seller and Buyer
may agree that Seller may assign to Buyer all proceeds of any insurance net of
expenses covering such Assets and shall thereafter be relieved of any obligation
to repair or replace such Assets. If the insurance proceeds net of expenses do
not equal the allocated value of the damaged Asset as specified on Schedule
12.02, Seller may elect to pay to Buyer an amount equal to the value of such
Asset less the insurance proceeds or terminate this Agreement. Any insurance
proceeds exceeding the cost of repair of the damaged Asset shall be an Excluded
Asset. Notwithstanding the foregoing, prior to the Effective Time, if the value
of the Assets destroyed or damaged exceed Twenty-Five Million Dollars
($25,000,000), then Buyer may terminate this Agreement.
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12.09 Relationship of the Parties.
Nothing in this Agreement or the Related Agreements shall be construed
to create any joint venture, partnership, agency or other similar fiduciary
relationship between the parties hereto or thereto. The Parties and their
Affiliates under this Agreement and the Related Agreements are nothing other
than independent contractors for the sale or purchase of specific property,
goods or services. The Parties hereto acknowledge that, for purposes of this
Agreement and the Related Agreements, (i) none of the Parties or their
Affiliates shall be considered to be the agent, representative, employee,
master, or servant of the others for any purpose (ii) none of the Parties or
their Affiliates shall have any obligation to manage or operate any of their
respective businesses with any duty or standard of care to the other Party or
their Affiliates, and (iii) none of the Parties or their Affiliates have any
authority, right or power to enter into a contract or commitment, assume any
obligation or make any representation or warranty on behalf of the others
(except as expressly specified in this Agreement or the Related Agreements).
The Parties agree and acknowledge that except as expressly provided herein or in
the Related Agreements, none of the Parties or their Affiliates shall owe
duties, fiduciary or otherwise to the other. The Parties and their Affiliates
are, and will be after Closing, competitors with the right to pursue any
business opportunity for their respective individual benefit and make no
representation or warranty regarding the manner in which they will conduct their
respective businesses and operations. None of the Parties or their Affiliates
shall have any obligation to refrain from (i) engaging in the same or similar
activities or lines of business as the Parties or their Affiliates, (ii)
developing or marketing any products or services that compete, directly or
indirectly with those Parties or their Affiliates, (iii) investing or owning any
interest publicly or privately in, or developing a business relationship with,
any Person engaged in the same or similar activities or lines of business as, or
otherwise in direct or indirect competition with, the Parties or their
Affiliates, or (iv) doing business with any client or customer of the Parties or
their Affiliates. None of the Parties or their Affiliates shall have any
obligation to offer any business opportunity (except as expressly specified in
this Agreement or the Related Agreements) and may modify or otherwise change any
of their respective businesses or operations at any time.
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12.10 Pursue Insurance Benefits.
If an occurrence gives rise to an indemnification claim by a Party,
the Party (as the Indemnified Party) shall diligently pursue any claims for
recovery, under applicable insurance contracts or similar arrangements (but
excluding self-insurance arrangements) in favor of such Indemnified Party.
ARTICLE 13
ENVIRONMENTAL LIABILITIES
13.01 Environmental Liabilities.
(a) Seller shall be liable for those Damages for Environmental
Liability which are incurred on account of, or which are attributable to, any
SH&E Condition disclosed on Schedule 13.01(a) hereto. In the case of SH&E
Conditions that are covered by this Section 13.01(a), Seller, subject to the
liability limits in Section 13.01(f)(v) and Schedule 13.01(a), will retain,
after the Effective Time, one hundred percent (100%) of the liability for those
SH&E Conditions that are identified in Schedule 13.01(a) unless (i) Seller can
demonstrate that any such condition is fundamentally different, either
quantitatively or qualitatively, from that which would have prevailed had the
Assets not been transferred to Buyer, or (ii) the Parties agree otherwise in
writing.
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(b) Seller shall be liable for those Damages for Environmental
Liability which are incurred on account of, or which are attributable to, any
SH&E Condition arising out of, resulting from, or relating to the Operations or
any activities involving the Assets on or prior to the Effective Time which is
known or unknown at the Effective Time but is not determined to be in
noncompliance under SH&E Laws or related Legal Requirements until after the
Effective Time or subject to remedy or corrective action under SH&E Laws or
related Legal Requirements until after the Effective Time. In the case of SH&E
Conditions covered by this Section 13.01(b), Seller, subject to the liability
limits in Sections 13.01(f)(iii) and (f)(iv), and net of any insurance recovery
(but excluding self-insurance arrangements), will retain, after the Effective
Time, one hundred percent (100%) of the liability; provided that Buyer can
demonstrate that any such condition arises solely out of, results solely from,
or relates solely to the Operations or any activities involving the Assets prior
to the Effective Time. To the extent that the Kansas Department of Health and
Environment Order No. 87-E-26, dated August 31, 1988, and subsequent amendments,
address MTBE without triggering the need for system modifications or increased
cost, MTBE shall be subject to Section 13.01(a). Groundwater remediation system
modifications and increased groundwater remediation cost which are required
solely for the purpose of addressing MTBE contamination shall be covered under
this Section 13.01(b), provided that Buyer does not introduce MTBE to the site
or any contamination is not the result of migration from third parties after the
Effective Time.
(c) Seller and Buyer agree to share the cost of upgrades to the
waste water treatment plant, which are required by the state under paragraph
(C)(4) of the current NPDES permit (Kansas Water Pollution Control permit
I-WA09-P002, effective January 1, 1999) for the Asset, that are in excess of
those cost covered by the Two Million Dollars ($2,000,000) limitation set out in
Schedule 13.01(a), and subject to the liability limits in Section 13.01(f)(iii)
as follows:
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For cost less than One Million Dollars ($1,000,000), Seller and Buyer shall
split the cost on a 75:25 basis with Seller paying seventy-five percent (75%)
and Buyer paying twenty-five percent (25%) of the cost; for cost between One
Million Dollars ($1,000,000) but less than Two Million Dollars ($2,000,000),
Seller and Buyer shall split the cost on a 50:50 basis; for cost between Two
Million Dollars ($2,000,000) but less than Three Million Dollars ($3,000,000),
Seller and Buyer shall split the cost on a 25:75 basis with Seller paying
twenty-five percent (25%) and Buyer paying seventy-five percent (75%); and for
cost Three Million Dollars ($3,000,000) and above Buyer shall pay one hundred
percent (100%).
(d) For those Damages for Environmental Liability which are not
covered by Sections 13.01(a), 13.01(b), 13.01(c) and 13.01(e), the Parties,
subject to the liability limits in Section 13.01 (f)(iii) and (f)(iv), and net
of any insurance recovery (but excluding self insurance arrangements), shall
share such Damages, equally, unless the Parties agree otherwise. This Section
includes, but is not limited to, Damages for Environmental Liability (i) where
pre-Closing or post- Closing origin is indeterminate and (ii) High Production
Volume chemical testing program, a voluntary program under the guidance of the
US EPA, testing costs, where such testing costs shall not exceed Two Hundred
Seventy-Five Thousand Dollars ($275,000) in the aggregate over a five (5) year
period. This Section does not include Damages for Environmental Liabilities
which are known to be attributable to Buyer because they arise solely out of,
result solely from, or relate solely to the operations or any activities
involving the Assets after the Effective Time.
(e) Buyer shall be liable for those Damages for Environmental
Liability which are not imposed upon Seller under Sections 13.01(a), 13.01(b),
13.01(c) or 13.01(d) and to the extent Seller's liability is limited or
extinguished by Section 13.01(f).
(f) Any Seller liability and responsibility for Damages for
Environmental Liability incurred pursuant to this Section 13.01 shall arise if,
and only to the extent, that:
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(i) Damages are incurred pursuant to SH&E Laws or
related Legal Requirements in existence as of the Effective Time and, where
such Damages arise out of regulatory noncompliance or necessary
environmental remediation or response actions, encompass only work
reasonably necessary, as of the discovery of any SH&E Condition, to meet
the minimum requirements of SH&E Laws and related Legal Requirements in
existence at the Effective Time;
(ii) Buyer has given Seller written notice identifying
the SH&E Condition, or of any major site assessment or major investigation
that could lead to the discovery of an SH&E Condition, so that Seller may
participate, at its own expense, in any discussions or negotiations with
any applicable governmental authority concerning the design and
implementation of any remediation plan or project where Seller has, or is
reasonably likely to have, any liability or responsibility, and Buyer has
not proposed, discussed or agreed to any such plan or project without
Seller's prior written consent, which shall not be unreasonably withheld;
(iii) For purposes of Sections 13.01(b) and (d),
Seller's obligations under this Section 13.01 relate to Environmental
Liabilities identified and for which written notice of liability is given
by Buyer to Seller within four (4) years after the Effective Time,
regardless of when such amounts must be paid. With regard to Seller's
obligations under this Section 13.01 that relate to fines and penalties,
Buyer shall have an additional year to provide written notice to Seller;
(iv) Seller's total aggregate liability under Sections
13.01(b) and 13.01(d), for Environmental Liability collectively shall not
exceed Five Million Dollars ($5,000,000) and all amounts for which Seller
is obligated under Section 13.01 are net of any insurance recovery (but
excluding self-insurance arrangements) by Buyer; and
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(v) Notwithstanding anything to the contrary, (A) on
the tenth (10th) anniversary of the Effective Time, Seller may at its
discretion pay to Buyer a lump sum payment representing the present value
(calculated using a discount rate of seventeen percent (17%) real) as of
the date for all identified, reasonably estimated and unpaid projected
Damages for Environmental Liability with respect to environmental projects
which are ongoing on that date and which are subject to Section 13.01 of
this Agreement; and/or (B) prior to the tenth (10th) anniversary of the
Effective Time, and with the consent of Buyer, Seller may at its discretion
pay to Buyer a lump sum payment representing the present value (calculated
using a discount rate of seventeen percent (17%) real) as of such date for
some or all identified, reasonably estimated and unpaid projected Damages
for Environmental Liability which are subject to Section 13.01 of the
Agreement. Upon such lump sum payment pursuant to this Section
13.01(f)(v)(B) Seller shall have no further obligations to Buyer for
Damages for Environmental Liability under Section 13.01 for any
Environmental Liabilities addressed by such payment.
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13.02 Environmental Investigations.
For a period of four (4) years after the Effective Time, Buyer shall
not conduct any site assessment or investigation that could lead to the
discovery of an SH&E Condition and which would involve drilling or penetration
of the surface of the ground, unless (i) such site assessment or investigation
is performed in the ordinary course of business such as for geophysical studies
for equipment foundations, or (ii) ordered to conduct such an assessment or
investigation by any federal, state, or local governmental authority having
jurisdiction thereof.
13.03 Waste Sites.
Buyer and Seller hereby agree to each bear the risk of liability for
environmental cleanup or costs and natural resource damages for all open and
closed off-site waste sites operated by third parties on the following basis: if
both Parties have liability or potential liability at the site, and if liability
at the site is apportioned by (i) an administrative settlement or administrative
order with a governmental agency, or (ii) a Judgment, and both Buyer and Seller
are formal parties to the actions specified in clause (i) or (ii) of this
sentence, then the risk between them shall be allocated as provided for in such
action. If both Parties have liability or potential liability at the site and
either Party is not a formal party to an action specified in clauses (i) or (ii)
of the preceding sentence, and the Party named in such action is being held
responsible or potentially responsible for the other Party's liability, then the
Parties will divide the risk on a proportionate basis according to the
respective volume of Hazardous Substances deposited in such waste sites by Buyer
on or after the Effective Time, which shall be at Buyer's risk, or by Seller
prior to the Effective Time, which shall be Seller's risk. Notwithstanding
anything to the contrary in the Agreement (i) this Section 13.03 is an
independent risk allocation method not governed by, or subject to, Section
13.01, and (ii) this Section 13.03 shall continue in effect into perpetuity;
provided further that, in any case where only one of the Parties has contributed
waste at a site covered by this Section 13.03, such Party will remain solely
responsible for such contribution.
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13.04 Environmental Coordination Committee.
Within thirty (30) days of the Effective Time, each Party will
designate two representatives, one legal and one technical, to consult on
coordination of their respective obligations under Article 13. (The Parties may
change the identity of these representatives as necessary or desirable.) The
four representatives will collectively be referred to as the Frontier/Equilon
Environmental Coordination Committee (the "Committee"). The sole purpose of the
Committee will be to facilitate communication and coordination on environmental
matters between the Parties, and it will have no formal schedule, duties, or
powers other than as the duly authorized representatives of the Parties may from
time to time agree. If the Parties agree in writing, the Committee may, among
other things, discuss project management, cost reimbursement, and liability
allocation issues. Neither the establishment of the Committee, nor any of its
activities, shall be construed to make either Party responsible in any way for
the acts or omissions of the other Party.
13.05 Environmental Cooperation.
Buyer and Seller covenant with each other that they shall cooperate
fully with each other and act in good faith in implementing this Article 13.
Buyer and Seller agree that the performance required by the covenant set forth
in the preceding sentence shall include, but not be limited to: (a) providing
to the other timely notice of all potential Environmental Liabilities that they
believe are covered under this Article 13 about which they become aware; (b)
sharing with the other in a timely manner all material non-privileged
correspondence received from any third party that is relevant to such potential
Environmental Liabilities; (c) affording the other timely access to and an
opportunity to comment on (both draft and final versions) any material non-
privileged correspondence to third parties, non-privileged study protocols and
results, drawings, charts, data, field notes and remediation workplans or
reports, or other non-privileged documentation relating to such Environmental
Liabilities; (d) providing the other with timely notice of and an opportunity to
attend and participate in any meetings or hearings with governmental bodies or
courts relating to any Environmental Liabilities that they believe are covered
under this Article 13, subject to the permission or consent of such governmental
bodies or courts, if required; (e) preparing all material strategies and plans
in consultation with each other; (f) consulting with each other to ensure that
any work under this Article 13 is performed in a workmanlike and cost-effective
manner; (g) negotiating access agreements and scheduling all work to be
performed so as to minimize any unreasonable cost and inconvenience to each
other; and (h) performing all work under this Article 13 in accordance with all
applicable SH&E Laws or related Legal Requirements.
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13.06 Remediation by Buyer.
Buyer shall supervise and perform any remediation on any property of
Buyer or on any property contiguous to a property of Buyer, except such
remediation as Seller may elect to perform in accordance with Section 13.07.
13.07 Remediation by Seller.
(a) Seller's Election. Seller, at Seller's sole choice, may, by
timely notice to Buyer with respect to any Environmental Liabilities under
Section 13.01(a), supervise and perform any remediation on any property of Buyer
or any property contiguous to a property of Buyer, subject to Buyer's oversight
and approval and mutually acceptable access agreements.
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(b) Performance of Remediation. Seller, with the approval of
Buyer (which shall not be unreasonably withheld), may have access to and use of
the storage facilities, loading facilities, docks, rail sidings, and other plant
equipment or facilities, and waste water treatment plants and similar waste
treatment and disposal systems on the Asset in conjunction with any work
performed pursuant to Schedule 13.01(a) for purposes such as the disposal of
well development water and treated ground water, provided that (i) Seller's use
of such facilities and systems shall not interfere with or disrupt Buyer's
operations or Buyer's use of such facilities and systems (including by reducing
the capacity needed for Buyer's use), (ii) Seller's use of such facilities and
systems shall not violate any SH&E Laws or related Legal Requirements, (iii)
Seller shall be responsible for, and Buyer shall fully cooperate in, obtaining
all approvals required by any governmental bodies for such use and (iv) Seller
shall promptly perform any remediation or repair any malfunction or impairment
of performance of such facilities and systems to the extent resulting from
Seller's use of such facilities and systems.
13.08 Payments and Reimbursements.
Seller shall make payment to Buyer for work or other matters for which
Seller is liable under Section 13.01 according to one or more of the following
methods, at Seller's election: (i) direct payment to third parties; (ii)
reimbursement of Buyer; (iii) a combination of (i) and (ii).
13.09 Environmental Insurance
(a) The initial premiums for environmental insurance and
subsequent deductabilities shall be shared equally between the Parties. The
portion of the environmental deductible paid by Seller shall be included in and
credited towards the total aggregate liability amount set forth in Section
13.01(f)(iv).
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(b) If an occurrence gives rise to a liability for Damages for
Environmental Liability claim by a Party, the Party shall first pursue and
recover any claims under applicable environmental insurance contracts or similar
arrangements (but excluding self-insurance arrangements) in favor of such Party.
(c) The Parties acknowledge that the Buyer shall use best
efforts to obtain environmental insurance that will include Twenty-Five Million
Dollars ($25,000,000) average for a ten (10) year term with a Five Hundred
Thousand ($500,000) deductible.
13.10 Insurance Recoveries.
When used in Article 13, the term "net of any insurance recovery"
means (i) after subtraction of any amounts paid to a claimant Party by an
environmental insurance carrier (excluding any deductibles paid by the Parties
and any self-insurance arrangements), or (ii) $0.00, if any environmental
coverage claim by the Parties is denied by the insurance carrier, or (iii)
$0.00, if the insurance carrier has not settled a claim within twelve (12)
months of its submission; provided that, with respect to clauses (i) or (ii) of
this sentence, any amounts subsequently recovered, either through litigation or
settlement with the insurance carrier, will be promptly reimbursed to the liable
Party entitled to such reimbursement such that the claimant Party does not
receive a "double recovery."
ARTICLE 14
INDEMNIFICATION; SURVIVAL
14.01 Indemnification.
A. INDEMNIFICATION BY SELLER. SELLER AGREES TO PAY AND TO INDEMNIFY
FULLY, HOLD HARMLESS AND DEFEND BUYER AND ITS RESPECTIVE AFFILIATES, AGENTS,
OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, SERVANTS, CONSULTANTS,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL CLAIMS
BASED UPON ALLEGATIONS OF AND/OR DAMAGES (WHETHER BASED ON NEGLIGENT ACTS OR
OMISSIONS, STATUTORY LIABILITY, STRICT LIABILITY OR OTHERWISE) ARISING OUT OF
THE FOLLOWING:
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(i) TO THE EXTENT NOT KNOWN TO BUYER OR TO THE EXTENT NOT
DISCLOSED IN THE DATA ROOM MATERIAL, ANY INACCURACY OR BREACH OF ANY
REPRESENTATION OR WARRANTY OF SELLER CONTAINED IN THIS AGREEMENT OR ANY
CERTIFICATE DELIVERED PURSUANT HERETO AND MADE AT OR AS OF THE EFFECTIVE
TIME, OR OF ANY COVENANT OF AGREEMENT OF SELLER CONTAINED IN THIS
AGREEMENT.
(ii) ENVIRONMENTAL LIABILITY RETAINED BY SELLER, PURSUANT TO THE
TERMS OF ARTICLE 13.
(iii) LIABILITIES ASSUMED BY SELLER IN SECTION 2.04(b) AND
SECTIONS 4.05(a) AND (c).
B. INDEMNIFICATION BY BUYER. BUYER AGREES TO PAY AND TO INDEMNIFY
FULLY, HOLD HARMLESS AND DEFEND SELLER AND ITS RESPECTIVE OWNERS, AFFILIATES,
AGENTS, OFFICERS, DIRECTORS, PARTNERS, EMPLOYEES, SERVANTS, CONSULTANTS,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL CLAIMS
BASED UPON ALLEGATIONS OF AND/OR DAMAGES (WHETHER BASED ON NEGLIGENT ACTS OR
OMISSIONS, STATUTORY LIABILITY, STRICT LIABILITY OR OTHERWISE) ARISING OUT OF
THE FOLLOWING:
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(i) ANY INACCURACY OR BREACH OF ANY REPRESENTATION OR WARRANTY
OF BUYER CONTAINED IN THIS AGREEMENT OR ANY CERTIFICATE DELIVERED PURSUANT
HERETO AND MADE ON OR AS OF THE EFFECTIVE TIME, OR OF ANY COVENANT OR
AGREEMENT OF BUYER CONTAINED IN THIS AGREEMENT.
(ii) ANY LIABILITY WHATSOEVER (WHETHER KNOWN, UNKNOWN, ACCRUED,
ABSOLUTE, CONTINGENT OR OTHERWISE) INCURRED AS THE RESULT OF THE OWNERSHIP
OR OPERATION OF THE ASSETS BY BUYER AND ITS SUBSIDIARIES AFTER THE
EFFECTIVE TIME, EXCEPT AS SET FORTH IN ARTICLE 13.
(iii) ENVIRONMENTAL LIABILITY ASSUMED BY BUYER PURSUANT TO
ARTICLE 13.
(iv) EXCLUSIVE OF LIABILITY COVERED UNDER ARTICLE 13, ANY BUYER
ASSUMED LIABILITY, AND ANY LIABILITY WHICH RESULTS FROM ANY VIOLATION OF
ANY LEGAL REQUIREMENT WHICH OCCURS AFTER THE EFFECTIVE TIME.
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(v) ANY LIABILITY UNDER THE SECURITIES ACT, THE EXCHANGE ACT OR
ANY OTHER FEDERAL OR STATE "BLUE SKY" OR SECURITIES OR OTHER LAW OR
REGULATION, AT COMMON LAW OR OTHERWISE, OR ARISING OUT OF OR BASED UPON THE
OFFERING AND SALE OF THE SENIOR NOTES, INCLUDING ANY UNTRUE STATEMENT OR
ALLEGED UNTRUE STATEMENT OF A MATERIAL FACT RELATING TO OR CONTAINED IN ANY
PRELIMINARY PROSPECTUS, REGISTRATION STATEMENT OR ANY PROSPECTUS FORMING A
PART THEREOF, OR ANY AMENDMENT THEREOF OR SUPPLEMENT THERETO, OR ARISING
OUT OF OR BASED UPON ANY OMISSION OR ALLEGED OMISSION TO STATE A MATERIAL
FACT REQUIRED TO BE STATED OR NECESSARY TO MAKE THE STATEMENTS THEREIN NOT
MISLEADING, UNLESS SUCH INFORMATION WHICH WAS PROVIDED IN WRITING BY SELLER
WAS UNTRUE, INACCURATE OR AN EXPRESS DISCLAIMER OF ACCURACY AS SPECIFIED ON
MATERIALS PROVIDED TO BUYER IN CONNECTION WITH PRESENTATIONS TO INVESTMENT
BANKERS AND RATING AGENCIES.
C. No Party to this Agreement shall bring any action, suit or proceeding
(whether under any federal, state or local statute or law) against any other
Party, or seek to join any other Party to any pending action, suit or proceeding
which arises out of, relates to or is connected with any matter indemnified
under this Section 14.01, except to enforce the provisions of this Section
14.01.
