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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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(MARK ONE)
<S> <C>
[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, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
</TABLE>
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-4014
FINA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<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:
<TABLE>
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
Class A Common Stock $.50 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____
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K ON ANY AMENDMENT TO THIS
FORM 10-K. [ ]
The aggregate market value of the Class A Common voting stock held by
non-affiliates of the Registrant as of February 11, 1998 was $162,562,360 based
on the closing price of $59.8125 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 February 11, 1998:
CLASS A COMMON STOCK -- 29,224,072
CLASS B COMMON STOCK -- 2,000,000
Documents Incorporated by Reference: Part III: The Company's Proxy
Statement for Annual Meeting of Stockholders to be held April 15, 1998.
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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 5
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 8
8. Financial Statements and Supplementary Data................. page 13
9. Changes in and Disagreements with Accountants on Accounting
and
Financial Disclosure...................................... page 40
PART III:
10. Directors and Executive Officers of the Registrant.......... page 40
11. Executive Compensation...................................... page 40
12. Security Ownership of Certain Beneficial Owners and
Management................................................ page 41
13. Certain Relationships and Related Transactions.............. page 41
PART IV:
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.................................................. page 41
</TABLE>
<PAGE> 3
PART I
ITEM 1 BUSINESS
(a) FINA, Inc. (and subsidiaries, collectively the "Company" or "FINA") was
organized in 1956 as American Petrofina, Incorporated and is part of an
international group of companies in more than 40 countries which are affiliated
with PetroFina S.A., ("PetroFina") 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 owns 100% of PDI and American Petrofina Holding
Company.
On February 17, 1998, PetroFina and the Company announced that they entered
into a definitive agreement and plan of merger pursuant to which the Company
will become an indirect, wholly-owned subsidiary of PetroFina. Under the terms
of the agreement, current shareholders of the Company, other than PetroFina and
its subsidiaries will receive in exchange for each FINA, Inc. share they
currently hold $60 and a warrant entitling the holder to purchase nine-tenths
(0.9) of one PetroFina American Depositary Share ("ADS") at an exercise price of
$42.25 per ADS. Thus, each 10 warrants will entitle the holder of those
warrants, upon payment of $380.25, to receive nine ADSs. The warrants will be
exercisable for a period of five years from effective date of the merger.
PetroFina intends to seek listing of the warrants on the New York Stock
Exchange. The agreement was recommended by a Special Committee of the Board of
Directors of the Company and approved by the Company's Board of Directors.
Goldman, Sachs & Co. acted as financial adviser to the Special Committee. The
merger is subject to customary closing conditions. The Company and PetroFina
also announced that they have entered into a Memorandum of Understanding with
class counsel regarding the proposed comprehensive settlement of various class
action lawsuits that had been filed relating to the transaction. The settlement
is subject to, among other things, completion of definitive documentation
relating to the settlement, court approval and consummation of the merger.
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.
Capital expenditures for 1997 were $340.7 million compared to the prior
year's $263.3 million. Capital expenditures by segments of the Company are shown
in Note 14 to the Consolidated Financial Statements on pages 32 through 34.
Expenditures associated with refining, supply and transportation and marketing
were $48.0 million of the total capital expenditures primarily for efficiency
and yield improvement projects at both refineries. Expenditures of $125.4
million for exploration and production were attributable primarily to
exploration and development drilling activity. Expenditures relating to
chemicals were $159.0 million due to major expansions in two of the Company's
four product lines. The capital expenditures budget for 1998 is $395.5 million.
No major individual assets or subsidiaries were acquired or disposed of
during the five years ending December 31, 1997.
(b) Segment data is shown in Note 14 "Segment Data" to Consolidated
Financial Statements on pages 32 through 34.
(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, styrene monomer, polystyrene and high density polyethylene, and
the licensing of certain chemical processes. The energy products are produced by
FOCC, a Delaware corporation. Petrochemicals and plastics are manufactured by
FOCC and by Cos-Mar Company ("Cos-Mar"), a 50% owned joint venture.
The Company markets gasoline and other refined products, including naphtha,
jet fuel, distillates, diesel fuel, heavy oils and asphalt, under the FINA(R)
brand or as unbranded products. FINA(R) transportation fuel products are
primarily sold through 2,659 branded retail outlets, of which 53 are
company-owned service
1
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stations and the remainder are owned and operated by 230 independent businesses
located in 15 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.
Following are products which accounted for more than 10% of consolidated
revenues in 1997, 1996 and 1995, and their appropriate percentage of revenues
for the three years:
<TABLE>
<CAPTION>
PERCENTAGE OF REVENUES
-----------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Refined Products:
Gasoline.................................................. 26% 30% 31%
Distillates............................................... 18% 20% 19%
Petrochemicals and Plastics................................. 27% 29% 32%
Natural Gas................................................. 19% 12% 8%
</TABLE>
Additional segment data is shown in Note 14 "Segment Data" to Consolidated
Financial Statements on pages 32 through 34 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.
In September 1997, the Company and BASF announced their intention to
construct the world's largest steam cracker on property adjacent to the
Company's Port Arthur, Texas Refinery. When completed on a projected date of
late 2000, the steam cracker's integration with the Refinery will fully utilize
the Refinery's capacity, optimize refining and cracker feedstocks, and supply
raw materials to the Company's Chemicals plants. This investment is still
subject to a confirmation of the cost estimate and to parent Board's final
approval.
The Company licenses its patented chemical processes throughout the world.
The net earnings derived from licensing were not material to the consolidated
results of operations in 1997, 1996 and 1995.
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 and crude oil vary according to the overall
supply environment 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 Southern and
Midwestern 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 1997, 1996 or 1995, and no account
receivable from any customer exceeded 5% of the Company's consolidated
stockholders' equity at December 31, 1997, 1996 or 1995.
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.
2
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During 1997, $11.3 million was expended on pollution control and
environmental protection capital projects. It is estimated that environmental
capital expenditures will be approximately $14.6 million companywide in 1998.
Additionally, during 1997, $34.5 million was charged to expenses relating to
ongoing environmental administration and maintenance activities at operating
facilities.
The number of persons employed on December 31, 1997 was 2,802 full time and
71 part time.
(d) Sales, operating profit (loss), and identifiable assets for the three
years ended December 31, 1997 were substantially all attributable to domestic
operations.
(e) "Executive Officers of the Registrant" are described in Part III, Item
10.
