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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-4014
FINA, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 13-1820692
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
FINA PLAZA, DALLAS, TEXAS 75206
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's Telephone Number Including Area Code: (214) 750-2400
Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------------------------------- --------------------------------------------
<S> <C>
Class A Common Stock $1 par value American Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
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
--- ---
The aggregate market value of the Class A Common voting stock held by
non-affiliates of the Registrant as of January 27, 1995 was $163,650,127 based
on the closing price of $74.50 per share as recorded by the American Stock
Exchange.
The number of shares outstanding of each of the issuer's classes of common
stock, as of March 1, 1995:
CLASS A COMMON STOCK -- 14,594,902
CLASS B COMMON STOCK -- 1,000,000
Documents Incorporated by Reference: Part III: The Company's Proxy
Statement for Annual Meeting of Stockholders to be held April 12, 1995
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CROSS REFERENCE SHEET
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FORM 10-K ITEM LOCATION IN
NUMBER AND CAPTION FORM 10-K
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PART I:
1. Business..................................................................... page 1
2. Properties................................................................... page 3
3. Legal Proceedings............................................................ page 5
4. Submission of Matters to a Vote of Security Holders.......................... page 6
PART II:
5. Market for the Registrants' Common Stock and Related Security Holder
Matters.................................................................... page 6
6. Selected Financial Data...................................................... page 7
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................................... page 7
8. Financial Statements and Supplementary Data.................................. page 14
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure....................................................... page 37
PART III:
10. Directors and Executive Officers of the Registrant........................... page 37
11. Executive Compensation....................................................... page 37
12. Security Ownership of Certain Beneficial Owners and
Management................................................................. page 38
13. Certain Relationships and Related Transactions............................... page 38
PART IV:
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K................................................................... page 38
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PART I
ITEM 1 BUSINESS
(a) FINA, Inc. (and subsidiaries, collectively the "Company" and "FINA")
was organized in 1956 as American Petrofina, Incorporated and is part of an
international group of about 166 companies in 34 countries which are affiliated
with Petrofina S.A., a publicly-held corporation organized under the laws of the
Kingdom of Belgium. Petrofina Delaware, Incorporated ("PDI") owns approximately
85% and 100% of the Class A and Class B common stock of the Company,
respectively. Petrofina S.A. owns 100% of American Petrofina Holding Company
which owns 75% of the stock of PDI. The remaining 25% of PDI's stock is owned by
Petrofina S.A.
FINA, Inc. is engaged, through its wholly-owned, main operating subsidiary,
Fina Oil and Chemical Company ("FOCC"), in crude oil and natural gas exploration
and production; petroleum products refining, supply and transportation and
marketing; and chemicals manufacturing and marketing. A wholly-owned subsidiary
of the Company, Fina Natural Gas Company, is engaged in natural gas marketing.
Fina Technology, Inc., a subsidiary of the Company, licenses certain proprietary
processes to others.
The Company entered the year with a strategic plan to strengthen its
balance sheet and better position itself for future profit growth by focusing on
items within management's control. Implementation of the plan, which included
further consolidation of the Upstream and Downstream businesses through sales of
non-strategic assets, constrained capital expenditures and productivity
improvements reduced debt by more than $160 million, or 20%, and reduced the
total debt to total capital ratio from 42% to 36%. Asset sales reflected the
Company's strategic objectives of geographic consolidation and organizational
streamlining. Capital expenditures were $136 million, or 9% above the prior
year's $125.4 million.
Capital expenditures by segments of the Company are shown in Note 12 to the
Consolidated Financial Statements on pages 30 and 31. Expenditures associated
with refining, supply and transportation and marketing were $48.8 million of the
total capital expenditures primarily due to safety and environmental projects at
both refineries. Expenditures of $49.3 million for exploration and production
were attributable primarily to development activity. Expenditures relating to
chemicals were $33.6 million. Capital expenditures are expected to increase to
$215 million in 1995.
No major individual assets or subsidiaries were acquired or disposed of
during the five years ending December 31, 1994.
(b) Segment data is shown in Note 12 "Segment Data" to consolidated
financial statements on pages 30 and 31 herein.
(c) The Company has grouped its businesses into (1) crude oil and natural
gas exploration and production, and natural gas marketing; (2) petroleum
products refining, supply and transportation and marketing; and (3) chemicals
manufacturing and marketing, primarily petrochemicals and plastics including
polypropylene, polystyrene, styrene monomer, high density polyethylene, and
aromatics, and the licensing of certain chemical processes. The energy products
are produced and refined by FOCC, a Delaware corporation. Petrochemicals and
plastics are manufactured by FOCC and by Cos-Mar Company, a 50% owned joint
venture.
The Company markets gasoline and other refined products under the FINA(R)
brand and also markets some unbranded products. FINA(R) fuel products are
primarily sold through 231 independent businesses which supply approximately
2,569 branded retail outlets, located in 11 states in the Southeastern and
Southwestern regions of the United States. The Company also markets
petrochemicals and plastics under the FINA(R) brand. Fina Natural Gas Company is
engaged in natural gas marketing.
FOCC also markets naphtha, jet fuel, distillates, diesel fuel, heavy oils,
and asphalt.
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Following are products which accounted for more than 10% of consolidated
revenues in 1994, 1993 and 1992, and their appropriate percentage of revenues
for the last three years:
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PERCENTAGE OF REVENUES
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1994 1993 1992
---- ---- ----
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Refined Products:
Gasoline...................................................... 29% 34% 37%
Distillates................................................... 20% 23% 22%
Petrochemicals and Plastics..................................... 28% 21% 21%
Natural Gas..................................................... 14% 13% 10%
</TABLE>
Additional segment data is shown in Note 12 "Segment Data" to consolidated
financial statements on pages 30 and 31 herein.
Sufficient raw material is available in the foreseeable future for
supplying the needs of the various manufacturing units of the Company, although
political situations in the important oil producing nations can aggravate the
supply situation in the United States where imports of oil are necessary to meet
demand.
The Company licenses its patented chemical processes throughout the world,
but the net earnings derived from licensing were not material to the
consolidated results of operations in 1994, 1993 and 1992.
The business of the Company cannot be considered seasonal and is sensitive
to crude oil and natural gas pricing, margins between crude oil and refined
products and chemicals margins. There are, however, fluctuations, such as
increased demand for gasoline during summer months. Inflation increases the
costs of labor and supplies and increases costs of acquiring and replacing
property, plant and equipment.
Inventories of refined products fluctuate and crude oil inventories vary
according to the overall supply picture and in anticipation of price increases
or decreases. Payments for crude oil are generally expected by the 20th day of
the month following the month in which the crude oil was delivered. Payments for
refined products are generally expected within 10 days of billing. Payments for
chemicals are generally expected within 30 days of billing. Credit is sometimes
extended for a longer period on products when there is a surplus, and in some
cases, credit terms are influenced by credit history and financial stability.
No material part of the business is dependent on a single customer or a few
customers. Most of the Company's customers are located in the South and Midwest
regions of the United States, except with respect to chemicals where customers
are located throughout the United States. No single customer accounted for more
than 5% of the Company's sales in 1994, 1993 or 1992, and no account receivable
from any customer exceeded 5% of the Company's consolidated stockholders' equity
at December 31, 1994, 1993 or 1992.
No material portion of the business is subject to renegotiation of profits
or termination of contracts or subcontracts at the election of the government.
In both the crude oil and natural gas exploration and production and
natural gas marketing segment and the petroleum products refining, supply and
transportation and marketing segment, the principal methods of competition are
price and availability of product. In the petroleum products and chemicals
segments, quality of the product is also a competitive factor.
During 1994, $21.7 million was expended on pollution control and
environmental protection capital projects. It is estimated that environmental
protection facilities will require capital expenditures in 1995 of approximately
$19.3 million companywide. Additionally, during 1994, $51.6 million was charged
to expense relating to various environmental activities.
The number of persons employed on December 31, 1994 was 2,716 full time and
54 part time.
(d) Sales, operating profit (loss), and identifiable assets as of and for
the three years ended December 31, 1994 were substantially all attributable to
domestic operations.
(e) "Executive Officers of the Registrant" are described in Part III, Item
10.
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ITEM 2 PROPERTIES
(a) The Company owns and operates two refineries in Texas. The total raw
materials processed at both refineries averaged 215,000 barrels per day for the
year. The Port Arthur, Texas refinery is located on 1,231 acres in Jefferson
County, Texas and the Big Spring, Texas refinery is located on 1,259 acres in
Howard County, Texas.
In 1990, the plant located in Carville, Louisiana became the largest single
site polystyrene manufacturing plant in the United States and the second largest
in the world with total net capacity of approximately 700 million pounds per
year. The world's largest single production train is installed at the plant. The
Carville, Louisiana plant, and the adjacent styrene monomer plant discussed
below, are located on 358 acres in Iberville Parish, Louisiana.
The Company owns and operates a polypropylene plant at La Porte, Texas on
76.5 acres of land in Harris County, Texas. The throughput capacity is
approximately 960 million pounds per year. The La Porte, Texas, plant is the
third largest single site polypropylene manufacturing facility in the United
States.
Sigma Coatings, which conducted the Company's paint and industrial coatings
business, was sold in 1993 to an affiliate of Petrofina S.A. in an arm's length
transaction. The sales price was $7.8 million plus working capital. No gain or
loss was recorded.
The Company purchased a high density polyethylene plant in 1992. The plant
is located in Harris County, Texas, in the Bayport area. The plant has a
demonstrated capacity of 360 million pounds per year and is situated on 54.7
acres of land.
FOCC operates, for a 50% owned joint venture, a styrene monomer plant
located in Carville, Louisiana. Gross production capacity is 1.9 billion pounds
per year. This plant is the largest single site styrene production facility in
the world.
Through a 26% ownership interest in a joint venture with Hercules,
Incorporated, the Company owned an interest in a paraxylene facility rated at a
600 million pound capacity per year and located in St. Croix, V.I. The plant was
closed by the end of 1992.
A subsidiary of the Company owns a 33% interest in a propylene splitter at
Mont Belview, Texas with an approximate 650 million pounds per year capacity.
Approximately two-thirds of the output is currently supplied as raw material to
the Company's La Porte polypropylene plant.
Over 1,455 miles of crude oil gathering and mainline pipelines are owned
and operated by the Company, together with 372 miles of products pipelines which
are leased. The Company also owns storage terminals and owns and leases rail
tank cars which are used in its distribution systems.
Of the approximately 2,607 branded service stations in the Company's
marketing network, 85 are owned in fee, and 35 are leased.
At the end of 1993, the Company had one 225,000 DWT, 1.5 million barrel
capacity tanker, the T/T Brooklyn under time charter for a remaining period of 5
years. During 1994, the T/T Brooklyn had its long-term lease terminated and the
vessel was re-delivered to its owners. Another vessel, T/T Williamsburgh, had
its long-term lease terminated in 1993, and the vessel was re-delivered to its
owners.
(b) Reserve Quantity information is shown in "Supplemental Oil and Gas Data
(Unaudited)" to consolidated financial statements on pages 34 and 35 herein.
(c) 1. Location of Reserves. The Company's major crude oil reserves are
located in West Texas in the Permian Basin and the Company's major gas reserves
are located in High Island A571 offshore in the Gulf of Mexico, at Mecom and
LaTerre in Louisiana, and in the Texas Rio Grande Valley. All of the Company's
proved oil and gas reserves are located in the United States.
3
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2. Reserves Reported to Other Agencies
Total proved net oil and gas reserves as of December 31, 1993 were reported
to the Energy Information Agency of the U.S. Department of Energy in May 1994
(EIA-28) in the amounts of 36 million barrels of crude oil and natural gas
liquids and 439 BCF of natural gas.
The reserve estimates reported above do not vary by more than five percent
from the similar amounts reported to the SEC for the same date.
3. Production
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FISCAL YEAR
ENDED DECEMBER 31,
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1994 1993 1992
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Average Sales Price:
Crude Oil and Condensate ($/Bbl)........................... $14.27 $15.66 $17.67
Natural Gas ($/MCF)........................................ $ 1.85 $ 2.11 $ 1.77
Production (Lifting) Costs, including production severance
taxes ($BOE) (natural gas converted to barrels at 6 MCF to
1 Bbl)..................................................... $ 5.28 $ 5.09 $ 4.42
</TABLE>
All of the Company's production is located in the United States. Any
volumes of natural gas liquids resulting from ownership of processing plant
facilities are not significant.
4. Productive Wells and Acreage
As of December 31, 1994:
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<CAPTION>
PRODUCTIVE WELLS
- ------------------------------------------
GROSS NET DEVELOPED ACREAGE
- ---------------- ------------------ ----------------------
OIL GAS OIL GAS GROSS NET
- ------ ---- ------ ------ -------- --------
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2,238 448 681.9 207.3 862,309 306,658
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5. Undeveloped Lease Acreage
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GROSS NET
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As of December 31, 1994................................ 347,823 acres 189,723 acres
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Fee, mineral and royalty acreage was 1,036,342 net acres as of December 31,
1994.
6. Drilling Activity
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NET WELLS
YEAR ENDED DECEMBER 31,
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1994 1993 1992
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Exploratory
Productive.............................................. 1.5 6.1 9.0
Dry..................................................... 1.2 5.1 9.4
Development
Productive.............................................. 30.1 18.0 37.3
Dry..................................................... 1.6 3.5 1.7
</TABLE>
7. Present Activity as of December 31, 1994
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DRILLING WELLS IN PROGRESS
Gross....................................................... 13
Net......................................................... 9.47
</TABLE>
4
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8. At all times the Company has contractual obligations to deliver natural
gas, usually on an "as needed" basis. Therefore, contract quantities are not
fixed and determinable. In May of 1989, the Company began purchasing gas
produced by unaffiliated companies for resale to the Company's customers. During
1994, 247,916 MMCF of gas was purchased and resold from both affiliated and
unaffiliated companies. The Company's obligations to deliver natural gas have
been met.
On December 31, 1994, the Company was obligated to deliver 4,762,562
barrels of crude oil in January 1995, 4,283,372 barrels in February, 2,077,676
barrels in March and 1,014,059 barrels in April. The Company purchases crude oil
either at the lease, on the spot market or on the futures market to fulfill its
commitments. The Company met its contractual obligations to date.
ITEM 3 LEGAL PROCEEDINGS
As of December 31, 1994, neither FINA, Inc. nor any of its subsidiaries was
a party to, nor was any of their property subject to, any uninsured material
pending legal proceedings or claim which exceeds 10% of the current assets.
Management believes that there is no environmental liability pertaining to
proceedings involving a governmental authority in excess of $100,000 which is
reasonably foreseeable in relation to its business activities and operational
permits other than:
1. The United States Environmental Protection Agency ("EPA") is empowered
by the Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA") to investigate hazardous waste disposal sites and to
remove, or to cause responsible parties to remove, or treat hazardous
substances and to restore the sites to a safe condition. FOCC and
Cos-Mar, for which FOCC acts as operator, have been named as
potentially responsible parties with respect to the Brio site in Harris
County, Texas. FOCC and Cos-Mar, along with other potentially
responsible parties, have signed a consent decree with the EPA,
agreeing to treat or remove certain hazardous substances. FOCC's share
of the cleanup costs, both individually and as 50% owner of Cos-Mar, is
$395,000.
2. FOCC has also been named a potentially responsible party by the State
of New Jersey at the Duane Marine site in Perth Amboy, New Jersey. A
group of potentially responsible parties, including FOCC, have agreed
to conduct an investigation. It is not possible at this time to
estimate the amount of monies for which FOCC will be liable, if any.
3. The EPA has listed the hazardous waste disposal area of a refinery
located in El Dorado, Kansas, as a Superfund site pursuant to CERCLA.
As a former owner of the site, FOCC would be liable for 65% of the
clean-up cost which is currently estimated to be $4,170,000. FOCC
signed a consent order with the State of Kansas and the present owner
of the site. The State of Kansas and the EPA have approved a plan for
cleanup.
4. FOCC's Windsor, New Jersey, plant was closed in 1989. Under New
Jersey's closing law, surface cleanup of the site was conducted at a
cost of $1,000,000. The remaining groundwater cleanup was initiated in
1994 at an estimated total cost of $675,000 and will take a number of
years to complete.
5. FOCC and 8 other potentially responsible parties have been required by
the Texas Natural Resource Conservation Commission (TNRCC) to conduct
an investigation of the closed Col-Tex refinery located near Colorado
City, Texas. For a portion of the site, FOCC has covered pits which
could harm birds, provided fencing around the area, and installed a
hydrocarbon abatement system to stop oil from seeping into the Colorado
River. The other named potentially responsible parties have appealed
the TNRCC's Order regarding remediation to the state district court.
6. A hazardous waste operating permit has been issued to the Big Spring
Refinery. Pursuant to the permit, FOCC initiated interim corrective
action to recover free product from ground water. FOCC is also
obligated to submit a remediation plan.
5
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7. FOCC is engaged in several underground storage tank (UST) removal and
remediation activities in several states. These activities are conducted
pursuant to applicable state regulations, and a substantial portion of
costs are reimbursable from various state UST remediation funds.
Environmental contingencies and the Company's policy regarding
environmental costs are discussed in Note 11 to the consolidated financial
statements, on page 29. A reserve has been established in accordance with the
policy. Although the level of future expenditures for environmental matters,
including clean-up obligations, is impossible to determine with any degree of
certainty, it is management's opinion that the costs, although potentially
significant to any one accounting period, when finally determined will not have
a material adverse effect on the consolidated financial position or liquidity of
the Company.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of the Company's fiscal year ended December 31, 1994.
PART II
ITEM 5 MARKET FOR THE REGISTRANTS' COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
The Class A Common Stock of the Company is traded on the American Stock
Exchange under the symbol FI. On January 27, 1995, there were 14,594,902 Class A
Common Shares outstanding and 2,651 holders of the shares.
COMMON STOCK MARKET PRICES BY QUARTER AND DIVIDEND PAID PER QUARTER
<TABLE>
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1994 1993
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DIVIDEND DIVIDEND
HIGH LOW PAID HIGH LOW PAID
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1st Quarter........................... $71 3/4 $67 1/2 $ .80 $67 3/4 60 1/2 $.80
2nd Quarter........................... 76 5/8 69 1/2 .80 67 1/4 60 1/4 .80
3rd Quarter........................... 79 3/4 75 1/4 1.00 69 3/4 60 1/2 .80
4th Quarter........................... 76 1/2 64 1.00 71 68 1/2 .80
</TABLE>
The Stock Transfer Agent and Registrar of Stock is First Chicago Trust
Company of New York, P.O. Box 2500, Jersey City, New Jersey 07303-2500.
6
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ITEM 6 SELECTED FINANCIAL DATA
FINA, INC. AND SUBSIDIARIES
SUMMARY OF FINANCIAL AND OPERATING DATA
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<CAPTION>
1994 1993 1992 1991 1990
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(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
FINANCIAL
Sales and other operating revenues..................... $3,421,112 $3,416,223 $3,397,523 $3,336,353 $3,978,202
Depreciation, depletion, amortization, and lease
impairment........................................... 185,961 198,341 194,804 190,947 176,097
Net earnings:
Earnings before cumulative effect of accounting
change............................................. 102,041 70,353 24,138 42,008 125,543
Cumulative effect of accounting change(1)............ -- -- (34,320) -- --
Net earnings (loss).................................. 102,041 70,353 (10,182) 42,008 125,543
Earnings per common share:
Earnings before cumulative effect of accounting
change............................................. 6.54 4.51 1.55 2.71 8.11
Cumulative effect of accounting change(1)............ -- -- (2.20) -- --
Net earnings (loss).................................. 6.54 4.51 (.65) 2.71 8.11
Capital expenditures................................... 136,381 125,472 211,442 296,590 333,861
Long-term debt......................................... 531,162 740,058 890,389 840,464 740,966
Total long-term obligations............................ 532,148 766,476 950,960 911,521 816,221
Total assets........................................... 2,493,862 2,511,353 2,924,475 2,916,341 2,879,380
Stockholders' equity................................... 1,144,807 1,098,827 1,076,966 1,135,923 1,140,529
Cash dividends per share............................... 3.60 3.20 3.20 3.20 3.20
Average shares outstanding............................. 15,595 15,590 15,563 15,530 15,480
OPERATIONS
Crude oil, condensate, and natural gas liquids produced
(in thousands of net barrels)........................ 4,556 5,905 7,164 7,681 8,211
Natural gas produced (in millions of cubic feet)....... 52,864 67,924 75,589 74,359 74,843
Natural gas sold (in millions of cubic feet)........... 259,515 204,449 178,712 131,978 106,721
Total refinery throughput (barrels per day)............ 215,000 198,000 187,000 175,000 175,000
Major petrochemicals and plastics sold (millions of
pounds).............................................. 3,200 3,000 2,700 2,500 2,300
Company-branded service stations....................... 2,607 2,675 2,644 2,919 3,136
Undeveloped leasehold acreage (net).................... 189,723 203,734 257,836 311,382 261,093
Fee, mineral, and royalty acreage (net)................ 1,036,342 1,045,108 1,056,963 1,052,984 1,044,322
Employees (year-end)................................... 2,770 3,224 3,369 3,665 3,997
</TABLE>
- ---------------
(1) Cumulative effect to January 1, 1992 of change in accounting for
postretirement benefits other than pensions.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
DISCUSSION OF FINANCIAL INFORMATION
Fina's net income for 1994 was $102 million compared to $70 million in 1993
and $24 million in 1992 (before cumulative effect of accounting change). Net
income for 1994 includes $13 million of gain from sale of assets and $33 million
of inventory gains, after-tax, related to improved crude, product and chemical
prices since the beginning of the year. These gains were partially offset by a
$30 million after-tax charge for establishment of reserves for various
contingencies including $12.8 million after-tax for future environmental
remediation projects.
Net income for 1993 included a $75 million after-tax gain from sale of
assets and a $33 million after-tax charge to state inventories at the lower of
LIFO cost or market.
The net loss for 1992 includes an after-tax charge of $34.3 million from
adoption of Financial Accounting Standards Board Statement No. 106, which
relates to employee post-retirement benefits other than pensions.
7
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Earnings per common share in 1994 were $6.54 compared to $4.51 in 1993 and
a net loss in 1992 of $.65 per share ($1.55 per share net earnings before
cumulative effect of accounting change). The Company paid total dividends of
$3.60 per share in 1994 and $3.20 per share in 1993 and 1992.
Sales and other operating revenues for 1994 at $3.4 billion were
essentially unchanged from 1993 and 1992, with higher chemical prices and
volumes offsetting lower petroleum and natural gas prices and volumes. The
increase in 1992 over 1991 of $100 million was a result of higher volumes and
natural gas prices offsetting lower petroleum and chemical prices.
Total assets in 1994 and 1993 remained constant at $2.5 billion. Total
assets decreased by $413 million in 1993 from 1992. The decrease in 1993 was
principally due to price and volume related inventory declines, depreciation,
depletion and amortization in excess of capital expenditures and a decrease in
receivables. Book value of assets sold, excluding receivables, was $58.4 million
in 1993.
Cost of raw materials and products purchased and direct operating expenses
as a percent of sales and other operating revenues were relatively constant for
1994, 1993 and 1992.
Selling, general and administrative expenses have decreased over the three
year period because of a cost reduction program.
Interest expense decreased from 1992 to 1993 and again in 1994 primarily
because of decreased debt levels and lower interest rates on floating interest
rate debt in 1993 and 1994.
Interest and other income for 1993 includes $106.6 million from gain on
sale of assets, including $101.8 million from exploration and production related
properties.
Long-term obligations less current installments were $532 million at the
end of 1994, compared to $766 million in 1993 and $951 million in 1992. Total
debt was $650 million at year-end 1994, compared to $811 million at year-end
1993 and $1.215 billion at year-end 1992. The principal paydown was primarily
from operating income, working capital reductions, and the proceeds from asset
sales, as part of the plan to reduce debt. The increase in total debt in 1992
was due primarily to the large capital expenditure associated with the
acquisition of the HDPE plant described herein under the subheading "Chemicals"
and to expenditures to upgrade the Port Arthur, Texas Refinery.
Stockholders' equity was $1.145 billion, or $73.41 per common share, in
1994 compared to $1.099 billion, or $70.47 per common share, in 1993 and $1.077
billion, or $69.16 per common share, in 1992. The increase in stockholders'
equity in 1994 and 1993 was attributable to net income after annual dividends of
$3.60 per share in 1994 and $3.20 per share in 1993.
Crude oil and refined products and chemicals are priced at the lower of
cost (last-in, first-out, "LIFO") or market on an aggregate basis. Materials and
supplies are priced at average cost, not in excess of market; in the case of
material salvaged, an allowance is made for obsolescence and depreciation.
Because of a significant decline in the price of crude oil and refined products,
the Company recorded a valuation reserve in 1993 of $47,048,000 pre-tax to
reduce the LIFO cost of inventory to net realizable value. The price of crude
oil, petroleum products and chemicals increased in 1994 allowing restoration
through income of the full amount of the reserve established in 1993. The excess
of replacement cost of crude oil and refined products and chemicals over LIFO
cost at December 31, 1994 was approximately $8.4 million.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other than Pensions" (Statement 106), which establishes a new accounting
principle for the cost of retiree health care and other postretirement benefits.
Prior to 1992, the Company recognized these benefits on the pay-as-you-go basis.
The effect of adopting Statement 106 for the year ended December 31, 1992 was to
increase net periodic postretirement benefits costs by $1,500,000 ($.10 per
share), decrease earnings before cumulative effect of accounting change by
$990,000 ($.06 per share) and increase net loss by $35,310,000 ($2.26 per
share).
The impact of the various lines of business on the financial position and
results of operations is discussed in the following text under appropriate
operating unit subheadings.
8
<PAGE> 11
Exploration and Production and Natural Gas Marketing
Revenues and earnings (loss) before interest and income tax were $549.2
million and ($3.4 million), $519.8 million and $121.1 million and $456.9 million
and $51.1 million for 1994, 1993 and 1992, respectively.
Exploration and production earnings before interest and taxes decreased
$124.5 million from 1993 including an $89 million decrease in gain from asset
sales. Asset sales gains were $12.7 million in 1994 and $101.8 million in 1993.
The remainder of the decrease was because of lower oil and gas prices and
volumes partially offset by lower operating costs.
Average crude oil, condensate and natural gas liquids production was 12,500
barrels per day, a decline from 16,200 barrels in 1993 because of natural
declines, divestitures and limited drilling. Natural gas production in 1994 was
145 MMCF per day and 186 MMCF per day in 1993. Natural gas wellhead sales
volumes declined due to asset sales and mild winter weather.
Average wellhead prices for crude fell $1.39 per barrel to $14.27 in 1994.
Average wellhead prices for natural gas were $1.85 per MCF in 1994 down from
$2.11 per MCF in 1993.
The drilling program for 1994 got off to a slow start with significant
resources devoted to the sale of lower value properties and geographic
consolidation, a strategy initiated in 1993. Reserve additions were 7.5 million
barrels oil equivalent. Total reserves fell 18% after production of 13.4 million
barrels oil equivalent. Divestitures accounted for 49% of the decline. Finding
and development costs in 1994 were $5.71 per barrel oil equivalent compared to
$5.74 in 1993 and $3.90 in 1992. Lifting costs, at $5.28 per barrel oil
equivalent was up from $5.09 in 1993.
The Company participated in 3 net exploratory wells, compared to 11 in 1993
and 18 in 1992. The success rate was 56% compared to 54% in 1993 and 50% in
1992.
Natural Gas Marketing in 1994 increased sales 27% compared to 1993. Sales
volume was 711 million cubic feet per day. Income from gas trading increased
11%. This was accomplished with no increase in per-unit marketing costs.
Overall, gas marketing activities added 17 cents per thousand cubic feet to the
value of the Company's natural gas production.
Refining, Marketing, Supply & Transportation
Revenues and earnings (loss) before interest and income tax were $2.0
billion and $47.2 million, $2.1 billion and ($8.3 million), and $2.2 billion and
($61.4 million) for 1994, 1993 and 1992, respectively.
The earnings for 1994 include $25.4 million of inventory gains from the
reversal of a 1993 valuation reserve due to price increases of crude oil and
petroleum products since the beginning of the year and a $6.2 million gain from
the sale of the Company's retail operations in the Minneapolis/St. Paul area.
Offsetting these gains were $29.4 million of established reserves including
$18.7 for future environmental remediation. Sale of the Minneapolis/St. Paul
area retail operation will allow increased focus on a single Dallas/Fort Worth
area retail operations.
During 1994, the Downstream was reorganized into two geographic Business
Units which contributed to improved results. The business unit structure
improved communications and teamwork across business lines and increased focus
on key elements of the business, while facilitating better productivity and
lower cost of operations. This reorganization is expected to provide further
benefits in 1995. Record-setting refinery operations and greater productivity
contributed to the improved earnings, even in a persistently difficult industry
business environment characterized by low refining margins.
Refining margins were disappointing, specifically the fuels margin.
Industry fuels margins were only 7 cents per barrel better than 1993, which was
a very low year, and were 50 cents per barrel below the historical five-year
average. Aromatics margins were strong, about 65 cents per barrel above 1993.
This was especially helpful at the Port Arthur refinery where the Company is
among the industry leaders in aromatics production compared to crude throughput.
Margins at the Big Spring refinery were improved from 1993 primarily because
9
<PAGE> 12
of improved yields. Overall, poor industry margins continued to negatively
affect earnings and mask significant improvements in refining operations.
Refinery operations were excellent in 1994 with a new record throughput of
215,000 barrels per day. Yields were substantially improved over 1993 with
throughput records set in numerous units, including the catalytic cracking
units, reformers and hydrotreaters. Both refineries have turnaround activity
scheduled for 1995 in the reforming areas.
Chemicals
Revenues and earnings before interest and income taxes were $890.3 million
and $164.4 million, $794.8 million and $53.7 million, and $729.7 million and
$102.8 million for 1994, 1993 and 1992, respectively. Earnings for 1994 include
an inventory gain from the reversal of a 1993 valuation reserve of $16 million
from price recovery since the first of the year.
Chemicals was the largest contributor to earnings, as demands and margins
for the Company's products continued to increase. With all plants operating at
maximum capacity, total demand for some products could not be met.
As with the Downstream, the Chemicals segment was reorganized into business
units of Styrenics, Polypropylene and Polyethylene. The business units, which
facilitated enhanced teamwork and focus, were particularly important at a time
when demands grew rapidly, resulting in critically low inventories and the need
for close and effective coordination between plant and sales personnel. The
benefits were apparent in more optimized plant scheduling and in helping manage
customer relations as on-time deliveries became more difficult.
Industry margins growth exceeded expectations reflecting strong product
demand growth and increased capacity utilization. Industry demands for
polypropylene, polystyrene, and HDPE resulted in industry capacity utilization
levels in the 90-95% range. Margins for all products improved as the year
progressed in spite of rapidly increasing raw material costs. Petrochemical
demand and prices are expected to remain strong through 1995.
Total chemicals sales growth continued in 1994 with volumes up 7 percent
compared to 1993. Total production and sales volumes were 3.1 billion pounds in
1994 compared to 3.0 billion pounds in 1993 and 2.7 billion pounds in 1992.
Early in 1995, plans were announced for debottlenecking the polystyrene
plant in Carville, Louisiana. The first quarter 1995 project will increase
capacity on all production lines, and will increase annual polystyrene capacity
by 45 million pounds, to 775 million pounds. FINA also will build a new 250
million pound crystal polystyrene production line utilizing proprietary
technology at the Carville site. It will commence operations in the third
quarter of 1996 and will increase total polystyrene capacity to 1.025 billion
pounds per year, making the Carville plant the largest single site polystyrene
facility in the world.
An expansion at the LaPorte polypropylene plant to increase capacity by 400
million pounds per year is scheduled for completion in the fourth quarter of
1995. After completion, at a capacity of 1.4 billion pounds per year, it will be
the largest polypropylene plant in the world.
Sigma Coatings, a manufacturer of paint and industrial coatings was sold in
1993 to an affiliate of Petrofina S.A. for $7.8 million plus working capital. No
gain or loss was recorded.
ENVIRONMENTAL MATTERS
The Company is subject to extensive federal, state and local environmental
laws and regulations, including the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA or Superfund), the Resource Conservation
and Recovery Act (RCRA), the Clean Water Act and the Clean Air Act. These
regulations, which are constantly changing, regulate the discharge of materials
into the environment and may require the Company to remove or mitigate the
environmental effects of the disposal or
10
<PAGE> 13
release of petroleum or chemical substances at various sites, including
Superfund sites, service stations, terminals and other operating or inactive
facilities.
Environmental expenditures are expensed or capitalized depending on their
future economic benefit. Expenditures that relate to an existing condition
caused by past operations and that have no future economic benefits are
expensed. Liabilities for expenditures of a non-capital nature are recorded when
environmental assessment and/or remediation is probable, and the costs can be
reasonably estimated.
In 1994, the Company spent approximately $21.7 million in capital
expenditures for environmental protection and for compliance with federal, state
and local environmental laws and regulations. Environmental costs charged to
expense in 1994 were $51.6 million. Costs charged to operating expense include
ongoing administration and maintenance activities at operating facilities, and
reserves associated with site remediation at current operating facilities,
former operating facilities, and off-premises waste disposal sites.
Total environmental cash expenditures at the Company's operating locations
are expected to increase over the next several years as the Company complies
with present and future regulatory requirements. These costs are likely to be
substantial, and will be incurred over an extended period of time. Estimated
capital expenditures for 1995 related to environmental matters are $19.3
million.
The Company has been advised it may be a Potentially Responsible Party
(PRP) at 19 Federal Superfund sites and one state Superfund site. Due to the
number of PRPs involved at most sites, the number of possible remedial
solutions, the number of years of remedial activity required, and the
evolutionary nature of the technology involved, the Company is unable to assess
and quantify the extent of its responsibilities at the majority of the sites.
The Company and Cos-Mar, a joint venture for which the Company acts as
operator, have been named as potentially responsible parties for a Superfund
site, the Brio site, in Harris County, Texas. The Company and Cos-Mar, along
with other potentially responsible parties, have signed a consent decree with
the EPA, agreeing to treat or remove certain hazardous substances. FOCC's share
of the cleanup costs, both individually and as 50% owner of Cos-Mar, is
$395,000.
The EPA has listed the hazardous waste disposal area of a refinery located
in El Dorado, Kansas, as a Superfund site. As a former owner of the site, the
Company would be liable for 65% of the clean-up cost which is currently
estimated to be $4,170,000. The Company signed a consent order with the State of
Kansas and the present owner of the site which recommends cleanup alternatives.
The State of Kansas and the EPA have approved a clean-up plan for surface
impoundments at the site and remediation began in late 1994.
In response to an Administrative Order from the Texas Natural Resources
Conservation Commission to 9 PRPs, the Company agreed to conduct an
investigation of a closed refinery located near Colorado City, Texas. The other
named PRP's have appealed the order. A comprehensive investigation of the site
is now underway. The Company also operates a hydrocarbon abatement system, which
captures contaminated groundwater before it reaches the Colorado River.
A hazardous waste operating permit issued to the Big Spring refinery
requires an investigation of the sources of soil and groundwater contamination
at the site. An environmental assessment of inactive waste management units is
ongoing, and widespread on site and off site groundwater contamination has been
confirmed. The Company has taken action to define the extent of contamination
and has initiated interim groundwater recovery. The design of a full-scale
groundwater collection and treatment system is nearing completion.
11
<PAGE> 14
Discussions are also ongoing with governmental agencies regarding the scope
of investigation and remediation activities at operating and inactive locations.
Although the level of future expenditures for environmental matters, including
cleanup obligations, is impossible to determine with any degree of certainty, it
is management's opinion that the costs, although potentially significant to any
one accounting period, when finally determined will not have a materially
adverse effect on the financial position or liquidity of the Company.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash liquidity requirements for working capital, capital
expenditures, acquisitions and debt reductions over the past three years were
financed primarily by a combination of funds generated from operations,
borrowings and dispositions of assets.
The Company had working capital of $115.7 million at December 31, 1994 and
$164.9 million at December 31, 1993. Excluding short term obligations and the
current portion of total debt, working capital increased from 1993 by $24.5
million.
Cash flow from operations was $275.4 million in 1994, $378.3 million in
1993 and $119.3 million in 1992. The 1994 cash flow from operations decreased
primarily because of an increase in inventories and accounts receivable. The
1993 cash flow from operations increased primarily because of substantial
decreases in inventories, and accounts receivable, including an $80 million sale
of accounts receivable during 1993. Cash flow in 1992 decreased because of lower
earnings and changes in various working capital components.
During 1994, the Company furthered its debt reduction plan and, as a
result, total debt at year-end 1994 was reduced to $650 million from a level of
$1.24 billion during the first quarter of 1993. Debt was reduced primarily with
proceeds from the sale of assets and funds from operations. The majority
stockholder of the Company has not been the principal lender in the past two
fiscal years.
In 1993, the Company entered into long-term note agreements with certain
insurance companies that provided for unsecured borrowings aggregating $275
million under Series A, Series B, and Series C Senior Notes. Proceeds from these
notes were used to repay other debt.
The Company had an unsecured revolving credit facility with a group of
banks in the amount of $450 million at December 31, 1993. Under the facility,
the Company has available credit in an amended amount of $400 million through
May 2000. No borrowings were outstanding under this facility at December 31,
1994.
The Company paid dividends of $3.60 per share in 1994 and $3.20 per share
in 1993 and 1992.
The Company believes that cash provided by operations, together with
borrowings available under the revolving credit facility with banks, will be
sufficient to fund the Company's working capital requirements, capital
expenditures, principal, interest and dividends.
Capital Expenditures
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Exploration, Production and Natural Gas............ $ 49,299 $ 30,665 $ 61,885
Refining, Marketing, and Supply and
Transportation................................... 48,817 86,233 77,711
Chemicals.......................................... 33,579 7,226 69,183(1)
Corporate and Other................................ 4,686 1,348 2,663
-------- -------- --------
Total.................................... $136,381 $125,472 $211,442
</TABLE>
- ---------------
(1) Includes a $32 million non-cash item.
1994 capital expenditures were 9% above 1993. Projected capital
expenditures in 1995 are $215 million.
12
<PAGE> 15
IMPACT OF INFLATION AND CHANGING PRICES
The business of the Company is not seasonal but is sensitive to crude oil
and natural gas pricing, margins between crude oil and refined products, and
chemical margins. Inflation impacts the Company by increasing costs of labor and
supplies, and increasing costs of acquiring and replacing property, plant and
equipment. The replacement cost of property, plant and equipment is generally
greater than the historical cost as a result of inflation.
Market conditions continue to be the primary factor in determining the
prices and costs of Company products.
MANAGEMENT RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS
The management of FINA, Inc. is responsible for the financial information
and representations contained in the Consolidated Financial Statements and other
sections of this Annual Report on Form 10-K. The Company believes that the
financial statements fairly reflect the substance of its transactions and
present its consolidated financial position and results of operations in
conformity with generally accepted accounting principles. In preparing the
Consolidated Financial Statements, the Company is required to include amounts
that are based on estimates and judgments which the Company believes are
reasonable under the circumstances.
The Company has developed and maintains a system of internal accounting
controls designed to provide reasonable assurance that assets are safeguarded
from loss or unauthorized use and that transactions are properly recorded. In
establishing and maintaining internal controls, management must exercise
judgment in determining that the cost of such controls does not exceed the
benefits to be derived.
The Board of Directors exercises its oversight role for the Consolidated
Financial Statements through its Audit Committee, which is composed solely of
directors who are not officers or employees of the Company. The Audit Committee
meets with Company management, internal auditors, and the independent auditors
to review the audit scope and any recommendations for improvements in the
Company's internal accounting controls. The independent auditors are engaged to
provide an objective, independent view of the fairness of reported operating
results and financial condition.