D. IN ACKNOWLEDGMENT OF THE EXPRESS NEGLIGENCE DOCTRINE, THE PARTIES
AGREE AND CONFIRM THAT THE INDEMNIFICATIONS SET FORTH IN SECTIONS 14.01(A) AND
14.01(B) SHALL APPLY ACCORDING TO THEIR TERMS WHETHER OR NOT THE NEGLIGENCE OF
ANY INDEMNIFIED PARTY IS ALLEGED OR PROVEN.
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14.02 Notification and Third Party Claims.
Within thirty (30) days following the determination thereof, an
Indemnified Party shall give the Indemnifying Party written notice of any matter
which an Indemnified Party has determined has given or could give rise to a
right of indemnification under this Agreement, stating the amount of the Damage,
if known, and method of computation thereof, all with reasonable particularity
and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises ("Claim Notice")
provided that the failure of the Indemnified Party to provide such 30-day notice
shall only relieve the Indemnifying Party of its obligation to indemnify the
Indemnified Party to the extent that the Indemnifying Party is actually
prejudiced by such failure. The obligations and liabilities of an Indemnifying
Party under this Article 14 with respect to Damages arising from claims of any
third party that are subject to the indemnification provisions of this Article
14 ("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions:
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(a) Within fifteen (15) days of the receipt of a Claim Notice of a Third
Party Claim, the Indemnifying Party shall notify the Indemnified Party whether
the Indemnifying Party elects to defend such Third Party Claim. If the
Indemnifying Party so elects, it shall undertake the defense thereof by counsel
of its own choosing, which counsel shall be reasonably satisfactory to the
Indemnified Party; provided that if, in the Indemnified Party's and the
Indemnifying Party's reasonable judgment, a conflict of interest exists between
the Indemnified Party and the Indemnifying Party with respect to such Third
Party Claim, or if the Indemnifying Party elects not to defend such Third Party
Claim, or if the Indemnifying Party fails to notify the Indemnified Party within
the fifteen (15) day notice period that it elects to defend such Third Party
Claim, such Indemnified Party shall be entitled to select counsel of its own
choosing, in which event the Indemnifying Party shall be obligated to pay the
reasonable fees and expenses of such counsel to the extent that the Indemnifying
Party is finally determined to be obligated to indemnify the Indemnified Party
under this Agreement. The Claim Notice of the Third Party Claim by the
Indemnified Party shall contain all material information known to the
Indemnified Party with respect to the Third Party Claim and shall include copies
of materials submitted to the Indemnified Party by the relevant third party with
respect to the Third Party Claim.
(b) If the Indemnifying Party refuses or fails at any time to defend the
Indemnified Party against any Third Party Claim, the Indemnified Party shall
have the right to undertake the defense, and to compromise or settle such Third
Party Claim on behalf of and for the account and at the risk of the Indemnifying
Party to the extent that the Indemnifying Party is finally determined to be
obligated to indemnify the Indemnified Party under this Agreement with respect
to such Third Party Claim.
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(c) If the Indemnifying Party elects to undertake and diligently pursues
the defense of a Third Party Claim hereunder, the Indemnifying Party shall
control all aspects of the defense and if the Indemnifying Party acknowledges in
writing its duty to provide full indemnification to the Indemnified Party
regarding such Third Party Claim, the Indemnifying Party may enter into a
settlement of such Third Party Claim and may settle, compromise or enter into a
judgment with respect to such Third Party Claim; provided, that the Indemnifying
Party shall not enter into any such settlement, compromise or judgment without
the prior written consent of the Indemnified Party if it would result in the
imposition of any non-monetary liability or obligation on the Indemnified Party.
If the Indemnified Party undertakes the defense of a Third Party Claim hereunder
for any reason other than that provided in Section 14.02(b) hereof, it shall not
settle, compromise or enter into any judgment with respect to a Third Party
Claim for which it is seeking or shall seek indemnification hereunder without
the prior written consent of the Indemnifying Party, which shall not be
unreasonably withheld or delayed.
(d) If the Indemnifying Party elects to undertake and diligently pursues
the defense of a Third Party Claim hereunder, the Indemnified Party shall
provide the Indemnifying Party with access to all reasonably requested
witnesses, records and documents of the Indemnified Party relating to any Third
Party Claim.
(e) The Indemnified Party may participate in the defense of any Third
Party Claim at its own expense.
14.03 LIMITATION ON INDEMNIFICATION.
WITH RESPECT OF ANY CLAIM BY A PARTY FOR INDEMNITY UNDER THIS ARTICLE 14
WHICH DOES NOT INVOLVE A THIRD PARTY CLAIM, NO PARTY TO THIS AGREEMENT SHALL
SEEK, AND AN ARBITRATOR APPOINTED UNDER ARTICLE 15 MAY NOT AWARD, ANY INDIRECT,
SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES. NOTHING IN THIS SECTION
14.03 SHALL LIMIT IN ANY WAY A PARTY'S INDEMNIFICATION OBLIGATIONS WITH RESPECT
TO A THIRD PARTY CLAIM.
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14.04 Survival.
The indemnification obligations specified in Sections 14.01 and 14.02
shall continue and be in effect for a period of three (3) years after the date
hereof except:
(a) As to any claim of which written notice was given to the
Indemnifying Party before the end of such time period; or
(b) The obligations with respect to Sections 5.11 and 10.06
shall continue and be in effect until thirty (30) days after the expiration of
the applicable statute of limitations with respect to such Taxes; or
(c) The obligations with respect to Section 5.15 shall continue
and be in effect for a period of ten (10) years after the Effective Time; or
(d) As otherwise provided in Article 13; or
(e) The obligations with respect to Article 16 shall continue and
be in effect for a period of five (5) years after the Effective Time.
14.05 Coordination of Indemnification Rights.
(a) Except for any action seeking specific performance and/or
injunctive relief for the breach of any covenant contained in this Agreement, or
for common law fraud or deceit, the indemnification provided any Person pursuant
to this Article 14 shall be such Person's sole remedy for any breach by any
Party hereto of any representation, warranty or covenant contained in this
Agreement, or in any certificate or document (to the extent such certificates or
documents relate to matters covered by the representations, warranties or
covenants contained herein) required to be delivered in connection herewith, or
in connection with the consummation of the transactions provided for hereby.
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(b) A Claim Notice in connection with any Section of this Article 14
shall be deemed to be a Claim Notice in connection with all Sections of this
Article 14, pursuant to which the Person asserting such claim has any right to
be indemnified, defended or held harmless.
(c) Notwithstanding any provisions to the contrary contained in this
Article 14, the right of any Person to be indemnified, defended or held harmless
in connection with any claim pursuant to any Section of this Article 14 shall be
reduced to the extent that such Person is or has been indemnified, defended
and/or held harmless, pursuant to any other provisions of this Agreement or any
of the Related Agreements.
(d) In the event that an Indemnified Party has a right of recovery
against any third party with respect to any Damages in connection with which a
payment is made to such Indemnified Party by an Indemnifying Party; then
(i) such Indemnifying Party shall, to the extent of such payment, be
subrogated to all of the rights of recovery of such Indemnified Party
against such third party with respect to such Damages; and
(ii) such Indemnified Party shall execute all papers required and take all
action necessary to secure such rights, including, but not limited to, the
execution of such documents as are necessary to enable such Indemnifying
Party to bring suit to enforce such rights.
(e) The Indemnifying Party, in its sole discretion and upon notice to
the Indemnified Party, may elect to set off any amount payable to the
Indemnified Party under this Agreement by the Indemnifying Party against any
amount for which the Indemnifying Party is entitled to indemnification under
this Article 14, provided that the Indemnified Party shall be indemnified in the
manner provided in this Article 14 for any indemnifiable amount not covered by
such set off.
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(f) In the event of any conflict between this Article 14 and any
other provisions of this Agreement, this Article 14 shall prevail.
14.06 Right to Cure.
Any Party that is obligated to indemnify, defend and/or hold harmless
any Person pursuant to any provision of this Article 14 shall have the right to
cure, within a reasonable time, not to exceed thirty (30) days after receipt of
written notice, and in a manner reasonably satisfactory to such Person, any
matter giving rise to such obligation; provided, however, that any such cure
shall not relieve or reduce any such obligation to the extent that such cure is
inadequate.
ARTICLE 15
ARBITRATION
15.01 Dispute Resolution.
Any controversy or claim ("Claim"), whether based on contract, tort,
statute or other legal or equitable theory (including but not limited to any
claim of fraud, misrepresentation or fraudulent inducement or any question of
validity or effect of this Agreement including this section) arising out of or
related to this Agreement (including any amendments or extensions), or the
breach or termination thereof, shall be settled by mediation and consultations
between the Parties initiated upon the Notice of any Party. In the event of
failure of such mediation and consultations to settle such Claim in a manner
acceptable to all Parties within thirty (30) days following the Notice, then any
such Claim shall be settled by binding arbitration in accordance with this
provision and the then current CPR Institute for Dispute Resolution Rules for
Non- Administered Arbitration of Business Disputes. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C. Sections 1-16, to the
exclusion of any provision of state law inconsistent therewith or which would
produce a different result, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction.
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15.02 Place.
The arbitration shall be held in Houston, Texas.
15.03 Arbitrators.
There shall be three (3) independent and impartial arbitrators of whom
Seller appoints one (1) and Buyer appoints one (1) and the third of which shall
be appointed by the two (2) Party-appointed arbitrators in accordance with the
arbitration rules. The arbitrators shall determine the Claims of the Parties
and render a final award in accordance with the substantive law of the State of
Texas, excluding the conflicts provisions of such law. The arbitrators shall
specify the reasons for the award in writing.
15.04 Statute of Limitations.
Subject to Section 14.04, any Claim by a Party shall be time-barred if
the asserting Party commences arbitration with respect to such Claim later than
two (2) years after the cause of action accrues. All statutes of limitations
and defenses based upon passage of time applicable to any Claim of a defending
Party (including any counterclaim or setoff) shall be tolled while the
arbitration is pending.
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15.05 Discovery.
The arbitrator shall order the Parties to promptly exchange copies of
all exhibits and witness lists, and, if requested by a Party, to produce other
relevant documents, to answer up to ten (10) interrogatories (including
subparts), to respond to up to ten (10) requests for admissions (which shall be
deemed admitted if not denied) and to produce for deposition and, if requested,
at the hearing all witnesses that such Party has listed and up to four (4) other
persons within such Party's control. Any additional discovery shall only occur
by agreement of the Parties or as ordered by the arbitrator upon a finding of
good cause.
15.06 Costs.
Each Party shall bear its own costs, expenses and attorneys' fees;
provided that if court proceedings to stay litigation or compel arbitration are
necessary, the Party who unsuccessfully opposes such proceedings shall pay all
reasonable associated costs, expenses, and attorneys' fees in connection with
such court proceeding.
15.07 Breach.
The Parties recognize that irreparable injury will result from a
breach of any provision of this Agreement and that money damages will be
inadequate to fully remedy the injury. In order to prevent such irreparable
injury, the arbitrator shall have the power to grant temporary or permanent
injunctive or other equitable relief. Prior to the appointment of an
arbitrator a Party may, notwithstanding any other provision of this Agreement,
seek temporary injunctive relief from any court of competent jurisdiction;
provided, that the Party seeking such relief shall (if arbitration has not
already been commenced) simultaneously commence arbitration. Such court ordered
relief shall not continue more than ten (10) days after the appointment of the
arbitrator (or in any event for longer than sixty (60) days).
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15.08 Consent to Jurisdiction.
The Parties hereby consent to the non-exclusive jurisdiction of the
state or federal courts of Texas for the enforcement of any award rendered by
the arbitrators.
ARTICLE 16
TECHNOLOGY
16.01 Grants.
Seller shall grant and hereby does grant to Buyer for Use in the operation
of the Refinery, a non-exclusive, irrevocable (except as provided in this
Article 16) royalty-free, paid-up license or sublicense (both, as the case may
be, without a right to sublicense or transfer except as expressly provided in
this Article 16) to Intellectual Property, which exists at the Effective Time
and which is in Use in the Operations or which is needed to be Used in the
Operations. By executing this Agreement, effective as of the Effective Time,
the Buyer is assuming all relevant duties and obligations of Seller with respect
to Intellectual Property under the Technology Transfer Agreement ("TTA")
attached as Schedule 16.01, including the confidentiality obligations of Article
6 therein but excluding any liability under Section 12(c) of the TTA unless such
liability arises as a result of the action or lack of action on behalf of Buyer
other than using the Intellectual Property in a manner substantially similar to
the manner in which it was used in Seller's Operations. For avoidance of doubt,
this grant is revoked in the event that Equilon repurchases the Refinery at the
time of said repurchase.
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16.02 Exclusions.
For avoidance of doubt, in the grant provisions of Section 16.01, the
sublicense of Intellectual Property by Seller does not include any intellectual
property outside the grant of Section 2 of the TTA and the License Agreement
between Seller and Texaco Development Corporation dated August 1, 1993. The
foregoing shall not be construed to limit or modify Equilon's representation or
warranty in Section 16.06 of this Agreement.
16.03 Licensed Technology Rights.
(a) Assignable and Transferable Licensed Technology Rights.
Seller agrees to transfer, as soon as reasonably possible, Licensed Technology
Rights which, for purposes of definition under this Section, comprise agreements
which are (i) freely transferable without the permission of the licensor or
vendor, (ii) not in use by Seller or its Affiliates at the Effective Time and
(iii) not required by Seller in the future for its own benefit. These Licensed
Technology Rights are listed on Schedule 16.03(a). This transfer shall be made
by assignment or sublicense as the case may be for all Licensed Technology
Rights on Schedule 16.03(a). Any fees required to be paid for such transfer
shall be paid solely by Buyer.
(b) Non-assignable or non-transferable Licensed Technology
Rights. Buyer recognizes that the Licensed Technology Rights listed on Schedule
16.03(b) are not freely assignable without the permission of the licensor or
vendor. Seller, at the written request of Buyer, agrees to contact the licensor
or vendor and seek a permitted transfer of the Licensed Technology Rights or
obtention of a new license for Buyer. In that event, all fees and costs
necessary to transfer the Licensed Technology Rights or to acquire a new license
commensurate therewith to Buyer, shall be paid solely by Buyer. Seller shall
make a good faith attempt to maintain the status quo of such non-assignable non-
transferable Licensed Technology Rights until Buyer can secure transfer or a new
license to Buyer.
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(c) It is the intent of Buyer and Seller that all Licensed
Technology Rights used in the Operations of the Refinery are included in either
Schedule 16.03(a) or Schedule 16.03(b). However, both Buyer and Seller
recognize that because of the complexity of the instant transaction it is
possible that some Licensed Technology Rights may not have been scheduled under
either Section 16.03(a) or (b). In that event, if any Licensed Technology
Rights are not included on Schedules 16.03(a) or (b) and, if the lack of such
Licensed Technology Rights results in a Material Adverse Effect on the
operations of the Refinery, then Buyer and Seller will cooperate to attain, at
the lowest possible cost, rights for Buyer to Use the Licensed Technology
Rights. Any fees necessary to obtain such Licensed Technology Rights shall be
shared equally by Buyer and Seller.
(d) In any assignment or issuance of a sublicense to Buyer of Licensed
Technology Rights, Buyer agrees to assume and will be subject to all applicable
obligations of the assigned license or the master license necessary to enable
Buyer to Use the Licensed Technology Rights in Buyer's operation of the
Refinery.
(e) Seller may terminate any assignment or sublicense made to Buyer under
Section 16.03 if Buyer is materially in default of any of the material
obligations undertaken by Buyer in the assignment or sublicense. Seller shall
give Buyer written notice at least 30 days prior to the date of termination.
The notice shall specifically identify the obligation breached, the facts
constituting the default and state Seller's intent to terminate. If Buyer cures
such default prior to the expiration of the 30 day period, the sublicense or
assignment shall not terminate. The foregoing shall not apply to any assignment
pursuant to which Seller does not retain any future liability.
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16.04 Confidentiality.
(a) The confidentiality obligations of the Buyer with respect to
Confidential Information (which for purposes of this Article 16 shall mean any
technical proprietary, secret or confidential information relating to
Intellectual Property disclosed by Seller, directly or indirectly to Buyer)
under this Article 16 shall be as follows:
(i) Nothing in this Article 16 shall restrict in any way
the right of Seller or Seller's Affiliates to use or disclose or permit
others to use or disclose Confidential Information, which it possesses and
otherwise has a free right to use and disclose.
(ii) With respect to Confidential Information comprising
Intellectual Property, Buyer shall maintain such Confidential Information
in confidence, and shall Use it solely for the operations of the Refinery.
(iii) With respect to Licensed Technology Rights, each Party
may use and disclose Confidential Information comprising Licensed
Technology Rights but only to the extent permitted under the terms of any
agreement with the third party licensor of same, as the case may be.
(b) Except where provided otherwise with respect to Confidential
Information whose disclosure and Use in Section 16.04(a) is governed by an
agreement with a third party pertaining to Licensed Technology Rights, Buyer's
obligation of confidentiality and restricted use in Section 16.04(a) above shall
not apply to any information which Buyer can show by reasonable proof:
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(i) was available to the public prior to or becomes
available to the public subsequent to the receipt of such Confidential
Information by Buyer pursuant to this Article 16 and through no fault of
Buyer; or
(ii) was in the possession of Buyer prior to the receipt of
such Confidential Information by Buyer pursuant to this Article 16, and was
not acquired by Buyer from a third party under and existing obligation of
confidence; or
(iii) is subsequently received by Buyer from a third party
without an obligation of confidentiality; or
(iv) is independently developed by an employee or employees
of Buyer not having direct or indirect access to such Confidential
Information of another party.
For purposes of this Article 16, specific items of Confidential Information
made available to Buyer under this Article 16 shall not be deemed to fall within
any of the exceptions as set forth above merely because such items are embraced
by more general information which falls within one or more exceptions, nor shall
a combination of features be deemed to fall within such exceptions merely
because the individual features fall with such exceptions.
(c) Confidential Information, which is required to be disclosed, (i)
by any applicable law, stock exchange rules or by any applicable judgment, order
or decree of any governmental entity having jurisdiction or (ii) in connection
with the preparation of tax returns, communications with governmental
authorities with respect thereto or proceedings relating to taxes, may be
disclosed, provided that Buyer only discloses such Confidential Information to
the least extent practicable, and Buyer shall provide Seller with prompt and
reasonable notice thereof so that Seller may seek a suitable protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Article 16. In the event that such protective order or other remedy is not
obtained or Seller waives compliance with the provisions of this Article 16, and
Buyer is required to disclose such Confidential Information, Buyer will furnish
only that portion of the Confidential Information which Buyer is required to
disclose and, to the extent practicable, Buyer will exercise its best efforts to
obtain reliable assurance that confidential treatment shall be accorded and such
Confidential Information so furnished.
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(d) Buyer shall have a right to disclose and Use with service
providers, consultants, independent contractors and government agencies, all
Confidential Information (unless prohibited by a Licensed Technology Right
obligation), received from Seller but only if such recipient agrees to be bound
pursuant to an obligation of confidentiality and nonuse comprising restrictions
at least as stringent as provided herein.
16.05 Term and Termination.
The grants made in Sections 16.01 and 16.03 shall not be subject to
any term unless Seller repurchases the Refinery.
16.06 Representations and Warranties.
Seller represents and warrants to Buyer as follows:
(a) Seller has the right to grant the licenses of Intellectual
Property as set forth in this Article 16;
(b) to the Knowledge of Seller, except as set forth on Schedule 5.12,
(i) there are no facts that would support a claim that Seller does not have the
right, immediately prior to the Effective Time, to Use the intellectual property
Used in Seller's Operations, which claim may result in a Material Adverse
Effect; (ii) there are no facts or claims of ownership to any Intellectual
Property having a Material Adverse Effect licensed or assigned to Buyer pursuant
to this Article 16; (iii) there are no facts that would support a claim that may
result in losses having a Material Adverse Effect, that Seller's Use of the
Intellectual Property in the Operations of the Refinery licensed pursuant to
this Article 16 has not infringed or otherwise violated any intellectual
property right of a third party; and (iv) there are no facts that would support
a claim that may result in losses having a Material Adverse Effect, that Use by
Buyer in the operations of the Refinery of the Intellectual Property licensed
pursuant to this Article 16 will infringe or otherwise violate any intellectual
property right of a third party.
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(c) Except as otherwise stated in this Article 16, ANY ORAL OR
WRITTEN REPORT, DATA OR OTHER INFORMATION PROVIDED TO BUYER HEREUNDER, WHETHER
PROVIDED UNDER LICENSE OR OTHERWISE, SHALL BE PROVIDED ON AN "AS IS" BASIS
WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO THE
RESULTS OR EFFECTS OBTAINED THROUGH USE OF INFORMATION, OR THAT IT IS FIT FOR
ANY USE INTENDED OR CAN BE USED WITHOUT INFRINGING THE PATENT OR COPYRIGHT
RIGHTS OF A PERSON. Without any limitation on the preceding, ANY IMPLIED
WARRANTY OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE IS EXPRESSLY
EXCLUDED FROM THIS ARTICLE 16 WITH RESPECT TO ANY INFORMATION PROVIDED
HEREUNDER. Except as otherwise stated in this Article 16, Use in the operations
of the Refinery by Buyer of Intellectual Property or Confidential Information
disclosed hereunder by Seller to Buyer shall be solely at Buyer's own risk and
Seller shall not be liable for any damage resulting from inaccuracy,
incorrectness, unsoundness, and/or unreliability in the said Use thereof,
whether or not such liability is cause by the negligence of Seller.
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16.07 Access and Support.
(a) Buyer shall have access, during normal business hours and
,subject to conventional safety precautions, to facilities of Seller for the
purposes of the grant of license under Section 16.01 hereunder.
(b) Buyer shall be entitled to possession of Deliverables containing
Intellectual Property which are located at the Refinery without cost to Buyer.
Deliverables not located at the Refinery consisting of design manuals,
blueprints, operating manuals, engineering studies and object codes which were
developed specifically and exclusively for Use at the Refinery shall be
delivered to Buyer at Seller's expense at the written request of Buyer.
Deliverables not located at the Refinery that were not developed specifically or
exclusively for Use at the Refinery will be made available pursuant to Section
16.07(a) and provided to Buyer, at the written request of Buyer, at Buyer's
cost.
16.08 Export Control.
Buyer agrees to comply with any applicable U.S. export control laws and
regulations in regard to any information or data covered by this Article 16.
