<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1995
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 1-3876
HOLLY CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-1056913
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Crescent Court, Suite 1600
Dallas, Texas 75201-6927
- ------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 871-3555
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
8,253,514 shares of Common Stock, par value $.01 per share, were outstanding on
December 8, 1995.
<PAGE> 2
HOLLY CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet -
October 31, 1995 (Unaudited) and July 31, 1995 3
Consolidated Statement of Income (Unaudited) -
Three Months Ended October 31, 1995 and 1994 4
Consolidated Statement of Cash Flows (Unaudited) -
Three Months Ended October 31, 1995 and 1994 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Securities Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HOLLY CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Unaudited
October 31, July 31,
1995 1995
-------- ---------
<C> <C> <C>
ASSETS
------
Current assets
Cash and cash equivalents $ 28,059 $ 13,432
Accounts receivable: Trade 39,136 37,733
Crude oil 42,326 48,092
-------- --------
81,462 85,825
Inventories: Crude oil and refined products 29,280 35,649
Materials and supplies 6,239 6,532
-------- --------
35,519 42,181
Income taxes receivable - 1,540
Prepayments and other 10,667 10,032
-------- --------
Total current assets 155,707 153,010
Properties, plants and equipment, at cost 253,904 249,814
Less accumulated depreciation, depletion and amortization 121,631 118,629
-------- --------
132,273 131,185
Other assets 2,240 3,189
-------- --------
$290,220 $287,384
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable $101,193 $106,817
Accrued liabilities 13,831 13,702
Income taxes payable 3,099 476
Current maturities of long-term debt 10,775 14,275
-------- --------
Total current liabilities 128,898 135,270
Deferred income taxes 17,521 17,506
Long-term debt, less current maturities 58,065 54,565
Contingencies
Stockholders' equity
Preferred stock, $1.00 par value -
1,000,000 shares authorized; none issued - -
Common stock, $.01 par value - 20,000,000 shares
authorized; 8,650,282 shares issued 87 87
Additional capital 6,132 6,132
Retained earnings 80,086 74,803
-------- --------
86,305 81,022
Common stock held in treasury, at cost - 396,768 shares (569) (569)
Deferred charge - amount due from ESOP - (410)
-------- --------
Total stockholders' equity 85,736 80,043
-------- --------
$290,220 $287,384
======== ========
</TABLE>
See accompanying notes.
3
<PAGE> 4
HOLLY CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Dollars in Thousands Except Per Share Amounts)
<TABLE>
<CAPTION>
Unaudited
Three Months Ended
October 31,
--------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Revenues
Net Sales $164,719 $ 160,600
Miscellaneous 119 124
--------- ---------
164,838 160,724
Costs and expenses
Cost of sales 144,990 139,247
General and administrative 3,429 3,355
Depreciation, depletion and amortization 3,973 3,523
Exploration expenses, including dry holes 561 466
Miscellaneous 96 28
--------- ---------
153,049 146,619
--------- ---------
Income from operations 11,789 14,105
Other
Interest income 331 181
Interest expense (1,909) (2,120)
--------- ---------
(1,578) (1,939)
--------- ---------
Income before income taxes and cumulative effect
of change in accounting for turnarounds 10,211 12,166
Income tax provision
Current 4,168 4,501
Deferred (60) 413
--------- ---------
4,108 4,914
--------- ---------
Income before cumulative effect of
change in accounting method 6,103 7,252
Cumulative effect to August 1, 1994 of change
in accounting for turnarounds, net of taxes - 5,703
--------- ---------
Net income $ 6,103 $ 12,955
========= =========
Income per common share
Income before cumulative effect of
change in accounting method $ .74 $ .88
Cumulative effect to August 1, 1994 of change
in accounting for turnarounds, net of taxes - .69
--------- ---------
Net income $ .74 $ 1.57
======== =========
Cash dividends paid per share $ .10 $ .10
Average number of shares of common
stock outstanding (in thousands) 8,254 8,254
</TABLE>
See accompanying notes.
4
<PAGE> 5
HOLLY CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Unaudited
Three Months Ended
October 31,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income $ 6,103 $ 12,955
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation, depletion and amortization 3,973 3,523
Deferred income taxes (60) 413
Dry hole costs and leasehold impairment 112 2
Cumulative effect to August 1, 1994 of
change in accounting for turnarounds - (5,703)
(Increase) decrease in operating assets
Accounts receivable 4,363 18,156
Inventories 6,662 6,551
Income taxes receivable 1,540 697
Prepayments and other (685) 253
Increase (decrease) in operating liabilities
Accounts payable (5,624) (21,947)
Accrued liabilities 204 1,625
Income taxes payable 2,628 3,656
Other, net 438 (2,514)
-------- --------
Net cash provided by operating activities 19,654 17,667
Cash flows from financing activities
Cash dividends (825) (825)
-------- --------
Net cash used for financing activities (825) (825)
Cash flows from investing activities
Additions to properties, plants and equipment (4,202) (3,736)
-------- --------
Net cash used for investment activities (4,202) (3,736)
-------- --------
Cash and cash equivalents
Increase for the period 14,627 13,106
Beginning of year 13,432 3,297
-------- --------
End of period $ 28,059 $ 16,403
======== ========
Supplemental disclosure of cash flow information
Cash paid during period for
Interest $ 278 $ 290
Income taxes $ - $ 100
</TABLE>
See accompanying notes.
5
<PAGE> 6
HOLLY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Presentation of Financial Statements
In the opinion of the Company, the accompanying consolidated financial
statements, which have not been audited by independent accountants (except for
the consolidated balance sheet as of July 31, 1995), reflect all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the Company's consolidated financial position as of October 31, 1995, the
consolidated results of operations for the three months ended October 31, 1995
and 1994, and consolidated cash flows for the three months ended October 31,
1995 and 1994.
Certain notes and other information have been condensed or omitted.
Therefore, these financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the fiscal year ended July 31, 1995.
References herein to the "Company" are for convenience of presentation
and may include obligations, commitments or contingencies that pertain solely
to one or more affiliates of the Company. Results of operations for the first
three months of fiscal 1996 are not necessarily indicative of the results to be
expected for the full year.
Note B - Debt
In November 1995, the Company completed the funding from a group of
insurance companies of a new private placement of Senior Notes in the amount of
$39 million and the extension of $21 million of previously outstanding Senior
Notes. The new $39 million Series C Notes have a 10-year life, require equal
annual principal payments of $5,571,000 beginning December 15, 1999, and bear
interest at 7.62%. The new $21 million Series D Notes, for which previously
issued Series B Notes were exchanged, have a ten-year life, require equal
annual principal payments of $3,000,000 beginning December 15, 1999, and bear
interest at an initial rate of 10.16%, with reductions to 7.82% for the periods
subsequent to the original maturity dates of the exchanged Series B Notes.
Both the new notes and the extension notes have other terms and conditions
similar to the previously outstanding Senior Notes. At October 31, 1995,
$3,500,000 of current maturities have been reclassified to long-term as result
of this transaction.
Maturities of long-term debt subsequent to October 31, 1995 for the next
five fiscal years are as follows: 1996 -- $10,775,000; 1997 -- $10,775,000;
1998 - $10,775,000; 1999 -- $5,175,000 and 2000 -- $13,746,000.
6
<PAGE> 7
HOLLY CORPORATION
Notes to Consolidated Financial Statements (Continued)
Note C - Contingencies
In July 1993, the United States Department of Justice (DOJ), on behalf
of the United States Environmental Protection Agency (EPA), filed a suit
against the Company's subsidiary, Navajo Refining Company (Navajo) alleging
that, beginning in September 1990 and continuing through the present, Navajo
has violated and continues to violate the Resource Conservation and Recovery
Act (RCRA) and implementing regulations of the EPA by treating, storing and
disposing of certain hazardous wastes without compliance with regulatory
requirements. The Company believes that the parties are in the final stage of
negotiating a resolution of the litigation. If settled as anticipated, the
Company would close the existing evaporation ponds of its wastewater management
system at a cost believed to be substantially less than $1 million. The
settlement also contemplates that the Company would implement one of several
alternatives to the existing wastewater treatment system. Depending upon which
approach is utilized, the Company could incur total costs of approximately $3
million over the next several years. The costs to implement an alternative
wastewater treatment system would be capitalized and amortized over the future
useful life of the resulting asset in accordance with generally accepted
accounting principles. The settlement with the DOJ also is expected to involve
the payment of civil penalty of less than $2 million. In fiscal 1993, the
Company recorded a $2 million reserve for the litigation.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Net income for the first quarter ended October 31, 1995 was $6.1 million
as compared to $13.0 million, which included a gain of $5.7 million for an
accounting change, for the first quarter of the prior year.
Excluding the effects of the change in accounting for turnarounds, net
income decreased in the current year's first quarter as compared to the same
period of fiscal 1995. Refinery margins, were less than in the first quarter
of the prior year as crude oil costs were slightly higher and product prices
were slightly lower in the current year's first quarter as compared to the
prior year's first quarter. Partially offsetting the lower margins in the
fiscal 1996 first quarter was an increase of 5% in sales volumes over the prior
year's first quarter. Revenues increased in the quarter ended October 31, 1995
from the prior year's comparable period as a result of the greater sales
volumes, partially offset by the decrease in product prices.
7
<PAGE> 8
HOLLY CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Effective August 1, 1994, the Company changed its method of accounting
for turnaround costs. Turnarounds consist of preventive maintenance on major
processing units as well as the shutdown and restart of all units, and
generally are scheduled at two to three year intervals. Previously, the
Company estimated the costs of the next scheduled turnaround and ratably
accrued the related expenses prior to the actual turnaround. To provide for a
better matching of turnaround costs with revenues, the Company changed its
accounting method for turnaround costs to one that results in the amortization
of costs incurred over the period until the next scheduled turnaround. The
cumulative effect of this accounting change through the 1994 fiscal year was an
increase in net income in the first quarter of fiscal 1995 of $5.7 million.
Financial Condition
Cash flows from operations during the three months ended October 31,
1995 exceeded capital expenditures and dividends paid, resulting in a net
increase of cash and cash equivalents of $14.6 million. Working capital
increased during the three months ended October 31, 1995 by $9.1 million to
$26.8 million. At October 31, 1995, the Company had $25 million of borrowing
capacity under the Credit Agreement which can be used for short term working
capital needs. The Company believes that these sources of funds, together with
future cash flows from operations and a new private placement and extension of
debt as described below should provide sufficient resources, financial strength
and flexibility for the Company to satisfy its liquidity needs, capital
requirements, and debt service obligations and to permit the payment of
dividends for the foreseeable future.
Net cash provided by operating activities amounted to $19.7 million in
the first three months of fiscal 1996, as compared to $17.7 million in the same
period of the prior year. The change in the method of accounting for
turnaround costs did not have any effect on cash provided from operations. The
net change in working capital accounts for both periods was comparable.
8
<PAGE> 9
HOLLY CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Cash flows used for investing activities were $4.2 million in the first
three months of fiscal 1996, as compared to $3.7 million in the same period of
the prior year, all of which amounts were for capital expenditures. The
Company has adopted capital budgets totalling $44 million for fiscal 1996. The
major components of this budget are projects relating to the Company's 60,000
barrel per day Navajo Refinery in Artesia, New Mexico. The projects involve
refinery upgrades to improve product yields, a joint venture to ship liquid
petroleum gas (LPGs) to Mexico, and construction of a new 12" pipeline from the
Navajo Refinery to El Paso, Texas.
The Company believes its presently scheduled capital projects will
improve product yields and enhance refining profitability. The first of these
projects, a UOP Isomerization unit, will increase the refinery's internal
octane generating capabilities and will result in improved light product
yields. This unit is expected to be operational during the fourth quarter of
fiscal 1996. In addition, the Company has determined to make certain
state-of-the-art upgrades to its fluid catalytic cracking unit (FCC), which
will improve FCC high value product yields. Engineering and equipment
procurement for this project will proceed during fiscal 1996, with completion
and realization of benefits occurring during fiscal 1997. The total estimated
cost of these two projects is $12.5 million.
The Company has entered into a joint venture with Mapco and Amoco
Pipeline to transport LPGs to Mexico. In connection with this project, a new
12" pipeline will be constructed from the Navajo refinery in Artesia, New
Mexico to El Paso, Texas which should result in reduced operating expenses at
current throughputs and position Navajo to transport higher volumes in the
event of future refinery expansion. The new line will replace an 8" pipeline
currently used by Navajo which, in turn, is to be transferred to the joint
venture. The Company's total net cash investment in the project, including a
25% interest in the joint venture, is estimated to be $22 million.
The remainder of the approved capital budgets will be for various
refinery improvements, environmental and safety enhancements and approximately
$2 million for oil and gas exploration and production activities.
9
<PAGE> 10
HOLLY CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
Cash flows used for financing activities amounted to $.8 million in the
first three months of fiscal 1996, as compared to $.8 million in the same
period of the prior year, all of which were for dividends. In November 1995,
the Company completed the funding from a group of insurance companies of a new
private placement of Senior Notes in the amount of $39 million and the
extension of $21 million of previously outstanding Senior Notes. This private
placement is intended to finance the Company's $44 million capital budget for
the 1996 fiscal year, and to enhance the Company's future investment
flexibility and financial strength. The $39 million of new Senior Notes will
have a 10 year maturity, with equal annual principal payments of $5.6 million
beginning at the end of the fourth year, and an interest rate of 7.62%. The
extension of $21 million of previously issued Series B Notes extends the final
maturity of these notes from June 2001 to December 2005, with the first
principal payment date changed from June 1996 to December 1999, and with an
interest rate of 7.82% for the period subsequent to the original maturity date.
Both the new notes and the extension notes have other terms and conditions
similar to the previously outstanding Senior Notes. With the closing of this
transaction, maturities of long-term debt for the next five fiscal years are
now as follows: 1996 -- $10,775,000; 1997 -- $10,775,000; 1998 -- $10,775,000;
1999 -- $5,175,000 and 2000 -- $13,746,000.
Diamond Shamrock, Inc., an independent refiner and marketer, completed
in November 1995 the construction of a 409-mile, ten-inch refined products
pipeline from its McKee refinery near Dumas, Texas to El Paso, the Company's
largest market. Diamond Shamrock announced that this pipeline will have an
initial capacity of 27,000 BPD, and that Diamond Shamrock intends to use its
pipeline to supply fuels to the El Paso, New Mexico, Arizona and northern
Mexico markets. The Diamond Shamrock pipeline should substantially increase
the supply of products in the Company's principal markets.
In June 1995, an investor group announced that it was negotiating to
purchase an existing crude oil pipeline running from West Texas to a refinery
near Houston as part of the investor group's plan to reverse the line and
extend it for use in transporting refined products from the Gulf Coast to El
Paso. There have been periodic reports since then that the group is taking
steps to attempt to bring the project to fruition. If such a project were to
be consummated, there would be a substantial increase in supply for the
Company's markets. Neither the viability of this project nor its long-term
ramifications can presently be ascertained.
10
<PAGE> 11
HOLLY CORPORATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
At times in the past, the common carrier pipelines used by the Company
to serve the Tucson and Phoenix markets have been operated at or near their
capacity. In addition, the common carrier pipeline used by the Company to
serve the Albuquerque market currently is operating at or near capacity. As a
result, the volume of refined products that the Company and other shippers have
been able to deliver to these markets at times has been limited. In general,
there is no assurance that the Company will not experience future constraints
on its ability to deliver its products through common carrier pipelines or that
any existing constraints will not worsen. In particular, the flow of
additional product into El Paso for shipment to Arizona, either as a result of
the new Diamond Shamrock pipeline or otherwise, could result in the
reoccurrence of such constraints.
In July 1993, the United States Department of Justice (DOJ), on behalf
of the United States Environmental Protection Agency (EPA), filed a suit
against the Company's subsidiary, Navajo Refining Company (Navajo) alleging
that, beginning in September 1990 and continuing through the present, Navajo
has violated and continues to violate the Resource Conservation and Recovery
Act (RCRA) and implementing regulations of the EPA by treating, storing and
disposing of certain hazardous wastes without compliance with regulatory
requirements. The Company believes that the parties are in the final stages of
negotiating a resolution of the litigation. If settled as anticipated, the
Company would close the existing evaporation ponds of its wastewater management
system at a cost believed to be substantially less than $1 million. The
settlement also contemplates that the Company would implement one of several
alternatives to the existing wastewater treatment system. Depending upon which
approach is utilized, the Company could incur total costs of approximately $3
million over the next several years. The costs to implement an alternative
wastewater treatment system would be capitalized and amortized over the future
useful life of the resulting asset in accordance with generally accepted
accounting principles. The settlement with the DOJ also is expected to involve
the payment of a civil penalty of less than $2 million. In fiscal 1993, the
Company recorded a $2 million reserve for the litigation.
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In July 1993, the DOJ, acting on behalf of the EPA, filed a complaint in
the United States District Court for the District of New Mexico alleging that
Navajo, beginning in September 1990 and continuing until the present, had
violated and continues to violate the RCRA and implementing regulations of the
EPA by treating, storing and disposing of certain hazardous wastes without
necessary authorization and without compliance with regulatory requirements.
The complaint seeks a court order directing Navajo to comply with these
regulatory standards and civil penalties for the alleged non- compliance. The
Company believes that the parties are in the final stages of negotiations that
should resolve the litigation. Based on these negotiations, the Company would
close the existing evaporation ponds of its wastewater management system and
implement an alternative wastewater treatment system. Any settlement with DOJ
and EPA also is expected to involve payment of a civil penalty. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note C to the Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Securities Holders
At the annual meeting of stockholders of December 14, 1995, all seven of
the management's nominees for directors as listed in the proxy statement were
elected.
SCHEDULE OF VOTES CAST FOR EACH DIRECTOR
<TABLE>
<CAPTION>
Total Shares Voted Total Shares Voted
"For" "Withheld"
------------------- ------------------
<S> <C> <C>
Matthew P. Clifton 7,004,855 17,461
Marcus R. Hickerson 7,006,259 16,057
A. J. Losee 7,005,133 17,183
Thomas K. Matthews, II 7,002,351 19,965
Robert G. McKenzie 7,005,867 16,449
Lamar Norsworthy 7,004,855 17,461
Jack P. Reid 7,004,855 17,461
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: See Index to Exhibits on page 14.
(b) Reports on Form 8-K: None.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOLLY CORPORATION
--------------------------
(Registrant)
Date: December 14, 1995 By /S/Henry A.Teichholz
--------------------------
Henry A. Teichholz
Vice President, Treasurer
and Controller
(Duly Authorized Principal
Financial and Accounting
Officer)
13
<PAGE> 14
HOLLY CORPORATION
INDEX TO EXHIBITS
(Exhibits are numbered to correspond to the exhibit
table in Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
4.1 - Third Amendment to First Amended and Restated Credit Agreement, dated as of November 15, 1995,
among Holly Corporation, Navajo Refining Company, Holly Petroleum, Inc., Navajo Pipeline Co.,
Navajo Holdings, Inc., Lea Refining Company, Navajo Western Asphalt Company, Montana Refining
Company, a Partnership and Navajo Crude Oil Marketing Company, NationsBank of Texas, N.A., as
Agent, and NationsBank of Texas, N.A., Banque Paribas, The First National Bank of Boston, and
The Bank of Nova Scotia.
4.2 - Guaranty, dated as of November 1, 1995, of Navajo Crude Oil Marketing Company and Navajo
Western Asphalt Company in favor of New York Life Insurance Company, John Hancock Mutual Life
Insurance Company, John Hancock Variable Life Insurance Company, Confederation Life Insurance
Company, The Penn Insurance and Annuity Company, The Penn Mutual Life Insurance Company, The
Manhattan Life Insurance Company, The Union Central Life Insurance Company, Safeco Life
Insurance Company, American International Life Assurance Company of New York, Pan-American Life
Insurance Company and Jefferson-Pilot Life Insurance Company.
4.3 - Letter of Consent, Waiver and Amendment, dated as of November 15, 1995, among Holly
Corporation, and New York Life Insurance Company, John Hancock Mutual Life Insurance Company,
John Hancock Variable Life Insurance Company, Confederation Life Insurance Company, The Penn
Insurance and Annuity Company, The Penn Mutual Life Insurance Company, The Manhattan Life
Insurance Company, The Union Central Life Insurance Company, Safeco Life Insurance Company,
American International Life Assurance Company of New York, Pan-American Life Insurance Company
and Jefferson-Pilot Life Insurance Company.
</TABLE>
14
<PAGE> 15
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C> <C>
4.4 - 7.62% Series C Senior Note of Holly Corporation, dated as of November 21, 1995, to John Hancock
Mutual Life Insurance Company, with schedule attached thereto of five other substantially
identical Notes which differ only in the respects set forth in such schedule.
4.5 - Series D Senior Note of Holly Corporation, dated as of November 21, 1995, to John Hancock
Mutual Life Insurance Company, with schedule attached thereto of three other substantially
identical Notes which differ only in the respects set forth in such schedule.
4.6 - Note Agreement of Holly Corporation, dated as of November 15, 1995, to John Hancock Mutual Life
Insurance Company, with schedule attached thereto of five other substantially identical Note
Agreements which differ only in the respects set forth in such schedule.
4.7 - Guaranty, dated as of November 15, 1995, of Navajo Refining Company, Navajo Pipeline Company,
Lea Refining Company, Navajo Holdings, Inc., Navajo Western Asphalt Company and Navajo Crude
Oil Marketing Company in favor of John Hancock Mutual Life Insurance Company, John Hancock
Variable Life Insurance Company, Alexander Hamilton Life Insurance Company of America, The Penn
Mutual Life Insurance Company, AIG Life Insurance Company an Pan-American Life Insurance
Company.
27 - Financial Data Schedule
</TABLE>
15
<PAGE> 1
EXHIBIT 4.1
THIRD AMENDMENT TO
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED CREDIT
AGREEMENT (herein called this "Amendment") made as of the 15th day of November,
1995, by and among Holly Corporation ("Borrower"), Navajo Refining Company
("Navajo"), Holly Petroleum, Inc. ("Holly Petroleum"), Navajo Pipeline Co.
("Navajo Pipeline"), Navajo Holdings, Inc. ("Navajo Holdings"), Lea Refining
Company ("Lea"), Navajo Western Asphalt Company ("Navajo Western"), Montana
Refining Company, a Partnership ("Montana") and Navajo Crude Oil Marketing
Company ("Navajo Crude") (Navajo, Holly Petroleum, Navajo Pipeline, Navajo
Holdings, Lea, Navajo Western and Navajo Crude collectively referred to herein
as "Guarantors"), NationsBank of Texas, N.A., as Agent ("Agent"), and
NationsBank of Texas, N.A., Banque Paribas, The First National Bank of Boston,
and The Bank of Nova Scotia (collectively, "Lenders"),
WITNESSETH:
WHEREAS, Borrower, Guarantors, Montana, Agent and Lenders have
entered into that certain First Amended and Restated Credit Agreement dated as
of July 23, 1993, as amended by that certain First Amendment to First Amended
and Restated Credit Agreement dated as of April 7, 1994, and by that certain
Second Amendment to First Amended and Restated Credit Agreement dated as of
June 13, 1995 (as so amended, the "Original Agreement"), for the purpose and
consideration therein expressed, whereby Lenders became obligated to make loans
to Borrower, and to issue letters of credit for the account of Borrower and
Montana, as therein provided; and
WHEREAS, Borrower, Guarantors, Montana, Agent and Lenders
desire to amend the Original Agreement for the purposes expressed herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained herein and in the Original Agreement
and in consideration of the loans which may hereafter be made by Lenders to
Borrower and of the letters of credit which may hereafter be issued, extended
and renewed by Lenders for the account of Borrower and for the account of
Montana, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
agree as follows:
I.
DEFINITIONS AND REFERENCES
A. Terms Defined in the Original Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Agreement shall have the same meanings whenever
used in this Amendment.
-1-
<PAGE> 2
B. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
"Amendment" shall mean this Third Amendment to First Amended
and Restated Credit Agreement.
"Credit Agreement" shall mean the Original Agreement as
amended hereby.
II.
AMENDMENTS TO ORIGINAL AGREEMENT
A. Defined Terms. The following definition of "Mandatory
Principal Payment" is hereby added to Section 1.1 of the Original Agreement
immediately following the definition of "Majority Banks":
"'Mandatory Principal Payment'. The aggregate mandatory
principal payments that will be due on the Private Placement Date
pursuant to the 1995 Private Placement Agreement and the Private
Placement Agreement."
The definition of "Minimum Working Capital Requirements" in
Section 1.1 of the Original Agreement is hereby amended in its entirety to read
as follows:
"'Minimum Working Capital Requirements'. The Minimum Working
Capital Requirements shall be satisfied at any time when Consolidated
Current Assets minus Consolidated Current Liabilities equals or
exceeds Fifteen Million Dollars ($15,000,000),except that the Minimum
Working Capital Requirements shall be satisfied in each year
commencing 1996, during the period from and including April 30 until
but excluding the Private Placement Date, only if Consolidated Current
Assets minus Consolidated Current Liabilities equals or exceeds the
sum of $15,000,000 plus the Mandatory Principal Payment. For purposes
of this paragraph, Consolidated Current Liabilities will be calculated
without including any payments of principal on the notes issued under
the Private Placement Agreement or the 1995 Private Placement
Agreement which are required to be repaid within one year from the
time of calculation."
The following definition of "1995 Private Placement Agreement"
is hereby added to Section 1.1 of the Original Agreement immediately following
the definition of "Navajo Western."
"'1995 Private Placement Agreement'. Those substantially
similar Note Agreements, each dated as of November 15, 1995 providing
for the issuance by Borrower of $39,000,000 in aggregate principal
amount of its Series C Senior Notes due December 15, 2005 and of
$21,000,000 in aggregate principal amount of its
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<PAGE> 3
Series D Notes due December 15, 2005, as the same may from time to
time be amended."
The definition of "Private Placement Agreement" in Section 1.1
of the Original Agreement is hereby amended in its entirety to read as follows:
"'Private Placement Agreement'. Those substantially similar
Note Agreements, each dated as of June 15, 1991, providing for the
issuance by Borrower of $28,000,000 in aggregate principal amount of
its Series A Senior Notes originally due June 15, 1998 and of
$52,000,000 in aggregate principal amount of its Series B Senior Notes
originally due June 15, 2001, as the same may from time to time be
amended."
The definition of "Private Placement Date" in Section 1.1 of
the Original Agreement is hereby amended in its entirety to read as follows:
"'Private Placement Date'. So long as the Private Placement
Agreement or the 1995 Private Placement Agreement is in effect, the
date in each year commencing 1996 on which Borrower makes the required
annual prepayments in respect of the notes issued under the Private
Placement Agreement or the 1995 Private Placement Agreement."
The following definition of "Third Amendment" is hereby added
to Section 1.1 of the Original Agreement immediately following the definition
of "Subsidiary."
"'Third Amendment'. That certain Third Amendment to this
Agreement dated as of November 15, 1995, by and among Borrower,
Guarantors, Montana, Agent and Banks."
B. Indebtedness. Section 7.1(j) of the Original agreement is
hereby amended in its entirety to read as follows:
"(j) Indebtedness in an aggregate amount not to exceed
$107,800,000 arising under the Private Placement Agreement, the 1995
Private Placement Agreement and the guaranties thereof by the
Guarantors and such other Subsidiaries as guarantee the Obligations
from time to time, so long as the maturities, rates of interest,
prepayment premiums and dates of payment do not differ materially from
those set forth on Exhibit A to the Third Amendment;"
Section 2.3. Working Capital. Section 7.8 of the Original
Agreement is hereby amended in its entirety to read as follows:
"Section 7.8. Working Capital. The Related Persons shall not,
at any time, permit Consolidated Current Assets minus Consolidated
Current Liabilities to be less than Ten Million Dollars ($10,000,000)
at any time, except that in each year commencing 1996, during the
period from and including April 30 until but excluding the Private
Placement Date, Consolidated Current Assets minus Consolidated Current
Liabilities
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<PAGE> 4
shall not be less than the sum of $10,000,000 plus the Mandatory
Principal Payment. For purposes of this Section 7.8, Consolidated
Current Liabilities will be calculated without including any payments
of principal on the notes issued under the Private Placement Agreement
or the 1995 Private Placement Agreement which are required to be
repaid within one year from the time of calculation."
Section 2.4. Borrower's Working Capital. Section 7.9 of the
Original Agreement is hereby amended in its entirety to read as follows:
"Section 7.9. Borrower's Working Capital. The Related Persons
shall not, at any time, permit Consolidated Current Assets minus
Consolidated Current Liabilities to be less than Five Million Six
Hundred Thousand Dollars ($5,600,000), except that in each year
commencing 1996, during the period from and including April 30 until
but excluding the Private Placement Date, Consolidated Current Assets
minus Consolidated Current Liabilities shall not be less than the sum
of $5,600,000 plus the Mandatory Principal Payment. For purposes of
this section only, the current assets and current liabilities of
Montana and the Montana General Partners shall be excluded from the
calculation of Consolidated Current Liabilities and Consolidated
Current Assets. For purposes of this Section 7.9, Consolidated Current
Liabilities will be calculated without including any payments of
principal on the notes issued under the Private Placement Agreement or
the 1995 Private Placement Agreement which are required to be repaid
within one year from the time of calculation."
Section 2.5. Event of Default. Section 10(l) of the Original
Agreement is hereby amended in its entirety to read as follows:
"(l) the aggregate principal amount of the notes
issued pursuant to either the Private Placement Agreement or
the 1995 Private Placement Agreement is increased, the rate of
interest or premium on such notes is increased from the rates
set forth on Exhibit A to the Third Amendment, or the
amortization schedule for such notes is modified without the
prior written consent of Majority Banks, or an event of
default shall occur and be continuing under the Private
Placement Agreement, the 1995 Private Placement Agreement or
any document or instrument executed and delivered in
connection therewith; or"
III.
CONDITIONS OF EFFECTIVENESS
A. Effective Date. This Amendment shall become effective
as of the date first above written when, and only when, (i) Agent shall have
received, at Agent's office, a counterpart of this Amendment executed and
delivered by Borrower, each Guarantor, Montana and each Lender, and (ii) Agent
shall have additionally received, in form and substance satisfactory to Agent,
certificates of the Secretary of Borrower and each Guarantor dated the date of
this Amendment certifying that (a) the persons named as authorized signatories
in prior Secretary's Certificates delivered to Agent (the "Prior Certificates")
are
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<PAGE> 5
authorized to sign this Amendment, (b) the resolutions authorizing the
execution of the Loan Documents that were attached to the Prior Certificates
have not been amended, modified or revoked in any respect and are in full force
and effect on the date hereof and (c) that the charter documents of Borrower or
such Guarantor attached to the Prior Certificates have not been amended,
modified or revoked in any respect and are in full force and effect on the date
hereof.
IV.
REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of Related Persons. In
order to induce each Lender to enter into this Amendment, Borrower represents
and warrants as to itself and each other Related Person, and each other Related
Person represents and warrants as to itself, to each Lender that:
1. The representations and warranties contained in
Section 5.1 of the Original Agreement are true and correct at and as
of the time of the effectiveness hereof.
2. Each of Borrower, each Guarantor and Montana is
duly authorized to execute and deliver this Amendment, and Borrower is
and will continue to be duly authorized to borrow monies and to perform
its obligations under the Credit Agreement. Each of Borrower, each
Guarantor and Montana has duly taken all corporate or partnership
action necessary to authorize the execution and delivery of this
Amendment and to authorize the performance of its obligations
hereunder.
3. The execution and delivery by each of Borrower,
each Guarantor and Montana of this Amendment, the performance by such
Person of its obligations hereunder and the consummation of the
transactions contemplated hereby do not and will not conflict with any
provision of law, statute, rule or regulation or of any of its
organizational documents, or of any material agreement, judgment,
license, order or permit applicable to or binding upon it, or result in
the creation of any lien, charge or encumbrance upon any assets or
properties or any of its assets. Except for those which have been
obtained, no consent, approval, authorization or order of any court or
governmental authority or third party is required in connection with
the execution and delivery by any of Borrower, any Guarantor or Montana
of this Amendment or to consummate the transactions contemplated
hereby.
4. When duly executed and delivered, this Amendment
will be a legal and binding obligation of Borrower, Guarantors and
Montana enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or similar laws of general application relating
to the enforcement of creditors' rights and by equitable principles of
general application.
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V.
MISCELLANEOUS
A. Ratification of Agreements. The Original Agreement as
hereby amended is hereby ratified and confirmed in all respects. Any reference
to the Credit Agreement in any Loan Document shall be deemed to be a reference
to the Original Agreement as hereby amended. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of Lenders under the Credit
Agreement, the Notes or any other Loan Document nor constitute a waiver of any
provision of the Credit Agreement, the Notes or any other Loan Document. Each
Guarantor hereby consents to the provisions of this Amendment and the
transactions contemplated herein, and hereby ratifies and confirms the
Guaranty, and agrees that its obligations and covenants thereunder are
unimpaired hereby and shall remain in full force and effect.
B. Survival of Agreements. All representations,
warranties, covenants and agreements of each of Borrower, Guarantors and
Montana herein shall survive the execution and delivery of this Amendment and
the performance hereof, including without limitation the making or granting of
the Loans, and shall further survive until all of the Obligations are paid in
full. All statements and agreements contained in any certificate or instrument
delivered by Borrower, any Guarantor or Montana hereunder or under the Credit
Agreement to any Lender shall be deemed to constitute representations and
warranties by, and/or agreements and covenants of, such Person under this
Amendment and under the Credit Agreement.
C. Loan Documents. This Amendment is a Loan Document,
and all provisions in the Credit Agreement pertaining to Loan Documents apply
hereto.
D. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of Texas and any
applicable laws of the United States of America in all respects, including
construction, validity and performance.
E. Counterparts. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment.
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE> 7
IN WITNESS WHEREOF, this Amendment is executed as of the date
first above written.
HOLLY CORPORATION,
a Delaware corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President, Treasurer
and Controller
NAVAJO REFINING COMPANY,
a Delaware corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
NAVAJO PIPELINE CO.,
a Delaware corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
NAVAJO HOLDINGS, INC.,
a New Mexico corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
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<PAGE> 8
HOLLY PETROLEUM, INC.,
a Delaware corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
LEA REFINING COMPANY,
a Delaware corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
NAVAJO WESTERN ASPHALT
COMPANY, a New Mexico corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
MONTANA REFINING COMPANY,
A PARTNERSHIP,
a Montana general partnership
By: Navajo Northern, Inc., its General
Partner and a Nevada corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
-8-
<PAGE> 9
NAVAJO CRUDE OIL MARKETING
COMPANY, a Texas corporation
By: /s/ HENRY A. TEICHHOLZ
------------------------------------
Henry A. Teichholz
Vice President and Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ E. MURPHY MARKHAM, IV
------------------------------------
E. Murphy Markham, IV
Senior Vice President
BANQUE PARIBAS
By: /s/ MARIAN LIVINGSTON
------------------------------------
Marian Livingston
Vice President
By: /s/ BRIAN MALONE
------------------------------------
Brian Malone
Vice President
THE FIRST NATIONAL BANK OF
BOSTON
By: /s/ H. LOUIS BAILEY
------------------------------------
H. Louis Bailey
Director
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<PAGE> 10
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
------------------------------------
F.C.H. Ashby
Senior Manager Loan Operations
NATIONSBANK OF TEXAS, N.A.
By: /s/ E. MURPHY MARKHAM, IV
------------------------------------
E. Murphy Markham, IV
Senior Vice President
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<PAGE> 1
EXHIBIT 4.2
GUARANTY
THIS GUARANTY, dated as of November 1, 1995, made separately by each
of the undersigned corporations (together with their successors and assigns,
each a "Guarantor" and collectively, the "Guarantors"), in favor of each of the
purchasers (together with their successors and assigns, including, without
limitation, any holder of a Note (as defined below), each a "Holder" and
collectively, the "Holders") listed on Annex 1 to the separate Note Agreements
(collectively, as amended from time to time, the "Note Agreement"), dated as of
June 15, 1991, between Holly Corporation (the "Company"), a Delaware
corporation, and each of the Holders, pursuant to which the Company has issued
Twenty Eight Million Dollars ($28,000,000) in aggregate principal amount of its
9.72% Senior Notes due June 15, 1998 (the "9.72% Notes") and Fifty Two Million
Dollars in aggregate principal amount of its 10.16% Senior Notes due June 15,
2001 (the "10.16% Notes," the 9.72% Notes and the 10.16% Notes referred to
collectively in this Guaranty as the "Notes"),
W I T N E S S E T H:
WHEREAS, the Company owns directly, or indirectly through one or more
subsidiaries, all of the outstanding shares of stock of each Guarantor; and
WHEREAS, the Company has issued and sold its 9.72% Notes and its
10.16% Notes to the Holders pursuant to the Note Agreement; and
WHEREAS, pursuant to the terms of the Note Agreement, it is a
continuing obligation of the Company to cause each Restricted Subsidiary which
guaranties the obligations of the Company under the Revolving Credit Agreement
to execute and deliver to the Holders a satisfactory guaranty of the
obligations of the Company under the Note Agreement and the Notes; and
WHEREAS, each Guarantor a party hereto is a Restricted Subsidiary and
has guaranteed the obligations of the Company under the Revolving Credit
Agreement;
WHEREAS, the board of directors of each Guarantor has determined that
such Guarantor's execution, delivery and performance of this Guaranty may
reasonably be expected to benefit such Guarantor, directly or indirectly, and
are in the best interests of such Guarantor;
NOW, THEREFORE, in consideration of the premises and of Ten Dollars
($10) and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to comply with the terms and
provisions of the Note Agreement and to avoid an Event of Default thereunder,
each Guarantor hereby agrees with Holders as follows:
1. DEFINITIONS.
Reference is hereby made to the Note Agreement for all purposes. All
terms used in this Guaranty that are defined in the Note Agreement and not
otherwise defined in this Guaranty have the same meanings when used in this
Guaranty. As used in this Guaranty, the following terms shall have the
following meanings:
<PAGE> 2
"OBLIGATIONS" means collectively all of the indebtedness,
obligations, and undertakings that are guaranteed by Guarantor and
described in subsections (a) and-(b) of Section 2 hereof.