13
<PAGE> 16
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINA, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.......................................................... 15
Consolidated Balance Sheets -- December 31, 1994 and 1993............................. 16
Consolidated Statements of Operations -- Three years ended December 31, 1994.......... 17
Consolidated Statements of Stockholders' Equity -- Three years ended December 31,
1994................................................................................ 18
Consolidated Statements of Cash Flows -- Three years ended December 31, 1994.......... 19
Notes to Consolidated Financial Statements............................................ 20
Schedule VIII -- Consolidated Valuation and Qualifying Accounts -- Three years ended
December 31, 1994................................................................... 36
</TABLE>
All other schedules are omitted as the required information is inapplicable
or presented in the consolidated financial statements or related notes.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
FINA, Inc.:
We have audited the consolidated financial statements of FINA, Inc. and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the consolidated
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FINA, Inc.
and subsidiaries as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1994, in conformity with generally accepted accounting
principles. Also, in our opinion, the related consolidated financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in note 7 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" in 1992.
KPMG Peat Marwick LLP
Dallas, Texas
January 27, 1995
15
<PAGE> 18
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 3,533 $ 3,276
Accounts and notes receivable, less allowance for doubtful
receivables of $7,201 in 1994 and $6,685 in 1993............... 365,614 293,269
Inventories....................................................... 286,538 264,536
Deferred Federal income taxes..................................... 21,381 34,272
Prepaid expenses and other current assets......................... 9,013 10,960
---------- ----------
Total current assets...................................... 686,079 606,313
---------- ----------
Investments in and advances to affiliates........................... 16,754 30,292
Net property, plant and equipment, at cost (successful efforts
method for oil and gas properties)................................ 1,691,062 1,792,718
Deferred charges and other assets, at cost less applicable
amortization...................................................... 99,967 82,030
---------- ----------
$2,493,862 $2,511,353
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations............................................ $ 57,000 $ 33,000
Current installments of long term debt and lease obligations...... 61,014 11,256
Accounts payable.................................................. 352,123 303,186
Accrued liabilities............................................... 100,264 93,966
---------- ----------
Total current liabilities................................. 570,401 441,408
---------- ----------
Long term debt, excluding current installments...................... 531,162 740,058
Lease obligations, excluding current installments................... 986 26,418
Deferred Federal income taxes....................................... 159,704 148,380
Other deferred credits and liabilities.............................. 86,802 56,262
Stockholders' equity:
Preferred stock of $1 par value. Authorized 4,000,000 shares; none
issued......................................................... -- --
Class A common stock of $1 par value. Authorized 19,000,000
shares; issued 14,594,702 shares in 1994 and 14,593,502 shares
in 1993........................................................ 14,595 14,594
Class B common stock of $1 par value. Authorized and issued
1,000,000 shares............................................... 1,000 1,000
Additional paid-in capital.......................................... 450,029 449,952
Retained earnings................................................... 679,183 633,281
---------- ----------
Total stockholders' equity................................ 1,144,807 1,098,827
---------- ----------
Commitments and contingencies
$2,493,862 $2,511,353
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
16
<PAGE> 19
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Sales and other operating revenues...................... $3,421,112 $3,416,223 $3,397,523
Interest and other income, net.......................... 15,987 103,605 18,790
---------- ---------- ----------
3,437,099 3,519,828 3,416,313
---------- ---------- ----------
Costs and expenses:
Cost of raw materials and products purchased............ 2,525,139 2,637,843 2,619,541
Direct operating expenses............................... 398,269 375,879 370,011
Selling, general and administrative expenses............ 78,054 88,749 90,721
Taxes, other than on income............................. 44,562 52,101 53,818
Dry holes and abandonments.............................. 8,156 15,844 8,248
Depreciation, depletion, amortization and lease
impairment........................................... 185,961 198,341 194,804
Interest................................................ 47,023 58,190 61,762
Less interest capitalized............................... (2,422) (3,234) (2,702)
---------- ---------- ----------
3,284,742 3,423,713 3,396,203
---------- ---------- ----------
Earnings before income taxes and cumulative
effect of accounting change................... 152,357 96,115 20,110
---------- ---------- ----------
Income taxes:
Current:
Federal.............................................. 23,351 28,807 (1,926)
State................................................ 2,750 1,600 453
Deferred -- Federal..................................... 24,215 (4,645) (2,555)
---------- ---------- ----------
50,316 25,762 (4,028)
---------- ---------- ----------
Earnings before cumulative effect of accounting
change........................................ 102,041 70,353 24,138
Cumulative effect to January 1, 1992 of change in
accounting for postretirement benefits other than
pensions, net of income tax benefit of $17,680.......... -- -- (34,320)
---------- ---------- ----------
Net earnings (loss)............................. $ 102,041 $ 70,353 $ (10,182)
========= ========= =========
Earnings (loss) per common share:
Earnings before cumulative effect of accounting
change............................................... $ 6.54 $ 4.51 $ 1.55
Cumulative effect of accounting change.................. -- -- (2.20)
---------- ---------- ----------
Net earnings (loss)............................. $ 6.54 $ 4.51 $ (.65)
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE> 20
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
----------------- ADDITIONAL TOTAL
PREFERRED CLASS PAID-IN RETAINED STOCKHOLDERS'
STOCK CLASS A B CAPITAL EARNINGS EQUITY
--------- ------- ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991.... $ -- $14,555 $1,000 $ 447,566 $672,802 $1,135,923
Shares issued in connection with
employee benefit plans, 16,199
shares........................ -- 17 -- 1,010 -- 1,027
Net loss........................ -- -- -- -- (10,182) (10,182)
Dividends paid, $3.20 per
share......................... -- -- -- -- (49,802) (49,802)
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1992.... -- 14,572 1,000 448,576 612,818 1,076,966
Shares issued in connection with
employee benefit plans, 21,705
shares........................ -- 22 -- 1,376 -- 1,398
Net earnings.................... -- -- -- -- 70,353 70,353
Dividends paid, $3.20 per
share......................... -- -- -- -- (49,890) (49,890)
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1993.... -- 14,594 1,000 449,952 633,281 1,098,827
Shares issued in connection with
employee benefit plans, 1,200
shares........................ -- 1 -- 77 -- 78
Net earnings.................... -- -- -- -- 102,041 102,041
Dividends paid $3.60 per
share......................... -- -- -- -- (56,139) (56,139)
--------- ------- ------ ---------- -------- -------------
Balance at December 31, 1994.... $ -- $14,595 $1,000 $ 450,029 $679,183 $1,144,807
======= ======= ====== ======== ======== ============
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE> 21
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1993 1992
--------- ----------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)................................... $ 102,041 $ 70,353 $ (10,182)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Cumulative effect of accounting change, before
tax.............................................. -- -- 52,000
Depreciation, depletion, amortization, lease
impairment and abandonments...................... 190,044 210,055 197,299
Net equity in losses of affiliates................. 6,269 5,504 6,079
Gain on sale of assets............................. (18,768) (106,603) (18,814)
Changes in assets and liabilities:
Accounts and notes receivable.................... (72,345) 148,241 18,670
Inventories...................................... (22,002) 102,982 (41,309)
Prepaid expenses and other current assets........ 1,947 4,539 (384)
Accounts payable and accrued liabilities......... 55,235 (43,408) (48,337)
Current and deferred income taxes................ 24,215 (4,645) (20,235)
Other............................................ 8,741 (8,728) (15,522)
--------- ----------- ---------
Net cash provided by operating activities..... 275,377 378,290 119,265
--------- ----------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment............ (133,928) (121,899) (179,442)
Proceeds from sales of assets......................... 68,170 165,288 6,586
Proceeds from sale of notes receivable................ -- 34,337 --
Investments in and advances to affiliates............. (3,430) (6,369) (3,253)
Dividends received in excess of equity in earnings
of affiliates...................................... 10,699 1,261 5,520
--------- ----------- ---------
Net cash provided by (used in) investing
activities.................................. (58,489) 72,618 (170,589)
--------- ----------- ---------
Cash flows from financing activities:
Additions to long term debt and lease obligations..... 52,040 1,018,781 400,177
Payments of long term debt and lease obligations...... (236,610) (1,352,750) (210,051)
Net change in short term obligations.................. 24,000 (70,000) (88,000)
Issuance of common stock.............................. 78 1,398 1,027
Dividends paid........................................ (56,139) (49,890) (49,802)
--------- ----------- ---------
Net cash provided by (used in) financing
activities.................................. (216,631) (452,461) 53,351
--------- ----------- ---------
Net increase (decrease) in cash and cash equivalents.... 257 (1,553) 2,027
Cash and cash equivalents at beginning of year.......... 3,276 4,829 2,802
--------- ----------- ---------
Cash and cash equivalents at end of year................ $ 3,533 $ 3,276 $ 4,829
========= =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE> 22
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) GENERAL
FINA, Inc. and subsidiaries (the Company) is engaged in crude oil and
natural gas exploration and production and natural gas marketing; petroleum
products refining, supply and transportation and marketing; and chemicals
manufacturing and marketing. Most of the Company's customers are located in the
United States. Raw materials are readily available and the Company is not
dependent upon a single supplier or a few suppliers.
Class A and Class B common stock are identical in all respects except Class
B stockholders elect one more than a majority of the members of the Board of
Directors of the Company. Class A stockholders are entitled to elect the
remaining members of the Board of Directors. Petrofina Delaware, Incorporated
(PDI) owns 100% of the Class B common stock and approximately 85% of the Class A
common stock. Petrofina S.A. (Petrofina), a Belgian publicly-held corporation,
owns 100% of American Petrofina Holding Company which owns 75% of the stock of
PDI. The remaining 25% of PDI's stock is owned by Petrofina.
(B) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and all of its significant subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.
(C) STATEMENTS OF CASH FLOWS
For purposes of reporting cash flows, all certificates of deposit and short
term highly liquid debt instruments, such as U.S. Treasury bills and notes, with
original maturities of three months or less are considered cash equivalents.
The indirect method is used to present cash flows from operating
activities. Additional cash flow information follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest paid, net of amounts capitalized............... $ 44,807 $ 52,101 $66,730
======= ======= =======
Income taxes paid, net of refunds received.............. $ 33,001 $ 14,344 $(8,124)
======= ======= =======
</TABLE>
Capital lease obligations of $27,548,000 in 1994 and $26,501,000 in 1993
were converted into debt as a result of termination of time charters relating to
tankers.
In connection with the exchange discussed in note 6, the Company
transferred nonmonetary assets with an estimated fair value of $32,000,000 in
1992.
(D) INVESTMENTS IN AFFILIATES
Investments in affiliates in which the Company owns between 20% and 50% of
the voting stock are carried at amortized cost adjusted for changes in equity
since acquisition.
(E) INVENTORIES
Crude oil and refined products and chemicals are priced at the lower of
cost (last-in, first-out) (LIFO) or market on an aggregate basis. Materials and
supplies are priced at average cost, not in excess of market; in the case of
material salvaged, an allowance is made for obsolescence and depreciation.
Because of price declines in crude oil and refined products in 1993, a valuation
reserve of $47,048,000 was established to reduce the LIFO cost of inventory to
net realizable value. As prices increased in 1994 the valuation reserve was
eliminated. The
20
<PAGE> 23
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
excess of replacement cost of crude oil and refined products and chemicals over
LIFO cost was $8,262,000 at December 31, 1994.
During 1994, certain inventory quantities were reduced, resulting in
liquidations of LIFO inventory which decreased pretax earnings by approximately
$5,600,000.
A summary of inventories follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------------------
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Crude oil and refined products and chemicals......... $ 250,808 $ 225,286 $ 326,225
Materials and supplies............................... 35,730 39,250 41,293
--------- --------- ---------
$ 286,538 $ 264,536 $ 367,518
========= ========= =========
</TABLE>
(F) PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties are accounted for in accordance with Statement of
Financial Accounting Standards No. 19. Costs to acquire mineral interests in oil
and gas properties, to drill exploratory wells that find proved reserves and to
drill and equip development wells are capitalized. Geological and geophysical
costs and costs to drill exploratory wells that do not find proved reserves are
expensed.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value and, if necessary, a loss is
recognized by providing an impairment allowance. The remaining unproved oil and
gas properties are aggregated and an overall impairment allowance is provided
based on prior experience. Capitalized costs of proved oil and gas properties
are depreciated and depleted by the unit-of-production method based on proved
oil and gas reserves estimated by Company engineers.
Substantially all other property, plant and equipment is depreciated by the
straight-line method at rates based on the estimated useful lives of the classes
of property.
Interest is capitalized as a component of the cost of construction and
development projects in progress.
Repairs and maintenance are charged to earnings as incurred. Renewals and
betterments are capitalized. When assets are sold, retired or otherwise disposed
of, the applicable costs and reserves are removed from the accounts and the
resulting gain or loss is recognized.
(G) RESEARCH AND DEVELOPMENT
Research and development costs, which are expensed as incurred, amounted to
$12,932,000 in 1994, $12,233,000 in 1993 and $11,298,000 in 1992.
(H) INCOME TAXES
The Company files a consolidated Federal income tax return with PDI and its
affiliates. Under the terms of the tax sharing agreement with PDI, the Company
is allocated Federal income taxes on a separate return basis.
Effective January 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 109 (Statement 109), "Accounting for
Income Taxes." The effect of adopting Statement 109 was not material.
21
<PAGE> 24
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(I) EARNINGS PER COMMON SHARE
Earnings per common share is based on the weighted average number of
outstanding shares. Shares issuable upon the exercise of stock options are
excluded from the computation since their effect is insignificant.
(J) FINANCIAL INSTRUMENTS
Interest rate swap agreements are used to help manage interest rate
exposure. The differential to be paid or received under these agreements is
accrued as interest rates change and is recognized over the life of the
agreements.
The Company uses futures contracts and forward purchase commitments to
reduce its exposure to fluctuations in the prices of crude oil and natural gas.
The Company hedges crude oil purchase and sales commitments, firm natural gas
purchase and sales commitments and anticipated crude oil purchases. Gains and
losses related to qualifying hedges of firm commitments or anticipated
transactions are deferred and recognized in income when the hedged transaction
occurs.
The Company enters into agreements with institutions of high credit
quality; therefore the risk of nonperformance by counterparties is considered to
be negligible.
(K) RECLASSIFICATIONS
Certain previously reported financial information has been reclassified to
conform to the 1994 presentation.
(2) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1994 1993
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Proved oil and gas properties............................... $ 906,738 $1,012,024
Unproved oil and gas properties............................. 254,998 246,607
Refining and marketing facilities........................... 1,332,412 1,343,241
Chemical facilities......................................... 314,960 292,170
Marine transportation....................................... -- 58,830
Pipelines................................................... 82,976 79,971
Other....................................................... 69,241 67,648
---------- ----------
2,961,325 3,100,491
Less accumulated depreciation, depletion, amortization and
lease impairment.......................................... 1,270,263 1,307,773
---------- ----------
$1,691,062 $1,792,718
========= =========
</TABLE>
Property, plant and equipment includes capitalized lease obligations of
$4,653,000 and $69,364,000 and related accumulated depreciation of $3,866,000
and $67,943,000 at December 31, 1994 and 1993.
22
<PAGE> 25
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(3) CURRENT AND LONG TERM DEBT
Short term obligations due to various banks were $27,000,000 and
$33,000,000, at December 31, 1994 and 1993 and bear interest at weighted average
rates of 6.15% and 3.4%, respectively. Short term obligations due to PDI were
$55,000,000 at December 31, 1994, and bear interest at 6.18% as to $5 million,
6.20% as to $25 million and 6.30% as to $25 million.
A summary of long term debt follows:
<TABLE>
<CAPTION>
DECEMBER 31
---------------------
1994 1993
-------- --------
(IN THOUSANDS)
<S> <C> <C>
6.64% Series A Senior Notes, due May 1, 2000................... $117,000 $117,000
7.13% Series B Senior Notes, due May 1, 2002................... 125,000 125,000
7.57% Series C Senior Notes, due May 1, 2003................... 33,000 33,000
Notes under revolving credit agreements with PDI, due in 1997
(6.35% at December 31, 1994)................................. 100,000 200,000
Note to PDI, due in 1995 (6.01% at December 31, 1994).......... 75,000 150,000
Other.......................................................... 141,359 119,371
-------- --------
Total long term debt................................. 591,359 744,371
Less current installments of long term debt.................... 60,197 4,313
-------- --------
Long term debt, excluding current installments....... $531,162 $740,058
======== ========
</TABLE>
The Company has a $400,000,000 revolving bank credit facility through May
2000 (no borrowings were outstanding under the facility at December 31, 1994 or
1993) and a $150,000,000 credit facility with PDI through 1997. The Company
intends to use borrowings under these facilities to finance the repayment of
$25,000,000 of short term obligations due to various banks and the $75,000,000
note bearing interest at 6.01% to PDI, and has classified these borrowings as
long term debt at December 31, 1994. Borrowings under the credit facilities bear
interest at various market rate options.
The Senior Notes, a note payable to a bank, the bank revolving credit
facility and the PDI loan agreements contain provisions that limit sales of
assets and mergers, limit the incurrence of indebtedness and restrict payments
to stockholders. No material amounts of long term debt are collateralized by
Company assets.
Letters of credit are maintained with various banks, aggregating
$28,956,000 at December 31, 1994; principally for pollution control and worker's
compensation obligations.
Interest rate swap agreements, which expire at various dates through 2003,
effectively convert an aggregate principal amount of $155,000,000 of fixed rate
long term debt into variable rate borrowings. Under these agreements, interest
is paid at variable market rates, and interest is received at fixed rates. At
December 31, 1994 and 1993, the weighted average variable interest rate under
these agreements was 6.19% and 3.41%. The estimated fair value of these
agreements (based on current market rates) approximated a net payable of
$9,898,000 at December 31, 1994 and a net receivable of $4,032,000 at December
31, 1993. Exposure to credit loss is only when the fair value of the agreement
is a net receivable.
The outstanding borrowings due to PDI and various banks bear interest at
current market rates and thus, the carrying amount of debt approximates
estimated fair value. The estimated fair value of the debt instruments that bear
interest at fixed rates was $348,000,000 ($379,000,000 carrying value) at
December 31, 1994, and approximated the carrying amount of these instruments at
December 31, 1993.
The aggregate maturities of long term debt and capitalized lease
obligations for the five years ending December 31, 1999 are as follows:
1995 -- $61,014,000; 1996 -- $109,825,000; 1997 -- $135,710,000; 1998 --
$62,008,000; and 1999 -- $53,705,000.
23
<PAGE> 26
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) INCOME TAXES
Actual income tax expense (benefit) differs from the "normal" income tax
expense at U.S. statutory rates as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed income tax expense (at U.S. statutory rates)... $53,325 $33,641 $ 6,837
Excess Federal over foreign income taxes................ (859) (120) (587)
Tax-free benefits and dividends on Company owned
life insurance........................................ (3,141) (3,352) (3,929)
Acquired subsidiary tax loss carryforward............... -- -- (5,522)
Section 29 credit....................................... (2,088) (7,393) --
Change in temporary differences due to 1993 tax rate
change................................................ -- 4,565 --
Miscellaneous items..................................... 3,079 (1,579) (827)
------- ------- -------
$50,316 $25,762 $(4,028)
======= ======= =======
</TABLE>
The tax effects of the primary temporary differences giving rise to the
deferred Federal income tax assets and liabilities as determined under Statement
109 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1994 1993
-------- --------
<S> <C> <C>
(IN THOUSANDS)
Deferred income tax assets:
Employee benefits.............................................. $ 5,875 $ 7,045
Basis in inventories........................................... 7,519 23,202
Provision for losses........................................... 9,783 5,806
Alternative minimum tax credit carryforwards................... 59,943 58,197
Miscellaneous items............................................ 6,771 7,108
-------- --------
Total deferred income tax assets....................... 89,891 101,358
-------- --------
Deferred income tax liabilities:
Property, plant and equipment, principally due to differences
in depreciation, depletion, amortization, lease impairment
and abandonments............................................ 200,698 188,409
Investments in affiliates, principally due to differences in
joint venture depreciation.................................. 26,401 26,289
Miscellaneous items............................................ 1,115 768
-------- --------
Total deferred income tax liabilities.................. 228,214 215,466
-------- --------
Net deferred Federal income tax liability.............. $138,323 $114,108
======== ========
</TABLE>
At December 31, 1994, alternative minimum tax credit carryforwards of
approximately $59,943,000 are available to reduce future Federal regular income
taxes payable over an indefinite period.
24
<PAGE> 27
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(5) EMPLOYEE STOCK OPTIONS
Options to purchase shares of Class A common stock have been granted to
officers and employees under a stock option plan adopted in 1979. The stock
option plan expired in 1989, and no further grants will be made under that plan.
A summary of transactions follows:
<TABLE>
<CAPTION>
OPTION PRICE
NUMBER ----------------------------
OF SHARES PER SHARE TOTAL
--------- ------------- ----------
<S> <C> <C> <C>
Outstanding and exercisable at December 31,
1993......................................... 33,284 $60.125-70.50 $2,338,000
============
Terminated and reverted to plan................ (1,600) $60.125-70.50 (111,000)
============
Exercised...................................... (1,200) $60.125-70.50 (78,000)
============
------ ----------
Outstanding and exercisable at December 31,
1994......................................... 30,484 $ 70.50 $2,149,000
====== ============ =========
</TABLE>
The option price for options granted is the market value at date of grant.
Each option granted may be exercised in cumulative annual installments of
one-third of grant upon completion of two years of continued employment and
expires ten years from date of grant. No amounts are recorded until options are
exercised, at which time proceeds in excess of the par value of the shares are
credited to additional paid-in capital.
(6) INVESTMENTS IN JOINT VENTURES
The Company had 25.85% ownership interest in two joint ventures engaged
primarily in the production and worldwide marketing of terephthalates, the basic
raw materials for polyesters, which were accounted for by the equity method. In
August 1992, the Company exchanged its 25.85% interest in one of the joint
ventures and $53,983,000 in cash for a high density polyethylene plant and
related working capital of $24,820,000. A gain of $6,373,000 was recognized
based on the fair value of the assets exchanged. Investments in and advances to
the joint venture were $2,105,000 and $2,804,000 at December 31, 1994 and 1993
and equity in earnings of the joint ventures was $76,000 in 1994, $33,000 in
1993 and $3,271,000 in 1992. The Company sold chemicals aggregating $16,444,000
in 1992 to an affiliate of one of the joint ventures.
The Company and GE Plastics, a wholly owned subsidiary of General Electric
Company (GE), are joint venturers in Cos-Mar Company, a chemical operation. The
Company's interest is 50% and is accounted for by the equity method. The
venturers reimburse the joint venture for the costs of operating the facility
and raw material and finished product inventories are the property of the
venturers. Direct operating expenses include charges from the joint venture of
$16,011,000 in 1994, $15,990,000 in 1993 and $16,411,000 in 1992. Investments in
and advances to the joint venture were $8,829,000 and $21,379,000 at December
31, 1994 and 1993. The Company has guaranteed the joint venture's borrowings
from a bank, which aggregated $40,000,000 at December 31, 1994. GE has
guaranteed the joint venture's borrowings from a bank, which aggregated
$74,200,000 at December 31, 1994.
(7) EMPLOYEE AND POST RETIREMENT BENEFITS
The Company and its subsidiaries have two defined benefit pension plans
covering substantially all employees. The benefits are based on years of service
and the employee's final average monthly compensation. The Company's funding
policy is to contribute annually not less than the minimum required nor more
than the maximum amount that can be deducted for Federal income tax purposes.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
A restoration benefit plan provides supplemental pension benefits to
certain participants whose benefits are limited by the defined benefit pension
plans. The funding policy is to contribute annually amounts equal to benefit
payments made.
25
<PAGE> 28
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the plans' funded status and the amounts recognized in the
consolidated balance sheets follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------
1994 1993
------------------------ ------------------------
DEFINED DEFINED
BENEFITS RESTORATION BENEFITS RESTORATION
PLANS PLAN PLAN PLAN
--------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation............. $ (94,196) $(3,785) $(100,722) $(2,903)
========= ======== ========= ========
Accumulated benefit obligation,
including vested benefits.......... $(104,895) $(3,796) $(112,842) $(2,976)
========= ======== ========= ========
Projected benefit obligation............ $(127,077) $(4,615) $(140,482) $(4,056)
Plan assets at fair value, primarily
listed and stocks U.S. Government
securities............................ 180,705 -- 185,240 --
--------- ----------- --------- -----------
Plan assets in excess of (less than)
projected benefit obligation.......... 53,628 (4,615) 44,758 (4,056)
Unrecognized net loss from past
experience different from that assumed
and effect of changes in
assumptions........................... 1,982 426 7,572 737
Unrecognized prior service cost being
recognized over 15 years.............. 2,114 657 2,311 694
Unrecognized net (asset) liability at
date of adoption being recognized over
15.3 years............................ (7,075) 850 (8,413) 971
Adjustment required to recognize minimum
liability............................. -- (1,114) -- (1,322)
--------- ----------- --------- -----------
Prepaid (accrued) pension cost included
in the consolidated balance sheets.... $ 50,649 $(3,796) $ 46,228 $(2,976)
========= ======== ========= ========
</TABLE>
A summary of the components of pension expense (income) follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost -- benefits earned during the year.... $ 5,848 $ 5,620 $ 5,228
Interest cost on projected benefit obligation...... 10,495 10,509 9,404
Actual return on plan assets....................... (2,063) (22,914) (13,218)
Net asset gain (loss) deferred for later
recognition...................................... (17,128) 5,235 (2,750)
Amortization of unrecognized prior service cost.... 234 188 205
Amortization of unrecognized actuarial losses...... 33 18 20
Amortization of unrecognized net asset............. (1,217) (1,217) (1,217)
Cost of termination benefits....................... 710 -- 671
-------- -------- --------
Total pension expense (income)........... $ (3,088) $ (2,561) $ (1,657)
======== ======== ========
</TABLE>
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation were 8.75% and 4.5%, respectively, as of December
31, 1994, and 7.5% and 4.5%, respectively, as of December 31, 1993 and 9% and
6%, respectively, as of December 31, 1992. The expected long term rate of return
on assets was 11% for 1994, 1993
26
<PAGE> 29
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and 1992. The effect on the projected benefit obligation of these changes was a
decrease of approximately $24,100,000 in 1994 and an increase of approximately
$14,800,000 in 1993.
In addition to providing pension benefits, certain health care and life
insurance benefits are provided to active and retired employees. During 1994,
substantially all covered employees were eligible for those benefits after they
reach normal retirement age. The health care benefits in excess of certain
limits and the life insurance benefits are insured. The cost of providing these
benefits for active employees are expensed when the insurance premiums and
claims as paid. The cost of providing these benefits for active employees was
$10,092,000 in 1994, $11,219,000 in 1993 and $12,055,000 in 1992.
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards No. 106 "Employers' Accounting for Postretirement Benefits
Other than Pensions" (Statement 106). The effect of adopting Statement 106 for
the year ended December 31, 1992 was to increase net periodic postretirement
benefit cost by $1,500,000, decrease earnings before cumulative effect of
accounting change by $990,000 ($.06 per share) and increase net loss by
$35,310,000 ($2.26 per share).
A summary of the postretirement plan's funded status and the amounts
recognized in the consolidated balance sheets follows:
<TABLE>
<CAPTION>
DECEMBER 31
-------------------
1994 1993
------- --------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees....................................................... $43,118 $ 48,072
Fully eligible active plan participants........................ 3,443 6,936
Other active plan participants................................. 14,120 14,775
------- --------
60,681 69,783
Unrecognized net loss............................................ (3,789) (15,951)
Unrecognized prior service cost.................................. 241 263
------- --------
Accrued postretirement benefit cost.............................. $57,133 $ 54,095
======= ========
</TABLE>
A summary of the components of net periodic postretirement benefit cost
follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost............................................... $1,226 $1,043 $1,100
Interest cost.............................................. 4,878 4,653 4,600
Amortization of unrecognized prior service cost............ (22) (22) --
Amortization of net loss from earlier periods.............. 504 -- --
------ ------ ------
Net periodic postretirement benefit cost................... $6,586 $5,674 $5,700
====== ====== ======
</TABLE>
For measurement purposes, an 8.67% and 7.50% weighted average annual rate
of increase in the per capita cost of covered benefits (i.e., health care cost
trend rate) for pre-65 and post-65 years of age, respectively, was assumed for
1995; the rate was assumed to decrease gradually to 5% by the year 2002 and
remain at that level thereafter. A 10.13% and 9.23% annual rate for pre-65 and
post-65 years of age, respectively, was assumed for 1994. The health care cost
trend rate assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care cost trend rates by one percentage
point in each year would increase the accumulated postretirement benefit
obligation as of December 31, 1994 by $3,653,000 and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
for the year ended December 31, 1994 by $439,000.
27
<PAGE> 30
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.75%, 7.5% and 9% at December 31, 1994,
1993 and 1992. The effect on the accumulated benefit obligation of these changes
was a decrease of $11,665,000 in 1994 and an increase of $10,600,000 in 1993.
Defined contribution retirement savings plans (Thrift Plans) are available
to substantially all employees. The Thrift Plans permit employees to elect
salary deferral contributions of up to 10% of their compensation on a
tax-deferred basis and requires the Company to match up to the first 6% of the
participants' compensation. The expense for the Company's contribution was
$5,963,000 in 1994, $6,007,000 in 1993 and $5,883,000 in 1992.
(8) SALE OF ACCOUNTS AND NOTES RECEIVABLE
Certain accounts and notes receivable were sold with recourse. At December
31, 1994, and 1993, $80,000,000 of accounts receivable and $32,100,000 and
$34,300,000, respectively, of notes receivable sold were outstanding under these
agreements. The Company remains obligated to reimburse the purchasers for or
repurchase any uncollectible amounts pursuant to the recourse provisions of the
agreements.
(9) LEASES
The Company occupies certain marketing and manufacturing facilities and
uses certain equipment under leases expiring at various dates over the next 20
years. Under terms of certain lease agreements, the Company has agreed not to
mortgage certain of its interests in oil and gas properties.
At December 31, 1994, minimum lease payments on capital and operating
leases were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES (I) LEASES (II)
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
1995............................................................ $ 903 $22,172
1996............................................................ 484 21,434
1997............................................................ 483 18,378
1998............................................................ 95 13,763
1999............................................................ -- 9,876
Later years to 2014............................................. -- 14,447
----------
Total minimum lease payments.......................... 1,965
Imputed interest (6.5%)......................................... 161
----------
Present value of minimum lease payments (iii)................... $1,804
==========
</TABLE>
- ---------------
(i) Substantially all leases provide that the Company shall pay taxes,
maintenance, insurance and certain other operating expenses applicable to
the leased properties. The Company terminated tanker leases in 1993 and
1994.
(ii) Minimum payments have not been reduced by minimum sublease rentals of
approximately $3,164,000 which are due in the future under noncancellable
subleases.
(iii) Presented in the consolidated balance sheets as current installments and
noncurrent lease obligations of $818,000 and $986,000 and $6,493,000 and
$26,418,000 at December 31, 1994 and 1993.
Total rental expense was $26,962,000 (net of $1,191,000 subleases) in 1994,
$32,749,000 (net of $1,345,000 subleases) in 1993 and $29,944,000 (net of
$1,372,000 subleases) in 1992. Contingent rentals were not significant.
28
<PAGE> 31
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(10) RELATED PARTY TRANSACTIONS
Sales and other operating revenues for 1993 and 1992 include $37,300,000
and $4,000,000, respectively, of reimbursements from business interruption and
property damage insurance resulting from operating problems in 1992 at the Port
Arthur refinery and a fire at the Big Spring refinery in 1993. The Company's
insurance provider on these claims is a wholly-owned subsidiary of Petrofina.
The Company has a 50% interest in joint ventures with PDI in Texas and with
Petrofina in Hong Kong which market chemicals in international trade. The
Company sold chemicals aggregating $1,401,000 in 1994, $985,000 in 1993 and
$6,447,000 in 1992 to the joint ventures.
Accounts receivable include $10,719,000 and $3,996,000 at December 31, 1994
and 1993, respectively, from affiliates.
Accounts payable include $6,539,000 and $8,817,000 at December 31, 1994 and
1993, respectively, to affiliates.
During 1994 the Company assumed a $50,000,000 note from PDI payable to a
bank in 1995. Interest expense relating to borrowings from PDI (see note 3) was
$13,916,000 in 1994, $28,565,000 in 1993 and $48,127,000 in 1992. Accrued
liabilities include accrued interest of $791,000 and $3,580,000 at December 31,
1994 and 1993, respectively, which is payable to PDI for such borrowings.
Crude oil and natural gas aggregating $16,626,000 in 1994, $21,145,000 in
1993 and $8,879,000 in 1992 were purchased from PDI in the ordinary course of
business.
Refined products and chemicals aggregating $34,963,000 in 1994, $50,992,000
in 1993 and $56,997,000 in 1992 were purchased from Petrofina and its affiliates
other than PDI in the ordinary course of business.
(11) CONTINGENCIES
The Company was contingently liable at December 31, 1994, under pending
lawsuits and other claims, some of which involved substantial sums. Considering
certain liabilities that have been set up for the lawsuits and claims, and the
difficulty in determining the ultimate liability in some of these matters,
internal counsel is of the opinion that the amounts, if any, that ultimately
might be due in connection with such lawsuits and claims would not have a
material adverse effect upon the Company's consolidated financial condition.
The Company is subject to extensive Federal, state and local environmental
laws and regulations. These regulations, which are constantly changing, regulate
the discharge of materials into the environment and may require the Company to
remove or mitigate the environmental effects of the disposal or release of
petroleum or chemical substances at various sites. Such contingencies may exist
for various sites including, but not limited to: Superfund Sites for which the
Company has been named as a potentially responsible party, operating and closed
refineries, chemical facilities, oil fields, service stations, terminals and
land development areas. Environmental expenditures are expensed or capitalized
depending on their future economic benefit. Expenditures that relate to an
existing condition caused by past operations and that have no future economic
benefit are expensed. Liabilities for expenditures of a noncapital nature are
recorded when environmental assessment and/or remediation is probable, and the
costs can be reasonably estimated. The level of future expenditures for
environmental matters, including cleanup obligations, is impossible to determine
with any degree of probability. Although potentially significant with respect to
results of operations for any one accounting period, management believes that
such costs will not have a material adverse effect on liquidity or financial
position.
29
<PAGE> 32
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(12) SEGMENT DATA
The Company is engaged in crude oil and natural gas exploration and
production and natural gas marketing; petroleum products refining, supply and
transportation and marketing; and chemicals manufacturing and marketing. Segment
data as of and for the three years ended December 31, 1994 follows (in
thousands):
<TABLE>
<CAPTION>
EXPLORATION, REFINING,
PRODUCTION SUPPLY AND
AND NATURAL TRANSPORTATION CORPORATE
GAS MARKETING AND MARKETING CHEMICALS AND OTHER CONSOLIDATED
------------- ------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1994:
Sales:
Unaffiliated customers....... $ 549,160 $1,981,444 $ 888,728 $ 178 $ 3,419,510
========== ========== ======== ========
Affiliates................... $ -- $ -- $ 1,602 $ -- 1,602
========== ========== ======== ========
Inter-segment................ $ 42,358 $ 154,965 $ 14,425 $ -- --
========== ========== ======== ========
------------
$ 3,421,112
=========
Operating profit (loss)......... $ (15,713) $ 42,473 $ 171,164 $ (16,953) $ 180,971
Interest and other income....... $ 12,307 $ 4,771 $ (6,765) $ 5,674 15,987
Interest expense, net........... (44,601) (44,601)
---------- ------------
Earnings before income
taxes................. $ (3,406) $ 47,244 $ 164,399 $ (55,880) $ 152,357
========== ========== ======== ======== =========
Accounts and notes receivable,
net.......................... $ 68,198 $ 208,055 $ 73,058 $ 16,303 $ 365,614
========== ========== ======== ======== =========
Identifiable assets............. $ 656,977 $1,307,181 $ 420,901 $ 108,803 $ 2,493,862
========== ========== ======== ======== =========
Depreciation, depletion,
amortization and lease
impairment................... $ 82,425 $ 80,471 $ 18,872 $ 4,193 $ 185,961
========== ========== ======== ======== =========
Capital expenditures............ $ 49,299 $ 48,817 $ 33,579 $ 4,686 $ 136,381
========== ========== ======== ======== =========
</TABLE>
30
<PAGE> 33
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
EXPLORATION, REFINING,
PRODUCTION SUPPLY AND
AND NATURAL TRANSPORTATION CORPORATE
GAS MARKETING AND MARKETING CHEMICALS AND OTHER CONSOLIDATED
------------- ------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
1993:
Sales:
Unaffiliated customers....... $ 519,810 $2,101,448 $ 793,372 $ 156 $ 3,414,786
========== ========== ======== ========
Affiliates................... $ -- $ -- $ 1,437 $ -- 1,437
========== ========== ======== ========
Inter-segment................ $ 45,570 $ 167,160 $ 5,491 $ -- --
========== ========== ======== ========
------------
$ 3,416,223
=========
Operating profit (loss)......... $ 13,277 $ (8,329) $ 60,437 $ (17,919) $ 47,466
Interest and other income....... $ 107,872 $ (12) $ (6,713) $ 2,458 103,605
Interest expense, net........... (54,956) (54,956)
---------- ------------
Earnings before income
taxes................. $ 121,149 $ (8,341) $ 53,724 $ (70,417) $ 96,115
========== ========== ======== ======== =========
Accounts and notes receivable,
net.......................... $ 88,038 $ 155,054 $ 49,398 $ 779 $ 293,269
========== ========== ======== ======== =========
Identifiable assets............. $ 745,473 $1,260,463 $ 402,270 $ 103,147 $ 2,511,353
========== ========== ======== ======== =========
Depreciation, depletion,
amortization and lease
impairment................... $ 94,704 $ 79,347 $ 19,562 $ 4,728 $ 198,341
========== ========== ======== ======== =========
Capital expenditures............ $ 30,665 $ 86,233 $ 7,226 $ 1,348 $ 125,472
========== ========== ======== ======== =========
1992:
Sales:
Unaffiliated customers....... $ 456,856 $2,210,867 $ 706,348 $ 97 $ 3,374,168
========== ========== ======== ========
Affiliates................... $ -- $ -- $ 23,355 $ -- 23,355
========== ========== ======== ========
Inter-segment................ $ 45,303 $ 156,859 $ 6,431 $ -- --
========== ========== ======== ========
------------
$ 3,397,523
=========
Operating profit (loss)......... $ 43,568 $ (64,691) $ 99,714 $ (18,211) $ 60,380
Interest and other income....... $ 7,538 $ 3,277 $ 3,096 $ 4,879 18,790
Interest expense, net........... (59,060) (59,060)
---------- ------------
Earnings before income taxes
and cumulative effect of
accounting change.......... $ 51,106 $ (61,414) $ 102,810 $ (72,392) $ 20,110
========== ========== ======== ======== =========
Accounts and notes receivable,
net.......................... $ 112,617 $ 198,034 $ 115,321 $ 15,538 $ 441,510
========== ========== ======== ======== =========
Identifiable assets............. $ 897,119 $1,398,368 $ 524,868 $ 104,120 $ 2,924,475
========== ========== ======== ======== =========
Depreciation, depletion,
amortization and lease
impairment................... $ 94,613 $ 77,223 $ 17,833 $ 5,135 $ 194,804
========== ========== ======== ======== =========
Capital expenditures............ $ 61,885 $ 77,711 $ 69,183 $ 2,663 $ 211,442
========== ========== ======== ======== =========
</TABLE>
31
<PAGE> 34
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Consolidated totals are after elimination of inter-segment amounts.