16.09 Source Codes.
Seller and Buyer recognize that source codes are not within the definition
of Deliverables in this Agreement. Notwithstanding, Seller recognizes that
Buyer may require access to source codes for the programs set out in Schedule
16.09. Buyer shall provide an escrow within ninety (90) days of the Effective
Time, to a commercial escrow site, of the source codes for the software set out
in Schedule 16.09. In the event that the Seller (i) enters into bankruptcy,
either voluntarily or involuntarily; (ii) is dissolved; or (iii) no longer
supports the specific source codes or fails to support the specific source code
or to offer to support the specific source code in each case, on reasonable
commercial terms and conditions, in regard to the above-referenced software,
then Buyer shall then be permitted access to said escrowed source codes with a
right to make derivative works thereof for Use in the operation of the Refinery.
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16.10 Transfer of Intellectual Property.
In the event that Buyer transfers or pledges to any person, ownership of
the Refinery, or any part thereof, the licenses granted herein under Section
16.01 may be extended to such transferee or lender, but only to the extent
necessary for Use of the Intellectual Property in the operation of the Refinery.
Any obligations of Buyer provided hereunder, including those accepted under the
TTA, including all confidentiality obligations of Article 6 therein, shall be
accepted by transferee or lender prior to any such grant from Buyer.
ARTICLE 17
RISK OF LOSS
The risk of damage, destruction, or other loss to or of the Assets shall
remain with Seller from and after the execution of this Agreement and until the
Effective Time, at which time Seller shall place Buyer in possession of the
Assets; and from and after the Effective Time, all risks of damage, destruction,
or other casualty loss to or of the Assets (to the extent not attributable to
any breaches of a representation, warranty, covenant or agreement of Seller
hereunder) shall be borne solely by Buyer.
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ARTICLE 18
COMMISSIONS AND FINDER'S FEES
Seller represents and warrants to Buyer, and Buyer represents and warrants
to Seller, that it has not engaged any broker, finder, or agent in connection
with the transactions contemplated hereunder and has not incurred any unpaid
liability to any broker, finder, or agent for any brokerage fees, finder's fees,
or commissions with respect to such transactions; and each agrees to indemnify
the other against any claims asserted against the other for any such fees or
commissions by any Person purporting to act or to have acted for or on behalf of
the Indemnifying Party.
ARTICLE 19
MISCELLANEOUS
19.01 Entire Agreement; Amendments.
This Agreement and the Related Agreements, including their Exhibits
and Schedules and other writings referred to herein or therein or delivered
pursuant hereto or thereto which form a part hereof, contain the entire
understanding of the Parties with respect to the subject matter hereof provided
that the Confidentiality Agreement between Seller and Guarantor dated February
17, 1999 is in effect until the Effective Time. There are no restrictions,
agreements, promises, warranties, covenants, or undertakings other than those
expressly specified herein or therein. This Agreement and the Related
Agreements supersede any and all prior agreements and understandings between the
Parties with respect to the subject matter hereof. This Agreement shall not be
amended, altered, or modified except by an instrument in writing duly executed
by the Parties.
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19.02 Invalidity.
If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under any present or future laws, such provision shall be fully
severable; this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part of this Agreement;
and the remaining provisions of this Agreement shall remain in full force and
effect, unaffected by the illegal, invalid or unenforceable provision or by its
severance from this Agreement. In lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
19.03 Effect of Waiver or Consent.
No waiver or consent, express or implied, by any Party or of any
breach or default by any other Party in the performance by such other Party of
its obligations hereunder shall be deemed or construed to be a consent or waiver
to or of any other or subsequent breach or default in the performance by such
other Party of the same or any other obligations of such other Party hereunder.
Failure on the part of a Party to exercise its rights or to complain of any act
of the other Party or to declare the other Party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such Party of its
rights hereunder until the applicable statute of limitations period has run.
19.04 Limitation on Benefits of this Agreement.
No person or entity other than the Parties (or their respective
successors or assigns as permitted hereunder) is or shall be entitled to bring
any action to enforce any provision of this Agreement against either of the
Parties, and the covenants, undertakings, and agreements specified in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the Parties (or their respective successors and assigns as permitted hereunder).
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19.05 Notices.
All notices, demands, requests, or other communications which may be
or are required to be given, served, or sent by either Party to the other Party
pursuant to this Agreement shall be in writing and shall be:
(i) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid;
(ii) transmitted by hand or courier delivery; or
(iii) sent by telegram, facsimile, or telex, addressed in each case as
follows:
(a) If to Seller:
EQUILON ENTERPRISES LLC
1100 Louisiana, Room 2398
Houston, Texas 77002
Attention: Vice President Refining
Facsimile: (713) 277-9902
With a copy (which shall not constitute notice) to:
Equiva Services LLC
910 Louisiana, OSP 780
Houston, Texas 77002
Attention: Assistant General Counsel-Commercial
Facsimile: (713) 241-3444
(b) If to Buyer:
FRONTIER EL DORADO REFINING COMPANY
5340 S. Quebec Street
Suite 200N
Englewood, Colorado 80111
Attention: President
Facsimile: (303) 714-0163
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With a copy (which shall not constitute notice) to:
FRONTIER OIL CORPORATION
10000 Memorial Dr., Suite 600
Houston, Texas 77024
Attention: General Counsel
Facsimile: (713) 688-0616
(ii) If to Guarantor:
FRONTIER OIL CORPORATION
10000 Memorial Dr., Suite 600
Houston, Texas 77024
Attention: President
Facsimile: (713) 688-0616
With a copy (which shall not constitute notice) to:
FRONTIER OIL CORPORATION
10000 Memorial Dr., Suite 600
Houston, Texas 77024
Attention: General Counsel
Facsimile: (713) 688-0616
Each Party may designate by prior notice in writing a new address to which
any notice, demand, request, or communication may thereafter be so given,
served, or sent. Each notice, demand, request, or communication which shall be
mailed, delivered, or transmitted in the manner described above shall be deemed
sufficiently given, served, sent, and received for all purposes at such time as
it is actually delivered to the appropriate above listed or properly changed
address or at such time as delivery is refused upon actual presentation at such
address (with the return receipt, the delivery receipt, the affidavit of
messenger, or the facsimile answerback being deemed prima facie evidence of such
delivery).
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19.06 Binding Effect.
Subject to the provisions hereof restricting assignment, this
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and permitted assigns.
19.07 Additional Actions and Documents.
Each of the Parties hereby agrees to take or cause to be taken such
further actions to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments, and to use all reasonable
efforts to obtain such consents, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this Agreement, whether before, at or after the closing of transactions
contemplated by this Agreement, provided that neither Party shall be obligated
to make payments or incur obligations to third parties or governmental agencies
in connection therewith except to pay such Party's reasonable expenses or to pay
normal fees to governmental agencies.
19.08 Schedules.
The Schedules attached to this Agreement have been prepared to the
best of the Parties' knowledge, information and belief and shall be as complete
as possible as of the date hereof. However, each Party reserves the right to
make revisions, corrections, additions or other changes to any Schedule in a
supplement delivered to the other Party at any time prior to two days prior to
the Closing Date, provided that (i) the Party delivering any such supplement
provides prompt notice of such delivery to the other Party; and (ii) the other
Party consents to such supplement.
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19.09 Place of Transfer of Title and Possession.
Title to and possession of the Assets as of the Closing shall pass to
Buyer in the State of Kansas. Title to and possession of any Equilon Inventory
in Transit as of the Closing shall pass to Buyer at the place where it is then
situated.
19.10 Execution in Counterparts.
This Agreement may be executed simultaneously in several counterparts,
each of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
19.11 Choice of Law.
This Agreement shall be governed by and construed in accordance with
the laws of Texas, without regard to the conflict of laws principles of Texas,
and applicable United States Federal Law.
19.12 Publicity.
At all times prior to the Effective Time, Seller and Buyer shall, and
shall use their reasonable efforts to cause their Affiliates to, cooperate in
the development and distribution of all news releases and other public
disclosures relating to the proposed transactions described in this Agreement,
and to ensure that no such releases or disclosures are made without prior notice
to, and the consent of, the other Party; provided, however, that at all times
prior to the Effective Time and after the Effective Time no news release or
other disclosure whatsoever may disclose the terms of this Agreement unless both
Parties agree to the form and content of such disclosure, each being under no
obligation to agree and having the right to withhold agreement for any reason;
provided, however, that either Party may make all disclosures which, in the
written opinion of counsel, are required under applicable Legal Requirements,
including, but not limited to, regulations of the Securities and Exchange
Commission with such Party giving the other Party as much advance notice thereof
as is feasible.
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19.13 Confidentiality.
(a) Each of Seller and Buyer (and their respective Affiliates)
acknowledges that the information and material, in whatever form, including but
not limited to this Agreement and the Related Agreements (collectively, the
Confidential Information) disclosed or made available to it by, and relating to,
the other (and its Affiliates) prior to the Effective Time is confidential.
Each of Seller and Buyer (and their respective Affiliates) further agrees that
it shall use reasonable efforts not to make disclosure of the Confidential
Information to any Person, other than its members or owners, officers,
employees, advisers and representatives to whom such disclosure is necessary or
convenient for the completion of the transactions contemplated by this
Agreement, or any of the Related Agreements, and except in an arbitration
proceeding as described in Article 15 or as may be required by a court of
competent jurisdiction. Each of Seller and Buyer (and their respective
Affiliates) shall appropriately notify each officer, employee, adviser and
representative to whom any such disclosure is made, that such disclosure is made
in confidence and shall be kept in confidence.
(b) Each of Seller and Buyer (and their respective Affiliates) agrees to
use diligent efforts in accordance with customary and reasonable commercial
practice, and at least with the same degree of skill and care that it would
manifest in protection of its own confidential information, to protect the
Confidential Information.
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(c) Each of the Parties (and their respective Affiliates) agrees to
notify the other promptly, in the event that it becomes aware of the
unauthorized possession or use of the Confidential Information (or any part
thereof) by any third Person, including any of its officers, employees, advisers
or representatives. Each of Seller and Buyer (and their respective Affiliates)
agrees to cooperate with the other in connection with the other's efforts to
terminate or prevent such unauthorized possession or use of its Confidential
Information. Each of Seller and Buyer (and their respective Affiliates) shall
pay the other's reasonable out-of-pocket expenses in so cooperating with the
payor in protecting its Confidential Information, unless the unauthorized
possession or use of the Confidential Information resulted from the willful
misconduct or gross negligence of the Party otherwise entitled to reimbursement
of its expenses.
(d) Each of Seller and Buyer (and their respective Affiliates)
acknowledges that the other will suffer injury for which the other will not have
an adequate remedy at law, in the event of a breach of the provisions of this
Section 19.13, and that the other shall be entitled to injunctive relief as is
reasonably necessary to prevent or curtail such breach, whether actual or
threatened; provided, that, in no event (including, but not limited to, a
willful breach of this Agreement by Seller or Buyer, respectively) shall Seller
or Buyer (or their respective Affiliates) be prevented from exercising all of
the rights granted to it hereunder.
(e) Notwithstanding any other provision of this Agreement, the
obligations of each of Seller and Buyer (and their respective Affiliates) to
maintain the confidentiality of the Confidential Information shall not apply to
any portion of the Confidential Information that:
(i) is or becomes generally available to the public through
no fault of Buyer or any of its representatives, including information in
the public domain;
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(ii) the Buyer receives from a source other than the Seller
without any requirement to keep such information secret;
(iii) the Buyer can prove was in its possession without any
obligation of secrecy at the time of its disclosure; or
(iv) the Buyer develops independently of and without
reference to or use of the Confidential Information.
(a) The provisions of this Section 19.13 shall remain in force
for a period of five (5) years from the Effective Time.
(b) Seller acknowledges and agrees that following the
consummation of the Closing, nothing herein shall restrict the use
by Buyer and its Affiliates of the Refinery Records, the same
becoming the property of the Buyer as a consequence of the
transactions contemplated herein. Except for the Refinery Records,
Buyer shall not use the Confidential Information for any other
purpose than the evaluation of the transactions contemplated
hereunder.
(c) In the event of any inconsistency between the provisions of
this Section 19.13 and the confidentiality provisions of any Related
Agreement the provisions of the Related Agreement shall control with
respect to any matters addressed by such Related Agreement.
(d) At the request of Seller, Buyer shall within twenty (20)
days after receiving such request return to Seller all written
Confidential Information which is not a Refinery Record, including
all photocopies of the same.
19.14 Costs and Expenses.
Except as expressly provided herein, or in any Related Agreement, each
of the parties to this Agreement and the Related Agreements, shall bear its own
expenses incurred in connection with the negotiation, preparation, execution and
Closing of this Agreement, and the Related Agreements, and the transactions
provided for hereby and thereby.
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19.15 Assignment.
Seller may upon notice to Buyer transfer or assign any of its rights
but not its obligations under this Agreement without prior consent of Buyer,
provided that, Seller may, upon notice to Buyer, assign its rights and
obligations under this Agreement to an Affiliate of Seller. Buyer may not
transfer or assign any of its rights or obligations under this Agreement without
the prior written consent of Seller. Even if consent is obtained, no Party may
make an assignment or delegation, above, unless such Party delivers to the other
Party hereto such written assumptions, affirmations and/or legal opinions as
such other Party may reasonably request to preserve their rights and remedies
hereunder. This Agreement shall inure to the benefit of and will be binding
upon the Parties hereto and their respective legal representatives, successors
and permitted assigns.
19.16 Exclusivity.
From now until the Closing or termination of this Agreement in
accordance with its terms, Seller shall not, directly or indirectly, through any
officer, director, shareholder, partner, principal, agent or representative
(including, without limitation, investment bankers, attorneys and accountants),
pursue, encourage or participate in any discussions, arrangements,
understandings or negotiations with any third party (including, without
limitation, providing information with respect to the Refinery or any of the
Assets to such person or other cooperating with such person) with respect to a
sale or transfer of all or any part of the Refinery or any of the Assets.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers or representatives of Buyer, Seller and Guarantor
as of the day and year first above written.
SELLER:
EQUILON ENTERPRISES LLC
By: /s/ J. M. Morgan
-----------------------------------
Name: James M. Morgan
Title: President and Chief Exective Officer
BUYER:
FRONTIER EL DORADO REFINING COMPANY
By: /s/ JRG
------------------------------------
Name: James R. Gibbs
Title: Vice President
GUARANTOR:
FRONTIER OIL CORPORATION
By: /s/ JRG
------------------------------------------
Name: James R. Gibbs
Title: Chairman of the Board, President and Chief
Exective Officer
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$175,000,000
REVOLVING CREDIT AGREEMENT
among
FRONTIER OIL AND REFINING COMPANY,
as Borrower
and
THE LENDERS NAMED HEREIN
and
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent, Documentation Agent and Lead Arranger
and
PARIBAS,
as Syndication Agent and Lead Arranger
November 16, 1999
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Table of Contents
Page
ARTICLE 1. INTERPRETATION AND DEFINITIONS. . . . . . . . . . . . . . 1
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . .1
Section 1.2 Accounting Terms. . . . . . . . . . . . . . . . . 20
Section 1.3 Interpretation. . . . . . . . . . . . . . . . . . 20
ARTICLE 2. COMMITMENTS . . . . . . . . . . . . . . . . . . . . . . .20
Section 2.1 Commitments.. . . . . . . . . . . . . . . . . . . 20
Section 2.2 Fees. . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.3 Mandatory Prepayment of Advances and Pledge
of Cash Collateral . . . . . . . . . . . . . . . 21
Section 2.4 Making Advances . . . . . . . . . . . . . . . . . 21
Section 2.5 Repayment . . . . . . . . . . . . . . . . . . . . 23
Section 2.6 Interest. . . . . . . . . . . . . . . . . . . . . 23
Section 2.7 Prepayments . . . . . . . . . . . . . . . . . . . 24
Section 2.8 Voluntary Conversion of Advances. . . . . . . . . 24
Section 2.9 Issuance of Letters of Credit . . . . . . . . . . 25
Section 2.10 Drawing and Reimbursement . . . . . . . . . . . . 25
Section 2.11 Obligations Absolute. . . . . . . . . . . . . . . 26
Section 2.12 Letter of Credit Fees and Charges . . . . . . . . 26
Section 2.13 Limits of Liability of Agent and Lenders. . . . . 27
Section 2.14 Payments. . . . . . . . . . . . . . . . . . . . . 27
Section 2.15 Computation of Interest and Fees. . . . . . . . . 28
Section 2.16 Payments on Non-Business Days . . . . . . . . . . 28
Section 2.17 Sharing of Payments, Etc. . . . . . . . . . . . . 28
Section 2.18 Evidence of Debt. . . . . . . . . . . . . . . . . 29
ARTICLE 3. YIELD PROTECTION. . . . . . . . . . . . . . . . . . . . .29
Section 3.1 Increased LIBOR Advance Costs . . . . . . . . . . 29
Section 3.2 Illegality. . . . . . . . . . . . . . . . . . . . 29
Section 3.3 Inadequacy of LIBOR . . . . . . . . . . . . . . . 30
Section 3.4 Increased Letter of Credit Costs. . . . . . . . . 30
Section 3.5 Capital Adequacy. . . . . . . . . . . . . . . . . 30
Section 3.6 Funding Losses. . . . . . . . . . . . . . . . . . 31
Section 3.7 Substitution of Lender. . . . . . . . . . . . . . 31
ARTICLE 4. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . .31
Section 4.1 Initial Advance or Letter of Credit . . . . . . . 31
Section 4.2 Advances. . . . . . . . . . . . . . . . . . . . . 34
Section 4.3 Letters of Credit . . . . . . . . . . . . . . . . 35
ARTICLE 5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . .36
Section 5.1 Corporate Existence and Power . . . . . . . . . . 36
Section 5.2 Authorization . . . . . . . . . . . . . . . . . . 36
Section 5.3 Governmental Action . . . . . . . . . . . . . . . 37
Section 5.4 Binding Effect. . . . . . . . . . . . . . . . . . 37
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Section 5.5 Other Information . . . . . . . . . . . . . . . . 37
Section 5.6 Litigation. . . . . . . . . . . . . . . . . . . . 37
Section 5.7 Subsidiaries. . . . . . . . . . . . . . . . . . . 37
Section 5.8 Trademarks, Etc.. . . . . . . . . . . . . . . . . 37
Section 5.9 Fire, Etc.. . . . . . . . . . . . . . . . . . . . 37
Section 5.10 Burdensome Agreements . . . . . . . . . . . . . . 37
Section 5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . 38
Section 5.12 Title to Properties . . . . . . . . . . . . . . . 38
Section 5.13 Ownership . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .38
Section 6.1 Information . . . . . . . . . . . . . . . . . . . 38
Section 6.2 Audits. . . . . . . . . . . . . . . . . . . . . . 39
Section 6.3 Returns and Allowances. . . . . . . . . . . . . . 40
Section 6.4 Other Covenants . . . . . . . . . . . . . . . . . 40
Section 6.5 Performance of Material Contracts . . . . . . . . 40
Section 6.6 Cleanup Period. . . . . . . . . . . . . . . . . . 40
Section 6.7 Dividends, Etc. . . . . . . . . . . . . . . . . . 40
Section 6.8 Use of Advances and Letters of Credit . . . . . . 41
Section 6.9 Amendment, Etc. of Material Contracts . . . . . . 41
ARTICLE 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . .41
Section 7.1 Events of Default . . . . . . . . . . . . . . . . 41
ARTICLE 8. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . .43
Section 8.1 Authorization and Action. . . . . . . . . . . . . 43
Section 8.2 Agent's Reliance, Etc.. . . . . . . . . . . . . . 43
Section 8.3 UBOC and Affiliates . . . . . . . . . . . . . . . 44
Section 8.4 Lender Credit Decision. . . . . . . . . . . . . . 44
Section 8.5 Indemnification . . . . . . . . . . . . . . . . . 44
Section 8.6 Successor Agent . . . . . . . . . . . . . . . . . 44
Section 8.7 Agent as Collateral Holder. . . . . . . . . . . . 45
ARTICLE 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . .46
Section 9.1 Amendments, Etc.. . . . . . . . . . . . . . . . . 46
Section 9.2 Notices, Etc. . . . . . . . . . . . . . . . . . . 46
Section 9.3 No Waiver; Remedies . . . . . . . . . . . . . . . 46
Section 9.4 Costs and Expenses. . . . . . . . . . . . . . . . 47
Section 9.5 Indemnification . . . . . . . . . . . . . . . . . 47
Section 9.6 Right of Setoff . . . . . . . . . . . . . . . . . 48
Section 9.7 Binding Effect. . . . . . . . . . . . . . . . . . 48
Section 9.8 Assignments and Participations. . . . . . . . . . 48
Section 9.9 Governing Law . . . . . . . . . . . . . . . . . . 50
Section 9.10 Headings. . . . . . . . . . . . . . . . . . . . . 50
Section 9.11 Execution in Counterparts . . . . . . . . . . . . 50
Section 9.12 Alternative Dispute Resolution. . . . . . . . . . 51
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Schedule 1: Letter of Credit Banks for Eligible Accounts
Schedule 2: Approved Account Debtors
Schedule 3: Methods of Calculation of Fair-Market Value of Inventory
Exhibit A: Revolving Note
Exhibit B: Security Agreement
Exhibit C: Teletransmission Agreement
Exhibit D: Guaranty
Exhibit E: Stock Pledge Agreement
Exhibit F: Clawback Agreement
Exhibit G: Application and Agreement for Irrevocable Standby
Letter of Credit
Exhibit H: Borrowing Base Certificate
Exhibit I: Assignment and Acceptance
Exhibit J: Notice of Borrowing
Exhibit K: Notice of Conversion/Continuation
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REVOLVING CREDIT AGREEMENT
This Agreement, dated as of November 16, 1999, is entered into by (1)
FRONTIER OIL AND REFINING COMPANY, a Delaware corporation (the "Borrower"), (2)
the financial institutions listed on the signature pages hereof and each other
financial institution that becomes a party hereto pursuant to Section 9.8
(collectively the "Lenders"), (3) UNION BANK OF CALIFORNIA, N.A., a national
banking association, as Administrative Agent (in such capacity, the "Agent"),
Documentation Agent and Lead Arranger, and (4) PARIBAS, a French banking
corporation, as Syndication Agent and Lead Arranger.
ARTICLE 1.
INTERPRETATION AND DEFINITIONS
Section 1.1 Definitions. The terms set forth below, as used herein, shall
have the respective meanings set forth below.
"Accounts" means the unpaid portion of the obligations to the Borrower of
customers of the Borrower to pay for (a) goods sold and shipped (net of
commissions to agents) or (b) services rendered to Conoco Inc. pursuant to the
Resid Processing Agreement. Such obligations shall be deemed to have been paid
when the payment therefor clears the Lockbox Account or, in the case of certain
wire transfers, the Concentration Account (as defined in the Security
Agreement).