ITEM 2 PROPERTIES
(a) The Company owns and operates two refineries in Texas. The total raw
materials processed at both refineries averaged 232,000 barrels per day for
1997. 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.
The polystyrene plant located in Carville, Louisiana is the largest
polystyrene manufacturing plant in the world; total net capacity is 1.025
billion pounds per year. The Carville, Louisiana plant, and the adjacent styrene
monomer plant, also the largest styrene plant in the world, discussed herein,
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. During 1997, the throughput capacity
was 1.5 billion pounds per year. The La Porte, Texas, plant is the largest
polypropylene manufacturing plant in the world. An expansion of the plant was
underway in 1997.
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
capacity of 420 million pounds per year and is situated on 54.7 acres of land. A
major expansion of the plant was underway in 1997.
The Company operates, for a 50% owned joint venture, a styrene monomer
plant located in Carville, Louisiana. Gross production capacity is 2 billion
pounds per year. This plant is the largest styrene plant in the world.
A subsidiary of the Company owns a 33% interest in a propylene splitter at
Mont Belvieu, Texas, with an approximate capacity of 1.5 billion pounds per
year. An expansion of the plant was underway in 1997.
Over 1,071 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.
(b) Reserve Quantity information is shown in "Supplemental Oil and Gas Data
(Unaudited)" to Consolidated Financial Statements on pages 35 and 36.
(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.
2. Reserves Reported to Other Agencies
Total proved net oil and gas reserves as of December 31, 1996 were reported
to the Energy Information Agency of the U.S. Department of Energy in May 1997
(EIA-28) in the amounts of 39 million barrels of crude oil and natural gas
liquids and 371 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
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3. Production
<TABLE>
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FISCAL YEAR
ENDED DECEMBER 31,
------------------------
1997 1996 1995
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Average Wellhead Sales Price:
Crude Oil and Condensate ($/Bbl).......................... $17.90 $19.33 $15.53
Natural Gas ($/MCF)....................................... $ 2.60 $ 2.45 $ 1.57
Production (Lifting) Costs, including production severance
taxes ($BOE) (natural gas converted to barrels at 6 MCF to
1 Bbl).................................................... $ 3.56 $ 4.21 $ 4.35
</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, 1997:
<TABLE>
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PRODUCTIVE WELLS
----------------------------------
GROSS NET DEVELOPED ACREAGE
-------------- ------------ --------------------
OIL GAS OIL GAS GROSS NET
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<S> <C> <C> <C> <C> <C>
1,125 481 430 226 535,243 228,062
</TABLE>
5. Undeveloped Lease Acreage
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GROSS NET
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As of December 31, 1997................................ 635,345 acres 242,686 acres
</TABLE>
Fee, mineral and royalty acreage was 1,045,771 net acres as of December 31,
1997.
6. Drilling Activity
<TABLE>
<CAPTION>
GROSS WELLS NET WELLS
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- -------------------------
1997 1996 1995 1997 1996 1995
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Exploratory
Productive......................... 38 21 12 28.2 17.9 8.6
Dry................................ 12 8 5 6.2 6.0 3.2
Development
Productive......................... 45 77 31 24.9 40.8 10.9
Dry................................ 0 6 6 0 1.5 3.9
</TABLE>
7. Present Activity as of December 31, 1997
<TABLE>
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DRILLING WELLS IN PROGRESS
Gross....................................................... 8.0
Net......................................................... 4.6
</TABLE>
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
1997, 281,082 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, 1997, the Company was obligated to deliver 5,482,571
barrels of crude oil in January 1998, 2,099,779 barrels in February, 1,957,044
barrels in March and 1,902,052 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.
4
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ITEM 3 LEGAL PROCEEDINGS
As of December 31, 1997, 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 may be reasonably expected to exceed
10% of the current assets.
Following the public announcement of the merger proposal of PetroFina
described in Item 1 of this Form 10-K Annual Report, suits were filed suit in
the Court of Chancery of the State of Delaware against PetroFina, FINA and its
directors at the date of filing. The suits, which purported to be class actions,
alleged a breach of fiduciary duties and seek to enjoin the merger or, if
consummated, to set it aside. The Company and PetroFina have entered into a
Memorandum of Understanding with class counsel regarding a proposed
comprehensive settlement of such suits. The settlement is subject to, among
other things, completion of definitive documentation relative to the settlement,
court approval and consummation of the merger.
Management believes that there is no environmental liability pertaining to
proceedings involving a governmental authority with sanctions in excess of
$100,000 which is reasonably foreseeable in relation to its business activities
and operational permits other than:
The Texas Natural Resource Conservation Commission filed a lawsuit in 1992
alleging that an emission from a pipeline owned and operated by FOCC and
Cosden Pipeline Company has impacted groundwater under two residential
subdivisions in Howard County, Texas. Plaintiff seeks approximately
$1,500,000 in damages and penalties.
Environmental contingencies and the Company's policy regarding
environmental costs are discussed in Note 13 to the Consolidated Financial
Statements, on pages 31 and 32. A reserve has been established in accordance
with the policy. The level of future expenditures for environmental matters,
including clean-up obligations, is impossible to determine with any degree of
accuracy.
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, 1997.
5
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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 February 11, 1998, there were 29,224,072 Class
A Common Shares outstanding and 2,288 holders of the shares.