Operating profit (loss) is sales less operating expenses and is substantially
all derived from domestic operations. Identifiable assets are those assets that
are used in the operations in each business segment.
Most customers are located in the South and Midwest regions of the United
States. No single customer accounted for more than 5% of sales in 1994, 1993 or
1992, and no account receivable from any customer exceeded 5% of consolidated
stockholders' equity at December 31, 1994, 1993 or 1992.
(13) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER QUARTER QUARTER QUARTER
ENDED ENDED ENDED ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- -------- ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1994:
Sales and other operating revenues.... $777,450 $838,081 $918,237 $ 887,344
======== ======== ========== =========
Gross profit.......................... $ 68,365 $ 49,908 $ 69,126 $ 79,782
======== ======== ========== =========
Net earnings.......................... $ 25,017 $ 13,357 $ 27,973 $ 35,694
======== ======== ========== =========
Earnings per common share............. $ 1.60 $ 0.86 $ 1.79 $ 2.29
======== ======== ========== =========
1993:
Sales and other operating revenues.... $853,606 $931,598 $846,240 $ 784,779
======== ======== ========== =========
Gross profit.......................... $ 36,127 $ 62,837 $ 42,769 $ 10,326
======== ======== ========== =========
Net earnings (loss)................... $ 83 $ 61,960 $ 21,729 $ (13,419)
======== ======== ========== =========
Earnings (loss) per common share...... $ -- $ 3.97 $ 1.39 $ (0.85)
======== ======== ========== =========
</TABLE>
Gross profit is defined as sales and other operating revenues less cost of
raw materials and products purchased; direct operating expenses; taxes, other
than on income; and depreciation, depletion, amortization and lease impairment.
32
<PAGE> 35
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA
SUPPLEMENTAL OIL AND GAS DATA (UNAUDITED)
The following tables set forth supplementary disclosures for oil and gas
producing activities in accordance with Statement of Financial Accounting
Standards No. 69.
(A) CAPITALIZED COSTS
Capitalized costs relating to oil and gas producing activities and the
related amounts of accumulated depreciation, depletion, amortization and lease
impairment follow:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
(IN THOUSANDS)
Proved oil and gas properties.................. $ 906,738 $1,012,024 $1,148,016
Unproved oil and gas properties................ 254,998 246,607 262,920
---------- ---------- ----------
1,161,736 1,258,631 1,410,936
Less accumulated depreciation, depletion,
amortization and lease impairment............ 585,138 613,120 644,303
---------- ---------- ----------
Net capitalized costs.......................... $ 576,598 $ 645,511 $ 766,633
========= ========= =========
</TABLE>
(B) COSTS INCURRED
A summary of costs incurred in oil and gas property acquisition,
exploration and development activities (both capitalized and charged to expense)
for the three years ended December 31, 1994 follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition of unproved properties..................... $ 2,784 $ 1,181 $ 3,477
======= ======= =======
Acquisition of proved properties....................... $ 237 $ 482 $ 581
======= ======= =======
Exploration costs...................................... $32,674 $21,476 $34,525
======= ======= =======
Development costs...................................... $28,314 $23,869 $44,121
======= ======= =======
</TABLE>
The above costs were incurred in the United States.
33
<PAGE> 36
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (CONTINUED)
(C) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following table presents the results of operations for oil and gas
producing activities for the three years ended December 31, 1994.
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Sales.............................................. $139,532 $209,753 $241,449
Transfers.......................................... 17,205 17,751 16,956
-------- -------- --------
Total...................................... 156,737 227,504 258,405
Production costs..................................... (66,374) (83,237) (84,530)
Exploration costs.................................... (14,173) (15,632) (20,974)
Depreciation, depletion, amortization, lease
impairment and abandonments........................ (86,236) (106,140) (96,886)
-------- -------- --------
(10,046) 22,495 56,015
Income tax benefit (expense)......................... 5,604 (480) (19,045)
-------- -------- --------
Results of operations from producing activities,
excluding interest costs........................... $ (4,442) $ 22,015 $ 36,970
======== ======== ========
</TABLE>
(D) RESERVE QUANTITY INFORMATION
The following table presents the Company's estimate of its proved oil and
gas reserves, all of which are located in the United States. The Company
emphasizes that reserve estimates are inherently imprecise and that estimates of
new discoveries are more imprecise than those of producing oil and gas
properties. Accordingly, the estimates are expected to change as future
information becomes available. The estimates have been prepared by the Company's
internal petroleum reservoir engineers.
<TABLE>
<CAPTION>
1994 1993 1992
----------------- ------------------ -----------------
OIL GAS OIL GAS OIL GAS
------ ------- ------ -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Proved developed and undeveloped
reserves:
Beginning of year................... 36,090 439,066 42,479 655,649 47,772 724,561
Revisions of previous estimates..... 2,571 (40,376) (6,405) (23,294) 750 (7,191)
Purchases of minerals in place...... 57 6 419 1,705 3,080 9,796
Sales of minerals in place.......... (4,756) (28,780) (2,803) (156,418) (3,664) (18,598)
Extensions and discoveries.......... 2,293 31,152 8,305 29,348 1,705 22,670
Production.......................... (4,556) (52,864) (5,905) (67,924) (7,164) (75,589)
------ ------- ------ -------- ------ -------
End of year......................... 31,699 348,204 36,090 439,066 42,479 655,649
====== ======= ====== ======== ====== =======
Proved developed reserves:
Beginning of year................... 23,644 306,991 34,892 468,310 37,538 501,042
====== ======= ====== ======== ====== =======
End of year......................... 19,986 237,270 23,644 306,991 34,892 468,310
====== ======= ====== ======== ====== =======
</TABLE>
Oil reserves, which include condensate and natural gas liquids, are stated
in thousands of barrels and gas reserves are stated in millions of cubic feet.
34
<PAGE> 37
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (CONTINUED)
(E) STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN
RELATING TO PROVED OIL AND GAS RESERVES
The following table, which presents a standardized measure of discounted
future net cash flows and changes therein relating to proved oil and gas
reserves, is presented pursuant to Statement of Financial Accounting Standards
No. 69. In computing this data, assumptions other than those required by the
Financial Accounting Standards Board could produce different results.
Accordingly, the data should not be construed as representative of the fair
market value of the Company's proved oil and gas reserves.
Future cash inflows were computed by applying year end prices of oil and
gas relating to proved reserves to the estimated year end quantities of those
reserves. Future price changes were considered only to the extent provided by
contractual arrangements in existence at year end. Future development and
production costs were computed by estimating the expenditures to be incurred in
developing and producing the proved oil and gas reserves at the end of the year,
based on year end costs. Future income tax expenses were computed by applying
the year end statutory tax rate adjusted for tax credits, with consideration of
future tax rates already legislated, to the future pretax net cash flows
relating to proved oil and gas reserves, less the tax basis of the properties
involved. The standardized measure of discounted future cash flows represents
the present value of estimated future net cash flows using a discount rate of
10% a year.
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------
1994 1993 1992
--------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Future cash inflows.............................. $ 977,811 $1,330,387 $2,057,618
Future production and development costs.......... (422,277) (484,783) (662,757)
Future income tax expenses....................... (45,859) (121,028) (272,716)
--------- ---------- ----------
Future net cash flows............................ 509,675 724,576 1,122,145
10% annual discount for estimated timing of cash
flows.......................................... (191,981) (277,041) (453,814)
--------- ---------- ----------
Standardized measure of discounted future net
cash flows..................................... $ 317,694 $ 447,535 $ 668,331
========= ========= =========
Beginning of year................................ $ 447,535 $ 668,331 $ 622,366
Changes resulting from:
Sales and transfers of oil and gas produced,
net of production costs..................... (90,363) (144,267) (173,875)
Extensions and discoveries..................... 26,246 51,053 32,912
Purchases of minerals in place................. 350 3,555 30,101
Sales of minerals in place..................... (48,157) (154,814) (43,306)
Previously estimated development costs incurred
during the year............................. 25,625 26,337 42,258
Revisions of previous quantities............... (4,880) (49,494) 2,341
Accretion of discount.......................... 52,227 82,980 74,846
Net change in income taxes..................... 46,163 86,754 (37,529)
Net changes in prices and costs................ (137,052) (122,900) 118,217
--------- ---------- ----------
End of year...................................... $ 317,694 $ 447,535 $ 668,331
========= ========= =========
</TABLE>
35
<PAGE> 38
SCHEDULE VIII
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
PERIOD EXPENSES DEDUCTIONS PERIOD
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1992 --
Allowance for doubtful receivables............ $ 5,279 $ 6,603 $ 6,443(1) $ 5,439
======== ======== ======== ========
Year ended December 31, 1993 --
Allowance for doubtful receivables............ $ 5,439 $ 5,549 $ 4,303(1) $ 6,685
======== ======== ======== ========
Inventory valuation reserve................... $ -- $ 47,048 $ -- $ 47,048
======== ======== ======== ========
Year ended December 31, 1994 --
Allowance for doubtful receivables............ $ 6,685 $ 3,652 $ 3,136(1) $ 7,201
======== ======== ======== ========
Inventory valuation reserve................... $ 47,048 $ -- $ 47,048 $ --
======== ======== ======== ========
</TABLE>
- ---------------
(1) Bad debts written off, less recoveries.
36
<PAGE> 39
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements by the
Registrant with its accountants on accounting or financial disclosures.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF REGISTRANT AND SERVED AS AN
CAPACITIES SERVED IN 1994 AGE OFFICER SINCE
- --------------------------------------------- --- -------------
<S> <C> <C>
Paul D. Meek, 64 6-06-68
Chairman of the Board
Ron W. Haddock, 54 6-19-86
President and Chief Executive Officer
Yves Bercy 49 7-01-93
Vice President, Chief Financial Officer
and Treasurer
Cullen M. Godfrey, 49 4-15-87
Vice President, Secretary and General
Counsel
Michael J. Couch, 43 4-30-84
Vice President
H. Patrick Jack, 43 8-23-89
Vice President
Henry J. Lartigue, Jr., 61 1-01-89
Vice President (Retired 7/1/94)
Neil A. Smoak, 49 4-24-86
Vice President
Glenn E. Selvidge, 58 2-15-78
Vice President (Retired 7/1/94)
S. R. West, 55 5-02-83
Vice President
James D. Grier, 53 1-01-92
Controller
Brendan M. O'Connor, 49 10-18-84
Treasurer (Resigned 4/13/94)
Linda Middleton, Assistant Secretary 44 8-20-84
</TABLE>
There is incorporated by reference pages 3 through 6 of the Company's Proxy
Statement for the Annual Meeting of Security Holders to be held April 12, 1995.
ITEM 11 EXECUTIVE COMPENSATION
There is incorporated by reference pages 2 through 3 and 8 through 13 of
the Company's Proxy Statement for the Annual Meeting of Security Holders to be
held April 12, 1995.
37
<PAGE> 40
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated by reference the first page and pages 2 through 5 of
the Proxy Statement for the Annual Meeting of Security Holders to be held April
12, 1995.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference pages 4 through 5, 12 and 18 of the
Company's Proxy Statement for the Annual Meeting of Security Holders to be held
April 12, 1995.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following are incorporated by reference or filed as part of this
Annual Report:
1. and 2. Consolidated Financial Statements and Schedules:
Reference is made to page 14 of this Form 10-K for a list of all
consolidated financial statements and schedules filed as part of this
Form 10-K.
3. Exhibits:
<TABLE>
<S> <C>
(3a) -- The Articles of Incorporation of FINA, Inc.
(3b) -- The Bylaws of FINA, Inc.
(10a) -- Thrift and Employee Stock Ownership Plan for Employees of American
Petrofina, Incorporated
(10b) -- Credit Agreement of March 7, 1995 with NationsBank of Texas, N.A. as
Agent
(10c) -- American Petrofina, Incorporated Employee Non-Qualified Stock Option
Plan (1979)
(10d) -- Form 11-K Amdel Inc. Employee Investment Plan
(10e) -- Agreement between FINA, Inc. and Glenn E. Selvidge
(10h) -- Agreements between FINA, Inc. (formerly American Petrofina,
Incorporated) and Ron W. Haddock
(10i) -- Agreement between FINA, Inc. and Henry J. Lartigue
(10j) -- Employee Stock Ownership Plan of American Petrofina, Incorporated
(10k) -- FINA Capital Accumulation Plan
(10l) -- Fina Restoration Plan
(19) -- FINA, Inc.'s Proxy Statement for Annual Meeting of Security Holders
to be held April 12, 1995
(21) -- Subsidiaries of the Registrant
(23) -- Independent Auditors' Consent
</TABLE>
38
<PAGE> 41
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FINA, Inc.
(Registrant)
By: /s/ CULLEN M. GODFREY
Cullen M. Godfrey, Vice President,
Secretary and General Counsel
Date: March 7, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES AND TITLES DATE
- --------------------------------------------- ---------------------------
<S> <C>
By: /s/ PAUL D. MEEK March 7, 1995
Paul D. Meek
Chairman of the Board
By: /s/ RON W. HADDOCK March 7, 1995
Ron W. Haddock
President and CEO, Director
By: /s/ FRANCOIS CORNELIS March 7, 1995
Francois Cornelis
Director
By: March , 1995
Axel de Broqueville
Director
By: March , 1995
Pierre Jungels
Director
By: /s/ ROBERT L. MITCHELL March 7, 1995
Robert L. Mitchell
Director
By: /s/ DAVID C. TREEN March 7, 1995
David C. Treen
Director
By: March , 1995
Henrique Bandeira Vieira
Director
By: /s/ YVES BERCY March 7, 1995
Yves Bercy
Vice President, Chief Financial Officer and
Treasurer
By: /s/ JAMES D. GRIER March 7, 1995
James D. Grier
Controller and Principal Accounting Officer
</TABLE>
39
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- -----------------------------------------------------------------------------------
<S> <C> <C>
(3a) -- The Articles of Incorporation of FINA, Inc.
(3b) -- The Bylaws of FINA, Inc.
(10a) -- Thrift and Employee Stock Ownership Plan for Employees of American
Petrofina, Incorporated
(10b) -- Credit Agreement of March 7, 1995 with NationsBank of Texas, N.A. as
Agent
(10c) -- American Petrofina, Incorporated Employee Non-Qualified Stock Option
Plan (1979)
(10d) -- Form 11-K Amdel Inc. Employee Investment Plan
(10e) -- Agreement between FINA, Inc. and Glenn E. Selvidge
(10h) -- Agreements between FINA, Inc. (formerly American Petrofina,
Incorporated) and Ron W. Haddock
(10i) -- Agreement between FINA, Inc. and Henry J. Lartigue
(10j) -- Employee Stock Ownership Plan of American Petrofina, Incorporated
(10k) -- FINA Capital Accumulation Plan
(10l) -- Fina Restoration Plan
(19) -- FINA, Inc.'s Proxy Statement for Annual Meeting of Security Holders
to be held April 12, 1995
(21) -- Subsidiaries of the Registrant
(23) -- Independent Auditors' Consent
</TABLE>
<PAGE> 1
EXHIBIT 10(b)
Execution Copy
U.S. $400,000,000
CREDIT AGREEMENT
Dated as of March 7, 1995
Among
FINA OIL AND CHEMICAL COMPANY
as Borrower
FINA, INC.
as Guarantor
and
THE BANKS NAMED HEREIN
as Banks
and
CIBC INC.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Co-Agents
and
NATIONSBANK OF TEXAS, N.A.
as Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
---------------------
Section 1.02. Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------------------
Section 1.03. Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------
Section 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. The A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------
Section 2.02. Making the A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------------
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----
Section 2.04. Optional Reduction of the Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------------
Section 2.05. Repayment and Prepayment of A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------------------
Section 2.06. Interest on A Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------
Section 2.07. Interest Rate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------------------------
Section 2.08. The B Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------
Section 2.09. Payments, Computations; Interest on Overdue
--------------------------------------------
Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------
Section 2.10. Consequential Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
Section 2.11. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------
Section 2.12. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------
Section 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-----
Section 2.14. Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------
Section 2.15. Optional Termination by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------------------
ARTICLE III
CONDITIONS
Section 3.01. Conditions Precedent to Initial Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------------------------------
Section 3.02. Conditions Precedent to Each A Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------------------------
Section 3.03. Conditions Precedent to Certain Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------------------------------------
Section 3.04. Conditions Precedent to Each B Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------------------------
ARTICLE IV
GUARANTY
Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------
Section 4.02. Guaranty Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
-----------------
Section 4.03. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------
Section 4.04. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------
Section 4.05. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------------
Section 4.06. Continuing Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------------
</TABLE>
<PAGE> 3
<TABLE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
<S> <C> <C>
Section 5.01. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------
Section 5.02. Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------
Section 5.03. Authorization and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
---------------------------
Section 5.04. Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-----------------------
Section 5.05. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------------------
Section 5.06. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
----------
Section 5.07. Regulation U; Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------------------
Section 5.08. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------------
Section 5.09. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----
Section 5.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----
Section 5.11. Holding Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------
Section 5.12. Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
-----------------------
Section 5.13. Ownership of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
---------------------
Section 5.14. Guarantor's Independent Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------------------
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------------
Section 6.02. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------------------
Section 6.03. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
---------------
Section 6.04. Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
------------------------
Section 6.05. Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------------------------------
Section 6.06. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------------------
Section 6.07. Visitation Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------------
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01. Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------
Section 7.02. Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-----------
Section 7.03. Merger and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------------
Section 7.04. Agreements to Restrict Dividends and Certain
--------------------------------------------
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------
Section 7.05. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------
Section 7.06. Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
----------------------------
Section 7.07. Change of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
------------------
Section 7.08. Limitation on Loans, Advances and Investments . . . . . . . . . . . . . . . . . . . . . . . . 34
---------------------------------------------
Section 7.09. Fiscal Year; Accounting Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------------------------------
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------
ARTICLE IX
THE AGENT AND THE CO-AGENTS
Section 9.01. Authorization and Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
------------------------
Section 9.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
----------------------
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C>
Section 9.03. NationsBank and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------------------
Section 9.04. Bank Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------------
SECTION 9.05. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------
Section 9.06. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
---------------
Section 9.07. Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
---------
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------
Section 10.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------
Section 10.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------------
Section 10.04. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------------------
Section 10.05. Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------------
Section 10.06. Bank Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-----------------------------------
Section 10.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------
Section 10.08. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--------
Section 10.09. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
-------------------------
Section 10.10. Survival of Agreements, Representations and
---------------------------------------------
Warranties, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------
Section 10.11. Borrower's Right to Apply Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------------------------
Section 10.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
---------------
Section 10.13. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------
Section 10.14. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------
Section 10.15. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
------------
</TABLE>
-iii-
<PAGE> 5
Schedule I - Agent and Bank Information
Schedule II - Borrower and Guarantor Information
Schedule III - Existing Permitted Liens (7.02)
Schedule IV - Certain Existing Transfer Restrictions (7.04)
Schedule V - Certain Loans and Investments (7.08)
Exhibit A-1 - Form of A Note
Exhibit A-2 - Form of B Note
Exhibit B-1 - Notice of A Borrowing
Exhibit B-2 - Notice of B Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Opinion of Counsel for the Borrower and the Guarantor
Exhibit E - Opinion of Special Counsel to Agent
-iv-
<PAGE> 6
CREDIT AGREEMENT
Dated as of March 7, 1995
This Credit Agreement dated as of March 7, 1995, is by and among the
Borrower, the Guarantor, the Agent, the Co-Agents and the Banks. In
consideration of the mutual covenants and agreements contained herein, the
Borrower, the Guarantor, the Agent, the Co-Agents and the Banks hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"A Advance" means an advance by a Bank to the Borrower as part of an A
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance, each
of which shall be a "Type" of A Advance.
"A Borrowing" means a borrowing consisting of simultaneous A Advances
of the same Type to the Borrower made by each of the Banks pursuant to Section
2.01.
"A Note" means a promissory note of the Borrower payable to the order
of any Bank, in substantially the form of Exhibit A-1 hereto, evidencing the
aggregate indebtedness of the Borrower to such Bank resulting from A Advances.
"Advance" means an A Advance or a B Advance.
"Affiliate" of any Person means any corporation, partnership, limited
liability company, limited liability partnership, joint venture or other entity
of which more than 10% of the outstanding capital stock or other equity
interests having ordinary voting power to elect a majority of the board of
directors of such corporation, partnership, limited liability company, limited
liability partnership, joint venture or other entity or others performing
similar functions (irrespective of whether or not at the time capital stock or
other equity interests of any other class or classes of such corporation,
partnership, limited liability company, limited liability partnership, joint
venture or other entity shall or might have voting power upon the occurrence of
any contingency) is at the time directly or indirectly owned by such Person or
which owns at the time directly or indirectly more than 10% of the outstanding
capital stock or other equity interests having ordinary voting power to elect a
majority of the board of directors of such Person or others performing similar
functions (irrespective of whether or not at the time capital stock or other
equity interests of any other class or classes of such corporation,
partnership, limited liability company, limited liability partnership, joint
venture or other entity shall or might have voting power upon the occurrence of
any contingency).
"Agent" means NationsBank of Texas, N.A. in its capacity as agent
pursuant to Article IX hereof and any successor Agent pursuant to Section 9.06.
"Agent's Fee Letter" means the letter agreement dated as of February
22, 1995 among the Agent, the Borrower and the Guarantor.
<PAGE> 7
"Agreement" means this Credit Agreement dated as of March 7, 1995
among the Borrower, the Guarantor, the Agent, the Co-Agents and the Banks, as
amended or modified from time to time.
"Applicable Lending Office" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of a Base Rate Advance and such
Bank's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and,
in the case of a B Advance, the office of such Bank notified by such Bank to
the Agent as its Applicable Lending Office with respect to such B Advance.
"Applicable Margin" means, at any time with respect to any A Advance,
the following percentages determined as a function of the ratio of the
Guarantor's Consolidated Debt to its Consolidated Capitalization on the last
day of the immediately preceding calendar quarter:
Ratio
equal to or Ratio
greater than equal to or
Ratio less .40 but less greater
than .40 than .45 than .45
Eurodollar Rate
Advance 0.20% 0.225% 0.25%
Base Rate Advance 0.00% 0.00% 0.00%
The foregoing ratio (a) shall be deemed to be less than .40 to and
including December 31, 1994 and (b) shall thereafter be determined from the
financial statements of the Guarantor and its Subsidiaries most recently
delivered pursuant to Section 6.02 and certified to by an authorized financial
officer of the Guarantor in accordance with Section 6.02. Any change in the
Applicable Margin after March 31, 1995 shall be effective upon the date of
delivery of the financial statements pursuant to Section 6.02 and receipt by
the Agent of the certificate required by Section 6.02. If the Guarantor fails
to deliver any financial statements within the times specified in Section 6.02,
such ratio shall be deemed to be greater than .45 until the Guarantor delivers
such financial statements to the Agent and the Banks.
"Assignment" means an assignment and acceptance entered into by a Bank
and an Eligible Assignee, and accepted by the Agent, in substantially the form
of the attached Exhibit C.
"B Advance" means an advance by a Bank to the Borrower as part of a B
Borrowing resulting from the auction bidding procedure described in Section
2.08.
"B Borrowing" means a borrowing consisting of simultaneous B Advances
to the Borrower from each of the Banks whose offer to make one or more B
Advances as part of such borrowing has been accepted by the Borrower under the
auction bidding procedure described in Section 2.08.
"B Note" means a promissory note of the Borrower payable to the order
of any Bank, in substantially the form of Exhibit A-2 hereto, evidencing the
indebtedness of the Borrower to such Bank resulting from a B Advance made to
the Borrower by such Bank.
"B Reduction" has the meaning specified in Section 2.01.
-2-
<PAGE> 8
"Banks" means the banks listed on the signature pages hereof and each
other Person that becomes a Bank pursuant to an Assignment.
"Base Rate" means a fluctuating interest rate per annum as shall be in
effect from time to time which rate per annum shall at all times be equal to
the highest of:
(a) the rate of interest announced publicly by NationsBank, from
time to time, as NationsBank's prime rate; or
(b) 1/2 of one percent per annum above the Federal Funds Rate in
effect from time to time.
"Base Rate Advance" means an A Advance which bears interest as
provided in Section 2.06(a).
"Borrower" means Fina Oil and Chemical Company, a Delaware corporation.
"Borrowing" means an A Borrowing or a B Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized to close in Dallas, Texas or New York City and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"Capitalization" means for any Person the sum of Consolidated Debt of
such Person plus the Consolidated Tangible Net Worth of such Person.
"Co-Agent" means either CIBC Inc. or Texas Commerce Bank National
Association in their capacities as co-agents pursuant to Article IX hereof, and
"Co-Agents" means such banks collectively.
"Code" means, as appropriate, the Internal Revenue Code of 1986, as
amended, or any successor Federal tax code, and any reference to any statutory
provision shall be deemed to be a reference to any successor provision or
provisions.
"Commitment" of any Bank means at any time the amount set forth on the
signature pages opposite such Bank's name on the signature pages hereof or in
an Assignment, as such amount may be terminated, reduced or increased pursuant
to Section 2.04, Section 2.15, Section 8.01 or Section 10.06.
"Consolidated" refers to the consolidation of the accounts of any
Person and its subsidiaries in accordance with generally accepted accounting
principles.
"Credit Documents" means this Agreement, the Notes, and each other
agreement, instrument or document executed by the Borrower or the Guarantor at
any time in connection with this Agreement.
"Debt" means, in the case of any Person, (i) indebtedness of such
Person for borrowed money, (ii) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) obligations of such
Person to pay the deferred purchase price of property or services, (iv)
obligations of such Person as lessee under leases which are, in accordance with
generally accepted accounting principles, recorded as capital leases, (v)
obligations of such Person in connection with production payments (except for
obligations incurred in connection with Volumetric Production Payments, stated
as either deferred credits or deferred revenues in amounts outstanding at any
time that do
-3-
<PAGE> 9
not exceed, in the aggregate, 10 percent of Borrower's Tangible Net Worth),
(vi) all liabilities of such Person in respect of unfunded vested benefits
under any Plan, (vii) obligations of such Person under or relating to letters
of credit or guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vi) of this definition, and (viii)
indebtedness or obligations of others of the kinds referred to in clauses (i)
through (vii) of this definition secured by any Lien on or in respect of any
property of such Person (limited, however, to the lesser of the amount of its
liability or the value of such property).
"Default" means an Event of Default or an event which, with the giving
of notice or lapse of time or both, would constitute an Event of Default.
"Domestic Lending Office" means, with respect to any Bank, the office
of such Bank specified as its "Domestic Lending Office" opposite its name on
Schedule I hereto or in an Assignment or such other office of such Bank as such
Bank may from time to time specify to the Borrower and the Agent.
"Effective Date" means the date that all of the conditions in Section
3.01 shall have been satisfied or waived.
"Eligible Assignee" means (i) a Bank or (ii) a commercial bank or
financial institution or other Person acceptable to the Agent and the Borrower,
such acceptance not to be unreasonably withheld.
"Environment" or "Environmental" shall have the meanings set forth in
42 U.S.C. Section 9601(8) (1982).
"Environmental Protection Statute" shall mean any United States local,
state or federal, or any foreign, law, statute, regulation, order, consent
decree or other agreement or Governmental Requirement arising from or in
connection with or relating to the protection or regulation of the Environment,
including, without limitation, those laws, statutes, regulations, orders,
decrees, agreements and other Governmental Requirements relating to the
disposal, cleanup, production, storing, refining, handling, transferring,
processing or transporting of Hazardous Waste, Hazardous Substances or any
pollutant or contaminant, wherever located.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder from time to time.
"ERISA Affiliate" of the Guarantor means any trade or business
(whether or not incorporated) which is a member of a group of which the
Guarantor is a member and which is under common control within the meaning of
the regulations under Section 414 of the Code.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Bank, the
office of such Bank specified as its "Eurodollar Lending Office" opposite its
name on Schedule I hereto or in an Assignment (or, if no such office is
specified, its Domestic Lending Office) or such other office of such Bank as
such Bank may from time to time specify to the Borrower and the Agent.
-4-
<PAGE> 10
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
Rate Advance comprising part of the same A Borrowing, an interest rate per
annum equal to the rate per annum at which deposits in U.S. dollars are offered
by the principal office of each of the Reference Banks in London, England to
prime banks in the London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
substantially equal to the amount of the Eurodollar Rate Advance of such
Reference Bank comprising part of such A Borrowing to be outstanding during
such Interest Period and for a period equal to such Interest Period. The
Eurodollar Rate for the Interest Period for each Eurodollar Rate Advance
comprising part of the same A Borrowing shall be determined by the Agent on the
basis of applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest Period.
"Eurodollar Rate Advance" means an A Advance which bears interest as
provided in Section 2.06(b).
"Eurodollar Rate Reserve Percentage" of any Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or
other marginal reserve requirement) for such Bank with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities having a term
equal to such Interest Period.
"Events of Default" has the meaning specified in Section 8.01.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Fixed Rate Advance" means (i) any A Advance which is a Eurodollar
Rate Advance and (ii) any B Advance.
"Governmental Requirements" means all judgments, orders, writs,
injunctions, decrees, awards, laws, ordinances, statutes, regulations, rules,
franchises, permits, certificates, licenses, authorizations and the like and
any other requirements of any government or any commission, board, court,
agency, instrumentality or political subdivision thereof.
"Guaranteed Obligations" means all obligations of the Borrower to the
Banks hereunder and under the Notes or any other Credit Document to which the
Borrower is a party, whether for principal, interest, fees, expenses,
indemnities or otherwise, and whether now or hereafter existing.
"Guarantor" means Fina, Inc., a Delaware corporation.
-5-
<PAGE> 11
"Hazardous Substance" shall have the meaning set forth in 42 U.S.C.
Section 9601(14) and shall also include each other substance considered to be a
hazardous substance under any Environmental Protection Statute.
"Hazardous Waste" shall have the meaning set forth in 42 U.S.C.
Section 6903(5) and shall also include each other substance considered to be a
hazardous waste under any Environmental Protection Statute (including, without
limitation 40 C.F.R. Section 261.3).
"Insufficiency" means, with respect to any Plan, the amount, if any,
by which the present value of the vested benefits under such Plan exceeds the
fair market value of the assets of such Plan allocable to such benefits.
"Interest Period" means, for each A Advance comprising part of the
same A Borrowing, the period commencing on the date of such A Advance and
ending on the last day of the period selected by the Borrower pursuant to the
provisions below and Section 2.02. The duration of each such Interest Period
shall be (a) in the case of a Base Rate Advance, the period commencing on the
date of such Advance and ending on the last day of the then current calendar
quarter and (b) in the case of a Eurodollar Rate Advance, one, two, three, or
six months, in each case as the Borrower may select in the applicable Notice of
A Borrowing; provided, however, that:
(i) Interest Periods commencing on the same date for A Advances
comprising part of the same A Borrowing shall be of the same duration;
(ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided, in
the case of any Interest Period for a Eurodollar Rate Advance, that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(iii) any Interest Period which begins on the last Business Day of
the calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month in which it would have ended if there
were a numerically corresponding day in such calendar month; and
(iv) the Borrower may not select an Interest Period for any A
Advance made prior to the Termination Date if the last day of such Interest
Period would be later than the Termination Date.
"Lien" means any mortgage, lien, pledge, charge, deed of trust,
security interest, encumbrance or other type of preferential arrangement to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law or otherwise (including, without
limitation, the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement).
"Liquid Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States;
(b) (i) negotiable or nonnegotiable certificates of deposit, time
deposits, or other similar banking arrangements maturing within 180 days from
the
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date of acquisition thereof ("bank debt securities"), issued by (A) any Bank or
(B) any other bank or trust company which has a combined capital surplus and
undivided profit of not less than $250,000,000 or the dollar equivalent
thereof, if at the time of deposit or purchase, such bank debt securities are
rated not less than "A" (or the then equivalent) by the rating service of
Standard & Poor's Ratings Group or of Moody's Investors Service, and (ii)
commercial paper issued by (A) any Bank or (B) any other Person if at the time
of purchase such commercial paper is rated not less than "A-2" (or the then
equivalent) by the rating service of Standard & Poor's Ratings Group or not
less than "P-2" (or the then equivalent) by the rating service of Moody's
Investors Service, or upon the discontinuance of both of such services, such
other nationally recognized rating service or services, as the case may be, as
shall be selected by the Borrower or the Guarantor with the consent of the
Majority Banks;
(c) repurchase agreements relating to investments described in
clauses (a) and (b) above with a market value at least equal to the
consideration paid in connection therewith, with any Person who regularly
engages in the business of entering into repurchase agreements and has a
combined capital surplus and undivided profit of not less than $250,000,000 or
the dollar equivalent thereof, if at the time of entering into such agreement
the debt securities of such Person are rated not less than "A" (or the then
equivalent) by the rating service of Standard & Poor's Ratings Group or of
Moody's Investors Service;
(d) shares of any mutual fund registered under the Investment
Company Act of 1940, as amended, which invests solely in underlying securities
of the types described in clauses (a), (b) and (c) above and which do not
constitute "margin stock" within the meaning of Regulation U of the Federal
Reserve Board; and
(e) such other instruments (within the meaning of Article 9 of the
Texas Business and Commerce Code) as the Borrower or the Guarantor may request
and the Majority Banks may approve in writing, which approval will not be
unreasonably withheld.
"Majority Banks" means at any time Banks holding at least 51% of the
then aggregate unpaid principal amount of the A Notes held by the Banks, or, if
no such principal amount is then outstanding, Banks having at least 51% of the
Commitments or, if no such principal amount is then outstanding and all
Commitments have terminated, Banks holding at least 51% of the then aggregate
unpaid principal amount of the B Notes held by the Banks.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Guarantor or any ERISA Affiliate of
the Guarantor is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Multiple Employer Plan" means an employee benefit plan, other than a
Multiemployer Plan, subject to Title IV of ERISA to which the Guarantor or any
ERISA Affiliate of the Guarantor, and one or more employers other than the
Guarantor or an ERISA Affiliate of the Guarantor, is making or accruing an
obligation to make contributions or, in the event that any such plan has been
terminated, to which the Guarantor or any ERISA Affiliate of the Guarantor made
or accrued an obligation to make contributions during any of the five plan
years preceding the date of termination of such plan.
"NationsBank" means NationsBank of Texas, N.A.
"Note" means an A Note or a B Note.
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"Notice of A Borrowing" has the meaning specified in Section 2.02(a).
"Notice of B Borrowing" has the meaning specified in Section 2.08(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means, with respect to any Person, Liens:
(a) for taxes, assessments or governmental charges or levies on
property of such Person incurred in the ordinary course of business to the
extent not required to be paid pursuant to Sections 6.01 and 6.06;
(b) imposed by law, such as landlords', carriers', warehousemen's
and mechanics' liens and other similar Liens arising in the ordinary course of
business securing obligations which are not overdue for a period of more than
15 days or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of such Person in accordance with generally accepted accounting
principles;
(c) arising in the ordinary course of business out of pledges or
deposits under workers' compensation laws, unemployment insurance, old age
pensions or other social security or retirement benefits, or similar
legislation or to secure public or statutory obligations of such Person;
(d) securing Debt existing on the date of this Agreement and
listed on the attached Schedule III; provided that the Debt secured by such
Liens shall not be renewed, refinanced or extended if the amount of such Debt
so renewed is greater than the outstanding amount of such Debt on the date of
this Agreement;
(e) constituting easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, licenses,
restrictions on the use of property or minor imperfections in title thereto
which, in the aggregate, are not material in amount, and which do not in any
case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of such Person;
(f) securing judgments against such Person which are being
appealed and do not constitute an Event of Default under Section 8.01(f); or
(g) on real property acquired by such Person after the date of
this Agreement and securing only Debt of such Person incurred to finance the
purchase price of such property; provided that any such Lien is created within
180 days of the acquisition of such property and provided further that the Debt
secured by all such Liens does not exceed 35% of Consolidated Tangible Net
Worth of the Guarantor and the Restricted Subsidiaries.
"Person" means an individual, partnership, corporation, limited
liability company, limited liability partnership, business trust, joint stock
company, trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means an employee pension benefit plan (other than a
Multiemployer Plan) as defined in Section 3(2) of ERISA currently maintained
by, or to which contributions have been made at any time after December 31,
1984 by, the Guarantor or any ERISA Affiliate of the Guarantor for employees of
the Guarantor or any such ERISA Affiliate and covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code.
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"Reference Banks" means [NationsBank, CIBC Inc. and Generale Bank].
"Restricted Payment" means, with respect to any Person, (i) any
dividend paid on its capital stock, (ii) any repurchase of its capital stock,
or (iii) any loan or advance or payment of any kind with respect to its capital
stock.
"Restricted Subsidiary" means the Borrower or any other Subsidiary of
the Guarantor which (i) is organized under the laws of the United States or any
state thereof and (ii) has assets with an aggregate book value exceeding
$10,000,000.
"Revolving Period" means the period of time commencing on the
effectiveness of this Agreement and ending on the Termination Date.
"Subsidiary" of any Person means any corporation of which more than
50% of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation or others performing
similar functions (irrespective of whether or not at the time capital stock of
any other class or classes of such corporation shall or might have voting power
upon the occurrence of any contingency) is at the time directly or indirectly
owned by such Person.
"Substantial Part" means, with respect to the assets of the Guarantor
and the Restricted Subsidiaries, assets which in the aggregate in any one
fiscal year of the Guarantor exceed 10% of the Consolidated Tangible Net Worth
of the Guarantor and its Subsidiaries.
"Tangible Net Worth" of any Person means, as of any date of
determination, the excess of total assets of such Person over total
liabilities, total assets and total liabilities each to be determined in
accordance with generally accepted accounting principles, excluding, however,
from the determination of total assets (i) patents, patent applications,
trademarks, copyrights and trade names, (ii) goodwill, organizational,
experimental, research and development expense and other like intangibles,
(iii) treasury stock, and (iv) monies set apart and held in a sinking or other
analogous fund established for the purchase, redemption or other retirement of
capital stock.
"Termination Date" means May 15, 2000, or the earlier date of
termination in whole of the Commitments pursuant to Section 2.04, 2.15, or
8.01.
"Termination Event" means (i) a "reportable event", as such term is
described in Section 4043 of ERISA (other than a "reportable event" not subject
to the provision for 30-day notice to the PBGC), or an event described in
Section 4062(f) of ERISA, or (ii) the withdrawal of the Guarantor or any ERISA
Affiliate of the Guarantor from a Multiple Employer Plan during a plan year in
which it was a "substantial employer", as such term is defined in Section
4001(a)(2) of ERISA, or the incurrence of liability by the Guarantor or any
ERISA Affiliate of the Guarantor under Section 4064 of ERISA upon the
termination of a Plan or Multiple Employer Plan, or (iii) the distribution of a
notice of intent to terminate a Plan pursuant to Section 4041(a)(2) of ERISA or
the treatment of a Plan amendment as a termination under Section 4041 of ERISA,
or (iv) the institution of proceedings to terminate a Plan by the PBGC under
Section 4042 of ERISA, or (v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Type" shall have the meaning set forth in the definition of the term
"A Advance" above.
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<PAGE> 15
"Volumetric Production Payment" means, with respect to any Person, any
obligation of such Person to deliver pre-determined volumes of oil or gas out
of future production from designated reserves that is without recourse to other
assets of such Person.
"Withdrawal Liability" shall have the meaning given such term under
Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
Section 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles, and each reference herein to "generally
accepted accounting principles" shall mean generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 5.05.