"Acquisition Agreement" means the Asset Purchase and Sale Agreement dated as
of October 19, 1999 among Equilon, FEDRC and FOC.
"Advances" has the meaning set forth in Section 2.1.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the equity interests having
ordinary voting power for the election of directors of such Person or to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of equity interests, by contract or otherwise.
"Applicable Base Rate Margin" means the applicable interest-rate margin
determined pursuant to the table set forth below, in accordance with the Pricing
Level in effect from time to time.
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Pricing Level Margin
--------------- ---------------
Pricing Level 1 1.50% per annum
Pricing Level 2 1.75% per annum
Pricing Level 3 2.00% per annum
Pricing Level 4 2.25% per annum
Notwithstanding the foregoing, (a) if the exclusion of Investible Cash from the
calculation done at any time to determine the effective Pricing Level would
cause the effective Pricing Level to be more than one Pricing Level less
favorable for the Borrower than the Pricing Level determined by the inclusion of
Investible Cash in such calculation, then the effective Pricing Level shall be
the Pricing Level that is only one Pricing Level more favorable for the Borrower
than the Pricing Level determined by the exclusion of Investible Cash from such
calculation, and (b) during the period from and including the Closing Date to
but excluding the first anniversary thereof, the Applicable Base Rate Margin
shall be that specified for Pricing Level 3 unless Pricing Level 4 would
otherwise be in effect, in which case that specified for Pricing Level 4.
"Applicable Commitment Fee Rate" means the applicable rate determined
pursuant to the table set forth below, in accordance with the Pricing Level in
effect from time to time.
Pricing Level Rate
--------------- ----------------
Pricing Level 1 0.375% per annum
Pricing Level 2 0.375% per annum
Pricing Level 3 0.500% per annum
Pricing Level 4 0.500% per annum
Notwithstanding the foregoing, (a) if the exclusion of Investible Cash from the
calculation done at any time to determine the effective Pricing Level would
cause the effective Pricing Level to be more than one Pricing Level less
favorable for the Borrower than the Pricing Level determined by the inclusion of
Investible Cash in such calculation, then the effective Pricing Level shall be
the Pricing Level that is only one Pricing Level more favorable for the Borrower
than the Pricing Level determined by the exclusion of Investible Cash from such
calculation, and (b) during the period from and including the Closing Date to
but excluding the first anniversary thereof, the Applicable Commitment Fee Rate
shall be that specified for Pricing Level 3 unless Pricing Level 4 would
otherwise be in effect, in which case that specified for Pricing Level 4.
"Applicable LIBOR Margin" means the applicable interest-rate margin
determined pursuant to the table set forth below, in accordance with the Pricing
Level in effect from time to time.
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Pricing Level Margin
--------------- ---------------
Pricing Level 1 1.50% per annum
Pricing Level 2 1.75% per annum
Pricing Level 3 2.00% per annum
Pricing Level 4 2.25% per annum
Notwithstanding the foregoing, (a) if the exclusion of Investible Cash from the
calculation done at any time to determine the effective Pricing Level would
cause the effective Pricing Level to be more than one Pricing Level less
favorable for the Borrower than the Pricing Level determined by the inclusion of
Investible Cash in such calculation, then the effective Pricing Level shall be
the Pricing Level that is only one Pricing Level more favorable for the Borrower
than the Pricing Level determined by the exclusion of Investible Cash from such
calculation, and (b) during the period from and including the Closing Date to
but excluding the first anniversary thereof, the Applicable LIBOR Margin shall
be that specified for Pricing Level 3 unless Pricing Level 4 would otherwise be
in effect, in which case that specified for Pricing Level 4.
"Applicable LOC Fee Rate" means the applicable rate determined pursuant to
the table set forth below, in accordance with the Pricing Level in effect from
time to time.
Pricing Level Rate
--------------- ----------------
Pricing Level 1 1.125% per annum
Pricing Level 2 1.375% per annum
Pricing Level 3 1.625% per annum
Pricing Level 4 1.875% per annum
Notwithstanding the foregoing, (a) if the exclusion of Investible Cash from the
calculation done at any time to determine the effective Pricing Level would
cause the effective Pricing Level to be more than one Pricing Level less
favorable for the Borrower than the Pricing Level determined by the inclusion of
Investible Cash in such calculation, then the effective Pricing Level shall be
the Pricing Level that is only one Pricing Level more favorable for the Borrower
than the Pricing Level determined by the exclusion of Investible Cash from such
calculation, and (b) during the period from and including the Closing Date to
but excluding the first anniversary thereof, the Applicable LOC Fee Rate shall
be that specified for Pricing Level 3 unless Pricing Level 4 would otherwise be
in effect, in which case that specified for Pricing Level 4.
"Applicable Reference Rate Margin" means the applicable interest-rate margin
determined pursuant to the table set forth below, in accordance with the Pricing
Level in effect from time to time.
Pricing Level Margin
--------------- ---------------
Pricing Level 1 0.25% per annum
Pricing Level 2 0.50% per annum
Pricing Level 3 0.75% per annum
Pricing Level 4 1.00% per annum
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Notwithstanding the foregoing, (a) if the exclusion of Investible Cash from the
calculation done at any time to determine the effective Pricing Level would
cause the effective Pricing Level to be more than one Pricing Level less
favorable for the Borrower than the Pricing Level determined by the inclusion of
Investible Cash in such calculation, then the effective Pricing Level shall be
the Pricing Level that is only one Pricing Level more favorable for the Borrower
than the Pricing Level determined by the exclusion of Investible Cash from such
calculation, and (b) during the period from and including the Closing Date to
but excluding the first anniversary thereof, the Applicable Reference Rate
Margin shall be that specified for Pricing Level 3 unless Pricing Level 4 would
otherwise be in effect, in which case that specified for Pricing Level 4.
"Assignment and Acceptance" means an Assignment and Acceptance substantially
in the form of Exhibit I.
"Authorized Officer" means, with respect to any action, an officer of the
Borrower authorized to take such action pursuant to resolutions of the Borrower
delivered to the Agent from time to time.
"Base Rate" means, for any Interest Period for each Base Rate Advance that is
part of the same Borrowing, the rate of interest per annum equal to the sum of
(a) the Term Federal Funds Rate for such Interest Period plus (b) 0.5% per
annum.
"Base Rate Advance" means, at any time, any Advance that bears interest as
provided in Section 2.6(a)(iii).
"Borrowing" means a borrowing by the Borrower consisting of Advances of the
same Type made by the Lenders on the same day.
"Borrowing Base" means, at any time of determination, the difference between
(a) the sum of:
(i) 95% of the amount of Eligible Accounts backed by letters of credit
issued by banks listed on Schedule 1, but only to the extent, with respect to
any such bank, that the aggregate face amount of all letters of credit backing
Eligible Accounts issued by such bank that are outstanding at any time does not
exceed the applicable amount set forth for such bank on Schedule 1 (provided,
however, that the Agent reserves the right in its sole discretion to make
exceptions to the foregoing by notification of the same to the Borrower in
writing);
(ii) 90% of the amount of Eligible Accounts receivable from approved
account debtors listed from time to time on Schedule 2 or as to which the
Majority Lenders through the Agent have otherwise given their prior written
approval, which listing or approval may be withdrawn at any time by the Majority
Lenders through the Agent by written notification to the Borrower (such Eligible
Accounts to include those receivable from account debtors that are Governmental
Persons that have complied with the granting and perfection provisions of the
federal Assignment of Claims Act of 1940);
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(iii) 85% of Eligible Accounts that do not fall within clause (i) or (ii)
above (provided, however, that the aggregate amount of Eligible Accounts
consisting of Accounts receivable from Conoco Inc. for the rendering of services
pursuant to the Resid Processing Agreement, before making the calculations set
forth in clauses (i) and (ii) above and in this clause (iii) for the purpose of
determining the aggregate amount of Eligible Accounts to be included in the
Borrowing Base, shall not exceed $600,000);
(iv) 80% of positive Eligible Exchange Balances (provided, however, that
the aggregate amount of Eligible Exchange Balances, before making the
calculation set forth in this clause (iv) for the purpose of determining the
aggregate amount of Eligible Exchange Balances to be included in the Borrowing
Base Certificate, shall not exceed $8,500,000);
(v) 70% of Eligible Inventory (subject to the proviso in clause (vi)
below); and
(vi) 70% of Eligible Prepaid Crude Purchases (provided, however, that (A)
the aggregate amount of Eligible Prepaid Crude Purchases, before making the
calculation described in this clause (vi) for the purpose of determining the
aggregate amount of Eligible Prepaid Crude Purchases to be included in the
Borrowing Base, shall not exceed $18,000,000 and (B) the aggregate amount of
Eligible Inventory and Eligible Prepaid Crude Purchases, before making the
calculations described in clause (v) above and in this clause (vi) for the
purpose of determining the aggregate amount of Eligible Inventory and Eligible
Prepaid Crude Purchases to be included in the Borrowing Base, shall not exceed
$125,000,000);
minus (b) the amount, if any, by which the aggregate amount charged for federal
excise taxes on motor fuels that is included in the sum of the amounts
determined pursuant to clauses (a)(i), (ii) and (iii) above exceeds the lesser
of (i) $3,000,000 and (ii) 5% of such sum.
"Borrowing Base Certificate" means a certificate of the Borrower, together
with attached schedules, substantially in the form of Exhibit H.
"Business Day" means a day of the year on which banks are not required or
authorized to close in Los Angeles and, if the applicable Business Day relates
to any LIBOR Advances, on which dealings are carried on in the London interbank
market.
"Calculation Period" means, for purposes of calculating any financial measure
with respect to FOC and its Subsidiaries, any period of four successive fiscal
quarters of FOC ending on the last day of a fiscal quarter of FOC.
"Capitalized Leases" has the meaning set forth in clause (e) of the
definition of Debt in this Section 1.1.
"Cash Equivalents" means investments having a maturity of not greater than 3
months from the date of acquisition thereof in (a) obligations issued or
unconditionally guaranteed by the United States of America or any agency
thereof, (b) certificates of deposit of any commercial bank organized under the
laws of the United States of America or any state thereof and having combined
capital and surplus of at least $1 billion, (c) commercial paper with a rating
of at least Prime-1 by Moody's Investors Service, Inc. or A-1 by Standard &
Poor's Ratings Group or (d) other investments agreed to from time to time
between the Borrower and the Agent.
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"Cheyenne Refinery" means FRI's crude oil refinery in Cheyenne, Wyoming.
"Claim" means any claim, cause of action, action, dispute or controversy
between any of the Credit Parties, on the one hand, and the Agent and/or the
Lenders, on the other hand, whether sounding in contract, tort or otherwise,
that arises out of or relates to (a) any of the Credit Documents, (b) any
negotiations or communications relating to any of the Credit Documents, whether
or not incorporated into the Credit Documents or any indebtedness evidenced
thereby, or (c) any alleged agreements, promises, representations or
transactions in connection with any of the foregoing.
"Clawback Agreement" means the Clawback Agreement executed by FOC in favor of
the Agent substantially in the form of Exhibit F.
"Closing Date" means the date on which the first Advance is made, or Letter
of Credit is issued, pursuant to this Agreement.
"Cogen Lease" means the Sub-Sublease Agreement (Cogeneration Facility) dated
as of October 19, 1999 between FEDRC and Equilon.
"Collateral" means, collectively, (a) the "Collateral" as defined in the
Security Agreement and (b) the "Collateral" as defined in the Stock Pledge
Agreement.
"Commercial Finance Audit" means an audit of the Borrower's books, records
and accounting procedures conducted by the Agent.
"Commitment" has the meaning set forth in Section 2.1.
"Commitment Termination Date" means November 16, 2002; provided, however,
that, upon (a) written request by the Borrower not later than the date that is 1
year before the Commitment Termination Date in effect from time to time and (b)
written notice of extension of the Commitment Termination Date by the Agent to
the Borrower, the Commitment Termination Date may be extended from time to time
by the Agent and the Lenders, in their sole and absolute discretion, for up to
an additional year.
"Convert," "Conversion" and "Converted" each refer to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.8, 3.2
or 3.3.
"Credit Documents" means this Agreement, the Notes, the Security Agreement,
the Teletransmission Agreement, the Guaranty, the Stock Pledge Agreement, the
Clawback Agreement, any Letter of Credit Requests that are executed by the
Borrower from time to time, any Assignments and Acceptances that are executed
from time to time, the FOC Demand Note, any "Term Notes" (as defined in the
Security Agreement) that are executed by FOC from time to time, the Fee Letters
and the Letters of Credit.
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"Credit Parties" means the Borrower, FOC, FHI, FRMI, FRI, FEDRC and FPI.
"Crude Supply Agreement" means the Foreign Crude Supply Agreement, ETCo
Contract No. CSI56116, dated October 19, 1999 between the Borrower and Equiva.
"Debt" of any Person means, at any date without duplication, (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments; (c)
all obligations of such Person to pay the deferred purchase price of property or
services (excluding normal trade payables not overdue that are incurred in the
ordinary course of such Person's business); (d) all indebtedness created or
arising under any conditional-sale or other title-retention agreement with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of a default are
limited to repossession or sale of such property); (e) all obligations of such
Person as lessee under leases that have been or should be, in accordance with
generally accepted accounting principles, recorded as capitalized leases; (f)
all obligations, contingent or otherwise of such Person under acceptance,
letter-of-credit or similar facilities; (g) all obligations of such Person to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of such Person or any warrants, rights or options to acquire such capital
stock, valued, in the case of redeemable preferred stock, at the greater of its
voluntary and involuntary liquidation preference plus accrued and unpaid
dividends; (h) all executory obligations of such Person in respect of
interest-rate swap agreements and other similar agreements designed to hedge
against fluctuations in interest rates; (i) all Debt referred to in any of
clauses (a) through (h) above that is guaranteed directly or indirectly by such
Person, or in effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (iii) to advance or supply funds to maintain working capital
or equity capital of another Person or otherwise to maintain the net worth or
solvency of such Person (including any agreement in the nature of a support
arrangement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (iv) otherwise to assure
a creditor against loss; (j) all Debt referred to in any of clauses (a) through
(h) above secured by (or for which the holder of such Debt has an existing
right, contingent or otherwise, to be secured by) any Lien on property
(including accounts receivable and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt; and (k) any accumulated funding deficiency (as defined in Section 412(a)
of the Internal Revenue Code of 1986) for a Plan of such Person.
"Default" means any Event of Default or any event or condition that, with the
giving of notice or the lapse of time, or both, would become an Event of
Default.
"Default Rate" has the meaning set forth in Section 2.6(b).
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"El Dorado Refinery" means the crude oil refinery in El Dorado, Kansas being
acquired by FEDRC from Equilon.
"Eligible Accounts" means those Accounts of the Borrower that (a) are within
60 days of the date of the related invoice, (b) are less than 30 days past-due,
(c) are (together with the relevant "Related Contracts," as defined in the
Security Agreement) covered by a perfected first-priority security interest in
favor of the Agent and (d) comply with all of the representations, warranties
and covenants of the Borrower in the Credit Documents; provided, however, that
Eligible Accounts shall not include the following:
(i) Accounts with respect to which the account debtor is an officer,
employee or agent of the Borrower;
(ii) Accounts with respect to which goods have been placed on consignment,
guaranteed sale or other terms by reason of which the payment by the account
debtor may be conditional;
(iii) Accounts with respect to which the account debtor is not a Person
resident in the United States;
(iv) Accounts with respect to which the account debtor is the United
States of America or any department, agency or instrumentality of the United
States of America; provided, however, that an Account shall not be deemed
ineligible by reason of this clause (iv) if the Borrower has taken the necessary
steps, to the satisfaction of the Agent evidenced in writing, to perfect a
first-priority security interest in such Account in favor of the Agent in
compliance with the Assignment of Claims Act of 1940 (31 U.S.C. Sec. 3727);
(v) Accounts with respect to which the account debtor is a state of the
United States of America or a county, city, town, municipality or other division
of any such state; provided, however, that an Account shall not be deemed
ineligible by reason of this clause (v) if the Borrower has taken the necessary
steps, to the satisfaction of the Agent evidenced in writing, to perfect a
first-priority security interest in such Account in favor of the Agent in
compliance with all applicable Governmental Rules;
(vi) Accounts with respect to which the account debtor is an Affiliate of
the Borrower;
(vii) Accounts to whose account debtor the Borrower is or is to become
liable, but only if such liability does not relate to any such Account and only
to the extent of such liability;
(viii) that portion of the aggregate Accounts owed to the Borrower by any
single account debtor that exceeds 10% (or, in the case of Equiva or Citgo
Petroleum Corporation, 15%, provided that said percentage may be reduced by the
Agent at any time by written notice of the same to the Borrower) of the amount
of all of the Accounts of the Borrower, except as approved by the Agent in
writing from time to time;
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<PAGE>
(ix) Accounts not denominated in United States dollars;
(x) Accounts with respect to which an invoice has not been sent within 2
Business Days after the effective date of any Borrowing Base Certificate in
which such Accounts would otherwise be included for purposes of calculation of
the Borrowing Base;
(xi) Accounts due from a particular account debtor if any Account due from
such account debtor does not comply with the Borrower's representations and
warranties in Section 8 of the Security Agreement and if the Agent notifies the
Borrower that such Accounts are ineligible;
(xii) Accounts with respect to which the account debtor disputes liability
or makes any claim, in whole or in part, but only (A) to the extent that the
aggregate amount in dispute and/or as to which claim is made for all such
Accounts exceeds $250,000, (B) to the extent that the aggregate amount of all
such Accounts exceeds $500,000 or (C) if the amount in dispute or claimed cannot
be quantified reasonably accurately;
(xiii) Accounts due from a particular account debtor if any event of the
types described in Section 7.1(e) occurs with respect to such account debtor;
(xiv) Accounts due from a particular account debtor if such account debtor
suspends normal business operations; and
(xv) Accounts that are not satisfactory to the Agent, in its sole
discretion, using reasonable business judgment.
Notwithstanding clauses (vi) and (vii) above, if (A) the obligations of an
account debtor under an Account are supported by a letter of credit in form and
substance satisfactory (including with respect to all documentary and other
requirements of such letter of credit) to the Majority Lenders in their sole
discretion, issued by a bank satisfactory to the Majority Lenders in their sole
discretion, (B) the proceeds of such letter of credit have been assigned to the
Agent as collateral for the Obligations pursuant to documentation in form and
substance satisfactory to the Majority Lenders in their sole discretion and (C)
such letter of credit has been delivered to the Agent, then such Account shall
not be excluded from Eligible Accounts pursuant to such clause (vi) or (vii).
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<PAGE>
"Eligible Exchange Balances" means the aggregate amount of all of the
Borrower's positive Exchange Balances with other Persons, after deducting
therefrom (a) the amount equal to the sum of the values of all obligations of
the Borrower to deliver petroleum products, to pay money or to give other value
that the Borrower owes or incurs whenever it trades, lends, borrows or exchanges
petroleum products in the ordinary course of business with Persons other than
its Affiliates, the value thereof being the lesser of (i) the cost to the
Borrower, as set forth in the books and records of the Borrower (valued on a
first-in, first-out basis in accordance with generally accepted accounting
principles), of like petroleum products for the previous month and (ii) the
fair-market value of like petroleum products as determined in accordance with
the methods prescribed in Schedule 3, (b) the amount of all discounts,
allowances, rebates, credits and adjustments to such Exchange Balances, (c) the
amount billed for or representing retainage, if any, with respect to such
Exchange Balances, until all prerequisites to the immediate payment of retainage
have been satisfied, and (d) all Exchange Balances owing by any Affiliate of the
Borrower; provided, however, that Eligible Exchange Balances shall not include
any Exchange Balance with respect to which: (i) the Agent does not have a
perfected first-priority security interest; (ii) any representation, warranty or
covenant contained in this Agreement or any other Credit Document has been
breached; (iii) the customer or trading partner has disputed liability, or made
any claim to the Borrower with respect to such Exchange Balance or with respect
to any other Exchange Balance due from such customer or trading partner, other
than for a minimal adjustment in the ordinary course of business and in
accordance with regular commercial practice; or (iv) any event of a type
described in Section 7.1(e) has occurred with respect to the customer or trading
partner, or the customer or trading partner has suspended normal business
operations.
"Eligible Inventory" means all of the Borrower's Inventory that (a) is
covered by a perfected first-priority security interest in favor of the Agent
(subject only to storage, transportation and other nonconsensual Liens created
by operation of law or tariff in favor of carriers, transporters and
warehousemen, securing only amounts due to such carriers, transporters and
warehousemen in respect of carriage, transportation and storage services with
respect to such Inventory, in each case securing obligations not then in
default), (b) complies with all of the Borrower's representations, warranties
and covenants in the Credit Documents, (c) is not obsolete, unsalable, damaged
or otherwise unfit for sale or further processing in the ordinary course of
business, (d) is currently salable in compliance with all applicable
Governmental Rules and without the need for any Governmental Action, (e) is held
at locations set forth on Schedule 1 to the Security Agreement, (f) is listed on
Schedule 3 attached to the most recent Borrowing Base Certificate delivered to
the Lenders and (g) is otherwise satisfactory to the Agent, in its sole
discretion, using reasonable business judgment, all such Inventory to be valued,
at any time of determination, at the lower of (i) fair-market value as
determined in accordance with the methods prescribed in Schedule 3 and (ii)
cost, as set forth in the books and records of the Borrower (valued on a
first-in, first-out basis, in accordance with generally accepted accounting
principles).
"Eligible Prepaid Crude Purchases" means the aggregate amount of all of the
Borrower's Prepaid Crude Purchases, after deducting therefrom any amounts
payable by the Borrower to Equiva in respect of such Prepaid Crude Purchases or
otherwise; provided, however, that Eligible Prepaid Crude Purchases shall not
include any Prepaid Crude Purchase with respect to which: (a) the Agent does
not have a perfected first-priority security interest; (b) any representation,
warranty or covenant contained in this Agreement or any other Credit Document
has been breached; (c) Equiva has disputed liability or made any claim to the
Borrower, other than for a minimal adjustment in the ordinary course of business
and in accordance with regular commercial practice; (d) during the period of the
existence of such Prepaid Crude Purchase, any event of a type described in
Section 7.1(e) has occurred with respect to Equiva, or Equiva has suspended
normal business operations or (d) Equilon and Motiva Enterprises LLC, a Delaware
limited liability company ("Motiva"), are not jointly and severally liable in a
manner acceptable to the Agent (provided that the condition that Equilon and
Motiva be jointly and severally liable for such Prepaid Crude Purchase shall be
deemed to be met in any event only if and so long as both Equilon and Motiva
maintain commercial paper ratings of at least A-1 from Moody's Investors
Service, Inc. and at least P-1 from Standard & Poor's Ratings Group).