COMMON STOCK MARKET PRICES BY QUARTER AND DIVIDEND PAID PER QUARTER
<TABLE>
<CAPTION>
1997 1996
-------------------------------- --------------------------------
DIVIDEND DIVIDEND
HIGH LOW PAID HIGH LOW PAID
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1st Quarter........................... $ 66 48$1/8 $0.70 51$7/8 $ 47 $0.60
2nd Quarter........................... 67 1/2 63 0.80 55 1/4 48 3/8 0.70
3rd Quarter........................... 67 1/8 63 5/8 0.80 55 1/2 48 7/8 0.70
4th Quarter........................... 67 1/2 63 0.80 54 1/2 46 1/2 0.70
</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
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND EMPLOYEES)
<S> <C> <C> <C> <C> <C>
FINANCIAL
Sales and other operating revenues..................... $4,462,477 $4,081,244 $3,606,637 $3,421,112 $3,416,223
Depreciation, depletion, amortization, and lease
impairment........................................... 201,854 171,029 213,964* 185,961 198,341
Net earnings:
Earnings before cumulative effect of accounting
change............................................. 126,401 153,206 104,425 102,041 70,353
Net earnings (loss).................................. 126,401 153,206 104,425 102,041 70,353
Earnings per common share:
Earnings before cumulative effect of accounting
change............................................. 4.05 4.91 3.35 3.27 2.26
Net earnings (loss).................................. 4.05 4.91 3.35 3.27 2.26
Earnings prior to the adoption of SFAS 121:
Net earnings......................................... -- -- 142,598 -- --
Earnings per share................................... -- -- 4.57 -- --
Capital expenditures................................... 340,716 263,330 218,436 136,381 125,472
Long-term debt......................................... 593,532 584,983 496,331 531,162 740,058
Total long-term obligations............................ 594,988 587,290 498,446 532,148 766,476
Total assets........................................... 3,014,674 2,855,822 2,487,718 2,493,862 2,511,353
Stockholders' equity................................... 1,277,112 1,247,285 1,178,057 1,144,807 1,098,827
Cash dividends per share............................... 3.10 2.70 2.30 1.80 1.60
Average shares outstanding............................. 31,218 31,214 31,198 31,188 31,180
OPERATIONS
Crude oil, condensate, and natural gas liquids produced
(in thousands of net barrels)........................ 3,806 3,808 3,749 4,556 5,905
Natural gas produced (in millions of cubic feet)....... 69,698 56,719 52,119 52,864 67,924
Natural gas sold (in millions of cubic feet)........... 293,531 193,682 190,926 259,515 204,449
Total refinery throughput (barrels per day)............ 232,000 211,000 220,000 215,000 198,000
Major petrochemicals and plastics sold (millions of
pounds).............................................. 4,104 3,700 3,000 3,200 3,000
Company-branded service stations....................... 2,659 2,578 2,702 2,607 2,675
Undeveloped leasehold acreage (net).................... 242,686 212,625 209,167 189,723 203,734
Fee, mineral, and royalty acreage (net)................ 1,045,771 1,036,180 1,035,922 1,036,342 1,045,108
Employees (year-end)................................... 2,873 2,664 2,693 2,770 3,224
</TABLE>
- ---------------
* Includes a $58,723,000 charge for adoption of Financial Accounting Standard
No. 121 (FAS 121)
7
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ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
DISCUSSION OF FINANCIAL INFORMATION
Net income for 1997 was $126 million compared to $153 million in 1996 and
$104 million in 1995. Net income for 1995 was $143 million prior to an
accounting change for Statement of Financial Accounting Standards No. 121 ("SFAS
121") resulting in a $38 million reduction to net income. The decrease in 1997
earnings was primarily the result of higher exploration expenses, an $8 per
barrel drop in crude oil prices which negatively impacted inventory valuation
and substantially lower chemical margins, only partially offset by higher
volumes and lower costs in all lines of business and higher refining margins.
Quarterly earnings during 1997 were relatively stable during the first three
quarters ranging between $39 million and $44 million. Fourth quarter earnings
declined to $3.6 million due to increased exploration expenses, lower refining
and chemicals margins, and a $3.50 per barrel drop in crude oil prices which
significantly impacted inventory valuations.
Basic and diluted earnings per common share in 1997 were $4.05 compared to
$4.91 and $3.35 in 1996 and 1995, respectively. Stockholders' equity was $1.277
billion, or $40.91 per common share, in 1997, compared to $1.247 billion, or
$39.96 per common share, in 1996 and $1.178 billion, or $37.75 per common share,
in 1995. The increase in stockholders' equity in 1997, 1996 and 1995 was
attributable to net income less annual dividends of $3.10 per share in 1997,
$2.70 per share in 1996 and $2.30 per share in 1995.
Sales and other operating revenues for 1997 were $4.5 billion compared to
$4.1 billion in 1996 and $3.6 billion in 1995. The increase in 1997 was
primarily due to higher natural gas production, sales and prices, and higher
volumes in Downstream and Chemicals, partially offset by lower refined product
and chemicals prices.
Total assets were $3.0 billion in 1997 compared to $2.9 billion in 1996 and
$2.5 billion in 1995. The increase in 1997 was principally due to capital
expenditures exceeding depreciation, depletion and amortization, and an increase
in receivables and inventories, partially offset by a reduction in investments
in affiliates.
Cost of raw materials and products purchased increased 12% in 1997
primarily due to an increase in natural gas marketing volumes and prices and
higher chemicals volumes. Direct operating expenses as a percent of sales and
other operating revenues were relatively constant for 1997, 1996 and 1995.
Selling, general and administrative expenses were $98.6 million, $87.0
million and $86.2 million in 1997, 1996 and 1995, respectively. The increase in
1997 primarily reflects increased bad debt expense, higher selling expense
associated with the chemicals expansion projects and year 2000 computer
programming costs.
Interest expense increased $1.9 million in 1997 from 1996 because of higher
average debt outstanding and higher interest rates. Both 1997 and 1996 interest
expense was lower than 1995, reflecting lower interest rates.
Interest and other income for 1997 was $6.1 million compared to a $2.7
million loss in 1996 and an $11.1 million loss in 1995. The increase in 1997 was
primarily associated with gains from asset sales of exploration and production
properties.
Total balance sheet debt was $686 million at year-end 1997, compared to
$696 million at year-end 1996 and $554 million at year-end 1995. The increase in
1996 was primarily due to the termination of $120 million of off-balance-sheet
financing which consisted of an $80 million account receivable sale and a $40
million guaranteed Cos-Mar joint venture borrowing from a bank which was
replaced with an additional investment by the Company. Total debt was $736
million, $696 million and $674 million for 1997, 1996 and 1995, respectively.
Total debt includes $50 million and $120 million of off-balance-sheet financing
in 1997 and 1995, respectively.
During the fourth quarter of 1995, the Company adopted SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed of", ("SFAS 121") which resulted in a before-tax addition of
$58,723,000 to depreciation, depletion and amortization expense. After tax, the
additional charge was $38,173,000 or $1.22 per share. Under SFAS 121, the
Company evaluates impairment of exploration and production assets on a
field-by-field basis rather than using a one country cost center for its
8
<PAGE> 11
proved properties. On this basis, certain fields are impaired because they are
not expected to recover their entire book value from future cash flows. The
value of certain marketing assets in the Company's Downstream business were also
impaired under SFAS 121. As a result, the Company recognized a non-cash, pretax
charge of $52,523,000 related to its exploration and production assets and
$6,200,000 related to its marketing assets. The fair values of the impaired
assets were determined by using the present value of expected future cash flows
for the oil and gas properties and sales prices for similar assets for marketing
assets. If estimated future cash flows are not achieved with respect to certain
fields, further writedowns may be required.