"OBLIGATION DOCUMENTS" means this Guaranty, the Note Agreement,
the Notes, all other documents and instruments under, by reason of
which, or pursuant to which any or all of the Obligations are
evidenced, governed, secured, or otherwise dealt with, heretofore or
hereafter delivered.
"OBLIGORS" means the Company, the Guarantors, and any other
endorsers, guarantors or obligors, primary or secondary, of any or all
of the Obligations.
"SECURITY" means any rights, properties, or interests of the
Holders under the Obligation Documents or otherwise, that provide
recourse or other benefits to the Holders in connection with the
Obligations or the non-payment or non-performance thereof, including,
without limitation, collateral (whether real or personal, tangible or
intangible) in which the Holders have rights under or pursuant to any
Obligation Documents, guaranties of the payment or performance of any
Obligation, bonds, surety agreements, keep-well agreements, letters of
credit, rights of subrogation, rights of offset, and rights pursuant to
which other claims are subordinated to the Obligations.
2. GUARANTY.
(a) Each Guarantor hereby irrevocably, absolutely, and
unconditionally guarantees, jointly and severally, to the Holders the
prompt, complete, and full payment when due, and no matter how the
same shall become due, of:
(i) The Notes, including all principal, all
interest thereon and all other sums payable thereunder; and
(ii) All other sums payable under the other
Obligation Documents, whether for principal, interest, fees,
delivery of cash collateral, costs, expenses or otherwise.
(b) Each Guarantor, hereby irrevocably, absolutely, and
unconditionally guarantees, jointly and severally, to the Holders the
prompt, complete and full performance, when due, and no matter how the
same shall become due, of all obligations and undertakings of the
Company to the Holder under, by reason of, or pursuant to any of the
Obligation Documents.
(c) If the Company shall for any reason fail to pay any
Obligation, as and when such Obligation shall become due and payable,
whether at its stated maturity, as a result of the exercise of any
power to accelerate, or otherwise, then each Guarantor will, forthwith
upon demand by the Required Holders, pay such Obligation in full to
the Holders. If the Company shall for any reason fail to perform
promptly any Obligation, then Guarantor will, forthwith upon demand by
the Required Holders, cause such Obligation to be performed or, if
specified by the Required Holders, provide sufficient funds, in such
amount and manner as the Required Holders shall in good faith
determine,
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<PAGE> 3
for the prompt, full and faithful performance of such Obligation by
the Required Holders or such other Person as the Required Holders
shall designate.
(d) If either the Company or any Guarantor fails to pay
or perform upon demand any Obligation as described in the immediately
preceding subsections (a), (b) or (c), then each Guarantor will incur
the additional obligation to pay to the Holders and each Guarantor
will forthwith upon demand by the Required Holders pay to the Holders,
the amount of any and all expenses, including fees and disbursements
of any counsel and of any experts or agents, in each case, retained by
the Required Holders on behalf of the Holders that the Holders may
incur as a result of such failure, such expenses to be incurred in
accordance with paragraph 11B of the Note Agreement.
(e) Each Guarantor shall be primarily liable hereunder
for the payment and performance of the Obligations, from each other
Guarantor.
3. UNCONDITIONAL GUARANTY.
(a) No action that the Required Holders may take or omit
to take in connection with any of the Obligation Documents, any of the
Obligations (or any other indebtedness owing by Guarantor to the
Holders), or any Security, and no course of dealing of the Holders
with any Obligor or any other Person, shall release or diminish any
Guarantor's obligations, liabilities, agreements or duties under this
Guaranty, affect this Guaranty in any way, or afford any Guarantor any
recourse against any Holder, regardless of whether any such action or
inaction may increase any risks to or liabilities of the Holders or
any Obligor or increase any risk to or diminish any safeguard of any
Security. Without limiting the foregoing, each Guarantor hereby
expressly agrees that, except as may be provided in the Note
Agreement, any Holder may, from time to time, without notice to or the
consent of Guarantor:
(i) Amend, change or modify, in whole or in part,
any one or more of the Obligation Documents and give or refuse
to give any waivers or other indulgences with respect thereto;
(ii) Neglect, delay, fail, or refuse to take or
prosecute any action for the collection or enforcement of any
of the Obligations, to foreclose or take or prosecute any
action in connection with any Security or Obligation Document,
to bring suit against any Obligor or any other Person, or to
take any other action concerning the Obligations or the
Obligation Documents;
(iii) Accelerate, change, rearrange, extend, or
renew the time, terms, or manner for payment or performance of
any one or more of the Obligations;
(iv) Compromise or settle any unpaid or
unperformed Obligation or any other obligation or amount due
or owing, or claimed to be due or owing, under any one or more
of the Obligation Documents;
(v) Take, exchange, amend, eliminate, surrender,
release, or subordinate any or all Security for any or all of
the Obligations, accept additional
3
<PAGE> 4
or substituted Security therefor, and perfect or fail to
perfect the Holders' rights in any or all Security;
(vi) Discharge, release, substitute or add
Obligors; and
(vii) Apply all monies received from Obligors or
others, or from any Security for any of the Obligations, as
such Holder may determine to be in its best interest, without
in any way being required to marshall Security or assets or to
apply all or any part of such monies upon any particular
Obligations.
(b) No action or inaction of any Obligor or any other
Person, and no change of law or circumstances, shall release or
diminish any Guarantor's obligations, liabilities, agreements, or
duties under this Guaranty, affect this Guaranty in any way, or afford
any Guarantor any recourse against any Holder. Without limiting the
foregoing, the obligations, liabilities, agreements, and duties of
each Guarantor under this Guaranty shall not be released, diminished,
impaired, reduced, or affected by the occurrence of any of the
following from time to time, even if occurring without notice to or
without the consent of such Guarantor:
(i) Any voluntary or involuntary liquidation,
dissolution, sale of all or substantially all assets,
marshalling of assets of liabilities, receivership,
conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, or
composition of any Obligor or any other proceedings involving
any Obligor or any of the assets of any Obligor under laws
for the protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or
stay of actions or lien enforcement proceedings against, any
Obligor, any properties of any Obligor, or the estate in
bankruptcy of any Obligor in the course of or resulting from
any such proceedings;
(ii) The failure by any Holder or the Required
Holders to file or enforce a claim in any proceeding described
in the immediately preceding subsection (i) or to take any
other action in any proceeding to which any Obligor is a
party;
(iii) The release by operation of law of any
Obligor from any of the Obligations or any other obligations
to the Holders;
(iv) The invalidity, deficiency, illegality, or
unenforceability of any of the Obligations or the Obligation
Documents, in whole or in part, any bar by any statute of
limitations or other law of recovery on any of the
Obligations, or any defense or excuse for failure to perform
on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse
whatsoever;
(v) The failure of any Obligor or any other
Person to sign any guaranty or other instrument or agreement
within the contemplation of any Obligor or the Holders;
(vi) The fact that any Guarantor may have incurred
directly part of the Obligations or is otherwise primarily
liable therefor; or
4
<PAGE> 5
(vii) Without limiting any of the foregoing, any
fact or event (whether or not similar to any of the foregoing)
that in the absence of this provision would or might
constitute or afford a legal or equitable discharge or release
of or defense to a guarantor or surety other than the actual
payment and performance by each Guarantor under this Guaranty.
(c) The Required Holders may invoke the benefits of this
Guaranty before pursuing any remedies against any Obligor or any other
Person and before proceeding against any Security now or hereafter
existing for the payment or performance of any of the Obligations. The
Required Holders may maintain an action against any Guarantor on this
Guaranty without joining any other Obligor therein and without
bringing separate action against any other Obligor. The obligations of
each Guarantor under this Guaranty are not joint, but are separate and
distinct from the obligations of each other Guarantor and all other
Obligors.
(d) If any payment to the Holders by any Obligor is held
to constitute a preference or a voidable transfer under applicable
state or federal laws, or if for any other reason the Holders are
required to refund such payment to the payor thereof or to pay the
amount thereof to any other Person, then such payment to the Holders
shall not constitute a release of any Guarantor from any liability
under this Guaranty, and each Guarantor agrees to pay such amount to
the Holders on demand and agrees and acknowledges that this Guaranty
shall continue to be effective or shall be reinstated, as the case may
be, to the extent of any such payment or payments.
(e) This is a continuing guaranty and shall apply to and
cover all obligations and renewals and extensions thereof and
substitutions therefor from time to time.
4. WAIVER.
Each Guarantor hereby waives, with respect to the Obligations, this
Guaranty, and the other Obligation Documents:
(a) notice of the incurrence of any Obligation by the
Company;
(b) notice that the Holders, any Obligor, or any other
Person has taken or omitted to take any action under any Obligation
document or any other agreement or instrument relating thereto or
relating to any Obligation;
(c) notice of acceptance of this Guaranty and all rights
of the Guarantor under Section 34.02 of the Texas Business and
Commerce Code;
(d) demand, presentment for payment, and notice of
demand, dishonor, nonpayment, or nonperformance;
(e) notice of intention to accelerate, notice of
acceleration, protest, and notice of protest; and
(f) all other notices whatsoever.
5
<PAGE> 6
5. EXERCISE OF REMEDIES.
Each Holder and the Required Holders, on behalf of the Holders, as
provided in the Note Agreement, shall have the right to enforce, from time to
time, in any order and at the sole discretion of the Required Holders's or such
Holder, as the case may be, any rights, powers and remedies that the Holders
may have under the Obligation Documents or otherwise, including, but not
limited to, judicial foreclosure, the exercise of rights of power of sale, the
taking of a deed or assignment in lieu of foreclosure, the appointment of a
receiver to collect rents, issues and profits, the exercise of remedies against
personal property, or the enforcement of any assignment of leases, rentals, oil
or gas production, or other properties or rights, whether real or personal,
tangible or intangible; and each Guarantor shall be liable to the Holders under
this Guaranty for any deficiency resulting from the exercise by any Holder of
any such right or remedy even though any rights that such Guarantor may have
against the Company or others may be destroyed or diminished by exercise of any
such right or remedy. No failure on the part of any Holder or the Required
Holders to exercise, and no delay in exercising, any right under this Guaranty
or under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any right preclude any other or further
exercise thereof or the exercise of any other right. The rights, powers and
remedies of each Holder and the Required Holders provided in this Guaranty and
in the other Obligation Documents are cumulative and are in addition to, and
not exclusive of, any other rights, powers or remedies provided by law or in
equity. The rights of each Holder and the Required Holders under this Guaranty
are not conditional or contingent on any attempt by any Holder and the Required
Holders to exercise any of their rights under any other Obligation Document
against any Obligor or any other Person.
6. SUBROGATION.
Until all of the Obligations have been paid and performed in full, no
Guarantor shall have the right to exercise any right of subrogation with
respect hereto (including without limitation any right of subrogation under
Section 34.04 of the Texas Business and Commerce Code), and each Guarantor
hereby waives any rights to enforce any remedy that such Guarantor may have
against the Company and any right to participate in any Security until such
time. If any amount shall be paid to any Guarantor on account of any
subrogation rights or other remedy or Security at any time when all of the
Obligations and all other expenses guaranteed pursuant to this Guaranty shall
not have been paid in full, then such amount shall be held in trust for the
benefit of the Holders, shall be segregated from the other funds of Guarantor
and shall forthwith be paid over to the Holders as collateral for, or then or
at any time thereafter applied in whole or in part by the Holders against, all
or any portion of the Obligations, whether matured or unmatured, in such order
as each Holder shall elect. If Guarantor shall make payment to the Holders of
all or any portion of the Obligations and if all of the Obligations shall be
finally paid in full, then each Holder will, at each Guarantor's request and
expense, execute and deliver to such Guarantor (without recourse,
representation or warranty) appropriate documents necessary to evidence the
transfer by subrogation to Guarantor of an interest in the Obligations
resulting from such payment by such Guarantor.
6
<PAGE> 7
7. SUCCESSORS AND ASSIGNS.
No Guarantor's rights or obligations under this Guaranty may be
assigned or delegated. This Guaranty shall apply to and inure to the benefit of
each Holder and such Holder's successors or assigns, including, without
limitation, any subsequent holder of Notes. Without limiting the generality of
the immediately preceding sentence, any Holder may assign its rights under this
Guaranty or grant a participation in such rights in connection with the
assignment of or the granting of a participation in the Obligations.
8. REPRESENTATIONS AND WARRANTIES.
Each Guarantor hereby represents and warrants as follows:
(a) The recitals at the beginning of this Guaranty are
true and correct in all respects as to such Guarantor.
(b) The value of the consideration received and to be
received by such Guarantor in connection herewith is reasonably worth
at least as much as the liability and obligations of such Guarantor
under this Guaranty, and the incurrence of such liability and
obligations in return for such consideration may reasonably be
expected to benefit such Guarantor, directly or indirectly.
(c) Such Guarantor is not "insolvent" on the date of the
execution and delivery by such Guarantor of this Guaranty (that is,
the sum of Guarantor's absolute and contingent liabilities, including
the Obligations, does not exceed the Fair Market Value of Guarantor's
assets). Such Guarantor's capital is adequate for the businesses in
which Guarantor is engaged and intends to be engaged. Such Guarantor
has not by this Guaranty incurred, nor does such Guarantor intend to
incur or believe that it will incur, debts that will be beyond its
ability to pay as such debts mature.
9. NO ORAL CHANGE.
No amendment of any provision of this Guaranty shall be effective
unless it is in writing and signed by each Guarantor and the Required Holders,
and no waiver of any provision of this Guaranty, and no consent to any
departure by any Guarantor from this Guaranty, shall be effective unless it is
in writing and signed by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specified purpose
for which given.
10. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) GOVERNING LAW. THIS GUARANTY IS TO BE PERFORMED IN
THE STATE OF TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
(b) JURISDICTION. EACH GUARANTOR HEREBY IRREVOCABLY
SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE OF NEW
YORK AND
7
<PAGE> 8
FEDERAL COURTS OF THE STATE OF NEW YORK AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING HERETO BY SERVING THE SECRETARY OF STATE OF THE STATE OF
TEXAS (OR BY OTHER SERVICE) IN ACCORDANCE WITH ANY APPLICABLE
PROVISIONS OF THE TEXAS REVISED CIVIL STATUES, AS AMENDED, GOVERNING
SERVICE OF PROCESS UPON FOREIGN CORPORATIONS.
11. INVALIDITY OF PARTICULAR PROVISION.
If any term or provision of this Guaranty shall be determined to be
illegal or unenforceable, then all other terms and provisions hereof shall
nevertheless remain effective and shall be enforced to the fullest extent
permitted by applicable law.
12. HEADINGS AND REFERENCES.
The headings used in this Guaranty are for purposes of convenience
only and shall not be used in construing the provisions of this Guaranty. The
words "this Guaranty," "this instrument," "herein," "hereof," "hereby" and
words of similar import refer to this Guaranty as a whole and not to any
particular subdivision unless expressly so limited. The word "or" is not
exclusive. Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
13. TERM.
This Guaranty shall be irrevocable and shall terminate when all of the
Obligations have been completely and finally paid and performed, the Holders
have no obligation to make any loans or other advances to the Company, and all
obligations and undertakings of the Company under, by reason of, or pursuant to
the Obligation Documents have been completely performed, and this Guaranty is
thereafter subject to reinstatement as provided in Section 3(d) of this
Guaranty. All extensions of credit and financial accommodations heretofore or
hereafter made by the Holders to the Company pursuant to the terms of the Note
Agreement, the Notes or any amendment or waiver of any provision thereof, shall
be conclusively presumed to have been made in acceptance of this Guaranty and
in reliance on this Guaranty.
14. NOTICES.
Any notice of communication required or permitted under this Guaranty
shall be given as provided in the Note Agreement.
15. LIMITATION ON INTEREST.
The Holders and each Guarantor intend to contract in strict compliance
with applicable usury law from time to time in effect, and the provisions of
the Note Agreement limiting the interest for which each Guarantor is obligated
are expressly incorporated in this Guaranty by reference.
8
<PAGE> 9
16. COUNTERPARTS.
This Guaranty may be executed in any number of counterparts, each of
which when so executed shall be deemed to constitute one and the same Guaranty.
17. ENTIRE AGREEMENT.
THIS WRITTEN GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
[Remainder of page intentionally blank. Next page is signature page.]
9
<PAGE> 10
IN WITNESS WHEREOF, each Guarantor has executed and delivered this
Guaranty as of the date first above written.
NAVAJO CRUDE OIL MARKETING
COMPANY
By /s/ HENRY A. TEICHHOLZ
------------------------------------
Name: Henry A. Teichholz
Title: Vice President and Treasurer
NAVAJO WESTERN ASPHALT
COMPANY
By /s/ HENRY A. TEICHHOLZ
------------------------------------
Name: Henry A. Teichholz
Title: Vice President and Treasurer
[Signature page of the GUARANTY, dated as of November 1, 1995, in respect of
the Note Agreement, dated as of June 15, 1991, of HOLLY CORPORATION]
<PAGE> 1
EXHIBIT 4.3
LETTER OF CONSENT, WAIVER, AND AMENDMENT
HOLLY CORPORATION
100 Crescent Court, Suite 1600
Dallas, Texas 75201
As of November 15, 1995
TO THE PERSONS LISTED ON
Annex 1 hereto
Re: Consent, Waiver and Amendment regarding certain Subsidiary
Guaranties and the acquisition by Holly Corporation of certain
1991 Notes (as herein defined)
Ladies and Gentlemen:
Reference is made to each of the following:
(a) those certain Note Agreements, each dated as of June
15, 1991 (hereinafter referred to, collectively, as the "1991 NOTE
AGREEMENT"), by and among Holly Corporation, a Delaware corporation
(hereinafter referred to as the "COMPANY"), and each of the
purchasers listed on Annex 1 thereto (hereinafter referred to,
collectively, as the "1991 PURCHASERS"), pursuant to which the Company
issued and sold, and the 1991 Purchasers purchased, the Company's
(i) 9.72% Series A Senior Notes due June 15, 1998
(hereinafter referred to, collectively, as the "SERIES A
NOTES") in the aggregate principal amount of
Twenty-Eight Million Dollars ($28,000,000), and
(ii) 10.16% Series B Senior Notes due June 15,
2001 (hereinafter referred to, collectively, as the "SERIES B
NOTES," and, together with the Series A Notes, the "1991
NOTES") in the aggregate principal amount of Fifty-Two Million
Dollars ($52,000,000); and
(b) those certain proposed Note Agreements, each dated as
of November 15, 1995 (hereinafter referred to, collectively, as the
"1995 NOTE AGREEMENT"), by and among the Company and each of the
purchasers listed on Annex 1 thereto (hereinafter referred to,
collectively, as the "1995 PURCHASERS"), which provide for the issuance
and sale by the Company, and the purchase by the 1995 Purchasers, of
the Company's:
(i) 7.62% Series C Senior Notes due December 15,
2005 (hereinafter referred to, collectively, as the "SERIES C
NOTES") in the aggregate principal amount of Thirty-Nine
Million Dollars ($39,000,000), and
(ii) Series D Senior Notes due December 15, 2005
(hereinafter referred to, collectively, as the "SERIES D
NOTES," and, together with the Series C Notes, the "1995
NOTES") in the aggregate principal amount of Twenty-One
Million Dollars ($21,000,000).
<PAGE> 2
Pursuant to the terms of the 1995 Note Agreement, the purchasers of the
Series D Notes shall tender to the Company part or all of the Series B Notes
held by such purchasers as payment of the purchase price of an equal principal
amount of the Series D Notes.
Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed thereto in the 1991 Note Agreement.
SECTION 1. CERTAIN TERMS OF THE 1991 NOTE AGREEMENT
1.1 PRO RATA OFFER FOR 1991 NOTES; RETIRED NOTES DEEMED
NOT OUTSTANDING. Pursuant to paragraph 4F of the 1991 Note Agreement, the
Company is, among other things, prohibited from acquiring any of the 1991 Notes
prior to their respective stated final maturities, unless (i) the Company shall
have offered to acquire a proportional share of the aggregate principal amount
of 1991 Notes held by each holder of 1991 Notes at the time outstanding upon
the same terms, conditions and consideration, and (ii) such acquisition is not
directly or indirectly conditioned upon the holder of any 1991 Note giving its
consent to any amendment, supplement or waiver to any provision of the 1991
Note Agreement. Additionally, any 1991 Note retired or acquired by the Company,
a Subsidiary or an Affiliate in connection with an offer to acquire Notes
pursuant to paragraph 4F is deemed by the terms of the 1991 Note Agreement not
to be outstanding.
1.2 SUBSIDIARY GUARANTIES. Pursuant to paragraph 5J of
the 1991 Note Agreement, the Company is obligated to, among other things, cause
a Restricted Subsidiary which is not already a guarantor of the 1991 Notes to
execute and deliver a Subsidiary Guaranty in each case where such Restricted
Subsidiary guaranties the obligations of the Company under the Revolving Credit
Agreement.
1.3 EVENT OF DEFAULT. Pursuant to paragraph 7A(vi) of the
1991 Note Agreement, it shall, among other things, be an Event of Default if
the Company fails to perform or observe its obligations in respect of paragraph
5J of the 1991 Note Agreement and such failure shall not be remedied within
thirty (30) days after a Responsible Officer of the Company obtains actual
knowledge thereof.
1.4 CONSENTS TO AMENDMENTS. Pursuant to paragraph 11C
of the 1991 Note Agreement, the written consent of all of the holders of 1991
Notes is required to change the time of payment of interest payable with
respect to any Note.
SECTION 2. COMPANY REPRESENTATIONS AND WARRANTIES
In order to induce each of the other parties hereto to execute
and accept this Letter, the Company hereby represents and warrants that:
2.1 HOLDERS OF 1991 NOTES. Annex 1 hereto contains the
names of all of the holders of the 1991 Notes as of the date hereof, indicating
which of such holders are also 1995 Purchasers.
2
<PAGE> 3
2.2 ADDITIONAL RESTRICTED SUBSIDIARY GUARANTORS UNDER THE
REVOLVING CREDIT AGREEMENT.
(A) NAVAJO CRUDE. Navajo Crude Oil Marketing
Company, a Texas corporation ("Navajo Crude"), is a Restricted
Subsidiary which has guarantied the obligations of the Company
under the Revolving Credit Agreement pursuant to a guaranty
agreement dated as of April 7, 1994.
(B) NAVAJO WESTERN. Navajo Western Asphalt
Company, a New Mexico corporation ("Navajo Western"), is a
Restricted Subsidiary which has guarantied the obligations of
the Company under the Revolving Credit Agreement pursuant to a
guaranty agreement dated as of February 20, 1992.
(C) NO OTHER GUARANTORS. Navajo Crude and Navajo
Western are the only Restricted Subsidiaries which have
undertaken to guaranty the obligations of the Company under
the Revolving Credit Agreement since June 26, 1991.
(D) FAILURE TO DELIVER SUBSIDIARY GUARANTIES. A
Responsible Officer of the Company has discovered that the
Company has inadvertently failed to comply with its
obligations under paragraph 5J of the 1991 Note Agreement.
Such Responsible Officer first became aware of such failure on
or about October 30, 1995.
2.3 MATURITY DATES OF 1991 NOTES AND 1995 NOTES. The
maturity date of the Series A Notes is June 15, 1998, the maturity date of the
Series B Notes is June 15, 2001, the maturity date of the Series C Notes is
December 15, 2005 and the maturity date of the Series D Notes is December 15,
2005. The Company has no present intention of amending or changing any of the
respective maturity dates listed in the immediately preceding sentence.
SECTION 3. DELIVERY OF SUBSIDIARY GUARANTIES
In order to remedy the Company's failure to comply with
paragraph 5J of the 1991 Note Agreement, prior to or contemporaneously
herewith, the Company has caused each of Navajo Crude and Navajo Western to
execute and deliver to each of holder of 1991 Notes (i) a Subsidiary Guaranty
dated as of November 1, 1995, substantially in the form of Exhibit E to the
1991 Note Agreement, and (ii) a copy of the resolutions of the board of
directors of such Subsidiaries, certified by their respective secretaries or
assistant secretaries, authorizing the execution, delivery and performance of
such Subsidiary Guaranty.
SECTION 4. CONSENT, WAIVER AND AMENDMENT
By executing and delivering to the Company a counterpart of
this letter of consent, waiver and amendment ("THIS LETTER"), each holder of
1991 Notes:
(a) consents to the acquisition of $21,000,000 of
the Series B Notes by the Company in exchange for an equal
aggregate principal amount of the 1995 Notes pursuant to
the terms and conditions of the 1995 Note Agreement,
notwithstanding paragraph 4F of the 1991 Note Agreement,
3
<PAGE> 4
(b) consents to the payment of accrued interest to the
date of acquisition on each Series B Note being delivered to the
Company in exchange for the Series D Notes,
(c) waives any Default or Event of Default under
paragraph 7A(vi) of the 1991 Note Agreement that may have existed due
solely to the failure of the Company to cause Navajo Crude and Navajo
Western to deliver a Subsidiary Guaranty, and the required resolutions
of their respective board of directors and certificates from their
respective secretaries or assistant secretaries, in a more timely
fashion, and
(d) agrees that the last paragraph of paragraph 4F the
1991 Note Agreement is hereby amended and restated so as to read in it
entirety as follows:
"For purposes of paragraph 4A, any Notes purchased or
otherwise acquired by the Company or any of the Subsidiaries
or Affiliates pursuant to this paragraph 4F shall be deemed to
be outstanding and the Company, such Subsidiary or such
Affiliate the holder thereof, but such Notes shall not be
deemed to be outstanding for any other purpose under this
Agreement (including, without limitation, any determination of
the Required Holders)."
SECTION 5. NO OTHER WAIVERS, AMENDMENTS
Except as expressly provided herein, the terms of this Letter
shall not effect or amend any other term or provision of the 1991 Note
Agreement, and shall not operate as a waiver by any of the 1991 Purchasers, or
any other holder of the 1991 Notes, of, or otherwise prejudice their rights,
remedies or powers under, the 1991 Note Agreement or under applicable law and
the terms and provisions of the 1991 Note Agreement continue in full force and
effect.
SECTION 6. MISCELLANEOUS
6.1 GOVERNING LAW. THIS LETTER SHALL BE CONSTRUED,
INTERPRETED, AND ENFORCED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED WHOLLY
WITHIN SUCH STATE, WITHOUT REGARD TO ANY CHOICE OR CONFLICTS OF LAW RULES.
6.2 DUPLICATE ORIGINALS. Two or more duplicate originals
of this Letter may be signed by the parties, each of which shall be an original
but all of which together shall constitute one and the same instrument. This
Letter may be executed in one or more counterparts and shall be effective when
at least one counterpart shall have been executed by each party hereto, and
each set of counterparts which, collectively, show execution by each party
hereto shall constitute one duplicate original.
6.3 SECTION HEADINGS. The titles of the sections hereof
appear as a matter of convenience only, do not constitute a part of this Letter
and shall not affect the construction hereof.
4
<PAGE> 5
6.4 SUCCESSORS AND ASSIGNS. This Letter shall inure to
the benefit of and be binding upon the successors and assigns of each of the
partieshereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; NEXT PAGE IS SIGNATURE PAGE]
5
<PAGE> 6
If this Letter is satisfactory to you, please so indicate by signing
the acceptance at the foot of a counterpart of this Letter, whereupon this
Letter will become binding between us in accordance with its terms.
Very truly yours,
HOLLY CORPORATION
By: /s/ Henry A. Teichholz
----------------------
Name: Henry A. Teichholz
Title: Vice President, Treasurer
and Controller
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 7
Accepted and Agreed to:
NEW YORK LIFE INSURANCE COMPANY
By: /s/ Lisa Scuderi
----------------
Name: Lisa Scuderi
Title: AssistanT Vice President
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 8
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ EUGENE X. HODGE
-------------------
Name: Eugene X. Hodge
Title: Investment Officer
JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
By: /s/ STEPHEN A. MACLEAN
----------------------
Name: Stephen A. MacLean
Title: Vice President - Investments
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 9
CONFEDERATION LIFE INSURANCE
COMPANY
By: /s/ MARK G. ULEVICH
-------------------
Name: Mark G. Ulevich
Title: Director, Private Placements
Confederation Insurance Co.
(U.S.) In Rehabilitation
By:
-------------------
Name:
Title:
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 10
THE PENN INSURANCE AND ANNUITY
COMPANY
By: /s/ BARBARA B. HENDERSON
------------------------
Name: Barbara B. Henderson
Title: Investment Officer
THE PENN MUTUAL LIFE INSURANCE
COMPANY
BY: /s/ BARBARA B. HENDERSON
------------------------
NAME: Barbara B. Henderson
Title: Assistant Vice President
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 11
THE MANHATTAN LIFE INSURANCE
COMPANY
By: /s/ J.N. KOTSONIS
-----------------
Name: J.N. Kotsonis
Title: Sr. Vice President & CFO
By: /s/ NORM GORDON
---------------
Name: Norm Gordon
Title: Second Vice President
THE UNION CENTRAL LIFE INSURANCE
COMPANY
By: /s/ JOSEPH A. TUCKER III
------------------------
NAME: Joseph A. Tucker III
Title: Assistant Treasurer
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 12
SAFECO LIFE INSURANCE
COMPANY
By: /s/ MICHAEL C. KNEBEL
---------------------
NAME: Michael C. Knebel
Title: Vice President and Treasurer
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 13
AMERICAN INTERNATIONAL LIFE
ASSURANCE COMPANY OF NEW YORK
By: /s/ JEROME T. MULDOWNEY
-----------------------
Name: Jerome T. Muldowney
Title: Senior Vice President
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 14
PAN-AMERICAN LIFE INSURANCE
COMPANY
By: /s/ F. ANDERSON STONE
---------------------
Name: F. Anderson Stone
Title: Vice President
Corporate Securities
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 15
JEFFERSON-PILOT LIFE INSURANCE
COMPANY
By: /s/ ROBERT E. WHALEN, II
------------------------
Name: Robert E. Whalen, II
Title: Second Vice President
[SIGNATURE PAGE TO 1995 HOLLY CORPORATION LETTER OF CONSENT,
WAIVER AND AMENDMENT]
<PAGE> 16
ANNEX 1
LIST OF HOLDERS OF 1991 NOTES
NEW YORK LIFE INSURANCE COMPANY
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY (A 1995 PURCHASER)
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (A 1995 PURCHASER)
CONFEDERATION LIFE INSURANCE COMPANY
THE PENN INSURANCE AND ANNUITY COMPANY
THE PENN MUTUAL LIFE INSURANCE COMPANY
THE MANHATTAN LIFE INSURANCE COMPANY
THE UNION CENTRAL LIFE INSURANCE COMPANY
SAFECO LIFE INSURANCE COMPANY
AMERICAN INTERNATIONAL LIFE ASSURANCE COMPANY OF NEW YORK
PAN-AMERICAN LIFE INSURANCE COMPANY (A 1995 PURCHASER)
JEFFERSON-PILOT LIFE INSURANCE COMPANY (A 1995 PURCHASER)
Annex 1-1
<PAGE> 1
EXHIBIT 4.4
HOLLY CORPORATION
7.62% SERIES C SENIOR NOTE DUE DECEMBER 15, 2005
No. RC-1 Dallas, Texas
$7,500,000 November 21, 1995
PPN: 435758 B@5
HOLLY CORPORATION (the "Company"), a Delaware corporation, for value
received, hereby promises to pay to JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
or registered assigns the principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLARS ($7,500,000) on December 15, 2005 and to pay interest (computed on the
basis of a 360-day year of twelve 30-day months) on the unpaid principal
balance thereof from the date of this Note at the rate of seven and sixty-two
one-hundredths percent (7.62%) per annum, semi-annually on the fifteenth (15th)
day of each June and December in each year, commencing on the later of June 5,
1996 or the payment date next succeeding the date hereof, until the
principal amount hereof shall become due and payable; and to pay on demand
interest on any overdue principal (including any overdue prepayment of
principal) and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) on any overdue installment of interest, at a rate equal to the
higher of (a) nine and sixty-two one-hundredths percent (9.62%) per annum, or
(b) the lesser of (i) the maximum rate permitted by applicable law, or (ii) the
sum of (A) two percent (2%) per annum plus (B) the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time to time in New
York City as its Prime Rate. In no event shall the Company be required to pay
any amounts as interest or Make-Whole Amount hereunder in an amount or at a
rate exceeding the maximum rate permitted by law.
Payments of principal, Make-Whole Amount, if any, and interest shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Agreement (defined
below).
This Note is one of an issue of Series C Notes of the Company issued
in an aggregate principal amount limited to $39,000,000 pursuant to separate
Note Agreements (collectively, the "Note Agreement"), each dated as of November
15, 1995, between the Company and, respectively, each of the purchasers listed
on Annex 1 to the Note Agreement and is entitled to the benefits thereof.
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Agreement. As provided in the Note Agreement,
this Note is subject to prepayment, in whole or in part, in certain cases
without a Make-Whole Amount and in other cases with a Make-Whole Amount. The
Company agrees to make required prepayments on account of such Notes in
accordance with the provisions of the Note Agreement.
This Note is a registered Note and is transferable only by surrender
thereof at the principal office of the Company as specified in the Note
Agreement, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or its attorney duly
authorized in writing.
<PAGE> 2
Under certain circumstances, as specified in the Note Agreement, the
principal of this Note (together with any applicable Make-Whole Amount) may be
declared due and payable in the manner and with the effect provided in the Note
Agreement.
THIS NOTE AND THE NOTE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
HOLLY CORPORATION
By: /s/ HENRY A. TEICHHOLZ
----------------------------
Name: Henry A. Teichholz
Title: Vice President, Treasurer
and Controller
2
<PAGE> 3
Schedule to Exhibit Number 4.4
Five other Series C Senior Notes were executed, each substantially
identical to Exhibit Number 4.4 except that the Payees and principal amounts of
the other Series C Senior Notes were as follows:
<TABLE>
<CAPTION>
Payee Principal Amount
----- ----------------
<S> <C> <C>
1. John Hancock Mutual Life Insurance Company $ 5,500,000.00
2. John Hancock Variable Life Insurance Company $ 2,000,000.00
3. Alexander Life Insurance Company of America $15,000,000.00
4. The Penn Mutual Life Insurance Company $ 5,000,000.00
5. AIG Life Insurance Company $ 4,000,000.00
</TABLE>
The Series C Senior Notes did not differ in any other material respect.
<PAGE> 1
EXHIBIT 4.5
HOLLY CORPORATION
SERIES D SENIOR NOTE DUE DECEMBER 15, 2005
No. RD-1 Dallas, Texas
$6,000,000 November 21, 1995
PPN: 435758 B# 3
HOLLY CORPORATION (the "Company"), a Delaware corporation, for value
received, hereby promises to pay to JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
or registered assigns the principal sum of SIX MILLION DOLLARS ($6,000,000) on
December 15, 2005 and to pay interest (computed on the basis of a 360-day year
of twelve 30-day months) on the unpaid principal balance thereof from the date
of this Note at the rate set forth in the table below during the periods set
forth in the table below:
<TABLE>
<CAPTION>
==================================================================
PERIOD INTEREST RATE
- ------------------------------------------------------------------
<S> <C>
Closing Date through June 14, 1996 10.160%
- ------------------------------------------------------------------
June 15, 1996 through June 14, 1997 9.770%
- ------------------------------------------------------------------
June 15, 1997 through June 14, 1998 9.380%
- ------------------------------------------------------------------
June 15, 1998 through June 14, 1999 8.990%
- ------------------------------------------------------------------
June 15, 1999 through December 14, 1999 8.600%
- ------------------------------------------------------------------
December 15, 1999 through June 14, 2000 8.730%
- ------------------------------------------------------------------
June 15, 2000 through December 14, 2000 8.275%
- ------------------------------------------------------------------
December 15, 2000 through June 14, 2001 8.366%
- ------------------------------------------------------------------
June 15, 2001 through December 14, 2005 7.820%
==================================================================
</TABLE>
payable semi-annually on the 15th day of each June and December in each year
commencing on the later of June 15, 1996 or the interest payment date next
succeeding the date hereof, until the principal amount hereof shall be due and
payable; and to pay on demand interest on any overdue principal (including any
overdue prepayment of principal) and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) on any overdue installment of interest, at
a rate equal to the higher of
(a) the sum of
(i) two percent (2%) per annum plus
(ii) the rate of interest applicable thereto at the time
such additional interest first became payable as set forth in the
table above, or
(b) the lesser of
<PAGE> 2
(i) the maximum rate permitted by applicable law, and
(ii) the sum of
(A) two percent (2%) per annum plus
(B) the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York from time to time in
New York City as its Prime Rate.