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<PAGE>
"ENSR" means ENSR Consulting and Engineering.
"Environmental Law" means any Governmental Rule relating to pollution or
protection of the environment or any natural resource, to any Hazardous Material
or to health or safety, including any Governmental Rule relating to the use,
handling, transportation, treatment, storage, disposal, release or discharge of
any Hazardous Material.
"Environmental Permit" means any Governmental Action required under any
Environmental Law.
"Environmental Proceeding" means any action, suit, written demand, demand
letter, claim, notice of noncompliance or violation, notice of liability or
potential liability, investigation, proceeding, consent order or consent
agreement relating in any way to any Environmental Law, any Environmental Permit
or any Hazardous Material or arising from alleged injury or threat to health,
safety or the environment, including (a) by any Governmental Person for
enforcement, cleanup, removal, response, remedial or other actions or damages
and (b) by any Person for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Equilon" means Equilon Enterprises LLC, a Delaware limited liability
company.
"Equiva" means Equiva Trading Company, a Delaware general partnership.
"Eurocurrency Liabilities" has the meaning set forth in Regulation D of the
Board of Governors of the Federal Reserve System.
"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Balance" means, with respect to any Person (other than any
Affiliate of the Borrower), the amount equal to the sum of the values of all
rights to receive petroleum products, to receive payment of money or to receive
other value that the Borrower generates, acquires, possesses or owns whenever
the Borrower trades, lends, borrows or exchanges petroleum products in the
ordinary course of business with such Person, the value of such petroleum
products being the lesser of (a) the cost to the Borrower, as set forth in the
books and records of the Borrower (valued on a first-in, first-out basis in
accordance with generally accepted accounting principles), of like petroleum
products for the previous month and (b) the fair-market value of like petroleum
products as determined in accordance with the methods prescribed in Schedule 3.
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<PAGE>
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"FEDRC" means Frontier El Dorado Refining Company, a Delaware corporation
that is wholly owned by FRMI.
"FEDRC Processing Agreement" means the Processing Agreement dated as of
November 16, 1999 between the Borrower and FEDRC.
"Fee Letters" means (a) the letter agreement dated November 16, 1999 between
the Borrower and UBOC concerning fees payable by the Borrower to UBOC for its
own account with respect to this Agreement and (b) the letter agreement dated
November 16, 1999 between the Borrower and Paribas concerning fees payable by
the Borrower to Paribas for its own account with respect to this Agreement.
"FHI" means Frontier Holdings Inc., a Delaware corporation that is wholly
owned by FOC.
"FOC" means Frontier Oil Corporation, a Wyoming corporation.
"FOC Demand Note" means (a) the Eighth Amended and Restated Demand Promissory
Note dated November 16, 1999, in the face amount of $20,000,000, issued by FOC
in favor of the Borrower and (b) all restatements, replacements and extensions
of such Note.
"FOC EBITDA" means, for FOC and its consolidated Subsidiaries with respect to
any fiscal period, net income (or net loss) plus the sum of (a) net interest
expense, (b) income tax expense, (c) depreciation expense, (d) amortization
expense and (e) noncash write-downs or write-offs of assets, less the sum of (a)
net extraordinary gains included in net income and (b) net gains on the sale of
assets other than asset sales in the ordinary course of business.
"FOC Funded Debt" means, with respect to FOC and its Subsidiaries on a
consolidated basis, (a) all Debt thereof for borrowed money, including the Debt
of the Borrower hereunder and the Debt incurred by FOC pursuant to the FOC Note
Offering, plus (b) the principal portion of all Capitalized Leases of FOC and
its Subsidiaries plus (c) all Debt of any type described in clause (a) or (b)
above that is guaranteed directly or indirectly by FOC or any Subsidiary or that
is in effect guaranteed by FOC or any Subsidiary pursuant to an agreement of any
type described in clause (i) of the definition of "Debt" in this Section 1.1.
"FOC Note Offering" means the offering by FOC pursuant to the Prospectus of
at least $190,000,000 in principal amount of its Senior Notes Due 2009.
"FPI" means Frontier Pipeline Inc., a Delaware corporation that is wholly
owned by FRMI.
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<PAGE>
"FRI" means Frontier Refining Inc., a Delaware corporation that is wholly
owned by FRMI.
"FRI Processing Agreement" means the Processing Agreement dated as of June
30, 1998 between the Borrower and FRI.
"FRMI" means Frontier Refining & Marketing Inc., a Delaware corporation that
is wholly owned by FHI.
"Governmental Action" means any authorization, approval, consent, waiver,
exception, license, filing, registration, permit, notarization, special lease or
other requirement of any Governmental Person.
"Governmental Person" means, whether domestic or foreign, any national,
federal, state or local government, any political subdivision thereof, or any
governmental, quasi- governmental, judicial, public or statutory
instrumentality, authority, body or entity, including any central bank and any
comparable authority.
"Governmental Rule" means any treaty, law, rule, regulation, ordinance,
order, code, interpretation, judgment, writ, injunction, decree, determination,
directive, award, guideline, request, policy or similar form of decision of any
Governmental Person or arbitrator.
"Guarantors" means FHI, FRMI, FRI, FEDRC and FPI.
"Guaranty" means the Guaranty executed by the Guarantors in favor of the
Lenders and the Agent substantially in the form of Exhibit D.
"Hazardous Material" means any substance or material that is described as a
toxic or hazardous substance, waste or material or as a pollutant, contaminant
or infectious waste, or words of similar import, in any Environmental Law,
including asbestos, petroleum (including crude oil or any fraction thereof,
natural gas, natural-gas liquid, liquefied natural gas or synthetic gas usable
for fuel, or any mixture of any of the foregoing), polychlorinated biphenyls,
urea formaldehyde, radon gas, radioactive matter, and any chemical that may
cause cancer or reproductive toxicity.
"Indenture" means the Indenture dated as of November 12, 1999 between FOC and
Chase Bank of Texas, National Association, as Trustee.
"Interest Period' means, with respect to each LIBOR Advance or Base Rate
Advance making up part of the same Borrowing, the period commencing on the date
of such Advance or the date of the Conversion of any Advance into such an
Advance and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each Interest Period for LIBOR Advances shall
be any number of days between 7 days and 1 month, or 2, 3 or 6 whole months, as
the Borrower may select upon notice (by means of a Notice of Borrowing or a
Notice of Conversion/Continuation) received by the Agent not later than 11:00
a.m., Los Angeles time, on the third Business Day before the first day of such
Interest Period, and the duration of each Interest Period for Base Rate Advances
shall be any number of days between 1 day and 7 days, as the Borrower may select
upon notice (by means of a Notice of Borrowing or a Notice of
Conversion/Continuation) received by the Agent not later than 1:30 p.m., Los
Angeles time, on the Business Day immediately preceding the first day of such
Interest Period; provided, however, that
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(a) Interest Periods commencing on the same date for Advances making up
part of the same Borrowing shall be of the same duration;
(b) whenever the last day of an Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, unless, if such Interest
Period relates to LIBOR Advances, such extension would cause the last day of
such Interest Period to occur in the next succeeding calendar month, in which
case the last day of such Interest Period shall occur on the next preceding
Business Day;
(c) not more than 5 different Interest Periods may be outstanding at any
one time; and
(d) no Interest Period may end after the Commitment Termination Date.
"Inventory" has the meaning set forth in Section 1(a) of the Security
Agreement.
"Inventory Audit" means an audit of the physical properties and volumes,
using standard practices and standard tank-gauging wire-line devices or another
method acceptable to the Agent, of all or a portion, as determined by the Agent
from time to time, of the Borrower's Inventory, conducted by an independent
consulting firm selected by the Agent.
"Investible Cash" means, at any time of determination, the smallest aggregate
amount of cash and Cash Equivalents held by FOC on any day during the most
recently completed fiscal quarter with respect to which FOC has delivered
financial statements to the Lenders pursuant to Section 7(j) of the Clawback
Agreement.
"Issuing Bank" means UBOC in its capacity as issuer of Letters of Credit
hereunder. Each reference in this Agreement to a Lender or the Lenders shall be
deemed to include the Issuing Bank.
"Lead Arrangers" means UBOC and Paribas in their capacity as Lead Arrangers
of the credit facilities provided under this Agreement.
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<PAGE>
"Letter of Credit Amount" means the stated maximum amount available to be
drawn under a particular Letter of Credit, as such amount may be reduced or
reinstated from time to time in accordance with the terms of such Letter of
Credit.
"Letter of Credit Request" means a request by the Borrower for the issuance
of a Letter of Credit, on the Issuing Bank's standard form of Application and
Agreement for Irrevocable Standby Letter of Credit, the current form of which is
attached hereto as Exhibit G, and containing terms and conditions satisfactory
to the Agent in its sole discretion.
"Letter of Credit Usage" means, at any time of determination, the sum of:
(a) 100% of the Letter of Credit Amount of all outstanding Letters of
Credit other than those issued to support the purchase of Ratable Crude;
(b) with respect to the period from and including the date of issuance of
any outstanding Letter of Credit issued to support the purchase of Ratable Crude
by the Borrower to and including the last day of the month preceding the month
in which such Ratable Crude is to be delivered, 0% of the Letter of Credit
Amount of such Letter of Credit;
(c) with respect to the first through the tenth day, inclusive, of the
month of delivery of any Ratable Crude to the Borrower, 35% of the Letter of
Credit Amount of any outstanding Letter of Credit issued to support the purchase
of such Ratable Crude by the Borrower;
(d) with respect to the eleventh through the twentieth day, inclusive, of
the month of delivery of any Ratable Crude to the Borrower, 70% of the Letter of
Credit Amount of any outstanding Letter of Credit issued to support the purchase
of such Ratable Crude by the Borrower;
(e) with respect to the period from the twenty-first day of the month of
delivery of any Ratable Crude to the Borrower through the date of payment for
such Ratable Crude, inclusive, 100% of the Letter of Credit Amount of any
outstanding Letter of Credit issued to support the purchase of such Ratable
Crude by the Borrower; and
(f) with respect to the period from the date of payment for any Ratable
Crude through the date of expiration or cancellation (as determined by the
Agent) of any outstanding Letter of Credit issued to support the purchase of
such Ratable Crude by the Borrower, inclusive, 20% of the Letter of Credit
Amount of such Letter of Credit.
Upon not less than 3 days' prior written notice from the Agent to the Borrower,
the percentages set forth above may be adjusted by the Agent from time to time
at the Agent's discretion if at any time any Commercial Finance Audit reveals
that Ratable Crude delivery patterns are materially different from those
determined pursuant to the most recent Commercial Finance Audit performed from
time to time.
"Letters of Credit" has the meaning set forth in Section 2.1.
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<PAGE>
"LIBOR Advance" means, at any time, any Advance that bears interest as
provided in Section 2.6(a)(ii).
"LIBOR" means, for any Interest Period for each LIBOR Advance that is part of
the same Borrowing, the rate per annum obtained by dividing (a) the rate of
interest per annum (rounded upward, if necessary, to the nearest 1/100th of 1%)
at which U.S.-dollar deposits would be offered to UBOC outside the United States
2 Business Days before the first day of such Interest Period, in an amount
comparable to the amount of UBOC's LIBOR Advance for such Interest Period and
for a term coinciding with such Interest Period, by (b) a percentage equal to
100% minus the LIBOR Reserve Percentage for such Interest Period.
"LIBOR Reserve Percentage" means, for any Interest Period for each LIBOR
Advance that is part of the same Borrowing, the reserve percentage applicable on
any day not more than 2 Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve requirement)
for UBOC with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on LIBOR Advances
is determined) having a term equal to such Interest Period.
"Lien" means, with respect to any asset, (a) any lien, charge, option, claim,
mortgage, security interest, pledge or other encumbrance or any other type of
preferential arrangement of any kind in respect of such asset or (b) the
interest of a vendor or lessor under any conditional-sale agreement, capital
lease or other title-retention agreement relating to such asset.
"Lockbox Account" has the meaning set forth in the Security Agreement.
"Majority Lenders" means, at any time, Lenders (one of which shall be the
Agent) owed at least 51% of the Obligations then outstanding or, if no
Obligations are then outstanding, Lenders (one of which shall be the Agent)
having at least 51% of the Commitments.
"Material Contracts" means the FRI Processing Agreement, the FEDRC Processing
Agreement, the Crude Supply Agreement, the Offtake Agreement, the Operating
Agreement and the Cogen Lease.
"Note" means a Revolving Note of the Borrower payable to the order of a
Lender, substantially in the form of Exhibit A, evidencing the indebtedness of
the Borrower to such Lender resulting from the Advances made by such Lender from
time to time.
"Notice of Borrowing" has the meaning set forth in Section 2.4(a).
"Notice of Conversion/Continuation" has the meaning set forth in Section 2.8.
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<PAGE>
"Obligations" means all payment obligations of the Borrower outstanding from
time to time under this Agreement and the other Credit Documents, whether for
principal, reimbursement of drawings under Letters of Credit (including
contingent reimbursement obligations under outstanding Letters of Credit),
interest, fees, expenses, indemnification or otherwise.
"Offtake Agreement" means the Frontier Products Offtake Agreement, El Dorado
Refinery, dated as of October 19, 1999 between the Borrower and Equiva.
"Old Credit Agreement" means the Amended and Restated Revolving Credit and
Letter of Credit Agreement dated as of June 30, 1997 among the Borrower, each of
UBOC, Paribas and Bank of Scotland, and UBOC, as agent for such banks.
"Operating Agreement" means the Operating Agreement (Conoco Pipe Line Company
and Frontier Pipeline Inc. Joint Interest Pipeline System) dated September 13,
1989 between Conoco Pipe Line Company and FPI, as amended to the date hereof.
"Paribas" means Paribas, a French banking corporation, in its individual
capacity.
"Person" means an individual, a corporation, a limited liability company, a
partnership, an association, a business trust or any other entity or
organization, including any Governmental Person.
"Prepaid Crude Purchases" means the amount equal to the sum of the values of
all rights to receive crude oil that the Borrower acquires, possesses or owns
whenever the Borrower purchases crude oil in the ordinary course of business
from Equiva, the value thereof being the lesser of (a) the cost to the Borrower
for such crude oil, as set forth in the books and records of the Borrower, and
(b) the fair-market value of such crude oil, as determined in accordance with
the methods prescribed in Schedule 3.
"Pricing Level" means Pricing Level 1, Pricing Level 2, Pricing Level 3 or
Pricing Level 4.
"Pricing Level 1" means the Pricing Level that applies to each Advance
(whether then outstanding or thereafter made) on and after, to each Letter of
Credit (whether then outstanding or thereafter issued) on and after, and to each
Commitment on and after, the date of receipt by UBOC of a schedule of
computations referred to in Section 7(j)(i) or (ii) of the Clawback Agreement if
the ratio of (a) the difference between FOC Funded Debt and Investible Cash as
of the end of the fiscal quarter ended immediately before that date to (b) FOC
EBITDA for the Calculation Period ended on the last day of that fiscal quarter
was less than 2.0:1.0, as demonstrated by that schedule.
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<PAGE>
"Pricing Level 2" means the Pricing Level that applies to each Advance
(whether then outstanding or thereafter made) on and after, to each Letter of
Credit (whether then outstanding or thereafter issued) on and after, and to each
Commitment on and after, the date of receipt by UBOC of a schedule of
computations referred to in Section 7(j)(i) or (ii) of the Clawback Agreement if
the ratio of (a) the difference between FOC Funded Debt and Investible Cash as
of the end of the fiscal quarter ended immediately before that date to (b) FOC
EBITDA for the Calculation Period ended on the last day of that fiscal quarter
was equal to or greater than 2.0:1.0 but less than 2.5:1.0, as demonstrated by
that schedule.
"Pricing Level 3" means the Pricing Level that applies to each Advance
(whether then outstanding or thereafter made) on and after, to each Letter of
Credit (whether then outstanding or thereafter issued) on and after, and to each
Commitment on and after, the date of receipt by UBOC of a schedule of
computations referred to in Section 7(j)(i) or (ii) of the Clawback Agreement if
the ratio of (a) the difference between FOC Funded Debt and Investible Cash as
of the end of the fiscal quarter ended immediately before that date to (b) FOC
EBITDA for the Calculation Period ended on the last day of that fiscal quarter
was equal to or greater than 2.5:1.0 but less than 3.0:1.0, as demonstrated by
that schedule.
"Pricing Level 4" means the Pricing Level that applies to each Advance
(whether then outstanding or thereafter made) on and after, to each Letter of
Credit (whether then outstanding or thereafter issued) on and after, and to each
Commitment on and after, the date of receipt by UBOC of a schedule of
computations referred to in Section 7(j)(i) or (ii) of the Clawback Agreement if
the ratio of (a) the difference between FOC Funded Debt and Investible Cash as
of the end of the fiscal quarter ended immediately before that date to (b) FOC
EBITDA for the Calculation Period ended on the last day of that fiscal quarter
was equal to or greater than 3.0:1.0, as demonstrated by that schedule.
"Prospectus" means the Prospectus dated November 9, 1999 relating to the FOC
Note Offering, as amended to include pricing information with respect to the
notes being offered.
"Ratable Crude" means crude oil (a) delivered to the Borrower at either
Refinery by common-carrier pipeline or by truck or (b) delivered to the Borrower
through common-carrier pipeline, and sold by the Borrower, at Cushing, Oklahoma,
in each case referred to in clauses (a) and (b) above on a predetermined,
prorated basis over the course of a delivery month; provided, however, that each
delivery of crude oil as described in clause (b) above shall be treated as
Ratable Crude only if in each instance the Agent has received evidence
reasonably satisfactory thereto that such crude oil will be delivered on a
ratable basis substantially similar to that for Ratable Crude delivered to the
Borrower at one of the Refineries.
"Reference" means a judicial reference conducted pursuant to any Credit
Document in accordance with the law of the State of California, as in effect at
the time the referee is selected pursuant to the judicial reference provision
contained in such Credit Document.
"Reference Rate" means the variable rate of interest per annum established by
UBOC from time to time as its "reference rate." Such "reference rate" is set by
UBOC as a general reference rate of interest, taking into account such factors
as UBOC may deem appropriate, it being understood that many of UBOC's commercial
or other loans are priced in relation to such rate, that it is not necessarily
the lowest or best rate actually charged to any customer and that UBOC may make
various commercial or other loans at rates of interest having no relationship to
such rate. For purposes of this Agreement, each change in the Reference Rate
shall be effective as of the opening of business on the date announced as the
effective date of any change in such "reference rate."
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<PAGE>
"Reference Rate Advance" means, at any time, any Advance that bears interest
as provided in Section 2.6(a)(i).
"Refineries" means the Cheyenne Refinery and the El Dorado Refinery.
"Register" has the meaning set forth in Section 9.8(c).
"Resid Processing Agreement" means the Resid Processing Agreement dated June
1, 1991 among Conoco Inc., the Borrower and FRI.
"Security Agreement" means the Security Agreement executed by the Borrower in
favor of the Agent substantially in the form of Exhibit B.
"Stock Pledge Agreement" means the Stock Pledge Agreement executed by FRMI in
favor of the Agent substantially in the form of Exhibit E.
"Subsidiary" means, as to any Person, any corporation, limited liability
company, partnership, joint venture or other entity of which (a) a majority of
the outstanding capital stock or other ownership interests having ordinary
voting power to elect a majority of the board of directors or Persons performing
similar functions (irrespective of whether at the time other such capital stock
or interests have or might have voting power upon the occurrence of a
contingency) or (b) a majority of the interests in the capital or profits of
which is at the time directly or indirectly owned by such Person, by such Person
and one or more of its other Subsidiaries or by one or more of such Person's
other Subsidiaries. Unless otherwise specified herein, "Subsidiary" means a
Subsidiary of FOC.
"Super-Majority Lenders" means, at any time, Lenders (one of which shall be
the Agent) owed at least 75% of the Obligations then outstanding or, if no
Obligations are then outstanding, Lenders (one of which shall be the Agent)
having at least 75% of the Commitments.
"Teletransmission Agreement" means the Teletransmission Agreement between the
Borrower and UBOC, as Issuing Bank, substantially in the form of Exhibit C.
"Term Federal Funds Rate" means, for any Interest Period for each Base Rate
Advance that is part of the same Borrowing, the rate per annum at which UBOC is
offered federal funds in the term federal funds market as of 10:00 a.m., Los
Angeles time, on the first day of such Interest Period, in an amount comparable
to the amount of UBOC's Base Rate Advance for such Interest Period and for a
term coinciding with such Interest Period.
"Type" refers to the distinction among Reference Rate Advances, LIBOR
Advances and Base Rate Advances."
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"UBOC" means Union Bank of California, N.A. in its individual capacity.
"Year 2000 Problem" means the inability of computers, as well as embedded
microchips in noncomputing devices, to properly perform date-sensitive functions
with respect to certain dates before and after December 31, 1999.
Section 1.2 Accounting Terms. 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, on a basis consistent with the
audited consolidated financial statements of FOC and FRMI referred to in Section
6(e) of the Clawback Agreement and Section 6(f) of the Guaranty, respectively.
Section 1.3 Interpretation. In this Agreement the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to statutes are to be construed as including all statutory
provisions consolidating, amending or replacing the statute referred to;
references to "writing" include printing, typing, lithography and other means of
reproducing words in a tangible, visible form; the words "including," "includes"
and "include" are deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), recitals,
exhibits, annexes or schedules are to those of this Agreement unless otherwise
provided; references to agreements and other contractual instruments are deemed
to include all subsequent amendments and other modifications to such
instruments, but only to the extent such amendments and other modifications are
not prohibited by the terms of this Agreement; and references to Persons include
their respective permitted successors and assigns.
ARTICLE 2.
COMMITMENTS
Section 2.1 Commitments.
(a) Each Lender agrees severally, on the terms and conditions contained in
this Agreement, to extend credit to the Borrower from time to time from the
Closing Date to the Commitment Termination Date by making funded advances to the
Borrower (the "Advances") pursuant to Section 2.4 and participating in letters
of credit issued for the account of the Borrower (the "Letters of Credit")
pursuant to Section 2.9, in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender's name on the signature
pages hereof or, if such Lender has entered into one or more Assignments and
Acceptances, set forth for such Lender in the Register maintained by the Agent
pursuant to Section 9.8(c); provided, however, that the sum of (i) the aggregate
principal amount of all Advances outstanding, (ii) the aggregate Letter of
Credit Amount of all Letters of Credit outstanding and (iii) the aggregate
amount of unreimbursed drawings under all Letters of Credit shall not exceed
$175,000,000 at any time; further provided, however, that the sum of (i) the
aggregate principal amount of all Advances outstanding, (ii) the Letter of
Credit Usage and (iii) the aggregate amount of unreimbursed drawings under all
Letters of Credit shall not exceed the Borrowing Base at any time; and further
provided, however, that the aggregate principal amount of all Advances
outstanding at any time shall not exceed $100,000,000 (said agreement by each
Lender, subject to the foregoing provisos, herein called such Lender's
"Commitment"). Within the limits of each Lender's Commitment, the Borrower may
borrow under Section 2.4, have Letters of Credit issued for the Borrower's
account under Section 2.9, prepay Advances under Section 2.7(a), reborrow under
Section 2.4, and have additional Letters of Credit issued for the Borrower's
account under Section 2.9 after the expiration of previously issued Letters of
Credit.