Crude oil, refined products and petrochemicals 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, less an allowance
for obsolescence. Because of price declines in a majority of the products during
1997, a valuation reserve of $1.1 million was established at December 31, 1997
to reduce the LIFO cost of inventory to replacement cost. The excess of
replacement cost of crude oil, refined products and petrochemicals over LIFO
cost was approximately $65.8 million at December 31, 1996.
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.
Exploration and Production and Natural Gas Marketing
Revenues and earnings/(loss) before interest and income tax were $896.8
million and $52.0 million, $569.0 million and $69.3 million, and $352.9 million
and ($66.9 million) for 1997, 1996 and 1995, respectively. Decreased earnings in
1997 were due to higher exploration expenses, lower crude prices, and lower
natural gas marketing income, only partially offset by higher natural gas
production, higher gas prices, and lower lifting costs.
Crude oil, condensate and natural gas liquids production was 3.8 million
barrels in 1997, flat with 1996. Natural gas production in 1997 was 69.7 billion
cubic feet, an increase from 56.7 billion cubic feet in 1996.
Average wellhead prices for crude fell $1.43 per barrel to $17.90 in 1997.
Average wellhead prices for natural gas were $2.60 per MCF in 1997, up from
$2.45 per MCF in 1996.
Drilling activity resulted in reserve additions of 18 million barrels of
oil equivalent during 1997 replacing 121% of production sales. Finding and
development costs in 1997 were $11.59 per barrel oil equivalent, compared to
$5.71 in 1996, a result of higher drilling and dry hole costs. Lifting costs, at
$3.56 per barrel oil equivalent, were improved from $4.21 in 1996.
The Company participated in 50 gross exploratory wells, compared to 29 in
1996 and 17 in 1995. The success rate was 76% compared to 72% in 1996 and 71% in
1995. The Company's participation in net exploratory wells was 34.4, compared
with 23.9 in 1996 and 11.8 in 1995. The success rate for net exploratory wells
was 82% compared to 75% in 1996 and 73% in 1995.
Natural Gas Marketing sales volumes averaged 770 million cubic feet per day
in 1997, up 54% from 500 million cubic feet per day in 1996.
Refining, Supply and Transportation and Marketing
Revenues and earnings/(loss) before interest and income tax were $2.5
billion and $71.7 million, $2.5 billion and ($16.8 million), and $2.2 billion
and ($4.7 million) for 1997, 1996 and 1995, respectively.
Improved results during 1997 were primarily due to higher industry refining
margins during the first three quarters, enhanced refining operations and
yields, the absence of major turnarounds, and lower operating costs, only
partially offset by inventory value losses caused by the drop in crude oil
prices, and lower marketing margins.
Refinery operations in 1997 included a throughput of 232,000 barrels per
day. At the Port Arthur, Texas Refinery throughput averaged more than 175,000
barrels per day, while at the Big Spring, Texas Refinery,
9
<PAGE> 12
throughput averaged 57,000 barrels per day. The record throughput and income at
both refineries was a result of decreased turnaround activities and improved
operations.
In September 1997, a letter of intent was signed with BASF to construct the
world's largest Steam Cracker on property adjacent to the Port Arthur, Texas
Refinery. The integration of the cracker with the Refinery will fully utilize
Port Arthur's capacity, optimize refining and cracker feedstocks, and supply raw
materials to the Company's Chemicals plants. This investment is still subject to
a confirmation of the cost estimate and to parent Board's final approval.
Chemicals
Revenues and earnings before interest and income taxes were $1.1 billion
and $121.7 million, $1.0 billion and $231.2 million, and $1.1 billion and $290.6
million for 1997, 1996 and 1995, respectively.
Chemicals was the largest contributor to earnings, although down 47% from
1996 due to a 50% drop in industry margins only partially offset by higher sales
volumes. Record production was achieved during 1997 for polystyrene which was up
16%, polypropylene which was up 7% and polyethylene which was up 1% while
styrene production was down 6% due to two scheduled turnarounds.
A major expansion is underway to double capacity at the Company's joint
venture Propylene Splitter at Mont Belvieu, Texas, which takes propylene mix
from refineries, including the Port Arthur, Texas Refinery, and produces polymer
grade propylene for the Polypropylene Plant. In addition, a major step toward
increasing captive olefin supply was taken with the signing of a joint venture
letter of intent with BASF to construct the world's largest steam cracker on
property adjacent to the Port Arthur, Texas Refinery with a nameplate capacity
of 1.95 billion pounds per year of refinery grade propylene and 1.8 billion
pounds of ethylene per year.
Total chemical sales volumes were a record 4.1 billion pounds including
intra-company sales, up 11% versus the prior year reflecting effective marketing
activities and the full year operation of the 250 million pound per year
expansion project at the Polystyrene Plant, which was completed in mid-1996.
That expansion made the Carville, Louisiana Polystyrene Plant the largest
polystyrene plant in the world. At the Polypropylene Plant in LaPorte, Texas, a
500 million pound-per-year expansion started up at the end of 1995, making it
the largest polypropylene plant in the world. In 1996, project implementation
began on an expansion of the High Density Polyethylene Plant near Houston that
will double the facility's production capacity when completed in late 1998.
Construction also began on another expansion at the Polypropylene Plant which
will further increase capacity by 550 million pounds in late 1998.
YEAR 2000
In 1996, the Company developed a plan to deal with the Year 2000 issue and
began converting its computer systems to be Year 2000 compliant. The plan
provides for the conversion efforts to be completed by mid-1999. The Year 2000
issue is the result of computer programs being written using two digits rather
than four to define the applicable year. The Year 2000 costs are being funded
through operating cash flows and are not expected to be material in relation to
the Company's operating results. The Company is expensing all costs associated
with these system changes as the costs are incurred.