Section 1.04. Miscellaneous. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to
Articles and Sections of and Schedules and Exhibits to this Agreement, unless
otherwise specified.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. The A Advances. Each Bank severally agrees, on the
terms and conditions hereinafter set forth, to make A Advances to the Borrower
from time to time on any Business Day prior to the Termination Date in an
aggregate amount outstanding not to exceed at any time such Bank's Commitment,
provided that the aggregate amount of the Commitments of the Banks shall be
deemed used from time to time to the extent of the aggregate amount of the B
Advances then outstanding and such deemed use of the aggregate amount of the
Commitments shall be applied to the Banks ratably according to their respective
Commitments (such deemed use of the aggregate amount of the Commitments being a
"B Reduction"). Each A Borrowing shall be in an aggregate amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, and shall
consist of A Advances of the same Type made to the Borrower on the same day by
the Banks ratably according to their respective Commitments. Within the limits
of each Bank's Commitment, the Borrower may borrow, prepay pursuant to Section
2.05(b) and reborrow under this Section 2.01. The indebtedness of the Borrower
resulting from the A Advances made from time to time by each Bank shall be
evidenced by an A Note of the Borrower payable to the order of such Bank.
Section 2.02. Making the A Advances. (a) During the Revolving
Period, each A Borrowing shall be made on notice, given not later than 10:00
A.M. (Dallas time) (1) in the case of a proposed Borrowing comprised of
Eurodollar Rate Advances, at least three Business Days prior to the date of the
proposed Borrowing, and (2) in the case of a proposed Borrowing comprised of
Base Rate Advances, on the Business Day of the proposed Borrowing, by the
Borrower requesting such A Borrowing to the Agent, which shall give to each
Bank prompt notice thereof by telecopy, telex or cable. Each such notice of an
A Borrowing (a "Notice of A Borrowing") shall be in writing (including by
telecopy), in
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substantially the form of Exhibit B-1 hereto, executed by the Borrower and
specifying therein the requested (i) date of such A Borrowing (which shall be a
Business Day), (ii) Type of A Advances comprising such A Borrowing, (iii)
aggregate amount of such A Borrowing, and (iv) Interest Period for each such A
Advance. In the case of a proposed A Borrowing comprised of Eurodollar Rate
Advances, the Agent shall promptly notify each Bank of the applicable interest
rate under Section 2.06(b). Each Bank shall, before 1:00 P.M. (Dallas time) on
the date of a proposed A Borrowing, make available for the account of its
Applicable Lending Office to the Agent at its address referred to in Section
10.02, in same day funds, such Bank's ratable portion of such A Borrowing.
After the Agent's receipt of such funds and upon fulfillment of the applicable
conditions set forth in Article III, the Agent will make such funds available
to the Borrower at the Agent's aforesaid address.
(b) Anything in subsection (a) above to the contrary
notwithstanding:
(i) at no time shall there be outstanding more than five A
Borrowings consisting of Eurodollar Rate Advances and one
Borrowing consisting of Base Rate Advances (other than
Borrowings consisting of Base Rate Advances as a result of
Section 2.02(b)(iii), (iv), or (v));
(ii) the Borrower may not select Eurodollar Rate Advances for any A
Borrowing to be made if the aggregate amount of such Borrowing
is less than $20,000,000;
(iii) if any Bank shall, at least one Business Day before the date
of any requested A Borrowing to be made, notify the Agent that
the introduction of or any change in or in the interpretation
of any law or regulation makes it unlawful, or that any
central bank or other governmental authority asserts that it
is unlawful, for such Bank or its Eurodollar Lending Office to
perform its obligations hereunder to make Eurodollar Rate
Advances or to fund Eurodollar Rate Advances hereunder, the
right of the Borrower to select Eurodollar Rate Advances for
such A Borrowing or any subsequent A Borrowing shall be
suspended until such Bank shall notify the Agent that the
circumstances causing such suspension no longer exist, and,
except as provided in Section 2.02(b)(vi), each Advance
comprising such A Borrowing shall be a Base Rate Advance;
(iv) if the Majority Banks shall, on or before the date of any
requested A Borrowing to be made, notify the Agent that the
Eurodollar Rate for Eurodollar Rate Advances comprising such A
Borrowing will not adequately reflect the cost to such Banks
of making their respective Eurodollar Rate Advances for such A
Borrowing, the right of the Borrower to select Eurodollar Rate
Advances for such A Borrowing or any subsequent A Borrowing
shall be suspended until the Agent, at the request of the
Majority Banks, shall notify the Borrower and the Banks that
the circumstances causing such suspension no longer exist,
and, except as provided in Section 2.02(b)(vi), each Advance
comprising such A Borrowing shall be a Base Rate Advance;
(v) if less than two Reference Banks furnish timely information to
the Agent for determining the Eurodollar Rate for Eurodollar
Rate Advances, comprising any requested A Borrowing to be
made, the right of the Borrower to select Eurodollar Rate
Advances, as the case may be, for such A Borrowing or any
subsequent A Borrowing shall be suspended until the Agent
shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist, and,
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except as provided in Section 2.02(b)(vi), each Advance
comprising such A Borrowing shall be a Base Rate Advance;
(vi) if the Borrower has requested a proposed A Borrowing
consisting of Eurodollar Rate Advances and as a result of
circumstances referred to in Section 2.02(b)(iii), (iv) or (v)
such A Borrowing would not consist of Eurodollar Rate
Advances, the Borrower may, by notice given not later than
2:00 P.M. (Dallas time) at least one Business Day prior to the
date such proposed A Borrowing would otherwise be made, cancel
such A Borrowing, in which case such A Borrowing shall be
cancelled and no Advances shall be made as a result of such
requested A Borrowing, but the Borrower shall indemnify the
Banks in connection with such cancellation as contemplated by
Section 2.02(c); and
(vii) if the Borrower shall fail to select the duration or
continuation of any Interest Period for any Eurodollar Rate
Advances in accordance with the provisions contained in the
definition of "Interest Period" in Section 1.01 and this
paragraph (b), the Agent will promptly so notify the Borrower
and the Banks and such A Advances will be made available to
the Borrower on the date of such A Borrowing as Base Rate
Advances.
(c) Each Notice of A Borrowing shall be irrevocable and binding on
the Borrower, except as set forth in Section 2.02(b)(vi). In the case of any A
Borrowing requested by the Borrower which the related Notice of A Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Bank against any loss, cost or expense incurred by such Bank as
a result of any failure to fulfill on or before the date specified in such
Notice of A Borrowing for such A Borrowing the applicable conditions set forth
in Article III, including, without limitation, any loss (including loss of
reasonably anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank to
fund the A Advance to be made by such Bank as part of such A Borrowing when
such A Advance, as a result of such failure, is not made on such date. A
certificate in reasonable detail as to the basis for and the amount of such
loss, cost or expense submitted to the Borrower and the Agent by such Bank
shall be prima facie evidence of the amount of such loss, cost or expense. If
an A Borrowing requested by the Borrower which the related Notice of A
Borrowing specifies is to be comprised of Eurodollar Rate Advances is not made
as an A Borrowing comprised of Eurodollar Rate Advances as a result of Section
2.02(b), the Borrower shall indemnify each Bank against any loss (excluding
loss of profits), cost or expense incurred by such Bank by reason of the
liquidation or reemployment of deposits or other funds acquired by such Bank
(prior to the time such Bank is actually aware that such A Borrowing will not
be so made) to fund the A Advance to be made by such Bank as part of such A
Borrowing. A certificate in reasonable detail as to the basis for and the
amount of such loss, cost or expense submitted to the Borrower and the Agent by
such Bank shall be prima facie evidence of the amount of such loss, cost or
expense.
(d) Unless the Agent shall have received notice from a Bank prior
to the date of any A Borrowing that such Bank will not make available to the
Agent such Bank's ratable portion of such A Borrowing, the Agent may assume
that such Bank has made such portion available to the Agent on the date of such
A Borrowing in accordance with subsection (a) of this Section 2.02 and the
Agent may, in reliance upon such assumption, make available to the Borrower
requesting such A Borrowing on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such ratable portion available to
the Agent, such
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<PAGE> 18
Bank and the Borrower severally agree to repay to the Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until the date such amount
is repaid to the Agent, at (i) in the case of the Borrower, the interest rate
applicable at the time to A Advances comprising such A Borrowing and (ii) in
the case of such Bank, the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall constitute such
Bank's A Advance as part of such A Borrowing for purposes of this Agreement.
(e) The failure of any Bank to make the A Advance to be made by it
as part of any A Borrowing shall not relieve any other Bank of its obligation,
if any, hereunder to make its A Advance on the date of such A Borrowing, but no
Bank shall be responsible for the failure of any other Bank to make the A
Advance to be made by such other Bank on the date of any A Borrowing.
Section 2.03. Fees.
(a) Facility Fee. The Borrower agrees to pay to each Bank a
facility fee on such Bank's Commitment (regardless of usage) from the date
hereof until the Termination Date at a rate of .10% per annum, payable in
arrears on the last day of each calendar quarter during the term of such Bank's
Commitment, and on the Termination Date.
(b) Administrative Fee. The Borrower agrees to pay to the Agent,
for its sole account, an administrative fee as set forth in the Agent's Fee
Letter.
(c) Bid Request Fee. The Borrower agrees to pay to the Agent on
the date of each request for B Advances pursuant to Section 2.08 a bid request
fee as set forth in the Agent's Fee Letter.
(d) Arrangement Fee. The Borrower agrees to pay to the Agent on
the date of this Agreement an arrangement fee as set forth in the Agent's Fee
Letter.
Section 2.04. Optional Reduction of the Commitments. The Borrower
shall have the right, upon at least five Business Days notice to the Agent, to
terminate in whole or reduce ratably in part the unused portions of the
respective Commitments of the Banks, provided that each partial reduction shall
be in the aggregate amount of at least $10,000,000, and provided further, that
the aggregate amount of the Commitments of the Banks shall not be reduced to an
amount which is less than the aggregate principal amount of the Advances then
outstanding. Any such reduction or termination of the Commitments shall be
permanent.
Section 2.05. Repayment and Prepayment of A Advances. (a) The unpaid
principal amount of each A Advance that is made by each Bank shall be repaid by
the Borrower in full on the last day of the Interest Period for such A Advance.
(b) The Borrower may, in respect of Base Rate Advances upon at
least one Business Days' notice, and, in respect of Eurodollar Rate Advances
upon at least three Business Days' notice, to the Agent stating the proposed
date (which shall be a Business Day) and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the A Advances comprising part of the same A
Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid and amounts, if any,
required to be paid pursuant to Section 2.10 as a result of such prepayment;
provided, however, that each partial prepayment pursuant to this Section
2.05(b) shall be in an aggregate principal
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amount not less than $5,000,000 and in an aggregate principal amount such that
after giving effect thereto no A Borrowing comprised of Base Rate Advances
shall have a principal amount outstanding of less than $5,000,000 and no A
Borrowing comprised of Eurodollar Rate Advances shall have a principal amount
outstanding of less than $20,000,000.
Section 2.06. Interest on A Advances. The Borrower shall pay
interest on the unpaid principal amount of each A Advance made by each Bank
from the date of such A Advance until such principal amount shall be paid in
full, at the following rates per annum:
(a) Base Rate Advances. If such A Advance is a Base Rate Advance,
a rate per annum equal at all times during the Interest Period for such A
Advance to the Base Rate in effect from time to time during such Interest
Period for such A Advance, payable on the last day of such Interest Period.
(b) Eurodollar Rate Advances. If such A Advance is a Eurodollar
Rate Advance, a rate per annum equal at all times during the Interest Period
for such A Advance to the sum of the Eurodollar Rate for such Interest Period
plus the Applicable Margin in effect from time to time for such A Advance,
payable on the last day of such Interest Period and, if such Interest Period
has a duration of more than three months, on each day which occurs during such
Interest Period every three months from the first day of such Interest Period.
(c) Additional Interest on Eurodollar Rate Advances. The Borrower
shall pay to each Bank, so long as such Bank shall be required under
regulations of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities, additional interest on the unpaid principal amount of
each Eurodollar Rate Advance of such Bank, from the date of such Advance until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (i) the Eurodollar Rate for
the Interest Period for such Advance from (ii) the rate obtained by dividing
such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Bank for such Interest Period, payable on each date
on which interest is payable on such Advance. Such additional interest shall
be determined by such Bank and notified to the Borrower through the Agent. A
certificate as to the amount of such additional interest submitted to the
Borrower and the Agent by such Bank shall be conclusive and binding for all
purposes, absent manifest error.
Section 2.07. Interest Rate Determination. (a) Each Reference Bank
agrees to furnish to the Agent timely information for the purpose of
determining each Eurodollar Rate. If any of the Reference Banks shall not
furnish such timely information to the Agent for the purpose of determining any
such Eurodollar Rate, the Agent shall determine such Eurodollar Rate on the
basis of timely information furnished by the remaining Reference Banks, subject
to Section 2.02(b).
(b) The Agent shall give prompt notice to the Borrower and the
Banks of the applicable interest rate for such A Advance determined by the
Agent for purposes of Section 2.06(a) or (b), and the applicable rate, if any,
furnished by each Reference Bank for the purpose of determining the applicable
interest rate under Section 2.06(b).
Section 2.08. The B Advances. (a) Each Bank severally agrees that
the Borrower may make B Borrowings under this Section 2.08 from time to time on
any Business Day during the period from the date hereof until the date
occurring 30 days prior to the Termination Date in the manner set forth below;
provided that,
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following the making of each B Borrowing, the aggregate amount of the Advances
then outstanding shall not exceed the aggregate amount of the Commitments of
the Banks (computed without regard to any B Reduction).
(i) The Borrower may request a B Borrowing under this Section 2.08
by delivering to the Agent, not later than 9:00 A.M. (Dallas
time) at least five Business Days prior to the date of the
proposed B Borrowing, a notice of a B Borrowing (a "Notice of
B Borrowing"), in substantially the form of Exhibit B-2
hereto, specifying the date and aggregate amount of the
proposed B Borrowing, the maturity date for repayment of each
B Advance to be made as part of such B Borrowing (which
maturity date may not be earlier than the date occurring 14
days after the date of such B Borrowing or later than the
earlier of 6 months after the date of such B Borrowing or the
Termination Date), the interest payment date or dates relating
thereto, and any other terms to be applicable to such B
Borrowing (including, without limitation, the basis to be used
by the Banks in determining the rate or rates of interest to
be offered by them as provided in paragraph (ii) below and
prepayment terms, if any, but excluding any waiver or other
modification to any of the conditions set forth in Article
III). The Borrower may not select a maturity date for any B
Borrowing which ends after the Termination Date. The Agent
shall promptly notify each Bank of each request for a B
Borrowing received by it from the Borrower by sending such
Bank a copy of the related Notice of B Borrowing.
(ii) Each Bank may, if in its sole discretion it elects to do so,
irrevocably offer to make one or more B Advances to the
Borrower as part of such proposed B Borrowing at a rate or
rates of interest specified by such Bank in its sole
discretion, by notifying the Agent (which shall give prompt
notice thereof to the Borrower), before 9:00 A.M. (Dallas
time) three Business Days before the date of such proposed B
Borrowing specified in the Notice of B Borrowing delivered
with respect thereto pursuant to paragraph (i) above, of the
minimum amount and maximum amount of each B Advance which such
Bank would be willing to make as part of such proposed B
Borrowing (which amounts may, subject to the proviso to the
first sentence of this Section 2.08(a), exceed such Bank's
Commitment), the rate or rates of interest therefor and such
Bank's Applicable Lending Office with respect to such B
Advance; provided that if the Agent in its capacity as a Bank
shall, in its sole discretion, elect to make any such offer,
it shall notify the Borrower of such offer before 8:45 A.M.
(Dallas time) three Business Days before the date of the
proposed B Borrowing specified in the Notice of B Borrowing
delivered with respect thereto pursuant to paragraph (i)
above. Any Bank which has not notified the Agent of an offer
prior to the time specified above shall be deemed to have
elected not to make such an offer.
(iii) The Borrower shall, in turn, before 10:00 A.M. (Dallas time)
three Business Days before the date of such proposed B
Borrowing specified in the Notice of B Borrowing delivered
with respect thereto pursuant to paragraph (i) above, either
(A) cancel such B Borrowing by giving the Agent
notice to that effect, or
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(B) accept one or more of the offers made by any
Bank or Banks pursuant to paragraph (ii) above, in its sole
discretion, by giving notice to the Agent of the amount of
each B Advance (which amount shall be equal to or greater than
the minimum amount, and equal to or less than the maximum
amount, notified to the Borrower by the Agent on behalf of
such Bank for such B Advance pursuant to paragraph (ii) above)
to be made by each Bank as part of such B Borrowing, and
reject any remaining offers made by Banks pursuant to
paragraph (ii) above by giving the Agent notice to that
effect.
(iv) If the Borrower notifies the Agent that such B Borrowing is
cancelled pursuant to paragraph (iii)(A) above, the Agent
shall give prompt notice thereof to the Banks and such B
Borrowing shall not be made.
(v) If the Borrower accepts one or more of the offers made by any
Bank or Banks pursuant to paragraph (iii)(B) above, the Agent
shall in turn promptly notify (A) each Bank that has made an
offer as described in paragraph (ii) above, of the date and
aggregate amount of such B Borrowing and whether or not any
offer or offers made by such Bank pursuant to paragraph (ii)
above have been accepted by the Borrower, (B) each Bank that
is to make a B Advance as part of such B Borrowing, of the
amount of each B Advance to be made by such Bank as part of
such B Borrowing, and (C) each Bank that is to make a B
Advance as part of such B Borrowing, upon receipt, that the
Agent has received forms of documents appearing to fulfill the
applicable conditions set forth in Article III. Each Bank
that is to make a B Advance as part of such B Borrowing shall,
before 1:00 P.M. (Dallas time) on the date of such B Borrowing
specified in the notice received from the Agent pursuant to
clause (A) of the preceding sentence or any later time when
such Bank shall have received notice from the Agent pursuant
to clause (C) of the preceding sentence, make available for
the account of its Applicable Lending Office to the Agent at
its address referred to in Section 10.02 such Bank's portion
of such B Borrowing, in same day funds. Upon fulfillment of
the applicable conditions set forth in Article III and after
receipt by the Agent of such funds, the Agent will make such
funds available to the Borrower at the Agent's aforesaid
address. Promptly after each B Borrowing the Agent will
notify each Bank of the amount of the B Borrowing, the
consequent B Reduction and the dates upon which such B
Reduction commenced and will terminate.
(b) Each B Borrowing shall be in an aggregate amount of not less
than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of each B Borrowing, the Borrower shall be in compliance
with the limitation set forth in the proviso to the first sentence of Section
2.08(a).
(c) Within the limits and on the conditions set forth in this
Section 2.08, the Borrower may from time to time borrow under this Section
2.08, repay pursuant to subsection (d) below, and reborrow under this Section
2.08, provided that no B Borrowing shall be made within three Business Days of
the date of another B Borrowing.
(d) The Borrower shall repay to the Agent for the account of each
Bank which has made a B Advance to the Borrower on the maturity date of each B
Advance (such maturity date being that specified by the Borrower for repayment
of such B Advance in the related Notice of B Borrowing delivered pursuant to
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subsection (a)(i) above) the then unpaid principal amount of such B Advance.
The Borrower shall not have any right to prepay any principal amount of any B
Advance unless, and then only on the terms, specified by the Borrower for such
B Advance in the related Notice of B Borrowing delivered pursuant to subsection
(a)(i) above and set forth in the B Note evidencing such B Advance.
(e) The Borrower shall pay interest on the unpaid principal amount
of each B Advance from the date of such B Advance to the date the principal
amount of such B Advance is repaid in full, at the rate of interest for such B
Advance specified by the Bank making such B Advance in its notice with respect
thereto delivered pursuant to subsection (a)(ii) above, payable on the interest
payment date or dates specified by the Borrower for such B Advance in the
related Notice of B Borrowing delivered pursuant to subsection (a)(i) above, as
provided in the B Note evidencing such B Advance.
(f) The indebtedness of the Borrower resulting from each B Advance
made to the Borrower as part of a B Borrowing shall be evidenced by a separate
B Note of the Borrower payable to the order of the Bank making such B Advance.
Section 2.09. Payments, Computations; Interest on Overdue Amounts.
(a) The Borrower shall make each payment hereunder and under the Notes to be
made by it not later than 10:00 A.M. (Dallas time) on the day when due in U.S.
dollars to the Agent at its address referred to in Section 10.02 in same day
funds. The Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal, interest or fees ratably (other than
amounts payable pursuant to Section 2.06(c), 2.08, 2.10, 2.11 or 2.13) to the
Banks for the account of their respective Applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Bank to such
Bank for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. In no event shall any
Bank be entitled to share any administrative fee paid to the Agent pursuant to
Section 2.03(b), any bid request fee paid to the Agent pursuant to Section
2.03(c) or any other fee paid to the Agent, as such.
(b) All computations of interest based on the Base Rate and of
fees shall be made by the Agent on the basis of a year of 365 or 366 days, as
the case may be, and all computations of interest based on the Eurodollar Rate
or the Federal Funds Rate shall be made by the Agent, and all computations of
interest pursuant to Section 2.06(c) shall be made by a Bank, on the basis of a
year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Agent (or, in the case
of Section 2.06(c), by a Bank) of an interest rate hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or fee, as the case
may be; provided, however, if such extension would cause payment of interest on
or principal of Eurodollar Rate Advances to be made in the next following
calendar month, such payment shall be made on the next preceding Business Day.
(d) Unless the Agent shall have received notice from the Borrower
prior to the date on which any payment is due by the Borrower to any Bank
hereunder that the Borrower will not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank
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<PAGE> 23
on such due date an amount equal to the amount then due such Bank. If and to
the extent the Borrower shall not have so made such payment in full to the
Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Agent, at the Federal Funds Rate.
(e) Whenever any reference is made to any Bank's "ratable share"
or "ratable portion" (or any similar reference) of any amount hereunder, such
share or portion shall be calculated to not more than four decimal places,
rounding up or down, as appropriate.
(f) Any amount payable hereunder or under the Notes or under any
other Credit Document which is not paid when due (whether at stated maturity,
by acceleration or otherwise) shall bear interest, to the extent permitted by
law, from the date on which such amount became due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times to: (i) in the
case of any overdue principal of any Advance, the greater of (x) the sum of the
Base Rate in effect from time to time plus 2% per annum and (y) the sum of the
rate per annum required to be paid on such Advance immediately prior to the
date on which such amount became due plus 2% per annum, or (ii) in the case of
any interest, fee or other amount payable hereunder or under the Notes or under
any other Credit Document, the sum of the Base Rate in effect from time to time
plus 2% per annum.
Section 2.10. Consequential Losses. If (a) any payment (or purchase
pursuant to Section 2.11(c)) of principal of any Eurodollar Rate Advance or B
Advance made to the Borrower is made other than on the last day of an Interest
Period relating to such Advance (or in the case of a B Advance, other than on
the original scheduled maturity date thereof), as a result of a prepayment
pursuant to Section 2.05(b) or 2.12 or acceleration of the maturity of the
Notes pursuant to Section 2.15 or Section 8.01 or for any other reason or as a
result of any such purchase; or (b) the Borrower fails to make a principal or
interest payment with respect to any Eurodollar Rate Advance or B Advance on
the date such payment is due and payable, the Borrower shall, upon demand by
any Bank (with a copy of such demand to the Agent), pay to the Agent for the
account of such Bank any amounts required to compensate such Bank for any
additional losses, costs or expenses which it may reasonably incur as a result
of any such payment or purchase, including, without limitation, any loss
(including loss of reasonably anticipated profits, except in the case of such a
purchase pursuant to Section 2.11(c)), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Bank to fund or maintain such Advance.
Section 2.11. Increased Costs. (a) If, due to either (i) the
introduction of or any change (including without limitation, but without
duplication, any change by way of imposition or increase of reserve requirements
included, in the case of Eurodollar Rate Advances, the Eurodollar Rate Reserve
Percentage) in or in the interpretation, application or applicability of any law
or regulation or (ii) the compliance with any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the cost to any Bank of agreeing to make or
making, funding or maintaining any Fixed Rate Advance to the Borrower, then the
Borrower shall from time to time, upon demand by such Bank (with a copy of such
demand to the Agent), pay to the Agent for the account of such Bank additional
amounts sufficient to compensate such Bank for such increased cost. A
certificate as to the amount of such increased cost, submitted to the Borrower
and the Agent by such Bank, shall be prima facie evidence of the amount of such
increased cost. Promptly after any
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<PAGE> 24
Bank becomes aware of any such introduction, change or proposed compliance,
such Bank shall notify the Borrower thereof, provided that the failure to
provide such notice shall not affect such Bank's rights hereunder, except that
such Bank's right to recover such increased costs from the Borrower for any
period prior to such notice shall be limited to the period of (i) 180 days, if
such increased cost relates to any outstanding Advance, or (ii) 90 days, in
each other event, immediately prior to the date such notice is given to the
Borrower.
(b) If any Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by
such Bank or any corporation controlling such Bank and that the amount of such
capital is increased by or based upon the existence of such Bank's commitment
to lend to the Borrower hereunder and other commitments of this type, then,
upon demand by such Bank (with a copy of such demand to the Agent), the
Borrower shall immediately pay to the Agent for the account of such Bank, from
time to time as specified by such Bank, additional amounts sufficient to
compensate such Bank or such corporation in the light of such circumstances, to
the extent that such Bank reasonably determines such increase in capital to be
allocable to the existence of such Bank's commitment to lend hereunder. A
certificate as to such amounts submitted to the Borrower and the Agent by such
Bank shall be conclusive and binding for all purposes, absent manifest error.
(c) In the event that any Bank makes a demand for payment under
Section 2.06(c) or this Section 2.11, the Borrower may within ninety days of
such demand, if no Default then exists, replace such Bank with another
commercial bank in accordance with all of the provisions of the last sentence
of Section 10.06(a) (including execution of an appropriate Assignment) provided
that (i) all obligations of such Bank to lend hereunder shall be terminated and
the A Note and any B Note payable to such Bank and all other obligations owed
to such Bank hereunder shall be purchased in full without recourse at par plus
accrued interest at or prior to such replacement, (ii) such replacement bank
shall be reasonably satisfactory to the Agent, (iii) such replacement bank
shall, from and after such replacement, be deemed for all purposes to be a
"Bank" hereunder with a Commitment in the amount of the respective Commitment
of the assigning Bank immediately prior to such replacement (plus, if such
replacement bank is already a Bank prior to such replacement, the respective
Commitment of such Bank prior to such replacement), as such amount may be
changed from time to time pursuant hereto, and shall have all of the rights,
duties and obligations hereunder of the Bank being replaced, and (iv) such
other actions shall be taken by the Borrower, such Bank and such replacement
bank as may be appropriate to effect the replacement of such Bank with such
replacement bank on terms such that such replacement bank has all of the
rights, duties and obligations hereunder as such Bank (including, without
limitation, execution and delivery of new Notes to such replacement bank,
redelivery to the Borrower in due course of the Notes payable to such Bank and
specification of the information contemplated by Schedule I as to such
replacement bank).
Section 2.12. Illegality. Notwithstanding any other provision of
this Agreement, if any Bank shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation shall make it
unlawful, or any central bank or other governmental authority shall assert that
it is unlawful, for any Bank or its Applicable Lending Office to make any Fixed
Rate Advance or to continue to fund or maintain any Fixed Rate Advance
hereunder, then, on notice thereof to the Borrower by the Agent, (i) the
obligation of each of the Banks to make any Fixed Rate Advance of the same Type
shall be suspended until the Agent shall notify the Borrower and the Banks that
the circumstances
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<PAGE> 25
causing such suspension no longer exist, and (ii) the Borrower shall forthwith
prepay in full all Fixed Rate Advances then outstanding of all Banks which are
affected Fixed Rate Advances, together with all accrued interest thereon and
all amounts payable pursuant to Section 2.10, unless each Bank shall determine
in good faith in its sole opinion that it is lawful to maintain the Fixed Rate
Advances made by such Bank to the end of the Interest Period then applicable
thereto.
Section 2.13. Taxes. (a) Any and all payments by the Borrower or the
Guarantor hereunder or under the Notes or any other Credit Document shall be
made, in accordance with Section 2.09, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges
or withholdings with respect thereto, and all liabilities with respect thereto,
excluding in the case of each Bank and the Agent, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the laws of which
such Bank or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Borrower or the
Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable by it hereunder or under any Note or other Credit Document to
any Bank or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.13) such Bank or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower or the Guarantor,
as the case may be, shall make such deductions and (iii) the Borrower or the
Guarantor, as the case may be, shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Borrower or the Guarantor, as the case may
be, agrees to pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any
payment made by the Borrower or the Guarantor hereunder or under any Note or
other Credit Document executed by it or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any Note or
other Credit Document (hereinafter referred to as "Other Taxes").
(c) THE BORROWER AND THE GUARANTOR WILL INDEMNIFY EACH BANK, THE
CO-AGENTS AND THE AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING,
WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY JURISDICTION ON
AMOUNTS PAYABLE UNDER THIS SECTION 2.13) OWED AND PAID BY SUCH BANK, CO-AGENT
OR THE AGENT (AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING PENALTIES,
INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO. THIS
INDEMNIFICATION SHALL BE MADE WITHIN 30 DAYS FROM THE DATE SUCH BANK, THE
CO-AGENT OR THE AGENT (AS THE CASE MAY BE) MAKES WRITTEN DEMAND THEREFOR.
(d) Within 30 days after the date of the payment of Taxes by or at
the direction of the Borrower or the Guarantor, the Borrower will furnish to
the Agent, at its address referred to in Section 10.02, the original or a
certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
the Borrower or the Guarantor hereunder, the agreements and obligations of the
Borrower and the Guarantor contained in this Section 2.13 shall survive the
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<PAGE> 26
payment in full of principal and interest hereunder and under the Notes and
other Credit Documents.
(f) Each Bank that is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to the
Borrower and the Agent on the date of this Agreement or upon the effectiveness
of any Assignment and Acceptance (i) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the
case may be, certifying in each case that such Bank is entitled to receive
payments under this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes, (ii) if applicable, an
Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax, and (iii) any other governmental forms which are necessary or required
under an applicable tax treaty or otherwise by law to reduce or eliminate any
withholding tax, which have been reasonably requested by the Borrower. Each
Bank which delivers to the Borrower and the Agent a Form 1001 or 4224 and Form
W-8 or W-9 pursuant to the next preceding sentence further undertakes to
deliver to the Borrower and the Agent two further copies of the said Form 1001
or 4224 and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Borrower and
the Agent, and such extensions or renewals thereof as may reasonably be
requested by the Borrower and the Agent certifying in the case of a Form 1001
or 4224 that such Bank is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes.
The Borrower shall withhold tax at the rate and in the manner required by the
laws of the United States with respect to payments made to a Bank failing to
timely provide the requisite Internal Revenue Service forms.
Section 2.14. Payments Pro Rata. Except as provided in Sections
2.03(b), 2.03(c), 2.03(d), 2.06(c), 2.10, 2.11, 2.13, or 2.15, each of the
Banks agrees that if it should receive any payment (whether by voluntary
payment, by realization upon security, by the exercise of the right of setoff
or banker's lien, by counterclaim or cross action, by the enforcement of any
right under this Agreement or the Notes or other Credit Documents, or
otherwise) in respect of any obligation of the Borrower or Guarantor hereunder
or under the Notes or other Credit Documents of a sum which with respect to the
related sum or sums received by other Banks is in a greater proportion than the
total amount of principal, interest, fees or any other obligation incurred
hereunder, as the case may be, then owed and due to such Bank bears to the
total amount of principal, interest, fees or any such other obligation then
owed and due to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash without recourse
from the other Banks an interest in the obligations of the Borrower to such
Banks in such amount as shall result in a proportional participation by all of
the Banks in the aggregate unpaid amount of principal, interest, fees or any
such other obligation, as the case may be, owed to all of the Banks, provided
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Bank, such purchase from each other Bank shall be rescinded and
each such other Bank shall repay to the purchasing Bank the purchase price to
the extent of such other Bank's ratable share (according to the proportion of
(i) the amount of the participation purchased from such other Bank as a result
of such excess payment to (ii) the total amount of such excess payment) of such
recovery together with an amount equal to such other Bank's ratable share
(according to the proportion of (i) the amount of such other Bank's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of
any interest or other amount paid or payable by the purchasing Bank in respect
of the total amount so recovered. The Borrower agrees
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<PAGE> 27
that any Bank so purchasing a participation from another Bank pursuant to this
Section 2.14 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
Section 2.15. Optional Termination by Banks. Notwithstanding
anything to the contrary in this Agreement, if Petrofina S.A., a societe
anonyme (corporation) organized and existing under the laws of Belgium
("Petrofina"), shall at any time own, directly or indirectly, capital stock of
the Guarantor representing less than 50% of the voting power of all capital
stock of the Guarantor, then in such event (i) the Guarantor shall promptly and
in any case within 15 days of such event notify the Agent and the Agent shall
so inform the Banks, (ii) each Bank shall have the option, for 30 days from the
date of its receipt of notice from the Agent, to terminate its Commitment and
to require the Borrower to repay all Advances then outstanding and payable to
such Bank, together with accrued and unpaid interest and fees payable to such
Bank, and (iii) the Borrower shall repay all Advances, interest and fees
payable to all such terminating Banks within 60 days of the date the last
terminating Bank has exercised its option to terminate its Commitment; provided
however, that no Bank shall be entitled to repayment of its Advances, interest
and fees pursuant to this Section if at the scheduled time of such repayment
any Default has occurred which is continuing unless with the consent of the
Agent and all Banks; and provided further, however, that unless the Majority
Banks elect to continue their Commitments, the Commitments of all Banks shall
be deemed to have been terminated pursuant to this Section and the Borrower
shall be obligated to repay all outstanding Advances, interest and fees
hereunder to the Banks within 60 days of the date the last terminating Bank
exercised its option to terminate its Commitment pursuant to this Section.
ARTICLE III
CONDITIONS
Section 3.01. Conditions Precedent to Initial Borrowings. The
obligation of each Bank to make its initial Advance as part of the initial
Borrowing is subject to the conditions precedent that:
(a) Documentation. On or before the day on which the initial
Borrowing is made, the Agent shall have received the following duly executed by
all the parties thereto, in form and substance satisfactory to the Agent and
the Banks, and (except for the Notes) in sufficient copies for each Bank:
(i) This Agreement duly executed by the Borrower, the
Guarantor, the Agent, the Co-Agents and each Bank.
(ii) A certificate of the Secretary or an Assistant
Secretary of the Borrower certifying (i) copies of the Certificate of
Incorporation and Bylaws of the Borrower as in effect on the date
hereof, and (ii) the names and true signatures of the officers of the
Borrower authorized to sign the Credit Documents executed or to be
executed by the Borrower.
(iii) A certificate of the Secretary or an Assistant
Secretary of the Guarantor certifying (i) copies of the Certificate of
Incorporation and Bylaws of the Guarantor as in effect on the date
hereof, and (ii) the names and true signatures of the officers of the
Guarantor authorized to sign the Credit Documents executed or to be
executed by the Guarantor.
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<PAGE> 28
(iv) A favorable opinion of Cullen M. Godfrey, General
Counsel for each of the Borrower and the Guarantor, substantially in
the form of Exhibit D hereto and as to such other matters as any Bank
through the Agent may reasonably request.
(v) A favorable opinion of Messrs. Bracewell & Patterson,
counsel for the Agent, substantially in the form of Exhibit E hereto.
(vi) The Agent's Fee Letter, executed by the Agent, the
Borrower and the Guarantor.
(b) No Material Adverse Change. No event or events which,
individually or in the aggregate has had or is reasonably likely to cause a
material adverse change in the business, assets, condition or operations of (i)
the Borrower and its Subsidiaries taken as a whole, or (ii) the Guarantor and
its Subsidiaries taken as a whole shall have occurred.
(c) Payment of Fees. On the date of this Agreement, the Borrower
shall have paid the fees required by paragraphs (b) and (d) of Section 2.03 and
all costs and expenses which have been invoiced and are payable pursuant to
Section 10.04.
(d) No Default. No Default shall have occurred and be continuing
or would result from such Borrowing or from the application of the proceeds
therefrom.
(e) Representations and Warranties. The representations and
warranties contained in Article V hereof shall be true and correct in all
material respects on and as of the Effective Date before and after giving
effect to the initial Borrowing and to the application of the proceeds from
such Borrowing, as though made on and as of such date.
(f) Termination of Existing Credit Agreement. The Agent, the
Co-Agents and the Banks shall have received sufficient evidence indicating that
the Borrower's and the Guarantor's obligations under the Amended and Restated
Credit Agreement dated as of March 10, 1994 among the Borrower, the Guarantor,
the banks parties thereto, and NationsBank of Texas, N.A., as agent, have been
repaid and all commitments of the banks party thereto have been terminated.
(g) No Material Litigation. No legal or regulatory action or
proceeding has commenced and is continuing against the Borrower, the Guarantor
or any of their Subsidiaries since the date of this Agreement which could
reasonably be expected to cause a material adverse change in the business,
assets, condition or operations of (i) the Borrower and its Subsidiaries taken
as a whole, or (ii) the Guarantor and its Subsidiaries taken as a whole.
Section 3.02. Conditions Precedent to Each A Borrowing. The
obligation of each Bank to make an A Advance on the occasion of any A Borrowing
(including the initial Borrowing) shall be subject to the further conditions
precedent that on the date of such A Borrowing the following statements shall
be true (and each of the giving of the applicable Notice of A Borrowing and the
acceptance by the Borrower of the proceeds of such A Borrowing shall constitute
a representation and warranty by the Borrower that on the date of such A
Borrowing such statements are true):
(i) the representations and warranties contained in Article V
(other than in Section 5.05 and Section 5.06) are correct on
and as of the date of such A Borrowing, before and after
giving effect to such
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A Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date,
(ii) no event has occurred and is continuing, or would result from
such A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default, and
(iii) after giving effect to such A Borrowing and all other
Borrowings which have been requested on or prior to such date
but which have not been made prior to such date, the aggregate
principal amount of all Borrowings will not exceed the
aggregate of the Commitments;
and the Agent shall have received such other approvals, opinions or documents
as any Bank through the Agent may reasonably request.
Section 3.03. Conditions Precedent to Certain Borrowings. The
obligation of each Bank to make that portion of an A Advance on the occasion of
any A Borrowing which would increase the aggregate outstanding amount of A
Advances owing to such Bank over the aggregate amount of A Advances owing to
such Bank outstanding immediately prior to the making of such Advance shall in
each case be subject to the further conditions precedent that on the date of
such Borrowing the following statements shall be true (and each of the giving
of the applicable Notice of Borrowing and the acceptance by the Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by
the Borrower that on the date of such Borrowing such statements are true): (i)
the representations and warranties contained in Section 5.05 and Section 5.06
are correct on and as of the date of such Borrowing, before and after giving
effect to such Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date, and (ii) no Default occurred and is
continuing, or would result from such Borrowing or from the application of the
proceeds therefrom.
Section 3.04. Conditions Precedent to Each B Borrowing. The
obligation of each Bank which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the further conditions precedent that (a) at or
before the time required by paragraph (iii) of Section 2.08(a), the Agent shall
have received the written confirmatory notice of such B Borrowing contemplated
by such paragraph, (b) on or before the date of such B Borrowing but prior to
such B Borrowing, the Agent shall have received a B Note executed by the
Borrower payable to the order of such Bank for each of the one or more B
Advances to be made by such Bank as part of such B Borrowing, in a principal
amount equal to at least the principal amount of the B Advance to be evidenced
thereby and otherwise on such terms as were agreed to for such B Advance in
accordance with Section 2.08, and (c) on the date of such B Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of B Borrowing and the acceptance by the Borrower of the proceeds of
such B Borrowing shall constitute a representation and warranty by the Borrower
that on the date of such B Borrowing such statements are true):
(i) the representations and warranties contained in Article V are
correct on and as of the date of such B Borrowing, before and
after giving effect to such B Borrowing and to the application
of the proceeds therefrom, as though made on and as of such
date,
(ii) no event has occurred and is continuing, or would result from
such B Borrowing or from the application of the proceeds
therefrom, which constitutes a Default, and
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(iii) following the making of such B Borrowing and all other
Borrowings to be made on the same day to the Borrower under
this Agreement, the aggregate principal amount of all Advances
then outstanding shall not exceed the aggregate amount of the
Commitments to the Borrower (computed without regard to any B
Reduction);
and the Agent shall have received such other approvals, opinions or documents
as any Bank through the Agent may reasonably request.