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(b) Reduction of Commitments. The Borrower shall have the right, upon at
least 7 Business Days' notice to the Agent, to terminate in whole or reduce
ratably in part the unused portions of the respective Commitments of the
Lenders; provided, however, that each partial reduction shall be in the
aggregate amount of $5,000,000 or an integral multiple thereof.
Section 2.2 Fees.
(a) The Borrower will pay to the Agent for the account of the Lenders, at the
Applicable Commitment Fee Rate, a commitment fee on the actual daily amount by
which $175,000,000 exceeds the sum of (i) the aggregate face amount of all
Letters of Credit outstanding plus (ii) the aggregate amount of all Advances
outstanding, for each Lender from the date on which such Lender becomes a party
hereto until the Commitment Termination Date. The commitment fee payable
hereunder shall be payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing on December 31, 1999, and on the
Commitment Termination Date.
(b) The Borrower will pay to the Agent and Paribas, for their respective
accounts, such fees as provided in their respective Fee Letters.
Section 2.3 Mandatory Prepayment of Advances and Pledge of Cash
Collateral. If at any time (a) the sum of (i) the aggregate principal amount of
all Advances outstanding, (ii) the aggregate Letter of Credit Amount of all
Letters of Credit outstanding and (iii) the aggregate amount of unreimbursed
drawings under all Letters of Credit exceeds (b) the aggregate Commitments, or
if at any time (a) the sum of (i) the aggregate principal amount of all Advances
outstanding, (ii) the Letter of Credit Usage and (iii) the aggregate amount of
unreimbursed drawings under all Letters of Credit exceeds (b) the Borrowing
Base, then, in either case, the Borrower will immediately, without notice or
request by the Agent or the Lenders, prepay the Advances (together with accrued
interest to the date of prepayment on the principal amount prepaid) and/or
pledge additional cash collateral to the Agent to secure reimbursement of
amounts available to be drawn under outstanding Letters of Credit, in an
aggregate amount equal to such excess.
A. ADVANCES
Section 2.4 Making Advances.
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(a) Each Borrowing shall be made on notice, given (i) with respect to any
Borrowing consisting of Reference Rate Advances or Base Rate Advances, not later
than 1:30 p.m., Los Angeles time, on the Business Day before the date of the
proposed Borrowing and (ii) with respect to any Borrowing consisting of LIBOR
Advances, not later than 11:00 a.m., Los Angeles time, on the third Business Day
before the date of the proposed Borrowing, each such notice to be given by the
Borrower to the Agent, which shall give each Lender prompt notice thereof by
telecopier. Each such notice of a Borrowing shall be in writing in the form of
Exhibit J (a "Notice of Borrowing"), or by telephone confirmed promptly in
writing, by an Authorized Officer, specifying (A) the requested date of such
Borrowing (which shall be a Business Day), (B) the requested Type of Advances
making up such Borrowing, (C) the requested aggregate amount of such Borrowing,
(D) in the case of a Borrowing consisting of LIBOR Advances or Base Rate
Advances, the requested initial Interest Period for such Advances and (E) the
fact that the statements set forth in Section 4.2(b) are true as of the date of
such Borrowing. Each Lender shall, before 11:00 a.m., Los Angeles time, on the
day of such Borrowing, make available to the Agent at its address referred to in
Section 9.2, in immediately available funds, such Lender's ratable portion of
such Borrowing. After the Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article 4, the Agent will make such funds
available to the Borrower by crediting the Borrower's concentration account
number 0880412175 at the Agent's aforesaid address. Notwithstanding the
provisions of the first sentence of this Section 2.4(a), if the Borrower gives
the Agent notice, by telephone confirmed promptly by telecopier, of a Borrowing
consisting of Reference Rate Advances by 8:30 a.m., Los Angeles time, or of a
Borrowing consisting of Base Rate Advances by 7:00 a.m., Los Angeles time, in
either case on the day of the proposed Borrowing, the Agent and the Lenders will
use their best efforts (but shall not be obligated) to make such Advances
available on the day on which such notice is given; provided, however, that the
Agent and the Lenders shall no longer be required to use their best efforts as
described in this sentence if the Agent, at its sole option exercisable at any
time, gives the Borrower notice of the same.
(b) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. The Borrower will indemnify each Lender against any loss, cost or
expense incurred by such Lender as a result of any failure to fulfill, on or
before the date specified for such Borrowing in the related Notice of Borrowing,
the applicable conditions set forth in Article 4, including any loss (including
loss of anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to fund the Advance to be made by such Lender as part of such Borrowing when
such Advance, as a result of such failure, is not made on such date.
(c) Unless the Agent receives notice from a Lender before the date of any
Borrowing that such Lender will not make available to the Agent such Lender's
ratable portion of such Borrowing, the Agent may assume that such Lender has
made such portion available to the Agent on the date of such Borrowing in
accordance with Section 2.4(a), 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 Lender has not made such ratable portion
available to the Agent, such Lender 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, the interest rate applicable at the time to the Advances making
up such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate.
If such Lender repays to the Agent such corresponding amount, such amount so
repaid shall constitute such Lender's Advance as part of such Borrowing for
purposes of this Agreement.
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(d) The failure of any Lender to make the Advance to be made by it as part of
any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
Section 2.5 Repayment. On the Commitment Termination Date, the Borrower
will repay to the Agent for the account of the Lenders the outstanding principal
amount of the Advances.
Section 2.6 Interest.
(a) The Borrower will pay interest on the unpaid principal amount of each
Advance, from the date of such Advance until such principal amount has been paid
in full, (i) during such periods as such Advance is a Reference Rate Advance, at
a rate per annum equal at all times to the sum of the Reference Rate in effect
from time to time plus the Applicable Reference Rate Margin, payable monthly in
arrears on the last Business Day of each calendar month during such periods and
on the Commitment Termination Date, (ii) during such periods as such Advance is
a LIBOR Advance, at a rate per annum equal at all times during each Interest
Period for such Advance to the sum of LIBOR for such Interest Period for such
Advance plus the Applicable LIBOR Margin, payable on the last day of such
Interest Period, and (iii) during such periods as such Advance is a Base Rate
Advance, at a rate per annum equal at all times during each Interest Period for
such Advance to the sum of the Base Rate for such Interest Period for such
Advance plus the Applicable Base Rate Margin, payable on the last day of such
Interest Period.
(b) Any amount of principal of any Advance that is not paid when due (whether
at stated maturity, by required prepayment, by acceleration or otherwise) shall
bear interest, from the date on which such amount is due until such amount is
paid in full, payable on demand, at a rate per annum (the "Default Rate") equal
at all times to the sum of the otherwise applicable interest rate plus 3.00% per
annum.
(c) The Agent will give prompt notice to the Borrower and the Lenders of each
applicable interest rate determined by the Agent for purposes of Section 2.6(a).
(d) If the Borrower fails to select the duration of any Interest Period for
any LIBOR Advances or Base Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.1, the Agent will
forthwith so notify the Borrower and the Lenders, and such Advances shall
automatically, on the last day of the then existing Interest Period therefor,
Convert into Reference Rate Advances.
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Section 2.7 Prepayments.
(a) The Borrower may on any Business Day, in the case of Reference Rate
Advances or Base Rate Advances upon prior written notice not later than 9:00
a.m., Los Angeles time, on the day of any prepayment of such Advances, and in
the case of LIBOR Advances upon at least 3 Business Days' prior written notice,
to the Agent stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrower will, prepay the
outstanding principal amounts of the Advances making up a Borrowing in whole or
ratably in part, together, in the case of LIBOR Advances or Base Rate Advances,
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that any prepayment of LIBOR Advances or Base Rate
Advances shall be made on, and only on, the last day of an Interest Period for
such Advances; and further provided, however, that each partial prepayment shall
be in the aggregate principal amount of $300,000 or an integral multiple of
$100,000 in excess thereof.
(b) If at any time the aggregate principal amount of all Advances outstanding
exceeds $100,000,000, then the Borrower will immediately, without notice or
request by the Lenders, prepay the outstanding principal amounts of the Advances
making up one or more Borrowings in whole or ratably in part in the aggregate
amount equal to such excess, together with accrued interest to the date of such
prepayment on the principal amount prepaid.
Section 2.8 Conversion of Advances.
(a) The Borrower may on any Business Day, upon prior written notice in the
form of Exhibit K (a "Notice of Conversion/Continuation") signed by an
Authorized Officer and given to the Agent (a) with respect to any Conversion to
Reference Rate Advances or Base Rate Advances, not later than 11:00 a.m., Los
Angeles time, on the Business Day immediately preceding the date of the proposed
Conversion and (b) with respect to any Conversion to LIBOR Advances, not later
than 11:00 a.m., Los Angeles time, on the third Business Day before the date of
the proposed Conversion, subject to the provisions of Sections 3.2 and 3.3,
Convert all the Advances of one Type making up the same Borrowing into Advances
of another Type; provided, however, that any Conversion of LIBOR Advances or
Base Rate Advances into Advances of another Type shall be made on, and only on,
the last day of an Interest Period for such LIBOR Advances or Base Rate
Advances. Each Notice of Conversion shall, within the restrictions specified
above, specify (i) the date of such Conversion, (ii) the Advances to be
Converted and (iii) if such Conversion is into LIBOR Advances or Base Rate
Advances, the duration of the initial Interest Period for such Advances. Each
Notice of Conversion shall be irrevocable and binding on the Borrower. The
Agent shall give each Lender prompt notice by telecopier of each Notice of
Conversion.
(b) On any date on which the aggregate unpaid principal amount of LIBOR
Advances composing any Borrowing is reduced, by payment or prepayment or
otherwise, to less than $1,000,000, such Advances shall automatically Convert
into Reference Rate Advances. Upon the occurrence and during the continuation of
any Default, (A) each LIBOR Advance and Base Rate Advance shall automatically,
on the last day of the then existing Interest Period therefor, Convert into a
Reference Rate Advance, and (B) the obligation of the Lenders to make, or to
Convert Advances into, LIBOR Advances or Base Rate Advances shall be suspended.
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B. LETTERS OF CREDIT
Section 2.9 Issuance of Letters of Credit.
(a) The Borrower shall be entitled to request the issuance of Letters of
Credit by giving the Issuing Bank a Letter of Credit Request at least 1 Business
Day before the requested date of issuance of such Letter of Credit (which shall
be a Business Day). Any Letter of Credit Request received by the Issuing Bank
later than 3:00 p.m., Los Angeles time, shall be deemed to have been received on
the next Business Day. Each Letter of Credit Request shall be delivered by
telecopier (subject to the terms and conditions of the Teletransmission
Agreement), shall be signed by an Authorized Officer, shall be irrevocable and
shall be effective upon receipt by the Issuing Bank. Provided that a valid
Letter of Credit Request has been received by the Issuing Bank and upon
fulfillment of the other applicable conditions set forth in Article 4, the
Issuing Bank will issue the requested Letter of Credit. If a Letter of Credit
Request is received by the Issuing Bank after 3:00 p.m., Los Angeles time, on
the Business Day before the requested date of issuance of the related Letter of
Credit, then the Issuing Bank will use its best efforts, but shall not be
obligated, to issue such Letter of Credit on the requested date of issuance,
upon fulfillment of the applicable conditions set forth in Article 4. No Letter
of Credit shall have an expiration date later than 60 days after the Commitment
Termination Date.
(b) Immediately upon the issuance of each Letter of Credit, the Issuing Bank
shall be deemed to have sold and transferred to each Lender, and each Lender
shall be deemed to have purchased and received from the Issuing Bank, in each
case irrevocably and without any further action by any party, an undivided
interest and participation in such Letter of Credit, each drawing thereunder and
the obligations of the Borrower under this Agreement in respect thereof in an
amount equal to the product of (i) a fraction the numerator of which is the
amount of the Commitment of such Lender and the denominator of which is the
aggregate amount of all of the Commitments and (ii) the maximum amount available
to be drawn under such Letter of Credit (assuming compliance with all conditions
to drawing). The Issuing Bank will promptly advise each Lender of the issuance
of each Letter of Credit, the Letter of Credit Amount of such Letter of Credit,
any change in the face amount or expiration date of such Letter of Credit, the
cancellation or other termination of such Letter of Credit and any drawing under
such Letter of Credit.
Section 2.10 Drawing and Reimbursement. The payment by the Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by UBOC of a Reference Rate Advance in the amount of
such payment (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)). In the event that any such Advance by UBOC
resulting from a drawing under a Letter of Credit is not repaid by the Borrower
by 11:00 a.m., Los Angeles time, on the day of such drawing, UBOC will promptly
so notify the Agent, and the Agent will promptly so notify each other Lender.
Each such Lender will, on the day of such notification, make a Reference Rate
Advance, which shall be used to repay the applicable portion of UBOC's Reference
Rate Advance with respect to such Letter of Credit drawing, in an amount equal
to the amount of such Lender's participation in such drawing (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)), and will deliver to the Agent for UBOC's account, on the day of such
notification and in immediately available funds, the amount of such Reference
Rate Advance. In the event that any Lender fails to make available to the Agent
for the account of UBOC the amount of such Reference Rate Advance, UBOC shall be
entitled to recover such amount on demand from such Lender, together with
interest thereon at the Federal Funds Rate.
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Section 2.11 Obligations Absolute. The obligations of the Borrower under
this Agreement, any Letter of Credit Request and any other agreement or
instrument relating to any Letter of Credit shall be absolute, unconditional and
irrevocable and shall be paid strictly in accordance with the terms of the
aforementioned documents under all circumstances, including the following:
(a) any lack of validity or enforceability of any Letter of Credit, this
Agreement or any other Credit Document;
(b) the existence of any claim, setoff, defense or other right that the
Borrower may have at any time against any beneficiary or transferee of any
Letter of Credit (or any Person for whom any such beneficiary or transferee may
be acting), the Issuing Bank, any Lender (other than the defense of payment in
accordance with the terms of this Agreement) or any other Person, whether in
connection with this Agreement, any other Credit Document, the transactions
contemplated hereby or thereby or any unrelated transaction;
(c) any statement or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect, or any
statement therein being untrue or inaccurate in any respect whatsoever;
(d) payment by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not comply with the terms of
such Letter of Credit;
(e) any exchange, release or nonperfection of any Collateral or other
collateral, or any release, amendment or waiver of or consent to departure from
the Guaranty or any other guaranty, for any of the Obligations of the Borrower
in respect of the Letters of Credit; and
(f) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing.
Section 2.12 Letter of Credit Fees and Charges.
(a) The Borrower will pay to the Agent for the account of the Lenders, from
the Closing Date to the Commitment Termination Date, a letter of credit fee at
the Applicable LOC Fee Rate on the aggregate of the actual daily Letter of
Credit Amounts of all Letters of Credit outstanding from time to time. Such
letter of credit fee shall be payable monthly in arrears on the first Business
Day of each calendar month, commencing on December 1, 1999, to the extent
accrued during the immediately preceding calendar month.
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(b) The Borrower will pay to the Issuing Bank for its own account such
additional fees and charges (including cable charges) as are generally
associated with letters of credit, in accordance with the Agent's standard
internal charge guidelines in effect from time to time.
Section 2.13 Limits of Liability of Agent and Lenders.
(a) The Borrower agrees to the provisions in the Letter of Credit Request
form; provided, however, that the terms of this Agreement shall take precedence
if there is any inconsistency between the terms of this Agreement and the terms
of said form.
(b) The Borrower assumes all risks of the acts or omissions of any
beneficiary or transferee of any Letter of Credit with respect to its use of
such Letter of Credit. Neither the Issuing Bank nor any other Lender nor any of
their respective officers or directors shall be liable or responsible for (i)
the use that may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith; (ii) the validity,
sufficiency or genuineness of documents, or of any endorsement thereof, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of any Letter of Credit, including
failure of any documents to bear any reference or adequate reference to any
Letter of Credit; or (iv) any other circumstance whatsoever in making or failing
to make payment under any Letter of Credit; provided, however, that the Borrower
shall have a claim against the Issuing Bank, and the Issuing Bank shall be
liable to the Borrower, to the extent of any direct, but not consequential,
damages suffered by the Borrower that the Borrower proves were caused by (A) the
Issuing Bank's willful misconduct or gross negligence in determining whether
documents presented under any Letter of Credit comply with the terms of such
Letter of Credit or (B) the Issuing Bank's willful failure to make lawful
payment under any Letter of Credit after the presentation to the Issuing Bank by
the beneficiary or transferee of such Letter of Credit of a draft and
certificates strictly complying with the terms and conditions of such Letter of
Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank
may accept any document that appears on its face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
C. PAYMENT PROVISIONS
Section 2.14 Payments.
(a) The Borrower will make each payment hereunder and under the Notes not
later than 11:00 a.m., Los Angeles time, on the day when due, in U.S. dollars
and immediately available funds, to the Agent at its address set forth in
Section 9.2. The Agent will promptly thereafter cause to be distributed like
funds relating to the payment of principal, interest or fees ratably (other than
amounts payable pursuant to Section 2.2(b) or Article 3) to the Lenders and like
funds relating to the payment of any other amount payable to any Lender to such
Lender, in each case to be applied in accordance with the terms of this
Agreement.
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(b) The Borrower hereby authorizes each Lender, if and to the extent that any
payment owed to such Lender is not made when due hereunder or under any other
Credit Document, to charge from time to time against any or all of the
Borrower's accounts with such Lender any amount so due.
(c) Unless the Agent receives notice from the Borrower before the date on
which any payment is due to the Lenders 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 Lender on such due date an
amount equal to the amount then due to such Lender. If and to the extent that
the Borrower has not so made such payment in full to the Agent, each Lender will
repay to the Agent forthwith upon demand such amount distributed to such Lender,
together with interest thereon, for each day from the date such amount was
distributed to such Lender until the date on which such Lender repays such
amount to the Agent, at the Federal Funds Rate.
Section 2.15 Computation of Interest and Fees. All computations of
interest and fees hereunder shall be made on the basis of a year of 360 days for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
Section 2.16 Payments on Non-Business Days. Whenever any payment hereunder
or under any other Credit Document is stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest or fee, as the case may be; provided, however, that, if such
extension would cause payment of interest on or principal of LIBOR Advances to
be made in the next succeeding calendar month, such payment shall be made on the
next preceding Business Day.
Section 2.17 Sharing of Payments, Etc. If any Lender obtains any payment
(whether voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of the Advances made by it or the Letters of Credit
participated in by it (other than pursuant to Section 2.2(b) or Article 3) in
excess of its ratable share of payments on account of the Advances and Letters
of Credit obtained by all of the Lenders, then such Lender will forthwith
purchase from the other Lenders such participations in the Advances made by them
and the Letters of Credit participated in by them as necessary to cause such
purchasing Lender to share the excess payment ratably with each of them;
provided, however, that, if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each other
Lender shall be rescinded, and each such other Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery, together
with an amount equal to such Lender's ratable share (according to the proportion
of (a) the amount of such Lender's required repayment to (b) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this section may, to the fullest extent permitted by law,
exercise all of its rights of payment (including the right of setoff) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
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Section 2.18 Evidence of Debt.
(a) The indebtedness of the Borrower resulting from all Advances made by each
Lender from time to time shall be evidenced by the Notes.
(b) The books and accounts of the Agent shall be conclusive evidence, absent
manifest error, of all Letter of Credit Amounts and of the amounts of all
Advances, drawings under Letters of Credit, reimbursements under Letters of
Credit, fees, interest and other charges advanced, due, outstanding or paid
pursuant to this Agreement or any other Credit Document.
Section 2.19 Payments under Old Credit Agreement. On the Closing Date, any
"Loans" or "Letters of Credit" outstanding under the Old Credit Agreement shall
be deemed to be Advances and Letters of Credit, respectively, outstanding under
this Agreement; provided, however, that (a) the interests of the Lenders in such
Advances and Letters of Credit shall be pro rata in accordance with their
Commitments hereunder and (b) the Lenders shall make all appropriate adjustments
directly between themselves with respect to any "Loans" outstanding under, and
any payments under, the Old Credit Agreement for periods before the Closing
Date.
ARTICLE 3.
YIELD PROTECTION
Section 3.1 Increased LIBOR Advance Costs. If, due to either (a) the
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of LIBOR Advances, included in the
LIBOR Reserve Percentage) in or in the interpretation of any Governmental Rule
or (b) compliance with any Governmental Rule (whether or not having the force of
law), there is an increase in the cost to any Lender of agreeing to make,
making, funding or maintaining any LIBOR Advance, then the Borrower will from
time to time, upon demand by such Lender (with a copy of such demand to the
Agent), pay to the Agent for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased cost, submitted to the Borrower and the Agent by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.
Section 3.2 Illegality. Notwithstanding any other provision of this
Agreement, if the introduction of, or any change in or in the interpretation of,
any Governmental Rule makes it unlawful, or any Governmental Person asserts that
it is unlawful, for any Lender to perform its obligations hereunder to make
LIBOR Advances or to continue to fund or maintain LIBOR Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Agent, (a) the obligation of such Lender to make LIBOR Advances and
to Convert Advances into LIBOR Advances shall be suspended until the Agent
notifies the Borrower that such Lender has determined that the circumstances
causing such suspension no longer exist, and (b) the Borrower will forthwith
prepay in full all LIBOR Advances of such Lender then outstanding, together with
interest accrued thereon, unless the Borrower, within 5 Business Days of such
notice and demand, Converts all LIBOR Advances of all Lenders then outstanding
into Reference Rate Advances in accordance with Section 2.8.
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Section 3.3 Inadequacy of LIBOR. If, with respect to any LIBOR Advance,
the Majority Lenders notify the Agent that the interest rate determined pursuant
to Section 2.6(a)(ii) for any Interest Period for such Advance will not
adequately reflect the cost to the Majority Lenders of making, funding or
maintaining their respective LIBOR Advances for such Interest Period, then the
Agent will forthwith so notify the Borrower and the Lenders, whereupon (a) all
LIBOR Advances shall automatically, on the last day of the then existing
respective Interest Periods therefor, Convert into Reference Rate Advances, and
(b) the obligations of the Lenders to make, or to Convert Advances into, LIBOR
Advances shall be suspended until the Agent notifies the Borrower and the
Lenders that the circumstances causing such suspension no longer exist.