In no event shall the Company be required to pay any amounts as interest or
Make-Whole Amount hereunder in an amount or at a rate exceeding the maximum
rate permitted by law.
Payments of principal, Make-Whole Amount, if any, and interest shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Agreement (defined
below).
This Note is one of an issue of Series D Notes of the Company issued
in an aggregate principal amount limited to $21,000,000 pursuant to separate
Note Agreements (collectively, the "Note Agreement"), each dated as of November
15, 1995, between the Company and, respectively, each of the purchasers listed
on Annex 1 to the Note Agreement, and is entitled to the benefits thereof.
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Agreement. As provided in the Note Agreement,
this Note is subject to prepayment, in whole or in part, in certain cases
without a Make-Whole Amount and in other cases with a Make-Whole Amount. The
Company agrees to make required prepayments on account of such Notes in
accordance with the provisions of the Note Agreement.
This Note is a registered Note and is transferable only by surrender
thereof at the principal office of the Company as specified in the Note
Agreement, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or its attorney duly
authorized in writing.
Under certain circumstances, as specified in the Note Agreement, the
principal of this Note (together with any applicable Make-Whole Amount) may be
declared due and payable in the manner and with the effect provided in the Note
Agreement.
2
<PAGE> 3
THIS NOTE AND THE NOTE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
HOLLY CORPORATION
By: /s/ HENRY A. TEICHHOLZ
---------------------------
Name: Henry A. Teichholz
Title: Vice President, Treasurer
and Controller
3
<PAGE> 4
Schedule to Exhibit Number 4.5
Three other Series D Senior Notes were executed, each substantially
identical to Exhibit Number 4.5 except that the Payees and principal amounts of
the other Series D Senior Notes were as follows:
<TABLE>
<CAPTION>
Payee Principal Amount
----- ----------------
<S> <C>
1. John Hancock Mutual Life Insurance Company $12,000,000.00
2. John Hancock Variable Life Insurance Company $ 2,000,000.00
3. Pan-American Life Insurance Company $ 1,000,000.00
</TABLE>
The Series D Senior Notes did not differ in any other material respect.
<PAGE> 1
EXHIBIT 4.6
================================================================================
HOLLY CORPORATION
_________________________
NOTE AGREEMENT
_________________________
DATED AS OF NOVEMBER 15,1995
$39,000,000 7.62% SERIES C SENIOR NOTES DUE DECEMBER 15, 2005
$21,000,000 SERIES D SENIOR NOTES DUE DECEMBER 15, 2005
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1 AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1A. Authorization of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1B. Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2A. Purchase Price of Notes and Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2B. Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3A. Opinion of Purchaser's Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3B. Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3C. Representations and Warranties; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3D. Sale of Notes to Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3E. Purchase Permitted by Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3F. Private Placement Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3G. Closing Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3H. Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3I. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3J. Revolving Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3K. Letter of Consent, Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4A. Required Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4B. Optional Prepayment with Make-Whole Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4C. Notice of Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4D. Partial Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4E. Required Prepayments Upon Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4F. Repurchase of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4G. Limitations on Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5A. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5B. Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5C. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5D. Corporate Existence, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5E. Payment of Taxes, Claims and Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5F. Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5G. Covenant to Secure Notes Equally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5H. ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5I. Payment of Notes and Maintenance of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5J. Guaranties from Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6A. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6B. Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6C. Restricted Subsidiary Funded Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C> <C>
6D. Dispositions of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6E. Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6F. Restricted Payments and Restricted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6G. Mergers and Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6H. Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
61. Consolidated Current Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6J. Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6K. Designation of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6L. Private Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6M. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7A. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7B. Annulment of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7C. Action Under Subsidiary Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8A. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8B. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8C. Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8D. Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8E. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8F. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8G. Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8H. Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8I. Regulation G, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8J. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8K. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8L. Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8M. Possession of Franchises, Licenses, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8N. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8O. Certain Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9A. Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9B. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11A. Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11B. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11C. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes . . . . . . . . . . . . . . . . . . 47
11E. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11F. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11G. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11H. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
iii
<PAGE> 4
<TABLE>
<S> <C> <C>
11I. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11J. Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11K. Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11L. Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11M. Disclosure to Other Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11N. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
<TABLE>
<S> <C> <C>
Annex 1 - Information as to Purchasers
Annex 2 - Payment Instructions
Annex 3 - Information as to Company
</TABLE>
<TABLE>
<S> <C> <C>
Exhibit Al - Form of 7.62% Senior Note Due December 15, 2005
Exhibit A2 - Form of Series D Senior Note Due December 15, 2005
Exhibit Bl - Form of Special Counsel's Closing Opinion
Exhibit B2 - Form of Company Outside Counsel's Closing Opinion
Exhibit B3 - Form of Company General Counsel's Closing Opinion
Exhibit C - Form of Officers' Certificate
Exhibit D1 - Form of Company Secretary's Certificate
Exhibit D2 - Form of Guarantor Secretary's Certificate
Exhibit E - Form of Subsidiary Guaranty
</TABLE>
iv
<PAGE> 5
HOLLY CORPORATION
_________________________
NOTE AGREEMENT
_________________________
$39,000,000 7.62% SERIES C SENIOR NOTES DUE DECEMBER 15, 2005
$21,000,000 SERIES D SENIOR NOTES DUE DECEMBER 15, 2005
Dated as of November 15, 1995
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Ladies and Gentlemen:
HOLLY CORPORATION (together with its successors and assigns, the
"Company"), a Delaware corporation, hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF NOTES. The Company will authorize the
issue of:
(i) Thirty-Nine Million Dollars ($39,000,000) in
aggregate principal amount of its seven and sixty-two
one-hundredths percent (7.62%) Series C Senior Notes due December
15, 2005 (the "Series C Notes"); and
(ii) Twenty-One Million Dollars ($21,000,000) in
aggregate principal amount of its Series D Senior Notes due
December 15, 2005 (the "Series D Notes") (the Series C Notes and
the Series D Notes are referred to in this Agreement collectively
as the "Notes").
1B. PROVISIONS.
(i) Each Series C Note shall
(a) bear interest on the unpaid
principal balance thereof from the date of the Note at
the rate of seven and sixty-two one-hundredths percent
(7.62%) per annum, payable semi-annually on the 15th
day of each June and December in each year commencing on
the later of June 15, 1996 or the interest payment date
next succeeding the date of such Series C Note, until
the principal amount thereof shall be due and payable,
and shall bear interest on any overdue payment
(including any overdue prepayment) of principal, any
overdue payment of Make-
<PAGE> 6
Whole Amount, and, to the extent permitted by applicable
law, any overdue payment of interest, at a rate per
annum from time to time equal to the greater of
(I) nine and sixty-two one hundredths
percent (9.62%) per annum, or
(II) the lesser of
(A) the maximum rate permitted by
applicable law, or
(B) the sum of
(1) two percent (2%)
per annum plus
(2) the rate of
interest publicly announced by Morgan
Guaranty Trust Company of New York
from time to time in New York City as
its Prime Rate;
(b) mature on December 15, 2005; and
(c) be in the form of the Note set out in Exhibit
A1 to this Agreement.
(ii) Each Series D Note shall
(a) bear interest on the unpaid principal balance
thereof from the date of the Note at the rate set forth in the
table below during the periods set forth in the table below:
<TABLE>
<CAPTION>
================================================================================
Period Interest Rate
- --------------------------------------------------------------------------------
<S> <C>
Closing Date through June 14, 1996 10.160%
- --------------------------------------------------------------------------------
June 15, 1996 through June 14, 1997 9.770%
- --------------------------------------------------------------------------------
June 15, 1997 through June 14, 1998 9.380%
- --------------------------------------------------------------------------------
June 15, 1998 through June 14, 1999 8.990%
- --------------------------------------------------------------------------------
June 15, 1999 through December 14, 1999 8.600%
- --------------------------------------------------------------------------------
December 15, 1999 through June 14, 2000 8.730%
- --------------------------------------------------------------------------------
June 15, 2000 through December 14, 2000 8.275%
- --------------------------------------------------------------------------------
December 15, 2000 through June 14, 2001 8.366%
- --------------------------------------------------------------------------------
June 15, 2001 through December 14, 2005 7.820%
================================================================================
</TABLE>
payable semi-annually on the 15th day of each June and December in each year
commencing on the later of June 15, 1996 or the interest payment date next
succeeding the date of such
2
<PAGE> 7
Series D Note, until the principal amount thereof shall be due and payable,
and shall bear interest on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of Make-Whole Amount, and, to
the extent permitted by applicable law, any overdue payment of interest, at a
rate per annum from time to time equal to the greater of
(I) the sum of
(A) two percent (2%) per annum plus
(B) the rate of interest applicable
thereto at the time such additional interest first
became payable, or
(II) the lesser of
(A) the maximum rate permitted by
applicable law, or
(B) the sum of
(1) two percent (2%) per annum
plus
(2) the rate of interest publicly
announced by Morgan Guaranty Trust Company of
New York from time to time in New York City
as its Prime Rate;
(b) mature on December 15, 2005; and
(c) be in the form of the Note set out in Exhibit A2 to
this Agreement.
The term "Notes" as used in this Agreement shall include each Note delivered
pursuant to any provision of this Agreement or the Other Note Agreements
referred to in paragraph 2 of this Agreement and each Note delivered in
substitution or exchange for any such Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES.
2A. PURCHASE PRICE OF NOTES AND CLOSING DATE. The Company hereby
agrees to sell to you and, subject to the terms and conditions set forth in this
Agreement, you agree to purchase from the Company the aggregate principal amount
of Notes set forth opposite your name in the Purchaser Schedule attached to this
Agreement as Annex 1, at one hundred percent (100%) of such aggregate principal
amount. The Closing will be held at 10:00 a.m., at the offices of your special
counsel, Hebb & Gitlin, a Professional Corporation, One State Street, Hartford,
Connecticut 06103. At the Closing, the Company will deliver to you one or more
Notes registered in your name, evidencing the aggregate principal amount of
Notes to be purchased by you of the series and in the denomination or
denominations specified with respect to you in Annex 1 to this Agreement,
against (i) in the case of the Series C Notes, payment of the purchase price
thereof by wire transfer of immediately available funds, as directed by the
Company on Annex 2 to this Agreement, or (ii) in the case of the Series D Notes,
delivery by you to the Company of the Company's 10.16% Series B Senior Notes due
June 15, 2001 in an aggregate principal
3
<PAGE> 8
amount equal to the aggregate principal amount of the Series D Notes to be
purchased by you on the Closing Date.
2B. OTHER PURCHASERS. Concurrently with the execution and
delivery of this Agreement, the Company is entering into other Note Agreements
(the "Other Note Agreements") identical with this Agreement (except as to the
identity of the purchaser and the principal amount of Notes to be purchased)
with the other purchasers (the "Other Purchasers") named in Annex 1 to this
Agreement. The sale to you and the sales to the Other Purchasers are to be
separate and several sales.
3. CLOSING CONDITIONS.
Your obligation to purchase and pay for the Notes to be purchased by
you under this Agreement on the Closing Date is subject to the satisfaction, on
or before the Closing Date, of the following conditions:
3A. OPINION OF PURCHASER'S SPECIAL COUNSEL. You shall have
received from Hebb & Gitlin, a professional corporation, which is acting as
special counsel for you in connection with this transaction, a favorable
opinion satisfactory to you and substantially in the form of Exhibit B1 to this
Agreement.
3B. OPINION OF COMPANY'S COUNSEL. You shall have received from
(i) Baker & Botts, L.L.P., special counsel for the
Company, a favorable opinion satisfactory to you and substantially in
the form of Exhibit B2 to this Agreement, and
(ii) Christopher L. Cella, Esq., General Counsel for the
Company, a favorable opinion satisfactory to you and substantially in
the form of Exhibit B3 to this Agreement.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 8 of this Agreement shall
be true on and as of the Closing Date, except to the extent of changes caused
by the transactions contemplated in this Agreement; there shall exist on the
Closing Date no Event of Default or Default; and you shall have received a
certificate dated the Closing Date and signed by the President, a Vice
President or the Treasurer of the Company, substantially in the form of Exhibit
C to this Agreement, certifying to both such effects, and that the conditions
specified in this paragraph 3 have been fulfilled, and certificates dated the
Closing Date and signed by the Secretary or an Assistant Secretary of the
Company and the Secretary or Assistant Secretary of each Guarantor,
substantially in the form of Exhibit D1 and Exhibit D2, respectively, to this
Agreement, with respect to the matters therein set forth.
3D. SALE OF NOTES TO OTHER PURCHASERS. The Company shall have
sold to the Other Purchasers the Notes to be purchased by them on the Closing
Date and shall have received payment in full therefor.
3E. PURCHASE PERMITTED BY APPLICABLE LAWS. The offer, purchase
and sale of, and payment for, the Notes to be purchased by you on the Closing
Date on the terms and conditions provided in this Agreement (including the use
of the proceeds of such Notes by the Company) shall not violate any applicable
law or governmental regulation (including, without limitation,
4
<PAGE> 9
Section 5 of the Securities Act or Regulation G, T or X of the Board of
Governors of the Federal Reserve System) and shall not subject you to any tax,
penalty, liability or other onerous condition under or pursuant to any
applicable law or governmental regulation, and you shall have received such
certificates or other evidence as you may reasonably request to establish
compliance with this condition.
3F. PRIVATE PLACEMENT NUMBER. The Company shall have obtained or
caused to be obtained a private placement number for each series of the Notes
from the CUSIP Service Bureau of Standard & Poor's Corporation.
3G. CLOSING EXPENSES. The Company shall have paid the statement
for fees and disbursements of Hebb & Gitlin, a Professional Corporation,
special counsel to you and the Other Purchasers, presented on the Closing Date.
3H. SUBSIDIARY GUARANTIES. You shall have received a Guaranty (the
"Subsidiary Guaranty"), addressed to you and the Other Purchasers,
substantially in the form of Exhibit E to this Agreement, from Navajo Refining
Company, a Delaware corporation, Navajo Pipeline Co., a Delaware corporation,
Lea Refining Company, a Delaware corporation, Navajo Holdings, Inc., a New
Mexico corporation, Navajo Western Asphalt Company, a New Mexico corporation,
and Navajo Crude Oil Marketing Company, a Texas corporation (each Person
delivering a Subsidiary Guaranty being referred to as a "Guarantor"), each of
which is a Restricted Subsidiary and a guarantor of the Revolving Credit
Agreement.
3I. PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby and all
documents incident to this Agreement shall be satisfactory in substance and
form to you, and you shall have received all such counterpart originals or
certified or other copies of such documents as you may reasonably request.
3J. REVOLVING CREDIT AGREEMENT. On or prior to the Closing Date,
you shall have received a fully executed copy of the Revolving Credit Agreement
and each amendment thereto (including, without limitation, that certain third
amendment to the Revolving Credit Agreement, dated as of November 15, 1995) and
of each other document delivered in connection therewith that you may request,
in each case certified as true and correct by an officer of the Company.
3K. LETTER OF CONSENT, WAIVER AND AMENDMENT. On or prior to the
Closing Date, each holder of (i) the Company's 9.72% Series A Senior Notes due
June 15, 1998, and (ii) the Company's 10.16% Series B Notes due June 15,
2001, shall have executed and delivered to the Company a letter of consent,
waiver and amendment relating to the 1991 Note Agreement. Such letter of
consent, waiver and amendment shall be satisfactory in form and scope to you in
your sole and absolute discretion.
4. PREPAYMENTS.
The entire principal amount of the Series C Notes then outstanding is
due on December 15, 2005, and the entire principal amount of the Series D Notes
then outstanding is due on December 15, 2005. The Notes shall be subject to
required prepayment as set forth in paragraph 4A of this Agreement and shall be
subject to prepayment, at the option of the Company, as set
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forth in paragraph 4B of this Agreement and also subject to prepayment or
purchase under the circumstances set forth in paragraph 4E and paragraph 4F of
this Agreement, respectively.
4A. REQUIRED PREPAYMENTS.
(i) SERIES C NOTES. Until the Series C Notes
shall be paid in full, the Company shall apply to the
prepayment of the Series C Notes, without any Make-Whole Amount
being due in respect thereof, the sum of Five Million Five
Hundred Seventy-One Thousand Four Hundred Twenty-Nine Dollars
($5,571,429) on December 15 in each of the years 1999 to 2004,
inclusive, and such principal amounts of the Notes, together
with interest thereon to the prepayment dates, shall become due
on such prepayment dates. The remaining Five Million Five
Hundred Seventy-One Thousand Four Hundred TwentyNine Dollars
($5,571,429) principal amount of the Notes, together with
interest accrued thereon, shall become due on the maturity date
of the Notes.
(ii) SERIES D NOTES. Until the Series D Notes
shall be paid in full, the Company shall apply to the
prepayment of the Series D Notes, without any Make-Whole
Amount being due in respect thereof, the sum of Three Million
Dollars ($3,000,000) on December 15 in each of the years 1999
to 2004, inclusive, and such principal amounts of the Notes,
together with interest thereon to the prepayment dates, shall
become due on such prepayment dates. The remaining Three
Million Dollars ($3,000,000) principal amount of the Notes,
together with interest accrued thereon, shall become due on
the maturity date of the Notes.
(iii) APPLICATION OF OTHER PREPAYMENTS. Each
prepayment of any Note pursuant toparagraph 4B or paragraph 4E
of this Agreement shall reduce pro rata the prepayments
becoming due after such prepayment and payments at maturity
required by paragraph 4A(i) and paragraph 4A(ii) of this
Agreement in respect of all Notes of the same series as such
Note, such pro rata reduction to be determined by multiplying
any such prepayment or payment by the quotient of the
principal amount of the Note so prepaid divided by the
principal amount of Notes of the same series outstanding
immediately prior to such prepayment.
4B. OPTIONAL PREPAYMENT WITH MAKE-WHOLE AMOUNT. The Notes shall
be subject to prepayment, in whole at any time or from time to time in part (in
a minimum aggregate principal amount of One Hundred Thousand Dollars ($1
00,000) or integral multiples of One Thousand Dollars ($1,000) in excess
thereof, or if the aggregate principal amount of Notes outstanding is less than
One Hundred Thousand Dollars ($1 00,000), then such lesser aggregate principal
amount), at the option of the Company, at one hundred percent (1 00%) of the
principal amount so to be prepaid plus interest thereon to the prepayment date
and the Make-Whole Amount, if any, with respect to each such Note.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company will give to each
holder of Notes irrevocable written notice of any prepayment to be made
pursuant to paragraph 4B of this Agreement not less than ten (1 0) days nor
more than sixty (60) days prior to the prepayment date, specifying such
prepayment date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to paragraph 4B of this Agreement. The notice of prepayment
shall also set forth in
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reasonable detail the Company's calculation of the Make-Whole Amount payable to
the holders of the Notes in connection with such prepayment. Notice of
prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment date
and together with the Make-Whole Amount, if any, shall become due and payable
on such prepayment date.
4D. PARTIAL PAYMENTS PRO RATA. Upon any partial prepayment of
Notes pursuant to paragraph 4A or paragraph 4B of this Agreement, the principal
amount so prepaid shall be allocated to all Notes at the time outstanding in
proportion to the respective aggregate principal amounts of Notes then
outstanding.
4E. REQUIRED PREPAYMENTS UPON CHANGE IN CONTROL.
(i) NOTICE. In the event that a Responsible Officer of
the Company obtains actual knowledge of a Change in Control, the
Company shall, within five (5) Business Days of obtaining such
knowledge, give written notice of such Change in Control to each
holder of Notes and, simultaneously with the sending of such notice,
use reasonable efforts to give telephonic advice of such Change in
Control to the investment officer of each such holder specified in
Annex 1 to this Agreement (as supplemented by written notice from each
such holder). Each such notice shall contain a description, in
reasonable detail, of such Change in Control.
(ii) OFFER TO PREPAY. If on any day during the period of
six (6) complete consecutive calendar months commencing immediately
after a Change in Control, an Event of Default shall occur under
paragraph 7A(v) of this Agreement, the Company shall, within five (5)
Business Days after the day on which a Responsible Officer of the
Company obtains knowledge thereof, give written notice of such fact to
each holder of Notes and, simultaneously with the sending of such
notice, use reasonable efforts to give telephonic advice of such fact
to the investment officer of each such holder specified in Annex 1 to
this Agreement (as supplemented by written notice from each such
holder). Such written notice (the "Offer Notice") shall contain and
constitute an irrevocable offer to prepay all, but not less than all,
the Notes held by such holder.
(iii) ACCEPTANCE OF OFFER TO PREPAY. To accept such
offered prepayment, a holder of Notes shall cause a written notice of
such acceptance with respect to all, but not less than all, the Notes
held by such holder (which acceptance will be irrevocable) to be
delivered to the Company not later than the forty-fifth (45th) day
following its receipt of the Offer Notice whereupon such offered
prepayment shall be due and payable on the forty-fifth (45th) day
following the expiration of such forty-five (45) day period (or if the
date of expiration of such forty-five (45) day period is not a
Business Day, the first Business Day thereafter) (the date of such
prepayment being referred to as the "Control Prepayment Date"). Such
offered prepayment shall be made at one hundred percent (100%) of the
principal amount of Notes so to be prepaid, plus interest thereon to
the Control Prepayment Date and the Make-Whole Amount, if any, with
respect to such Notes.
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4F. REPURCHASE OF NOTES. The Company will not, and will not
permit any of the Subsidiaries or Affiliates to, prepay, retire, purchase or
otherwise acquire in whole or in part prior to their respective stated final
maturities (other than by purchase as provided in this paragraph 4F or
prepayment pursuant to paragraph 4A, paragraph 4B or paragraph 4E of this
Agreement or upon acceleration of such final maturity pursuant to paragraph 7A
of this Agreement), directly or indirectly, Notes held by any Person, unless:
(i) the Company or such Subsidiary or Affiliate shall
have offered to acquire (regardless of whether such offer shall be
accepted) the same proportion of the aggregate principal amount of
Notes held by each other holder of Notes at the time outstanding upon
the same terms, conditions and consideration; and
(ii) such acquisition is not directly or indirectly
conditioned upon the holder of any Note or Notes giving consent to any
amendment, supplement or waiver to any provision of this Agreement or
any Other Note Agreement, the Notes or the Subsidiary Guaranty, and no
such consent is otherwise given, directly or indirectly, in connection
with any such acquisition.
For purposes of paragraph 4A, any Notes purchased or otherwise acquired by the
Company or any of the Subsidiaries or Affiliates pursuant to this paragraph 4F
shall be deemed to be outstanding and the Company, such Subsidiary or such
Affiliate the holder thereof, but such Notes shall not be deemed to be
outstanding for any other purpose under this Agreement (including, without
limitation, any determination of the Required Holders).
4G. LIMITATIONS ON PREPAYMENTS. Except as specifically set forth
in this Agreement, the Other Note Agreements and the Notes, the Notes shall not
be subject to prepayment.
5. AFFIRMATIVE COVENANTS.
5A. FINANCIAL STATEMENTS. The Company will deliver to each holder
of Notes in duplicate:
(i) as soon as practicable and in any event within sixty
(60) days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year, consolidated statements of
income and cash flows of the Company and the Subsidiaries for the
period from the beginning of the current fiscal year to the end of
such quarterly period, and a consolidated balance sheet of the Company
and the Subsidiaries as at the end of such quarterly period, setting
forth, in the case of each quarterly period commencing with the
quarterly period ending October 31, 1995, in comparative form figures
for the corresponding period in the preceding fiscal year, all in
reasonable detail and certified by a Responsible Officer of the
Company, subject to changes resulting from year-end adjustments,
together with the adjustments to such consolidated financial
statements necessary to reflect the elimination therefrom of the
accounts of the Unrestricted Subsidiaries; provided that delivery
within the period specified above of copies of the Quarterly Report on
Form 1O-Q of the Company for such quarterly period filed with the SEC,
together with the adjustments to such consolidated financial
statements necessary to reflect the elimination therefrom of the
accounts of the Unrestricted Subsidiaries, shall be deemed to satisfy
the provisions of this clause (i), so
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long as such Quarterly Report as so adjusted shall contain the
information referred to above in this clause (i);
(ii) as soon as practicable and in any event within
ninety-five (95) days after the end of each fiscal year, consolidated
statements of income and cash flows of the Company and the
Subsidiaries for such year, and a consolidated balance sheet of the
Company and the Subsidiaries as at the end of such year, setting
forth, in the case of each fiscal year commencing with the fiscal year
ending July 31, 1996, in comparative form corresponding consolidated
figures from the preceding annual audit, all in reasonable detail,
audited, in accordance with generally accepted auditing standards, by
independent public accountants of recognized standing selected by the
Company, and reported on by such accountants without qualification as
to scope of audit or limitations imposed by the Company, together with
the adjustments to such consolidated financial statements necessary to
reflect the elimination therefrom of the accounts of the Unrestricted
Subsidiaries; provided that delivery within the period specified above
of copies of the Annual Report on Form 10-K of the Company for such
fiscal year filed with the SEC, together with the adjustments to such
consolidated financial statements necessary to reflect the elimination
therefrom of the accounts of the Unrestricted Subsidiaries, shall be
deemed to satisfy the provisions of this clause (ii), so long as such
Annual Report as so adjusted shall contain the information referred to
above in this clause (ii);
(iii) promptly upon transmission thereof, copies of all
such financial statements, proxy statements, notices and reports as it
sends to its public stockholders and copies of all registration
statements (without exhibits) and all reports that it files with the
SEC; and
(iv) with reasonable promptness, such other financial data
as any holder may reasonably request and that is reasonably available
to the Company (including, without limitation, a copy of each report
(other than those referred to above in this paragraph 5A) submitted to
the Company or any Subsidiary by independent accountants in connection
with any annual, interim or special audit made by them of the books of
the Company or any Subsidiary).
Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Company will deliver to each holder of Notes a certificate of a
Responsible Officer demonstrating (with computations in reasonable detail)
compliance by the Company and the Restricted Subsidiaries with the provisions
of paragraph 6A(xi), paragraph 6B, paragraph 6C, paragraph 6D(i), paragraph
6E, paragraph 6F, paragraph 6G, paragraph 6H and paragraph 6I of this Agreement
and stating that there exists no Event of Default or Default, or, if any Event
of Default or Default exists, specifying the nature and period of existence
thereof and what action the Company proposes to take with respect thereto. If
the Company no longer files an Annual Report on Form 10-K with the SEC, the
Company will use its best efforts to deliver to each holder of Notes, together
with each delivery of financial statements required by clause (ii) above, a
certificate of the accountants described in such clause stating that, in making
the audit necessary to their report concerning such financial statements, they
have obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any such Event of Default or Default, specifying the
nature and period of existence thereof. Such accountants, however, shall
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not be liable to anyone by reason of their failure to obtain knowledge of any
such Event of Default or Default that would not be disclosed in the course of
an audit conducted in accordance with generally accepted auditing standards.
The Company also covenants that forthwith upon a Responsible Officer obtaining
knowledge of an Event of Default or Default, it will deliver to each holder of
Notes a certificate of a Responsible Officer specifying the nature and period
of existence thereof and what action the Company proposes to take with respect
thereto.
5B. INSPECTION OF PROPERTY. The Company will permit any Person
designated in writing by a holder of Notes, at such holder's expense or, so
long as an Event of Default shall exist, at the Company's expense, to visit and
inspect any of the Properties of the Company and the Subsidiaries, to examine
the corporate books and financial records of the Company and the Subsidiaries
and make copies thereof or extracts therefrom and to discuss the affairs,
finances and accounts of any of such entities with the principal officers of
the Company and its independent public accountants (which independent public
accountants are hereby authorized to have such discussions), all at such
reasonable times and as often as such holder may reasonably request and
provided that the Company shall have the right to be present during, and to
receive reasonable prior notice of, any discussion with the Company's
independent public accountants.
5C. MAINTENANCE OF PROPERTIES; INSURANCE.
(i) MAINTENANCE OF PROPERTIES. Subject to sales and other
dispositions permitted under paragraph 6D of this Agreement, the
Company will maintain or cause to be maintained in good repair,
working order and condition (ordinary wear and tear excepted) all
Properties used or useful in the business of the Company and the
Restricted Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof
provided, that nothing in this paragraph 5C shall prohibit the Company
or any Restricted Subsidiary from discontinuing use or operation of
any of its Properties if such discontinuance, in the reasonable
judgment of the Company or such Restricted Subsidiary, would not have
a material adverse effect on the business, condition (financial or
other), Properties or operations of the Company and the Restricted
Subsidiaries, taken as a whole.
(ii) INSURANCE. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance
with respect to its Properties and business and the Properties and
business of the Restricted Subsidiaries against loss or damage of the
kinds customarily insured against by corporations of established
reputation engaged in the same or similar businesses and similarly
situated, of such type, in such amounts and with such levels of
deductibles, as are customarily carried under similar circumstances by
such other corporations.
5D. CORPORATE EXISTENCE, ETC. Except as provided in paragraph 6G
of this Agreement and except that any Restricted Subsidiary may be liquidated
(subject to paragraph 6D of this Agreement), the Company will and will cause
each Restricted Subsidiary to,
(i) at all times preserve and keep in full force and
effect its corporate existence,
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(ii) at all times preserve and keep in full force and
effect the rights and franchises material to the business of the
Company and the Restricted Subsidiaries taken as a whole, and
(iii) qualify to do business in each jurisdiction where the
failure to do so would have a material adverse effect on the business,
condition (financial or other), Properties or operations of the
Company and the Restricted Subsidiaries, taken as a whole.
5E. PAYMENT OF TAXES, CLAIMS AND ACCOUNTS PAYABLE. The Company
will, and will cause each of the Subsidiaries to, pay all material taxes,
assessments and other governmental charges imposed upon it or any of its
Properties or in respect of any of its franchises, business, income or Property
before any penalty or interest accrues thereon, and the Company will, and will
cause each of the Subsidiaries to, pay all material claims and accounts payable
(including, without limitation, with respect to labor, services, materials and
supplies) for sums that have become due and payable, provided that no such tax,
assessment, charge, claim, account payable, interest or penalty need be paid if
it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such accrual or other appropriate
provision, if any, as shall be required by generally accepted accounting
principles shall have been made therefor.
5F. COMPLIANCE WITH LAWS, ETC. The Company will, and will cause
each of the Subsidiaries to, comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental authority (including,
without limitation, applicable Environmental Protection Law), noncompliance
with which would materially adversely affect the business, condition (financial
or other), assets, Property or operations of the Company and the Restricted
Subsidiaries taken as a whole.
5G. COVENANT TO SECURE NOTES EQUALLY. If the Company or any
Restricted Subsidiary shall create or assume any Lien upon any of its Property,
whether now owned or hereafter acquired, other than Liens permitted by the
provisions of paragraph 6A of this Agreement, the Company will make or cause to
be made effective provision whereby the Notes will be secured by such Lien
equally and ratably with any and all other Debt thereby secured.
5H. ERISA COMPLIANCE. The Company will, and will cause each ERISA
Affiliate to, at all times
(i) with respect to each Pension Plan, make timely
payments of contributions required to meet the minimum funding
standard set forth in ERISA or the IRC with respect thereto and, with
respect to any Multiemployer Plan, make timely payment of
contributions required to be paid thereto as provided by Section 515
of ERISA and
(ii) comply with all other provisions of ERISA,
except for such failures to make contributions and failures to comply as would
not have a material adverse effect on the business, condition (financial or
other), Properties or operations of the Company and the Restricted Subsidiaries
taken as a whole.
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5I. PAYMENT OF NOTES AND MAINTENANCE OF OFFICE. The Company will
punctually pay, or cause to be paid, the principal and interest (and Make-Whole
Amount, if any) to become due in respect of the Notes according to the terms
thereof and will maintain an office at the address of the Company set forth in
paragraph 11H of this Agreement where notices, presentations and demands in
respect of this Agreement or the Notes may be made upon it. Such office will
be maintained at such address until such time as the Company notifies the
holders of the Notes of any change of location of such office, which will in
any event be located in the United States of America.
5J. GUARANTIES FROM SUBSIDIARIES. If any Restricted Subsidiary
guarantees the obligations of the Company under the Revolving Credit Agreement,
then contemporaneously therewith the Company will cause such Restricted
Subsidiary to execute and deliver to the holders of the Notes a Subsidiary
Guaranty and a copy of the resolutions of the board of directors of such
Restricted Subsidiary, certified by its secretary or assistant secretary,
authorizing the execution, delivery and performance of such Subsidiary
Guaranty.
6. NEGATIVE COVENANTS.
All covenants contained herein shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that such action or condition would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of an Event of Default if such action is taken or such
condition exists.
6A. LIENS. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or suffer to exist any Lien
upon any of its Property, whether now owned or hereafter acquired, without
equally and ratably securing the Notes in accordance with the provisions of
paragraph 5G of this Agreement, except:
(i) Liens for taxes, assessments and governmental charges
not yet due or that are being contested in good faith by appropriate
proceedings;
(ii) Liens incurred or deposits made in the ordinary
course of business,
(a) in respects of leases, statutory obligations
or claims or demands of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons that are not
yet due or that are being contested in good faith by
appropriate proceedings, and in respect of which adequate
reserves are carried on the books of the Person liable
therefor to the extent required by generally accepted
accounting principles,
(b) in connection with workers' compensation,
unemployment insurance, social security and other like laws,
(c) to secure reimbursement obligations in
respect of letters of credit (including, without limitation,
letters of credit issued to finance the acquisition of
inventory), bids, leases, tenders, sales contracts, statutory
obligations, government contracts, surety and performance
bonds and other similar obligations not
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incurred in connection with the borrowing of money, the
obtaining of advances or the payment of the deferred purchase
price of Property, or
(d) incidental to the conduct of its business or
ownership of its Property, provided that,
(I) such obligations shall not have
arisen in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the
deferred purchase price of Property, and
(II) such Liens shall not in the
aggregate materially detract from the value of the
Property encumbered thereby or materially interfere
with the use of such Property in the ordinary conduct
of the owning Person's business;
(iii) Liens on Property of any Restricted Subsidiary to
secure obligations of such Restricted Subsidiary to the Company or to
a Wholly-Owned Restricted Subsidiary;
(iv) Liens existing on June 26, 1991 securing an amount not
in excess of Three Million Three Hundred Seventy-Two Thousand Dollars
($3,372,000);
(v) Liens on cash, instruments, investment securities,
accounts receivable and chattel paper, documents and instruments
relating to such accounts receivable or arising out of or in
connection with the sale or lease of goods or the rendering of
services (and all rights relating to such accounts receivable, chattel
paper, documents and instruments), inventories and spare parts and
spare accessories, as well as the proceeds of each of the foregoing,
securing the Revolving Credit Agreement;
(vi) Liens on Property acquired or constructed by the
Company or any Restricted Subsidiary after the date hereof to secure
Debt of the Company or such Restricted Subsidiary incurred in
connection with such acquisition or construction, and Liens existing
on such Property at the time of acquisition thereof, provided that
(a) no such Lien shall extend to or cover any
Property other than the Property being acquired or
constructed,
(b) the amount of Debt secured by any such Lien
shall not exceed an amount equal to the lesser of the total
purchase or construction price or Fair Market Value (as
determined in good faith by the Board of Directors or the
board of directors of such Restricted Subsidiary) of the
Property being acquired or constructed, determined at the time
of such acquisition or at the time of substantial completion
of such construction,
(c) such Lien shall be created concurrently with
or within twelve (12) months after such acquisition or the
substantial completion of such construction,
(d) no Default or Event of Default shall exist at
the time of creation, incurrence or assumption of such Lien,
and
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e) if such Property is being acquired or
constructed by a Restricted Subsidiary, then, at the time of
such acquisition or construction, the amount of the Debt
secured by any such Lien shall not exceed eighty percent (80%)
of the Fair Market Value of such Property at such time;
(vii) Liens existing on Property of a corporation at the
time it becomes a Restricted Subsidiary or is merged or consolidated
with the Company or a Restricted Subsidiary, provided that
(a) no such Lien shall extend to or cover any
Property other than the Property subject to such Lien at the
time of any such transaction,
(b) the amount of Debt secured by any such Lien
shall not exceed the Fair Market Value (as determined in good
faith by the Board of Directors or the board of directors of
such Restricted Subsidiary) of the Property subject thereto,
determined at the time of any such transaction,
(c) such Lien was not created in contemplation of
any such transaction, and
(d) no Default or Event of Default shall exist at
the time of any such transaction;
(viii) Liens created, incurred or assumed in connection with
any issuance of industrial revenue or development bonds by any
Governmental Authority, provided that
(a) the net proceeds from the issuance of such
bonds are used to acquire or construct fixed assets for use by
the Company or one or more Restricted Subsidiaries,
(b) no such Lien shall extend to or cover any
Property other than such fixed assets, and
(c) no Default or Event of Default shall exist at
the time of any such transaction;
(ix) Liens on Property of the Company or any Restricted
Subsidiary in favor of any Governmental Authority or in favor of a
prime contractor under a contract with a Governmental Authority and,
in each case, resulting from acceptance of progress or partial
payments in the ordinary course of business under contracts with
Governmental Authorities;
(x) Liens permitted by the foregoing clauses (i) to (ix),
inclusive, of this paragraph 6A securing Debt that is being renewed,
extended or refunded, provided that
(a) except with respect to the Liens referred to
in clause (v) of this paragraph 6A, the principal amount of
such Debt outstanding at the time of such renewal, extension
or refunding is not increased, and
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(b) such Liens are not extended to any Property
not subject thereto at the time of such renewal, extension or
refunding; and
(xi) Liens, not otherwise permitted by the provisions of
this paragraph 6A, on Property of the Company or any Restricted
Subsidiary, provided that the sum of, without duplication,
(a) the aggregate amount of Debt secured by Liens
permitted only by this paragraph 6A(xi) (including, without
limitation, Capitalized Lease Obligations arising from Sale
and Leaseback Transactions), plus
(b) the aggregate amount of Debt secured by Liens
permitted by paragraph 6A(iv), plus
(c) the aggregate amount of
(I) all Unsecured Restricted Subsidiary
Funded Debt plus
(II) all Undersecured Restricted
Subsidiary Funded Debt,
owing to Persons other than the Company or a Restricted
Subsidiary
shall not exceed 15% of Consolidated Capitalization determined at the
time any such Lien is created.