ENVIRONMENTAL MATTERS
The Company was contingently liable at December 31, 1997, under pending
lawsuits and other claims, some of which involved substantial sums. Considering
certain liabilities or reserves 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 loss contingencies pursuant to federal, state and
local environmental laws and regulations. These regulations, which are currently
changing, regulate the discharge of materials into the environment and may
require the Company to incur future obligations to investigate the effects of
the release
10
<PAGE> 13
or disposal of certain petroleum, chemical and mineral substances at various
sites; to remediate or restore these sites; to compensate others for damage to
property and natural resources and for remediation and restoration costs. These
possible obligations relate to sites owned by the Company or others and
associated with past or present operations, including sites at which the Company
has been identified as a Potentially Responsible Party ("PRP") under the federal
Superfund laws and comparable state laws. The Company is currently participating
in environmental investigations, assessments and cleanups under these
regulations at federal Superfund and state-managed sites, as well as other
cleanup sites, including operating and closed refineries, chemicals facilities,
service stations, pipelines and terminals. The Company may in the future be
involved in additional environmental investigations, assessments and cleanups.
The magnitude of future costs will depend on factors such as the unknown nature
of contamination at many sites, the unknown timing, extent and method of the
remedial actions which may be required and the determination of the Company's
liability in proportion to other responsible parties.
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 Company has accrued for environmental remediation
obligations of $19,336,000 and $20,339,000 at December 31, 1997 and 1996,
respectively. Substantially all amounts accrued are expected to be paid out over
the next five to ten years. The level of future expenditures for environmental
remediation obligations is impossible to determine with any degree of
reliability. The Company spent approximately $11,321,000 and $13,484,000 during
1997 and 1996, respectively, in capital expenditures for environmental
protection and for compliance with federal, state and local environmental laws
and regulations. In addition, the Company expensed $34,504,000 and $43,621,000
in 1997 and 1996, respectively, for ongoing environmental administration and
maintenance activities at operating facilities. Total environmental cash
expenditures are expected to increase over an extended period of time. Estimated
environmental capital expenditures for 1998 are $14,570,000.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash liquidity requirements for working capital, capital
expenditures, acquisitions and debt service over the past three years were
financed primarily by a combination of funds generated from operations,
borrowings and dispositions of assets.
Operating cash flows, defined as earnings before interest, taxes,
depreciation, depletion, amortization and lease impairment (EBITDA), was $427.3
million in 1997 compared to $437.5 million in 1996 and $417.9 million in 1995.
The decrease in 1997 operating cash flows compared to 1996 is the result of
reduced operating profits by the Company due to lower Upstream and Chemical
profits in 1997, partially offset by increased Downstream earnings.
During 1997, cash provided by operating activities totaled $384.0 million,
compared with $221.6 million in 1996 and $366.2 million in 1995. Cash flow from
operating activities during 1997 increased compared to the prior year primarily
resulting from an increase in accounts receivable due to the termination of an
$80 million accounts receivable financing agreement.
The Company's year-end 1997 balance sheet debt was $686 million compared to
$696 million at year-end 1996 and $554 million at year-end 1995. The increase in
1996 was primarily due to the termination of $120 million of off-balance-sheet
financing which consisted of an $80 million account receivable sale and a $40
million guaranteed Cos-Mar joint venture borrowing from a bank which was
replaced with an additional investment by the Company. Total debt was $736
million, $696 million and $674 million for 1997, 1996 and 1995, respectively.
Total debt includes $50 million and $120 million of off-balance-sheet financing
in 1997 and 1995, respectively.
In July 1996, the Company offered initial public debt of $125 million
five-year notes at market rates. The proceeds were used to refinance debt at
lower costs. The public debt was registered with the Securities and Exchange
Commission on Form S-3 in June 1996 and carried credit ratings of single A from
Standard & Poor's and A-3 from Moody's Investors Service.
11
<PAGE> 14
The Company replaced its short term bank borrowings with a $400 million
commercial paper program supported fully by its unused revolving credit facility
in the third quarter of 1996.
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 has an unsecured revolving credit facility with a group of
banks in the amount of $550 million. Under the facility, the Company has
available credit in an amount of $420 million through February 2002.
The Company paid dividends of $3.10 per share in 1997, $2.70 per share in
1996 and $2.30 per share in 1995.
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>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Exploration, Production and Natural Gas.............. $125,403 $125,254 $ 55,606
Refining, Supply and Transportation and Marketing.... 47,965 72,231 42,234
Chemicals............................................ 158,997 54,318 113,911
Corporate and Other.................................. 8,351 11,517 6,685
-------- -------- --------
Total...................................... $340,716 $263,330 $218,436
</TABLE>
1997 capital expenditures were 29% above 1996. The projected capital
expenditures budget in 1998 is $395.5 million.
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
chemicals 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.
12
<PAGE> 15
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.
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................................ 14
Consolidated Balance Sheet -- December 31, 1997 and 1996.... 15
Consolidated Statement of Earnings -- Three years ended
December 31, 1997......................................... 16
Consolidated Statement of Stockholders' Equity -- Three
years ended December 31, 1997............................. 17
Consolidated Statement of Cash Flows -- Three years ended
December 31, 1997......................................... 18
Notes to Consolidated Financial Statements.................. 19
Schedule II -- Consolidated Valuation and Qualifying
Accounts -- Three years ended December 31, 1997........... 39
</TABLE>
All other schedules are omitted as the required information is inapplicable
or presented in the consolidated financial statements or related notes.
13
<PAGE> 16
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, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1997, 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 6 to the consolidated financial statements, the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" in
1995.
KPMG Peat Marwick LLP
Dallas, Texas
January 26, 1998, except as to the third paragraph
of note 1(a) which is as of February 17, 1998
14
<PAGE> 17
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 1,271 $ 1,585
Accounts and notes receivable, less allowance for doubtful
receivables of $4,829 in 1997 and $6,073 in 1996....... 581,724 552,553
Inventories............................................... 345,235 318,565
Deferred Federal income taxes............................. 31,298 17,408
Prepaid expenses and other current assets................. 16,434 14,587
---------- ----------
Total current assets.............................. 975,962 904,698
---------- ----------
Investments in and advances to affiliates................... 33,424 77,594
Net property, plant, and equipment at cost, (successful
efforts method for oil and gas properties)................ 1,849,378 1,720,965
Deferred charges and other assets, at cost less applicable
amortization.............................................. 155,910 152,565
---------- ----------
$3,014,674 $2,855,822
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term obligations.................................... $ 27,478 $ 71,735
Current installments of long term debt and lease
obligations............................................ 63,860 37,188
Accounts payable.......................................... 584,507 528,713
Accrued liabilities....................................... 151,102 104,321
---------- ----------
Total current liabilities......................... 826,947 741,957
---------- ----------
Long term debt and lease obligations, excluding current
installments.............................................. 594,988 587,290
Deferred Federal income taxes............................... 232,761 183,613
Other deferred credits and liabilities...................... 82,866 95,677
Stockholders' equity:
Preferred stock of $1 par value. Authorized 4,000,000
shares; none issued.................................... -- --
Class A common stock of $.50 par value. Authorized
38,000,000 shares; issued 29,221,972 shares in 1997 and
29,216,172 shares in 1996.............................. 14,611 14,608
Class B common stock of $.50 par value. Authorized and
issued 2,000,000 shares................................ 1,000 1,000
Additional paid-in capital................................ 451,100 450,899
Retained earnings........................................... 810,401 780,778
---------- ----------
Total stockholders' equity........................ 1,277,112 1,247,285
Commitments and contingencies...............................