Section 3.4 Increased Letter of Credit Costs. If, after the date hereof,
any change in any Governmental Rule or in the interpretation thereof by any
Governmental Person charged with the administration thereof either (a) imposes,
modifies or deems applicable any reserve, special deposit or similar requirement
against letters of credit or guaranties issued by or participated in, or assets
held by, or deposits in or for the account of, the Issuing Bank or any Lender or
(b) imposes on the Issuing Bank or any Lender any other condition regarding this
Agreement, the Issuing Bank, such Lender or any Letter of Credit, and the result
of any event referred to in the preceding clause (a) or (b) is to increase the
cost to the Issuing Bank of issuing or maintaining any Letter of Credit or to
any Lender of purchasing or maintaining any participation therein, then, upon
demand by the Issuing Bank or such Lender through the Agent, the Borrower will
pay to the Issuing Bank or such Lender through the Agent, from time to time as
specified by the Issuing Bank or such Lender through the Agent, additional
amounts sufficient to compensate the Issuing Bank or such Lender for such
increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower by the Issuing Bank or such Lender, shall be
conclusive and binding for all purposes, absent manifest error.
Section 3.5 Capital Adequacy. If any Lender determines that compliance
with any Governmental Rule (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type or the commitment to issue
or participate in, or the issuance of or participation in, the Letters of Credit
(or similar contingent obligations), then, upon demand by such Lender (with a
copy of such demand to the Agent), the Borrower will pay to the Agent for the
account of such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender in the light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's commitment
to lend hereunder or commitment to issue or participate in, or the issuance of
or participation in, Letters of Credit. A certificate as to such amounts
submitted to the Borrower by such Lender shall be conclusive and binding for all
purposes, absent manifest error.
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Section 3.6 Funding Losses. If any payment of principal of, or any
Conversion of, any LIBOR Advance or Base Rate Advance is made other than on the
last day of an Interest Period for such Advance, as a result of a payment or
Conversion pursuant to Section 3.2 or 3.3 or acceleration of the maturity of the
Obligations pursuant to Section 7.1 or for any other reason, the Borrower will,
upon demand by any Lender (with a copy of such demand to the Agent), pay to the
Agent for the account of such Lender any amounts required to compensate such
Lender for any additional losses, costs or expenses that it may reasonably incur
as a result of such payment or Conversion, including any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Advance.
Section 3.7 Substitution of Lender. If (a) any Lender demands payment
from the Borrower in any material amount pursuant to Section 3.1, 3.4 or 3.5 or
(b) any Lender gives notice of illegality pursuant to Section 3.2, and in either
case the event or circumstances causing such Lender to make such demand or give
such notice is not applicable to the Majority Lenders, then the Borrower shall
have the right, with the assistance of the Agent, to seek a mutually
satisfactory lender or lenders (which may be one or more of the Lenders) to
substitute for such Lender by purchasing the Obligations and assuming the
Commitment of such Lender; provided, however, that in any event the Borrower
shall be obligated to compensate such Lender pursuant to Section 3.1, 3.4 or 3.5
or to prepay such Lender's LIBOR Advances pursuant to Section 3.2, as
applicable.
ARTICLE 4.
CONDITIONS OF LENDING
Section 4.1 Initial Advance or Letter of Credit. The obligation of each
Lender to make an Advance on the occasion of the initial Borrowing hereunder,
and the obligation of the Issuing Bank to issue, and of each Lender to
participate in, the first Letter of Credit issued hereunder, is subject to the
conditions precedent set forth below.
(a) The FOC Note Offering (i) has been consummated in accordance with the
terms of the Prospectus, the Indenture and the related underwriting agreement,
without any waiver or amendment not consented to by the Lead Arrangers of any
term, provision or condition set forth therein, (ii) has been consummated in
compliance with all applicable Governmental Rules and (iii) has raised a gross
amount of at least $190,000,000 (subject to original-issue discount if the notes
issued are issued at less than their face amount).
(b) FEDRC's acquisition of the El Dorado Refinery has been consummated in
accordance with the terms of the Acquisition Agreement, without any waiver or
amendment not consented to by the Lead Arrangers of any term, provision or
condition set forth therein, and in compliance with all applicable Governmental
Rules.
(c) No material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Borrower,
any Affiliate thereof or the El Dorado Refinery has occurred since September 30,
1999 and is continuing.
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(d) No action, suit, investigation, litigation or proceeding affecting the
Borrower, any Affiliate thereof or the El Dorado Refinery is pending or
threatened before any Governmental Person or arbitrator (i) that could
reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower, any Affiliate thereof or the El Dorado Refinery or
(ii) that purports to affect the legality, validity or enforceability of the FOC
Note Offering, the Acquisition Agreement, this Agreement, any other Credit
Document or the consummation of any of the transactions contemplated hereby or
thereby.
(e) The Lenders are satisfied with the terms of the FEDRC Processing
Agreement and the FRI Processing Agreement.
(f) The Borrower has paid all accrued fees and expenses of the Lead
Arrangers, the Agent and the Lenders (as provided in Sections 2.12 and 9.4 and
in the Fee Letters and as otherwise agreed between the Borrower and either of
the Lead Arrangers, the Agent or any Lender), including the accrued fees and
disbursements of legal counsel to the Lead Arrangers, to the extent one or more
statements for such fees and expenses have been presented for payment.
(g) The Agent has received the following, each dated the Closing Date unless
otherwise specified below, in form and substance satisfactory to the Lenders and
in the number of originals required by the Agent:
(i) this Agreement, duly executed by the Borrower and the Lenders;
(ii) the Notes in favor of the respective Lenders, the Teletransmission
Agreement and the Fee Letters, duly executed by the Borrower;
(iii) the Security Agreement, duly executed by the Borrower, together
with the following:
(A) certificates of the appropriate Governmental Persons in the States
of California, Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska,
North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming, in Boone, Greene,
Marion and Platte Counties, Missouri and in Laramie County, Wyoming, dated as of
a recent date, listing all effective financing statements filed in those
jurisdictions that name the Borrower or, in the case of the States of
California, Kansas and Texas, Equilon or Equiva as debtor, together with copies
of such financing statements;
(B) proper UCC-1 financing statements for filing in each jurisdiction
that the Agent may deem necessary or desirable in order to perfect and protect
the Liens created by the Security Agreement, covering the Collateral described
in the Security Agreement;
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(C) one or more certificates evidencing the insurance required to be
maintained pursuant to Section 7(c) of the Guaranty;
(D) the "Lockbox Agreement" required to be maintained pursuant to
Section 5 of the Security Agreement;
(E) the FOC Demand Note, duly endorsed in a manner acceptable to the
Agent; and
(F) evidence that all other action that the Agent may deem necessary
or desirable in order to perfect and protect the Liens created by the Security
Agreement has been taken;
(iv) the Guaranty, duly executed by the Guarantors;
(v) the Stock Pledge Agreement, duly executed by FRMI, together with the
following:
(A) certificates representing the "Pledged Stock" referred to
in the Stock Pledge Agreement, accompanied by undated stock powers executed
in blank; and
(B) evidence that all other action that the Agent may deem necessary
or desirable in order to perfect and protect the Liens created by the Stock
Pledge Agreement has been taken;
(vi) the Clawback Agreement, duly executed by FOC;
(vii) copies of (A) the resolutions of the Board of Directors of each
Credit Party approving the Credit Documents to which such Credit Party is
or is to be a party and (B) all documents evidencing other necessary
corporate action and Governmental Action, if any, with respect to such
Credit Documents, in each case certified by the Secretary or an Assistant
Secretary of such Credit Party to be correct and complete and in full force
and effect as of the date of execution of each such document and as of the
Closing Date;
(viii) a certificate of the Secretary or an Assistant Secretary of each
Credit Party as to the incumbency, and setting forth a specimen signature,
of each of the persons (A) who has signed or will sign any Credit Document
on behalf of such Credit Party and (B) who will, until replaced by other
persons duly authorized for that purpose, act as the representatives of
such Credit Party for the purpose of signing documents in connection with
this Agreement and the transactions contemplated hereby;
(ix) a certificate of each Credit Party, signed on behalf of such Credit
Party by its President or a Vice President and its Secretary or any
Assistant Secretary, certifying as to the following: (A) the absence of
any amendments to the charter of such Credit Party since the date of the
certification with respect thereto referred to in Section 4.1(g)(x); (B)
the correctness and completeness of the copies of the bylaws of such Credit
Party and, to the extent such Credit Party is a party thereto, of the
Prospectus, the Indenture, the Acquisition Agreement, the FRI Processing
Agreement, the FEDRC Processing Agreement, the Crude Supply Agreement, the
Offtake Agreement and the Cogen Lease attached to such certificate and that
such documents are in full force and effect; (C) the due incorporation and
good standing of such Credit Party as a corporation organized under the
laws of its state of incorporation and the absence of any proceeding for
the dissolution or liquidation of such Credit Party; (D) the truthfulness
in all material respects of the representations and warranties of such
Credit Party contained in the Credit Documents, as though made on and as of
the Closing Date; and (E) the absence of any event occurring and
continuing, or resulting from the effectiveness of the Credit Documents,
that constitutes a Default with respect to such Credit Party;
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(x) certificates of the appropriate Governmental Persons, dated reasonably
near the Closing Date, attaching the charter (or the most recent amendment
and restatement thereof) of each Credit Party and all amendments thereto
and certifying that (A) such amendments are the only amendments to such
charter on file in such Governmental Person's office, (B) such Credit Party
has paid all franchise taxes to the date of such certificate and (C) such
Credit Party is duly incorporated and in good standing under the laws of
such state;
(xi) good-standing certificates, dated reasonably near the Closing Date,
with respect to the good standing of such of the Credit Parties to do
business in such jurisdictions as the Agent may reasonably request;
(xii) a recently prepared environmental report (or a recently prepared
update of a previous environmental report) prepared by ENSR or another
environmental consultant acceptable to the Agent with respect to the El
Dorado Refinery and related facilities owned or operated by FEDRC,
addressed to the Agent and covering such matters as reasonably required by
the Agent;
(xiii) one or more favorable opinions of legal counsel for the Credit
Parties, as to such matters as any Lender through the Agent may reasonably
request;
(xiv) copies of all opinions of legal counsel for FOC delivered pursuant to
the underwriting agreement for the FOC Note Offering; and
(xv) a Borrowing Base Certificate containing information as of Thursday,
November 11, 1999, with respect to Inventory of the Borrower that is to be,
is being or has been processed through the Cheyenne Refinery, with respect
to the Accounts of the Borrower and with respect to Inventory of the
Borrower that is to be acquired from Equilon or Equiva pursuant to the
Acquisition Agreement.
Section 4.2 Advances. The obligation of each Lender to make an Advance on
the occasion of each Borrowing is subject to the limitations of the Commitments,
to the performance by the Borrower of all of its obligations under this
Agreement and to the satisfaction of the following further conditions:
(a) the Agent has received a Notice of Borrowing with respect to such
Advance;
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(b) the following statements are true (and the acceptance by the Borrower of
the proceeds of such Borrowing shall constitute a representation and warranty by
the Borrower that on the date of such Borrowing such statements are true):
(i) the representations and warranties contained in each Credit Document
are correct in all material respects on and as of the date of such Borrowing,
before and after giving effect to such Borrowing and to the application of the
proceeds thereof, as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result from such
Borrowing or from the application of the proceeds thereof, that constitutes a
Default;
(iii) there are no "Short-Term Loans" (as defined in Section 1 of the
Guaranty) outstanding; and
(iv) during the 5 Business Days immediately preceding such Borrowing,
neither the Borrower nor any Affiliate thereof has made any "Long-Term Loan" (as
defined in Section 1 of the Guaranty) or made any distribution or taken any of
the other actions described in Section 6.7 of this Agreement or Section 8(h) of
the Guaranty; and
(c) the Agent has received such other approvals, opinions, evidence and
documents as any Lender through the Agent may reasonably request.
Section 4.3 Letters of Credit. The obligation of the Agent to issue, and
of each Lender to participate in, any Letter of Credit is subject to the
limitations of the Commitments, to the performance by the Borrower of all of its
obligations under this Agreement and to the satisfaction of the following
further conditions:
(a) the Agent has received a Letter of Credit Request with respect to such
Letter of Credit;
(b) the following statements are true (and each delivery of a Letter of
Credit Request shall constitute a representation and warranty by the Borrower
that on the date of issuance of the applicable Letter of Credit such statements
are true):
(i) the representations and warranties contained in each Credit Document
are correct in all material respects on and as of the date of issuance of such
Letter of Credit, before and after giving effect to the issuance of such Letter
of Credit, as though made on and as of such date; and
(ii) no event has occurred and is continuing, or would result from the
issuance of such Letter of Credit, that constitutes a Default; and
(c) the Agent has received such other approvals, opinions, evidence and
documents as any Lender through the Agent may reasonably request.
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Section 4.4 Determinations under Section 4.1. For purposes of determining
compliance with the conditions specified in Section 4.1, each Lender shall be
deemed to have consented to, approved or accepted, or to be satisfied with, each
document or other matter required under Section 4.1 to be consented to, approved
by, accepted or satisfactory to the Lenders unless an officer of the Agent
responsible for the transactions contemplated by the Credit Documents and
holding the position of Vice President or a more senior position receives notice
from such Lender before the earlier of the initial Borrowing hereunder and the
issuance of the initial Letter of Credit hereunder specifying such Lender's
objection thereto, and such objection is not withdrawn by notice to the Agent to
that effect.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders and the Agent as set
forth below.
Section 5.1 Corporate Existence and Power. The Borrower (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, (b) is duly qualified or licensed as a foreign
corporation, and is in good standing, in Colorado and in each other jurisdiction
in which it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed (except for jurisdictions in which the
failure to so qualify or be licensed could not reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower) and (c) has
all requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted.
Section 5.2 Authorization. The execution, delivery and performance by the
Borrower of this Agreement and each other Credit Document to which the Borrower
is or is to be a party, and the consummation of the transactions contemplated
hereby and thereby, are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not (a) contravene the
Borrower's charter documents or bylaws, (b) violate any Governmental Rule, (c)
conflict with or result in the breach of, or constitute a default under, any
Material Contract, loan agreement, indenture, mortgage, deed of trust or lease,
or any other contract or instrument, binding on or affecting the Borrower or any
of its properties, the conflict, breach or default of which could reasonably be
expected to have a material adverse effect on the business condition (financial
or otherwise), operations, performance, properties or prospects of the Borrower
or on the ability of the Borrower to perform its obligations under any of the
Credit Documents, or (d) result in or require the creation or imposition of any
Lien upon or with respect to any of the properties of the Borrower, other than
in favor of the Agent. The Borrower is not in violation of any such
Governmental Rule or in breach of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, the violation or breach of
which could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower.
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Section 5.3 Governmental Action. No Governmental Action is required for
the due execution, delivery or performance by the Borrower of this Agreement or
any other Credit Document to which the Borrower is or is to be a party, or for
the consummation of the transactions contemplated hereby or thereby, except for
Governmental Action that has been duly obtained, taken, given or made and is in
full force and effect.
Section 5.4 Binding Effect. This Agreement has been, and each other Credit
Document to which the Borrower is or is to be a party when delivered hereunder
will be, duly executed and delivered by the Borrower. This Agreement is, and
each other Credit Document to which the Borrower is or is to be a party when
delivered hereunder will be, the legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its terms, except
as the enforceability thereof may be limited to bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally.
Section 5.5 Other Information. No information, exhibit or report
furnished by the Borrower to the Agent or any Lender in connection with the
negotiation of the Credit Documents or pursuant to the terms of any of the
Credit Documents contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements contained therein, in
light of the circumstances in which made, not misleading.
Section 5.6 Litigation. There is no action, suit, investigation,
litigation or proceeding affecting the Borrower pending or, to the best
knowledge of the Borrower, threatened before any Governmental Person, arbitrator
or referee (a) that could reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or (b) that purports to
affect the legality, validity or enforceability of this Agreement or any other
Credit Document or the consummation of the transactions contemplated hereby or
thereby.
Section 5.7 Subsidiaries. The Borrower has no Subsidiaries.
Section 5.8 Trademarks, Etc. The Borrower possesses all trademarks, trade
names, copyrights and licenses necessary to conduct its business as now
operated, without any known conflict with the valid trademarks, trade names,
copyrights or licenses of others.
Section 5.9 Fire, Etc. Neither the business nor the properties of the
Borrower are affected by any fire, explosion, accident, strike, lockout or other
labor dispute, or other casualty (whether or not covered by insurance) that
could reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower.
Section 5.10 Burdensome Agreements. The Borrower is not a party to any
indenture, loan agreement, credit agreement, lease or other agreement or
instrument, or subject to any charter or corporate restriction, that could
reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower or on the ability of the Borrower to carry out its
obligations under this Agreement or any other Credit Document.
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Section 5.11 Taxes. The Borrower has filed, or there has been filed on its
behalf, all tax returns (federal, state, local and foreign) required to be filed
before the date of the making of this representation and warranty, and the
Borrower has paid all taxes shown thereon to be due, including interest,
additions to taxes and penalties, or has provided adequate reserves for the
payment thereof.
Section 5.12 Title to Properties. The Borrower has good and marketable
title to all properties, real or personal, purported to be owned by it.
Section 5.13 Ownership. FOC is the legal and beneficial owner of all of
the outstanding capital stock of FHI, and none of such stock is subject to any
Lien. FHI is the legal and beneficial owner of all of the outstanding capital
stock of FRMI, and none of such stock is subject to any Lien. FRMI is the legal
and beneficial owner of all of the outstanding capital stock of the Borrower,
FRI, FEDRC and FPI, and none of such stock is subject to any Lien (other than,
in the case of the stock of the Borrower, in favor of the Agent).
Section 5.14 Margin Stock. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of Governors of the Federal
Reserve System), and no proceeds of any Advance will be used to purchase or
carry any margin stock or to extend credit to another for the purpose of
purchasing or carrying any margin stock.
Section 5.15 Year 2000. The Borrower has developed and budgeted for a
comprehensive program to address the Year 2000 Problem, and the Borrower has
implemented that program substantially in accordance with its timetable and
budget. The Borrower reasonably expects that it will substantially avoid the
Year 2000 Problem as to all computers, and as to all embedded microchips in
noncomputing devices, that are material to the Borrower's business, properties
or operations. The Borrower has developed a feasible contingency plan to
adequately ensure uninterrupted and unimpaired business operation in the event
of failure of its own or a third party's systems or equipment (including systems
or equipment of vendors, customers and suppliers), or a general failure of or
interruption in its communications and delivery infrastructure, due to the Year
2000 Problem.
ARTICLE 6.
COVENANTS
So long as (1) any Commitment is in effect, (2) any Letter of Credit is
outstanding or (3) any Obligation remains unpaid, unless compliance has been
waived in writing by the Majority Lenders, the Borrower will observe the
covenants set forth below.
A. AFFIRMATIVE COVENANTS
Section 6.1 Information. The Borrower will deliver the following directly
to each Lender:
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(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
biweekly 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 every other week, commencing with November 24, 1999), 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 either of
the Refineries, 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;
(b) as soon as available and in any event within 45 days after the end of
each calendar month, a certificate of the chief financial officer or chief
accounting officer of the Borrower stating (i) whether the Borrower is in
compliance with all of its covenants and agreements contained in the Credit
Documents and (ii) whether there exists on the date of such certificate any
Default and, if any Default exists, setting forth the details thereof and the
action that the Borrower is taking or proposes to take with respect thereto;
(c) forthwith upon the occurrence of any Default, a certificate of the chief
financial officer or chief accounting officer of the Borrower setting forth the
details thereof and the action that the Borrower is taking or proposes to take
with respect thereto;
(d) forthwith upon any return, recovery, dispute or claim concerning Accounts
or sales of Inventory and exceeding $250,000 in any instance, a certificate of
the chief financial officer or chief accounting officer of the Borrower setting
forth the details thereof; and
(e) promptly upon request, such other information respecting the business,
condition (financial or otherwise), operations, performance, properties or
prospects of the Borrower as any Lender may from time to time reasonably
request.
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
Paribas and their respective 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 during each semiannual fiscal period of the
Borrower, as of the last day of such period) and Commercial Finance Audits
(which shall be conducted at least semiannually).
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Section 6.3 Returns and Allowances. The Borrower will treat returns and
allowances, if any, between the Borrower and its customers on the same basis and
in accordance with the usual and customary practices of the Borrower as they
existed before the date hereof, but such returns and allowances for any fiscal
year shall in no event exceed 2% of total sales for the previous fiscal year.
Section 6.4 Other Covenants. The Borrower will do, or refrain from doing,
as applicable, all things as necessary to permit the other Credit Parties to
comply with the covenants contained in Sections 7 and 8 of the Guaranty.
Section 6.5 Performance of Material Contracts. The Borrower will (a)
perform and observe all of the terms and provisions of each Material Contract to
be performed or observed by it, maintain each Material Contract in full force
and effect and enforce each Material Contract in accordance with its terms,
except in each case to the extent that the failure to do so could not reasonably
be expected to have a material adverse effect on the business, condition
(financial or otherwise), operations, performance, properties or prospects of
the Borrower, and (b) upon reasonable request by the Agent, make to each other
party to each Material Contract such demands and requests for information,
reports or action as the Borrower is entitled to make under such Material
Contract.
B. NEGATIVE COVENANTS
Section 6.6 Cleanup Period. The Borrower will not permit any calendar
year to pass without there being a period of at least 5 consecutive Business
Days in such calendar year during which the Borrower either (a) has no Advances
outstanding or (b) to the extent any Advances are outstanding during such
period, maintains an amount equal to the aggregate principal amount of such
Advances in the "Control Account" (as defined in the Security Agreement).