6B. FUNDED DEBT.
(i) Except as provided in clause (ii) of this paragraph
6B, the Company will not, and will not permit any Restricted
Subsidiary to, incur, issue, assume or guarantee any Funded Debt, or
sell, transfer or otherwise dispose of Funded Debt of any Restricted
Subsidiary, unless, immediately after and after giving effect thereto
and to the retirement of any Funded Debt of the Company or any
Restricted Subsidiary to be retired substantially concurrently with
such action,
(a) Consolidated Funded Debt shall not exceed
sixty percent (60%) of Consolidated Capitalization, and
(b) Consolidated Net Income Available for
Interest Expense for the period of four (4) consecutive fiscal
quarters of the Company most recently ended at the time of
such action shall be more than two hundred percent (200%) of
Pro Forma Consolidated Interest Expense for the period of four
consecutive fiscal quarters of the Company commencing with the
fiscal quarter in which such action shall occur.
(ii) The foregoing clause (i) and the provisions of
paragraph 6C of this Agreement will not apply to the renewal,
extension or refunding of any Funded Debt of the Company or any
Restricted Subsidiary so long as the principal amount of such
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Funded Debt outstanding at the time of such renewal, extension or
refunding is not increased.
6C. RESTRICTED SUBSIDIARY FUNDED DEBT. The Company will not
permit any Restricted Subsidiary to incur, issue, assume or guarantee any
Funded Debt except:
(i) Funded Debt owing to the Company or any Restricted
Subsidiary,
(ii) Funded Debt of a corporation at the time it becomes a
Restricted Subsidiary or is merged or consolidated with the Company or
a Restricted Subsidiary, provided that
(a) such Funded Debt was not created in
contemplation of any such transaction and
(b) no Default or Event of Default shall exist at
the time of any such transaction,
(iii) Funded Debt secured by any of the Liens specified in
clauses (vi) to (xi), inclusive, of paragraph 6A of this Agreement,
(iv) guarantees of Funded Debt outstanding under the
Revolving Credit Agreement (to the extent that Debt outstanding
thereunder would constitute Funded Debt, i.e., as contemplated by
clause (ii) or clause (iii) of the definition of "Funded Debt" in
paragraph 10 of this Agreement), and
(v) guarantees of the Notes.
6D. DISPOSITIONS OF PROPERTY. The Company will not, and will not
permit any Restricted Subsidiary or Unrestricted Subsidiary which was
previously a Restricted Subsidiary to, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer") any Property (other than (w) Restricted
Investments, except the stock of an Unrestricted Subsidiary that has been a
Restricted Subsidiary, (x) sales or other transfers or dispositions of Property
by the Company to a Restricted Subsidiary or by a Restricted Subsidiary to the
Company or another Restricted Subsidiary, (y) sales of inventory in the
ordinary course of business, and (z) dispositions, in the ordinary course of
business, of obsolete or worn-out Property no longer useful in the business of
the Company, the Restricted Subsidiaries and such Unrestricted Subsidiaries)
unless all of the following conditions have been satisfied:
(i) the sum of
(a) the net book value of such Property
(expressed as a percentage of Consolidated Net Tangible Assets
determined as of the last day of the fiscal quarter of the
Company most recently preceding such Transfer), together with
the net book value of all other such Property Transferred
subsequent to June 16, 1991 (in each case expressed as a
percentage of Consolidated Net Tangible Assets determined as
of the last day of the fiscal quarter of the Company most
recently preceding each such Transfer), minus
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(b) the aggregate net book value of all Property
Transferred subsequent to June 26, 1991 (including, without
limitation, the net book value of the Property which is the
subject of such Transfer, if applicable) to the extent that
the net proceeds arising therefrom have been applied to (or
are substantially concurrently with such Transfer being
applied to) the ratable prepayment of all Funded Debt of the
Company or any Restricted Subsidiary owing to Persons other
than the Company or any Restricted Subsidiary (any prepayment
of the Notes being made pursuant to paragraph 4B of this
Agreement), such aggregate net book value (or the portion
thereof corresponding to the portion of such net proceeds so
applied or being so applied) being expressed as a percentage
of Consolidated Net Tangible Assets determined as of the last
day of the fiscal quarter of the Company most recently
preceding each such Transfer,
shall not exceed thirty percent (30%);
(ii) if the foregoing clause (i) would not be satisfied
without the deduction provided for in the foregoing clause (i)(b), in
the opinion of the Board of Directors or the board of directors of the
relevant Restricted Subsidiary or Unrestricted Subsidiary, as the case
may be, the Transfer is for Fair Market Value; and
(iii) immediately after and after giving effect to such
Transfer, no Default or Event of Default would exist.
Property consisting of the stock of Restricted Subsidiaries or Unrestricted
Subsidiaries which were previously Restricted Subsidiaries shall be deemed to
have a net book value equal to the net book value of all Property of the issuer
of such stock at the time of any Transfer thereof, or the appropriate portion
thereof if less than all stock of such issuer is the subject of a Transfer,
minus the amount of Funded Debt of such issuer outstanding at the time of such
Transfer as to which the Company and the Restricted Subsidiaries have no
liability of any kind immediately after, and after giving effect to, such
Transfer. The net proceeds arising from any Transfer of Property shall be
deemed not to have been applied to the ratable prepayment of Funded Debt, as
provided in the foregoing clause (i)(b), to the extent that such Funded Debt
was deducted from the net book value of Property of any Restricted Subsidiary
or Unrestricted Subsidiary which was previously a Restricted Subsidiary in
connection with a Transfer thereof, as provided in the preceding sentence. For
purposes of this paragraph 6D, "Consolidated Net Tangible Assets" shall be
deemed to include the Property of any Unrestricted Subsidiary which was
previously a Restricted Subsidiary and which is or was the subject of any
Transfer subsequent to June 26, 1991.
6E. SALE AND LEASEBACK TRANSACTIONS. The Company will not, and will
not permit any Restricted Subsidiary to, enter into any Sale and Leaseback
Transaction if the lease arising therefrom has a term of more than three (3)
years unless the net proceeds arising therefrom have been applied to (or are
substantially concurrently with the consummation of such Sale and Leaseback
Transaction being applied to) the ratable prepayment of all Funded Debt of the
Company or any Restricted Subsidiary owing to Persons other than the Company or
any Restricted Subsidiary (any prepayment of the Notes being made pursuant to
paragraph 4B of this Agreement)), provided that the foregoing shall not apply
to a Sale and Leaseback Transaction giving rise to a Capitalized Lease
Obligation if the sum of, without duplication
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(i) the aggregate amount of such Capitalized Lease
Obligation, plus
(ii) the aggregate amount of all Debt secured by Liens
permitted by either paragraph 6A(iv) or paragraph 6A(xi) of this
Agreement (including, without limitation, Capitalized Lease
Obligations), plus
(iii) the aggregate amount of
(a) all Unsecured Restricted Subsidiary Funded
Debt plus
(b) all Undersecured Restricted Subsidiary Funded
Debt,
owing to Persons other than the Company or a Restricted Subsidiary
shall not exceed fifteen percent (15%) of Consolidated Capitalization,
determined at the time of such Sale and Leaseback Transaction.
6F. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS.
(i) Subject to clause (ii) of this paragraph 6F, the
Company will not at any time pay or declare any dividend on any class
of its stock or make any other distribution on account of any class of
its stock (whether in cash, stock or other Property except dividends
payable solely in common stock of the Company), or redeem, purchase or
otherwise acquire, directly or indirectly (including, without
limitation, causing a Restricted Subsidiary to make any such
redemption, purchase or acquisition), any shares of its stock, or make
any mandatory sinking fund payment in respect thereof (all of the
foregoing being called in this Agreement "Restricted Payments"), and
the Company will not, and will not permit any Restricted Subsidiary
to, at any time make any Restricted Investment, unless, immediately
after and after giving effect to any such Restricted Payment or
Restricted Investment, the sum of all such Restricted Payments and
Restricted Investments made subsequent to June 26, 1991 shall not
exceed the sum of:
(a) Seventy-five percent (75%) of Consolidated
Net Income (or minus one hundred percent (100%) in the case
of a loss) for the period commencing on February 1, 1991] and
ending on the last day of the fiscal quarter of the Company
most recently ended at the time such Restricted Payment or
Restricted Investment shall be made; plus
(b) the net cash proceeds from the sale of all
capital stock of the Company sold subsequent to January 31,
1991 to Persons other than Restricted Subsidiaries (including
in such net proceeds the net amount paid upon issuance and
exercise of any right to acquire any capital stock, or paid to
convert a convertible Debt Security to capital stock, but
excluding any amount paid to the Company upon issuance of such
convertible Debt Security); plus
(c) an amount equal to the aggregate principal
amount of any Debt Security of the Company (other than Debt
Securities held by Restricted Subsidiaries), minus the costs
and fees incurred upon the original issuance of
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such Debt Security, any unamortized original issue discount
with respect to any such Debt Security and any costs and
expenses of conversion, which has been converted into or
exchanged for capital stock subsequent to January 31, 1991;
plus
(d) Ten Million Dollars ($10,000,000).
(ii) The foregoing provisions of this paragraph 6F to the
contrary notwithstanding, the Company may
(a) acquire up to One Hundred Thousand (100,000)
shares of its common stock (with such number to be adjusted
for stock splits and reverse splits that occur after the
Closing Date) in any period of twelve (12) consecutive months
for purposes of employee stock ownership, benefit and
incentive plans, but the amount expended by the Company
therefor shall be included in any subsequent computation
required by this paragraph 6F,
(b) pay any dividend on its common stock within
ninety (90) days after the declaration thereof if payment of
such dividend would have been permitted at the time of such
declaration, and
(c) issue common stock in exchange for stock of
one or more classes of the Company or issue stock of any class
in exchange for stock of the same class as the class
exchanged, and only the amount, if any, of any cash or other
consideration that is distributed by the Company in connection
therewith shall be included in any computation required by
this paragraph 6F.
(iii) At the time of each proposed Restricted Payment or
Restricted Investment (the "Calculation Date"), the amount, if any, by
which
(a) the Fair Market Value of the inventory of any
Unrestricted Subsidiary plus the net book value of all other
Current Assets of such Unrestricted Subsidiary (determined in
each case as of the end of the month most recently ended for
which the Company has available for its internal use financial
statements of such Unrestricted Subsidiary, but in no event
more than fifty (50) days prior to the Calculation Date) that
secure any outstanding loan or advance that, when made by the
Company or any Restricted Subsidiary, constituted an
Investment described in clause (x) of the definition of
"Restricted Investment" ("Working Capital Loans"), are
exceeded by
(b) the aggregate principal amount of Working
Capital Loans to such Unrestricted Subsidiary outstanding on
the Calculation Date,
shall be deemed to be a Restricted Investment and shall be included in
the calculations necessary to determine whether the proposed
Restricted Payment or Restricted Investment may be made without
violation of paragraph 6F(i) of this Agreement.
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(iv) All Restricted Investments of any corporation that
becomes a Restricted Subsidiary after the Closing Date shall be deemed
to have been made thirty (30) days after such corporation shall have
become a Restricted Subsidiary.
6G. MERGERS AND CONSOLIDATIONS. The Company will not, and will
not permit any Restricted Subsidiary to, merge or consolidate with any other
corporation (except that a Restricted Subsidiary may merge or consolidate with
the Company or any other Restricted Subsidiary); provided that the foregoing
restriction does not apply to the merger or consolidation of the Company with
another corporation if either the Company shall be the continuing or surviving
corporation and immediately after and after giving effect to the consummation
of the transaction, no Default or Event of Default would exist or
(i) the successor corporation that results from such
merger or consolidation (the "Surviving Corporation") is organized
under the laws of any State of the United States (or the District of
Columbia);
(ii) the due and punctual payment of the principal of and
Make-Whole Amount, if any, and interest on all of the Notes, according
to their tenor, and the due and punctual performance and observance of
all the covenants in the Notes and this Agreement to be performed or
observed by the Company, are expressly assumed in writing by the
Surviving Corporation;
(iii) immediately after and after giving effect to the
consummation of the transaction, no Default or Event of Default would
exist; and
(iv) the Surviving Corporation could incur an additional One
Dollar ($1) of Funded Debt under paragraph 6B of this Agreement.
6H. CONSOLIDATED NET WORTH. The Company will not at any time
permit Consolidated Net Worth to be less than the sum of
(i) Ten Million Dollars ($10,000,000), plus
(ii) ten percent (10%) of Consolidated Net Income for the
period commencing on February 1, 1991 and ending on the last day of
the fiscal quarter of the Company most recently ended at such time
(but not less than zero in any event); plus
(iii) the net cash proceeds from the sale of all capital
stock of the Company sold by the Company subsequent to January 31,
1991 to Persons other than Restricted Subsidiaries (including in such
net proceeds the net amount paid upon issuance and exercise of a right
to acquire any capital stock, or to convert a convertible Debt
Security to capital stock, but excluding any amount paid to the
Company upon issuance of such convertible Debt Security).
6I. CONSOLIDATED CURRENT DEBT. The Company will not, and will
not permit any Restricted Subsidiary to, have outstanding any Consolidated
Current Debt (except Current Debt owing to the Company or another Restricted
Subsidiary), during a period of at least twenty (20) consecutive days in each
period of twelve (12) consecutive months ending on or after October
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31, 1995; provided that the Company and the Restricted Subsidiaries may have
such Consolidated Current Debt outstanding during such period if, on each day
on which such Consolidated Current Debt is outstanding during such period,
Consolidated Current Debt shall not exceed the maximum amount of additional
Funded Debt that the Company could incur on each such day under paragraph 6B of
this Agreement.
6J. AFFILIATES.
(i) The Company will not, and will not permit any
Restricted Subsidiary to, enter into or be a party to any transaction
or arrangement, including, without limitation, the purchase, sale or
exchange of Property or the rendering of any service, with any
Affiliate, other than an Unrestricted Subsidiary, except in the
ordinary course, and pursuant to the reasonable requirements, of the
business of the Company or such Restricted Subsidiary and upon fair
and reasonable terms no less favorable to the Company or such
Restricted Subsidiary than would obtain in a comparable arm's-length
transaction with a Person not an Affiliate.
(ii) The Company will not, and will not permit any
Restricted Subsidiary to, enter into any material transaction or
arrangement, including, without limitation, the purchase, sale or
exchange of Property or the rendering of any service, with any
Unrestricted Subsidiary, except upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would
obtain in a comparable arm's-length transaction with a Person other
than an Affiliate.
6K. DESIGNATION OF SUBSIDIARIES. The Board of Directors may at
any time designate any Restricted Subsidiary as an Unrestricted Subsidiary or
any Unrestricted Subsidiary as a Restricted Subsidiary, provided that no
Default or Event of Default shall exist immediately after, and after giving
effect to, any such designation (whether or not caused by such designation),
but it may not thereafter redesignate such Subsidiary.
6L. PRIVATE OFFERING. The Company will not, nor will it permit
anyone acting on its behalf to, offer the Notes or any part thereof or any
similar Securities for issue or sale to, or solicit any offer to acquire any of
the same from, anyone so as to bring the issuance and sale of the Notes within
the provisions of Section 5 of the Securities Act or the registration
provisions of any securities or "blue sky" law of any applicable jurisdiction.
6M. MARGIN REGULATIONS. Neither the Company nor any agent acting
on its behalf will take any action that might cause this Agreement or the
Notes to violate Regulation G, Regulation T, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
7. EVENTS OF DEFAULT.
7A. EVENTS OF DEFAULT. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such occurrence shall
be voluntary or involuntary or come about or be effected by operation of law or
otherwise):
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(i) the Company defaults in the payment of any principal
of or Make-Whole Amount on any Note when the same shall become due,
either by the terms thereof or otherwise as provided in this
Agreement; or
(ii) the Company defaults in the payment of any interest on
any Note for more than five (5) days after the date due; or
(iii) the Company or any Restricted Subsidiary defaults in
any payment of principal of or interest on any other obligation for
money borrowed, including, without limitation, the Revolving Credit
Agreement (or any Capitalized Lease Obligation, any obligation under a
conditional sale or other title retention agreement, any obligation
issued or assumed as full or partial payment for Property whether or
not secured by a purchase money mortgage or any obligation under notes
payable or drafts accepted representing extensions of credit), beyond
any period of grace provided with respect thereto, or the Company or
any Restricted Subsidiary fails to perform or observe any other
agreement, term or condition contained in any agreement under which
any such obligation is created (or if any other event thereunder or
under any such agreement shall occur and be continuing) and the effect
of such failure or other event is to cause, or to permit the holder or
holders of such obligation (or a trustee on behalf of such holder or
holders) to cause, such obligation to become due prior to any
originally stated maturity, or to be repurchased by the Company or any
Restricted Subsidiary, provided that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing or permitting
acceleration or repurchase shall occur and be continuing exceeds Five
Million Dollars ($5,000,000) and, provided further, that such
obligations are recourse to the Company or such Restricted Subsidiary;
or
(iv) any representation or warranty made by the Company in
this Agreement or in any writing furnished by the Company, or at the
direction and with the knowledge of the Company in connection with or
pursuant to this Agreement shall be false in any material respect on
the date as of which made; or
(v) the Company fails to perform or observe any agreement
contained in paragraph 6 of this Agreement; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained in this Agreement and such
failure shall not be remedied within thirty (30) days after any
Responsible Officer of the Company obtains actual knowledge thereof;
or
(vii) the Company or any Restricted Subsidiary makes an
assignment for the benefit of creditors or is generally not paying its
debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Restricted Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (the "Bankruptcy Law"), of any jurisdiction; or
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(ix) the Company or any Restricted Subsidiary petitions or
applies to any tribunal for, or consents to, the appointment of, or
the taking of possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or any Restricted
Subsidiary, or of any substantial part of the Property of the Company
or any Restricted Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a
Restricted Subsidiary) relating to the Company or any Restricted
Subsidiary under the Bankruptcy Law of any other jurisdiction; or
(x) any petition or application referred to in
subparagraph (ix) of this paragraph 7A is filed, or any such
proceedings are commenced, against the Company or any Restricted
Subsidiary and the Company or such Restricted Subsidiary by any act
indicates its approval thereof, consent thereto or acquiescence
therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than thirty
(30) days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the
Company and such order, judgment or decree remains unstayed and in
effect for more than sixty (60) days; or
(xii) a final judgment in an amount in excess of One
Million Dollars ($1,000,000) is rendered against the Company or any
Restricted Subsidiary and, within sixty (60) days after entry thereof,
such judgment is not discharged or execution thereof stayed pending
appeal, or within sixty (60) days after the expiration of any such
stay, such judgment is not discharged;
then
(a) if such event is an Event of Default
specified in clause (vii), clause (viii), clause (ix) or
clause (x) of this paragraph 7A with respect to the Company,
all of the Notes at the time outstanding shall automatically
become immediately due and payable at par together with
interest accrued thereon, without presentment, demand,
protest, notice of intent to accelerate or other notice of any
kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default
specified in any other clause of this paragraph 7A, the
Required Holders may at its or their option, declare all of
the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and payable together with interest
accrued thereon and together with the Make-Whole Amount with
respect to each Note, without presentment, demand, protest,
notice of intent to accelerate or other notice of any kind,
all of which are hereby waived by the Company, and
(c) if such event is an Event of Default
specified in any of clause (i) or clause (ii) of this
paragraph 7A, the holder of any Note may, at its option,
declare all of the Notes held by such holder to be, and all of
such Notes shall thereupon be and become, immediately due and
payable together with interest accrued
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thereon and together with the Make-Whole Amount with respect
to each such Note, without presentment, demand, protest,
notice of intent to accelerate or other notice of any kind,
all of which are hereby waived by the Company.
7B. ANNULMENT OF ACCELERATION. If the principal of and accrued
interest on all or any outstanding Notes have been declared immediately due and
payable by reason of the occurrence of any Event of Default described in
clauses (i) through (xii) of paragraph 7A of this Agreement, inclusive, the
Required Holders may, by written instrument filed with the Company, rescind and
annul such declaration and the consequences thereof, provided that at the time
such declaration is annulled and rescinded:
(i) no judgment or decree has been entered for the payment
of any monies pursuant to the Notes or this Agreement;
(ii) all arrears of interest upon all the Notes and all
other sums payable under the Notes and under this Agreement (except
any principal, interest or Make-Whole Amount on the Notes which has
become due and payable solely by reason of such declaration under
paragraph 7A of this Agreement) shall have been duly paid; and
(iii) each and every other Default and Event of Default
shall have been cured or waived pursuant to paragraph 11C of this
Agreement;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereto.
7C. ACTION UNDER SUBSIDIARY GUARANTY. The Required Holders shall
have the sole right to take any and all actions under the Subsidiary Guaranty
and no holder of Notes (unless it shall hold a sufficient principal amount of
Notes to constitute it the "Required Holder") shall have the right to take any
of such actions.
8. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants as of the Closing Date:
8A. ORGANIZATION AND QUALIFICATION.
(i) ORGANIZATION. The Company is a corporation duly
organized and existing in good standing under the laws of the State of
Delaware, each Restricted Subsidiary is duly organized and existing in
good standing under the laws of the jurisdiction in which it is
incorporated, and each of the Company and the Restricted Subsidiaries
has the corporate power to own its Property and to carry on its
business as now being conducted.
(ii) QUALIFICATION. Each of the Company and the
Restricted Subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing, in every jurisdiction in which
the nature of the business conducted or Property owned by it makes
such qualification necessary, except in such jurisdictions in which,
in the aggregate, the
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failure to be so qualified would not have a material adverse effect on
the business or Properties of the Company and the Restricted
Subsidiaries taken as a whole.
8B. FINANCIAL STATEMENTS. The Company has furnished you with
consolidated balance sheets of the Company and the Subsidiaries as at July 31
for the years ended July 31, 1994 and July 31, 1995, and consolidated
statements of income and cash flows of the Company and the Subsidiaries for
each such year, all certified by Ernst & Young, LLP. Such financial statements
are true and correct in all material respects have been prepared in accordance
with generally accepted accounting principles consistently followed throughout
the periods involved and show all liabilities, direct and contingent, of the
Company and the Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the financial condition of the
Company and the Subsidiaries as at the dates thereof, and the statements of
income and cash flows fairly present the results of the operations and cash
flows, respectively, of the Company and the Subsidiaries for the periods
indicated. There has been no material adverse change in the business,
condition (financial or other), Properties or operations of the Company and the
Subsidiaries taken as a whole since July 31, 1995.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against the
Company or any of the Restricted Subsidiaries, or any Properties or rights of
the Company or any of the Restricted Subsidiaries, by or before any court,
arbitrator or administrative or governmental body which challenges the
authority of the Company to issue the Notes or, except as set forth in Annex 3
to this Agreement, which could reasonably be expected to result in any material
adverse change in the business, condition (financial or other), Properties or
operations of the Company and the Restricted Subsidiaries taken as a whole.
8D. OUTSTANDING DEBT. Neither the Company nor any of the Restricted
Subsidiaries has outstanding any Debt except as permitted by paragraph 6 of
this Agreement and described on Annex 3 to this Agreement. There exists no
default under the provisions of any instrument evidencing such Debt or of any
agreement relating thereto.
8E. TITLE TO PROPERTIES. Each of the Company and the Restricted
Subsidiaries has good and indefeasible title to its real Properties, has an
enforceable leasehold interest in and the quiet enjoyment of all Properties
leased by it, and has (other than in the case Properties that it leases) good
and marketable title to all of its other Properties, including the Properties
reflected in the balance sheet as at July 31, 1995, referred to in paragraph 8D
of this Agreement (other than Properties disposed of in the ordinary course of
business), subject to no Lien of any kind except Liens permitted by paragraph
6A of this Agreement and excluding in each case defects that would not, in the
aggregate, have a material adverse effect on the business, condition (financial
or other), Properties or operations of the Company and the Restricted
Subsidiaries taken as a whole. All leases necessary in any material respect
for the conduct of the business of the Company and the Restricted Subsidiaries
are valid and subsisting and are in full force and effect.
8F. TAXES. Each of the Company and the Restricted Subsidiaries
has filed all Federal, State and other income tax returns that are required to
be filed, and has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have become due,
except such taxes as are being contested in good faith by appropriate
proceedings and for
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<PAGE> 30
which adequate reserves have been established in accordance with generally
accepted accounting principles. Federal income tax returns of the Company and
the Restricted Subsidiaries have been examined and reported on by the taxing
authorities or closed by applicable statutes and satisfied for all fiscal years
prior to and including the fiscal year ended on July 31, 1990.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS.
(i) BURDENSOME AGREEMENTS. Neither the Company nor any of
the Restricted Subsidiaries is a party to any contract or agreement or
subject to any charter or other corporate restriction that materially
and adversely affects the business, condition (financial or other),
Properties or operations of the Company and the Restricted
Subsidiaries taken as a whole.
(ii) CONFLICTING DOCUMENTS AND AGREEMENTS. Neither the
execution nor delivery of this Agreement or the Notes, nor the
offering, issuance and sale of the Notes, nor fulfillment of or
compliance with the terms and provisions of this Agreement and of the
Notes, will conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, or result
in any violation of, or result in the creation of any Lien upon any of
the Properties of the Company or any of the Restricted Subsidiaries
pursuant to, the charter or by-laws of the Company or any of the
Restricted Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the
Company or any of the Restricted Subsidiaries is subject. After
giving effect to the consent and waiver contemplated by paragraph 3K,
neither the acquisition of the Notes, nor the offering, issuance and
sale of the Notes violates or conflicts with any provision the 1991
Note Agreement.
(iii) RESTRICTIONS ON DEBT. Neither the Company nor any of
the Restricted Subsidiaries is a party to, or otherwise subject to any
provision contained in, any instrument evidencing indebtedness of the
Company or such Restricted Subsidiary, any agreement relating thereto
or any other contract or agreement (including its charter) that limits
the amount of, or otherwise imposes restrictions on the incurring of,
Debt of the Company of the type to be evidenced by the Notes except as
set forth in the agreements listed in Annex 3 to this Agreement.
8H. OFFERING OF NOTES. Neither the Company nor any agent acting
on its behalf has, directly or indirectly, offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the Notes
or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, more than you, the Other Purchasers and
four (4) other Persons (all of whom, including you and the Other Purchasers,
are institutional investors), and neither the Company nor any agent acting on
its behalf has taken or will take any action that would subject the issuance or
sale of the Notes to the provisions of Section 5 of the Securities Act, or to
the provisions of any securities or "blue sky" law of any applicable
jurisdiction.
8I. REGULATION G, ETC. Neither the Company nor any Subsidiary owns
or has any present intention of acquiring any "margin stock" as defined in
Regulation G (12 CFR Part 207)
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<PAGE> 31
of the Board of Governors of the Federal Reserve System ("Margin Stock"). The
proceeds of sale of the Notes will be used for capital expenditures and other
corporate purposes. None of such proceeds will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock or for the purpose of maintaining,
reducing or retiring any indebtedness that was originally incurred to purchase
or carry any stock that is currently a Margin Stock or for any other purpose
that might constitute this transaction a "purpose credit" within the meaning of
such Regulation G. Neither the Company nor any agent acting on its behalf has
taken or will take any action that might cause this Agreement or the Notes to
violate Regulation G, Regulation T, Regulation X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange
Act, in each case as in effect now or as the same may hereafter be in effect.
8J. ERISA.
(i) DISCLOSURE. Set forth in Annex 3 are the identities
of all ERISA Affiliates and all "employee benefit plans" with respect
to which the Company or any "affiliate" of the Company is a "party-in-
interest" or in respect of which the Notes could constitute an
"employer security" ("employee benefit plan" and "party-in-interest"
have the meanings specified in section 3 of ERISA and "affiliate" and
"employer security" have the meanings specified in section 407(d) of
ERISA).
(ii) PROHIBITED TRANSACTIONS. The execution and delivery
of this Agreement and the issuance and sale of the Notes hereunder
will not involve any transaction that is subject to the prohibitions
of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A) through section 4975(D),
inclusive, of the IRC. The representation by the Company in the
immediately preceding sentence is made in reliance upon the
representations in paragraph 9B of this Agreement and the
representations of the Other Purchasers contained in paragraph 9B of
the Other Note Agreements as to the source of the funds to be used to
pay the purchase price of the Notes.
(iii) ACCUMULATED FUNDING DEFICIENCY. No accumulated
funding deficiency (as defined in section 302 of ERISA and section 412
of the IRC), whether or not waived, exists with respect to any Pension
Plan.
(iv) COMPLIANCE WITH ERISA. The Company and the ERISA
Affiliates and each Pension Plan are in compliance with ERISA, except
for such failures to comply that in the aggregate for all such
failures would not have a material adverse effect on the business,
condition (financial or other), Properties or operations of the
Company and the Subsidiaries taken as a whole, or the ability of the
Company to perform its obligations under this Agreement and the Notes.
(v) MULTIEMPLOYER PLANS. Neither the Company nor any
ERISA Affiliate contribute to, maintain, or have any liability or
obligation in respect of, a Multiemployer Plan.
(vi) FOREIGN PENSION PLANS. The Company has no Foreign
Pension Plans.
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8K. ENVIRONMENTAL COMPLIANCE.
(i) COMPLIANCE. Each of the Company and the Subsidiaries
is in compliance with all Environmental Protection Laws in effect in
each jurisdiction where it is presently doing business except to the
extent of any failure so to comply that would not have a material
adverse effect on the business, condition (financial or other),
Properties or operations of the Company and the Subsidiaries taken as
a whole, or the ability of the Company to perform its obligations
under this Agreement and the Notes.
(ii) LIABILITY. Neither the Company nor any of the
Subsidiaries is subject to any liability under any Environmental
Protection Laws that, in the aggregate, would have a material adverse
effect on the business, condition (financial or other), Properties or
operations of the Company and the Subsidiaries taken as a whole, or the
ability of the Company to perform its obligations under this Agreement
and the Notes.
(iii) NOTICES. Neither the Company nor any of the
Subsidiaries has received any:
(a) notice from any Governmental Authority by
which any of its currently or previously owned or leased
Properties has been identified in any manner by any
Governmental Authority as a hazardous substance disposal or
removal site, "Super Fund" clean-up site, or other clean-up
site or candidate for removal or closure pursuant to any
Environmental Protection Law;
(b) notice of any Lien arising under or in
connection with any Environmental Protection Law that has
attached to any revenues of, or to, any of its currently or
previously owned or leased Properties; or
(c) any communication from any Governmental
Authority concerning any action or omission by the Company or
such Subsidiary in connection with its currently or previously
owned or leased Properties resulting in the release of any
hazardous substance or resulting in any violation of any
Environmental Protection Law;
in each case where the effect of which, in the aggregate for all such
notices and communications, would have a material adverse effect on
the business, condition (financial or other), Properties or operations
of the Company and the Subsidiaries taken as a whole, or the ability
of the Company to perform its obligations under this Agreement and the
Notes.
8L. GOVERNMENTAL CONSENT. Neither the nature of the Company or
of any Restricted Subsidiary, nor any of their respective businesses or
Properties, nor any relationship between the Company or any Restricted
Subsidiary and any other Person, nor any circumstance in connection with the
offering, issuance, sale or delivery of the Notes is such as to require the
Company or any Restricted Subsidiary to obtain any authorization, consent,
approval, exemption or other action by or notice to or filing with any court or
administrative or governmental body (other than routine filings after the
Closing Date with the Securities and Exchange Commission and state "blue sky"
authorities) in connection with the execution and delivery of this Agreement,
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the offering, issuance, sale or delivery of the Notes or fulfillment of or
compliance with the terms and provisions of this Agreement and of the Notes.
8M. POSSESSION OF FRANCHISES, LICENSES, ETC. The Company and the
Restricted Subsidiaries possess all franchises, certificates, licenses, permits
and other authorizations from governmental political subdivisions or regulatory
authorities, that are necessary in any material respect for the ownership,
maintenance and operation of their respective Properties, and neither the
Company nor any Restricted Subsidiary is in violation of any thereof in any
material respect.
8N. DISCLOSURE. This Agreement and all other documents,
certificates or statements furnished to you by or on behalf of the Company in
connection herewith, taken as a whole, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained in this Agreement and such documents, certificates and
statements not misleading. There is no fact peculiar to the Company or any of
the Subsidiaries that materially adversely affects or in the future may (so far
as the Company can now foresee) materially adversely affect the business,
condition (financial or other), Properties or operations of the Company and the
Subsidiaries, taken as a whole, and that has not been set forth in this
Agreement or in the other documents, certificates and statements furnished to
you by or on behalf of the Company prior to the date of this Agreement in
connection with the transactions contemplated hereby.
8O. CERTAIN LAWS.
(i) INVESTMENT COMPANY ACT. The Company is not, and is
not directly or indirectly controlled by, or acting on behalf of any
Person which is, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(ii) ABSENCE OF FOREIGN OR ENEMY STATUS. The Company is
not an "enemy" or an "ally of the enemy" within the meaning of Section
2 of the Trading with the Enemy Act (50 U.S.C. App Sections 1 et
seq.), as amended. The Company is not in violation of, and neither
the issue and sale of the Notes by the Company nor its use of the
proceeds thereof as contemplated by this Agreement will violate, the
Trading with the Enemy Act, as amended, or any executive orders,
proclamations or regulations issued pursuant thereto, including,
without limitation, regulations administered by the Office of Foreign
Asset Control of the Department of the Treasury (31 C.F.R. Chapter V).
(iii) HOLDING COMPANY STATUS. The Company is not a
"holding company" or an "affiliate" of a "holding company," or a
"subsidiary company" of a "holding company," or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
9. REPRESENTATIONS OF THE PURCHASER.
9A. PURCHASE OF NOTES. You represent to the Company that
(i) you are purchasing the Notes for investment for your
own account, for a separate account (as such term is used in Rule
144A, 17 C.F.R. Section 230.144A), for the
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account of another for which you have sole investment discretion or
for a trust of which you are the trustee, and
(ii) you are not purchasing the Notes with a view to or
for sale in connection with any distribution thereof within the
meaning of the Securities Act;
provided, that this representation shall not be deemed to prejudice your right
to
(i) sell or otherwise dispose of all or any part of the
Notes in compliance with the Securities Act or the rules and
regulations thereunder; and
(ii) have control over the disposition of all of your
assets to the fullest extent permitted or required by any applicable
law.
9B. ERISA.