---------- ----------
$3,014,674 $2,855,822
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
15
<PAGE> 18
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
THREE YEARS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Sales and other operating revenues..................... $4,462,477 $4,081,244 $3,606,637
Interest and other income, net......................... 6,070 (2,742) (11,111)
---------- ---------- ----------
4,468,547 4,078,502 3,595,526
---------- ---------- ----------
Costs and expenses:
Cost of raw materials and products purchased........... 3,476,924 3,099,671 2,673,521
Direct operating expenses.............................. 378,766 393,250 361,711
Selling, general and administrative expenses........... 98,565 87,027 86,247
Taxes, other than on income............................ 55,017 49,738 43,533
Dry holes and abandonments............................. 31,930 11,277 12,638
Depreciation, depletion, amortization and lease
impairment (1995 includes $58,723 for adoption of
SFAS 121)........................................... 201,854 171,029 213,964
Interest............................................... 45,048 43,137 50,707
Less interest capitalized.............................. (7,764) (4,889) (7,873)
---------- ---------- ----------
4,280,340 3,850,240 3,434,448
---------- ---------- ----------
Earnings before income taxes................... 188,207 228,262 161,078
---------- ---------- ----------
Income taxes:
Current:
Federal............................................. 22,524 50,896 39,401
State............................................... 4,024 4,729 8,801
Deferred - Federal..................................... 35,258 19,431 8,451
---------- ---------- ----------
61,806 75,056 56,653
---------- ---------- ----------
Net earnings................................... $ 126,401 $ 153,206 $ 104,425
========== ========== ==========
Basic and diluted earnings per common share.............. $ 4.05 $ 4.91 $ 3.35
========== ========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
16
<PAGE> 19
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE YEARS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
PREFERRED ----------------- PAID-IN RETAINED STOCKHOLDERS'
STOCK CLASS A CLASS B CAPITAL EARNINGS EQUITY
--------- ------- ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994.... $ -- $14,595 $1,000 $450,029 $679,183 $1,144,807
Shares issued in connection with
employee benefit plans, 18,168
shares........................ -- 9 -- 632 -- 641
Expenses from stock split....... -- -- -- (60) -- (60)
Net earnings.................... -- -- -- -- 104,425 104,425
Dividends paid, $2.30 per
share......................... -- -- -- -- (71,756) (71,756)
------- ------- ------ -------- -------- ----------
Balance at December 31, 1995.... -- 14,604 1,000 450,601 711,852 1,178,057
Shares issued in connection with
employee benefit plans, 8,600
shares........................ -- 4 -- 299 -- 303
Expenses from stock split....... -- -- -- (1) -- (1)
Net earnings.................... -- -- -- -- 153,206 153,206
Dividends paid, $2.70 per
share......................... -- -- -- -- (84,280) (84,280)
------- ------- ------ -------- -------- ----------
Balance at December 31, 1996.... -- 14,608 1,000 450,899 780,778 1,247,285
Shares issued in connection with
employee benefit plans, 5,800
shares........................ -- 3 -- 201 -- 204
Net earnings.................... -- -- -- -- 126,401 126,401
Dividends paid, $3.10 per
share......................... -- -- -- -- (96,778) (96,778)
------- ------- ------ -------- -------- ----------
Balance at December 31, 1997.... $ -- $14,611 $1,000 $451,100 $810,401 $1,277,112
======= ======= ====== ======== ======== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
17
<PAGE> 20
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings........................................... $ 126,401 $ 153,206 $ 104,425
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation, depletion, amortization, lease
impairment and abandonments....................... 202,701 171,313 214,952
Net equity in losses of affiliates.................. 6,084 5,598 4,713
Loss (gain) on sale of assets....................... (9,292) (4,977) 6,245
Deferred income taxes............................... 35,258 19,431 8,451
Changes in assets and liabilities:
Accounts and notes receivable..................... (29,171) (216,307) 29,368
Inventories....................................... (26,670) (17,069) (14,958)
Prepaid expenses and other current assets......... (1,847) (1,624) (3,950)
Accounts payable and accrued liabilities.......... 102,575 144,579 36,068
Other............................................. (21,998) (32,551) (19,140)
--------- --------- ---------
Net cash provided by operating activities...... 384,041 221,599 366,174
--------- --------- ---------
Cash flows from investing activities:
Additions to property, plant and equipment............. (330,555) (234,978) (213,142)
Proceeds from sales of assets.......................... 14,575 14,901 23,751
Investments in and advances to affiliates.............. 38,086 (65,600) (7,582)
Dividends received in excess of equity in earnings of
affiliates.......................................... -- 77 1,954
--------- --------- ---------
Net cash used in investing activities.......... (277,894) (285,600) (195,019)
--------- --------- ---------
Cash flows from financing activities:
Additions to long term debt and lease obligations...... 71,576 326,199 127,451
Payments of long term debt and lease obligations....... (37,206) (235,641) (186,693)
Net change in short term obligations................... (44,257) 51,735 (37,000)
Issuance of common stock............................... 204 302 581
Dividends paid......................................... (96,778) (84,280) (71,756)
--------- --------- ---------
Net cash provided by (used in) financing
activities................................... (106,461) 58,315 (167,417)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents..... (314) (5,686) 3,738
Cash and cash equivalents at beginning of year........... 1,585 7,271 3,533
--------- --------- ---------
Cash and cash equivalents at end of year................. $ 1,271 $ 1,585 $ 7,271
========= ========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
18
<PAGE> 21
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) GENERAL
FINA, Inc. with subsidiaries ("the Company") is an integrated energy
company. The Company's principal lines of business are crude oil and natural gas
exploration and production and natural gas marketing ("Upstream"); petroleum
products refining, supply and transportation and marketing ("Downstream"); and
chemicals manufacturing and marketing ("Chemicals"). The principal markets for
refined products are domestic wholesale and retail markets while natural gas is
sold primarily to domestic marketers, manufacturing facilities and local
distribution companies. Petrochemical and plastic products are primarily sold to
domestic manufacturers of fiber, film, packaging and consumable products. 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 on
any vote for the election of directors. The holders of record of the Class B
Common Stock are entitled to elect the smallest number comprising more than half
of the directors to be elected and the remaining directors are elected by the
holders of record of the Class A Common Stock voting separately as a class.