ARTICLE IV
GUARANTY
Section 4.01. Guaranty. The Guarantor hereby unconditionally
guarantees the punctual payment of the Guaranteed Obligations when due, whether
at stated maturity, by acceleration or otherwise, and agrees to pay any and all
expenses (including counsel fees and expenses) incurred by the Agent or any Bank
in enforcing any rights hereunder. Without limiting the generality of the
foregoing, the Guarantor's liability shall extend to all amounts which
constitute part of the Guaranteed Obligations and would be owed by the Borrower
under this Agreement or any of the Notes but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
Section 4.02. Guaranty Absolute. The Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
the Credit Documents executed from time to time by the Borrower, regardless of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or any Bank with respect
thereto. The obligations of the Guarantor hereunder are independent of the
Guaranteed Obligations, and provided an Event of Default exists as to the
Borrower and is continuing at the time an action is brought, a separate action
or actions may be brought and prosecuted against the Guarantor to enforce this
Agreement, irrespective or whether any action is brought against the Borrower
or whether the Borrower is joined in any such action or actions. The liability
of the Guarantor hereunder shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any of the
Credit Documents against the Borrower;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Guaranteed Obligations
or any other liabilities, or any other amendment or waiver of or any
consent to departure from any of the Credit Documents, including,
without limitation, any increase in the Guaranteed Obligations or any
other liabilities resulting from the making of additional Advances
guaranteed by the Guarantor to the Borrower or otherwise;
(iii) any taking, exchange, release or non-perfection of
any collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations or any other liabilities;
(iv) any manner of application of collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations or any other
liabilities, or any manner of sale or other disposition of any
collateral for all or any of the Guaranteed Obligations or any other
liabilities or any other assets of the Borrower or any of its
Subsidiaries;
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<PAGE> 31
(v) any change, restructuring or termination of the
corporate structure or existence of the Borrower or any of its
Subsidiaries; or
(vi) any other circumstances which might otherwise
constitute a defense available to, or a discharge of, the Borrower or
a guarantor.
This guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
Section 4.03. Waiver. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that the Agent or
any Bank protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right to take any action against
the Borrower or any other Person or any collateral.
Section 4.04. Subrogation. The Guarantor irrevocably waives any and
all rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder (i) to be subrogated to the rights of the Agent
and the Banks against the Borrower or any other Person with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the
Borrower or any other Person in respect thereof or (ii) to receive any payment,
in the nature of contribution or for any other reason, from any Person who has
provided security for the Guaranteed Obligations or who has also guaranteed or
is otherwise liable for the Guaranteed Obligations with respect to which such
payment was made. If any amount shall be paid to the Guarantor on account of
such subrogation or contribution rights at any time, such amount shall be held
in trust for the benefit of the Banks and shall forthwith be paid to the Agent
to be credited and applied upon the Guaranteed Obligations, whether matured or
unmatured, in such order as may be determined by the Agent.
Section 4.05. No Waiver; Remedies. No failure on the part of the
Agent or any Bank to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
Section 4.06. Continuing Guaranty. This guaranty is a continuing
guaranty and shall (i) remain in full force and effect until the later of (A)
the payment in full of the Guaranteed Obligations and all other amounts payable
under this guaranty and (B) the expiration or termination of each Commitment of
each Bank to the Borrower, (ii) be binding upon the Guarantor, its successors
and assigns, (iii) inure to the benefit of, and be enforceable by, the Agent,
the Co- Agents, and each of the Banks and their respective successors,
transferees and assigns, and (iv) not be terminated by the Guarantor or the
Borrower.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the Guarantor represents and warrants as
follows:
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Section 5.01. Corporate Existence. Each of the Borrower and the
Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all corporate powers
and all governmental licenses, authorizations, certificates, consents and
approvals required to carry on its business as now conducted in all material
respects. Each Subsidiary of the Borrower and of the Guarantor is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation, except where the failure to be so
organized, existing and in good standing could not reasonably be expected to
have a material adverse effect on the business, assets, condition or operations
of (i) the Borrower and its Subsidiaries taken as a whole, or (ii) the
Guarantor and its Subsidiaries taken as a whole. Each such Subsidiary has all
corporate powers and all governmental licenses, authorizations, certificates,
consents and approvals required to carry on its business as now conducted in
all material respects.
Section 5.02. Corporate Power. The execution, delivery and
performance by the Borrower and the Guarantor of the Credit Documents to which
each is a party and the consummation of the transactions contemplated by such
Credit Documents are within the Borrower's and the Guarantor's corporate
powers, respectively, have been duly authorized by all necessary corporate
action, do not contravene (i) the Borrower's or the Guarantor's charter or
by-laws or (ii) law or any contractual restriction binding on or affecting the
Borrower or the Guarantor and will not result in or require the creation or
imposition of any Lien prohibited by this Agreement. At the time of each
borrowing of any Advance by the Borrower, such borrowing and the use of the
proceeds of such Advance will be within the Borrower's corporate powers, will
have been duly authorized by all necessary corporate action, will not
contravene (i) the Borrower's charter or by- laws or (ii) law or any
contractual restriction binding on or affecting the Borrower and will not
result in or require the creation or imposition of any Lien prohibited by this
Agreement.
Section 5.03. Authorization and Approvals. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery and
performance by the Borrower or the Guarantor of the Credit Documents to which
each is a party or the consummation of the transactions contemplated by such
Credit Documents. At the time of each borrowing of any Advance by the
Borrower, no authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body will be required for
such borrowing or the use of the proceeds of such Advance.
Section 5.04. Enforceable Obligations. This Agreement has been duly
executed and delivered by the Borrower and the Guarantor. This Agreement is
the legal, valid and binding obligation of the Borrower and the Guarantor
enforceable against the Borrower or the Guarantor, respectively, in accordance
with its terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally. The A Notes of the Borrower are, and when
executed the B Notes of the Borrower will be, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally.
Section 5.05. Financial Statements. (a) The Consolidated and
consolidating balance sheets of the Guarantor and its Subsidiaries as at
December 31, 1993, and the related Consolidated and consolidating statements of
income and cash flows of the Guarantor and its Subsidiaries for the fiscal year
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then ended, copies of which have been furnished to each Bank, and the
Consolidated and consolidating balance sheets of the Guarantor and its
Subsidiaries as at September 30, 1994, and the related Consolidated and
consolidating statements of income and cash flows of the Guarantor and its
Subsidiaries for the nine months then ended, duly certified by an authorized
financial officer of the Guarantor, copies of which have been furnished to each
Bank, fairly present (subject, in the case of such balance sheets as at
September 30, 1994, and such statements of income and cash flows for the nine
months then ended, to year-end audit adjustments) the Consolidated and
consolidating financial condition of the Guarantor and its Subsidiaries as at
such dates and the Consolidated and consolidating results of operations of the
Guarantor and its Subsidiaries for the fiscal year and nine month period,
respectively, ended on such dates, all in accordance with generally accepted
accounting principles consistently applied. Since September 30, 1994, there
has been no material adverse change in the condition or operations of the
Guarantor or its Subsidiaries.
(b) The consolidating balance sheets of the Guarantor and its
Subsidiaries as at December 31, 1993 and September 30, 1994 referred to in
Section 5.05(a), and the related consolidating statements of income and cash
flows of the Guarantor and its Subsidiaries for the fiscal year and nine
months, respectively, then ended referred to in Section 5.05(a), to the extent
such balance sheets and statements pertain to the Borrower, fairly present
(subject, in the case of such balance sheet as at September 30, 1994 and such
statements of income and cash flows for the nine months then ended, to year-end
audit adjustments) the Consolidated financial condition of the Borrower and its
Subsidiaries as at such dates and the Consolidated results of operations of the
Borrower and its Subsidiaries for the fiscal year and nine month period,
respectively, ended on such dates, all in accordance with generally accepted
accounting principles consistently applied. Since September 30, 1994, there
has been no material adverse change in the condition or operations of the
Borrower or its Subsidiaries.
Section 5.06. Litigation. Except as otherwise disclosed in writing
by the Borrower or the Guarantor to the Banks and the Agent after the date
hereof and approved by the Majority Banks, there is, no pending or, to the
knowledge of the Borrower or the Guarantor, threatened action or proceeding
affecting the Borrower or the Guarantor or any Subsidiary of the Borrower or
the Guarantor before any court, governmental agency or arbitrator, which could
reasonably be expected to materially and adversely affect the financial
condition or operations of the Borrower and its Subsidiaries taken as a whole,
or of the Guarantor and its Subsidiaries taken as a whole, or which purports to
affect the legality, validity, binding effect or enforceability of this
Agreement or any Note.
Section 5.07. Regulation U; Use of Proceeds. Neither the Borrower
nor the Guarantor is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Advance will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any such margin stock. Following the application of the proceeds of each
Advance, not more than 25% of the value of the assets of the Borrower, or of
the Borrower and its Subsidiaries, which are subject to any arrangement with
the Agent or any Bank (herein or otherwise) whereby the Borrower's or any such
Subsidiary's right or ability to sell, pledge or otherwise dispose of assets is
in any way restricted will be such margin stock.
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Section 5.08. Investment Company Act. Neither the Borrower nor the
Guarantor is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 5.09. ERISA. No Termination Event has occurred or is
reasonably expected to occur with respect to any Plan for which an
Insufficiency exists. Neither the Guarantor nor any ERISA Affiliate of the
Guarantor has received any notification that any Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of ERISA,
and the Guarantor is not aware of any reason to expect that any Multiemployer
Plan is to be in reorganization or to be terminated within the meaning of Title
IV of ERISA.
Section 5.10. Taxes. As of the date of this Agreement, the United
States federal income tax returns of the Borrower and the Guarantor, and the
Subsidiaries of the Borrower and the Guarantor, have been examined through the
fiscal year ended December 31, 1987. The Borrower and the Subsidiaries of the
Borrower have filed all United States Federal income tax returns and all other
material domestic tax returns which are required to be filed by them and have
paid, or provided for the payment before the same become delinquent of, all
taxes due pursuant to such returns or pursuant to any assessment received by
the Borrower or any such Subsidiary, other than those taxes contested in good
faith by appropriate proceedings. The charges, accruals and reserves on the
books of the Borrower and the Subsidiaries of the Borrower in respect of taxes
are adequate.
Section 5.11. Holding Company. Neither the Borrower nor the
Guarantor is a "holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of 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.
Section 5.12. Environmental Condition. Except as set forth in any
reports filed with the Securities and Exchange Commission (copies of which have
been received by the Banks) pertaining to certain Environmental matters, the
Borrower and the Guarantor and their respective Subsidiaries are in compliance
in all material respects with all Environmental Protection Statutes to the
extent material to their respective operations or financial condition. As of
the date of this Agreement, there are no material Environmental matters
outstanding. The aggregate contingent and non- contingent liabilities of the
Borrower, the Guarantor and their respective Subsidiaries which are reasonably
expected to arise in connection with (i) the requirements of Environmental
Protection Statutes or (ii) any obligation or liability to any Person in
connection with any Environmental matters (including, without limitation, any
release or threatened release (as such terms are defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980) of any
Hazardous Waste, Hazardous Substance, other waste, petroleum or petroleum
products into the Environment) does not exceed 10% of the Consolidated Tangible
Net Worth of the Guarantor (excluding liabilities to the extent covered by
insurance if the insurer has confirmed that such insurance covers such
liabilities).
Section 5.13. Ownership of Borrower. The Guarantor owns 100% of the
outstanding shares of capital stock of the Borrower, and will derive
substantial direct and indirect benefit from the transactions contemplated by
this Agreement.
Section 5.14. Guarantor's Independent Decision. The Guarantor has,
independently and without reliance upon the Agent or any Bank, and based on
documents and information as it has deemed appropriate, made its own credit
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analysis and decision to enter into this Agreement and to undertake the
guaranty set forth in Article IV hereof.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment hereunder, unless the Majority Banks shall otherwise consent in
writing:
Section 6.01. Compliance with Laws, Etc. Each of the Borrower and
the Guarantor will comply, and cause each of its Subsidiaries to comply, in all
material respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, the payment and discharge before the
same become delinquent of all taxes, assessments and governmental charges or
levies imposed upon it or any of its Subsidiaries or upon any of its property
or any property of any of its Subsidiaries, and all lawful claims which, if
unpaid, might become a Lien upon any property of it or any of its Subsidiaries,
provided that neither the Borrower nor the Guarantor nor any Subsidiary of the
Borrower or the Guarantor shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings and with respect to which reserves in conformity with generally
accepted accounting principles, if required by such principles, have been
provided on the books of the Borrower or the Guarantor or such Subsidiary, as
the case may be.
Section 6.02. Reporting Requirements. The Guarantor will furnish to
each of the Banks:
(a) as soon as possible and in any event within five days after
the occurrence of each Default continuing on the date of such statement, a
statement of an authorized financial officer of the Borrower or the Guarantor,
as the case may be, setting forth the details of such Default and the actions,
if any, which the Borrower or the Guarantor has taken and proposes to take with
respect thereto;
(b) as soon as available and in any event not later than 60 days
after the end of each of the first three quarters of each fiscal year of the
Guarantor, the Consolidated and consolidating balance sheets of the Guarantor
and its Subsidiaries as of the end of such quarter (such consolidating balance
sheets to reflect such Subsidiaries, including the Borrower, as separate
entities) and the Consolidated and consolidating statements of income and cash
flow statements of the Guarantor and its Subsidiaries for the period commencing
at the end of the previous year and ending with the end of such quarter (such
consolidating statements of income and cash flow statements to reflect such
Subsidiaries, including the Borrower, as separate entities), all in reasonable
detail and duly certified (subject to year-end audit adjustments) by an
authorized financial officer of the Guarantor as having been prepared in
accordance with generally accepted accounting principles, together with a
has occurred, or, if a Default has occurred and is continuing, a statement as
to the nature thereof and the action, if any, which the Guarantor proposes to
take with respect thereto, and (ii) showing in detail the calculation
supporting such statement in respect of Section 7.01;
(c) as soon as available and in any event not later than 120 days
after the end of each fiscal year of the Guarantor, a copy of the annual audit
report
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for such year for the Guarantor and its Subsidiaries, including therein
Consolidated and consolidating balance sheets of the Guarantor and its
Subsidiaries as of the end of such fiscal year (such consolidating balance
sheets to reflect such Subsidiaries, including the Borrower, as separate
entities) and Consolidated and consolidating statements of income and cash flow
statements of the Guarantor and its Subsidiaries for such fiscal year (such
consolidating statements of income and cash flow statements to reflect such
Subsidiaries, including the Borrower, as separate entities), in each case
prepared in accordance with generally accepted accounting principles and
certified by KPMG Peat Marwick or other independent certified public
accountants of recognized standing acceptable to the Majority Banks, together
with a certificate of such accounting firm to the Banks (i) stating that, in
the course of the regular audit of the business of the Guarantor and its
Subsidiaries, which audit was conducted by such accounting firm in accordance
with generally accepted auditing standards, such accounting firm has obtained
no knowledge that a Default has occurred and is continuing, or if, in the
opinion of such accounting firm, a Default has occurred and is continuing, a
statement as to the nature thereof, and (ii) showing in detail the calculations
supporting such statement in respect of Section 7.01;
(d) promptly after the end of each fiscal quarter, copies of all
proxy material, reports and other information which the Guarantor sends to any
of its security holders, and copies of all reports and registration statements
which the Guarantor or any Subsidiary of the Guarantor files with the
Securities and Exchange Commission or any national securities exchange;
(e) as soon as possible and in any event (i) within 30 Business
Days after the Guarantor or any ERISA Affiliate of the Guarantor knows or has
reason to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Plan has occurred and (ii)
within 10 Business Days after the Guarantor or any ERISA Affiliate of the
Guarantor knows or has reason to know that any other Termination Event with
respect to any Plan has occurred or is reasonably expected to occur, a
statement of the chief financial officer or chief accounting officer of the
Guarantor describing such Termination Event and the action, if any, which the
Guarantor or such ERISA Affiliate of the Guarantor proposes to take with
respect thereto;
(f) promptly after receipt thereof by the Guarantor or any ERISA
Affiliate of the Guarantor, copies of each notice received by the Guarantor or
any ERISA Affiliate of the Guarantor from the PBGC stating its intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(g) within 30 days following request therefor by any Bank, copies
of each Schedule B (Actuarial Information) to each annual report (Form 5500
Series) of the Guarantor or any ERISA Affiliate of the Guarantor with respect
to each Plan;
(h) promptly after receipt thereof by the Guarantor or any ERISA
Affiliate of the Guarantor from the sponsor of a Multiemployer Plan, a copy of
each notice received by the Guarantor or any ERISA Affiliate of the Guarantor
concerning (i) the imposition of a Withdrawal Liability by a Multiemployer
Plan, (ii) the determination that a Multiemployer Plan is, or is expected to
be, in reorganization within the meaning of Title IV of ERISA, (iii) the
termination of a Multiemployer Plan within the meaning of Title IV of ERISA, or
(iv) the amount of liability incurred, or expected to be incurred, by the
Guarantor or any ERISA Affiliate of the Guarantor in connection with any event
described in clause (i), (ii) or (iii) above;
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<PAGE> 37
(i) promptly after it has knowledge of (A) any material litigation
pending or threatened against it which could reasonably be expected to cause a
material adverse change in the financial condition of the Borrower, the
Guarantor, or any Subsidiary, or (B) the occurrence of any other contingency
which could reasonably be expected to cause a material adverse change in the
financial condition of the Borrower, the Guarantor or any Subsidiary; and
(j) such other information respecting the business or properties,
or the condition or operations, financial or otherwise, of the Borrower or the
Guarantor or any of their Subsidiaries as any Bank through the Agent may from
time to time reasonably request.
Section 6.03. Use of Proceeds. The Borrower will use the proceeds of
the Advances only for general corporate purposes.
Section 6.04. Maintenance of Insurance. Each of the Borrower and the
Guarantor will maintain, and cause each of its Subsidiaries to maintain,
insurance with responsible and reputable insurance companies or associations in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas
in which the Borrower or the Guarantor or its respective Subsidiaries operate,
provided that the Borrower or the Guarantor or any of its respective
Subsidiaries may self-insure to the extent and in the manner normal for
companies of like size, type and financial condition.
Section 6.05. Preservation of Corporate Existence, Etc. Each of the
Borrower and the Guarantor will preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified, and cause each Subsidiary to qualify and remain
qualified, as a foreign corporation in each jurisdiction in which qualification
is necessary or desirable in view of its business and operations or the
ownership of its properties, except in the case of any Subsidiary where the
failure of such Subsidiary to so preserve, maintain, qualify and remain
qualified could not reasonably be expected to have a material adverse effect on
the business, assets, condition or operations of the Borrower and its
Subsidiaries taken as a whole, or of the Guarantor and its Subsidiaries taken
as a whole; provided, however, that nothing herein contained shall prevent any
transaction permitted by Section 7.03.
Section 6.06. Payment of Taxes, Etc. Each of the Borrower and the
Guarantor will pay and discharge, and cause each of its Subsidiaries to pay and
discharge, before the same shall become delinquent and which the failure to
timely pay or discharge could reasonably be expected to have a material adverse
effect on the business, assets, condition or operations of the Borrower and its
Subsidiaries taken as a whole, or of the Guarantor and its Subsidiaries taken
as a whole, (a) all taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits of property that are material in
amount, prior to the date on which penalties attach thereto and (b) all lawful
claims that are material in amount which, if unpaid, might by law become a Lien
upon its property; provided, however, that neither the Borrower, the Guarantor,
nor any such Subsidiary shall be required to pay or discharge any such tax,
assessment, charge, levy, or claim which is being contested in good faith and
by appropriate proceedings, and with respect to which reserves in conformity
with generally accepted accounting principles have been provided.
Section 6.07. Visitation Rights. At any reasonable time and from
time to time and so long as any visit or inspection will not unreasonably
interfere with
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the operations of the Borrower, the Guarantor or any of their Subsidiaries,
upon reasonable notice, each of the Borrower and the Guarantor will, and will
cause its Subsidiaries to, permit the Agent and any Bank or any of its agents
or representatives thereof, to examine and make copies of and abstracts from
the records and books of account of, and visit and inspect at its reasonable
discretion the properties of, the Borrower, the Guarantor and any such
Subsidiary, to discuss the affairs, finances and accounts of the Borrower, the
Guarantor and any such Subsidiary with any of their respective officers or
directors.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment to the Borrower hereunder, without the written consent of the
Majority Banks:
Section 7.01. Financial Covenants. The Guarantor will not: (a)
declare or make any Restricted Payments unless (i) no Default or Event of
Default shall have occurred and be continuing, and (ii) the amount of all such
Restricted Payments made on or after January 1, 1995 shall not exceed an amount
equal to (x) $200,000,000, plus (y) 75% of the Guarantor's Consolidated net
income for the period on or after January 1, 1995 to the date on which such
Restricted Payment is to be made (minus 100% of cumulative losses), plus (z)
100% of the net cash proceeds of any capital stock offering of the Guarantor
effective on or after January 1, 1995; or
(b) as of the last day of each calendar quarter, permit the
Consolidated Debt of the Guarantor to exceed 50% of the Consolidated
Capitalization of the Guarantor.
Section 7.02. Liens, Etc. Neither the Borrower nor the Guarantor
will create, assume, incur or suffer to exist, or permit any of the Restricted
Subsidiaries to create, assume, incur or suffer to exist, any Lien on or in
respect of any of its property, whether now owned or hereafter acquired, or
assign or otherwise convey, or permit any such Restricted Subsidiary to assign
or otherwise convey, any right to receive income, in each case to secure or
provide for the payment of any Debt of any Person, except Permitted Liens.
Section 7.03. Merger and Sale of Assets. Neither the Borrower nor
the Guarantor will merge or consolidate with or into any other Person, or sell,
lease or otherwise transfer a Substantial Part of the assets of the Guarantor
and the Restricted Subsidiaries, or permit any of the Restricted Subsidiaries
to merge or consolidate with or into any other Person, or sell, lease or
otherwise transfer a Substantial Part of the assets of the Guarantor and the
Restricted Subsidiaries, except that this Section 7.03 shall not prohibit:
(i) a sale of any account receivable without recourse or any
discount of an account receivable provided that (A) in the case of
such a sale, the sale proceeds are not less than the greater of either
the face value or the fair market value of such receivable and (B) in
the case of such a discount, the discount does not exceed the greater
of 20% of either the face value or the fair market value of such
receivable;
(ii) the Guarantor and the Restricted Subsidiaries from
selling any assets if 100% of the net proceeds of such sale are (1)
reinvested in the
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Guarantor's or the Borrower's business; (2) used to repay outstanding
Debt of the Guarantor or the Borrower; or (3) used to make Restricted
Payments permitted by Section 7.01(a); and
(iii) any of the Guarantor or a Restricted Subsidiary from
merging or consolidating with or into any Person, or transferring a
Substantial Part of the assets of the Guarantor and the Restricted
Subsidiaries to such Person, if in each case (x) such Person is a
corporation organized under the laws of the United States or any state
thereof, (y) such Person expressly assumes in writing all obligations
of the Borrower and the Guarantor hereunder, and (z) no Default or
Event of Default has occurred and is continuing.
Section 7.04. Agreements to Restrict Dividends and Certain Transfers.
Neither the Borrower nor the Guarantor will enter into or suffer to exist, or
permit any of its Subsidiaries to enter into or suffer to exist, any consensual
encumbrance or restriction on the ability of any Subsidiary of the Guarantor
(i) to pay, directly or indirectly, dividends or make any other distributions
in respect of its capital stock or pay any Debt or other obligation owed to the
Guarantor or to any Subsidiary of the Guarantor; or (ii) to make loans or
advances to the Guarantor or any Subsidiary of the Guarantor, except those
encumbrances and restrictions existing on the date hereof and described in
Schedule IV and those now or hereafter existing that are not more restrictive
in any respect than such encumbrances and restrictions described in Schedule
IV.
Section 7.05. Compliance with ERISA. The Guarantor will not (i)
terminate, or permit any ERISA Affiliate of the Guarantor to terminate, any
Plan so as to result in any liability of the Guarantor or any such ERISA
Affiliate to the PBGC in excess of $5,000,000, or (ii) permit to exist any
occurrence of any Termination Event with respect to a Plan for which there is
an Insufficiency in excess of $5,000,000.
Section 7.06. Transactions with Affiliates. Neither the Borrower nor
the Guarantor will make any material sale to, make any material purchase from,
extend material credit to, make material payment for services rendered by, or
enter into any other material transaction with, or permit any Restricted
Subsidiary to make any material sale to, make any material purchase from,
extend material credit to, make material payment for services rendered by, or
enter into any other material transaction with, any Affiliate of the Borrower
or the Guarantor or of such Restricted Subsidiary unless as a whole such sales,
purchases, extensions of credit, rendition of services and other transactions
are (at the time such sale, purchase, extension of credit, rendition of
services or other transaction is entered into) (i) in the ordinary course of
business, (ii) upon terms no less favorable to the Borrower or the Guarantor or
such Restricted Subsidiary than it would obtain in a comparable arms-length
transaction with a Person not an Affiliate, and (iii) on terms and conditions
reasonably fair in all material respects to the Borrower or the Guarantor or
such Restricted Subsidiary in the good faith judgment of the Borrower or the
Guarantor, as the case may be.
Section 7.07. Change of Business. Neither the Borrower nor the
Guarantor will, or will permit any Restricted Subsidiary to, materially change
the general nature of its business.
Section 7.08. Limitation on Loans, Advances and Investments. Neither
the Borrower nor the Guarantor will, or will permit any Restricted Subsidiary
to, make or permit to exist any loans, advances or capital contributions to, or
make any investment in, or purchase or commit to purchase any stock or other
securities or evidences of indebtedness of or interests in any Person, except
the following:
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(a) as shown on the attached Schedule V;
(b) the purchase of Liquid Investments;
(c) trade and customer accounts receivable which are for goods
furnished or services rendered in the ordinary course of business and are
payable in accordance with customary trade terms;
(d) ordinary course of business contributions, loans or advances
to, or investments in, a Restricted Subsidiary; and
(e) other capital investments not otherwise permitted by this
Section 7.08 in any Person not a Restricted Subsidiary provided that (i) the
aggregate amount of such investments outstanding at any time shall not exceed
$25,000,000; (ii) such Person shall be in the same or substantially similar
line or lines of business as the Guarantor and the Restricted Subsidiaries; and
(iii) the liabilities of such other Person shall be nonrecourse to the
Guarantor and the Restricted Subsidiaries.
Section 7.09. Fiscal Year; Accounting Practices. Neither the
Borrower nor the Guarantor will change, or will permit any Restricted
Subsidiary to change (a) its fiscal year from that existing as of the date of
this Agreement, or (b) its accounting principles and practices (except as may
be required by reason of a change in generally accepted accounting principles)
from those reflected in the financial statements referred to in Section 5.05 in
any manner which would materially affect any accounting determination
contemplated by this Agreement.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. If any of the following events
("Events of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Advance
when the same becomes due and payable in accordance with the terms hereof, or
shall fail to pay any interest on any such Advance or any fee or other amount
to be paid by it hereunder within five days after the same becomes due and
payable in accordance with the terms hereof; or
(b) any certification, representation or warranty made by the
Borrower or the Guarantor herein or by the Borrower or the Guarantor (or any of
their respective officers) in writing (including representations and warranties
deemed made pursuant to Section 3.02, 3.03 or 3.04) under or in connection with
any Credit Document shall prove to have been incorrect in any material respect
when made or deemed made; or
(c) the Borrower or the Guarantor shall fail to perform or observe
(i) any term, covenant or agreement contained in Section 6.02 on its part to be
performed or observed and such failure shall continue for three Business Days
after the earlier of the date notice thereof shall have been given to the
Borrower or the Guarantor by the Agent or any Bank or the date the Borrower or
the Guarantor shall have knowledge of such failure, or (ii) any covenant
contained in Section 6.05 (other than with respect to maintaining the corporate
existence of the Borrower or the Guarantor or maintaining any franchise of the
Borrower or the Guarantor which is material to the Borrower's or the
Guarantor's business and operations) and such failure shall continue for 30
days after the earlier of the date notice thereof shall have been given to the
Borrower or the Guarantor by the Agent or any Bank or the date the Borrower or
the Guarantor
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shall have knowledge of such failure, or (iii) any term, covenant or agreement
contained in any Credit Document (other than a term, covenant or agreement
described in clauses (i) and (ii) of this paragraph (c)) on its part to be
performed or observed; or
(d) the Borrower, the Guarantor, or any Restricted Subsidiary
shall fail to pay any principal of or premium or interest on any of its Debt
which is outstanding in a principal amount of at least $25,000,000 in the
aggregate (excluding Debt evidenced by the Notes) when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such
Debt; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such Debt shall be declared
to be due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof; or
(e) the Borrower, the Guarantor, or any Restricted Subsidiary
shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be instituted
by or against the Borrower, the Guarantor, or any Restricted Subsidiary seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), shall remain
undismissed or unstayed for a period of 30 days; or the Borrower, the
Guarantor, or any Restricted Subsidiary shall take any corporate action to
authorize any of the actions set forth above in this subsection (e); or
(f) any judgment or order for the payment of money in excess of
$10,000,000 shall be rendered against the Borrower, the Guarantor, or any
Restricted Subsidiary and remain unsatisfied and either (i) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (ii) there shall be any period of 30 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(g) any Termination Event with respect to a Plan shall have
occurred and, 30 days after notice thereof shall have been given to the
Borrower and the Guarantor by the Agent, (i) such Termination Event shall still
exist and (ii) the sum (determined as of the date of occurrence of such
Termination Event) of the Insufficiency of such Plan and the Insufficiency of
any and all other Plans with respect to which a Termination Event shall have
occurred and then exist (or in the case of a Plan with respect to which a
Termination Event described in clause (ii) of the definition of Termination
Event shall have occurred and then exist, the liability related thereto) is
equal to or greater than $10,000,000; or
(h) the Guarantor or any ERISA Affiliate of the Guarantor shall
have been notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date of such
notification), exceeds
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$10,000,000 in the aggregate or requires payments exceeding $5,000,000 per
annum; or
(i) the Guarantor or any ERISA Affiliate of the Guarantor shall
have been notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Guarantor and its ERISA
Affiliates to all Multiemployer Plans which are then in reorganization or being
terminated have been or will be increased over the amounts contributed to such
Multiemployer Plans for the respective plan years which include the date hereof
by an amount exceeding $10,000,000; or
(j) the Guarantor shall cease to own directly or indirectly 100%
of the capital stock of the Borrower;
then, and in any such event, the Agent (i) shall at the request, or may with
the consent of the Majority Banks, by notice to the Borrower, declare all of
the Commitments and the obligation of each Bank to make Advances to be
terminated, whereupon all of the Commitments and each such obligation shall
forthwith terminate, and (ii) shall at the request, or may with the consent of
the Majority Banks, by notice to the Borrower declare the Notes, all interest
thereon and all other amounts payable by the Borrower and the Guarantor under
this Agreement to be forthwith due and payable, whereupon such Notes, such
interest and all such amounts shall become and be forthwith due and payable,
without requirement of any presentment, demand, protest, notice of intent to
accelerate, further notice of acceleration or other further notice of any kind
(other than the notice expressly provided for above), all of which are hereby
expressly waived by the Borrower and the Guarantor; provided, however, that in
the event of any Event of Default described in Section 8.01(e) with respect to
the Borrower or the Guarantor, (A) the obligation of each Bank to make Advances
shall automatically be terminated and (B) the Notes, all such interest and all
such amounts shall automatically become and be due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or any other notice of any kind, all of which are hereby expressly
waived by the Borrower and the Guarantor.
ARTICLE IX
THE AGENT AND THE CO-AGENTS
Section 9.01. Authorization and Action. Each Bank hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Documents as are delegated to the Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by the Credit
Documents (including, without limitation, enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Majority Banks, and such instructions shall be binding upon all Banks
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to any Credit Document or applicable law. The Agent agrees
to give to each Bank prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.
Section 9.02. Agent's Reliance, Etc. Neither the Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the
Credit
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Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Agent: (i) may
treat the payee of any Note as the holder thereof until the Agent receives and
accepts an Assignment executed by the Borrower, the Bank which is the payee of
such Note, as assignor, and the assignee in accordance with Section 10.06; (ii)
may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Bank and shall not be responsible to any
Bank for any statements, warranties or representations made in or in connection
with the Credit Documents; (iv) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of the Credit Documents on the part of the Borrower or the Guarantor
or to inspect the property (including the books and records) of the Borrower or
the Guarantor; (v) shall not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Documents; and (vi) shall incur no liability under or in respect of the
Credit Documents by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
Section 9.03. NationsBank and Affiliates. With respect to its
Commitment, the Advances made by it and the Notes issued to it, NationsBank
shall have the same rights and powers under the Credit Documents and any Note
payable to NationsBank as any other Bank and may exercise the same as though it
was not the Agent; and the term "Bank" or "Banks" shall, unless otherwise
expressly indicated, include NationsBank in its individual capacity.
NationsBank and its affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
the Borrower, the Guarantor, any Subsidiary of the Borrower or the Guarantor
and any Person who may do business with or own securities of the Borrower, the
Guarantor, or any such Subsidiary, all as if NationsBank were not the Agent and
without any duty to account therefor to the Banks.
Section 9.04. Bank Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent, the Co-Agents or any
other Bank and based on the financial statements referred to in Section 5.05
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent,
the Co-Agents or any other Bank and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit Documents.
SECTION 9.05. INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY THE
AGENT AND THE CO-AGENTS (TO THE EXTENT NOT REIMBURSED BY THE BORROWER OR THE
GUARANTOR), RATABLY ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE A
NOTES THEN HELD BY EACH OF THEM (OR IF NO A NOTES ARE AT THE TIME OUTSTANDING
OR IF ANY A NOTES ARE HELD BY PERSONS WHICH ARE NOT BANKS, RATABLY ACCORDING TO
EITHER (I) THE RESPECTIVE AMOUNTS OF THEIR COMMITMENTS, OR (II) IF ALL
COMMITMENTS HAVE TERMINATED, THE RESPECTIVE AMOUNTS OF THE COMMITMENTS
IMMEDIATELY PRIOR TO THE TIME THE COMMITMENTS TERMINATED), FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT
AND THE CO-AGENTS IN ANY WAY RELATING TO OR ARISING OUT OF THE CREDIT DOCUMENTS
OR ANY ACTION TAKEN OR OMITTED BY THE AGENT UNDER THE CREDIT DOCUMENTS,
PROVIDED THAT NO BANK SHALL BE LIABLE TO THE AGENT AND THE CO-AGENTS FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DIS-
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BURSEMENTS RESULTING FROM THE AGENT'S OR ANY CO-AGENT'S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO
REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY
OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED BY THE AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE CREDIT DOCUMENTS TO THE EXTENT THAT THE AGENT IS
NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER OR THE GUARANTOR.
Section 9.06. Successor Agent. The Agent may resign at any time as
Agent under this Agreement by giving written notice thereof to the Banks and
the Borrower and may be removed at any time by the Borrower if at any time the
Agent, in its individual capacity as a Bank hereunder, shall hold less than
$30,000,000 of the aggregate Commitments. Upon any such resignation or
removal, the Borrower shall have the right to appoint, with the consent of the
Majority Banks (which consent shall not be unreasonably withheld), a successor
Agent. If no successor Agent shall have been so appointed by the Borrower with
such consent of the Majority Banks, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or
the Borrower's removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a Bank which is
a commercial bank organized under the laws of the United States of America or
of any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent under this
Agreement by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent and shall function as the Agent under this Agreement, and the
retiring Agent shall be discharged from its duties and obligations as Agent
under this Agreement. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article IX shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
Section 9.07. Co-Agents. The Co-Agents shall have no duties,
obligations, or liabilities in their capacities as Co-Agents.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc. No amendment or waiver of any
provision of any Credit Document, nor consent to any departure by the Borrower
or the Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Borrower and the Majority Banks, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all the Banks, do any
of the following: (a) waive any of the conditions specified in Article III,
(b) increase the Commitments of the Banks or subject the Banks to any
additional obligations, (c) reduce the principal of, or interest on, the Notes
or any fees or other amounts payable hereunder, (d) postpone any date fixed for
any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, (e) take action which requires the signing of all
the Banks pursuant to the terms of this Agreement, (f) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Notes, or
the number of Banks, which shall be required for the Banks or any of them to
take any action under this Agreement or any other Credit Document, (g) release
the Guarantor or otherwise change any obligation of the Guarantor to pay any
amount payable by the Guarantor hereunder or (h) amend this Section 10.01;
provided, further, that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Banks
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required above to take such action, affect the rights or duties of the Agent
under any Credit Document; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Guarantor in addition to any
other party required above to take such action, affect the rights or duties of
the Guarantor under any Credit Document.
Section 10.02. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telecopy, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to any Bank, as specified opposite its name on Schedule
I hereto or specified pursuant to an Assignment; if to the Borrower or the
Guarantor, as specified opposite its name on Schedule II hereto; and if to
NationsBank, as Agent, as specified opposite its name on Schedule I hereto or,
as to the Borrower, the Guarantor, or the Agent, at such other address as shall
be designated by such party in a written notice to the other parties and, as to
each other party, at such other address as shall be designated by such party in
a written notice to the Borrower, the Guarantor, and the Agent. All such
notices and communications shall, when mailed, telecopied, telegraphed, telexed
or cabled, be effective when deposited in the mails, sent by telecopier to any
party to the telecopier number as set forth herein or on Schedule I or Schedule
II (or other telecopy number specified by such party in a written notice to the
other parties hereto), delivered to the telegraph company, telexed to any party
to the telex number set forth hereinabove or on Schedule I or Schedule II (or
other telex number designated by such party in a written notice to the other
parties hereto), confirmed by telex answerback, or delivered to the cable
company, respectively, except that notices and communications to the Agent
pursuant to Article II or IX shall not be effective until received by the
Agent.
Section 10.03. No Waiver; Remedies. No failure on the part of any
Bank or the Agent to exercise, and no delay in exercising, any right under any
Credit Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies provided in the
Credit Documents are cumulative and not exclusive of any remedies provided by
law.
Section 10.04. Costs, Expenses and Taxes. (a) The Borrower agrees to
pay on demand (i) all reasonable costs and expenses of the Agent in connection
with the preparation, execution, delivery, administration, modification and
amendment of any Credit Document, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto
and with respect to advising the Agent as to its rights and responsibilities
under any Credit Document, Agent's out-of-pocket expenses associated with the
negotiation and closing and (ii) all costs and expenses, if any (including,
without limitation, reasonable counsel fees and expenses, which may include
inside counsel), of the Agent and each Bank in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) against the
Borrower or the Guarantor of any Credit Document.