Section 6.7 Dividends, Etc. The Borrower will not declare or pay any
dividends, purchase, redeem, retire, defease or otherwise acquire for value any
of its capital stock or any warrants, rights or options to acquire such capital
stock, now or hereafter outstanding, return any capital to its stockholder as
such, or make any distribution of assets, capital stock, warrants, rights,
options, obligations or securities to its stockholder as such (in this Section
6.7, all of the foregoing actions by the Borrower collectively called "making a
distribution"), if and so long as (a) any Advance is outstanding, (b) any
Default other than pursuant to Section 7.1(c), or any Default pursuant to
Section 7.1(c) that the Majority Lenders believe, in their reasonable judgment,
to be material (and a Default pursuant to Section 7.1(c) shall be deemed to be
material unless the Agent notifies the Borrower in writing that the Majority
Lenders believe such Default not to be material), has occurred and is continuing
or would result from making a distribution or (c) there has been an acceleration
of the Obligations; provided, however, that, in any case described in clause (b)
or (c) above, the Borrower shall not be prohibited from making a distribution if
and to the extent that (i) the same is not made from, or from cash derived from
the liquidation or conversion of, any Collateral or (ii) the same is made from,
or from cash derived from the liquidation or conversion of, Collateral (A) that
the Super-Majority Lenders, in their sole and absolute discretion, determine to
be unnecessary to fully and adequately secure the Obligations and (B) as to
which the Agent so notifies the Borrower in writing.
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Section 6.8 Use of Advances and Letters of Credit. The Borrower will not
use the proceeds of any Advance other than for its working capital purposes.
The Borrower will not request the issuance of any Letter of Credit other than to
support (a) its purchases of crude oil or petroleum products or (b) other
obligations of the Borrower incurred in the ordinary course of business and as
to which the Agent and the Majority Lenders have agreed, in their sole and
absolute discretion, to support the same by issuance of and participation in a
Letter of Credit.
Section 6.9 Amendment, Etc. of Material Contracts. The Borrower will not
cancel or terminate any Material Contract to which it is a party or consent to
or accept any cancellation or termination thereof. The Borrower will not (a)
amend or otherwise modify any Material Contract to which it is a party or give
any consent, waiver or approval thereunder, (b) waive any default under, or
breach of, any such Material Contract, (c) agree in any manner to any other
amendment, modification or change of any term or condition of any such Material
Contract or (d) take any other action in connection with any such Material
Contract, except in each case described in clause (a), (b), (c) or (d) above to
the extent that doing so could not reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1 Events of Default. If any one or more of the following events
(each an "Event of Default") occurs and is continuing:
(a) the Borrower fails to pay any Obligation when due;
(b) any representation or warranty made by any Credit Party or any Subsidiary
(or any of their respective officers) in or in connection with any Credit
Document proves to have been incorrect in any material respect when made;
(c) any Credit Party fails to perform or observe any term, covenant or
agreement in Article 6.B. hereof, in Section 8 of the Guaranty or in Section
7(k), (l), (m) or (o) of the Clawback Agreement on its part to be performed or
observed; or any Credit Party fails to perform or observe any other term,
covenant or agreement of any Credit Document on its part to be performed or
observed, and the same is not remedied within 10 days after written notice
thereof has been given to the Borrower by the Agent;
(d) any Credit Party or any Subsidiary fails to pay any principal of any Debt
thereof outstanding in a principal amount of at least $1,000,000 in the
aggregate (excluding the Obligations), or any interest or premium thereon, when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure continues after the applicable grace period, if
any, specified in the agreement or instrument relating to such Debt; any other
event occurs or condition exists under any agreement or instrument relating to
any such Debt and continues after the applicable grace period, if any, specified
in such agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Debt; or any
such Debt is declared to be due and payable, or is required to be prepaid,
redeemed, purchased or defeased (other than by a regularly scheduled required
prepayment, redemption, purchase or defeasance), or an offer to prepay, redeem,
purchase or defease such Debt is required to be made, in each case before the
stated maturity thereof;
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(e) any Credit Party or any Subsidiary generally does not pay its debts as
such debts become due, admits in writing its inability to pay its debts
generally or makes a general assignment for the benefit of creditors; any
proceeding is instituted by or against any Credit Party or any Subsidiary
seeking to adjudicate it a bankrupt or insolvent, seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief, or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
for any substantial part of its property; or any Credit Party or any Subsidiary
takes any corporate action to authorize any of the actions set forth above in
this Section 7.1(e);
(f) any judgment or order for the payment of money in excess of $1,000,000 is
rendered against any Credit Party or any Subsidiary, and either (i) enforcement
proceedings are commenced by any creditor upon such judgment or order or (ii)
there is any period of 10 consecutive days (or, if the entire amount is covered
by insurance (subject to applicable deductibles), 30 consecutive days) during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, is not in effect, unless such judgment or order has been
vacated, satisfied, dismissed, or bonded pending appeal or, in the case of a
judgment or order the entire amount of which is covered by insurance (subject to
applicable deductibles), is the subject of a binding agreement with the
plaintiff and the insurer covering payment therefor;
(g) there occurs, in the reasonable judgment of the Majority Lenders, any
material adverse change in the business, condition (financial or otherwise),
operations, performance, properties or prospects of the Borrower, FHI, FRMI,
FRI, FEDRC or FPI or any Subsidiary of any thereof;
(h) any provision of any Credit Document for any reason ceases to be valid
and binding on or enforceable against, in any material respect, any Credit Party
that is a party thereto, or such Credit Party so states in writing; or
(i) for any reason except to the extent permitted by the terms of the
Security Agreement or the Stock Pledge Agreement, there ceases to be a valid and
perfected first-priority security interest in favor of the Agent in any of the
Collateral purported to be covered by either of such agreements;
then, and in any such event, the Agent (i) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances, and the obligation of the Agent to
issue Letters of Credit, to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Majority Lenders, by notice to the Borrower, declare the Obligations, all
interest thereon and all other amounts payable under this Agreement and the
other Credit Documents to be forthwith due and payable, whereupon (A) the
Obligations, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and (B) to the extent any Letters of Credit are then outstanding, the Borrower
will deposit with and pledge to the Agent cash collateral in the aggregate
Letter of Credit Amount of such Letters of Credit; provided, however, that, in
the event of an actual or deemed entry of an order for relief with respect to
any Credit Party or any Subsidiary under the Federal Bankruptcy Code, (x) the
obligation of each Lender to make Advances and of the Agent to issue Letters of
Credit shall be terminated automatically, and (y) the Advances, all such
interest and all such amounts (including such cash collateral) shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
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ARTICLE 8.
THE AGENT
Section 8.1 Authorization and Action. Each Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by the Credit Documents (including
enforcement of and collection under the Credit Documents), the Agent shall not
be required to exercise any discretion or take any action, but shall be required
to act or refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to the Credit
Documents or applicable law. The Agent agrees to give each Lender prompt notice
of each notice given to it by the Borrower pursuant to the terms of this
Agreement.
Section 8.2 Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Credit
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent (a) may treat
any Lender that has signed this Agreement or an Assignment and Acceptance as the
holder of the applicable portion of the Obligations; (b) may consult with legal
counsel (including legal counsel for any Credit Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such legal counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with the
Credit Documents; (d) shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
any Credit Document on the part of any Credit Party or to inspect the property
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Credit Document or any
other instrument or document furnished pursuant thereto; and (f) shall incur no
liability under or in respect of any Credit Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier
or otherwise) believed by it to be genuine and signed or sent by the proper
party or parties.
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Section 8.3 UBOC and Affiliates. With respect to its Commitment, the
Advances made by it, the Note issued to it and the Letters of Credit
participated in by it, UBOC shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include UBOC in its individual capacity (including in its capacity as
Issuing Bank). UBOC and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, any Credit Party, any Subsidiary and any Person that may do business with
or own securities of any Credit Party or any Subsidiary, all as if UBOC were not
the Agent and without any duty to account therefor to the Lenders.
Section 8.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance on the Agent or any other Lender and based on
the financial statements referred to in Sections 6(e) and (f) of the Guaranty
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance on the Agent or
any other Lender and based on such documents and information as it deems
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
Section 8.5 Indemnification. The Lenders agree to indemnify the Agent (to
the extent not promptly reimbursed by the Borrower), ratably according to the
respective principal amounts of the Obligations then held by each of them (or,
if no Obligations are at the time outstanding or if any Obligations are then
held by Persons that are not Lenders, ratably according to the respective
amounts of their Commitments), from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of any of
the Credit Documents or any action taken or omitted by the Agent under any of
the Credit Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any costs and expenses payable by the Borrower under Section 9.4, to
the extent that the Agent is not promptly reimbursed for such costs and expenses
by the Borrower.
Section 8.6 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower and may be removed at any
time with or without cause with the written approval of the Majority Lenders.
Upon any such resignation or removal, the Majority Lenders shall have the right
to appoint a successor Agent. If no successor Agent has been so appointed by
the Majority Lenders, and has accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the Majority Lenders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a commercial bank organized
under the laws of the United States of America or of any state thereof and
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Credit
Documents. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was agent under this
Agreement.
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Section 8.7 Agent as Collateral Holder.
(a) Except for action expressly required of the Agent hereunder or under any
other Credit Document as holder of any Collateral, the Agent shall in all cases
be fully justified in refusing to act hereunder and thereunder unless it is
further indemnified to its satisfaction by the Lenders, proportionately in
accordance with the Obligations then due and payable to each of them, against
all liability and expense that may be incurred by the Agent by reason of taking
or continuing to take any such action.
(b) Except as expressly provided herein or in any other Credit Document, the
Agent shall have no duty to take any affirmative steps with respect to the
collection of amounts payable in respect of the Collateral. The Agent shall
incur no liability as a result of any private sale of the Collateral.
(c) The Lenders hereby consent, and agree upon written request by the Agent
to execute and deliver such instruments and other documents as the Agent may
deem desirable to confirm such consent, to the release of the Liens on the
Collateral, including any release in connection with any sale, transfer or other
disposition of the Collateral or any part thereof, in accordance with the Credit
Documents.
(d) The Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that the Agent accords its own
property, it being understood that neither the Agent nor any Lender shall have
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Agent or any Lender is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Collateral.
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ARTICLE 9.
MISCELLANEOUS
Section 9.1 Amendments, Etc. No amendment or waiver of any provision of
this Agreement, or consent to any departure by the Borrower therefrom, shall be
effective unless in writing and signed or consented to (in writing) by the
Majority Lenders and, in the case of amendments, the Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed or consented to (in writing) by
all of the Lenders, do any of the following: (a) waive any of the conditions
specified in Article 4; (b) increase the Commitments of the Lenders or subject
the Lenders to any additional obligations; (c) release any Collateral, except in
accordance with the terms of the Credit Documents; (d) reduce the principal of,
or interest on, the Advances or any fees or other amounts payable hereunder; (e)
postpone any date fixed for (i) payment of principal of, or interest on, the
Advances, (ii) reimbursement of drawings under Letters of Credit or (iii)
payment of fees or other amounts payable hereunder; (f) change the percentage of
the Commitments or of the Obligations outstanding, or the number of Lenders,
required for the Lenders or any of them to take any action hereunder; or (g)
amend this Section 9.1; further provided, however, that no amendment, waiver or
consent shall, unless in writing and signed or consented to (in writing) by the
Super-Majority Lenders, change the definition of "Borrowing Base" in Section
1.1; and further provided, however, that no amendment, waiver or consent shall,
unless in writing and signed or consented to (in writing) by the Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Agent under this Agreement or any other Credit Document.
Section 9.2 Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including by telecopier) and shall be mailed,
telecopied or delivered, if to the Borrower, to it at 5340 South Quebec, Suite
200N, Englewood, Colorado 80111, telecopier number 303-714-0163, Attention: Mr.
Jon D. Galvin, Vice President and Chief Financial Officer; if to any Lender, to
it at the address or telecopier number set forth below its name on the signature
pages hereof or in the Assignment and Acceptance by which it became a party
hereto; if to the Agent, to it at 445 South Figueroa Street, Los Angeles,
California 90071, telecopier number 213-236-4096, Attention: Energy Capital
Services; or, as to each party, to it at such other address or telecopier number
as designated by such party in a written notice to the other parties. All such
notices and communications shall be deemed received, (a) if personally
delivered, upon delivery, (b) if sent by first-class mail, on the third Business
Day following deposit into the mails and (c) if sent by telecopier, on the
Business Day following such sending, except that notices and communications to
the Agent pursuant to Article 2 or 8 shall not be effective until received by
the Agent.
Section 9.3 No Waiver; Remedies. No failure on the part of any Lender or
the Agent to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, and no single or partial exercise of any such right
shall preclude any other or further exercise thereof or the exercise of any
other right. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
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Section 9.4 Costs and Expenses. The Borrower agrees to pay on demand (a)
all costs and expenses of the Lead Arrangers in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, the other Credit Documents and the other documents to be delivered
hereunder, including (i) the reasonable fees and out-of-pocket expenses of legal
counsel for the Lead Arrangers with respect thereto and with respect to advising
the Lead Arrangers as to their respective rights and responsibilities, or the
perfection, protection or reservation of rights or interests, under this
Agreement, the other Credit Documents and such other documents to be delivered
hereunder, and (ii) the fees and expenses of any consultants, auditors or
accountants engaged by the Agent pursuant hereto (including for Commercial
Finance Audits (provided that the Borrower shall not be required to pay for more
than three Commercial Finance Audits conducted during any single calendar year),
Inventory Audits (provided that the Borrower shall not be required to pay for
more than three Inventory Audits conducted during any single calendar year) and
the reports referred in Sections 7(l) and (m) of the Guaranty), and (b) all
costs and expenses of the Agent and the Lenders (including reasonable attorneys'
fees and expenses of the Agent and the Lenders) in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the other Credit Documents and the other documents to be
delivered hereunder, whether in any action, suit or litigation, any bankruptcy,
insolvency or similar proceeding or otherwise.
Section 9.5 Indemnification.
(a) The Borrower hereby agrees to indemnify and hold harmless the Agent and
each Lender and each of their respective officers, directors, employees, agents,
advisors and Affiliates (each an "Indemnified Person") from and against all
claims, damages, losses, liabilities, costs and expenses (including reasonable
attorneys' fees and expenses, whether or not such Indemnified Person is named as
a party to any proceeding or is otherwise subjected to judicial or legal process
arising from any such proceeding) that any of them may incur, or that may be
claimed, asserted or awarded against any of them by any Person, in each case
arising out of, related to or in connection with, or in connection with the
preparation for a defense of any investigation, litigation or proceeding arising
out of, related to or in connection with, any Credit Document, any Advance, any
Letter of Credit, the FOC Note Offering, the acquisition of the El Dorado
Refinery the consummation of any transaction contemplated hereby or thereby, the
transfer of or payment or failure to pay under any Letter of Credit or the use
by the Borrower or the beneficiary of any Letter of Credit of the proceeds of
any Advance or of any drawing under any Letter of Credit, except to the extent
that any such claim, damage, loss, liability, cost or expense is found in a
final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Person's gross negligence or willful misconduct.
(b) The Borrower hereby agrees to indemnify each Indemnified Person from and
against any and all claims, demands, actions, damages (including all foreseeable
and unforeseeable consequential damages), losses, assessments, liabilities and
expenses (including reasonable fees and expenses of counsel) that may be
incurred by or awarded against any Indemnified Person, in each case arising out
of or in connection with or by reason of, or in connection with the preparation
for a defense of, any investigation, litigation or proceeding arising out of,
related to or in connection with (i) the actual or alleged presence of any
Hazardous Material in, on or under (A) any property owned or operated by the
Borrower or any Subsidiary thereof, (B) any property to which any Hazardous
Material has migrated from any property owned or operated by the Borrower or any
Subsidiary thereof or (C) any property at which the Borrower or any Subsidiary
thereof has disposed of any Hazardous Material (whether or not legal at the time
of such disposal) or (ii) any Environmental Proceeding relating in any way to
the Borrower or any Subsidiary thereof, in any case whether or not such
investigation, litigation or proceeding is brought by the Borrower, any
Subsidiary thereof, any of their respective directors, shareholders or creditors
or an Indemnified Person, whether or not any Indemnified Person is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated.
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Section 9.6 Right of Setoff. Upon (a) the occurrence and during the
continuation of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 7.1 to authorize the Agent to
declare the Obligations due and payable pursuant to the provisions of Section
7.1, each Lender is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any or all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Borrower against any or all of the obligations of the Borrower
now or hereafter existing under this Agreement and the other Credit Documents,
irrespective of whether such Lender has made any demand under this Agreement or
any such other Credit Document and although such obligations may be unmatured.
Each Lender agrees to notify the Borrower promptly after any such setoff and
application made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of each Lender under this section are in addition to other rights and
remedies (including other rights of setoff) that such Lender may have.
Section 9.7 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Agent and the Lenders and their
respective successors and assigns, except that (a) the Borrower shall not have
the right to assign any of its rights and obligations hereunder without the
prior written consent of the Majority Lenders and (b) the Lenders shall have the
right to assign their respective rights and obligations hereunder only in
accordance with Section 9.8.
Section 9.8 Assignments and Participations.
(a) Each Lender may assign to one or more banks or other entities acceptable
to the Agent, in the exercise of its reasonable discretion, all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment, the Advances owing to it and its participations in outstanding
Letters of Credit); provided, however, that (i) except in the case of an
assignment to a Person that, immediately before such assignment, was a Lender,
the amount of the Commitment of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than the lesser of
(A) the entire Commitment of such Lender at such time and (B) $10,000,000 and
(ii) the parties to each such assignment shall execute and deliver to the Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recording fee of $3,500. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least 5
Business Days after the date of delivery thereof to the Agent or, if so
specified in such Assignment and Acceptance, the date of acceptance thereof by
the Agent, (i) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Lender hereunder and (ii) the Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender shall cease to be a party
hereto, except that such Lender shall continue to be an "Indemnified Person"
under Section 9.5).
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(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statement, warranty
or representation made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other instrument or document furnished pursuant hereto; (ii)
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
any Subsidiary or the performance or observance by any Credit Party of any of
its obligations under any Credit Document or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Sections 6(e) and (f) of the Guaranty and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it may deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Documents as are delegated to the Agent by the
terms thereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of the Credit Documents are
required to be performed by it as a Lender.
(c) The Agent shall maintain at its address set forth in Section 9.2 a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the Commitment
of, and the principal amount of Obligations owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
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(d) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, the Agent shall, if such Assignment and Acceptance has
been completed and is in proper form and if such assignee is acceptable to the
Agent, in the exercise of its reasonable discretion, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower.
(e) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments, the Advances owing to
it and its participations in outstanding Letters of Credit); provided, however,
that (i) such Lender's obligations under this Agreement (including its
Commitment) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (iv) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of any Credit Document, or any consent to any departure by any Credit
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Advances, the amount to be
reimbursed in respect of any drawing under a Letter of Credit or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Advances, the amount to be reimbursed in respect of any drawing
under a Letter of Credit or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, or release all or
substantially all of the Collateral, except as provided in the Credit Documents.
(f) Any Lender may, in connection with any assignment or participation or
proposed assigned or participation pursuant to this Section 9.8, disclose to the
assignee or participant or proposed assignee or participant any information
relating to the Borrower that was furnished to such Lender by or on behalf of
the Borrower.
Section 9.9 Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF
CALIFORNIA.
Section 9.10 Headings. The section and subsection headings used herein
have been inserted for convenience of reference only and do not constitute
matters to be considered in interpreting this Agreement.
Section 9.11 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
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Section 9.12 Alternative Dispute Resolution
(a) Claims Subject to Judicial Reference; Selection of Referee. All Claims
involving the Borrower, including any and all questions of law or fact relating
thereto, shall, at the written request of the Borrower or the Agent (together
the "Parties"), be determined by Reference. The Parties shall select a single
neutral referee, who shall be a retired state- or federal-court judge with at
least 5 years of judicial experience in civil matters. In the event that the
Parties cannot agree upon a referee, the referee shall be appointed by a court
having jurisdiction over the same. The Borrower, on the one hand, and the
Lenders, on the other hand, shall bear equally the fees and expenses of the
referee unless the referee provides otherwise in the statement of decision.
(b) Conduct of Reference. Except as otherwise provided in this Agreement,
any Reference shall be conducted pursuant to the laws of the State of
California. The referee shall determine all issues relating to the
applicability, interpretation, legality and enforceability of this Agreement and
the other Credit Documents.
(c) Provisional Remedies, Self-Help and Foreclosure. No provision of this
Agreement shall limit the right of any Party (i) to exercise self-help remedies,
including setoff, (ii) to foreclose against or sell any collateral, by power of
sale or otherwise, or (iii) to obtain or oppose provisional or ancillary
remedies from a court of competent jurisdiction before, after or during the
pendency of a Reference. The exercise of, or opposition to, any such remedy
does not waive the right of any Party to Reference pursuant to this Agreement.
(d) Limitation on Damages. In the event that punitive damages are permitted
under the law of the State of California, the amount thereof shall not exceed a
sum equal to three times the amount of actual damages as determined by the
referee.
(e) Severability. In the event that any provision of any Credit Document is
found to be illegal or unenforceable, the remainder of such Credit Document
shall remain in full force and effect.
(f) Miscellaneous. In the event that multiple claims are asserted, some of
which are found not subject to the provisions of this Section 9.12, the Parties
agree to stay the proceedings of the claims not subject to this Section 9.12
until all other claims are resolved in accordance with this Section 9.12. In
the event that claims are asserted against multiple parties, some of which are
not subject to this Section 9.12, the Parties agree to sever the claims subject
to this Section 9.12 and resolve them in accordance with this Section 9.12. In
the event of any challenge to the legality or enforceability of this Section
9.12, the prevailing Party shall be entitled to recover the costs and expenses,
including reasonable attorneys' fees, incurred by it in connection therewith.
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<PAGE>
(g) WAIVER OF JURY TRIAL. IN CONNECTION WITH ANY REFERENCE OR ANY OTHER
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER BROUGHT IN STATE OR FEDERAL COURT,
THE BORROWER, THE LENDERS AND THE AGENT HEREBY EXPRESSLY, INTENTIONALLY AND
IRREVOCABLY WAIVE ANY RIGHT THEY MAY OTHERWISE HAVE TO TRIAL BY JURY OF ANY
CLAIM.
FRONTIER OIL AND REFINING COMPANY
By: /s/ Jon D. Galvin
-------------------------------
Jon D. Galvin
Vice President and
Chief Financial Officer
Commitment
$100,000,000 UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent, Documentation Agent, Lead
Arranger and Lender
By: /s/ Karyssa M. Henderson
--------------------------------
Name: Karyssa M. Henderson
Title: Vice President
Union Bank of California, N.A.
445 South Figueroa Street
Los Angeles, California 90071
Telecopier: 213-236-4096
Attention: Energy Capital Services
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<PAGE>
$75,000,000 PARIBAS,
as Syndication Agent, Lead Arranger and Lender
By: /s/ Barton D. Schouest
---------------------------------
Name: Barton D. Schouest
Title: Managing Director
By: /s/ John H. Roberts
---------------------------------
Name: John H. Roberts
Title: Vice President
Paribas
Houston Agency
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telecopier: 713-659-3832
Attention: Mr. Douglas Liftman or
Mr. Barton D. Schouest
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<PAGE>