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 100% of the stock of PDI.
On February 17, 1998, PetroFina and the Company announced that they entered
into a definitive agreement and plan of merger pursuant to which the Company
will become an indirect, wholly-owned subsidiary of PetroFina. Under the terms
of the agreement, current shareholders of the Company, other than PetroFina and
its subsidiaries will receive in exchange for each FINA, Inc. share they
currently hold $60 and a warrant entitling the holder to purchase nine-tenths
(0.9) of one PetroFina American Depositary Share ("ADS") at an exercise price of
$42.25 per ADS. Thus, each 10 warrants will entitle the holder of those
warrants, upon payment of $380.25, to receive nine ADSs. The warrants will be
exercisable for a period of five years from effective date of the merger.
PetroFina intends to seek listing of the warrants on the New York Stock
Exchange. The agreement was recommended by a Special Committee of the Board of
Directors of the Company and approved by the Company's Board of Directors.
Goldman, Sachs & Co. acted as financial adviser to the Special Committee. The
merger is subject to customary closing conditions. The Company and PetroFina
also announced that they have entered into a Memorandum of Understanding with
class counsel regarding the proposed comprehensive settlement of various class
action lawsuits that had been filed relating to the transaction. The settlement
is subject to, among other things, completion of definitive documentation
relating to the settlement, court approval and consummation of the merger.
(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.
19
<PAGE> 22
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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>
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest paid, net of amounts capitalized................ $37,385 $36,299 $45,249
======= ======= =======
Income taxes paid, net of refunds received............... $39,247 $46,749 $29,275
======= ======= =======
</TABLE>
(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, refined products and petrochemicals 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, less an
allowance for obsolescence. Because of price declines in a majority of the
products during 1997, a valuation reserve of $1,093,000 was established at
December 31, 1997, to reduce the LIFO cost of inventory to net realizable value.
The excess of replacement cost of crude oil, refined products and petrochemicals
over LIFO cost was $65,846,000 at December 31, 1996.
A summary of inventories follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Crude oil and refined products and chemicals................ $313,074 $286,949
Materials and supplies...................................... 32,161 31,616
-------- --------
$345,235 $318,565
======== ========
</TABLE>
(f) PROPERTY, PLANT AND EQUIPMENT
Oil and gas properties are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") 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.
20
<PAGE> 23
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Substantially all other property, plant and equipment is depreciated by the
straight-line method at rates based on the estimated useful lives for the
classes of property. Depreciation rates used are as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Refining and marketing facilities........................... 5.00% to 33.33%
Chemical facilities......................................... 6.66% to 33.33%
Pipelines................................................... 4.00% to 18.75%
Other....................................................... 6.66% to 33.33%
</TABLE>
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
$14,961,000 in 1997, $15,192,000 in 1996 and $13,200,000 in 1995.
(h) INCOME TAXES
Income taxes are accounted for pursuant to SFAS 109 "Accounting for Income
Taxes." The Company files a consolidated Federal income tax return with APHC and
its affiliates. Under the terms of the tax sharing agreement, the Company is
allocated Federal income taxes on a separate return basis.
(i) EARNINGS PER SHARE
The Company adopted SFAS 128 "Earnings Per Share" during the fourth quarter
of 1997. Under SFAS 128, basic earnings per share (EPS) is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. For the years and quarters
presented herein, basic and diluted earnings per share are the same.
(j) DERIVATIVE CONTRACTS
The Company utilizes derivative financial instruments to manage market
risks and reduce exposure resulting from fluctuations in interest rates and the
prices of crude oil, refined products and natural gas. Derivative instruments
used include swap agreements, futures and options contracts and forward purchase
and sales commitments. The Company's practice is to use derivative instruments
primarily for purposes other than trading.
Hedge accounting is utilized when there is a high degree of correlation
between price movements in the derivative and the item designated as being
hedged. Gains and losses related to qualifying hedges are deferred and are
recognized in the balance sheet as other assets and liabilities, until the
hedged transaction occurs. Realized and unrealized changes in the fair value of
the remaining derivative financial instruments and forward commitments are
recognized in income in the period in which the change occurs.
Occasionally, the Company will use derivative contracts to hedge foreign
currency exposure on firm commitments to purchase or build long-lived assets, in
which case the gain or loss on the derivative contract is deferred and reported
as an adjustment of the carrying value of the long-lived asset when the firm
commitment is paid.
21
<PAGE> 24
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In the event it becomes likely that an anticipated transaction will not
occur or that adequate correlation no longer exists, hedge accounting is
terminated and future changes in the value of the derivative are recognized as
gains or losses.
The cash flow impact of derivative financial instruments is reflected as
cash flows from operating activities in the Consolidated Statement of Cash Flow.
(k) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from estimates.
(2) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Proved oil and gas properties............................... $1,060,872 $ 975,173
Unproved oil and gas properties............................. 252,820 263,395
Refining and marketing facilities........................... 1,409,932 1,371,879
Chemical facilities......................................... 608,229 463,223
Pipelines................................................... 68,924 68,063
Other....................................................... 82,289 83,250
---------- ----------
3,483,066 3,224,983
Less accumulated depreciation, depletion, amortization and
lease impairment.......................................... 1,633,688 1,504,018
---------- ----------
$1,849,378 $1,720,965
========== ==========
</TABLE>
Property, plant and equipment includes capitalized lease obligations and
related accumulated depreciation of $8,795,000 and $4,604,000 at December 31,
1997, respectively, and $5,530,000 and $2,242,000 at December 31, 1996,
respectively.