You represent to the Company that, with respect to the funds with which
you are acquiring the Notes, and solely for purpose of determining whether such
purchase is a "prohibited transaction" (as provided for in section 406 of ERISA
or section 4975 of the IRC), all of such funds are from or are attributable to
one or more of:
(i) GENERAL ACCOUNT -- your general account assets or
assets of one or more segments of such general account, as the case
may be, and that all requirements for an exemption under Department of
Labor Prohibited Transaction Exemption 95-60 (60 F.R. 35925, July 12,
1995) have been satisfied; provided that in making such representation
you are relying on the Company's representations set forth in
paragraph 8J(i) and the related disclosure of "employee benefit plans"
set forth in Annex 3;
(ii) SEPARATE ACCOUNT -- a "separate account" (as defined
in section 3 of ERISA):
(a) 10% POOLED SEPARATE ACCOUNT -- in respect of
which all requirements for an exemption under DOL Prohibited
Transaction Class Exemption 90-1 are met with respect to the
use of such funds to purchase the Notes,
(b) IDENTIFIED PLAN ASSETS -- that is comprised
of employee benefit plans identified by you in writing and
with respect to which the Company hereby warrants and
represents that, as of the Closing Date, neither the Company
nor any ERISA Affiliate is a "party in interest" (as defined
in section 3 of ERISA) or a "disqualified person" (as defined
in section 4975 of the IRC) with respect to any plan so
identified, or
(c) GUARANTEED SEPARATE ACCOUNT -- that is
maintained solely in connection with fixed contractual
obligations of an insurance company, under which any amounts
payable, or credited, to any employee benefit plan having an
interest in such account and to any participant or beneficiary
of such plan (including an annuitant) are not affected in any
manner by the investment
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performance of the separate account (as provided by 29 C.F.R.
Section 2510.3-101(h)(1)(iii));
(iii) QUALIFIED PROFESSIONAL ASSET MANAGER -- an
"investment fund" managed by a "qualified professional asset manager"
(as such terms are defined in Part V of DOL Prohibited Transaction
Class Exemption 84-14) with respect to which the requirements of such
exemption have been satisfied, provided that in making this
representation, it is assumed that the conditions set forth in Part
I(a), Part I(d) and Part I(e) of such Exemption have been satisfied;
(iv) EXCLUDED PLAN -- an employee benefit plan that is
excluded from the provisions of section 406(a) of ERISA by virtue of
section 4(b) of ERISA; or
(v) EXEMPT FUNDS -- a separate investment account that is
not subject to ERISA and no funds of which come from assets of an
"employee benefit plan" or a "plan" or any other entity that is deemed
to hold assets of an "employee benefit plan" or a "plan," ("employee
benefit plan" is defined in section 3 of ERISA, and "plan" is defined
in section 4975(e)(1) of the IRC).
10. DEFINITIONS.
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the paragraph of this Agreement
following such term:
"AFFILIATE" means at any time a Person (other than the Company
or a Restricted Subsidiary)
(i) that directly or indirectly through one or
more intermediaries controls, or is controlled by, or is under
common control with, the Company,
(ii) that beneficially owns or holds five percent
(5%) or more of any class of the Voting Stock of the Company,
or
(iii) five percent (5%) or more of the Voting Stock
(or in the case of a Person which is not a corporation, five
percent (5%) or more of the equity interest) of which is
beneficially owned or held by the Company or a Restricted
Subsidiary.
The term "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"BANKRUPTCY LAW" has the meaning specified in clause (viii) of
paragraph 7A of this Agreement.
"BOARD OF DIRECTORS" means, at any time, the board of
directors of the Company or any committee thereof which, in the
instance, shall have the lawful power to exercise the power and
authority of such board of directors.
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"BUSINESS DAY" means any day, other than a Saturday, a Sunday
or a day on which commercial banks in New York, New York or Dallas,
Texas are permitted or required to be closed (other than a banking
holiday or moratorium of four days or more).
"CALCULATION DATE" has the meaning assigned to such term in
paragraph 6F of this Agreement.
"CAPITALIZED LEASE OBLIGATION" means any rental obligation
which, under generally accepted accounting principles, is or will be
required to be capitalized on the books of the Company or any
Subsidiary, taken at the amount thereof accounted for as indebtedness
(net of interest expense) in accordance with such principles.
"CHANGE IN CONTROL" means
(i) the direct or indirect acquisition by any
person (as such term is used in Section 13(d) and Section
14(d)(2) of the Exchange Act), or related persons constituting
a group (as such term is used in Rule 13d-5 under the Exchange
Act), of
(a) beneficial ownership of issued and
outstanding shares of Voting Stock of the Company,
the result of which acquisition is that such person
or such group possesses in excess of fifty percent
(50%) of the combined voting power of all then issued
and outstanding Voting Stock of the Company, or
(b) the power to elect, appoint, or
cause the election or appointment of at least a
majority of the members of the Board of Directors,
provided, that in determining whether such direct or indirect
beneficial ownership or power has been acquired by any person
or any group, any person or member of such group that is an
"employee benefit plan" (as defined in ERISA) of the Company,
and all members of the Norsworthy Group and the Simmons Group,
shall be deemed not to be persons or members of such acquiring
group, or
(ii) the sale of all or substantially all of the
Property of the Company other than pursuant to a merger or
consolidation permitted by paragraph 6G of this Agreement.
As used in this definition,
"Norsworthy Group" means
(i) Lamar Norsworthy, David Norsworthy and Nona
Barrett,
(ii) their respective parents, spouses, children
and lineal descendants, and
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(iii) the estate or any trust for the benefit of
any of the foregoing persons.
"Simmons Group" means
(i) Betty Regard, Margaret Simmons and Suzanne
Bartolucci,
(ii) their respective parents, spouses, children
and lineal descendants, and
(iii) the estate or any trust for the benefit of
any of the foregoing persons.
"CLOSING DATE" means November 21, 1995.
"COMPANY" has the meaning assigned to such term in the
introductory sentence of this Agreement.
"CONSOLIDATED CAPITALIZATION" means, at any time, the sum of
Consolidated Net Worth at such time plus Consolidated Funded Debt at
such time.
"CONSOLIDATED CURRENT DEBT" means, at any time,
(a) all Current Debt of the Company and the
Restricted Subsidiaries, determined on a consolidated basis at
such time in accordance with generally accepted accounting
principles, and
(b) all loans, and reimbursement obligations in
respect of letters of credit issued, under the Revolving
Credit Agreement that are secured by a Lien on the Property of
the Company or any Restricted Subsidiary; provided that
Consolidated Current Debt shall not include
(i) the amount of any reimbursement
obligation of the Company or any Restricted
Subsidiary in respect of letters of credit issued
pursuant to the Revolving Credit Agreement, except
for purposes of determining the character, as Current
Debt or Funded Debt, of the excess, if any, of
"Outstanding Credits" over the "Borrowing Base" as
provided in the definition of "Revolving Credit
Agreement" in this paragraph 10, and
(ii) Debt, if any, outstanding under the
Revolving Credit Agreement during the twenty (20) day
period referred to in clause (ii) of the definition
of "Funded Debt" in this paragraph 10,
at such time.
"CONSOLIDATED FUNDED DEBT" means, at any time, all Funded Debt
of the Company and the Restricted Subsidiaries, determined on a
consolidated basis at such time in accordance with generally accepted
accounting principles.
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"CONSOLIDATED NET INCOME" for any fiscal period means net
earnings (or loss) after income taxes of the Company and the
Restricted Subsidiaries determined on a consolidated basis in
accordance with generally accepted accounting principles, but
excluding:
(i) any gain or loss arising from the sale of
capital assets;
(ii) any gain or loss arising from any write-up of
assets; and
(iii) any income or loss attributable to minority
interests.
"CONSOLIDATED NET INCOME AVAILABLE FOR INTEREST EXPENSE" for
any period of four (4) consecutive fiscal quarters means the sum of
Consolidated Net Income for such period plus income taxes and interest
expense deducted in determining such Consolidated Net Income.
"CONSOLIDATED NET TANGIBLE ASSETS" means the net book value
(after deducting depreciation, obsolescence, amortization, valuation
and other proper reserves) at which all assets of the Company and the
Restricted Subsidiaries would be shown on a consolidated balance sheet
at such time, but excluding
(i) the aggregate amount of deferred assets,
other than insurance and prepaid taxes;
(ii) patents, copyrights, trademarks, trade names,
franchises, goodwill and other similar intangible assets;
(iii) unamortized debt discount and expense; and
(iv) subject to the final sentence of paragraph 6D
of this Agreement, Restricted Investments.
"CONSOLIDATED NET WORTH" means, at any time, total
stockholders' equity of the Company and the Restricted Subsidiaries,
determined on a consolidated basis at such time in accordance with
generally accepted accounting principles.
"CONTROL PREPAYMENT DATE" has the meaning assigned to such
term in paragraph 4E of this Agreement.
"CURRENT ASSETS" means, with respect to any Person, current
assets that would be shown on a balance sheet of such Person prepared
at such time in accordance with generally accepted accounting
principles.
"CURRENT DEBT" means any obligation for borrowed money (and
any notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money)
payable on demand or within a period of one (1) year from the date of
the creation thereof.
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"DEBT" means Funded Debt and Current Debt.
"ENVIRONMENTAL PROTECTION LAW" means any federal, state,
county, regional or local law, statute, or regulation (including,
without limitation, CERCLA, RCRA and SARA) enacted in connection with
or relating to the protection or regulation of the environment,
including, without limitation, those laws, statutes, and regulations
regulating the disposal, removal, production, storing, refining,
handling, transferring, processing, or transporting of Hazardous
Substances, and any regulations, issued or promulgated in connection
with such statutes by any Governmental Authority and any orders,
decrees or judgments issued by any court of competent jurisdiction in
connection with any of the foregoing.
As used in this definition,
"CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended
from time to time (by SARA or otherwise), and all rules and
regulations promulgated in connection therewith;
"Hazardous Substances" has the meaning assigned to
such term in 42 U.S.C. Section 9601(14), as amended from time
to time.
"RCRA" means the Resource Conservation and Recovery
Act of 1976, as amended from time to time, and any rules and
regulations issued in connection therewith; and
"SARA" means the Superfund Amendments and
Reauthorization Act of 1986, as amended from time to time, and
all rules and regulations promulgated in connection therewith.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" means any corporation or trade or business
that
(i) is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the IRC)
as the Company or
(ii) is under common control (within the meaning
of Section 414(c) of the IRC) with the Company.
"EVENT OF DEFAULT" means any of the events specified in
paragraph 7A of this Agreement, provided that there has been satisfied
any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further
condition, event or act, and "DEFAULT" means any of such events,
whether or not any such requirement has been satisfied.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
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"FAIR MARKET VALUE" means, at any time with respect to any
Property, the sale value of such Property that would be realized in an
arm's-length sale at such time between an informed and willing buyer,
and an informed and willing seller, under no compulsion to buy or
sell, respectively.
"FOREIGN PENSION PLAN" -- means any plan, fund or other
similar program:
(a) established or maintained outside of the
United States of America by any one or more of the Company or
the Restricted Subsidiaries primarily for the benefit of the
employees (substantially all of whom are aliens not residing
in the United States of America) of the Company or such
Restricted Subsidiaries, which plan, fund or other similar
program provides for retirement income for such employees or
results in a deferral of income for such employees in
contemplation of retirement; and
(b) not otherwise subject to ERISA.
"FUNDED DEBT" means, with respect to any Person, all
obligations for money borrowed of such Person which, in accordance
with generally accepted accounting principles, would be included in
determining long-term liabilities as shown on the balance sheet of
such Person, except that there shall be included as Funded Debt:
(i) any such obligations which, although payable
within one (1) year, constitute payments required to be made
on account of principal of Debt expressed to mature more than
one (1) year from the creation thereof,
(ii) with respect to a determination of Funded
Debt of the Company or any Restricted Subsidiary during the
twenty (20) day period referred to in paragraph 61 of this
Agreement, all Debt, if any, that would constitute
Consolidated Current Debt in the absence of clause (ii) of the
proviso to the definition of Consolidated Current Debt in this
paragraph 10 (including, without limitation, Debt, if any,
outstanding under the Revolving Credit Agreement) outstanding
during such period, and
(iii) for purposes of determining the character, as
Current Debt or Funded Debt, of the excess, if any, of
"Outstanding Credits" over the "Borrowing Base" as provided in
the definition of "Revolving Credit Agreement" in this
paragraph 10, loans, and reimbursement obligations in respect
of letters of credit issued, under the Revolving Credit
Agreement to the extent, but only to the extent, that such
loans and obligations are due more than one (1) year after the
incurrence thereof,
and there shall be excluded:
(a) obligations in respect of leases other than
Capitalized Lease Obligations; and
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(b) except as provided in the foregoing clauses
(ii) and (iii), obligations outstanding under the Revolving
Credit Agreement.
"GOVERNMENTAL AUTHORITY" means the government of the United
States of America, any state or any other political subdivision
thereof and any entity exercising executive or administrative
functions of or pertaining to any such government.
"GUARANTOR" has the meaning assigned to such term in paragraph
3H of this Agreement.
"INSTITUTIONAL INVESTOR" each Person purchasing a Note and
listed on Annex 1 to this Agreement, each of such Persons'
subsidiaries and affiliates, and any banking institution, insurance
company, pension fund, investment company, trust fund, nonprofit
institution or other similar institutional investor.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and all rules and regulations promulgated thereunder.
"LIEN" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction).
"MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount
equal to the excess of
(i) the Discounted Value of the Called Principal
of such Note over
(ii) the sum of such Called Principal plus
interest accrued thereon subsequent to the most recent
scheduled interest payment date to (including interest due on)
the Settlement Date with respect to such Called Principal.
The Make-Whole Amount shall in no event be less than zero.
As used in this definition,
"Called Principal" means, with respect to any Note,
the principal of such Note that is to be prepaid pursuant to
paragraph 4B or paragraph 4E of this Agreement or is declared
due and payable pursuant to paragraph 7A of this Agreement, as
the case may be.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount calculated by discounting
all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on a semiannual basis) equal to the
Reinvestment Yield with respect to such Called Principal.
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"Reinvestment Yield" means, with respect to the
Called Principal of any Note,
(i) the yield to maturity implied by the
Treasury Constant Maturity Series yields reported
(for the latest day for which such yields shall have
been so reported as of the Business Day next
preceding the Settlement Date with respect to such
Called Principal) in Federal Reserve Statistical
Release H.15(519) (or any comparable successor
publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the
remaining weighted average life to final maturity
(calculated in accordance with accepted financial
practice) of such Called Principal as of such
Settlement Date, plus
(ii) fifty (50) basis points.
Such implied yield shall be determined
(a) by calculating the remaining
weighted average life to final maturity of such
Called Principal rounded to the nearest quarter-year
and
(b) if necessary, by interpolating
linearly between Treasury Constant Maturity Series
yields.
"Remaining Scheduled Payments" means, with respect to
the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due on or after
the Settlement Date with respect to such Called Principal if
no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called Principal
is to be prepaid pursuant to paragraph 4B or paragraph 4E of
this Agreement or is declared due and payable pursuant to
paragraph 7A of this Agreement, as the case may be.
"MARGIN STOCK" has the meaning assigned to such term in
paragraph 8I of this Agreement.
"MULTIEMPLOYER PLAN" means any "multiemployer plan" (as such
term is defined in section 3(37) of ERISA) in respect of which the
Company or any ERISA Affiliate is an "employer" (as such term is
defined in section 3 of ERISA).
"1991 NOTE AGREEMENT" means those certain separate Note
Agreements, each dated as of June 15, 1991, by and among the Company
and each of the purchasers listed on Annex 1 thereto.
"NOTE DOCUMENTS" has the meaning assigned to such term in
paragraph 11L of this Agreement.
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"NOTES" has the meaning assigned to such term in paragraph 1
of this Agreement.
"OFFER NOTICE" has the meaning assigned to such term in
paragraph 4E of this Agreement.
"OTHER NOTE AGREEMENTS" has the meaning assigned to such term
in paragraph 2B of this Agreement.
"OTHER PURCHASERS" has the meaning assigned to such term in
paragraph 2B of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, and its
successors and assigns.
"PENSION PLAN" means any "employee pension benefit plan" (as
such term is defined in section 3 of ERISA) maintained by the Company
or any ERISA Affiliate for employees of the Company or such ERISA
Affiliate, excluding any Multiemployer Plan, but including, without
limitation, any Multiple Employer Pension Plan.
As used in this definition,
"Multiple Employer Pension Plan" means any employee
benefit plan within the meaning of Section 3(3) of ERISA
(other than a Multiemployer Plan), subject to Title IV of
ERISA, to which the Company or any ERISA Affiliate and an
employer (as such term is defined in Section 3 of ERISA) other
than an ERISA Affiliate or the Company, contribute.
"PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"PRO FORMA CONSOLIDATED INTEREST EXPENSE" for any period of
four (4) consecutive fiscal quarters of the Company means all interest
payable with respect to such period on, or with respect to,
Consolidated Funded Debt and Consolidated Current Debt (including,
without limitation, the Notes), assuming
(i) that the rate of interest in effect for
floating rate Debt shall at all times be the rate of interest
in effect on the first day of such period, and
(ii) that such Consolidated Funded Debt and
Consolidated Current Debt shall not be prepaid prior to their
respective regularly scheduled maturity dates.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or
intangible.
"REQUIRED HOLDERS" means the holder or holders of more than
fifty percent (50%) of the aggregate principal amount of the Notes
from time to time outstanding.
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"RESPONSIBLE OFFICER" means each of the Chairman of the Board
of Directors, the President, any Vice President and the Treasurer of
the Company.
"RESTRICTED INVESTMENT" means all investments, made in cash or
by delivery of Property, by the Company and the Restricted
Subsidiaries in any Person, whether by acquisition of stock,
indebtedness or other obligation or Security, or by loan, advance or
capital contribution, or otherwise, (the foregoing items being herein
called "Investments"), except the following:
(i) Investments in one or more Restricted
Subsidiaries or any corporation which concurrently with such
Investment becomes a Restricted Subsidiary;
(ii) Investments in direct obligations of the
United States of America or any agency thereof or obligations
guaranteed by the United States of America or any agency
thereof;
(iii) Investments in bankers' acceptances,
certificates of deposit, time deposits or repurchase
agreements maturing within one (1) year of the date of
acquisition thereof and issued or accepted by any bank, trust
company, savings bank or savings and loan association
organized under the laws of the United States of America, any
state thereof or the District of Columbia having combined
capital, surplus and undivided profits of at least One Hundred
Million Dollars ($100,000,000) and outstanding Debt rated Aa2
or higher by Moody's Investors Service, Inc. or AA or higher
by Standard & Poor's Corporation;
(iv) Investments in commercial paper rated in one
of the two highest rating categories by Moody's Investors
Service, Inc. or by Standard & Poor's Corporation and maturing
not more than Two Hundred Seventy (270) days from the date of
creation thereof;
(v) Investments in money market mutual funds that
invest solely in so-called "money market" instruments maturing
not more than one year after the acquisition thereof, which
funds are managed by Persons having, or who are members of
holding companies having, capital and surplus in excess of One
Hundred Million Dollars ($100,000,000);
(vi) Investments in variable rate tax exempt
bonds, notes or funds given either of the two highest ratings
by Moody's Investors Service, Inc. or Standard & Poor's
Corporation, or if payment thereunder may be made by drawing
on letters of credit issued by banks with outstanding Debt
securities having one of such ratings, so long as the
Investments in such bonds, notes or funds mature within one
(1) year of the date of acquisition thereof;
(vii) Investments in fixed income Securities rated
"A" or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation so long as such Securities mature within
one (1) year of the date of acquisition thereof;
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<PAGE> 45
(viii) Investments in money market preferred stocks
of any corporation that are to be re-auctioned within one (1)
year of the date of acquisition thereof and with either of the
two highest ratings by Moody's Investors Service, Inc. or
Standard & Poor's Corporation;
(ix) Investments consisting of loans and advances
of up to Six Million Dollars ($6,000,000) at any time
outstanding, to Montana Refining Company, A Limited
Partnership, a Montana limited partnership, for working
capital purposes; and
(x) Investments consisting of loans and advances
to Unrestricted Subsidiaries for working capital purposes,
provided that
(a) at the time of such loan or advance,
and after giving effect thereto, the aggregate
outstanding amount of such loans and advances to each
such Unrestricted Subsidiary are secured by its
inventory having a Fair Market Value and its other
Current Assets having a net book value, at the time
of the loan or advance (determined in each case as of
the end of the month most recently ended for which
the Company has available for its internal use
financial statements of such Unrestricted Subsidiary,
but in no event more than fifty (50) days prior to
the date of such loan or advance), in an aggregate
amount at least equal to the aggregate outstanding
principal amount of such loans and advances, and
(b) such Unrestricted Subsidiary is
engaged in the refining, transportation, marketing,
processing, exploration or production of petroleum
products.
Investments shall be valued at cost less any return of capital through
the sale or liquidation thereof or other return of capital thereon,
net of the expenses of any such sale or liquidation or any such return
of capital.
"RESTRICTED PAYMENT" has the meaning assigned to such term in
paragraph 6F of this Agreement.
"RESTRICTED SUBSIDIARY" means, at any time, a Subsidiary other
than Holly Petroleum, Inc., a Delaware corporation, and Navajo
Northern, Inc., a Nevada corporation, in respect of which
(i) at least
(a) eighty percent (80%) of the Voting
Stock of which, except directors qualifying shares
and any shares issued to comply with local ownership
legal requirements (provided that such directors
qualifying shares and other shares shall not
represent in excess of three percent (3%) of the
outstanding shares of the stock of any class of such
Restricted Subsidiary and, after taking such shares
into account, the Company shall,
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<PAGE> 46
directly or indirectly, own a majority of the Voting
Stock of such Subsidiary), and
(b) eighty percent (80%) of all
non-voting stock of every other class of which is, at
such time, owned by the Company either directly or
through other Subsidiaries meeting the requirements
of clause (i) and clause (ii) of this definition, and
(ii) that has not been designated a Restricted
Subsidiary by the Board of Directors in violation of paragraph
6K of this Agreement.
"REVOLVING CREDIT AGREEMENT" means, collectively,
(i) that certain First Amended and Restated
Credit Agreement, dated as of July 23, 1993, among the
Company, Navajo Refining Company ("Navajo"), Navajo Holdings,
Inc. ("Navajo Holdings"), Navajo Pipeline Co. ("Navajo
Pipeline"), Holly Petroleum, Inc. ("Holly Petroleum"), Lea
Refining Company ("Lea"), Navajo Western Asphalt Company
("Navajo Western") and Montana Refining Company, A Limited
Partnership ("Montana"), and NationsBank of Texas, N.A.
("NationsBank"), Banque Paribas ("Banque Paribas"), The First
National Bank of Boston ("Bank of Boston"), The First National
Bank of Nova Scotia ("Bank of Nova Scotia," together with
NationsBank, Banque Paribas and Bank of Boston, the "Lenders")
and NationsBank as agent for the Lenders, as amended by that
certain First Amendment to First Amended and Restated Credit
Agreement, dated as of April 7,1994, by and among the Company,
Navajo, Holly, Holly Petroleum, Navajo Pipeline, Navajo
Holdings, Lea, Navajo Western, Montana, Navajo Crude Oil
Marketing Company ("Navajo Crude"), the Lenders and
NationsBank as agent for the Lenders, as further amended by
that certain Second Amendment to First Amended and Restated
Credit Agreement, dated as of June 13, 1995, by and among the
Company, Navajo, Holly, Holly Petroleum, Navajo Pipeline,
Navajo Holdings, Lea, Navajo Western, Montana, Navajo Crude,
the Lenders and NationsBank as agent for the Lenders, as
further amended by that certain Third Amendment to First
Amended and Restated Credit Agreement, dated as of November
15,1995, by and among the Company, Navajo, Holly, Holly
Petroleum, Navajo Pipeline, Navajo Holdings, Lea, Navajo
Western, Montana, Navajo Crude, the Lenders and NationsBank as
agent for the Lenders, as the same may be further renewed,
extended, increased in amount or otherwise modified or amended
from time to time, and
(ii) any other agreement in effect at any time
(including renewals, extensions, increases in amount and other
modifications and amendments thereof) that provides for either
or both of the making of loans to, and the issuance of letters
of credit for, the account of, the Company, any of its
Subsidiaries or Montana:
provided, that in the case of any agreement described in clause (i) or
clause (ii), the sum of
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(a) the aggregate outstanding principal amount of
loans, plus
(b) the aggregate amount available to be drawn
under all outstanding letters of credit issued thereunder
other than Excluded Letters of Credit,
(collectively, the "Outstanding Credits") does not exceed the
inventory valued at Fair Market Value and the other Current Assets
valued at net book value (determined in each case as of the month most
recently ended for which the Company has financial statements
available for its internal use, but in no event more than fifty (50)
days beforehand) of the Company and the other Person or Persons to
which such loans are made or for the account of which such letters of
credit are issued (the "Borrowing Base").
At any time that the Outstanding Credits exceed the Borrowing Base,
such excess shall constitute part of either Consolidated Funded Debt
or Consolidated Current Debt, as the case may be, for all purposes
hereunder, without giving effect to clause (b) of the definition of
"Consolidated Current Debt." Solely for purposes of the preceding
sentence, reimbursement obligations under letters of credit, other
than Excluded Letters of Credit, shall be deemed to be debt for money
borrowed and shall constitute part of either Consolidated Funded Debt
or Consolidated Current Debt, as the case may be, without giving
effect to clause (b) of the definition of "Consolidated Current Debt."
As used in this definition,
"Excluded Letters of Credit" means letters of credit
issued under the Revolving Credit Agreement that were issued
in connection with
(i) the ordinary course purchase of
Property to be included in the inventory of the
Company or the Restricted Subsidiaries to the extent
that
(a) the Fair Market Value of such
Property purchased in connection with such
letter of credit, when such Letter of Credit
was issued, equals or exceeds the stated
amount of such letter of credit, and
(b) such Property is not included
in the calculation of Borrowing Base so long
as such letter of credit is outstanding, and
(ii) (a) obligations due to insurance
companies or surety companies in connection with insurance and
surety and performance bonds purchased in the ordinary course
of business of the Company and the Restricted Subsidiaries,
(b) obligations arising under worker's
compensation laws, and
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<PAGE> 48
(c) statutory and regulatory obligations
incidental to the operation of the business of the
Company and the Restricted Subsidiaries,
to the extent that the aggregate stated amount of all such
Letters of Credit outstanding under this clause (ii) does not
exceed Seven Million Five Hundred Thousand Dollars
($7,500,000) at any time.
"SALE AND LEASEBACK TRANSACTIONS" means any transaction or
series of related transactions in which the Company or a Restricted
Subsidiary sells or transfers any of its Property to any Person (other
than to the Company or to a Restricted Subsidiary) and concurrently
with such sale or transfer, or thereafter, rents or leases such
transferred Property or substantially similar Property from any
Person.
"SEC" means the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of the
Securities and Exchange Commission).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means "security" as defined in Section 2(l) of the
Securities Act.
"SERIES C NOTES" has the meaning specified in paragraph 1 of
this Agreement.
"SERIES D NOTES" has the meaning specified in paragraph 1 of
this Agreement.
"SUBSIDIARY" means any corporation organized under the laws of
any state of the United States of America which conducts the major
portion of its business in and makes the major portion of its sales to
Persons located in the United States of America, more than fifty
percent (50%) of the Voting Stock of which shall, at the time as of
which any determination is being made, be owned by the Company either
directly or through Subsidiaries.
"SUBSIDIARY GUARANTY" has the meaning assigned to such term in
paragraph 3H of this Agreement.
"SURVIVING CORPORATION" has the meaning assigned to such term
in paragraph 6G of this Agreement.
"TRANSFER" has the meaning assigned to such term in paragraph
6D of this Agreement.
"TRANSFEREE" means any direct or indirect transferee of all or
any part of any Note purchased by you under this Agreement.
"UNDERSECURED RESTRICTED SUBSIDIARY FUNDED DEBT" means, at any
time and with respect to any Restricted Subsidiary, the aggregate
amount of Secured Restricted Subsidiary Funded Debt of such Restricted
Subsidiary at such time minus eighty percent
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<PAGE> 49
(80%) of the Fair Market Value (as determined in good faith by the
board of directors of such Restricted Subsidiary) of the Property of
such Restricted Subsidiary that is subject to Liens securing such
Secured Restricted Subsidiary Funded Debt at such time.
As used in this definition,
"Secured Restricted Subsidiary Funded Debt' means,
with respect to any Restricted Subsidiary, all Funded Debt of
such Restricted Subsidiary other than Unsecured Restricted
Subsidiary Funded Debt.
"UNRESTRICTED SUBSIDIARY' means Holly Petroleum, Inc., a
Delaware corporation, and Navajo Northern, Inc., a Nevada corporation,
and any other Subsidiary created or acquired subsequent to the date
hereof, other than a Restricted Subsidiary.
"UNSECURED RESTRICTED SUBSIDIARY FUNDED DEBT" means, with
respect to any Restricted Subsidiary, Funded Debt of such Restricted
Subsidiary, the payment and performance obligations in respect of
which are not secured by a consensual Lien on any Property of a
Restricted Subsidiary.
"VOTING STOCK" means, with respect to any corporation, any
shares of stock of such corporation whose holders are entitled under
ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other
class or classes shall have or might have voting power by reason of
the happening of any contingency).
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" means any Restricted
Subsidiary all of the capital stock of which, except directors
qualifying shares and any shares issued to comply with local ownership
legal requirements (provided that such directors qualifying shares and
other shares shall not represent in excess of three percent (3%) of
the outstanding shares of the stock of any class of such Restricted
Subsidiary), is owned, directly or indirectly, by the Company or other
wholly-owned Restricted Subsidiaries.
"WORKING CAPITAL LOANS" has the meaning assigned to such term
in paragraph 6F of this Agreement.
11. MISCELLANEOUS.
11A. Note Payments. The Company agrees that, so long as you shall
hold any Note, it will make payments of principal thereof and Make-Whole
Amount, if any, and interest thereon, by wire transfer of immediately available
funds for credit to your account or accounts as specified in Annex 1 to this
Agreement, or such other account or accounts in the United States as you may
designate in writing, notwithstanding any contrary provision in this Agreement
or in any Note with respect to the place of payment. You agree that, before
disposing of any Note, you will make a notation thereon (or on a schedule
attached thereto) of all principal payments previously made thereon and of the
date to which interest thereon has been paid. The Company agrees to afford the
benefits of this paragraph 11A to any Transferee of any Note purchased by you
under this Agreement and which has made the same agreements relating to such
Note as you have made in this paragraph 11A.
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<PAGE> 50
11B. EXPENSES. The Company agrees, whether or not the transactions
contemplated hereby shall be consummated, to pay, and save each holder of Notes
harmless against liability for the payment of, reasonable out-of-pocket
expenses that arise in connection with such transactions and consist of
(a) stenographic and duplication costs and the
reasonable fees and expenses of one special counsel
representing all holders of Notes in connection with this
Agreement, the transactions contemplated hereby and any
subsequent modification of, or consent under, this Agreement
proposed by the Company, whether or not such proposed
modification is effected or such proposed consent is granted,
provided that if, in the reasonable judgment of the holders of
a majority in principal amount of either Series of Notes,
there is a reasonable possibility of a conflict between the
holders of the two series of Notes, the Company's obligation
under this paragraph (a) with respect to fees and expenses of
counsel shall apply to no more than two special counsels, each
of which will represent all holders of a single series of
Notes,
(b) the costs and expenses (which, in the case of
attorney's fees and expenses, shall be limited to those of a
single special counsel representing all holders of Notes)
incurred by any holder of Notes in enforcing any of its rights
under this Agreement or the Notes (including without
limitation costs or expenses incurred in any bankruptcy case),
provided that if, in the reasonable judgment of the holders of
a majority in principal amount of either Series of Notes,
there is a reasonable possibility of a conflict between the
holders of the two series of Notes, the Company's obligation
under this paragraph (b) with respect to fees and expenses of
counsel shall apply to no more than two special counsels, each
of which will represent all holders of a single series of
Notes, provided further that the first parenthetical
expression in this paragraph (b) shall not apply in the event
of any enforcement of the rights of any holder of Notes under
paragraph 7A(c) and each such holder shall be entitled to
reimbursement for the reasonable attorneys' fees and expenses
of any counsel representing only such holder in connection
with any such enforcement,
(c) the costs and expenses, including attorneys'
fees, incurred by any holder of Notes in complying with any
subpoena or any other legal process served upon any holder of
Notes in connection with this Agreement or the transactions
contemplated hereby or served upon any holder of Notes by
reason of its having acquired any Note, provided that such
subpoena or other legal process relates to the Company
specifically and not primarily to matters involving such
holder's investments or other activities (whether of a general
nature or as to a particular industry or category of
investments), and
(d) all fees and expenses payable in connection
with the filing in accordance with paragraph 3F of this
Agreement of applications with the CUSIP Service Bureau of
Standard & Poor's Corporation and the assignment of private
placement numbers with respect to same.
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<PAGE> 51
The obligations of the Company under this paragraph 11B shall survive transfer
by you and payment of any Note.
11C. CONSENT TO AMENDMENTS.
(i) AMENDMENTS. This Agreement may be amended, and the
Company may take any action in this Agreement prohibited, or omit to
perform any act in this Agreement required to be performed by it, if
the Company shall obtain the written consent to such amendment, action
or omission to act, of the Required Holders except that, without the
written consent of the holders of all Notes at the time outstanding,
no amendment to this Agreement shall
(a) change the maturity of any Note, or change
the principal of, or the rate or time of payment of interest
or any Make-Whole Amount payable with respect to any Note, or
affect the time, amount or allocation of any required
prepayments, or reduce the proportion of the principal amount
of the Notes required with respect to any consent,
(b) amend the provisions of paragraph 7 of this
Agreement, or
(c) amend the provisions of this paragraph 11C.
(ii) EFFECT OF AMENDMENTS. Each holder of any Note at any
time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter
may bear a notation referring to any such consent. No course of
dealing between the Company and the holder of any Note nor any delay
in exercising any rights under this Agreement or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used
in this Agreement and in the Notes, the term "this Agreement" and
references to this Agreement mean this Agreement as it may from time
to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES.
(i) FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES.
The Notes are issuable as registered notes without coupons in
denominations of Five Hundred Thousand Dollars ($500,000) and any
integral multiple of One Thousand Dollars ($1,000) in excess thereof.
The Company shall keep at its principal office a register in which the
Company shall provide for the registration of Notes and of transfers
of Notes. Upon surrender for registration of transfer of any Note at
the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and
of a like aggregate principal amount, registered in the name of such
transferee or transferees. At the option of the holder of any Note,
such Note may be exchanged for other Notes of like tenor and of any
authorized denominations, of a like aggregate principal amount, upon
surrender of the Note to be exchanged at the principal office of the
Company. Whenever any Notes are so surrendered for exchange, the
Company shall, at its expense, execute and deliver the Notes which the
holder making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or
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<PAGE> 52
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or
such holder's attorney duly authorized in writing. Any Note or Notes
issued in exchange for any Note or upon transfer thereof shall carry
the rights to unpaid interest and interest to accrue that were carried
by the Note so exchanged or transferred, so that neither gain nor loss
of interest shall result from any such transfer or exchange.
(ii) LOST NOTES. Upon receipt of written notice from you
or other evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of any Note held by you and, in the
case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Company (it being understood that an
unsecured indemnity agreement from any holder of Notes listed on Annex
1 or any bank, insurance company, pension fund, investment company or
other institutional investor shall be deemed to be reasonably
satisfactory to the Company), or in the case of any such mutilation
upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS. Prior to due presentment for
registration of transfer, the Company may treat the Person in whose name any
Note is registered as the owner and holder of such Note for the purpose of
receiving payment of principal of and Make-Whole Amount, if any, and interest
on such Note and for all other purposes whatsoever, whether or not such Note
shall be overdue, and the Company shall not be affected by notice to the
contrary.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or made in writing
by the Company in connection herewith shall survive the execution and delivery
of this Agreement and the Notes and transfer by you and payment of any Note,
regardless of any investigation made by you or on your behalf. Subject to the
preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between you and the Company and supersede all prior
agreements and understandings relating to the subject matter of this Agreement.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of either of the parties to this
Agreement shall bind and inure to the benefit of the respective successors and
assigns of the parties to this Agreement (including, without limitation,
Transferees of any Note purchased by you under this Agreement) whether so
expressed or not.
11H. NOTICES. All written communications provided for under this
Agreement shall be sent by certified or registered mail (or its equivalent) or
nationwide overnight delivery service (with charges prepaid) and
(i) if to you, addressed to you at the address specified
for such communications in Annex 1 to this Agreement, or at such other
address as you shall have specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to such
other holder at such address as such other holder shall have specified
to the Company in writing or, if any such other holder shall not have
so specified an address to the Company, then
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<PAGE> 53
addressed to such other holder in care of the last holder of such Note
that shall have so specified an address to the Company, and
(iii) if to the Company, addressed to it at 100 Crescent
Court, Suite 1600, Dallas, Texas, 75201, Attention: Treasurer, or at
such other address as the Company shall have specified to the holder
of each Note in writing.