(b) THE BORROWER AGREES, TO THE FULLEST EXTENT PERMITTED BY LAW,
TO INDEMNIFY AND HOLD HARMLESS THE AGENT, THE CO-AGENTS AND EACH BANK AND EACH
OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS FROM AND AGAINST
ANY AND ALL CLAIMS, DAMAGES, LIABILITIES AND EXPENSES (INCLUDING, WITHOUT
LIMITATION, REASONABLE FEES AND DISBURSEMENTS OF COUNSEL) FOR WHICH ANY OF THEM
MAY BECOME LIABLE OR WHICH MAY BE INCURRED BY OR ASSERTED AGAINST THE AGENT,
THE CO- AGENTS OR SUCH BANK OR ANY SUCH DIRECTOR, OFFICER, EMPLOYEE OR AGENT
(OTHER THAN BY ANOTHER BANK OR ANY SUCCESSOR OR ASSIGN OF ANOTHER BANK), IN
EACH CASE IN CONNECTION WITH OR ARISING OUT OF OR BY REASON OF ANY
INVESTIGATION, LITIGATION, OR PROCEEDING, WHETHER OR NOT THE AGENT, THE
CO-AGENTS OR SUCH BANK OR ANY SUCH DIRECTOR, OFFICER, EMPLOYEE OR AGENT IS A
PARTY THERETO, ARISING OUT OF, RELATED TO OR IN CONNECTION WITH ANY CREDIT
DOCUMENT OR ANY TRANSACTION IN WHICH ANY
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<PAGE> 46
PROCEEDS OF ALL OR ANY PART OF THE ADVANCES ARE APPLIED (OTHER THAN ANY SUCH
CLAIM, DAMAGE, LIABILITY OR EXPENSE TO THE EXTENT ATTRIBUTABLE TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF, OR VIOLATION OF ANY LAW OR REGULATION BY,
ANY SUCH INDEMNIFIED PARTY).
Section 10.05. Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 8.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 8.01,
each Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Bank to or for the credit or the
account of the Borrower or the Guarantor against any and all of the obligations
of the Borrower or the Guarantor now or hereafter existing under the Credit
Documents, irrespective of whether or not such Bank shall have made any demand
under this Agreement or such Notes and although such obligations may be
unmatured. Each Bank agrees promptly to notify the Borrower and the Guarantor
after such set-off and application made by such Bank, provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Bank under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
set-off) which such Bank may have.
Section 10.06. Bank Assignments and Participations.
(a) Assignments. Any Bank may assign to one or more banks or
other entities all or any portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Advances owing to it, and the Notes held by it); provided, however, that
(i) each such assignment of an Assigning Bank's Commitment shall be of a
constant, and not a varying, percentage of all of such Bank's rights and
obligations under this Agreement in respect of such Commitment, (ii) the amount
of the resulting Commitment and Advances of the assigning Bank (unless it is
assigning all its Commitment) and the assignee Bank pursuant to each such
assignment (determined as of the date of the Assignment with respect to such
assignment) shall in no event be less than $10,000,000 and shall be an integral
multiple of $1,000,000, (iii) each such assignment shall be to an Eligible
Assignee, (iv) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording in the Register, an Assignment,
together with the Note or Notes subject to such assignment, and (v) each
Eligible Assignee not already a Bank hereunder shall pay to the Agent an
assignment fee of $2,500 in connection with such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment, which effective date shall be at least three
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment, have the rights
and obligations of a Bank hereunder and (B) such Bank thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment covering all or the
remaining portion of such Bank's rights and obligations under this Agreement,
such Bank shall cease to be a party hereto).
(b) Terms of Assignments. By executing and delivering an
Assignment, the Bank thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto the matters set forth in
paragraphs 2 and 3 of such Assignment.
(c) The Register. The Agent shall maintain at its address
referred to on Schedule I a copy of each Assignment delivered to and accepted
by it and a
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<PAGE> 47
register for the recordation of the names and addresses of the Banks and the
Commitments of, and principal amount of the Advances owing to, each Bank from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Guarantor, the Agent, and the Banks may treat each Person whose name is
recorded in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower, the
Guarantor, or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(d) Procedures. Upon its receipt of an Assignment executed by a
Bank and an Eligible Assignee, together with the Note or Notes subject to such
assignment, the Agent shall, if such Assignment has been completed and is in
substantially the form of the attached Exhibit C, (i) accept such Assignment,
(ii) record the information contained therein in the Register, and (iii) give
prompt notice thereof to the Borrower and the Guarantor. Within five Business
Days after its receipt of such notice, the Borrower, at its own expense, shall
execute and deliver to the Agent (x) in exchange for the surrendered A Note, a
new A Note to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment (without giving affect to
any B Reduction) and, if such assigning Bank has retained any Commitment
hereunder, a new A Note to the order of such Bank in an amount equal to the
Commitment retained by it hereunder (without giving affect to any B Reduction),
and (y) in exchange for any surrendered B Note, a new B Note to the order of
such Eligible Assignee in an amount equal to the B Advances assumed by it
pursuant to such Assignment and, if such assigning Bank has retained any B
Advances hereunder, a new B Note to the order of such Bank in any amount equal
to the B Advances retained by it hereunder. Such new A Notes and B Notes shall
be dated the effective date of such Assignment and shall otherwise be in
substantially the form of the attached Exhibit A-1 or Exhibit A-2, as the case
may be.
(e) Participations. Each Bank may sell participations to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Advances owing to it, and the Notes held by it);
provided, however, that (i) such Bank's obligations under this Agreement
(including, without limitation, its Commitment to the Borrower hereunder) shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Bank shall
remain the holder of any such Notes for all purposes of this Agreement, (iv)
the Borrower, the Guarantor, the Agent, and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement, (v) such Bank shall not require the
participant's consent to any matter under this Agreement, except for changes in
the principal amount of such Bank's Commitment, any Note payable to such Bank
in which the participant has an interest, or the aggregate Commitments,
reductions in fees or interest, the date any amount is due hereunder, or
extending the Termination Date or continuing the Commitment of such Bank
pursuant to Section 2.15 hereof, and (vi) such Bank shall give prompt notice to
the Borrower of each such participation sold by such Bank. The Borrower hereby
agrees that participants shall have the same rights under Sections 2.06(d),
2.10, 2.11, and 10.04 hereof as the Bank to the extent of their respective
participations.
(f) Assignment to Federal Reserve Bank. Notwithstanding the
limitations set forth in paragraph (a) of this Section, any Bank may at any
time assign all or any portion of its rights under this Agreement or any Notes
payable to such Bank to a Federal Reserve Bank without the prior written
consent of the Borrower, the Guarantor, the Agent or the Co-Agents, provided
that no such assignment shall release such assigning Bank from any of its
obligations hereunder or substitute any such Federal Reserve Bank for such Bank
as a party hereto.
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<PAGE> 48
Section 10.07. Governing Law. This Agreement, the Notes and the
other Credit Documents shall be governed by, and construed in accordance with,
the laws of the State of Texas.
Section 10.08. Interest.
(a) It is the intention of the parties hereto that the Agent and
each Bank shall conform strictly to usury laws applicable to it, if any.
Accordingly, if the transactions with the Agent or any Bank contemplated hereby
would be usurious under applicable law, if any, then, in that event,
notwithstanding anything to the contrary in this Agreement, the Notes, or any
other agreement entered into in connection with or as security for this
Agreement or the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under applicable law that is
contracted for, taken, reserved, charged or received by the Agent or such Bank,
as the case may be, under this Agreement, the Notes, or under any other
agreement entered into in connection with or as security for this Agreement or
the Notes shall under no circumstances exceed the maximum amount allowed by
such applicable law and any excess shall be cancelled automatically and, if
theretofore paid, shall at the option of the Agent or such Bank, as the case
may be, be credited by the Agent or such Bank, as the case may be, on the
principal amount of the obligations owed to the Agent or such Bank, as the case
may be, by the Borrower or refunded by the Agent or such Bank, as the case may
be, to the Borrower, and (ii) in the event that the maturity of any Note or
other obligation payable to the Agent or such Bank, as the case may be, is
accelerated or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to the Agent or
such Bank, as the case may be, may never include more than the maximum amount
allowed by such applicable law and excess interest, if any, to the Agent or
such Bank, as the case may be, provided for in this Agreement or otherwise
shall be cancelled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall, at the option of the Agent or such
Bank, as the case may be, be credited by the Agent or such Bank, as the case
may be, on the principal amount of the obligations owed to the Agent or such
Bank, as the case may be, by the Borrower or refunded by the Agent or such
Bank, as the case may be, to the Borrower.
(b) In the event that at any time the interest rate applicable to
any Advance made by any Bank would exceed the maximum non-usurious rate allowed
by applicable law, the rate of interest to accrue on the Advances by such Bank
shall be limited to the maximum non-usurious rate allowed by applicable law,
but shall accrue, to the extent permitted by law, on the principal amount of
the Advances made by such Bank from time to time outstanding, if any, at the
maximum non-usurious rate allowed by applicable law until the total amount of
interest accrued on the Advances made by such Bank equals the amount of
interest which would have accrued if the interest rates applicable to the
Advances pursuant to Article II had at all times been in effect. In the event
that upon the final payment of the Advances made by any Bank and termination of
the Commitment of such Bank, the total amount of interest paid to such Bank
hereunder and under the Notes is less than the total amount of interest which
would have accrued if the interest rates applicable to such Advances pursuant
to Article II had at all times been in effect, then the Borrower agrees to pay
to such Bank, to the extent permitted by law, an amount equal to the excess of
(a) the lesser of (i) the amount of interest which would have accrued on such
Advances if the maximum non-usurious rate allowed by applicable law had at all
times been in effect or (ii) the amount of interest rates applicable to such
Advances pursuant to Article II had at all times been in effect over (b) the
amount of interest otherwise accrued on such Advances in accordance with this
Agreement.
Section 10.09. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate
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<PAGE> 49
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 10.10. Survival of Agreements, Representations and
Warranties, Etc. All warranties, representations and covenants made by the
Borrower or the Guarantor or any officer of the Borrower or the Guarantor
herein or in any certificate or other document delivered in connection with
this Agreement shall be considered to have been relied upon by the Banks and
shall survive the issuance and delivery of the Notes and the making of the
Advances regardless of any investigation. The indemnities and other
obligations of the Borrower contained in this Agreement, and the indemnities by
the Banks in favor of the Agent and its officers, directors, employees and
agents, will survive the repayment of the Advances and the termination of this
Agreement.
Section 10.11. Borrower's Right to Apply Deposits. In the event that
any Bank is placed in receivership or enters a similar proceeding, the Borrower
may, to the full extent permitted by law, make any payment due to such Bank
hereunder, to the extent of finally collected unrestricted deposits of the
Borrower in U.S. dollars held by such Bank, by giving notice to the Agent and
such Bank directing such Bank to apply such deposits to such indebtedness. If
the amount of such deposits is insufficient to pay such indebtedness then due
and owing in full, the Borrower shall pay the balance of such insufficiency in
accordance with this Agreement.
Section 10.12. Confidentiality. Each Bank agrees that it will use
best efforts, to the extent not inconsistent with practical business
requirements, not to disclose without the prior consent of the Borrower and the
Guarantor (other than to employees, auditors, accountants, counsel or other
professional advisors of the Agent or any Bank) any information with respect to
the Borrower or the Guarantor or their Subsidiaries which is furnished pursuant
to this Agreement and which (i) the Borrower or the Guarantor in good faith
consider to be confidential and (ii) is either clearly marked confidential or
is designated by the Borrower or the Guarantor to the Agent or the Banks in
writing as confidential, provided that any Bank may disclose any such
information (a) as has become generally available to the public, (b) as may be
required or appropriate in any report, statement or testimony submitted to or
required by any municipal, state or Federal regulatory body having or claiming
to have jurisdiction over such Bank or submitted to or required by the Board of
Governors of the Federal Reserve System or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in
response to any summons or subpoena in connection with any litigation, (d) in
order to comply with any law, order, regulation or ruling applicable to such
Bank, (e) to the prospective assignee or participant in connection with any
contemplated transfer of any of the Notes or any interest therein by such Bank,
provided that such prospective assignee or participant executes an agreement
with or for the benefit of the Borrower and the Guarantor containing provisions
substantially identical to those contained in this Section 10.12.
Section 10.13. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower, the Guarantor and the Agent,
and when each Bank listed on the signature pages hereof has delivered an
executed counterpart hereof to the Agent, has sent to the Agent a facsimile
copy of its signature hereon or has notified the Agent that such Bank has
executed this Agreement and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Guarantor, the Agent, each Bank and their
respective successors and assigns, except that the Borrower and the Guarantor
shall not have the right to assign any of their respective rights hereunder or
any interest herein without the prior written consent of the Banks.
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<PAGE> 50
SECTION 10.14. ENTIRE AGREEMENT. PURSUANT TO SECTION 26.02 OF THE
TEXAS BUSINESS AND COMMERCE CODE, A LOAN AGREEMENT IN WHICH THE AMOUNT INVOLVED
IN THE LOAN AGREEMENT EXCEEDS $50,000 IN VALUE IS NOT ENFORCEABLE UNLESS THE
LOAN AGREEMENT IS IN WRITING AND SIGNED BY THE PARTY TO BE BOUND OR THAT
PARTY'S AUTHORIZED REPRESENTATIVE.
THE RIGHTS AND OBLIGATIONS OF THE PARTIES TO AN AGREEMENT SUBJECT TO
THE PRECEDING PARAGRAPH SHALL BE DETERMINED SOLELY FROM THE WRITTEN LOAN
AGREEMENT, AND ANY PRIOR ORAL AGREEMENTS BETWEEN THE PARTIES ARE SUPERSEDED BY
AND MERGED INTO THE LOAN AGREEMENT. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS, AS DEFINED IN THIS AGREEMENT, REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
Section 10.15. Severability. In the event that any one or more of
the provisions contained in this Agreement or in any other Credit Document
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby.
[REMAINDER OF PAGE DELIBERATELY LEFT BLANK]
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<PAGE> 51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWER:
FINA OIL AND CHEMICAL COMPANY
______________________________
By:___________________________
Title:________________________
GUARANTOR:
FINA, INC.
______________________________
By:___________________________
Title:________________________
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
______________________________
Denise Ashford Smith
Senior Vice President
CO-AGENTS:
CIBC INC.
By:___________________________
Title:________________________
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By:___________________________
Title:________________________
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<PAGE> 52
Commitments BANKS:
$_________ NATIONSBANK OF TEXAS, N.A.
______________________________
Denise Ashford Smith
Senior Vice President
$__________ CIBC INC.
______________________________
By:___________________________
Title:________________________
$__________ TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
______________________________
By:___________________________
Title:________________________
$__________ BAYERISCHE LANDESBANK
GIROZENTRALE
CAYMAN ISLANDS BRANCH
______________________________
By:___________________________
Title:________________________
______________________________
By:___________________________
Title:________________________
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
______________________________
By:___________________________
Title:________________________
$__________ GENERALE BANK
______________________________
By:___________________________
Title:________________________
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<PAGE> 53
$__________ SOCIETE GENERALE, SOUTHWEST
AGENCY
______________________________
By:___________________________
Title:________________________
$__________ THE SANWA BANK, LIMITED,
DALLAS AGENCY
______________________________
By:___________________________
Title:________________________
$__________ BANK OF MONTREAL
______________________________
By:___________________________
Title:________________________
$__________ CREDIT COMMERCIAL DE FRANCE
______________________________
By:___________________________
Title:________________________
______________________________
By:___________________________
Title:________________________
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<PAGE> 54
$__________ CITICORP USA, INC.
______________________________
By:___________________________
Title:________________________
$__________ DEN DANSKE BANK AKTIESELSKAB
CAYMAN ISLANDS BRANCH
______________________________
By:___________________________
Title:________________________
______________________________
By:___________________________
Title:________________________
$__________ THE FUJI BANK, LIMITED,
HOUSTON AGENCY
______________________________
By:___________________________
Title:________________________
$__________ THE INDUSTRIAL BANK OF
JAPAN, LIMITED
______________________________
By:___________________________
Title:________________________
$__________ MELLON BANK, N.A.
______________________________
By:___________________________
Title:________________________
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<PAGE> 55
$__________ THE SUMITOMO BANK, LIMITED
HOUSTON AGENCY
______________________________
By:___________________________
Title:________________________
============
$400,000,000 Total Commitments
-50-
<PAGE> 1
EXHIBIT 10(d)
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE:)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-4014
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below:
AMDEL INC. EMPLOYEE INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
FINA, INC.
(FORMERLY NAMED AMERICAN PETROFINA, INCORPORATED)
FINA PLAZA
8350 N. CENTRAL EXPRESSWAY
DALLAS, TEXAS 75206
<PAGE> 2
AMDEL INC. EMPLOYEE INVESTMENT PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
YEARS ENDED DECEMBER 31, 1993 AND 1992
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Pension Committee
Amdel Inc. Employee Investment Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Amdel Inc. Employee Investment Plan as of December 31, 1993 and
1992, and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits of the
Amdel Inc. Employee Investment Plan as of December 31, 1993 and 1992, and the
changes in net assets available for plan benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment and reportable transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Dallas, Texas
April 15, 1994
<PAGE> 4
AMDEL INC. EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
PREFERRED
COMMON STOCK STOCK GOVERNMENT SECURITIES
---------------- ------- -----------------------
ATLANTIC ATLANTIC U.S. U.S.
FINA, RICHFIELD RICHFIELD SAVINGS TREASURY
TOTAL INC. COMPANY COMPANY BONDS OBLIGATIONS
---------- ------ ------- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1993:
Investments, at fair value:
FINA, Inc., Class A common stock (4,631 shares;
cost of $320,833) .......................... $ 318,381 318,381 -- -- -- --
The Boston Company Intermediate Government
Securities Fund (14,458 shares; cost
of $186,165)................................. 189,981 -- -- -- -- 189,981
Money market investments ....................... 1,605,572 11,200 -- -- -- --
Cash ............................................... 851 -- -- -- -- 850
Interest receivable ................................ 4,369 36 -- -- -- --
Contributions receivable from employees ............ 49,688 6,378 -- -- -- 2,730
Contributions receivable from employing companies .. 38,941 5,169 -- -- -- 2,527
---------- ------- ----- ----- ----- -------
Plan assets .................................... $2,207,783 341,164 -- -- -- 196,088
Forfeitures available for future use ............... (7,333) -- -- -- -- --
Amounts due others ................................. (850) -- -- -- -- (850)
---------- ------- ----- ----- ----- -------
Net assets available for plan benefits ......... $2,199,600 341,164 -- -- -- 195,238
========== ======= ===== ===== ===== =======
December 31, 1992:
Investments, at fair value:
FINA, Inc., Class A common stock (4,669 shares;
cost of $328,128) .......................... $ 281,723 281,723 -- -- -- --
The Boston Company Intermediate Government
Securities Fund (12,893 shares; cost
of $163,339)................................. 164,521 -- -- -- -- 164,521
Securities receivable (note 1) ..................... 1,383,687 -- -- -- -- --
Cash ............................................... 20,277 -- -- -- -- --
Dividends receivable ............................... 42 17 -- -- -- --
Contributions receivable from employees ............ 45,021 5,856 -- -- -- 2,674
Contributions receivable from employing companies .. 36,362 4,794 -- -- -- 2,375
Amounts receivable from others ..................... 2,020 2,020 -- -- -- --
---------- ------- ----- ----- ----- -------
Plan assets .................................... 1,933,653 294,410 -- -- -- 169,570
Forfeitures available for future use ............... (8,830) -- -- -- -- --
---------- ------- ----- ----- ----- -------
Net assets available for plan benefits ......... $1,924,823 294,410 -- -- -- 169,570
========== ======= ===== ===== ===== =======
</TABLE>
<PAGE> 5
AMDEL INC. EMPLOYEE INVESTMENT
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS -- (CONTINUED)
<TABLE>
<CAPTION>
TBC POOLED RETIREMENT
EMPLOYEE BALANCED MONEY COMPANY
FUND FUND MARKET FUND FORFEITURES
---------- ---------- ------------- -----------
<S> <C> <C> <C> <C>
December 31, 1993:
Investments, at fair value:
FINA, Inc., Class A common stock (4,631 shares;
cost of $320,833) ............................... -- -- -- --
The Boston Company Intermediate Government
Securities Fund (14,458 shares; cost of
$186,165)......................................... -- -- -- --
Money market investments ........................... 1,587,053 -- -- 7,319
Cash ............................................... 1 -- -- --
Interest receivable ................................ 4, 319 -- -- 14
Contributions receivable from employees ............ 40,580 -- -- --
Contributions receivable from employing companies ... 31,245 -- -- --
--------- ----- --------- ------
Plan assets .................................... 1,663,198 -- -- 7,333
Forfeitures available for future use ............... -- -- -- (7,333)
Amounts due others ................................. -- -- -- --
--------- ----- --------- ------
Net assets available for plan benefits ....... 1,663,198 -- -- --
========= ===== ========= ======
December 31, 1992:
Investments, at fair value:
FINA, Inc., Class A common stock (4,669 shares;
cost of $328,128) .............................. -- -- -- --
The Boston Company Intermediate Government
Securities Fund (12,893 shares; cost of
$163,339) ...................................... -- -- -- --
Securities receivable (note 1) .................... -- -- 1,383,687 --
Cash .............................................. -- -- 11,472 8,805
Dividends receivable .............................. -- -- 25
Contributions receivable from employees ........... -- -- 36,491 --
Contributions receivable from employing companies .. -- -- 29,193 --
Amounts receivable from others .................... -- -- -- --
--------- ----- --------- ------
Plan assets ................................... -- -- 1,460,843 8,830
Forfeitures available for future use .............. -- -- (8,830)
--------- ----- --------- ------
Net assets available for plan benefits ........ -- -- 1,460,843 --
========= ===== ========= ======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
AMDEL INC. EMPLOYEE INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1993 AND 1992
<TABLE>
<CAPTION>
PREFERRED
COMMON STOCK STOCK GOVERNMENT SECURITIES
------------------- -------- ---------------------
ATLANTIC ATLANTIC U.S. U.S.
RICHFIELD RICHFIELD SAVINGS TREASURY
TOTAL FINA, INC. COMPANY COMPANY BONDS OBLIGATIONS
------ ---------- -------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Allotments and contributions
Basic allotments by employees .................................. $ 489,501 51,975 -- -- -- 31,963
Additional allotments by employees ............................. 129,714 23,049 -- -- -- 3,803
Contributions by employing companies ........................... 501,496 72,252 -- -- -- 32,141
---------- ------- ------- ------ ------- -------
1,120,711 147,276 -- -- -- 67,907
Investment income (loss): ---------- ------- ------- ------ ------- -------
Dividends ........................................................ 23,562 14,254 -- -- -- 9,308
Interest ....................................................... 40,784 249 -- -- -- --
Other income (expense) ......................................... (7,595) 3,878 -- -- -- --
Net appreciation in fair values of investment .................. 49,059 44,939 -- -- -- 4,120
---------- ------- ------- ------ ------- -------
105,810 63,320 -- -- -- 13,428
Withdrawals: ---------- ------- ------- ------ ------- -------
In cash and in kind ............................................ 944,494 161,822 -- -- -- 55,667
Forfeitures .................................................... 7,250 2,020 -- -- -- --
---------- ------- ------- ------ ------- -------
951,744 163,842 -- -- -- 55,667
---------- ------- ------- ------ ------- -------
Transfers among funds .............................................. -- -- -- -- -- --
---------- ------- ------- ------ ------- -------
Net increase (decrease) in net assets available
for plan benefits ............................................. 274,777 46,754 -- -- -- 25,668
Net assets available for plan benefits:
Beginning of year ............................................. 1,924,823 294,410 -- -- -- 169,570
---------- ------- ------- ------ ------- -------
End of year ................................................... $2,199,600 341,164 -- -- -- 195,238
========== ======= ======= ====== ======= =======
Year ended December 31, 1992:
Allotments and contributions
Basic allotments by employees .................................. 475,804 66,021 -- -- -- 29,612
Additional allotments by employees ............................. 109,355 11,491 -- -- -- 3,838
Contributions by employing companies ........................... 475,802 66,020 -- -- -- 29,611
---------- ------- ------- ------ ------- -------
$1,060,961 143,532 -- -- -- 63,061
Investment income (loss): ---------- ------- ------- ------ ------- -------
Dividends ...................................................... 55,459 4,363 2,397 92 -- 5,359
Interest ....................................................... 8,334 171 -- -- 5,893 2,270
Net appreciation (depreciation) in fair
values of investments ........................................ (35,904) (33,990) (952) (345) -- 1,259
---------- ------- ------- ------ ------- -------
27,889 (29,456) 1,445 (253) 5,893 8,888
---------- ------- ------- ------ ------- -------
Withdrawals:
In cash and in kind ............................................ 1,283,887 211,358 64,702 19,372 22,036 84,863
---------- ------- ------- ------ ------- -------
1,283,887 211,358 64,702 19,372 22,036 84,863
---------- ------- ------- ------ ------- -------
Transfers among funds ............................................ -- 9,931 (91,073) (16,491) (68,139) 16,642
---------- ------- ------- ------ ------- -------
Net increase (decrease) in net assets available
for plan benefits ............................................ (195,037) (87,351) (154,330) (36,116) (84,282) 3,728
Net assets available for plan benefits:
Beginning of year .............................................. 2,119,860 381,761 154,330 36,116 84,282 165,842
---------- ------- ------- ------ ------- -------
End of year ..................................................... $1,924,823 294,410 -- -- -- 169,570
========== ======= ======= ====== ======= =======
</TABLE>
<PAGE> 7
AMDEL INC. EMPLOYEE INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS - (CONTINUED)
<TABLE>
<CAPTION>
TBC POOLED RETIREMENT
EMPLOYEE BALANCED MONEY COMPANY
FUND FUND MARKET FUND FORFEITURES
--------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1993:
Allotments and contributions
Basic allotments by employees .......................... 405,563 -- -- --
Additional allotments by employees ..................... 102,862 -- -- --
Contributions by employing companies ................... 397,103 -- -- --
--------- -------- ---------- ------
905,528 -- -- --
--------- -------- ---------- ------
Investment income (loss):
Dividends .............................................. -- -- -- --
Interest ............................................... 40,535 -- -- --
Other income (expense) ................................. (11,473) -- -- --
Net appreciation in fair values of investment .......... -- -- -- --
--------- -------- ---------- ------
29,062 -- -- --
--------- -------- ---------- ------
Withdrawals:
In case and in kind .................................... 727,005 -- -- --
Forfeitures ............................................ 5,230 -- -- --
--------- -------- ---------- ------
732,235 -- -- --
--------- -------- ---------- ------
Transfers among funds ...................................... 1,460,843 -- (1,460,843) --
--------- -------- ---------- ------
Net increase (decrease) in net assets available for plan
benefits ........................................... 1,663,198 -- (1,460,843) --
Net assets available for plan benefits:
Beginning of year ...................................... -- -- 1,460,843 --
--------- -------- ---------- ------
End of year ............................................ 1,663,198 -- -- --
========= ======== ========== ======
Year ended December 31, 1992:
Allotments and contributions
Basic allotments by employees .......................... -- -- 380,171 --
Additional allotments by employees ..................... -- -- 94,026 --
Contributions by employing companies ................... -- -- 380,171 --
--------- -------- ---------- ------
-- -- 854,368 --
--------- -------- ---------- ------
Investment income (loss):
Dividends .............................................. -- -- 43,248 --
Interest ............................................... -- -- -- --
Net appreciation (depreciation) in fair values of
investments ............................................ -- (1,876) -- --
--------- -------- ---------- ------
-- (1,876) 43,248 --
--------- -------- ---------- ------
Withdrawals:
In cash and in kind .................................... -- 143,255 738,301 --
--------- -------- ---------- ------
-- 143,255 738,301 --
--------- -------- ---------- ------
Transfers among funds ...................................... -- (15,110) 164,240 --
--------- -------- ---------- ------
Net increase (decrease) in net assets available for
plan benefits .................................... -- (160,241) 323,555 --
Net assets available for plan benefits: ------
Beginning of year...................................... -- 160,241 1,137,288 --
--------- -------- ---------- ------
End of year............................................ -- -- 1,460,843 --
========= ======== ========== ======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
AMDEL INC. EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993 AND 1992
(1) GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General
The Amdel Inc. Employee Investment Plan (the Plan) operates for the benefit
of certain employees of American Petrofina Pipe Line Co. and certain employees
of Fina Oil and Chemical Company (FOCC), both of which are wholly-owned
subsidiaries of FINA, Inc. and are hereafter referred to as "employing
companies."
The Plan is a defined contribution plan covering certain full-time
employees of the employing companies who have completed six months of service.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). The following description of the
Plan reflects all Plan amendments and is provided for general purposes only.
Participants should refer to the Plan document for more complete information.
The Plan is administered by a committee appointed by and acting on behalf
of the Board of Directors of FOCC. Pursuant to the Plan's trust agreement, an
independent trustee (Trustee) maintains custody of the Plan's assets.
NationsBank -- Texas served as Trustee until April 1, 1992 at which time The
Boston Safe Deposit and Trust Company became the independent trustee.
(b) Basis of Presentation
The accompanying financial statements of the Plan have been prepared on an
accrual basis using fair values for investments. The fair values of investments
are based on closing market quotations or listed redeemable values. Security
transactions are recorded on a trade date basis.
(c) Expenses Relating to Investment Securities
Expenses relating to the purchase or sale of investment securities are
added to the cost or deducted from the proceeds, respectively.
(d) Expenses of Administering the Plan
All costs and expenses incurred in administering the Plan, including the
fees and expenses of the Trustee, the fees of its counsel and other
administrative expenses, are borne by the employing companies.
(e) Contributions
Participants may elect to contribute up to 10% of their basic compensation
to the Plan. The employing company will contribute an amount equal to the
lesser of the amount contributed by the participant or 5% of the participant's
basic compensation. Employing company contributions are reduced by
participants' forfeitures.
(f) Investment Program and Vesting
The Trustee of the Plan by law retains responsibility for the investments
of the Plan. Consistent with the fiduciary standards of ERISA, safeguards are
adhered to in protecting the interests of Plan participants and their
beneficiaries.
A participant may direct the proportions of his or her allotments, employer
contributions, and any earnings received by the Trustee for his or her account
into a (a) Money Market Fund, (b) Government Securities Fund, or (c) the Class
A common stock of FINA, Inc. All previous investments in common and preferred
stock of Atlantic Richfield Company and investments in units of the Balanced
Fund were made by predecessor plans. In the absence of direction, all amounts
will be held in cash without interest. Participants
<PAGE> 9
AMDEL INC. EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
become completely vested in contributions of the employing companies upon five
years of service with the company.
Effective January 1, 1993, the Fidelity Retirement Money Market Fund was
replaced with the TBC Inc. Pooled Employee Funds Daily Liquidity Fund. The
balance at December 31, 1992 with respect to the Fidelity fund reflects a
receivable for the assets to be reinvested into the new fund.
A description of such rights and provisions and an explanation of the
treatment of forfeitures and other matters are contained in the Plan document.
Participation in each investment option at December 31, 1993 and 1992 is
presented below. The sum of participation by investment option is greater than
the total number of Plan participants because participation is allowed in more
than one option.
PARTICIPATION BY INVESTMENT OPTION
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
FINA, Inc. Class A Common Stock ........................................ 39 30
U.S. Government Securities Fund ........................................ 23 18
Retirement Money Market Fund ........................................... 108 205
</TABLE>
(g) Withdrawals
A participant may withdraw securities and cash attributable to his or her
allotments at any time. Withdrawal of any part of the amounts attributable to
the employing companies' contributions, except on retirement under the Amdel
Inc. Noncontributory Retirement Plan, death or disability, is contingent upon
completion of five years of service. Any amounts not eligible for withdrawal
due to employee termination are forfeited and applied to reduce subsequent
employing companies' contributions. In certain circumstances, amounts forfeited
may be restored to terminated employees who are subsequently reemployed
provided they repay the amount previously withdrawn or distributed.
Withdrawals in cash and in kind in the accompanying financial statements
represent the fair value of the assets at date of distribution.
(h) Form 5500 Reconciliation
The net assets and withdrawals reported in the Plan's Form 5500 are
different from the corresponding amount reported in the accompanying financial
statements by $800,165 and ($39,547), respectively in 1993 and $760,618 and
$220,801, respectively in 1992. These differences relate to the classification
of withdrawals currently payable to participants.
(2) FEDERAL INCOME TAXES
The Plan has obtained from the Internal Revenue Service a determination
letter indicating that the Plan qualifies under the provisions of Section
401(a) of the Internal Revenue Code and, accordingly, is exempt from Federal
income taxes under Section 501(a). The United States Federal income tax
status of the participants with respect to their contributions to the Plan is
described in information submitted to the participants and subject to certain
limitations.
<PAGE> 10
AMDEL INC. EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) PLAN TERMINATION
Although they have not expressed any intent to do so, the employing
companies have the right under the Plan to discontinue their contributions at
any time and to terminate the Plan subject to the provisions of ERISA. In the
event of Plan termination, participants will become 100% vested in their
accounts.
<PAGE> 11
SCHEDULE 1
AMDEL INC. EMPLOYEE INVESTMENT PLAN
ITEM 27(a) -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1993
<TABLE>
<CAPTION>
NUMBER OF CURRENT
IDENTITY OF MARKETABLE INVESTMENT DESCRIPTION OF INVESTMENT SHARES/UNITS COST VALUE
- --------------------------------- ------------------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
TBC Inc. Pooled Employee Daily Money Market Fund
Liquidity Fund 1,605,572 $1,605,572 $1,605,572
The Boston Company Intermediate Government Securities
Government Securities Fund Fund 14,458 186,165 189,981
FINA, Inc. Class A common stock Common Stock 4,631 320,833 318,381
---------- ----------
$2,112,570 $2,113,934
========== ==========
</TABLE>
See accompanying independent auditors' report.
<PAGE> 12
SCHEDULE 2
AMDEL INC. EMPLOYEE INVESTMENT PLAN
ITEM 27(D) -- SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
CURRENT VALUE OF
NUMBER OF PURCHASE SELLING COST OF ASSET ON NET
DESCRIPTION OF ASSET: TRANSACTIONS PRICE PRICE ASSET TRANSACTION DATE GAIN/(LOSS)
- --------------------- ------------- --------- ------- ------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchases:
FINA, Inc. Class A common
stock .......................... 16 $ 149,800 $ -- $ 149,800 $ 149,800 $ --
The Boston Company Intermediate
Government Securities Fund ..... 26 77,042 -- 77,042 77,042 --
TBC Inc. Pooled Employee Daily
Liquidation Fund ............... 67 2,501,653 -- 2,501,653 2,501,653 --
Sales:
FINA, Inc. Class A common
stock .......................... 1 -- 23,659 27,028 23,659 (3,369)
The Boston Company Intermediate
Government Securities Fund ..... 3 -- 55,667 54,216 55,667 1,451
TBC Inc. Pooled Employee Daily
Liquidation Fund ............... 37 -- 905,300 905,300 905,300 --
</TABLE>
See accompanying independent auditors' report.
<PAGE> 13
CONSENT OF INDEPENDENT AUDITORS
The Investment Plan Committee
Amdel Inc. Employee Investment Plan:
We consent to incorporation by reference in the Registration Statement (No.
2-49321 ) on Form S-8 of FINA, Inc. of our report dated April 22, 1994,
relating to the statements of net assets available for plan benefits of the
Amdel Inc. Employee Investment Plan as of December 31, 1993 and 1992, and the
related statements of changes in net assets available for plan benefits for the
years then ended, and the related supplemental schedules, which report appears
in the December 31, 1993 annual report on Form 11-K of the Amdel Inc. Employee
Investment Plan.
KPMG Peat Marwick
Dallas, Texas
April 22, 1994
<PAGE> 14
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMDEL INC.
EMPLOYEE INVESTMENT PLAN
/s/
---------------------------------
Cullen M. Godfrey
Vice President, Secretary and
General Counsel of the Registrant
Dated: April 26, 1994
<PAGE> 1
Exhibit 10(h)
RON W. HADDOCK
President and
Chief Executive Officer
(LOGO)
May 20, 1994
Mr. Glenn E. Selvidge
7107 Nicki Court
Dallas, TX 75252
Dear Glenn:
This letter, when executed by you in the space provided, will constitute an
Agreement between you and FINA, Inc. ("Company") concerning certain additional
considerations, in addition to normal entitlements, relative to your
retirement, effective July 1, 1994 instead of July 1, 1998. These additional
considerations are described below:
1. The Company agrees to pay you a total gross sum of $300,000 (equal to
two years of current annual salary) as a supplemental retirement benefit. This
amount will be paid as follows: $60,000 on July 10, 1994; $150,000 on January
10, 1995; and $90,000 on January 10, 1996.
2. The Company acknowledges that you will commence receipt of your
retirement benefits under all applicable Company provided plans on July 1,
1994. Your retirement benefit will be calculated, taking into account age and
service credits through June 30, 1998. Any portion of your retirement benefit
which cannot be paid from the Trust Fund of the Pension Plan will be paid
monthly by the Company, and such payments will be in addition to the amounts
provided in Paragraph 1 above. Any portion of your retirement benefit that is
paid by the Company can be converted to a joint and survivor option, in the
manner provided in the FINA, Inc. Pension Plan. If you want a joint and
survivor option, you must notify the Company, in writing, prior to July 1,
1994.
3. The monthly cost of Company medical care coverage, currently
administered through John Hancock, for you and your eligible dependent will be
determined in accordance with the provisions of the plan from time-to-time in
force. In January of each year, as a further retirement supplement, and upon
receipt of a statement from you, the Company shall pay you an amount equal to
the difference in the premium costs actually paid by you for the previous year
and the amount which you would have paid if your share of the premium costs had
been calculated as if you had 30 years of Company service on July 1, 1994. This
supplemental retirement benefit shall be available, based upon the same
formula, to your surviving spouse following your death.
4. The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
the business and/or assets of the Company expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to all or substantially all the business and/or
assets of the Company that assumes and agrees to perform this Agreement by
operation of law, or otherwise.
P.O. Box 2159 * Dallas, Texas 75221 * (214) 750-2554
<PAGE> 2
Mr. Glenn E. Selvidge
May 20, 1994
Page two
5. Federal income taxes, as appropriate, will be withheld by the Company
and forwarded to the Internal Revenue Service. Should any FICA or FICA-Medical
taxes be required relative to the amounts of money described herein, you will
pay your share and the Company will pay its share of such taxes.
6. In addition to each and all of the benefits, payments and
considerations provided above, you shall be entitled to the full benefit of
your participation in the Company's Phantom Share Plan and to any incidental
benefits, such as payment for accrued vacation time, which is customarily made
available to employees upon their retirement from the Company.
7. The parties hereto acknowledge and agree that the statements contained
herein are not merely recitations, but make and constitute valuable contractual
considerations.
8. This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
9. No right or interest of yours under this Agreement may be assigned,
transferred or alienated, in whole or in part, either directly or by operation
of law, and no such right or interest shall be liable for or subject to any
debt, obligation or liability of yours (other than a debt, obligation or
liability of yours to the Company).
If this is your understanding of this Agreement, please execute and return the
copy of this Letter Agreement, which is enclosed, to the undersigned.
Sincerely,
FINA, Inc.
/s/ RON W. HADDOCK
Ron W. Haddock
President and Chief Executive Officer
ACCEPTED AND AGREED TO this
6th day of June, 1994.
/s/ GLENN E. SELVIDGE
Glenn E. Selvidge
<PAGE> 1
Exhibit 10(i)
RON W. HADDOCK
President and
Chief Executive Officer
(LOGO)
May 20, 1994
Mr. Henry J. Lartigue, Jr.
3140 Amherst Avenue
Dallas, TX 75225
Dear Henry:
This letter, when executed by you in the space provided, will constitute an
Agreement between you and FINA, Inc. ("Company") concerning certain additional
considerations, in addition to normal entitlements, relative to your
retirement, effective July 1, 1994 instead of October 1, 1995. These additional
considerations are described below:
1. The Company will calculate the base salary you would have earned from
July 1, 1994 through September 30, 1995. This amount totals $257,500.