11I. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11J. SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to you, the determination of such satisfaction
shall be made by you in your sole and exclusive judgment exercised in good
faith.
11K. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE
GOVERNED BY, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN. THIS AGREEMENT MAY NOT BE CHANGED
ORALLY, BUT (SUBJECT TO THE PROVISIONS OF PARAGRAPH 11C OF THIS
AGREEMENT) ONLY BY AN AGREEMENT IN WRITING SIGNED BY THE PARTY AGAINST
WHOM ENFORCEMENT OF ANY WAIVER, CHANGE, MODIFICATION OR DISCHARGE IS
SOUGHT.
(ii) JURISDICTION. THE COMPANY HEREBY IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL
COURT SITTING IN NEW YORK CITY, NEW YORK, OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR
ANY OF THE OTHER NOTE AGREEMENTS, AND THE COMPANY HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT.
11L. LIMITATION ON INTEREST. The Company and you intend to contract
in strict compliance with applicable usury laws from time to time in effect.
In furtherance thereof, the Company and you stipulate and agree that none of
the terms and provisions contained in this Agreement, the Notes, the Subsidiary
Guaranty or any other document or instrument executed in connection herewith or
therewith (this Agreement, the Notes, the Subsidiary Guaranty and all such
other documents and instruments being herein referred to collectively as the
"Note Documents") shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum
amount of interest permitted to be charged under applicable law from time to
time in effect. Neither the Company, the Guarantors nor any other present or
future guarantor, endorser or other Person hereafter becoming liable for
payment of any obligation under any Note Document shall ever be liable for
unearned interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully charged under applicable law
from time to time in effect, and the provisions of
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<PAGE> 54
this paragraph 11L shall control over all other provisions of the Note
Documents that may be in conflict or apparent conflict herewith. You expressly
disavow any intention to charge or collect unearned interest in the event the
maturity of any Note held by you is accelerated or in the event that any Note
held by you is purchased by the Company. If
(i) the maturity of any Note held by you is accelerated
for any reason,
(ii) any Note held by you is prepaid or purchased by the
Company and as a result any amount held to constitute interest is
determined to be in excess of the legal maximum, or
(iii) you shall otherwise collect monies that are
determined to constitute interest that would otherwise increase the
interest on any or all of the obligations under the Note Documents to
an amount in excess of that permitted to be charged by applicable law
then in effect,
then all such sums determined to constitute interest in excess of such legal
limit shall, without penalty, be promptly applied to reduce the then
outstanding principal balance of the Notes held by you or, at your option,
promptly returned to the payor thereof upon such determination. In determining
whether or not the interest paid or payable, under any specific circumstance,
exceeds the maximum amount permitted under applicable law, the Company and you
shall, to the greatest extent permitted under applicable law,
(I) characterize any non-principal
payment as an expense, fee or Make-Whole Amount
rather than as interest,
(II) exclude voluntary prepayments and
the effects thereof, and
(III) amortize, prorate, allocate and
spread the total amount of interest throughout the
entire contemplated term of the Notes held by you in
accordance with the amounts outstanding from time to
time thereunder and the maximum legal rate of
interest from time to time in effect under applicable
law
in order lawfully to charge the maximum amount of interest permitted under
applicable law.
11M. DISCLOSURE TO OTHER PERSONS. You agree to use your best
efforts to hold in confidence and not disclose any written information
delivered or made available by or on behalf of the Company or any Subsidiary to
you (including without limitation any non-public information obtained pursuant
to paragraph 5A or paragraph 5B of this Agreement) in connection with or
pursuant to this Agreement that is clearly marked or labeled as being
confidential information, other than information
(i) that was publicly known or otherwise known to you, at
the time of disclosure (except pursuant to disclosure in connection
with this Agreement),
(ii) that subsequently becomes publicly known through no
act or omission by you,
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(iii) that otherwise becomes known to you, other than
through disclosure by the Company, or
(iv) that has been in your possession for a period of more
than five (5) years from the date on which such information originally
was furnished to you by the Company unless the Company shall have
requested you in writing, at least thirty (30) days prior to the end
of such five (5) year period, to maintain the confidentiality of such
information,
and provided that nothing in this Agreement shall prevent the holder of any
Note from delivering copies of any financial statements and other documents
delivered to such holder, or from disclosing any other information disclosed to
such holder, by or on behalf of the Company or any Subsidiary in connection
with or pursuant to this Agreement, to,
(a) the directors, officers, employees, agents
and professional consultants (including, without limitation,
auditors and attorneys) of such holder and such holder's
affiliates,
(b) any other holder of any Note,
(c) any Institutional Investor to which such
holder offers to sell such Note or any part thereof, provided
that such Institutional Investor agrees in writing to be bound
by the provisions of this paragraph 11M,
(d) any Institutional Investor to which such
holder sells or offers to sell a participation in all or any
part of such Note, provided that such Institutional Investor
agrees in writing to be bound by the provisions of this
paragraph 11M,
(e) any federal, state, provincial, municipal or
other regulatory authority having jurisdiction over such
holder,
(f) the National Association of Insurance
Commissioners or any similar organization, their successors or
any nationally recognized rating agency, or
(g) any other Person to which such delivery or
disclosure may be necessary or appropriate
(I) in compliance with any law, rule,
regulation or order applicable to such holder,
(II) in response to any subpoena or other
legal process,
(III) in connection with any litigation to
which such holder is a party (including, without
limitation, in connection with enforcement of its
rights hereunder), or
(IV) in order to correct any false or
misleading information which may become public
concerning such holder's relationship to the Company
or the transactions contemplated hereby,
51
<PAGE> 56
provided, that in each case such holder shall have given
prompt notice to the Company, prior to any such delivery or
disclosure to such other Person, of the circumstances giving
rise to the necessity therefor.
11N. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
[Remainder of page intentionally blank. Next page is signature page.]
52
<PAGE> 57
If this Agreement is satisfactory to you, please so indicate by
signing the acceptance at the foot of a counterpart of this Agreement and
returning such counterpart to the Company, whereupon this Agreement shall
become binding between us in accordance with its terms.
Very truly yours,
HOLLY CORPORATION
By: /s/ HENRY A. TEICHHOLZ
--------------------------------
Name: Henry A. Teichholz
Title: Vice President, Treasurer
and Controller
Accepted:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By: /s/ EUGENE X. HODGE
-----------------------------------
Eugene X. Hodge
Investment Officer
[NOTE AGREEMENT of HOLLY CORPORATION]
<PAGE> 58
ANNEX 1
INFORMATION AS TO PURCHASER
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RC-1; $7,500,000
Principal Amount RD-1; $6,000,000
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account No.: 541-55417
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: HOLLY CORPORATION
Description of
Security: 7.62% Series C Senior Notes Due December 15, 2005
Series D Senior Notes due December 15, 2005
Security Number: 435758 B@ 5 (Series C)
435758 B# 3 (Series D)
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Account Division T-10
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate Finance Dept. T-57
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Law Department of Purchaser
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 04-1414660
=============================================================================================================================
</TABLE>
Annex 1-1
<PAGE> 59
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY (GBSA)
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RC-2; $5,500,000
Principal Amount RD-2; $12,000,000
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account No.: 541-55417
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: HOLLY CORPORATION
Description of
Security: 7.62% Series C Senior Notes Due December 15, 2005
Series D Senior Notes due December 15, 2005
Security Number: 435758 B@ 5 (Series C)
435758 B# 3 (Series D)
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Account Division T-10
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate Finance Dept. T-57
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Law Department of Purchaser
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 04-1414660
=============================================================================================================================
</TABLE>
Annex 1-2
<PAGE> 60
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY (JHVLICO)
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RC-3; $2,000,000
Principal Amount RD-3; $2,000,000
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information The First National Bank of Boston
ABA No. 011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account No.: 541-55417
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: HOLLY CORPORATION
Description of
Security: 7.62% Series C Senior Notes Due December 15, 2005
Series D Senior Notes due December 15, 2005
Security Number: 435758 B@ 5 (Series C)
435758 B# 3 (Series D)
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Securities Account Division T-10
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Attention: Bond and Corporate Finance Dept. T-57
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Law Department of Purchaser
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 04-1414016
=============================================================================================================================
</TABLE>
Annex 1-3
<PAGE> 61
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RC-4; $15,000,000
Principal Amount
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Bank of NYC/CTR/BBK-IOC565
Institutional Custody Dept.
ABA No. 021 000 018
For credit to Alexander Hamilton Life Insurance Company
Account No.: 186101
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: HOLLY CORPORATION
Description of
Security: 7.62% Series C Senior Notes Due December 15, 2005
Security Number: 435758 B@ 5
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Bank of New York
Institutional Custody Administration
One Wall Street - 26th Floor
New York, New York 10286
Attn: Tony Martini
Fax: (212) 635-8844
with a copy to:
Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, N.C. 27420
Attn: Securities Administration - 3630
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, N.C. 27420
Attn: Securities Administration - 3630
Fax: (910) 691-3025
=============================================================================================================================
</TABLE>
Annex 1-4
<PAGE> 62
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Bank of New York
One Wall Street
3rd Floor, Window A
New York, New York 10286
For credit to Alexander Hamilton Life
Account No.: 186101
with a copy to:
Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, N.C. 27420
Attn: Securities Administration - 3630
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block ALEXANDER HAMILTON LIFE INSURANCE COMPANY OF AMERICA
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 56-1311063
=============================================================================================================================
</TABLE>
Annex 1-5
<PAGE> 63
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME THE PENN MUTUAL LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered THE PENN MUTUAL LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RC-5; $5,000,000
Principal Amount
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Bankers Trust Company
ABA #02100-1033
16 Wall Street
New York, NY 10005
Attn: Insurance Unit, Private Placements 01419540
For credit to the account of: The Penn Mutual Life Insurance Company
A/C #092497
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of company: HOLLY CORPORATION
Description of
Security: 7.62% Series C Senior Notes Due December 15, 2005
Security Number: 435758 B@ 5
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments The Penn Mutual Life Insurance Company
Independence Square
530 Walnut Street, Mailstop C1B
Philadelphia, PA 19172
Attn: Barbara B. Henderson
Assistant Vice President
Tel: (215) 956-8514
Fax: (215) 672-2760
By Courier:
The Penn Mutual Life Insurance Company
600 Dresher Road, Mailstop C1B
Horsham, PA 19044
Attn: Barbara B. Henderson
Assistant Vice President
Tel: (215) 956-8514
Fax: (215) 672-2760
=============================================================================================================================
</TABLE>
Annex 1-6
<PAGE> 64
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME THE PENN MUTUAL LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices The Penn Mutual Life Insurance Company
Independence Square
530 Walnut Street, Mailstop C1B
Philadelphia, PA 19172
Attn: Barbara B. Henderson
Assistant Vice President
Tel: (215) 956-8514
Fax: (215) 672-2760
By Courier:
The Penn Mutual Life Insurance Company
600 Dresher Road, Mailstop C1B
Horsham, PA 19044
Attn: Barbara B. Henderson
Assistant Vice President
Tel: (215) 956-8514
Fax: (215) 672-2760
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Law Department of Purchaser
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block THE PENN MUTUAL LIFE INSURANCE COMPANY
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 23-0952300
=============================================================================================================================
</TABLE>
Annex 1-7
<PAGE> 65
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME AIG LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered AIG LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RC-6; $4,000,000
Principal Amount
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Federal Reserve Bank of New York
A/C Fiduciary TR NYC
ABA #0260-0792-2
For credit to the account of: AIG Life Insurance Company
Account No.: 440526903
Attn: Ed Abad
Tel: (212) 313-2632
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of Company: HOLLY CORPORATION
Description of
Security: 7.62% Series C Senior Notes Due December 15, 2005
Security Number: 435758 B@5
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments AIG Life Insurance Company
c/o AIG Investment Advisers, Inc.
One Chase Manhattan Plaza
57th Floor
New York, NY 10005
Attn: Cash Settlement Administration
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices AIG Life Insurance Company
c/o AIG Investment Advisers, Inc.
One Chase Manhattan Plaza
57th Floor
New York, NY 10005
Attn: Cash Settlement Administration
=============================================================================================================================
</TABLE>
Annex 1-8
<PAGE> 66
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME AIG LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Fiduciary Trust Company of New York
Two World Trade Center
97th Floor- Securities Window
New York, NY 10048
Attn: Ed Abad
Tel: (212) 313-2632
For credit to AIG Life Insurance Company
Account No.: 440526903
With a copy to:
AIG Life Insurance Company
c/o AIG Investment Advisers, Inc.
One Chase Manhattan Plaza
57th Floor
New York, NY 10005
Attn: Cash Settlement Administration
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block AIG LIFE INSURANCE COMPANY
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 25-1118523
=============================================================================================================================
</TABLE>
Annex 1-9
<PAGE> 67
INFORMATION AS TO PURCHASER (CONT.)
<TABLE>
<S> <C>
=============================================================================================================================
PURCHASER NAME PAN-AMERICAN LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Name in Which Note is Registered PAN-AMERICAN LIFE INSURANCE COMPANY
- -----------------------------------------------------------------------------------------------------------------------------
Series; Note Registration Number, RD-4; $1,000,000
Principal Amount
- -----------------------------------------------------------------------------------------------------------------------------
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information First National Bank of Commerce
ABA no. 065000029
210 Baronne Street
New Orleans, LA 70112
Account of: Pan-American Life Insurance Company
Account No.: 1100-29496
- -----------------------------------------------------------------------------------------------------------------------------
Accompanying Information Name of company: HOLLY CORPORATION
Description of
Security: Series D Senior Notes due December 15, 2005
Security Number: 435758 B# 3
Due Date and Application (as among principal, premium and interest) of the
payment being made:
- -----------------------------------------------------------------------------------------------------------------------------
Address for Notices Related to Payments Pan-American Life Insurance Company
601 Poydras Street
New Orleans, LA 70130
Attention: Bond & Stock Accounting - 28th Floor
- -----------------------------------------------------------------------------------------------------------------------------
Address for All other Notices Pan-American Life Insurance Company
601 Poydras Street
New Orleans, LA 70130
Attention: Bond & Stock Accounting - 28th Floor
- -----------------------------------------------------------------------------------------------------------------------------
Instructions re Delivery of Notes Marylyn Andree - 28th Floor
Pan-American Life Insurance Company
601 Poydras Street
New Orleans, LA 70130
- -----------------------------------------------------------------------------------------------------------------------------
Signature Block PAN-AMERICAN LIFE INSURANCE COMPANY
By
------------------------
Name:
Title:
- -----------------------------------------------------------------------------------------------------------------------------
Tax Identification Number 72-0281240
=============================================================================================================================
</TABLE>
Annex 1-10
<PAGE> 68
ANNEX 2
PAYMENT INSTRUCTIONS
All proceeds of the sale of the Notes to be sent by wire transfer to Account No.
125-261-642-4 of Holly Corporation at NationsBank of Texas, N.A. (ABA No.
1110-0001-2), 901 Main Street, Dallas, Texas 75202 (contact at the Bank:
Michelle Jones, 214-508-1205).
Annex 2-1
<PAGE> 69
ANNEX 3
INFORMATION AS TO COMPANY
8C. ACTIONS PENDING.
None.
8D. OUTSTANDING DEBT.
None except:
1. Miscellaneous Restricted Subsidiary secured Funded Debt in the
aggregate principal amount of approximately $40,000.
2. Joint and several liability Debt of this Company and Navajo
Refining Company for the account of the Company or Navajo Refining Company in
the form of a $300,000 promissory note evidencing the contingent reimbursement
obligation in respect of letters of credit issued from time to time by The
First National Bank of Artesia.
3. Debt of the Company, Navajo Refining Company, Holly Petroleum,
Inc., Navajo Pipeline Co., Navajo Holdings, Inc., Lea Refining Company, Navajo
Western Asphalt Company, Montana Refining Company, a Partnership, and Navajo
Crude Oil Marketing Company under that certain First Amended and Restated
Credit Agreement, dated as of July 23, 1993, as amended (the "Existing
Revolving Credit Agreement"), with NationsBank of Texas, N.A. ("NationsBank"),
certain other banks and NationsBank, as agent for the banks. There are no
current borrowings outstanding, only letters of credit.
8G. RESTRICTIVE AGREEMENTS AND OTHER MATTERS.
None except:
1. the Existing Revolving Credit Agreement.
2. the 1991 Note Agreement.
8J. ERISA.
1. The ERISA Affiliates of the Company are: Navajo Refining
Company, Montana Refining Company, A Partnership, Navajo Corp., Holly
Petroleum, Inc., Black Eagle, Inc., Navajo Holdings, Inc., Navajo Pipeline
Company, Navajo Crude Oil Marketing Company, Lorefco, Inc., Lea Refining
Company, Navajo Northern, Inc., Navajo Western Asphalt Company and Navajo Crude
Oil Purchasing, Inc.
<PAGE> 70
2. The "employee benefit plans" to which the Company or any
"affiliate" of the Company is a "party-in-interest" or in respect of which the
Notes could constitute an "employer security" are (a) the employee pension
benefit plans consisting of the Holly Retirement Plan, the Thrift Plan for
Employees of Holly Corporation, Its Affiliates and Subsidiaries, the Thrift
Plan for Union Employees of Holly Corporation, Its Affiliates and Subsidiaries,
the Holly Corporation Employee Stock Ownership Plan and (b) the employee
welfare benefit plans listed below:
Holly Corporation Salaried Group Medical & Dental Plan
Prescription Drug Plan - Hourly & Salaried
The Navajo Refining Company Hourly Employees Association
Holly Corporation Long Term Disability Plan - Hourly & Salaried
Navajo Refining Company - Hourly & Salary Basic Life, Dep.
Life & AD&D
Voluntary Group Universal Life Plan - Hourly and Salaried
Holly Corporation Voluntary AD&D Plan with Aircraft Rider -
Hourly & Salaried
Occupational Accident Plan - Hourly & Salaried
Medical (a plan of Montana Refining Company)
Occupational Accident (a plan of Montana Refining Company)
<PAGE> 71
EXHIBIT A1
FORM OF SERIES C NOTE
HOLLY CORPORATION
7.62% SERIES C SENIOR NOTE DUE DECEMBER 15, 2005
No. [Place of Execution]
------
$ , 19
------------ ------------ ---
PPN: 435758 B@ 5
HOLLY CORPORATION (the "Company"), a Delaware corporation, for value
received, hereby promises to pay to ____________________ or registered assigns
the principal sum of ____________________ DOLLARS ($____________) on December
15, 2005 and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance thereof from the date of this
Note at the rate of seven and sixty-two one-hundredths percent (7.62%) per
annum, semi-annually on the fifteenth (15th) day of each June and December in
each year, commencing on the later of June 15, 1996 or the payment date next
succeeding the date hereof, until the principal amount hereof shall become due
and payable; and to pay on demand interest on any overdue principal (including
any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) on any overdue installment of interest, at a
rate equal to the higher of (a) nine and sixty-two one-hundredths percent
(9.62%) per annum, or (b) the lesser of (i) the maximum rate permitted by
applicable law, or (ii) the sum of (A) two percent (2%) per annum plus (B) the
rate of interest publicly announced by Morgan Guaranty Trust Company of New York
from time to time in New York City as its Prime Rate. In no event shall the
Company be required to pay any amounts as interest or Make-Whole Amount
hereunder in an amount or at a rate exceeding the maximum rate permitted by law.
Payments of principal, Make-Whole Amount, if any, and interest shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Agreement (defined
below).
This Note is one of an issue of Series C Notes of the Company issued
in an aggregate principal amount limited to $39,000,000 pursuant to separate
Note Agreements (collectively, the "Note Agreement"), each dated as of November
15, 1995, between the Company and, respectively, each of the purchasers listed
on Annex 1 to the Note Agreement and is entitled to the benefits thereof.
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Agreement. As provided in the Note Agreement,
this Note is subject to prepayment, in whole or in part, in certain cases
without a Make-Whole Amount and in other cases with a Make-Whole Amount. The
Company agrees to make required prepayments on account of such Notes in
accordance with the provisions of the Note Agreement.
This Note is a registered Note and is transferable only by surrender
thereof at the principal office of the Company as specified in the Note
Agreement, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or its attorney duly
authorized in writing.
EXHIBIT A1-1
<PAGE> 72
Under certain circumstances, as specified in the Note Agreement, the
principal of this Note (together with any applicable Make-Whole Amount) may be
declared due and payable in the manner and with the effect provided in the Note
Agreement.
THIS NOTE AND THE NOTE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
HOLLY CORPORATION
By:
-------------------------------------
Name:
Title:
EXHIBIT A1-2
<PAGE> 73
EXHIBIT A2
FORM OF SERIES D NOTE
HOLLY CORPORATION
SERIES D SENIOR NOTE DUE DECEMBER 15, 2005
No. [Place of Execution]
------
$ , 19
------------ ------------ ---
PPN: 435758 B# 3
HOLLY CORPORATION (the "Company"), a Delaware corporation, for value
received, hereby promises to pay to or registered assigns the
principal sum of DOLLARS ($ ) on December 15, 2005 and to pay
interest (computed on the basis of a 360-day year of twelve 30-day months) on
the unpaid principal balance thereof from the date of this Note at the rate set
forth in the table below during the periods set forth in the table below:
<TABLE>
<CAPTION>
================================================================================
PERIOD INTEREST RATE
- --------------------------------------------------------------------------------
<S> <C>
Closing Date through June 14, 1996 10.160%
- --------------------------------------------------------------------------------
June 15, 1996 through June 14, 1997 9.770%
- --------------------------------------------------------------------------------
June 15, 1997 through June 14, 1998 9.380%
- --------------------------------------------------------------------------------
June 15, 1998 through June 14, 1999 8.990%
- --------------------------------------------------------------------------------
June 15, 1999 through December 14, 1999 8.600%
- --------------------------------------------------------------------------------
December 15, 1999 through June 14, 2000 8.730%
- --------------------------------------------------------------------------------
June 15, 2000 through December 14, 2000 8.275%
- --------------------------------------------------------------------------------
December 15, 2000 through June 14, 2001 8.366%
- --------------------------------------------------------------------------------
June 15, 2001 through December 14, 2005 7.820%
================================================================================
</TABLE>
payable semi-annually on the 15th day of each June and December in each year
commencing on the later of June 15, 1996 or the interest payment date next
succeeding the date hereof, until the principal amount hereof shall be due and
payable; and to pay on demand interest on any overdue principal (including any
overdue prepayment of principal) and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) on any overdue installment of interest, at
a rate equal to the higher of
(a) the sum of
(i) two percent (2%) per annum plus
(ii) the rate of interest applicable thereto at
the time such additional interest first became payable as set
forth in the table above, or
EXHIBIT A2-1
<PAGE> 74
(b) the lesser of
(i) the maximum rate permitted by applicable law,
and
(ii) the sum of
(A) two percent (2%) per annum plus
(B) the rate of interest publicly
announced by Morgan Guaranty Trust Company of New
York from time to time in New York City as its Prime
Rate.
In no event shall the Company be required to pay any amounts as interest or
Make-Whole Amount hereunder in an amount or at a rate exceeding the maximum
rate permitted by law.
Payments of principal, Make-Whole Amount, if any, and interest shall
be made in such coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts to the
registered holder hereof at the address shown in the register maintained by the
Company for such purpose, in the manner provided in the Note Agreement (defined
below).
This Note is one of an issue of Series D Notes of the Company issued
in an aggregate principal amount limited to $21,000,000 pursuant to separate
Note Agreements (collectively, the "Note Agreement"), each dated as of November
15, 1995, between the Company and, respectively, each of the purchasers listed
on Annex 1 to the Note Agreement, and is entitled to the benefits thereof.
Capitalized terms used herein and not otherwise defined herein have the
meanings specified in the Note Agreement. As provided in the Note Agreement,
this Note is subject to prepayment, in whole or in part, in certain cases
without a Make-Whole Amount and in other cases with a Make-Whole Amount. The
Company agrees to make required prepayments on account of such Notes in
accordance with the provisions of the Note Agreement.
This Note is a registered Note and is transferable only by surrender
thereof at the principal office of the Company as specified in the Note
Agreement, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or its attorney duly
authorized in writing.
Under certain circumstances, as specified in the Note Agreement, the
principal of this Note (together with any applicable Make-Whole Amount) may be
declared due and payable in the manner and with the effect provided in the Note
Agreement.
EXHIBIT A2-2
<PAGE> 75
THIS NOTE AND THE NOTE AGREEMENT ARE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW.
HOLLY CORPORATION
By:
-------------------------------------
Name:
Title:
EXHIBIT A2-3
<PAGE> 76
EXHIBIT B1
FORM OF PURCHASER'S SPECIAL COUNSEL OPINION
[Letterhead of Hebb & Gitlin]
[Closing Date]
To the Persons Listed on
Annex 1 attached hereto
Re: Holly Corporation (the "Company")
Ladies and Gentlemen:
Reference is made to the separate Note Agreements dated as of November
15, 1995 (collectively, the "Note Agreement") between the Company and each of
the purchasers listed on Annex 1 thereto (the "Purchasers"), which provide,
among other things, for the issuance and sale by the Company of (x) its 7.62%
Series C Senior Notes due December 15, 2005, in the aggregate principal amount
of $39,000,000, and (y) its Series D Senior Notes due December 15, 2005, in the
aggregate principal amount of $21,000,000. The capitalized terms used herein
and not defined herein have the meanings assigned to them by or pursuant to the
terms of the Note Agreement.
We have acted as special counsel to the Purchasers in connection with
the transactions contemplated by the Note Agreement. This opinion is delivered
to you pursuant to paragraph 3A of the Note Agreement. In acting as such
counsel, we have examined:
(a) executed counterparts of the Note Agreement;
(b) the Company's 7.62% Series C Senior Notes due
December 15, 2005 and the Company's Series D Senior Notes due December
15, 2005, in each case executed by the Company, dated the date hereof,
and in the form, principal amount, and with the registration numbers
set forth on Annex 1 to the Note Agreement (the "Notes");
(c) a certified copy of the certificate of incorporation
of the Company;
(d) a certificate of the officers of the Company,
substantially in the form attached to the Note Agreement as Exhibit C;
(e) a certificate of the [Assistant] Secretary of the
Company, substantially in the form attached to the Note Agreement as
Exhibit D1;
EXHIBIT B1-1
<PAGE> 77
(f) a letter, dated November 21, 1995 to Hebb & Gitlin
and Baker & Botts, L.L.P. from CS First Boston Corporation making
certain representations with respect to the manner in which the Notes
were offered (the "Offeree Letter");
(g) the opinions of Baker & Botts, L.L.P., counsel to the
Company, and Christopher L. Cella, Esq., General Counsel of the
Company, each dated the date hereof; and
(h) originals, or copies certified or otherwise
identified to our satisfaction, of such other documents, records,
instruments and certificates of public officials as we have deemed
necessary or appropriate to enable us to render this opinion.
In rendering our opinion, we have relied, to the extent we deem
necessary and proper, on:
(a) warranties and representations contained in the Note
Agreement as to factual matters;
(b) the Offeree Letter; and
(c) said opinions of Baker & Botts, L.L.P. and
Christopher L. Cella, Esq., with respect to all questions governed by
either Delaware law or Texas law, and with respect to all questions
concerning the due incorporation and good standing of, and the
authorization, execution and delivery of instruments by, the Company
(except that we have made an independent examination of a certified
copy of the Restated Certificate of Incorporation of the Company, and
the certificate of the [Assistant] Secretary of the Company referred
to above setting forth its bylaws and corporate resolutions
authorizing its participation in the transactions contemplated by the
Note Agreement); based on such investigation as we have deemed
appropriate, said opinions are satisfactory in form and scope to us
and in our opinion the Purchasers and we are justified in relying
thereon.
Based on the foregoing, we are of the following opinions:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware.
2. The Company has all requisite corporate power and authority to
execute and deliver the Note Agreement, to issue and sell the Notes, and to
perform its obligations set forth in each of the Note Agreement and the Notes.
3. Each of the Note Agreement and the Notes has been duly
authorized by all necessary corporate action on the part of the Company, has
been executed and delivered by duly authorized officers of the Company, and
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
4. The execution and delivery of the Note Agreement and the
Notes, and the issue and sale of the Notes, by the Company and the performance
by the Company of its obligations thereunder will not conflict with, result in
a breach of any provision of, constitute a default under,
EXHIBIT B1-2
<PAGE> 78
or result in the creation or imposition of any Lien upon any of its Properties
pursuant to, the Restated Certificate of Incorporation or By-Laws of the
Company.
5. Under existing law, the offering, issuance, sale and delivery
of the Notes under the circumstances contemplated by the Note Agreement and the
Notes are exempt from the registration requirements of the Securities Act of
1933, as amended, and no qualification of an indenture with respect to the
Notes under the Trust Indenture Act of 1939, as amended, is required in
connection with such transactions.
6. Neither the issuance of the Notes nor the intended use of the
proceeds of the financing (as set forth in paragraph 81 of the Note Agreement)
will violate Regulations G, T or X of the Federal Reserve Board.
All opinions herein contained with respect to the enforceability of
documents and instruments are qualified to the extent that:
(a) the availability of equitable remedies, including
without limitation, specific enforcement and injunctive relief, is
subject to the discretion of the court before which any proceedings
therefor may be brought; and
(b) the enforceability of certain terms provided in the
Note Agreement and the Notes may be limited by
(i) applicable bankruptcy, reorganization,
arrangement, insolvency, moratorium or similar laws affecting
the enforcement of creditors' rights generally as at the time
in effect,
(ii) general principles of equity and the
discretion of a court in granting equitable remedies (whether
enforceability is considered in a proceeding at law or in
equity), and
(iii) common law or statutory requirements with
respect to commercial reasonableness.
We are admitted to the Bar in the State of New York. We express no
opinion as to the law of any jurisdiction other than the law of such state and
United States federal law. Baker & Botts, L.L.P. and Christopher L. Cella, Esq.
may rely on this opinion for the sole purpose of rendering their respective
opinions to be rendered pursuant to paragraph 3B of the Note Agreement.
Very truly yours,
EXHIBIT B1-3
<PAGE> 79
ANNEX 1
ADDRESSEES
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
John Hancock Variable Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, N.C. 27420
The Penn Mutual Life Insurance Company
Independence Square
530 Walnut Street, Mailstop C1B
Philadelphia, PA 19172
AIG Life Insurance Company
c/o AIG Investment Advisers, Inc.
One Chase Manhattan Plaza
57th Floor
New York, NY 10005
Pan-American Life Insurance Company
601 Poydras Street
New Orleans, LA 70130
EXHIBIT B1-4
<PAGE> 80
EXHIBIT B2
FORM OF COMPANY'S OUTSIDE COUNSEL OPINION
[Letterhead of Baker & Botts, L.L.P.]
To the Persons listed on
Annex 1 hereto
Re: Holly Corporation (the "Company")
Ladies and Gentlemen:
Reference is made to the separate Note Agreements, each dated as of
November 15, 1995 (collectively, the "Note Agreement"), between the Company and
each of the purchasers listed on Annex 1 thereto (the "Purchasers"), which
provide, among other things, for the issuance and sale by the Company on the
date hereof of (x) its 7.62% Series C Senior Notes due December 15, 2005, in
the aggregate principal amount of $39,000,000, and (y) its Series D Senior
Notes due December 15, 2005, in the aggregate principal amount of $21,000,000.
The capitalized terms used herein and not defined herein have the meanings
assigned to them by the terms of the Note Agreement.
We have acted as special counsel to the Company in connection with the
transactions contemplated by the Note Agreement. This opinion is delivered to
you pursuant to paragraph 3B(i) of the Note Agreement. As a basis for the
opinions hereinafter expressed, we have examined the following documents:
(a) the Note Agreement;
(b) the Company's 7.62% Series C Senior Notes due
December 15, 2005 and the Company's Series D Senior Notes due December
15, 2005, in each case executed by the Company, dated the date hereof,
and in the principal amount and with the registration numbers set
forth on Annex 1 to the Note Agreement, and in the form set forth,
respectively, on Exhibit A-1 and Exhibit A-2 to the Note Agreement
(the "Notes");
(c) the Guaranty, dated as of November 15, 1995, executed
by the Company's Restricted Subsidiaries, Navajo Refining Company, a
Delaware corporation ("Navajo"), Navajo Pipeline Co., a Delaware
corporation ("Navajo Pipeline"), Navajo Holdings, Inc., a New Mexico
corporation ("Navajo Holdings"), Navajo Western Asphalt Company, a New
Mexico corporation ("Navajo Western"), Navajo Crude Oil Marketing
Company, a Texas corporation ("Navajo Crude") and Lea Refining
Company, a Delaware corporation ("Lea") (Navajo, Navajo Pipeline and
Lea are hereinafter sometimes referred to collectively as the
"Delaware Guarantors" and individually as the "Delaware Guarantor",
and the Delaware Guarantors together with Navajo Holdings, Navajo
Crude and Navajo Western are hereinafter sometimes referred to
collectively as the "Guarantors" and individually as a "Guarantor")
(the "Guaranty"); and
EXHIBIT B2-1
<PAGE> 81
(d) a letter to Hebb & Gitlin and Baker & Botts, L.L.P.,
dated November 21, 1995, from CS First Boston Corporation making
certain representations with respect to the manner in which the Notes
were offered (the "Offeree Letter").
We have also examined originals, or copies certified or otherwise identified to
our satisfaction, of such corporate records of the Company, the Delaware
Guarantors and Navajo Crude, certificates of officers of the Company, the
Delaware Guarantors and Navajo Crude and certificates of public officials as we
have considered necessary or appropriate to enable us to render this opinion.
In rendering our opinion, we have relied upon the Offeree Letter and
the warranties and representations contained in the Note Agreement and the
above mentioned certificates of public officials and officers of the Company,
the Delaware Guarantors and Navajo Crude with respect to the accuracy of the
material factual matters contained therein.
Based upon the foregoing, and subject to the assumptions,
qualifications, exceptions and limitations set forth in this opinion, we are of
the opinion that:
1. Each of the Company, the Delaware Guarantors and Navajo Crude
is a corporation duly incorporated, validly existing and in good standing under
the laws of its state of incorporation and has all requisite corporate power
and authority to carry on its business as presently conducted and to own its
Property.
2. The Company has all requisite corporate power and authority to
execute and deliver the Note Agreement, to issue and sell the Notes, and to
perform its obligations set forth in each of the Note Agreement and the Notes.
3. Each of the Delaware Guarantors and Navajo Crude has all
requisite corporate power and authority to execute and deliver the Guaranty and
to perform its obligations set forth in the Guaranty.
4. Each of the Note Agreement and the Notes has been duly
authorized by all necessary corporate action on the part of the Company and has
been executed and delivered by a duly authorized officer of the Company. If,
notwithstanding the express choice of law provisions in the Note Agreement and
the Notes, the Note Agreement and Notes were to be governed by, and construed
in accordance with, the internal laws of the State of Texas, the Note Agreement
and Notes would each constitute a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
5. The Guaranty has been duly authorized by all necessary
corporate action on the part of each Delaware Guarantor and of Navajo Crude,
respectively, and has been executed and delivered by a duly authorized officer
of each Delaware Guarantor and Navajo Crude, respectively, and constitutes a
legal, valid and binding obligation of each Delaware Guarantor and of Navajo
Crude, enforceable against such Delaware Guarantor and Navajo Crude in
accordance with its terms.
6. The execution and delivery of the Note Agreement and the
Notes, and the issue and sale of the Notes, by the Company and the performance
by the Company of its obligations
EXHIBIT B2-2
<PAGE> 82
thereunder will not conflict with, result in a breach of any provision of, or
result in the creation or imposition of any Lien upon any of its Property or
the Property of any Guarantor pursuant to, the certificate of incorporation or
bylaws of the Company, or any Delaware Guarantor, or the articles of
incorporation or bylaws of Navajo Crude, or any applicable statute, rule or
regulation.
7. The execution and delivery of the Guaranty by the Guarantors
and the performance by the Guarantors of their obligations thereunder will not
conflict with, result in a breach of any provision of, or result in the
creation of any Lien upon any of its Property pursuant to, the certificate of
incorporation or bylaws of any Delaware Guarantor or the articles of
incorporation or bylaws of Navajo Crude, or any applicable statute, rule or
regulation.
8. The execution and delivery of the Note Agreement and the Notes
by the Company do not require any consent, approval or authorization of any
Federal or State of Texas governmental authority, or any consent, approval or
authorization of any governmental authority pursuant to the Delaware General
Corporation Law.
9. The execution and delivery of the Guaranty by the Guarantors
do not require any consent, approval or authorization of any Federal or State
of Texas governmental authority, or any consent, approval or authorization of
any governmental authority pursuant to the Delaware General Corporation Law.