2. The Company acknowledges that you will commence receipt of your
retirement benefits under all applicable Company provided plans on July 1,
1994. Your retirement benefit will be calculated, taking into account service
credits through September 30, 1995. Any portion of your retirement benefit
which cannot be paid from the Trust Fund of the Pension Plan will be paid
monthly by the Company, and such payments will be in addition to the amounts
provided in paragraph 4 below. Any portion of your retirement benefit that is
paid by the Company can be converted to a joint and survivor option, in the
manner provided in the FINA, Inc. Pension Plan. If you want a joint and
survivor option, you must notify the Company, in writing, prior to July 1,
1994.
3. As a participant in the Capital Accumulation Plan, you are entitled to
a matching Company contribution not to exceed six percent (6%) of base pay. The
amount which the Company would have contributed from July 1, 1994 through
September 30, 1995 totals $15,450.
4. A supplemental retirement benefit will be paid to you equal to (1)
earnings described in 1 above, plus (2) matching Company contributions to the
Capital Accumulation Plan described in 3 above, minus (3) pension benefit
payments, valued as a life-only benefit, described in 2 above from July 1, 1994
through September 30, 1995. This benefit will be paid in three equal
installments. The first will be on January 10, 1995, the second on January 10,
1996, and the final payment on January 10, 1997. Attachment I presents an
illustration of this arrangement before any tax withholding. It is understood
that this illustration is subject to final audit as of the date of retirement.
5. Federal income taxes, as appropriate, will be withheld by the Company
and forwarded to the Internal Revenue Service. Should any FICA or FICA-Medical
taxes be required relative to the amounts of money described herein, you will
pay your share and the Company will pay its share of such taxes.
P.0. Box 2159 * Dallas, Texas 75221 * (214) 750-2554
<PAGE> 2
Mr. Henry J. Lartigue, Jr.
May 20, 1994
Page two
6. The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all
the business and/or assets of the Company expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to all or substantially all the business and/or
assets of the Company that assumes and agrees to perform this Agreement by
operation of law, or otherwise.
7. In addition to each and all of the benefits, payments and
considerations provided above, you shall be entitled to any incidental
benefits, such as payment for accrued vacation time, which is customarily made
available to employees upon their retirement from the Company.
8. The parties hereto acknowledge and agree that the statements contained
herein are not merely recitations, but make and constitute valuable contractual
considerations.
9. This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
10. No right or interest of yours under this Agreement may be assigned,
transferred or alienated, in whole or in part, either directly or by operation
of law, and no such right or interest shall be liable for or subject to any
debt, obligation or liability of yours (other than a debt, obligation or
liability of yours to the Company).
If this is your understanding of this Agreement, please execute and return the
copy of this Letter Agreement, which is enclosed, to the undersigned.
Sincerely,
FINA, Inc.
/s/ RON W. HADDOCK
Ron W. Haddock
President and Chief Executive Officer
ACCEPTED AND AGREED TO this
6th day of June, 1994.
/s/ HENRY J. LARTIGUE, JR.
Henry J. Lartigue, Jr.
<PAGE> 1
EXHIBIT 10 l
================================================================================
FINA RESTORATION
PLAN
EFFECTIVE JANUARY 1, 1994
AMENDS AND RESTATES THE (NONQUALIFIED) EXCESS
BENEFIT PLAN OF AMERICAN PETROFINA,
INCORPORATED AND CERTAIN SUBSIDIARIES
ADOPTED BY THE COMPANY EFFECTIVE JANUARY 1, 1977
RESTATEMENT EFFECTIVE JANUARY 1, 1994
================================================================================
<PAGE> 2
FINA RESTORATION PLAN
1. Purpose. The purpose of the Fina Restoration Plan is to provide
additional benefits for certain highly compensated employees who participate in
the Fina Capital Accumulation Plan and the Fina Pension Plan. The Plan amends
and completely restates the Excess Benefit Plan of American Petrofina,
Incorporated and Certain Subsidiaries adopted by the Company effective January
1, 1977.
2. Definitions. The following definitions are used throughout the Plan.
(a) "Board of Directors" means the Board of Directors of the Company.
(b) "CAP" means the Fina Capital Accumulation Plan, as amended from
time to time, which is a defined contribution plan established by the Company
that is intended to qualify under Section 401(a) of the Code and to satisfy the
requirements of a qualified cash or deferred arrangement under Section 401(k)
of the Code.
(c) "Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
(d) "Committee" means the Retirement Committee of the Company.
(e) "Company" means Fina, Inc., a Delaware corporation.
(f) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
(g) "Participant" means an employee who is eligible to receive
benefits under the Plan. The term "Participant" will include the beneficiary of
a deceased Participant, unless the context clearly requires a different
interpretation.
(h) "Participating Employer" means the Company and any subsidiary or
other affiliate of the Company that participates in CAP or the Pension Plan.
(i) "Pension Plan" means the Fina Pension Plan, as amended from time
to time, which is a defined benefit pension plan that is sponsored by the
Company and is intended to qualify under Section 401(a) of the Code.
<PAGE> 3
(j) "Plan" means the Fina Restoration Plan as set forth herein and as
amended from time to time.
(k) "Plan Year" means the calendar year.
(l) "Restoration CAP Benefit" means the benefit described in Section
4(a).
(m) "Restoration Pension Benefit" means the benefit described in
Section 4(b).
(n) "Restoration Plan Account" means the account established for a
Participant under Section 5.
3. Eligibility. An employee of a Participating Employer will be a
Participant if he has elected to participate in CAP and is subject to the
limitation on compensation under Code Section 401(a)(17) or he is a participant
in the Pension Plan and is subject to the limitation on compensation under Code
Section 401(a)(17) or the limitation on benefits under Code Section 415.
4. Restoration Benefits.
(a) Restoration CAP Benefit. A Participant's Restoration CAP Benefit
for any Plan Year will be the difference, if any, between (i) and (ii) below,
where:
(i) is the amount of employer matching contributions and
forfeitures that would be contributed and/or allocated to the Participant's
accounts under CAP on the basis of the Participant's rate of before-tax or
after-tax contributions to CAP determined without regard to the maximum
dollar limitation on compensation under Code Section 401(a)(17) but taking
into account all other applicable limitations on contributions and
allocations under CAP; and
(ii) is the amount of employer matching contributions and
forfeitures actually allocated to the Participant's CAP accounts for the
Plan Year and not forfeited or distributed to the Participant pursuant to
Code Section 401(m)(6) or 4979(f).
(b) Restoration Pension Benefit. A Participant's Restoration Pension
Benefit will be an annual benefit equal to the difference, if any, between (i)
and (ii) below, where:
(i) is the annual benefit that would be payable to the Participant
under the Pension Plan beginning on his benefit commencement date if such
benefit were determined
-2-
<PAGE> 4
without regard to the maximum dollar limitation on compensation under Code
Section 401(a)(17) or the maximum benefit limitation under Code Section 415
but taking into account all other applicable benefit limitations under the
Pension Plan; and
(ii) is the annual benefit payable to the Participant under the
Pension Plan beginning on his benefit commencement date after applying the
limitations of Code Sections 401(a)(17) and 415 and all other applicable
benefit limitations under the Pension Plan.
5. Restoration Plan Accounts. The amount of a Participant's Restoration
CAP Benefit for any Plan Year will be credited as of a date or dates selected
by the Committee, but not later than the last day of the Plan Year, to an
account established for the Participant under the Plan. Amounts credited to the
Participant's Restoration Plan Account will be deemed to be invested on the
date on which the credit is made in whole and fractional shares of Class A
common stock of the Company.
6. Vesting. Subject to the rights of general creditors as set forth in
Section 10 and the right of the Company to discontinue the Plan as provided in
Section 13, a Participant will be vested in his Restoration CAP Benefit to the
same extent that he has a vested interest in his employer-provided benefit
under CAP and will be vested in his Restoration Pension Benefit to the same
extent that he has a vested interest in his employer-provided benefit under the
Pension Plan, unless the Participant's employment with the Company or any
subsidiary of the Company is terminated for Cause (as hereinafter defined). If
a Participant is terminated for Cause, the Participant's Restoration CAP
Benefit and his Restoration Pension Benefit will be forfeited and the
Participant will not be entitled to any benefit under the Plan. For purposes
of the Plan, "Cause" means any intentional act of fraud, embezzlement, or theft
committed by a Participant in the course of the Participant's employment by a
Participating Employer or any other intentional misconduct engaged in by the
Participant which is materially injurious to the business, reputation or
property of a Participating Employer.
7. Commencement of Benefits.
(a) Restoration CAP Benefit. A Participant's vested interest in his
Restoration CAP Benefit will be paid as soon as practicable following his
termination of employment for any reason (including death) with all
Participating Employers.
(b) Restoration Pension Benefit. Payment of a Participant's vested
interest in his Restoration Pension benefit will begin on the date that the
Participant begins to receive
-3-
<PAGE> 5
payment of his pension benefit under the Pension Plan. If payment of the
Restoration Pension Benefit begins before the Participant's normal retirement
age under the Pension Plan, the amount of his Restoration Pension Benefit will
be determined by applying the same reduction factors that are applicable to his
Pension Plan benefit.
8. Form of Benefits.
(a) Restoration CAP Benefit. A Participant's vested Restoration CAP
Benefit will be paid in cash, in a single lump sum distribution. The amount of
his Restoration CAP Benefit will be determined by valuing the whole and
fractional shares of Class A common stock of the Company credited to his
Restoration Plan Account as of the valuation date under CAP immediately
preceding the date of distribution.
(b) Restoration Pension Benefit. A Participant's Restoration Pension
Benefit will be paid in the same form as the normal form of the Participant's
pension benefit under the Pension Plan; provided, however, that if the
Participant elects to receive his Pension Plan benefit in an optional form, the
Restoration plan Benefit will be paid in the same optional form and will be
subject to the same reduction factors used under the Pension Plan to convert
the Participant's normal form of pension benefit to the optional form.
Notwithstanding the foregoing, the Participant may elect to receive his
Restoration Pension Benefit in an actuarially equivalent lump sum payment,
provided he makes such election at least six months prior to his benefit
commencement date or at such other time as the Committee determines is
appropriate. The value of such lump sum payment will be determined by using a
discount rate equal to the published interest rates that would be used (as of
the first day of the calendar quarter in which the distribution is made) by the
Pension Benefit Guaranty Corporation for purposes of determining the present
value of a lump sum distribution on termination of a defined benefit pension
plan and such other actuarial factors as are used in determining actuarial
equivalence under the Pension Plan.
9. Death Benefits.
(a) Restoration CAP Benefit. If a Participant who is entitled to
receive a Restoration CAP Benefit dies before receiving such benefit, the
amount of the Restoration Plan benefit will be paid to the person or persons
(including his estate) who are recognized under CAP as the beneficiary of the
Participant's CAP benefit.
(b) Restoration Pension Benefit. Upon the death of a Participant who
is receiving a Restoration Pension Benefit, the
-4-
<PAGE> 6
Restoration Pension Benefit will continue to be paid (if at all) in accordance
with the form of payment elected by the Participant under Section 8(b). If a
Participant who is entitled to receive a Restoration Pension Benefit dies
before payment of such benefit begins, the Participant's Restoration Pension
Benefit will be paid as a death benefit in the same manner, to the same extent
and to the same beneficiary as the Participant's pension benefit is continued
(if at all) under the Pension Plan.
10. Funding of Benefits. (a) The Plan will be unfunded. All benefits
payable to a Participant under the Plan will be paid from the general assets of
the Participating Employers that employed the Participant, and nothing
contained in the Plan will require the Participating Employers to set aside or
hold in trust any funds for the benefit of a Participant, who will have the
status of a general unsecured creditor with respect to the obligation of the
Participating Employers to make payments under the Plan. Any funds of the
Participating Employers available to pay benefits under the Plan will be
subject to the claims of general creditors of the Participating Employers and
may be used for any purpose by the Participating Employers.
(b) If the benefits payable under the Plan to a Participant is
attributable to periods of employment with more than one Participating
Employer, the Committee may allocate liability for the payment of the benefit
among the Participating Employers in any manner the Committee, in its sole
discretion, determines to be appropriate.
(c) Notwithstanding the provisions of Section 10(a), the Company may,
at the direction, and in the absolute discretion, of the Committee, transfer to
the trustee of one or more trusts established for the benefit of one or more
Participants assets from which all or a portion of the benefits provided under
the Plan will be satisfied, provided that such assets held in trust will at all
times be subject to the claims of general unsecured creditors of the
Participating Employers, and no Participant will at any time have a prior claim
to such assets. To the extent that benefits under the Plan are paid from any
such trust, the Participating Employers will be relieved of all liability for
such benefits.
11. Administration of the Plan. (a) The Committee will administer the Plan
and will have the full authority and discretion to accomplish that purpose,
including without limitation, the authority and discretion to (i) interpret the
Plan and correct any defect, supply any omission or reconcile any inconsistency
or ambiguity in the Plan in the manner and to the extent that the Committee
deems desirable to carry the purpose of the Plan, (ii) resolve all questions
relating to the eligibility of employees to become Participants, (iii)
determine
-5-
<PAGE> 7
the amount of benefits payable to Participants and authorize and direct the
Company with respect to the payment of benefits under the Plan, (iv) make all
other determinations and resolve all questions of fact necessary or advisable
for the administration of the Plan, and (v) make, amend and rescind such rules
as it deems necessary for the proper administration of the Plan. The Committee
will keep a written record of its action and proceedings regarding the Plan and
all dates, records and documents relating to its administration of the Plan.
(b) Any action taken or determination made by the Committee will,
except as otherwise provided in Section 12 below, be conclusive on all parties.
No member of the Committee will vote on any matter relating specifically to
such member. In the event that a majority of the members of the Committee will
be specifically affected by any action proposed to be taken (as opposed to
being affected in the same manner as each other Participant in the Plan), such
action will be taken by the Board of Directors.
12. Claims Procedure. (a) If a Participant does not receive the benefits
which he believes he is entitled to receive under the Plan, he may file a claim
for benefits with the Committee. All claims will be made in writing and will be
signed by the claimant. If the claimant does not furnish sufficient information
to determine the validity of the claim, the Committee will indicate to the
claimant any additional information which is required.
(b) Each claim will be approved or disapproved by the Committee within
90 days following the receipt of the information necessary to process the
claim. In the event the Committee denies a claim for benefits in whole or in
part, the Committee will notify the claimant in writing of the denial of the
claim. Such notice by the Committee will also set forth, in a manner calculated
to be understood by the claimant, the specific reason for such denial, the
specific Plan provisions on which the denial is based, a description of any
additional material or information necessary to perfect the claim with an
explanation of why such material or information is necessary, and an
explanation of the Plan's claim review procedure as set forth below. If no
action is taken by the Committee on a claim within 90 days, the claim will be
deemed to be denied for purposes of the review procedure.
(c) A claimant may appeal a denial of his claim by requesting a review
of the decision by the Committee or a person designated by the Committee, which
person will be a named fiduciary under Section 402(a)(2) of ERISA for purposes
of this Section. An appeal must be submitted in writing within six months after
the denial and must (i) request a review of the claim for benefits under the
Plan, (ii) set forth all of the
-6-
<PAGE> 8
grounds upon which the claimant's request for review is based and any facts in
support thereof, and (iii) set forth any issues or comments which the claimant
deems pertinent to the appeal. The Committee or the named fiduciary designated
by the Committee will make a full and fair review of each appeal and any
written materials submitted in connection with the appeal. The Committee or the
named fiduciary designated by the Committee will act upon each appeal within 60
days after receipt thereof unless special circumstances require an extension of
the time for processing, in which case a decision will be rendered as soon as
possible but not later than 120 days after the appeal is received. The claimant
will be given the opportunity to review pertinent documents or materials upon
submission of a written request to the Committee or named fiduciary, provided
the Committee or named fiduciary finds the requested documents or materials are
pertinent to the appeal. On the basis of its review, the Committee or named
fiduciary will make an independent determination of the claimant's eligibility
for benefits under the Plan. The decision of the Committee or named fiduciary
on any claim for benefits will be final and conclusive upon all parties
thereto. In the event the Committee or named fiduciary denies an appeal in
whole or in part, it will give written notice of the decision to the claimant,
which notice will set forth in a manner calculated to be understood by the
claimant the specific reasons for such denial and which will make specific
reference to the pertinent Plan provisions on which the decision was based.
13. Miscellaneous. (a) Nothing in the Plan will confer upon a Participant
the right to continue in the employ of the Participating Employers or will
limit or restrict the right of the Participating Employers to terminate the
employment of a Participant at any time with or without cause.
(b) Except as otherwise provided in the Plan, no right or benefit
under the Plan will be subject to anticipation, alienation, sale, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
assign, pledge, encumber or charge such right or benefit will be void. No such
right or benefit will in any manner be liable for or subject to the debts,
liabilities or torts of a Participant.
(c) The Plan may be amended at any time by the Committee provided such
amendment does not have the effect of increasing, directly or indirectly, the
benefit of any Participant. The Plan may also be amended or terminated by the
Board of Directors at any time. No action taken by the Committee or by the
Board of Directors to amend or terminate the Plan will have the effect of
decreasing a Participant's Plan benefit as of the date of such action.
-7-
<PAGE> 9
(d) The Plan is intended to provide benefits for "management or highly
compensated" employees within the meaning of Sections 201, 301 and 401 of
ERISA, and therefore to be exempt from the provisions of Parts 2, 3 and 4 of
Title I of ERISA. Accordingly, the Plan will terminate and no further benefits
will accrue hereunder in the event it is determined by a court of competent
jurisdiction or by an opinion of counsel that the Plan constitutes an employee
pension benefit plan within the meaning of Section 3(2) of ERISA, which is not
so exempt. In addition, in the absolute discretion of the Committee, the
benefit of each Participant accrued under the Plan on the date of termination
will be paid immediately to such Participant in a single lump sum cash payment.
(e) If any provision in the Plan is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
will nevertheless continue in full force and effect without being impaired or
invalidated in any way.
(f) THE PLAN WILL BE CONSTRUED AND GOVERNED IN ALL RESPECTS IN
ACCORDANCE WITH APPLICABLE FEDERAL LAW AND, TO THE EXTENT NOT PREEMPTED BY SUCH
FEDERAL LAW, IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
Executed at Dallas, Texas, this 5th day of December, 1993.
FINA, INC.
By /s/ CULLEN M. GODFREY
Vice President
-8-
<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant / /
Filed by a party other than the registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
FINA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
FINA, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rules 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
FINA, INC.
FINA PLAZA
DALLAS, TEXAS 75206
NOTICE OF ANNUAL MEETING OF SECURITY HOLDERS
TO BE HELD APRIL 12, 1995
To the Security Holders of
FINA, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Security Holders of FINA,
Inc. will be held at the DoubleTree Inn, 8250 North Central Expressway, Dallas,
Texas 75206; on the 12th day of April, 1995 at 10 o'clock in the forenoon to
consider and act upon the following matters:
1. To elect eight directors for the ensuing year to serve until their
respective terms expire and until their respective successors have been
duly elected and qualified; and
2. To approve the amendment of the Certificate of Incorporation to
increase the amount of authorized Class A Common Stock by 19 million shares
and the authorized Class B Common Stock by 1 million shares and to decrease
the par value to fifty cents effecting a stock split; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors fixed the close of business on March 6, 1995, as the
record date for the determination of security holders entitled to notice of and
to vote at the meeting and a list of security holders entitled to notice and to
vote will be available for inspection at the principal office of the Company
prior to the meeting and will be available at the meeting.
IF YOU CANNOT BE PRESENT AT THE MEETING, YOU ARE EARNESTLY REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT WITHOUT DELAY IN THE ENCLOSED
ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
CULLEN M. GODFREY
Secretary
Dallas, Texas
March 7, 1995
<PAGE> 3
FINA, INC.
FINA PLAZA
DALLAS, TEXAS 75206
PROXY STATEMENT
FOR
ANNUAL MEETING OF SECURITY HOLDERS
TO BE HELD APRIL 12, 1995
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of FINA, Inc., formerly named American Petrofina,
Incorporated, for use at the Annual Meeting of Security Holders of the Company
to be held on April 12, 1995. Discretionary authority to vote unmarked proxies
is being solicited and unmarked proxies will be voted FOR proposals in the
discretion of the Proxy Committee. Any proxy given by a security holder may be
revoked at any time before it is exercised by giving written notice of
revocation to the Secretary. Copies of this statement and form of proxy are
expected to be first provided to security holders on or about March 10, 1995.
At the close of business on March 6, 1995, the record date for the meeting,
the Company had outstanding and entitled to vote 14,594,902 shares of Class A
Common Stock and 1,000,000 shares of Class B Common Stock. Except as otherwise
provided in Article FOURTH of the Certificate of Incorporation of the Company,
each share of Class A and Class B Common Stock is entitled to one vote. Class B
Common Stock is not publicly traded. Only security holders of record at the
close of business on March 6, 1995, are entitled to vote at the April 12, 1995
meeting.
Article FOURTH of the Certificate of Incorporation provides that on any
vote for the election of directors the holders of record of the Class B Common
Stock shall be entitled, voting separately as a class, to elect the smallest
number comprising more than half of the directors to be elected, and the
remaining directors shall be elected by the holders of record of the Class A
Common Stock, voting separately as a class. In accordance with that provision of
Article FOURTH, at the Annual Meeting the holders of record of the Class B
Common Stock will be entitled to elect five directors and the holders of record
of the Class A Common Stock will be entitled to elect three directors.
Affiliates of the Company control more than three-quarters of the Class A
and Class B Common Stock, and thereby are entitled to the deciding voting
rights. Therefore, all proposals and elections offered to security holders will
be approved regardless of whether or how unaffiliated security holders may or
may not vote.
Included in the table below is information relating to the sole beneficial
owner of more than 5% of the outstanding Class A and Class B Common Stock of the
Company as of March 6, 1995.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
-------------- ------------------- ---------- ----------
<S> <C> <C> <C>
Class A Common Stock.............. Petrofina Delaware, Incorporated 12,398,056 84.90%
Fina Plaza
Dallas, TX 75206
Class B Common Stock.............. Petrofina Delaware, Incorporated 1,000,000 100%
Fina Plaza
Dallas, TX 75206
</TABLE>
<PAGE> 4
Petrofina S.A., a publicly held corporation organized under the laws of the
Kingdom of Belgium, owns 100% of American Petrofina Holding Company, 1209 Orange
Street, Wilmington, Delaware, which owns 75% of Petrofina Delaware,
Incorporated. The remaining 25% of Petrofina Delaware, Incorporated's stock is
owned by Petrofina S.A. In each such case, beneficial ownership includes both
sole voting and investment powers. All of the directors of Petrofina Delaware,
Incorporated and American Petrofina Holding Company are officers or employees of
the Company or of Petrofina S.A. More than 5% of the common stock of Petrofina
S.A. is controlled by Groupe Bruxelles Lambert S.A. (and related companies) and
Societe Generale de Belgique S.A. (and related companies).
At the close of business on March 6, 1995, there were registered in the
name of "Petrofina B.D.R. Account" 549,537 shares of Class A Common Stock
(representing less than 5% of this Class) against which there are outstanding
bearer deposit receipts which are publicly held. Such shares are voted according
to the instructions of various beneficial owners. If such instructions are not
given, Petrofina S.A. will vote the shares at its discretion.
Included in the table below is information relating to ownership of Class A
Common Stock of directors and officers:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------------- ------------------------ ------------- -------------
<S> <C> <C> <C>
Class A Common Stock Francois Cornelis 200 shares less than 1%
Class A Common Stock Ron W. Haddock 8,696 shares(1)(2) less than 1%
Class A Common Stock Paul D. Meek 205 shares less than 1%
Class A Common Stock Robert L. Mitchell 200 shares less than 1%
Class A Common Stock David C. Treen 100 shares less than 1%
Class A Common Stock Neil A. Smoak 1,424 shares(1)(2) less than 1%
Class A Common Stock Michael J. Couch 2,365 shares(1)(2) less than 1%
Class A Common Stock H. Patrick Jack 600 shares(1) less than 1%
Class A Common Stock All Directors and
Officers as a group 19,086 shares(3)(2) less than 1%
</TABLE>
- ---------------
(1) Included in this amount are the following shares relating to exercisable
stock options: 2,000 as to Mr. Haddock, 1,000 as to Mr. Smoak, 800 as to
Mr. Couch and 600 as to Mr. Jack.
(2) Included in this amount are the following shares held on September 30, 1994,
by the Trustee of the FINA Capital Accumulation Plan, a 401(k) plan: 1,696
as to Mr. Haddock, 25 as to Mr. Smoak, 1,133 as to Mr. Couch, none as to
Mr. Jack and 5,094 as to all officers as a group. Directors who are not
employees do not participate in the 401(k) plan.
(3) Included in this amount are 6,000 shares under currently vested exercisable
stock options.
On March 6, 1995, Boston Safe Deposit and Trust Company, as Trustee for the
FINA Capital Accumulation Plan ("FINA Plan") and as Trustee for the Amdel Inc.
Employee Investment Plan ("Amdel Plan") owned for the accounts of participants
in the FINA Plan and participants in the Amdel Plan an aggregate of 726,564
shares of Class A Common Stock (representing less than 5% of this Class), and,
as Trustee, has the right to vote these shares.
2
<PAGE> 5
Included in the table below is information relating to ownership of
Petrofina S.A. Common Stock as of September 30, 1994 except as otherwise noted:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------------------- ------------------------- ------------- -------------
<S> <C> <C> <C>
Petrofina S.A. Common Stock Francois Cornelis 1,401 shares less than 1%
Petrofina S.A. Common Stock Axel de Broqueville 1,292 shares less than 1%
Petrofina S.A. Common Stock Ron W. Haddock 2,265 shares(1) less than 1%
Petrofina S.A. Common Stock Pierre Jungels 1,209 shares less than 1%
Petrofina S.A. Common Stock Henrique Bandeira Vieira 2,650 shares less than 1%
Petrofina S.A. Common Stock Neil A. Smoak 456 shares(2) less than 1%
Petrofina S.A. Common Stock Michael J. Couch 287 shares(2) less than 1%
Petrofina S.A. Common Stock H. Patrick Jack 348 shares(2) less than 1%
Petrofina S.A. Common Stock All Directors and
Officers as a group 10,524 shares less than 1%
</TABLE>
- ---------------
(1) The Trustee of the FINA Capital Accumulation Plan held 386 shares of this
amount on Mr. Haddock's behalf as of September 30, 1994.
(2) Petrofina S.A. shares in these amounts are held by the Trustee of the FINA
Capital Accumulation Plan as of September 30, 1994.
In March, 1991, Petrofina S.A. issued warrants allowing holders to purchase
two shares of its common stock at 10,254 BF each (app. $325.63 each). On January
27, 1995 the value of Petrofina S.A. common stock was 9,400 BF each (app.
$298.51 each). The warrants are exercisable through 1996. The Company is
informed that on January 31, 1995 Mr. Cornelis was holder of 1,150 warrants, Mr.
de Broqueville of 1,078 warrants, Mr. Jungels of 954 warrants, Mr. Vieira of
2,130 warrants, Mr. Yves Bercy of 540 warrants and Mr. Haddock of 500 warrants.
VOTING PROCEDURES
Votes will be counted by Corporation Trust Company of Delaware as Forms of
Proxies are received from shareholders. Voting is not cumulative. Each common
share is entitled to one vote. Abstentions are treated as withheld or abstained
votes and are counted only for purposes of obtaining a quorum. Broker non-votes
are also counted only for purposes of obtaining a quorum. All matters discussed
herein are expected to be approved as the majority security holder has indicated
it will vote in favor of each proposal.
ELECTION OF DIRECTORS
Proxies received from Class A holders of record will be voted at the
meeting by Ron W. Haddock or Cullen M. Godfrey, and each or either of them, who
constitute the Class A Proxy Committee, in favor of the election as directors of
the Company of Ron W. Haddock, Robert L. Mitchell and David C. Treen unless
security holders withhold authority to vote or specify in their proxies a
contrary choice. Proxies received from the Class B holder of record by the Class
B Proxy Committee for the Board of Directors, consisting of Ron W. Haddock or
Cullen M. Godfrey, and each or either of them, will be voted at the meeting in
favor of the election as directors of the Company of Francois Cornelis, Axel de
Broqueville, Pierre Jungels, Paul D. Meek,
3
<PAGE> 6
and Henrique Bandeira Vieira. Petrofina Delaware, Incorporated has indicated
that it will vote in favor of the election of each of these nominees. All
directors are elected to serve until the next Annual Meeting of Security Holders
and until their respective successors are elected and qualify. In the event that
any of the nominees shall be unavailable, the applicable Proxy Committee is
authorized to substitute one or more nominees, although management has no reason
to anticipate that this will occur.
INFORMATION CONCERNING NOMINEES FOR DIRECTORS
Certain information is given below with respect to each nominee for
election as director. All of these nominees are members of the present Board of
Directors, having been elected at the last meeting of security holders. The
statement as to Class A Common Stock of the Company beneficially owned is based
upon information furnished by each nominee. Each nominee beneficially owns less
than 1% of the outstanding shares of Class A Common Stock.
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
SINCE DATE
NOMINEE FOR DIRECTOR AGE PRINCIPAL OCCUPATION DURING 1994 LISTED BELOW
- ------------------------------ ---- ------------------------------------ ------------------
<S> <C> <C> <C>
Francois Cornelis............. 45 Chief Executive Officer and Vice April 17, 1985
Chairman of Petrofina S.A.
Axel de Broqueville........... 51 Executive Director of Petrofina S.A. April 11, 1990
Ron W. Haddock................ 54 President and Chief Executive December 17, 1987
Officer of the Company
Pierre Jungels................ 51 Executive Director of Petrofina S.A. April 11, 1990
Paul D. Meek.................. 64 Chairman of the Board of the Company July 10, 1968
Robert L. Mitchell............ 71 Retired Vice-Chairman of Celanese April 25, 1985
Corporation
David C. Treen................ 66 Of Counsel to the law firm of June 21, 1984
Deutsch, Kerrigan & Stiles
Henrique Bandeira Vieira...... 56 Chief Executive Officer of Fina PLC December 1, 1990
</TABLE>
Mr. Cornelis was elected Chief Executive Officer of Petrofina, S.A. on May
11, 1990 and Vice Chairman of Petrofina S.A. on May 13, 1991, having served as
Executive Director and General Manager from May 1986 and May 1984, respectively.
In May 1991 he was elected Vice-Chairman of the Board of Directors of Petrofina
S.A. From October 1983 until May 1984 he served as Vice President of the
Company. Prior to that time he served as Assistant to the President of the
Company since January 1983. Prior to that time, he served as Assistant Manager
in the exploration and production department and as European refining and supply
operation coordinator with Petrofina S.A.
Mr. Axel de Broqueville has held his present position since May 12, 1989.
Prior to that time he was General Manager of Petrofina S.A. for at least the
preceding five-year period. He was Vice President of the Company from April 16,
1980 until October 31, 1983 managing the Company's supply and transportation
needs.
Mr. Haddock was elected President and Chief Executive Officer effective
January 1, 1989, having served as Executive Vice President and Chief Operating
Officer since June 1986. Prior to that time he was an officer and a director of
Esso Eastern, an Exxon subsidiary, for the preceding three years.
Mr. Pierre Jungels has held his present position since May 8, 1987. Prior
to that time he was Managing Director of Petrofina-United Kingdom for at least
the preceding five-year period.
4
<PAGE> 7
Mr. Meek was first elected Chairman of the Board of the Company in October
1984. He was President and Chief Executive Officer from April 1983 to June 1986.
Prior to that time, he was President and Chief Operating Officer since 1976. Mr.
Meek retired from active employment with the Company on June 1, 1989. He served
as a Commissioner of the Public Utility Commission of Texas from November 1989
to April 1992.
Mr. Mitchell retired as Vice-Chairman of Celanese Corporation in June 1986.
He was a director of Celanese Corporation from June 1977 to February 1987. In
addition, he is a director of McGean-Rohco, Inc., The Orvis Company, Inc. and
Dubois National Bank.
Mr. Treen is of Counsel to the law firms of Deutsch, Kerrigan & Stiles, New
Orleans, and O'Connor & Hannan, Washington, D.C. In 1980, he was elected to and
served as the Governor of the State of Louisiana until 1984. Prior to 1980, he
served as a member of Congress from the Third District of Louisiana. During 1994
Deutsch, Kerrigan & Stiles performed certain limited legal services for the
Company and may continue to perform similar services during the current year.
Mr. Vieira is Chief Executive Officer and Managing Director of Fina PLC and
was Executive Director of Petrofina S.A. since May 11, 1990. For at least the
preceding five-year period he served as Senior Vice President of Petrofina S.A.
MEETING AND DIRECTOR COMPENSATION INFORMATION
The Board of Directors in 1994 held five regular meetings and four consent
meetings. All directors other than Messrs. Cornelis, Vieira, de Broqueville and
Jungels attended at least 75% of the total number of meetings of the Board of
Directors and committee meetings of which they were members during their terms
of service. None of the directors who did not attend at least 75% of the
meetings, other than Mr. Cornelis, served on any committee of the Board of
Directors. The Company currently pays $1,000 to directors for each Board of
Directors' meeting attended and $1,000 to committee members for each committee
meeting attended. During 1994, Directors who were not active employees of the
Company received a fee equalling $1,334 per month.
The Board of Directors has an Audit Committee, which in 1994 consisted of
Messrs. Treen and Mitchell. The Committee met two times in 1994 to review with
the Company's independent public accountants the Company's accounting procedures
and the Company's audit.
The Board of Directors also has a Compensation Committee, which in 1994
consisted of Messrs. Treen, Mitchell and Cornelis. The Committee held two
meetings in 1994 to review the Company's salaries, bonuses and benefits for
officers and other key employees.
The Board of Directors does not have a nominating committee. The Board of
Directors nominates the Directors to Represent the Class A Common Stockholders.
Petrofina Delaware, Incorporated advises the Board of its nominees to represent
the Class B Common Stock.
INFORMATION CONCERNING OFFICERS
Mr. Ron W. Haddock was elected President and Chief Executive Officer
effective January 1, 1989, having served as Executive Vice President and Chief
Operating Officer since June 1986. Prior to that time he was an officer and a
director of Esso Eastern, an Exxon subsidiary, for at least the previous
three-year period.
Mr. Paul D. Meek was elected Chairman of the Board in October 1984 having
served as President and Chief Executive Officer from April 1983 to June 1986. He
served as President and Chief Operating Officer since 1976, and was a Vice
President of the Company from 1968 to 1976. He is now retired from active
5
<PAGE> 8
employment with the Company. He served as a Commissioner of the Public Utility
Commission of Texas from November 1989 to April 1992.
Mr. Yves Bercy was elected Vice President and Chief Financial Officer
effective July 1, 1993 and was additionally elected as Treasurer in April 1994.
He is also a director and Vice President of Petrofina Delaware, Incorporated.
Prior to that time he was Executive Assistant to the principal financial officer
of Petrofina S.A. since 1991 and served as principal accounting officer of
Petrofina S.A. beginning in 1985.
Mr. Cullen M. Godfrey was elected Vice President, Secretary and General
Counsel effective August 1, 1990. Prior to that time he was Assistant Secretary
of the Company since April 1987, and was Assistant General Counsel since 1982.
He has also managed the Company's Security Department since August 1990 and
Public Affairs Department since July 1994.
Mr. M. J. Couch was elected as Vice President in April 1984. His principal
duties in fiscal 1994 were to the supply and transportation facets of the
business. He formerly served as General Manager of Supply and Transportation and
Manager of Raw Materials since joining the Company in 1977.
Mr. H. Patrick Jack was elected Vice President in August 1989. From
February 1985 Mr. Jack was General Manager of Chemicals Marketing until his
promotion. His principal duty is to manage the chemicals business of the
Company.
Mr. Henry J. Lartigue, Jr. was elected as Vice President in January 1989.
He retired from employment July 1, 1994. His principal duty in fiscal 1994 was
to manage Public Affairs and Planning. For at least the previous five-year
period he was manager of Public Affairs for Exxon Company, U.S.A.
Mr. Neil A. Smoak was elected Vice President in April 1986. Prior to that
time he was the manager of the Oklahoma City regional exploration and production
office since 1983. His principal duty is to manage the exploration and
production activities of the Company.
Mr. Glenn E. Selvidge was elected Vice President in February 1978. He
retired from employment July 1, 1994. He was responsible for career development
for management and employees.
Mr. S. Robert West was elected Vice President in May 1983 and served
additionally as Controller from May 1983 through December 1991. His principal
duty is to manage the Information Systems and Internal Audit Departments of the
Company. Additionally, he is responsible for training and development.
Mr. James D. Grier was elected Controller effective January 1, 1992, and is
the principal accounting officer of the Company. He was formerly a partner with
the accounting firm of KPMG Peat Marwick LLP for at least the preceding
five-year period.
Mr. Brendan M. O'Connor was elected Treasurer in April 1985. He resigned in
April 1994. His principal duty was to perform the duties of the Treasurer.
Ms. Linda Middleton was elected Assistant Secretary in August 1984. Her
principal duty is to assist the Corporate Secretary.
Pursuant to 405(a) of Regulation S-K, the Company has learned from an
examination of Form 4's that no officers or directors filed late reports on Form
4 in 1994.
6
<PAGE> 9
INFORMATION CONCERNING CUMULATIVE TOTAL RETURN
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL STOCK PRICE AND DIVIDEND
PERFORMANCE OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
AMERICAN
MEASUREMENT PERIOD PETROLEUM STOCK
(FISCAL YEAR COVERED) FINA, INC. REFINING EXCHANGE
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 113.50 106.19 84.80
1991 102.06 114.07 104.45
1992 91.94 112.89 105.88
1993 110.17 135.62 125.79
1994 115.24 144.68 111.12
</TABLE>
The chart above reflects the price and dividend performance of the
Company's Class A Common Stock relative to the composite of American Stock
Exchange companies and to all companies listed in the Standard Industry
Classification (SIC) Code 2911 composite of "Petroleum Refining" companies. SIC
Code 2911 is comprised of approximately 52 companies including Exxon Corp.,
Ashland Oil Inc., Kerr McGee Corp., Chevron Corp., Atlantic Richfield Company,
Mobil Corp. and Phillips Petroleum Co. The base year of 1989 is held constant at
100 with all dividends paid and market increases added each year. If a company
paid no dividends and had no increase in market value since 1989, its base of
100 would not change.
Each data point has been weighted for the market capitalization of the
companies comprising SIC Code 2911. A copy of a listing of all companies
comprising the group will be provided without charge to any security holder upon
request to the Company.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following tabulation sets forth the aggregate compensation paid or
accrued during the fiscal year ended December 31, 1994, to the President and
Chief Executive Officer and each of the four highest paid executive officers for
services to the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- --------------------- -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
--- ----- ------- ------- ------- ---------- -------- ------- -------
OTHER ALL
ANNUAL RESTRICTED OTHER
NAME AND COMPEN- STOCK OPTIONS/ LTIP COMPEN-
PRINCIPAL SALARY BONUS SATION AWARD(S) SARS PAYOUTS SATION
POSITION YEAR ($) ($) ($) ($) (#)(1) ($)(2) ($)
- ----------------- ----- ------- ------- ------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ron W. Haddock 1994 478,872 135,000 -- -- -- -- 33,591 (3)
President and 1993 479,182 80,000 -- -- -- -- 23,674
Chief Executive 1992 479,525 -- 36,515(4) -- -- -- 24,524
Officer
Neil A. Smoak 1994 249,119 50,000 -- -- -- -- 17,758 (5)
Vice President 1993 247,357 35,000 -- -- -- -- 19,533
1992 242,454 -- -- -- -- -- 18,393
H. Patrick Jack 1994 219,518 80,000 -- -- -- -- 15,051 (6)
Vice President 1993 203,512 40,000 -- -- -- -- 16,043
1992 197,019 -- -- -- -- -- 14,495
Michael J. Couch 1994 197,017 50,000 -- -- -- -- 13,702 (7)
Vice President 1993 195,403 18,000 -- -- -- -- 15,555
1992 188,774 -- -- -- -- -- 15,006
Yves Bercy 1994 212,180 25,000 -- -- -- -- 1,408 (8)
Vice President, 1993 112,071 13,000 -- -- -- -- 391
Chief Financial 1992 -- -- -- -- -- -- --
Officer and
Treasurer
</TABLE>
- ---------------
(1) No options were awarded during the three-year period.