10. Under existing law, the offering, issuance, sale and delivery
of the Notes under the circumstances contemplated by the Note Agreement and the
Notes are exempt from the registration requirements of the Securities Act of
1933, as amended, and no qualification of an indenture is required with respect
to the Notes under the Trust Indenture Act of 1939, as amended.
11. Neither the issuance of the Notes nor the intended use of the
proceeds from the sale of the Notes (as set forth in paragraph 8I of the Note
Agreement) will violate Regulation G, T or X of the Board of Governors of the
Federal Reserve System.
12. The Company
(a) is not an "investment company" as such term
is defined in Section 3(a) of the Investment Company Act of 1940, as
amended, and
(b) is not a "holding company" or an "affiliate"
of a "holding company," or a "subsidiary company" of a "holding
company," or a "public utility" as such terms are defined in Section
2(a) of the Public Utility Holding Company Act of 1935, as amended.
13. The Company is the record owner and, to our knowledge, the
beneficial owner of all issued and outstanding shares of common stock of Navajo
Corp., a Delaware corporation. All such shares are owned free and clear of any
perfected security interest or, to our knowledge, any other Lien.
14. The Company and Navajo Corp. are the record owners and, to our
knowledge, the beneficial owners of 11,500 and 8,500 shares, respectively, of
the common stock of Navajo, which shares represent all the issued and
outstanding shares of common stock of Navajo. All
EXHIBIT B2-3
<PAGE> 83
such shares are owned free and clear of any perfected security interest or, to
our knowledge, any other Lien.
15. Under Texas choice of law principles, in a properly presented
case, the courts of the State of Texas, and the courts of the United States of
America sitting in the State of Texas and applying the principles of conflicts
of laws applied by the courts of the State of Texas, would give effect to
paragraph 11K(i) of the Note Agreement and the paragraph of the Notes which
provides that the Note Agreement and the Notes are to be construed and enforced
in accordance with the law of the State of New York. For purposes of the
foregoing opinion, we have assumed, with your permission and without any
independent investigation or inquiry, that the chief executive office of AIG
Life Insurance Company, one of the Purchasers under the Note Agreement, is
located in the State of New York.
The foregoing opinions with respect to the enforceability of documents
and instruments, and the absence of conflicts with or breaches of provisions of
applicable statutes, rules and regulations, are subject to the following
additional assumptions, qualifications, limitations and exceptions:
A. For purposes of our opinion set forth in Paragraph 5 above, we
have assumed that the choice of law provision contained in Section 10(a) of the
Guaranty would be given effect;
B. The enforceability of the Note Agreement, the Notes and the
Guaranty may be limited by:
(i) applicable bankruptcy, reorganization, fraudulent
conveyance, arrangement, insolvency, moratorium or similar laws
affecting the enforcement of creditors' rights generally as from time
to time in effect, including without limitation, Section 302 of the
Delaware General Corporation Law inasmuch as Article Ninth of the
Company's Restated Certificate of Incorporation contains the language
set forth in Section 102(b) of such Act, and
(ii) general principles of equity and the discretion of a
court in granting equitable remedies (whether enforceability is
considered in a proceeding at law or in equity);
C. The enforceability of certain of the remedial, waiver and
other provisions of the Guaranty may be limited by certain applicable laws
(including, without limitation, judicial decisions) which may impair the
enforceability thereof; but, in our opinion, such limitations do not render the
Guaranty invalid as a whole, and the holders of the Notes may exercise remedies
in respect thereof that would normally be available to the holder of a
guaranty;
D. We express no opinion as to the enforceability of the
provisions of the Note Agreement, the Notes and the Guaranty requiring the
payment of the Make-Whole Amount in the circumstances contemplated by paragraph
4E or paragraph 7A of the Note Agreement; and
E. We express no opinion concerning paragraph 11K(ii) of the
Note Agreement or Section 10(b) of the Guaranty.
EXHIBIT B2-4
<PAGE> 84
The opinions expressed herein are solely for your benefit in
connection with the transactions being consummated today pursuant to the Note
Agreement and may not be relied upon by you for any other purpose, or relied
upon by any other Person, without, in each instance, our prior written consent.
The foregoing opinions are limited in all respects to the laws of the
State of Texas and the United States of America and the General Corporate Law
of the State of Delaware, each as in effect on the date hereof, and no opinion
is expressed herein as to any matters governed by the laws of any other
jurisdiction.
Very truly yours,
EXHIBIT B2-5
<PAGE> 85
ANNEX 1
ADDRESSES
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
John Hancock Variable Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, N.C. 27420
The Penn Mutual Life Insurance Company
Independence Square
530 Walnut Street, Mailstop C1B
Philadelphia, PA 19172
AIG Life Insurance Company
c/o AIG Investment Advisers, Inc.
One Chase Manhattan Plaza
57th Floor
New York, NY 10005
Pan-American Life Insurance Company
601 Poydras Street
New Orleans, LA 70130
Hebb & Gitlin
One State Street
Hartford, CT 06103
EXHIBIT B2-6
<PAGE> 86
EXHIBIT B3
FORM OF COMPANY'S GENERAL COUNSEL OPINION
[Letterhead of Holly Corporation]
[Closing Date]
To the Persons Listed on
Annex 1 hereto
Re: Holly Corporation (the "Company")
Ladies and Gentlemen:
Reference is made to the separate Note Agreements, each dated as of
November 15, 1995 (collectively, the "Note Agreement"), between the Company and
each of the purchasers listed on Annex 1 thereto (the "Purchasers"), which
provide, among other things, for the issuance and sale by the Company on the
date hereof of (x) its 7.62% Series C Senior Notes due December 15, 2005, in
the aggregate principal amount of $39,000,000, and (y) its Series D Senior
Notes due December 15, 2005, in the aggregate principal amount of $21,000,000.
The capitalized terms used herein and not defined herein have the meanings
assigned to them by the terms of the Note Agreement.
I am Vice President and General Counsel of the Company and in that
capacity I have acted as legal counsel to the Company in connection with the
transactions contemplated by the Note Agreement. This opinion is delivered to
you pursuant to paragraph 3B(ii) of the Note Agreement. As a basis for the
opinions hereinafter expressed, I have examined the following documents:
(a) the Note Agreement;
(b) the Company's 7.62% Series C Senior Notes due
December 15, 2005 and the Company's Series D Senior Notes due December
15, 2005, in each case executed by the Company, dated the date hereof,
in the principal amount, and with the registration numbers set forth
on Annex 1 to the Note Agreement, and in the form set forth,
respectively, on Exhibit A-1 and Exhibit A-2 to the Note Agreement
(the "Notes"); and
(c) the Guaranty, dated as of November 15,1995, executed
by the Company's Restricted Subsidiaries, Navajo Refining Company, a
Delaware corporation ("Navajo"), Navajo Pipeline Co., a Delaware
corporation ("Navajo Pipeline"), Navajo Holdings, Inc., a New Mexico
corporation ("Navajo Holdings"), Navajo Western Asphalt Company, a New
Mexico corporation ("Navajo Western"), and Navajo Crude Oil Marketing
Company, a Texas corporation ("Navajo Crude") and Lea Refining
Company, a Delaware corporation ("Lea") (Navajo, Navajo Pipeline and
Lea are hereinafter sometimes referred to collectively
EXHIBIT B3-1
<PAGE> 87
as the "Delaware Guarantors" and individually as a "Delaware
Guarantor", and the Delaware Guarantors together with Navajo Holdings,
Navajo Crude and Navajo Western are hereinafter sometimes referred to
collectively as the "Guarantors" and individually as a "Guarantor")
(the "Guaranty").
I have also examined originals, or copies certified or otherwise identified to
my satisfaction, of such corporate records of the Company and the Restricted
Subsidiaries, certificates of officers of the Company and the Restricted
Subsidiaries and certificates of public officials as I have considered
necessary or appropriate to enable me to render this opinion.
In rendering my opinion, I have relied upon the warranties and
representations contained in the Note Agreement and the above-mentioned
certificates of public officials and officers of the Company and the Restricted
Subsidiaries with respect to the accuracy of the material factual matters
contained therein.
Based upon the foregoing, and subject to the assumptions,
qualifications, exceptions and limitations set forth in this opinion, I am of
the opinion that:
1. Each of Navajo Holdings and Navajo Western is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of New Mexico and has all requisite corporate power and authority to
carry on its business as presently conducted and to own its Property.
2. Each of Navajo Holdings and Navajo Western has all requisite
corporate power and authority to execute and deliver the Guaranty and to
perform its obligations set forth in the Guaranty.
3. The Guaranty has been duly authorized by all necessary
corporate action on the part of each of Navajo Holdings and Navajo Western and
has been executed and delivered by a duly authorized officer of Navajo Holdings
and Navajo Western, respectively, and constitutes a legal, valid and binding
obligation of each of Navajo Holdings and Navajo Western, respectively,
enforceable against each of Navajo Holdings and Navajo Western in accordance
with its terms.
4. To my knowledge, no special inquiry having been made, there is
no default or existing condition which, with the passage of time or notice, or
both, would result in a default by the Company or any Restricted Subsidiary
under any material contract, lease or commitment known to me to which any one
or more of the Company or any Restricted Subsidiary is a party or by which
their respective Properties are bound except where such default would not have
a material adverse effect on (a) the ability of the Company to perform its
obligations under the Note Agreement and the Notes, or (b) the ability of any
Guarantor to perform its obligations under the Guaranty.
5. The execution and delivery of the Note Agreement and the
Notes, and the issue and sale of the Notes, by the Company and the performance
by the Company of its obligations thereunder will not (a) conflict with, result
in a breach of any provision of, constitute a default under, or result in the
creation or imposition of any Lien upon any of its Property or the Property of
any Restricted Subsidiary pursuant to the articles or certificate of
incorporation or bylaws of
EXHIBIT B3-2
<PAGE> 88
the Company or any Restricted Subsidiary, or (b) to the best of my knowledge,
after due inquiry, conflict with, result in a breach of any provision of,
constitute a default under, or result in the creation or imposition of any Lien
upon any of its Property or the Property of any Restricted Subsidiary pursuant
to any agreement or instrument to which the Company or such Restricted
Subsidiary is a party or by which their respective Properties are bound.
6. The execution and delivery of the Guaranty by each Guarantor
and the performance by each Guarantor of its obligations thereunder will not
(a) conflict with, result in a breach of any provision of, or result in the
creation of any Lien upon any of its Property pursuant to the articles of
incorporation or bylaws of Navajo Holdings or Navajo Western, or (b) to the
best of my knowledge, after due inquiry, conflict with, result in a breach of
any provision of, constitute a default under, or result in the creation or
imposition of any Lien upon any Property of any Guarantor pursuant to any
agreement or instrument to which any Guarantor is a party or by which its
Properties are bound.
7. To the best of my knowledge, after due inquiry, there is no
judgment, order, action, suit, proceeding, inquiry, order or investigation, at
law or in equity, before any court or governmental authority, arbitration board
or tribunal, pending or threatened against the Company or any one or more of
the Restricted Subsidiaries, except for any such judgment, order, action, suit,
proceeding, inquiry, order or investigation that (a) does not challenge the
validity of the Note Agreement, the Notes or the Guaranty, and (b) would not
have a material adverse effect on (i) the ability of the Company to perform its
obligations under the Note Agreement and the Notes, or (ii) the ability of any
Guarantor to perform its obligations under the Guaranty.
8. The execution and delivery of the Guaranty by each of Navajo
Holdings and Navajo Western do not require any consent, approval or
authorization of any governmental authority pursuant to the New Mexico General
Corporation Act.
9. Lorefco, Inc., a Delaware corporation ("Lorefco"), is the
record owner and, to my knowledge, the beneficial owner of all of the issued
and outstanding shares of common stock of Lea. All such shares are owned free
and clear of any perfected security interest or, to my knowledge, any other
Lien.
10. The Company is the record owner and, to my knowledge, the
beneficial owner of all of the issued and outstanding shares of common stock of
Navajo Holdings. All such shares are owned free and clear of any perfected
security interest or, to my knowledge, any other Lien.
11. Navajo is the record owner and, to my knowledge, the
beneficial owner of all of the issued and outstanding shares of common stock of
Navajo Western. All such shares are owned free and clear of any perfected
security interest or, to my knowledge, any other Lien.
12. Navajo is the record owner and, to my knowledge, the
beneficial owner, of all of the issued and outstanding shares of common stock
of Navajo Crude Oil Purchasing Inc., a New Mexico corporation. All such shares
are owned free and clear of any perfected security interest or, to my
knowledge, any other Lien.
EXHIBIT B3-3
<PAGE> 89
13. The Company is the record owner and, to my knowledge, the
beneficial owner of all of the issued and outstanding shares of common stock of
Navajo Crude. All such shares are owned free and clear of any perfected
security interest or, to my knowledge, any other Lien.
14. Navajo is the record owner and, to my knowledge, the
beneficial owner of all of the issued and outstanding shares of common stock of
Lorefco. All such shares are owned free and clear of any perfected security
interest or, to my knowledge, any other Lien.
15. Navajo Holdings is the record owner and, to my knowledge, the
beneficial owner of all of the issued and outstanding shares of common stock of
Navajo Pipeline. All such shares are owned free and clear of any perfected
security interest or, to my knowledge, any other lien.
The foregoing opinions with respect to the enforceability of documents
and instruments, and the absence of conflicts with or breaches of provisions of
applicable statutes, rules and regulations, are subject to the following
additional assumptions, qualifications, limitations and exceptions:
A. For purposes of my opinion set forth in Paragraph 3
above, I have assumed that the choice of law provision contained in Section
1O(a) of the Guaranty would be given effect;
B. The enforceability of the Guaranty may be limited by:
(i) applicable bankruptcy, reorganization,
fraudulent conveyance, arrangement, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights
generally as from time to time in effect, and
(ii) general principles of equity and the
discretion of a court in granting equitable remedies (whether
enforceability is considered in a proceeding at law or in
equity);
C. The enforceability of certain of the remedial, waiver
and other provisions of the Guaranty may be limited by certain applicable laws
(including, without limitation, judicial decisions) which may impair the
enforceability thereof; but, in my opinion, such limitations do not render the
Guaranty invalid as a whole, and the holders of the Notes may exercise remedies
in respect thereof that would normally be available to the holder of a
guaranty;
D. I express no opinion as to the enforceability of the
provisions of the Guaranty requiring the payment of the Make-Whole Amount in
the circumstances contemplated by paragraph 4E or paragraph 7A of the Note
Agreement; and
E. I express no opinion concerning Section 1O(b) of the
Guaranty.
The opinions expressed herein are solely for your benefit in
connection with the transactions being consummated today pursuant to the Note
Agreement and may not be relied upon by you for any other purpose, or relied
upon by any other Person, without, in each instance, my prior written consent.
EXHIBIT B3-4
<PAGE> 90
The foregoing opinions are limited in all respects to the laws of the
State of Texas and the United States of America and the General Corporation Act
of the State of New Mexico, each as in effect on the date hereof, and no
opinion is expressed herein as to any matters governed by the laws of any other
jurisdiction.
Sincerely,
Christopher L. Cella
Vice President and General Counsel
EXHIBIT B3-5
<PAGE> 91
ANNEX 1
ADDRESSEES
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
John Hancock Variable Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, MA 02117
Alexander Hamilton Life Insurance Company of America
P.O. Box 21008
Greensboro, N.C. 27420
The Penn Mutual Life Insurance Company
Independence Square
530 Walnut Street, Mailstop C1B
Philadelphia, PA 19172
AIG Life Insurance Company
c/o AIG Investment Advisers, Inc.
One Chase Manhattan Plaza
57th Floor
New York, NY 10005
Pan-American Life Insurance Company
601 Poydras Street
New Orleans, LA 70130
Hebb & Gitlin
One State Street
Hartford, CT 06103
EXHIBIT B3-6
<PAGE> 92
EXHIBIT C
FORM OF OFFICERS' CERTIFICATE
CERTIFICATE OF OFFICERS OF HOLLY CORPORATION
We, ____________________ and ____________________, each hereby certify
that we are, respectively, the ___________________, and the ____________________
of HOLLY CORPORATION, a Delaware corporation (the "Company"), and that, as such,
we are authorized to execute and deliver this Certificate in the name and on
behalf of the Company, and that:
1. This certificate is being delivered pursuant to paragraph 3C
of the Company's separate Note Agreements (collectively, the "Note Agreement"),
each dated as of November 15, 1995, with each of the purchasers listed on Annex
1 thereto (collectively, the "Purchasers"). The terms used in this Certificate
and not defined herein shall have the respective meanings ascribed to them in
the Note Agreement.
2. The warranties and representations contained in paragraph 8 of
the Note Agreement are (except as affected by transactions contemplated by the
Note Agreement) true in all material respects on the date hereof with the same
effect as though made on and as of the date hereof.
3. The Company has performed and complied with all agreements and
conditions contained in the Note Agreement that are required to be performed or
complied with by the Company before or at the date hereof, and after giving
effect to the execution and delivery of the Note Agreement and the Notes, no
Default or Event of Default will exist on the date hereof.
4. _____ is on and as of the date hereof, and at all times
subsequent to __________ __, 1995 [date of resolutions] has been, the duly
elected, qualified and acting Assistant Secretary of the Company, and the
signature appearing on the Certificate of the Assistant Secretary dated the
date hereof and delivered to the Purchasers contemporaneously herewith is her
genuine signature.
EXHIBIT C-1
<PAGE> 93
IN WITNESS WHEREOF, we have executed this Certificate in the name and
on behalf of the Company as of __________ __, 19__. [Closing Date]
HOLLY CORPORATION
By:
-------------------------------------
Name:
By:
-------------------------------------
Name:
EXHIBIT C-2
<PAGE> 94
EXHIBIT D1
FORM OF COMPANY SECRETARY'S CERTIFICATE
CERTIFICATE OF [ASSISTANT] SECRETARY OF HOLLY CORPORATION
I, ____________________, hereby certify that:
I am the duly elected, qualified and acting [Assistant] Secretary of
HOLLY CORPORATION, a Delaware corporation (the "Company"), and that, as such, I
have access to its corporate records and am familiar with the matters herein
certified, and I am authorized to execute and deliver this Certificate in the
name and on behalf of the Company, and that:
1. This certificate is being delivered pursuant to paragraph 3C
of the Company's separate Note Agreements (collectively, the "Note Agreement"),
each dated as of November 15, 1995, with each of the purchasers listed on Annex
1 thereto (collectively, the "Purchasers"). The terms used in this Certificate
and not defined herein have the respective meanings ascribed to them in the
Note Agreement.
2. Attached hereto as Attachment A is a true and correct copy of
resolutions, and the preamble thereto, adopted by the Executive Committee of
the Board of Directors of the Company on __________, 1995, and such resolutions
and preamble set forth in Attachment A hereto were duly adopted by said
Executive Committee of the Board of Directors and are in full force and effect
on and as of the date hereof, not having been amended, altered or repealed, and
such resolutions are filed with the records of the Board of Directors.
3. The documents listed below were executed and delivered by the
Company pursuant to and in accordance with the resolutions set forth in
Attachment A hereto:
(a) the Company's Note Agreement providing for the sale
by the Company and the purchase by the Purchasers of the Company's
7.62% Series C Senior Notes due December 15, 2005, and the Company's
Series D Senior Notes due December 15, 2005 (the "Notes"); and
(b) the Notes.
4. Attached hereto as Attachment B is a true, correct and
complete copy of the bylaws of the Company as in full force and effect on and
as of the date hereof.
5. Each of the following named persons is on and as of the date
hereof, and at all times subsequent to __________ __, 1995 [date of adoption of
resolutions] has been a duly elected, qualified and acting officer of the
Company holding the office or offices set forth below opposite his name:
EXHIBIT D1-1
<PAGE> 95
Name Office Signature
Vice President and General /s/
Counsel ------------------
Vice President, Treasurer /s/
and Controller ------------------
[Assistant] Secretary /s/
------------------
6. The signature appearing opposite the name of each such person set
forth above is his genuine signature.
7. There have been no amendments or supplements to or restatements of
the Certificate of Incorporation of the Company since __________ __, 19__.
IN WITNESS WHEREOF, I have hereunto set my hand on ____, 1995.
[Closing Date]
HOLLY CORPORATION
--------------------------------------
[Assistant] Secretary
EXHIBIT D1-2
<PAGE> 96
ATTACHMENT A
EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS
HOLLY CORPORATION
UNANIMOUS WRITTEN CONSENT
The undersigned, being all of the members of the Executive Committee
of the Board of Directors of Holly Corporation, a Delaware corporation (the
"Company"), do hereby, pursuant to Section 141(f) of the Delaware General
Corporation Law, consent to the adoption of the following resolutions without
the holding of a meeting, such resolutions to have the same force and effect as
if they had been adopted by unanimous vote at a meeting of the Executive
Committee of the Board of Directors which was duly called and held and at which
all members of the Executive Committee of the Board of Directors of the Company
were present and acting throughout:
WHEREAS, the capitalized terms used herein and not defined herein
shall have the meanings assigned to them by or pursuant to the Note Agreement;
and
WHEREAS, this Committee has discussed and considered the transactions
contemplated by the form of Note Agreement (together with all exhibits and
schedules thereto, the "Note Agreement"), to be entered into separately by the
Company and each of the purchasers listed on Annex 1 thereto (together with any
affiliate of any thereof, the "Purchasers") pursuant to which the Purchasers
will purchase from the Company (a) the aggregate principal amount of
$39,000,000 of the Company's 7.62% Series C Senior Notes due December 15, 2005,
and (b) the aggregate principal amount of $21,000,000 of the Company's D Senior
Notes due December 15, 2005 (collectively, the "Notes") and the respective
forms of the Notes.
WHEREAS, this Committee determines that it is advisable and in the
best interest of the Company that the transactions contemplated by the Note
Agreement and the Notes be consummated substantially in accordance with their
respective provisions;
NOW THEREFORE, BE IT RESOLVED, that the transactions contemplated by
the Note Agreement and the Notes are hereby authorized and approved in each and
every respect; and each and every transaction effected or to be effected
pursuant to and substantially in accordance with the terms of the Note
Agreement and the Notes, including, but not limited to, each specific
transaction that is described, authorized and approved in these Resolutions, is
hereby authorized and approved in each and every respect;
RESOLVED, that the Company enter into a Note Agreement with each of
the Purchasers or any affiliate thereof; and that each of the Chairman of the
Board, the President, any Vice President, the Treasurer and each other officer
of the Company (each an "Authorized Officer") is hereby severally authorized to
execute and deliver, in the name and on behalf of the Company, each Note
Agreement, with such changes therein as shall be approved by the officer
executing and delivering the same, such approval to be evidenced conclusively
by such execution and delivery;
RESOLVED, that the Company exchange notes with the Purchasers in the
aggregate amount of Twenty-one Million Dollars ($21,000,000) and borrow from
the Purchasers the aggregate amount of Thirty-nine Million ($39,000,000) as
provided in the Note Agreement, such
EXHIBIT D1-3
<PAGE> 97
indebtedness to be evidenced by the Notes, in the amounts and upon the terms
and conditions provided for in the Note Agreement; and that each of the
Authorized Officers is hereby severally authorized to execute and deliver the
Notes, in the name and on behalf of the Company, with such changes therein as
shall be approved by the officer or officers executing and delivering the same,
such approval to be evidenced conclusively by such execution and delivery;
RESOLVED, that the Company enter into all other documents, agreements
and instruments contemplated by the Note Agreement and the Notes; and that each
of the Authorized Officers is hereby severally authorized to execute and
deliver, in the name and on behalf of the Company, such documents, agreements
and instruments, with such changes therein as shall be approved by the officer
executing and delivering the same, such approval to be evidenced conclusively
by such execution and delivery;
RESOLVED, that this Committee hereby authorizes each of the Authorized
Officers, severally, to execute and deliver for and on behalf of the Company
the certificates required by the Note Agreement;
RESOLVED, that the Authorized Officers and any person or persons
designated and authorized so to act by any Authorized Officer are hereby each
severally authorized, empowered and directed, for and on behalf of the Company,
to consummate the transactions contemplated by the Note Agreement and the Notes
and to perform as required thereunder;
RESOLVED, that the Authorized Officers and any person or persons
designated and authorized so to act by any Authorized Officer are hereby each
severally authorized, in the name and on behalf of the Company, to do and
perform or cause to be done and performed, all other acts, to pay or cause to
be paid, all related costs and expenses and to execute and deliver or cause to
be executed and delivered such other notices, requests, demands, directions,
consents, approvals, orders, applications, agreements, instruments,
certificates, financing statements, undertakings, supplements, amendments,
further assurances or other communications of any kind, under the corporate
seal of the Company or otherwise and in the name of and on behalf of the
Company or otherwise, as he, she or they may deem necessary, advisable or
appropriate to effectuate the purpose and intent of the foregoing Resolutions
or to comply with the requirements of the documents, agreements and instruments
(including, but not limited to, each Note Agreement and the Notes) approved and
authorized by the foregoing Resolutions;
RESOLVED, that any acts of any Authorized Officer and of any person or
persons designated and authorized to act by any Authorized Officer, which acts
would have been authorized by the foregoing Resolutions except that such acts
were taken prior to the adoption of such Resolutions, are hereby severally
ratified, confirmed, approved and adopted as the acts of the Company; and
RESOLVED, that each of the Secretary and each Assistant Secretary of
the Company is hereby severally authorized and empowered to certify to the
passage of the foregoing Resolutions.
EXHIBIT D1-4
<PAGE> 98
Attachment B
Bylaws of the Company
[To be supplied by Company.]
EXHIBIT D1-5
<PAGE> 99
EXHIBIT D2
FORM OF SUBSIDIARY SECRETARY'S CERTIFICATE
CERTIFICATE OF SECRETARY OF [SUBSIDIARY GUARANTOR]
I, ____________________, hereby certify that:
I am the duly elected, qualified and acting Secretary of [SUBSIDIARY
GUARANTOR], a __________ corporation (the "Company"), and that, as such, I have
access to its corporate records and am familiar with the matters herein
certified, and I am authorized to execute and deliver this Certificate in the
name and on behalf of the Company, and that:
1. This certificate is being delivered pursuant to paragraph 3C
of those separate Note Agreements (collectively, the "Note Agreement"), each
dated as of November 15, 1995, of Holly Corporation, a Delaware corporation
("Holly") with each of the purchasers listed on Annex 1 thereto. The terms used
in this Certificate and not defined herein shall have the respective meanings
ascribed to them in the Note Agreement.
2. Attached hereto as Attachment A is a true and correct copy of
resolutions and preamble thereto adopted by the Board of Directors of the
Company on __________, 1995, and such resolutions and preamble thereto set forth
in Attachment A hereto were duly adopted by said Board of Directors and are in
full force and effect on and as of the date hereof, not having been amended,
altered or repealed, and such resolutions are filed with the records of the
Board of Directors.
3. The Company's Subsidiary Guaranty of the 7.62% Series C Senior
Notes due December 15, 2005, and the Series D Senior Notes due December 15,
2005, of Holly, was executed and delivered by the Company pursuant to and in
accordance with the resolutions set forth in Attachment A hereto.
4. Attached hereto as Attachment B is a true, correct and
complete copy of the bylaws of the Company as in full force and effect on and
as of the date hereof.
5. Each of the following named persons is on and as of the date
hereof, and at all times subsequent to __________, 1995 has been a duly
elected, qualified and acting officer of the Company holding the office or
offices set forth below opposite his name:
[List Only Officers Executing Documents]
Name Office Signature
Vice-President and /s/
[Assistant] Secretary --------------------
Vice President and /s/
Treasurer --------------------
EXHIBIT D2-1
<PAGE> 100
6. The signature appearing opposite the name of each such person
set forth above is his or her genuine signature.
7. There have been no amendments or supplements to or
restatements of the Certificate of Incorporation of the Company since
__________ __, 19__.
8. No dissolution proceedings with respect to the Company have been
commenced or are imminent.
IN WITNESS WHEREOF, I have hereunto set my hand as of __________, 1995.
[SUBSIDIARY GUARANTOR]
----------------------------------------
[Assistant] Secretary
EXHIBIT D2-2
<PAGE> 101
ATTACHMENT A
UNANIMOUS WRITTEN CONSENT
OF
THE BOARD OF DIRECTORS
OF
[SUBSIDIARY GUARANTOR]
The undersigned, being all of the members of the Board of Directors of
Navajo Pipeline Co., a Delaware corporation (the "Company"), do hereby,
pursuant to Section 141(f) of the Delaware General Corporation Law, consent to
the adoption of the following resolutions without the holding of a meeting,
such resolutions to have the same force and effect as if they had been adopted
by unanimous vote at a meeting of the Board of Directors which was duly called
and held and at which all members of the Board of Directors of the Company were
present and acting throughout:
WHEREAS, capitalized terms used herein and not defined herein shall
have the meanings assigned to them by or pursuant to the Note Agreement; and
WHEREAS, this Board has discussed and considered the transactions
contemplated by the form of Note Agreement (together with all exhibits and
schedules thereto, the "Note Agreement"), to be entered into separately by
Holly Corporation, a Delaware corporation ("Holly") and each of the purchasers
listed on Annex 1 thereto (together with any affiliate of any thereof, the
"Purchasers") pursuant to which the Purchasers will purchase from Holly (a) the
aggregate principal amount of $39,000,000 of the Company's 7.62% Series C
Senior Notes due December 15, 2005, and (b) the aggregate principal amount of
$21,000,000 of the Company's Series D Senior Notes due December 15, 2005
(collectively, the "Notes") and the respective forms of the Notes and the form
of Guaranty to be entered into by the Company in favor of the Purchasers (the
"Purchaser Guaranty"); and
WHEREAS, this Board determines that the Purchaser Guaranty may
reasonably be expected to be of material benefit, direct and indirect, to the
Company, and it is advisable and in the best interest of the Company that the
transactions contemplated by the Note Agreement and the Notes be consummated
substantially in accordance with their provisions.
NOW THEREFORE, BE IT RESOLVED, that the transactions contemplated by
the Note Agreement and the Notes are hereby authorized and approved in each and
every respect; and each and every transaction effected or to be effected
pursuant to and substantially in accordance with the terms of the Note
Agreement and the Notes, including, but not limited to, each specific
transaction that is described, authorized and approved in these Resolutions, is
hereby authorized and approved in each and every respect;
RESOLVED, that the Company enter into the Purchaser Guaranty and that
each of the Chairman of the Board, the President, any Vice President, the
Treasurer and each other officer of the Company (each an "Authorized Officer")
is hereby severally authorized to execute and deliver, in the name and on
behalf of the Company, the Purchaser Guaranty, with such changes
EXHIBIT D2-3
<PAGE> 102
therein as shall be approved by the officer executing and delivering the same,
such approval to be evidenced conclusively by such execution and delivery;
RESOLVED, that the Company enter into all other documents, agreements
and instruments contemplated to be entered into by the Company, by the
Purchaser Guaranty, the Note Agreement and the Notes; and that each of the
Authorized Officers is hereby severally authorized to execute and deliver, in
the name and on behalf of the Company, such documents, agreements and
instruments, with such changes therein as shall be approved by the officer
executing and delivering the same, such approval to be evidenced conclusively
by such execution and delivery;
RESOLVED, that the Authorized Officers and any person or persons
designated or authorized to so act by any Authorized Officer are hereby each
severally authorized, empowered and directed, for and on behalf of the Company,
to consummate the transactions contemplated by the Purchaser Guaranty, the Note
Agreement and the Notes and to perform as required thereunder;
RESOLVED, that the Authorized Officers and any person or persons
designated and authorized to so act by any Authorized Officer are hereby each
severally authorized, in the name and on behalf of the Company, to do and
perform or cause to be done and performed all other acts, to pay or cause to be
paid all related costs and expenses and to execute and deliver or cause to be
executed and delivered such other notices, requests, demands, directions,
consents, approvals, orders, applications, agreements, instruments,
certificates, financing statements, undertakings, supplements, amendments,
further assurances or other communications of any kind, under the corporate
seal of the Company or otherwise and in the name of and on behalf of the
Company or otherwise, as he, she or they may deem necessary, advisable or
appropriate to effectuate the purpose and intent of the foregoing Resolutions
or to comply with the requirements of the documents, agreements and instruments
(including but not limited to the Purchaser Guaranty, the Note Agreement and
the Notes) approved and authorized by the foregoing Resolutions;
RESOLVED, that any acts of any Authorized Officer and of any person or
persons designated and authorized to act by any Authorized Officer, which acts
would have been authorized by the foregoing Resolutions except that such acts
were taken prior to the adoption of such Resolutions, are hereby severally
ratified, confirmed, approved and adopted as the acts of the Company; and
RESOLVED, that the Unanimous Written Consent of the Board of Directors
of the Company, dated as of __________, 1995, executed by the Board of
Directors of the Company is, and shall remain, in full force and effect;
RESOLVED, that this Consent may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same Consent;
and
RESOLVED, that each of the Secretary and each Assistant Secretary of
the Company is hereby severally authorized and empowered to certify to the
passage of the foregoing Resolutions.
EXHIBIT D2-4
<PAGE> 103
Attachment B
Bylaws of the Company
[To be supplied by Company.]
EXHIBIT D2-5
<PAGE> 104
EXHIBIT E
FORM OF GUARANTY
GUARANTY
THIS GUARANTY, dated as of November 15, 1995, made separately by each
of the undersigned corporations (together with their successors and assigns,
each a "Guarantor" and collectively, the "Guarantors"), in favor of each of the
purchasers (together with their successors and assigns, including, without
limitation, any holder of a Note (as defined below), each a "Holder" and
collectively, the "Holders") listed on Annex 1 to the separate Note Agreements
(collectively, as amended from time to time, the "Note Agreement"), dated as of
November 15, 1995, between Holly Corporation (the "Company"), a Delaware
corporation, and each of the Holders, pursuant to which the Company will issue
Thirty-Nine Million Dollars ($39,000,000) in aggregate principal amount of its
7.62% Series C Senior Notes due December 15, 2005 (the "Series C Notes") and
Twenty-One Million Dollars ($21,000,000) in aggregate principal amount of its
Series D Senior Notes due December 15, 2005 (the "Series D Notes" the Series C
Notes and the Series D Notes referred to collectively in this Guaranty as the
"Notes"),
WITNESSETH:
WHEREAS, the Company owns directly, or indirectly through one or more
subsidiaries, all of the outstanding shares of stock of each Guarantor; and
WHEREAS, the Company is contemporaneously with the execution of this
Guaranty issuing and selling its Series C Notes and its Series D Notes to the
Holders pursuant to the Note Agreement,; and
WHEREAS, it is a condition precedent to Holders' obligation to
purchase the Notes that each Guarantor execute and deliver to the Holders a
satisfactory guaranty of obligations of the Company under the Note Agreement
and the Notes; and
WHEREAS, the board of directors of each Guarantor has determined that
such Guarantor's execution, delivery and performance of this Guaranty may
reasonably be expected to benefit such Guarantor, directly or indirectly, and
are in the best interests of such Guarantor;
NOW, THEREFORE, in consideration of the premises and of Ten Dollars
($10) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce Holders to purchase
the Notes pursuant to the Note Agreement, each Guarantor hereby agrees with
Holders as follows:
1. DEFINITIONS.
Reference is hereby made to the Note Agreement for all purposes. All
terms used in this Guaranty that are defined in the Note Agreement and not
otherwise defined in this Guaranty have the same meanings when used in this
Guaranty. As used in this Guaranty, the following terms shall have the
following meanings:
EXHIBIT E-1
<PAGE> 105
"OBLIGATIONS" means collectively all of the indebtedness,
obligations, and undertakings that are guaranteed by Guarantor and
described in subsections (a) and (b) of Section 2 hereof.
"OBLIGATION DOCUMENTS" means this Guaranty, the Note
Agreement, the Notes, all other documents and instruments under, by
reason of which, or pursuant to which any or all of the Obligations
are evidenced, governed, secured, or otherwise dealt with, heretofore
or hereafter delivered.
"OBLIGORS" means the Company, the Guarantors, and any other
endorsers, guarantors or obligors, primary or secondary, of any or all
of the Obligations.
"SECURITY" means any rights, properties, or interests of the
Holders under the Obligation Documents or otherwise, that provide
recourse or other benefits to the Holders in connection with the
Obligations or the non-payment or non-performance thereof, including,
without limitation, collateral (whether real or personal, tangible or
intangible) in which the Holders have rights under or pursuant to any
Obligation Documents, guaranties of the payment or performance of any
Obligation, bonds, surety agreements, keep-well agreements, letters of
credit, rights of subrogation, rights of offset, and rights pursuant
to which other claims are subordinated to the Obligations.
2. GUARANTY.
(a) Each Guarantor hereby irrevocably, absolutely, and
unconditionally guarantees, jointly and severally, to the Holders the
prompt, complete, and full payment when due, and no matter how the
same shall become due, of:
(i) the Notes, including all principal, all
interest thereon and all other sums payable thereunder; and
(ii) all other sums payable under the other
Obligation Documents, whether for principal, interest, fees,
delivery of cash collateral, costs, expenses or otherwise.