(2) The Company does not have a long-term incentive plan tied to Company
performance.
(3) Includes the following for fiscal 1994: $18,412 under the Company's
restoration plan, life insurance over $50,000 of $3,790, management life
insurance under a universal life insurance policy of $2,389 and the
Company's $9,000 matching contribution to the 401(k) plan.
(4) Gain on a nonqualified stock option of FINA, Inc. Class A Common Stock
calculated as the spread between option price and market price.
(5) Includes the following for fiscal 1994: $5,691 under the Company's
restoration plan, reimbursement of $275 tax preparation fee, life insurance
over $50,000 of $1,128, management life insurance under a universal life
insurance policy of $1,664 and the Company's $9,000 matching contribution
to the 401(k) plan.
(6) Includes the following for fiscal 1994: $4,127 under the Company's
restoration plan, life insurance over $50,000 of $569, management life
insurance under a universal life insurance policy of $1,355 and the
Company's $9,000 matching contribution to the 401(k) plan.
8
<PAGE> 11
(7) Includes the following for fiscal 1994: $2,837 under the Company's
restoration plan, life insurance over $50,000 of $504, management life
insurance under a universal life insurance policy of $1,361 and the
Company's $9,000 matching contribution to the 401(k) plan.
(8) This amount is entirely attributable to imputed interest on an automobile
loan in the principal amount of $15,000.
Amounts are not included for pension plan (described herein) contributions
per employee or officers as a group since such contributions cannot be
separately and individually calculated and no contribution was due by the
Company to the Pension Plan for 1994. Compensation used to determine benefits
under the plan for employees is a formula based for base salary on average total
compensation for the highest three consecutive years of the last ten years of
employment prior to retirement and the highest five consecutive years of the
last ten years as to bonus. The Company also has a Phantom Share Plan which
payments are described below under "Phantom Share Plan." The individuals
included in the Summary Compensation Table are not participants in the Phantom
Share Plan.
In March 1991, an affiliate of the Company's majority security holder,
Petrofina S.A., sold 500 bonds valued at 10,000 BF each (app. $294.30 each at
time of issuance) to Ron W. Haddock. The affiliate arranged for a financial
institution to loan the amount needed to purchase the bonds to the buyers. The
interest rate paid on the bonds by the affiliate to the buyer is nearly equal to
the interest rate charged by the bank to buyers, and is considered a nominal
gain, if any. There is an expected gain from the warrants which accompanied each
bond. Each warrant allows the buyer to purchase two shares of the affiliate's
common stock at 10,254 BF each through 1996. The stock is restricted from
trading for 2 years. The market price on January 27, 1995 of the affiliate's
common stock was 9,400 BF each (app. $293.73 each). No gain has occurred.
An agreement providing supplemental retirement benefits between the Company
and Ron W. Haddock provided that upon retirement at age 55 or later, his
retirement benefit will equal 1.6% of base salary and bonuses over any
thirty-six consecutive month period out of the ten-year period preceding
retirement during which such earnings are the highest multiplied by the number
of completed years of service to the industry from June 11, 1963 to his date of
retirement from the Company. The agreement was amended in fiscal 1993 to vest
these benefits immediately. This determined benefit will then be reduced by a
portion of social security benefits, annuities payable by a previous employer,
benefits from the Company's Pension Plan and retirement benefits from the
Company's Excess Benefit Plan. Amounts payable hereunder are currently
undeterminable. Under this arrangement, the supplemental benefit which would
have been owed by the Company in fiscal 1994 was $102,794.
In 1994 the Company provided certain employees with automobiles and club
memberships for use in the Company's business. Beginning January 1, 1985,
nonessential automobiles were deleted from the fleet. Currently, no officers or
directors are furnished automobiles. Records are kept to conform to the
provisions of the Deficit Reduction Act of 1984. Such officers and employees
may, from time to time, make incidental personal use of club facilities, but the
Company does not require such individuals to maintain records with respect
thereto. The Company provided income tax preparation service by its independent
public accountants to Messrs. Meek, Bercy, Godfrey, Grier, Smoak and West in
1994 and reimbursed Mr. Haddock for expenses associated with income tax
preparation. The amounts set forth above as compensation do not reflect personal
benefits which may have been derived by officers and directors. After reasonable
inquiry, the Company has concluded that the amounts involved, if they could be
accurately determined, would be less than $50,000 in the case of each officer or
director.
9
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is appointed by the Board of Directors in April
of each year. Currently, and during 1994, there were three members of the
Committee. Mr. David C. Treen, an outside director, is Chairman of the Committee
and has served in this capacity since April 1985. Additional members are Mr.
Robert L. Mitchell, an outside director, and Mr. Francois Cornelis, an executive
of Petrofina S.A. and former employee of the Company. The members of the
Committee have served since at least 1990. There were no transactions with
management or other items required to be disclosed under Item 404 of Regulation
S-K with respect to the Committee members except as to David C. Treen who is of
counsel to the law firm of Deutsch, Kerrigan & Stiles, which firm received
payments of $91,593 in fiscal 1994.
Compensation Philosophy and Objectives
The Company's total compensation philosophy for executives is to provide a
competitively based program with an overall objective of creating value for the
Company's shareholders. The compensation program is designed and administered to
achieve the following objectives: (a) to maintain a stable, successful
management team motivated to provide good long-term shareholder returns; (b) to
reward executives based on Company performance, as well as individual
performance, with a significant portion of executive compensation "at risk",
particularly for senior executives; and (c) to provide a compensation system
that appropriately balances short-term and long-term considerations.
Compensation Components
For fiscal 1994, the Company's compensation program consisted of (i) base
salary (ii) cash bonuses (iii) matching contributions under the FINA Capital
Accumulation Plan, a 401(k) plan, "the FINA Plan", and (iv) contributions under
a restoration plan.
Base Salary -- The base salary levels of Executive Officers are reviewed
annually each April to determine whether they are competitive by comparison with
information from a peer group of companies that participate in the "Petroleum
Industry Executive Compensation Comparison" (hereinafter referred to as PIECC)
survey group. The PIECC companies are closely aligned to the asset/revenue size
of the Company and aligned by industry. The SIC code companies used in the
performance graph range broadly in asset/revenue size and are not grouped by
this criteria as are PIECC companies. There are 27 PIECC companies including:
Amerada Hess, Anadarko Petroleum, Diamond Shamrock, Enron Oil & Gas, Freeport
McMoRan Oil & Gas, Kerr McGee, Maxus Energy, Meridian Oil, Oryx Energy, Placid
Oil, Sonat Exploration, Tesoro Petroleum, and Valero Energy. The Chairman of the
Committee, or his designee, receives a memorandum from the President and Chief
Executive Officer as to salary recommendations for the Vice Presidents,
Controller and Department Heads reporting to the Chief Executive Officer. This
recommendation has been previously reviewed and approved by the majority
security holder. After action by the Compensation Committee, the salaries and
bonuses are subject to approval by the Board of Directors. There was no
modification or rejection in any material way by the Board of Directors of any
decision of the Compensation Committee.
An executive's base salary is heavily weighted by individual, functional
(line-of-business or area of administration) performance and level and scope of
responsibility. Executive Officers of the Company received no increase in base
salary in fiscal 1994 except Mr. Jack received an approximate 8% increase.
Although the overall competitive position of base salaries was below the PIECC
companies officers, the financial performance of the Company was the factor in
determining no raises, other than for Mr. Jack, in 1994 and nominal raises in
1993. Base salaries for the Company's Executive Officers, including the named
10
<PAGE> 13
Executive Officers, are generally at or below the average of the surveyed data.
Mr. Jack's salary was adjusted due to his particularly low positioning against
the PIECC group.
Cash Bonuses -- The Compensation Committee determines, on an annual basis,
whether or not to recommend and the amount of any bonuses to Executive Officers.
For fiscal 1994, a bonus fund or pool of $2.2 million was established for all
employees including Executive Officers. The pool size was determined by
competitive trends, retention needs and discretionary judgment of the Board and
majority security holder.
After the pool was determined, individual bonus awards for each position
were established. While bonuses for fiscal 1994 were improved from the prior
year, they were still conservative compared to the market average short-term
incentive, and adjusted solely based on individual performance as viewed by the
Chief Executive Officer, after consultation with committee members. Various
individual performance factors were considered including tenure, promotability
and operating responsibilities within the Company. The Chief Executive Officer
then presented the recommended award amounts to the Compensation Committee after
they had been reviewed and approved by the majority security holder. After
action by the Compensation Committee, the salaries and bonuses are subject to
approval by the Board of Directors. There was no modification or rejection in
any material way by the Board of Directors of any decision of the Compensation
Committee.
Deferred Compensation -- In fiscal 1994, FINA had no executive deferred
compensation plan other than (i) the FINA Plan, a 401(k) qualified plan provided
to all then formally eligible employees, as defined in the plan document and
(ii) a restoration plan which restores pension and Fina Plan benefits to
executives and employees reaching the maximum permitted by law, currently
$150,000 of salary. The FINA Plan is a broad-based pre-tax savings plan which
qualifies under 401(k) of the Internal Revenue Code permitting eligible
employees, not just executives, to defer a portion of their compensation and
encourage savings to provide additional financial security for the future.
CEO Compensation
Mr. Ron W. Haddock has been President and Chief Executive Officer since
1989, and the offices of Chief Executive Officer and President have been
combined throughout that time. Only one salary is paid for the combined
positions. Mr. Haddock's compensation package takes into account the
relationship of the Company to Petrofina S.A. Annually, Mr. Haddock's salary is
reviewed in light of the Company's financial results rather than utilizing the
PIECC survey used for other executives. Mr. Haddock did not receive a salary
increase in 1993 or 1994. With progressively improving financial results
resulting in bonus pools in 1993 and 1994, Mr. Haddock received a cash bonus at
the end of 1993 and early in 1995. Mr. Haddock's bonuses were a function of the
size of the pool, but the Compensation Committee also gave subjective
consideration to Mr. Haddock's experience, level and scope of responsibilities,
and his overall contribution to the success of the Company.
Options and Long-Term Incentives
FINA granted no long-term incentives in 1994 and has no active plan. The
most recent stock option plan of the Company expired by its terms in 1989.
Options at $70.50 were awarded to Executive Officers and employees on a
discretionary basis prior to expiration. The price of the last grant was $70.50
and is at or near market price at the date of this report.
11
<PAGE> 14
Summary
The Compensation Committee believes that the combination of base salary and
bonuses based upon individual and corporate performance provides a program which
attracts and retains key executives. The Company's financial performance allowed
making improvements to the competitive position of bonus payments of the
Executive Officers in fiscal 1994. Bonus payments are directly related to the
financial performance of the Company, i.e., net earnings. The performance of the
Company for fiscal 1993 was a net of more than $70 million and earnings per
common share were greater than $4.00. The performance of the Company for fiscal
1994 was a net of more than $100 million and earnings per common share were
greater than $6.00. There were no targets set for performance of the Company as
to salaries or other executive compensation.
Dated: February 23, 1995
<TABLE>
<S> <C>
/s/ DAVID C. TREEN /s/ FRANCOIS CORNELIS
David C. Treen, Francois Cornelis,
Chairman of the Compensation Committee Member of the Compensation Committee
</TABLE>
/s/ ROBERT L. MITCHELL
Robert L. Mitchell,
Member of the Compensation
Committee
Inapplicability of the $1 Million Deduction Limit. Recently enacted Section
162(m) of the Internal Revenue Code generally limits the corporate deduction for
compensation paid to Executive Officers to $1 million annually, unless certain
requirements are met. No modification of compensation programs is necessary as
no Executive Officer's compensation approaches $1 million annually.
Transactions with Management and Others. The law firm of Deutsch, Kerrigan
and Stiles received payments of $91,593 during fiscal 1994. One director, David
C. Treen, is of counsel to the firm.
Although the Company has joint venture interests with the majority security
holder and affiliates of Petrofina S.A., only administrative officers are common
to both companies, i.e. the Chief Financial Officer, General Counsel and
Secretary. A description of the joint ventures is under the caption
"Transactions with Security Holders" herein.
Compensation Committee Interlocks and Insider Participation. Mr. Francois
Cornelis is a member of the Compensation Committee. He is an executive of an
affiliate, Petrofina S.A., currently serving as Chief Executive Officer and Vice
Chairman.
Pension Plan. The FINA Pension Plan ("Pension Plan") covers employees of
FINA, Inc. and certain subsidiaries. There were no amendments to the Pension
Plan during 1994.
An eligible employee begins to participate in the Pension Plan on the first
day of the month coincident with or next following completion of twelve
consecutive months of employment during which at least 1,000 hours of service
are credited to such employee. Pursuant to the Tax Reform Act of 1986, the
Company has elected to fully vest participants after five years of service. The
pension formula is offset by up to 50% of an employee's social security primary
insurance amount payable at age 65.
A participant reaches normal retirement age upon attainment of his 65th
birthday. Married participants normally elect a joint and survivor annuity as
the method of receipt for benefits. Unmarried participants and
12
<PAGE> 15
those with spousal consent may elect a benefit payable for their lifetime only
or a reduced benefit may be shared with an eligible beneficiary.
The following table shows annual retirement benefits under the Pension Plan
for participants retiring at age 65 in 1996 based on the highest 36 consecutive
months of salary and bonus during the previous ten years, and years of
participation, and using the social security tax base through December 31, 1994,
as shown:
Retiring at age 65 in 1996. Highest 36 consecutive monthly
compensation during the previous ten years ending December 31, 1994. Social
Security tax base through December 31, 1994.
The table below is set forth by compensation levels and increases in
existing compensation of a person will move them to the next level.
<TABLE>
<CAPTION>
ANNUAL RETIREMENT BENEFITS
- ------------------------------------------------------------------------------
YEARS OF PARTICIPATION
FINAL AVERAGE ------------------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 9,181 $ 12,241 $ 15,302 $ 18,362 $ 21,777
75,000 15,368 20,491 25,614 30,737 36,215
100,000 21,556 28,741 35,927 43,112 50,652
150,000** 33,931 45,241 56,552 67,862 79,527
200,000** 46,306 61,741 77,177 92,612 108,402
250,000** 58,681 78,241 97,802 117,362 137,277*
300,000** 71,056 94,741 118,427 142,112* 166,152*
350,000** 83,431 111,241 139,052* 166,862* 195,027*
400,000** 95,806 127,741* 159,677* 191,612* 223,902*
450,000** 108,181 144,241* 180,302* 216,362* 252,777*
500,000** 120,556* 160,741* 200,927* 241,112* 281,652*
600,000** 145,306* 193,741* 242,177* 290,612* 339,402*
650,000** 157,681* 210,241* 262,802* 315,362* 368,277*
700,000** 170,056* 226,741* 283,427* 340,112* 397,152*
750,000** 182,431* 243,241* 304,052* 364,862* 426,027*
</TABLE>
- ---------------
* The maximum benefit limitation established by IRC Section 415(b) is $120,000
for 1995. Benefits exceeding this limitation would be paid through the
Company's Restoration Plan which mirrors the Pension Plan in operation and
participation. The Restoration (formerly the Excess Plan) has paid
supplemental benefits only to executive officers, but was implemented to
benefit those highly compensated employees whose pension benefit exceeds the
IRC 415(b) limits.
** The covered compensation limit established by IRC Section 401(a)(17) is
$150,000 for 1995. Pension benefits that are reduced due to this limitation
would also be paid through the Company's Restoration Plan. The Restoration
Plan has paid supplemental benefits to executive officers and one employee
and was implemented to benefit those whose compensation exceeds the
401(a)(17) limits.
The remuneration covered by the Pension Plan is composed of salaries and
bonuses.
Messrs. Haddock, Jack, Couch, and Smoak are vested under the Pension Plan
with service credits of 8.5, 9.8, 17.9, and 11.0 years, respectively. Mr. Bercy
is not vested.
Fina Restoration Plan. Effective January 1, 1994, the Company adopted a
plan designed to supplement those persons' pension and 401(k) plan benefits
whose compensation exceeds the 401(a) limits. The plan was named the Fina
Restoration Plan and effectively restores pension and 401(k) plan benefits to
persons making $150,000 or more which otherwise would have been lost due to pay
cap tax limits imposed by the Omnibus Budget Reconciliation Act. This plan is
being implemented to benefit those whose compensation exceeds the 401(a)(17)
limits and the 415(b) limits.
13
<PAGE> 16
The participant's benefit under this plan as to 401(k) compensatory related
sums will be paid in a single, lump-sum distribution upon death, retirement or
termination of employment for any reason. The pension related benefit can be
paid as a lump sum under the same circumstances or can be annuitized over the
lifetime of the person. The pension related benefit is subject to all conditions
of the Fina Pension Plan.
The amount of employer matching contributions and forfeitures that would
have been attributed to the participant will be identified to the participant.
Annual crediting will occur to a bookkeeping account as if shares of the
Company's Class A Common Stock had been purchased with the dollar amount,
although no actual shares of the Company's stock will be purchased or traded.
In 1994, $43,563 was credited to officers' and employees' accounts.
Employee Thrift Plan. The FINA Capital Accumulation Plan ("FINA Plan"), a
401(k) plan, was renamed in 1991. The Board of Directors adopted the FINA Plan
as described below in April 1991. The FINA Plan has been substantially in the
same form since June 1988 and is described in the following text. In January
1993 the existing plan was amended to recognize service for purposes of
participant vesting based upon length of employment as opposed to length of
participation in the Plan.
In June 1988, the Board of Directors approved an amendment to the FINA
Plan, then known as the Thrift and Employee Stock Ownership Plan of American
Petrofina, Incorporated, which provided that: (1) the plan, as amended, was
renamed the Thrift Plan of American Petrofina, Incorporated, (2) the
participants' interests in the PAYSOP provision was spun off to a separate new
plan named American Petrofina, Incorporated PAYSOP and Trust (the PAYSOP), and
(3) the PAYSOP was then terminated effective July 31, 1988, with the
participants' interests distributed in cash, stock, or transferred into the FINA
Plan. No amendments to the FINA Plan were made in 1989 or in 1990.
Effective January 1, 1984, the former Thrift Plan for Employees of American
Petrofina, Incorporated and the former Employee Stock Ownership Plan of American
Petrofina, Incorporated were combined and renamed "The Thrift and Employee Stock
Ownership Plan of American Petrofina, Incorporated." A 401(k) feature was added
to the FINA Plan allowing employees to invest up to 10% of their basic income on
a tax-deferred basis and allowing employees to purchase Petrofina S.A. common
stock. A Registration Statement Form S-8 was filed to effect the FINA Plan which
was approved by the Board of Directors on December 15, 1983.
The FINA Plan allows participants to contribute up to 5% of basic earnings
on an after-tax basis, up to 10% on a pre-tax basis, or a combination of pre-tax
and after-tax contributions not exceeding 10%. The Company will contribute an
equal amount up to the first 6% pre-tax of the participant's base income.
Company contributions are invested in the Company's Class A Common Stock and/or
Petrofina S.A. common stock at the election of the employee. The employee's
contribution is invested at his or her direction in either of these stocks or in
The Northern Trust Collective Short-Term Investment Fund, Wells Fargo U.S. Debt
Index, American Balanced Fund, Wells Fargo Equity Index Fund or a global fund
named New Perspective Fund.
Stock Options. The employee Non-Qualified Stock Option Plan -- 1979 (the
"1979 Plan") was adopted by the Board of Directors of the Company on August 7,
1979, ratified by the Company's security holders on April 16, 1980, and expired
by its terms in August 1989. Under the 1979 Plan, in 1979, 1981, 1983, 1984 and
1988, 134,000 shares, 16,900 shares, 102,950 shares, 1,800 shares, and 42,550
shares, respectively, were granted to officers and employees of the Company and
its subsidiaries. Of the 1979 and 1981 grants, 43,548 shares and 4,800 shares,
respectively, were converted to Incentive Stock Options. The 1983 and 1984
grants were incentive stock option grants exclusively. The 1988 options granted
were entirely non-qualified in
14
<PAGE> 17
composition. In addition to the options in the years noted above, an option was
exclusively granted in 1986 to Ron W. Haddock for 5,000 shares at $47.125 per
share which was fully exercised in 1992. All shares subject to the 1979 Plan are
shares of the Company's Class A Common Stock.
The 1979 Plan was amended in April 1984 at the Annual Meeting of Security
Holders to (i) allow stock to be traded for its cash equivalent for option
stock, (ii) allow the Board of Directors to issue Incentive Stock Options, and
(iii) impose a two-year holding period on stock issued pursuant to an Incentive
Stock Option.
No grants were made in 1994 as the 1979 Plan has expired, and no grant
table is presented.
The aggregated option exercises and year-end values of options held by the
CEO and four most highly compensated executives follows in tabulation form:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ACQUIRED YEAR-END (#) AT FISCAL YEAR-END
ON VALUE ------------------ ($)
EXERCISE REALIZED EXERCISABLE/ -------------------------
(#) ($) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME(A) (B) (C) (D) (E)(1)
- ------------------------------ -------- -------- ------------------ -------------------------
<S> <C> <C> <C> <C> <C>
Ron W. Haddock................ -- -- 2,000 2,000/0 None in-the-money
Neil A. Smoak................. 400 $5,350(2) 1,000 1,000/0 None in-the-money
H. Patrick Jack............... -- -- 600 600/0 None in-the-money
Michael J. Couch.............. -- -- 500 500/0 None in-the-money
</TABLE>
- ---------------
(1) The options were granted at $70.50 and were not in-the-money on the date of
preparation of this table.
(2) The option exercised consisted entirely of Class A Common Shares and the
shares are not marketable for two years from the date of exercise. The gain
was calculated based on market value on 6/13/94 of $73.50, and is not
attributable to income in 1994 due to the indefinite nature of the gain at
the future time when the shares become marketable.
Phantom Share Plan. In 1979 the Board of Directors of the Company adopted a
Phantom Share Plan under which senior management of the Company and designated
subsidiaries ("Participants") may be credited with phantom shares ("Rights") at
the discretion of a committee of the Board of Directors of the Company. During
1994 there were nine Participants. Upon retirement or termination of employment,
or in other specified circumstances, a Participant will be entitled to receive
for each phantom share credited to his account the excess, if any, of (a) the 20
day average market price per share of the Company's Class A Common Stock, plus
dividends and other distributions paid on each share of such Class since such
phantom share was credited to his account over (b) the price assigned to such
phantom share by the Committee under the Phantom Share Plan at the time it was
credited to his account. Such amount will generally be paid in cash over a
five-year period. No grant or amendment has been made to the Phantom Share Plan
since 1980.
The increase in net value during 1994 of the unvested Rights for all
Participants as a group was $3,548 (excluding basis). The formula used to
calculate the annual increase or decrease in value is based on the change in
annual market value per share, plus dividends per share, multiplied by the
number of phantom share rights which remain unvested. No amounts were paid or
distributed during the last fiscal year to the five persons named in the Summary
Compensation Table.
15
<PAGE> 18
SCHEDULE OF PAYMENTS
PHANTOM SHARE PLAN
(BASED ON RETIRED PARTICIPANTS ENTITLED TO RECEIVE CASH AS OF DECEMBER 31, 1994)
<TABLE>
<S> <C>
1994............................................... $37,146
1995............................................... 24,210
1996............................................... 24,210
1997............................................... 7,966
1998............................................... 7,966
</TABLE>
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG Peat Marwick LLP is the principal accountant selected by the Company.
Representatives of such firm are expected to be present at the Annual Meeting of
Security Holders, with the opportunity to make a statement if they desire to do
so, and will be available to respond to appropriate questions.
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK AND
TO SPLIT OUTSTANDING COMMON STOCK
(ITEM 2 ON FORM OF PROXY)
The Board of Directors recommends that the shareholders approve an
amendment to the Company's Certificate of Incorporation which would reduce the
par value of the Class A and Class B Common Stock (hereinafter "Common Stock")
from $1 per share to fifty cents per share, effect a two-for-one stock split
whereby each presently issued share of Common Stock, $1 par value per share,
would be converted into two shares of Common Stock, fifty cents par value per
share, and, in connection therewith, increase the number of authorized shares of
Common Stock from 20,000,000 shares with a par value of $1 per share to
40,000,000 shares with a par value of fifty cents per share. A copy of the text
of the proposed amendment is attached as Exhibit A to this Proxy Statement.
If approved by the shareholders, and assuming that any regulatory approvals
are obtained, the stock split would be effected by filing the amendment to the
Articles of Incorporation, which would result in each holder of Common Stock of
record at the close of business on a date to be determined by the Board of
Directors receiving one additional share of Common Stock for each share of
Common Stock held. All certificates outstanding on the record date would
continue to be valid, and, after the filing of the amendment, would represent
the same number of shares of Common Stock as they represented prior to the
split. Such shares would be deemed to have a par value of fifty cents per share
notwithstanding any statement to the contrary on the face of such certificates.
Shareholders should not return their existing certificates to the Company or its
transfer agent. Instead, shareholders should retain their certificates and would
receive a new certificate for one additional share for each share held at the
close of business on the record date. It is expected that new certificates would
be mailed to shareholders shortly after the record date.
The Company expects that any per share quarterly dividends declared or paid
with respect to the Common Stock after the stock split would be reduced
proportionately to give effect to the increased number of shares of Common Stock
outstanding. The proposed stock split would not change the aggregate amounts of
the Company's stated capital or surplus accounts, and would not affect the
proportionate interest of any common shareholder or the ratio of issued common
stock to authorized but unissued common stock. The amendment and the stock split
would not change the powers, preferences or rights of the Common Stock.
16
<PAGE> 19
Holders of Common Stock of the Company do not and would not have any preemptive
rights to subscribe to or purchase any of the authorized shares of Common Stock.
The Board of Directors has proposed the two-for-one stock split because the
board believes that the split would result in a decrease in the market price of
the Common Stock to a level at which the Common Stock would be more readily
tradeable and accessible to a broader base of investors. A lower per-share price
would enable investors to purchase "round lots" of the Company's Common Stock
for a lower total price than is the case currently. It is expected that, at
least initially, the trading price of the Common Stock on the exchanges would be
reduced to approximately one-half the trading price immediately before the
split. Shareholders should be aware, however, that brokerage charges and any
applicable transfer taxes on sales and transfers of shares would be higher after
the stock split on the same relative interest in the Company because that
interest would be represented by a greater number of shares.
In the opinion of the Company's tax counsel: (a) the stock split, if
implemented, will result in no gain or loss to shareholders for federal income
tax purposes, (b) the aggregate basis of the Common Stock, fifty cents par
value, held by a shareholder after the stock split will be equal to the
aggregate basis of the Common Stock, $1 par value, held before the split and (c)
for purposes of capital gains rules the holding period of the Common Stock,
fifty cents par value, held after the stock split will include the period for
which the Common Stock, $1 par value, held before the split was held, provided
that the Common Stock, $1 par value, was held as a capital asset at the time of
the split.
Although the proposed increase in the number of authorized shares of Common
Stock is greater than the number necessary to effect the proposed split, the
ratio of shares of outstanding Class A Common Stock to shares of authorized
Class A Common Stock would be the same after the split as before the split. This
larger number of authorized shares would provide the Company some flexibility by
making available additional shares of Common Stock that could be issued for
other corporate purposes. These corporate purposes might include, among other
things, the raising of additional capital funds through public or private
offerings, the acquisition by the Company of other companies or assets, and/or
the declaration of stock splits or stock dividends. At present, there are no
plans for the issuance of additional shares of Common Stock other than pursuant
to a Stock Option Plan. If the amendment is approved, the Company's outstanding
stock options, and the number of shares reserved for issuance pursuant to
employee benefit plans, will be adjusted as appropriate to reflect the stock
split. Total reserves are 324,596 shares of Class A Common Stock. The unissued
additional shares of Common Stock would be available for issuance in the future
by the board of directors without further authorization by a vote of
shareholders other than as required by applicable law and stock exchange rules.
The Board of Directors believes that adoption of the proposed amendment
would have no impact on any attempt to gain control of the Company, because the
ratio of issued to unissued shares of Common Stock would be unchanged by the
amendment and because all outstanding shares of Class B Common Stock and more
than three-fourths of the outstanding shares of Class A Common Stock are, and
would continue to be upon effectiveness of the stock split, held by a single
stockholder. The holder of the Class B Common Stock is entitled, pursuant to the
Company's Certificate of Incorporation, to elect a majority of the Board of
Directors.
The Company will apply for listing on the American Stock Exchange, on which
the Company's common shares are listed, of the additional shares of Common Stock
that would be outstanding after the split.
Financial statements are not included in this Proxy Statement as they are
not material to a decision upon the proposed amendment and stock split.
17
<PAGE> 20
The board of directors recommends a vote FOR adoption of the proposed
amendment to the Certificate of Incorporation. Such adoption will require the
affirmative vote of the holders of a majority of the outstanding Common Stock of
the Company. Proxies solicited hereby will be voted in favor of the proposed
amendment unless shareholders specify otherwise in their proxies. If the
amendment is adopted, the Company expects that, subject to any regulatory
approvals, the amendment would be filed with the Secretary of State of the State
of Delaware on a date shortly after the annual meeting of shareholders to be
fixed by the board of directors and that the stock split would become effective
at the close of business on the date of filing.
THIS PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK ENTITLED TO VOTE, EACH
VOTING SEPARATELY AS A CLASS. THE MAJORITY SECURITY HOLDER HAS INDICATED THAT IT
WILL VOTE IN FAVOR OF THE PROPOSAL THUS ENSURING ITS PASSAGE.
TRANSACTIONS WITH SECURITY HOLDERS
The Company has a 50% interest in joint ventures with Petrofina Delaware,
Incorporated ("PDI") in Texas and with Petrofina S.A. in Hong Kong which market
chemicals in international trade. The Company sold chemicals aggregating
$1,401,000 in 1994, $985,000 in 1993 and $6,447,000 in 1992 to the joint
ventures.
Accounts receivable include $10,719,000 and $3,996,000 at December 31, 1994
and 1993, respectively, from affiliates. Accounts payable include $6,539,000 and
$8,817,000 at December 31, 1994 and 1993, respectively, to affiliates.
During 1994 the Company assumed a $50,000,000 note from PDI payable to a
bank in 1995. Interest expense relating to borrowings from PDI was $13,916,000
in 1994, $28,565,000 in 1993, and $48,127,000 in 1992. Accrued liabilities
include accrued interest of $791,000 and $3,580,000 at December 31, 1994 and
1993, respectively, which is payable to PDI for such borrowings.
The Company purchased crude oil and natural gas aggregating $16,626,000 in
1994, $21,145,000 in 1993, and $8,879,000 in 1992 from PDI in the ordinary
course of business.
The Company purchased refined products and chemicals aggregating
$34,963,000 in 1994, $50,992,000 in 1993, and $56,997,000 in 1992 from Petrofina
and its affiliates other than PDI in the ordinary course of business.
The Company files a consolidated Federal income tax return with PDI and its
affiliates. Under the terms of the tax sharing agreement with PDI, the Company
is allocated Federal income taxes on a separate return basis.
SUBMISSION OF PROPOSALS BY SECURITY HOLDERS
Proposals submitted by security holders of the Company should be mailed to
the Secretary of FINA, Inc., P.O. Box 2159, Dallas, Texas 75221. In order for
any security holder proposal to be included in the Company's proxy statement and
form of proxy for the 1996 Annual Meeting of Security Holders, it must be
received by the Company on or before November 16, 1995. The security holder must
at the time the proposal is submitted be a record or beneficial owner of at
least 1% or $1,000 in market value of securities and have held such securities
for at least one year and continue to hold the securities through the date of
the meeting.
18
<PAGE> 21
GENERAL
The management does not know of any matters to be presented to the meeting
other than those stated in the Notice of Meeting. If other matters do properly
come before the meeting, the Proxy Committees will vote said proxy in accordance
with their judgment in such matters.
The solicitation of the accompanying form of proxy is made by the Company
and the expenses in connection with the solicitation will be borne by the
Company. In addition to the solicitation of proxies by mail, the Company may
solicit proxies by telephone, telegraph, and personal interviews. Brokerage
houses, custodians, nominees and fiduciaries may also be requested to forward
the soliciting material to the beneficial owners of stock held of record by such
persons and will be reimbursed for expenses incurred.
THE COMPANY WILL PROVIDE UPON REQUEST AND WITHOUT CHARGE TO EACH PERSON
SOLICITED A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
1994.
FINA, INC.
CULLEN M. GODFREY
Secretary
Dated: March 7, 1995
19
<PAGE> 22
EXHIBIT A
AMENDMENT TO CERTIFICATE OF INCORPORATION
RESOLVED, That Article FOURTH of the Certificate of Incorporation of the
Company be partially amended in that the first paragraph shall be amended as
follows:
FOURTH: 1. The total number of shares of all classes of capital stock which
the corporation shall have authority to issue is FORTY-FOUR MILLION (44,000,000)
shares, of which FOUR MILLION (4,000,000) shares shall be preferred stock of the
par value of $1.00 per share (hereinafter called "Preferred Stock") and FORTY
MILLION (40,000,000) shares shall be shares of common stock of the par value of
fifty cents per share (hereinafter called "Common Stock") which shall be divided
into two classes as follows:
(a) THIRTY-EIGHT MILLION (38,000,000) shares of Class A Common Stock, and
(b) TWO MILLION (2,000,000) shares of Class B Common Stock.
Upon the effectiveness of the amendments contained in the Articles of
Amendment (the "Effective Date"), each share of Common Stock of the Corporation
issued at the close of business on the Effective Date shall be reclassified,
changed and converted into two shares of Common Stock without change in the
aggregate amount of capital represented by the issued shares, such two-for-one
split to be accomplished by issuing to each holder of the Corporation's Common
Stock of record at the close of business on the Effective Date a certificate or
certificates at the rate of one additional share of Common Stock for each share
of the Common Stock held of record on the stock transfer records of the
Corporation at the close of business on the Effective Date.
<PAGE> 23
<TABLE>
<S> <C>
FINA, INC.
P
R PROXY -- ANNUAL MEETING OF SECURITY HOLDERS -- APRIL 12, 1995
O PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y The undersigned hereby appoints Ron W. Haddock or Cullen M. Godfrey, and each or either of
them, attorneys and proxies with full power of substitution to vote all Class A Common Stock of
the undersigned in FINA, Inc. at the Annual Meeting of Security Holders to be held on April 12,
1995, and at any adjournment thereof, with all powers the undersigned would possess if personally
present.
Election of Directors
Nominees:
THIS PROXY MUST BE SIGNED
Ron W. Haddock EXACTLY AS NAME APPEARS ON THE FRONT
Robert L. Mitchell
David C. Treen Executors, administrators, trustees, etc.,
should give full title as such. If the signer is a
corporation, please sign full corporate name
by duly authorized officer.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU
NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTOR'S RECOMMENDATIONS. SEE REVERSE
THE PROXY COMMITTEE CANNOT VOTE YOUR SHARE(S) UNLESS YOU SIGN AND RETURN THIS CARD. SIDE
</TABLE>
<TABLE>
<S> <C>
/ X / Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES LISTED ON THE REVERSE SIDE, DIRECTORS, PROPOSAL 1,
FOR APPROVAL OF PROPOSAL 2.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR WITHHELD FOR ABSTAIN
1. Election of / / / / 2. Proposal to amend the Company's Certificate of / / / /
Directors. Incorporation to increase from 19 million to
(see reverse) 38 million the number of authorized shares of
Class A Common Stock and to increase Class B
Common Stock from 1,000,000 to 2,000,000
For, except vote withheld from the following authorized shares and to decrease the par
nominee(s): value to fifty cents.
3. In their discretion, the proxies are authorized
to vote upon such other matters as may properly
come before the meeting.
--------------------------------------------
SIGNATURE(S) DATE , 1995 The signer hereby revokes all proxies heretofore given by
---------------------------- ---------- the signer to vote at said meeting or any adjournments
NOTE: Please sign exactly as name appears hereon. Joint owners thereof.
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
</TABLE>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
(Companies in which FINA, Inc. owns 50% or more at 12-31-94)
<TABLE>
<CAPTION>
State of
Name of Subsidiary Incorporation
- ------------------ --------------
<S> <C> <C>
American Petrofina Pipe Line Company Delaware 100%
American Petrofina, Incorporated Delaware 100%
(nameholder, incorporated 6-10-91)
Acturus Shipping, Inc. Delaware 100%
Archon Shipping, Inc. Delaware 100%
Cosden, Inc. Louisiana 100%
Cos-Mar, Incorporated Louisiana 50%
Cos-Mar Company (Joint Venture) 50%
Fina LaTerre, Inc. Delaware 100%
Fina Natural Gas Company Delaware 100%
Fina Oil and Chemical Company Delaware 1OO%
Fina Pipe Line Company Texas 100%
(formerly Cosden Pipe Line Company)
Fina Sales Corporation Barbados 100%
Fina Security, Inc. Delaware 100%
(formerly American Protectorate, Inc.)
Fina Splitter, Inc. Delaware 100%
Fina Technology, Inc. Delaware 100%
Fina United Corporation Delaware 100%
Finachem Sales Corporation Barbados 50%
Finachem, U.S. (Partnership) 50%
FinaServe, Inc. Texas 100%
Fin-Tax Pipe Line Company Texas 100%
La Terre Development Corp. Delaware 100%
Mistal, Inc. Delaware 53%
Petrofina Gas Pipeline Company Delaware 100%
Petrofina - U S. Incorporated Delaware 100%
Sigma Coating in Delaware 100%
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
FINA, Inc.:
We consent to incorporation by reference in the following registration
statements on Form S-8 of FINA, Inc. of our report dated January 27, 1995,
relating to the consolidated balance sheets of FINA, Inc. and subsidiaries as
of December 31, 1994 and 1993 and the related consolidated statements of
operations, stockholders' equity and cash flows and related schedules for each
of the years in the three-year period ended December 31, 1994, which report
appears in the December 31, 1994 annual report on Form 10-K of FINA, Inc.
Registration Statements of FINA, Inc.:
o Amdel Inc. Employee Investment Plan, Registration No. 2-49321
o American Petrofina, Incorporated Employee Non-Qualified Stock
Option Plan (1979), Registration No. 2-68232
o Thrift and Employee Stock Ownership Plan for Employees of
American Petrofina, Incorporated, Registration No. 2-89230
Our report refers to a change in the method of accounting for postretirement
benefits other than pensions in 1992.
KPMG Peat Marwick LLP
Dallas, Texas
March 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS AND FROM CONSOLIDATED STATEMENTS OF EARNINGS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS)
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 3,533
<SECURITIES> 0
<RECEIVABLES> 365,614
<ALLOWANCES> 0
<INVENTORY> 286,538
<CURRENT-ASSETS> 686,079
<PP&E> 1,691,062
<DEPRECIATION> 190,044
<TOTAL-ASSETS> 2,493,862
<CURRENT-LIABILITIES> 570,401
<BONDS> 531,162
<COMMON> 15,595
0
0
<OTHER-SE> 1,131,212
<TOTAL-LIABILITY-AND-EQUITY> 2,493,862
<SALES> 3,421,112
<TOTAL-REVENUES> 3,437,099
<CGS> 2,525,139
<TOTAL-COSTS> 398,269
<OTHER-EXPENSES> 316,733
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,023
<INCOME-PRETAX> 152,357
<INCOME-TAX> 50,316
<INCOME-CONTINUING> 102,041
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 102,041
<EPS-PRIMARY> 6.54
<EPS-DILUTED> 0
</TABLE>