(b) Each Guarantor, hereby irrevocably, absolutely, and
unconditionally guarantees, jointly and severally, to the Holders the
prompt, complete and full performance,when due, and no matter how the
same shall become due, of all obligations and undertakings of the
Company to the Holder under, by reason of, or pursuant to any of the
Obligation Documents.
(c) If the Company shall for any reason fail to pay any
Obligation, as and when such Obligation shall become due and payable,
whether at its stated maturity, as a result of the exercise of any
power to accelerate, or otherwise, then each Guarantor will, forthwith
upon demand by the Required Holders, pay such Obligation in full to
the Holders. If the Company shall for any reason fail to perform
promptly any Obligation, then Guarantor will, forthwith upon demand by
the Required Holders, cause such Obligation to be performed or, if
specified by the Required Holders, provide sufficient funds, in such
amount and manner as the Required Holders shall in good faith
determine,
EXHIBIT E-2
<PAGE> 106
for the prompt, full and faithful performance of such Obligation by
the Required Holders or such other Person as the Required Holders
shall designate.
(d) If either the Company or any Guarantor fails to pay
or perform upon demand any Obligation as described in the immediately
preceding subsections (a), (b) or (c), then each Guarantor will incur
the additional obligation to pay to the Holders and each Guarantor
will forthwith upon demand by the Required Holders pay to the Holders,
the amount of any and all expenses, including fees and disbursements
of any counsel and of any experts or agents, in each case, retained by
the Required Holders on behalf of the Holders that the Holders may
incur as a result of such failure, such expenses to be incurred in
accordance with paragraph 11B of the Note Agreement.
(e) Each Guarantor shall be primarily liable hereunder
for the payment and performance of the Obligations, from each other
Guarantor.
3. UNCONDITIONAL GUARANTY.
(a) No action that any one or more Holder may take or
omit to take in connection with any of the Obligation Documents, any
of the Obligations (or any other indebtedness owing by Guarantor to
the Holders), or any Security, and no course of dealing of any one or
more Holder with any Obligor or any other Person, shall release or
diminish any Guarantor's obligations, liabilities, agreements or
duties under this Guaranty, affect this Guaranty in any way, or afford
any Guarantor any recourse against any Holder, regardless of whether
any such action or inaction may increase any risks to or liabilities
of the Holders or any Obligor or increase any risk to or diminish any
safeguard of any Security. Without limiting the foregoing, each
Guarantor hereby expressly agrees that, except as may be provided in
the Note Agreement, any Holder may, from time to time, without notice
to or the consent of Guarantor:
(i) Amend, change or modify, in whole or in part,
any one or more of the Obligation Documents and give or refuse
to give any waivers or other indulgences with respect thereto;
(ii) Neglect, delay, fail, or refuse to take or
prosecute any action for the collection or enforcement of any
of the Obligations, to foreclose or take or prosecute any
action in connection with any Security or Obligation Document,
to bring suit against any Obligor or any other Person, or to
take any other action concerning the Obligations or the
Obligation Documents;
(iii) Accelerate, change, rearrange, extend, or
renew the time, terms, or manner for payment or performance of
any one or more of the Obligations;
(iv) Compromise or settle any unpaid or
unperformed Obligation or any other obligation or amount due
or owing, or claimed to be due or owing, under any one or more
of the Obligation Documents;
(v) Take, exchange, amend, eliminate, surrender,
release, or subordinate any or all Security for any or all of
the Obligations, accept additional
EXHIBIT E-3
<PAGE> 107
or substituted Security therefor, and perfect or fail to
perfect the Holders' rights in any or all Security;
(vi) Discharge, release, substitute or add
Obligors; and
(vii) Apply all monies received from Obligors or
others, or from any Security for any of the Obligations, as
such Holder may determine to be in its best interest, without
in any way being required to marshall Security or assets or to
apply all or any part of such monies upon any particular
Obligations.
(b) No action or inaction of any Obligor or any other
Person, and no change of law or circumstances, shall release or
diminish any Guarantor's obligations, liabilities, agreements, or
duties under this Guaranty, affect this Guaranty in any way, or afford
any Guarantor any recourse against any Holder. Without limiting the
foregoing, the obligations, liabilities, agreements, and duties of
each Guarantor under this Guaranty shall not be released, diminished,
impaired, reduced, or affected by the occurrence of any of the
following from time to time, even if occurring without notice to or
without the consent of such Guarantor:
(i) Any voluntary or involuntary liquidation,
dissolution, sale of all or substantially all assets,
marshalling of assets of liabilities, receivership,
conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, or
composition of any Obligor or any other proceedings involving
any Obligor or any of the assets of any Obligor under laws for
the protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or
stay of actions or lien enforcement proceedings against, any
Obligor, any properties of any Obligor, or the estate in
bankruptcy of any Obligor in the course of or resulting from
any such proceedings;
(ii) The failure by any Holder or the Required
Holders to file or enforce a claim in any proceeding described
in the immediately preceding subsection (i) or to take any
other action in any proceeding to which any Obligor is a
party;
(iii) The release by operation of law of any Obligor
from any of the Obligations or any other obligations to the
Holders;
(iv) The invalidity, deficiency, illegality, or
unenforceability of any of the Obligations or the Obligation
Documents, in whole or in part, any bar by any statute of
limitations or other law of recovery on any of the
Obligations, or any defense or excuse for failure to perform
on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse
whatsoever;
(v) The failure of any Obligor or any other
Person to sign any guaranty or other instrument or agreement
within the contemplation of any Obligor or the Holders;
(vi) The fact that any Guarantor may have incurred
directly part of the Obligations or is otherwise primarily
liable therefor; or
EXHIBIT E-4
<PAGE> 108
(vii) Without limiting any of the foregoing, any
fact or event (whether or not similar to any of the foregoing)
that in the absence of this provision would or might
constitute or afford a legal or equitable discharge or release
of or defense to a guarantor or surety other than the actual
payment and performance by each Guarantor under this Guaranty.
(c) The Required Holders may invoke the benefits of this
Guaranty before pursuing any remedies against any Obligor or any other
Person and before proceeding against any Security now or hereafter
existing for the payment or performance of any of the Obligations. The
Required Holders may maintain an action against any Guarantor on this
Guaranty without joining any other Obligor therein and without
bringing separate action against any other Obligor. The obligations of
each Guarantor under this Guaranty are not joint, but are separate and
distinct from the obligations of each other Guarantor and all other
Obligors.
(d) If any payment to the Holders by any Obligor is held
to constitute a preference or a voidable transfer under applicable
state or federal laws, or if for any other reason the Holders are
required to refund such payment to the payor thereof or to pay the
amount thereof to any other Person, then such payment to the Holders
shall not constitute a release of any Guarantor from any liability
under this Guaranty, and each Guarantor agrees to pay such amount to
the Holders on demand and agrees and acknowledges that this Guaranty
shall continue to be effective or shall be reinstated, as the case may
be, to the extent of any such payment or payments.
(e) This is a continuing guaranty and shall apply to and
cover all obligations and renewals and extensions thereof and
substitutions therefor from time to time.
4. WAIVER.
Each Guarantor hereby waives, with respect to the Obligations, this
Guaranty, and the other Obligation Documents:
(a) notice of the incurrence of any Obligation by the
Company;
(b) notice that the Holders, any Obligor, or any other
Person has taken or omitted to take any action under any Obligation
document or any other agreement or instrument relating thereto or
relating to any Obligation;
(c) notice of acceptance of this Guaranty and all rights
of the Guarantor under Section 34.02 of the Texas Business and
Commerce Code;
(d) demand, presentment for payment, and notice of
demand, dishonor, nonpayment, or nonperformance;
(e) notice of intention to accelerate, notice of
acceleration, protest, and notice of protest; and
(f) all other notices whatsoever.
EXHIBIT E-5
<PAGE> 109
5. EXERCISE OF REMEDIES.
Each Holder and the Required Holders, on behalf of the Holders, as
provided in the Note Agreement, shall have the right to enforce, from time to
time, in any order and at the sole discretion of the Required Holders's or such
Holder, as the case may be, any rights, powers and remedies that the Holders
may have under the Obligation Documents or otherwise, including, but not
limited to, judicial foreclosure, the exercise of rights of power of sale, the
taking of a deed or assignment in lieu of foreclosure, the appointment of a
receiver to collect rents, issues and profits, the exercise of remedies against
personal property, or the enforcement of any assignment of leases, rentals, oil
or gas production, or other properties or rights, whether real or personal,
tangible or intangible; and each Guarantor shall be liable to the Holders under
this Guaranty for any deficiency resulting from the exercise by any Holder of
any such right or remedy even though any rights that such Guarantor may have
against the Company or others may be destroyed or diminished by exercise of any
such right or remedy. No failure on the part of any Holder or the Required
Holders to exercise, and no delay in exercising, any right under this Guaranty
or under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any right preclude any other or further
exercise thereof or the exercise of any other right. The rights, powers and
remedies of each Holder and the Required Holders provided in this Guaranty and
in the other Obligation Documents are cumulative and are in addition to, and
not exclusive of, any other rights, powers or remedies provided by law or in
equity. The rights of each Holder and the Required Holders under this Guaranty
are not conditional or contingent on any attempt by any Holder and the Required
Holders to exercise any of their rights under any other Obligation Document
against any Obligor or any other Person.
6. SUBROGATION.
Until all of the Obligations have been paid and performed in full, no
Guarantor shall have the right to exercise any right of subrogation with
respect hereto (including without limitation any right of subrogation under
Section 34.04 of the Texas Business and Commerce Code), and each Guarantor
hereby waives any rights to enforce any remedy that such Guarantor may have
against the Company and any right to participate in any Security until such
time. If any amount shall be paid to any Guarantor on account of any
subrogation rights or other remedy or Security at any time when all of the
Obligations and all other expenses guaranteed pursuant to this Guaranty shall
not have been paid in full, then such amount shall be held in trust for the
benefit of the Holders, shall be segregated from the other funds of Guarantor
and shall forthwith be paid over to the Holders as collateral for, or then or
at any time thereafter applied in whole or in part by the Holders against, all
or any portion of the Obligations, whether matured or unmatured, in such order
as each Holder shall elect. If Guarantor shall make payment to the Holders of
all or any portion of the Obligations and if all of the Obligations shall be
finally paid in full, then each Holder will, at each Guarantor's request and
expense, execute and deliver to such Guarantor (without recourse,
representation or warranty) appropriate documents necessary to evidence the
transfer by subrogation to Guarantor of an interest in the Obligations
resulting from such payment by such Guarantor.
EXHIBIT E-6
<PAGE> 110
7. SUCCESSORS AND ASSIGNS.
No Guarantor's rights or obligations under this Guaranty may be
assigned or delegated. This Guaranty shall apply to and inure to the benefit
of each Holder and such Holder's successors or assigns, including, without
limitation, any subsequent holder of Notes. Without limiting the generality of
the immediately preceding sentence, any Holder may assign its rights under this
Guaranty or grant a participation in such rights in connection with the
assignment of or the granting of a participation in the Obligations.
8. REPRESENTATIONS AND WARRANTIES.
Each Guarantor hereby represents and warrants as follows:
(a) The recitals at the beginning of this Guaranty are
true and correct in all respects as to such Guarantor.
(b) The value of the consideration received and to be
received by such Guarantor in connection herewith is reasonably worth
at least as much as the liability and obligations of such Guarantor
under this Guaranty, and the incurrence of such liability and
obligations in return for such consideration may reasonably be
expected to benefit such Guarantor, directly or indirectly.
(c) Such Guarantor is not "insolvent" on the date of the
execution and delivery by such Guarantor of this Guaranty (that is,
the sum of Guarantor's absolute and contingent liabilities, including
the Obligations, does not exceed the Fair Market Value of Guarantor's
assets). Such Guarantor's capital is adequate for the businesses in
which Guarantor is engaged and intends to be engaged. Such Guarantor
has not by this Guaranty incurred, nor does such Guarantor intend to
incur or believe that it will incur, debts that will be beyond its
ability to pay as such debts mature.
9. NO ORAL CHANGE.
No amendment of any provision of this Guaranty shall be effective
unless it is in writing and signed by each Guarantor and the Required Holders,
and no waiver of any provision of this Guaranty, and no consent to any
departure by any Guarantor from this Guaranty, shall be effective unless it is
in writing and signed by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specified purpose
for which given.
10. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) GOVERNING LAW. THIS GUARANTY IS TO BE PERFORMED IN
THE STATE OF TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
(b) JURISDICTION. EACH GUARANTOR HEREBY IRREVOCABLY
SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE OF NEW
YORK AND
EXHIBIT E-7
<PAGE> 111
FEDERAL COURTS OF THE STATE OF NEW YORK AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING HERETO BY SERVING THE SECRETARY OF STATE OF THE STATE OF
TEXAS (OR BY OTHER SERVICE) IN ACCORDANCE WITH ANY APPLICABLE
PROVISIONS OF THE TEXAS REVISED CIVIL STATUES, AS AMENDED, GOVERNING
SERVICE OF PROCESS UPON FOREIGN CORPORATIONS.
11. INVALIDITY OF PARTICULAR PROVISION.
If any term or provision of this Guaranty shall be determined to be
illegal or unenforceable, then all other terms and provisions hereof shall
nevertheless remain effective and shall be enforced to the fullest extent
permitted by applicable law.
12. HEADINGS AND REFERENCES.
The headings used in this Guaranty are for purposes of convenience
only and shall not be used in construing the provisions of this Guaranty. The
words "this Guaranty," "this instrument," "herein," "hereof," "hereby" and
words of similar import refer to this Guaranty as a whole and not to any
particular subdivision unless expressly so limited. The word "or" is not
exclusive. Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires,
13. TERM.
This Guaranty shall be irrevocable and shall terminate when all of the
Obligations have been completely and finally paid and performed, the
Holders have no obligation to make any loans or other advances to the Company,
and all obligations and undertakings of the Company under, by reason of, or
pursuant to the Obligation Documents have been completely performed, and this
Guaranty is thereafter subject to reinstatement as provided in Section 3(d) of
this Guaranty. All extensions of credit and financial accommodations heretofore
or hereafter made by the Holders to the Company pursuant to the terms of the
Note Agreement, the Notes or any amendment or waiver of any provision thereof,
shall be conclusively presumed to have been made in acceptance of this Guaranty
and in reliance on this Guaranty.
14. NOTICES.
Any notice of communication required or permitted under this Guaranty
shall be given as provided in the Note Agreement.
15. LIMITATION ON INTEREST.
The Holders and each Guarantor intend to contract in strict compliance
with applicable usury law from time to time in effect, and the provisions of
the Note Agreement limiting the interest for which each Guarantor is obligated
are expressly incorporated in this Guaranty by reference.
EXHIBIT E-8
<PAGE> 112
16. COUNTERPARTS.
This Guaranty may be executed in any number of counterparts, each of
which when so executed shall be deemed to constitute one and the same Guaranty.
17. ENTIRE AGREEMENT.
THIS WRITTEN GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
EXHIBIT E-9
<PAGE> 113
IN WITNESS WHEREOF, each Guarantor has executed and delivered this
Guaranty as of the date first above written.
(provide signature line for each Guarantor)
[NAME OF GUARANTOR]
By
-----------------------------------
Name:
Title:
<PAGE> 114
Schedule to Exhibit Number 4.6
Five other Note Agreements were executed, each substantially identical
to Exhibit Number 4.6 except that the Purchasers under the other Note
Agreements were as follows:
1. Alexander Hamilton Life Insurance Company of America
2. AIG Life Insurance Company
3. Pan-American Life Insurance Company
4. The Penn Mutual Life Insurance Company
5. John Hancock Variable Life Insurance Company
The Note Agreements did not differ in any other material respect.
<PAGE> 1
EXHIBIT 4.7
GUARANTY
THIS GUARANTY, dated as of November 15, 1995, made separately by each
of the undersigned corporations (together with their successors and assigns,
each a "Guarantor" and collectively, the "Guarantors"), in favor of each of the
purchasers (together with their successors and assigns, including, without
limitation, any holder of a Note (as defined below), each a "Holder" and
collectively, the "Holders") listed on Annex 1 to the separate Note Agreements
(collectively, as amended from time to time, the "Note Agreement"), dated as of
November 15, 1995, between Holly Corporation (the "Company"), a Delaware
corporation, and each of the Holders, pursuant to which the Company will issue
Thirty-Nine Million Dollars ($39,000,000) in aggregate principal amount of its
7.62% Series C Senior Notes due December 15, 2005 (the "Series C Notes") and
Twenty-One Million Dollars ($21,000,000) in aggregate principal amount of its
Series D Senior Notes due December 15, 2005 (the "Series D Notes" the Series C
Notes and the Series D Notes referred to collectively in this Guaranty as the
"Notes"),
WITNESSETH:
WHEREAS, the Company owns directly, or indirectly through one or more
subsidiaries, all of the outstanding shares of stock of each Guarantor; and
WHEREAS, the Company is contemporaneously with the execution of this
Guaranty issuing and selling its Series C Notes and its Series D Notes to the
Holders pursuant to the Note Agreement,; and
WHEREAS, it is a condition precedent to Holders' obligation to
purchase the Notes that each Guarantor execute and deliver to the Holders a
satisfactory guaranty of obligations of the Company under the Note Agreement
and the Notes; and
WHEREAS, the board of directors of each Guarantor has determined that
such Guarantor's execution, delivery and performance of this Guaranty may
reasonably be expected to benefit such Guarantor, directly or indirectly, and
are in the best interests of such Guarantor;
NOW, THEREFORE, in consideration of the premises and of Ten Dollars
($10) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and in order to induce Holders to purchase
the Notes pursuant to the Note Agreement, each Guarantor hereby agrees with
Holders as follows:
1. DEFINITIONS.
Reference is hereby made to the Note Agreement for all purposes. All
terms used in this Guaranty that are defined in the Note Agreement and not
otherwise defined in this Guaranty have the same meanings when used in this
Guaranty. As used in this Guaranty, the following terms shall have the
following meanings:
"OBLIGATIONS" means collectively all of the indebtedness,
obligations, and undertakings that are guaranteed by Guarantor and
described in subsections (a) and (b) of Section 2 hereof.
<PAGE> 2
"OBLIGATION DOCUMENTS" means this Guaranty, the Note
Agreement, the Notes, all other documents and instruments under, by
reason of which, or pursuant to which any or all of the Obligations
are evidenced, governed, secured, or otherwise dealt with, heretofore
or hereafter delivered.
"OBLIGORS" means the Company, the Guarantors, and any other
endorsers, guarantors or obligors, primary or secondary, of any or all
of the Obligations.
"SECURITY" means any rights, properties, or interests of the
Holders under the Obligation Documents or otherwise, that provide
recourse or other benefits to the Holders in connection with the
Obligations or the non-payment or non-performance thereof, including,
without limitation, collateral (whether real or personal, tangible or
intangible) in which the Holders have rights under or pursuant to any
Obligation Documents, guaranties of the payment or performance of any
Obligation, bonds, surety agreements, keep-well agreements, letters of
credit, rights of subrogation, rights of offset, and rights pursuant
to which other claims are subordinated to the Obligations.
2. GUARANTY.
(a) Each Guarantor hereby irrevocably, absolutely, and
unconditionally guarantees, jointly and severally, to the Holders the
prompt, complete, and full payment when due, and no matter how the
same shall become due, of:
(i) the Notes, including all principal, all
interest thereon and all other sums payable thereunder; and
(ii) all other sums payable under the other
Obligation Documents, whether for principal, interest, fees,
delivery of cash collateral, costs, expenses or otherwise.
(b) Each Guarantor, hereby irrevocably, absolutely, and
unconditionally guarantees, jointly and severally, to the Holders the
prompt, complete and full performance, when due, and no matter how the
same shall become due, of all obligations and undertakings of the
Company to the Holder under, by reason of, or pursuant to any of the
Obligation Documents.
(c) If the Company shall for any reason fail to pay any
Obligation, as and when such Obligation shall become due and payable,
whether at its stated maturity, as a result of the exercise of any
power to accelerate, or otherwise, then each Guarantor will, forthwith
upon demand by the Required Holders, pay such Obligation in full to
the Holders. If the Company shall for any reason fail to perform
promptly any Obligation, then Guarantor will, forthwith upon demand by
the Required Holders, cause such Obligation to be performed or, if
specified by the Required Holders, provide sufficient funds, in such
amount and manner as the Required Holders shall in good faith
determine, for the prompt, full and faithful performance of such
Obligation by the Required Holders or such other Person as the
Required Holders shall designate.
2
<PAGE> 3
(d) If either the Company or any Guarantor fails to pay
or perform upon demand any Obligation as described in the immediately
preceding subsections (a), (b) or (c), then each Guarantor will incur
the additional obligation to pay to the Holders and each Guarantor
will forthwith upon demand by the Required Holders pay to the Holders,
the amount of any and all expenses, including fees and disbursements
of any counsel and of any experts or agents, in each case, retained by
the Required Holders on behalf of the Holders that the Holders may
incur as a result of such failure, such expenses to be incurred in
accordance with paragraph 11B of the Note Agreement.
(e) Each Guarantor shall be primarily liable hereunder
for the payment and performance of the Obligations, from each other
Guarantor.
3. UNCONDITIONAL GUARANTY.
(a) No action that any one or more Holder may take or
omit to take in connection with any of the Obligation Documents, any
of the Obligations (or any other indebtedness owing by Guarantor to
the Holders), or any Security, and no course of dealing of any one or
more Holder with any Obligor or any other Person, shall release or
diminish any Guarantor's obligations, liabilities, agreements or
duties under this Guaranty, affect this Guaranty in any way, or afford
any Guarantor any recourse against any Holder, regardless of whether
any such action or inaction may increase any risks to or liabilities
of the Holders or any Obligor or increase any risk to or diminish any
safeguard of any Security. Without limiting the foregoing, each
Guarantor hereby expressly agrees that, except as may be provided in
the Note Agreement, any Holder may, from time to time, without notice
to or the consent of Guarantor:
(i) Amend, change or modify, in whole or in part,
any one or more of the Obligation Documents and give or refuse
to give any waivers or other indulgences with respect thereto;
(ii) Neglect, delay, fail, or refuse to take or
prosecute any action for the collection or enforcement of any
of the Obligations, to foreclose or take or prosecute any
action in connection with any Security or Obligation Document,
to bring suit against any Obligor or any other Person, or to
take any other action concerning the Obligations or the
Obligation Documents;
(iii) Accelerate, change, rearrange, extend, or
renew the time, terms, or manner for payment or performance of
any one or more of the Obligations;
(iv) Compromise or settle any unpaid or
unperformed Obligation or any other obligation or amount due
or owing, or claimed to be due or owing, under any one or more
of the Obligation Documents;
(v) Take, exchange, amend, eliminate, surrender,
release, or subordinate any or all Security for any or all of
the Obligations, accept additional or substituted Security
therefor, and perfect or fail to perfect the Holders' rights
in any or all Security;
3
<PAGE> 4
(vi) Discharge, release, substitute or add
Obligors; and
(vii) Apply all monies received from Obligors or
others, or from any Security for any of the Obligations, as
such Holder may determine to be in its best interest, without
in any way being required to marshall Security or assets or to
apply all or any part of such monies upon any particular
Obligations.
(b) No action or inaction of any Obligor or any other
Person, and no change of law or circumstances, shall release or
diminish any Guarantor's obligations, liabilities, agreements, or
duties under this Guaranty, affect this Guaranty in any way, or afford
any Guarantor any recourse against any Holder. Without limiting the
foregoing, the obligations, liabilities, agreements, and duties of
each Guarantor under this Guaranty shall not be released, diminished,
impaired, reduced, or affected by the occurrence of any of the
following from time to time, even if occurring without notice to or
without the consent of such Guarantor:
(i) Any voluntary or involuntary liquidation,
dissolution, sale of all or substantially all assets,
marshalling of assets of liabilities, receivership,
conservatorship, assignment for the benefit of creditors,
insolvency, bankruptcy, reorganization, arrangement, or
composition of any Obligor or any other proceedings involving
any Obligor or any of the assets of any Obligor under laws for
the protection of debtors, or any discharge, impairment,
modification, release, or limitation of the liability of, or
stay of actions or lien enforcement proceedings against, any
Obligor, any properties of any Obligor, or the estate in
bankruptcy of any Obligor in the course of or resulting from
any such proceedings;
(ii) The failure by any Holder or the Required
Holders to file or enforce a claim in any proceeding described
in the immediately preceding subsection (i) or to take any
other action in any proceeding to which any Obligor is a
party;
(iii) The release by operation of law of any Obligor
from any of the Obligations or any other obligations to the
Holders;
(iv) The invalidity, deficiency, illegality, or
unenforceability of any of the Obligations or the Obligation
Documents, in whole or in part, any bar by any statute of
limitations or other law of recovery on any of the
Obligations, or any defense or excuse for failure to perform
on account of force majeure, act of God, casualty,
impossibility, impracticability, or other defense or excuse
whatsoever;
(v) The failure of any Obligor or any other
Person to sign any guaranty or other instrument or agreement
within the contemplation of any Obligor or the Holders;
(vi) The fact that any Guarantor may have incurred
directly part of the Obligations or is otherwise primarily
liable therefor; or
(vii) Without limiting any of the foregoing, any
fact or event (whether or not similar to any of the foregoing)
that in the absence of this provision would or
4
<PAGE> 5
might constitute or afford a legal or equitable discharge or
release of or defense to a guarantor or surety other than the
actual payment and performance by each Guarantor under this
Guaranty.
(c) The Required Holders may invoke the benefits of this
Guaranty before pursuing any remedies against any Obligor or any other
Person and before proceeding against any Security now or hereafter
existing for the payment or performance of any of the Obligations. The
Required Holders may maintain an action against any Guarantor on this
Guaranty without joining any other Obligor therein and without
bringing separate action against any other Obligor. The obligations of
each Guarantor under this Guaranty are not joint, but are separate and
distinct from the obligations of each other Guarantor and all other
Obligors.
(d) If any payment to the Holders by any Obligor is held
to constitute a preference or a voidable transfer under applicable
state or federal laws, or if for any other reason the Holders are
required to refund such payment to the payor thereof or to pay the
amount thereof to any other Person, then such payment to the Holders
shall not constitute a release of any Guarantor from any liability
under this Guaranty, and each Guarantor agrees to pay such amount to
the Holders on demand and agrees and acknowledges that this Guaranty
shall continue to be effective or shall be reinstated, as the case may
be, to the extent of any such payment or payments.
(e) This is a continuing guaranty and shall apply to and
cover all obligations and renewals and extensions thereof and
substitutions therefor from time to time.
4. WAIVER.
Each Guarantor hereby waives, with respect to the Obligations, this
Guaranty, and the other Obligation Documents:
(a) notice of the incurrence of any Obligation by the
Company;
(b) notice that the Holders, any Obligor, or any other
Person has taken or omitted to take any action under any Obligation
document or any other agreement or instrument relating thereto or
relating to any Obligation;
(c) notice of acceptance of this Guaranty and all rights
of the Guarantor under Section 34.02 of the Texas Business and
Commerce Code;
(d) demand, presentment for payment, and notice of
demand, dishonor, nonpayment, or nonperformance;
(e) notice of intention to accelerate, notice of
acceleration, protest, and notice of protest; and
(f) all other notices whatsoever.
5
<PAGE> 6
5. EXERCISE OF REMEDIES.
Each Holder and the Required Holders, on behalf of the Holders, as
provided in the Note Agreement, shall have the right to enforce, from time to
time, in any order and at the sole discretion of the Required Holders's or such
Holder, as the case may be, any rights, powers and remedies that the Holders
may have under the Obligation Documents or otherwise, including, but not
limited to, judicial foreclosure, the exercise of rights of power of sale, the
taking of a deed or assignment in lieu of foreclosure, the appointment of a
receiver to collect rents, issues and profits, the exercise of remedies against
personal property, or the enforcement of any assignment of leases, rentals, oil
or gas production, or other properties or rights, whether real or personal,
tangible or intangible; and each Guarantor shall be liable to the Holders under
this Guaranty for any deficiency resulting from the exercise by any Holder of
any such right or remedy even though any rights that such Guarantor may have
against the Company or others may be destroyed or diminished by exercise of any
such right or remedy. No failure on the part of any Holder or the Required
Holders to exercise, and no delay in exercising, any right under this Guaranty
or under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any right preclude any other or further
exercise thereof or the exercise of any other right. The rights, powers and
remedies of each Holder and the Required Holders provided in this Guaranty and
in the other Obligation Documents are cumulative and are in addition to, and
not exclusive of, any other rights, powers or remedies provided by law or in
equity. The rights of each Holder and the Required Holders under this Guaranty
are not conditional or contingent on any attempt by any Holder and the Required
Holders to exercise any of their rights under any other Obligation Document
against any Obligor or any other Person.
6. SUBROGATION.
Until all of the Obligations have been paid and performed in full, no
Guarantor shall have the right to exercise any right of subrogation with
respect hereto (including without limitation any right of subrogation under
Section 34.04 of the Texas Business and Commerce Code), and each Guarantor
hereby waives any rights to enforce any remedy that such Guarantor may have
against the Company and any right to participate in any Security until such
time. If any amount shall be paid to any Guarantor on account of any
subrogation rights or other remedy or Security at any time when all of the
Obligations and all other expenses guaranteed pursuant to this Guaranty shall
not have been paid in full, then such amount shall be held in trust for the
benefit of the Holders, shall be segregated from the other funds of Guarantor
and shall forthwith be paid over to the Holders as collateral for, or then or
at any time thereafter applied in whole or in part by the Holders against, all
or any portion of the Obligations, whether matured or unmatured, in such order
as each Holder shall elect. If Guarantor shall make payment to the Holders of
all or any portion of the Obligations and if all of the Obligations shall be
finally paid in full, then each Holder will, at each Guarantor's request and
expense, execute and deliver to such Guarantor (without recourse,
representation or warranty) appropriate documents necessary to evidence the
transfer by subrogation to Guarantor of an interest in the Obligations
resulting from such payment by such Guarantor.
6
<PAGE> 7
7. SUCCESSORS AND ASSIGNS.
No Guarantor's rights or obligations under this Guaranty may be
assigned or delegated. This Guaranty shall apply to and inure to the benefit
of each Holder and such Holder's successors or assigns, including, without
limitation, any subsequent holder of Notes. Without limiting the generality of
the immediately preceding sentence, any Holder may assign its rights under this
Guaranty or grant a participation in such rights in connection with the
assignment of or the granting of a participation in the Obligations.
8. REPRESENTATIONS AND WARRANTIES.
Each Guarantor hereby represents and warrants as follows:
(a) The recitals at the beginning of this Guaranty are
true and correct in all respects as to such Guarantor.
(b) The value of the consideration received and to be
received by such Guarantor in connection herewith is reasonably worth
at least as much as the liability and obligations of such Guarantor
under this Guaranty, and the incurrence of such liability and
obligations in return for such consideration may reasonably be
expected to benefit such Guarantor, directly or indirectly.
(c) Such Guarantor is not "insolvent" on the date of the
execution and delivery by such Guarantor of this Guaranty (that is,
the sum of Guarantor's absolute and contingent liabilities, including
the Obligations, does not exceed the Fair Market Value of Guarantor's
assets). Such Guarantor's capital is adequate for the businesses in
which Guarantor is engaged and intends to be engaged. Such Guarantor
has not by this Guaranty incurred, nor does such Guarantor intend to
incur or believe that it will incur, debts that will be beyond its
ability to pay as such debts mature.
9. NO ORAL CHANGE.
No amendment of any provision of this Guaranty shall be effective
unless it is in writing and signed by each Guarantor and the Required Holders,
and no waiver of any provision of this Guaranty, and no consent to any
departure by any Guarantor from this Guaranty, shall be effective unless it is
in writing and signed by the Required Holders, and then such waiver or consent
shall be effective only in the specific instance and for the specified purpose
for which given.
10. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(a) GOVERNING LAW. THIS GUARANTY IS TO BE PERFORMED IN
THE STATE OF TEXAS AND SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
(b) JURISDICTION. EACH GUARANTOR HEREBY IRREVOCABLY
SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE OF NEW
YORK AND
7
<PAGE> 8
FEDERAL COURTS OF THE STATE OF NEW YORK AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING
RELATING HERETO BY SERVING THE SECRETARY OF STATE OF THE STATE OF
TEXAS (OR BY OTHER SERVICE) IN ACCORDANCE WITH ANY APPLICABLE
PROVISIONS OF THE TEXAS REVISED CIVIL STATUES, AS AMENDED, GOVERNING
SERVICE OF PROCESS UPON FOREIGN CORPORATIONS.
11. INVALIDITY OF PARTICULAR PROVISION.
If any term or provision of this Guaranty shall be determined to be
illegal or unenforceable, then all other terms and provisions hereof shall
nevertheless remain effective and shall be enforced to the fullest extent
permitted by applicable law.
12. HEADINGS AND REFERENCES.
The headings used in this Guaranty are for purposes of convenience
only and shall not be used in construing the provisions of this Guaranty. The
words "this Guaranty," "this instrument," "herein," "hereof," "hereby" and
words of similar import refer to this Guaranty as a whole and not to any
particular subdivision unless expressly so limited. The word "or" is not
exclusive. Pronouns in masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa, unless the context otherwise
requires.
13. TERM.
This Guaranty shall be irrevocable and shall terminate when all of the
Obligations have been completely and finally paid and performed, the Holders
have no obligation to make any loans or other advances to the Company, and all
obligations and undertakings of the Company under, by reason of, or pursuant to
the Obligation Documents have been completely performed, and this Guaranty is
thereafter subject to reinstatement as provided in Section 3(d) of this
Guaranty. All extensions of credit and financial accommodations heretofore or
hereafter made by the Holders to the Company pursuant to the terms of the Note
Agreement, the Notes or any amendment or waiver of any provision thereof, shall
be conclusively presumed to have been made in acceptance of this Guaranty and
in reliance on this Guaranty.
14. NOTICES.
Any notice of communication required or permitted under this Guaranty
shall be given as provided in the Note Agreement.
15. LIMITATION ON INTEREST.
The Holders and each Guarantor intend to contract in strict compliance
with applicable usury law from time to time in effect, and the provisions of
the Note Agreement limiting the interest for which each Guarantor is obligated
are expressly incorporated in this Guaranty by reference.
8
<PAGE> 9
16. COUNTERPARTS.
This Guaranty may be executed in any number of counterparts, each of
which when so executed shall be deemed to constitute one and the same Guaranty.
17. ENTIRE AGREEMENT.
THIS WRITTEN GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY BLANK. NEXT PAGE IS SIGNATURE PAGE.]
9
<PAGE> 10
IN WITNESS WHEREOF, each Guarantor has executed and delivered this
Guaranty as of the date first above written.
NAVAJO CRUDE OIL MARKETING
COMPANY
By /s/ HENRY A. TEICHHOLZ
---------------------------------
Name: Henry A. Teichholz
Title: Vice President and
Treasurer
NAVAJO WESTERN ASPHALT
COMPANY
By /s/ HENRY A. TEICHHOLZ
---------------------------------
Name: Henry A. Teichholz
Title: Vice President and
Treasurer
[GUARANTY]
<PAGE> 11
NAVAJO PIPELINE CO.
By /s/ HENRY A. TEICHHOLZ
---------------------------------
Name: Henry A. Teichholz
Title: Vice President and
Treasurer
[GUARANTY]
<PAGE> 12
NAVAJO REFINING COMPANY
By /s/ HENRY A. TEICHHOLZ
---------------------------------
Name: Henry A. Teichholz
Title: Vice President and
Treasurer
[GUARANTY]
<PAGE> 13
LEA REFINING COMPANY
By /s/ HENRY A. TEICHHOLZ
---------------------------------
Name: Henry A. Teichholz
Title: Vice President and
Treasurer
[GUARANTY]
<PAGE> 14
NAVAJO HOLDINGS, INC.
By /s/ HENRY A. TEICHHOLZ
---------------------------------
Name: Henry A. Teichholz
Title: Vice President and
Treasurer
[GUARANTY]
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> OCT-31-1995
<CASH> 28,059
<SECURITIES> 0
<RECEIVABLES> 81,462
<ALLOWANCES> 0
<INVENTORY> 35,519
<CURRENT-ASSETS> 155,707
<PP&E> 253,904
<DEPRECIATION> 121,631
<TOTAL-ASSETS> 290,220
<CURRENT-LIABILITIES> 128,898
<BONDS> 58,065
<COMMON> 87
0
0
<OTHER-SE> 85,649
<TOTAL-LIABILITY-AND-EQUITY> 290,220
<SALES> 164,719
<TOTAL-REVENUES> 164,838
<CGS> 144,990
<TOTAL-COSTS> 153,049
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,909
<INCOME-PRETAX> 10,211
<INCOME-TAX> 4,108
<INCOME-CONTINUING> 6,103
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,103
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