(3) CURRENT AND LONG TERM DEBT
Short term obligations at December 31, 1997 include $297,478,000 of
commercial paper of which $270,000,000 is classified as long term debt and
discussed below. Short term obligations at December 31, 1996 included $2,000,000
of short term notes and $269,735,000 of commercial paper of which $200,000,000
was classified as long term debt. Weighted average interest rates for these
obligations at December 31, 1997 and 1996 were 5.84% and 5.53%, respectively.
22
<PAGE> 25
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of long term debt follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1997 1996
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Commercial Paper (5.60% to 6.70%)........................... $ 270,000 $ 200,000
6.64% Series A Senior Notes, due May 1, 2000................ 70,200 93,600
6.78% Unsecured Notes, due July 15, 2001.................... 124,013 123,736
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
Other....................................................... 33,047 44,731
---------- ----------
Total long term debt.............................. 655,260 620,067
Less current installments of long term debt................. 61,728 35,084
---------- ----------
Long term debt, excluding current installments.... $ 593,532 $ 584,983
========== ==========
</TABLE>
The Company has a $425,000,000 revolving credit facility, $325,000,000
maturing in February, 2002, and $100,000,000 in February, 1998, of which none
was outstanding under the facility at December 31, 1997. The Company intends to
rollover the commercial paper or use borrowings under this facility to finance
the repayment of $270,000,000 of commercial paper, classified as long term debt
at December 31, 1997. Borrowings under the credit facility bear interest at
various market rate options. The Company plans to replace the $100,000,000
portion of this facility with a similar facility at its due date.
The Senior Notes and the bank revolving credit facility contain provisions
that limit mergers and sales of assets, limit the incurrence of indebtedness and
restrict payments to stockholders. No material amounts of current and long term
debt are collateralized by Company assets.
Letters of credit are maintained with various banks, aggregating
$27,449,000 at December 31, 1997; principally for pollution control and workers'
compensation obligations.
The aggregate maturities of long term debt and capitalized lease
obligations for the five years ending December 31, 2002 are as follows:
1998 -- $63,860,000; 1999 -- $54,697,000; 2000 -- $48,722,000; 2001 --
$149,069,000; and 2002 -- $295,000,000.
(4) FINANCIAL INSTRUMENTS AND DERIVATIVE CONTRACTS
The Company uses swap agreements, futures and options contracts and forward
commitments to reduce its exposure to fluctuations in interest rates and in the
prices of crude oil, refined products and natural gas. Derivative instruments
give rise to credit risk due to possible nonperformance by the counter-parties.
However, through ongoing control procedures, FINA monitors the credit worthiness
of its counter-parties.
(a) INTEREST RATE SWAP AGREEMENTS
Interest rate swap agreements are used to help manage interest rate
exposure. Amounts to be paid or received under interest rate swap agreements are
accrued as interest rates change and are recognized over the life of the swap
agreements as an adjustment to interest expense. The related amounts payable to,
or receivable from, the counterparties are included in other current accrued
liabilities or assets. The fair value of the swap agreements are not recognized
in the consolidated financial statements because they are accounted
23
<PAGE> 26
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
for as hedges. The swap agreements expire at various dates through 2005. A
summary of the Company's interest rate swaps follows.
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
-------- --------
<S> <C> <C>
Fixed to Variable rates:
Notional amount (in thousands)............................ $224,315 $227,453
Average fixed rate received............................... 6.67% 6.65%
Average variable rate paid................................ 5.81% 5.63%
Variable to fixed rates:
Notional amount (in thousands)............................ $ 95,000 $ 50,000
Average fixed rate paid................................... 6.21% 6.21%
Average variable rate received............................ 5.75% 5.61%
</TABLE>
(b) COMMODITY DERIVATIVES CONTRACTS
The Company uses crude oil, refined products and natural gas commodity
derivative contracts to hedge future purchases and sales commitments and to
reduce financial exposure related to price changes on anticipated transactions.
Crude oil and refined product futures and forward contracts are used to
facilitate the supply of crude to the Company's refineries and sales of refined
products while managing price exposure. The Company recognizes realized and
unrealized gains and losses on these contracts in income during the period in
which the change in market value occurs.
The Company also uses futures contracts to sell natural gas as a hedge of
equity production. Gains and losses on the qualifying hedges are deferred and
included in the measurement of the related transaction when the hedged
transaction occurs. The following table summarizes the Company's major commodity
derivatives at December 31:
<TABLE>
<CAPTION>
NOTIONAL VOLUMES
AT DECEMBER 31
PURCHASES/(SALES)
DERIVATIVE ------------------
COMMODITY TYPE 1997 1996
--------- ---------- ------- -------
<S> <C> <C> <C>
Crude Oil -- (thousands of barrels) Forwards 2,708 4,435
Futures 563 (410)
Natural Gas -- (billions of British thermal
units) Price Hedge -- Futures 1,940 (7,620)
Price Hedge -- Forwards (2,214) (170)
Basis Hedge -- Swaps 3,603 --
Basis Hedge -- Forwards 3,956 (560)
</TABLE>
(c) FAIR VALUE OF FINANCIAL AND COMMODITY INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating the fair value of its financial and commodity instruments. The
reported amounts of cash equivalents, short-term receivable and payable and
short-term debt approximate fair value due to their short-term maturity. The
carrying value of the Company's floating rate debt approximated fair value and
the value of the fixed rate debt is estimated based on quoted market prices.
Market value is not readily determinable for certain equity investments and long
term receivables with a carrying value of $56,407,000 and $105,290,000 at
December 31, 1997 and 1996, respectively. The fair values of financial and
commodity derivatives are based on quoted market prices.
24
<PAGE> 27
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The carrying value and fair value of certain financial instruments as of
December 31, 1997 and 1996 are shown as assets and (liabilities) in the table
below:
<TABLE>
<CAPTION>
DECEMBER 31
------------------------------------------------
1997 1996
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
($ IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed rate long-term debt........... $(386,247) $(398,839) $(408,743) $(423,680)
Interest Rate Swaps................. -- 3,305 -- 4,543
Commodity Futures................... 19 19 1,730 1,730
Commodity Forwards.................. (990) (990) 4,475 4,475
Commodity Swaps..................... 797 797 3 3
</TABLE>
(5) INCOME TAXES
Actual income tax expense differs from the "normal" income tax expense at
U.S. statutory rates as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Computed income tax expense (at U.S. statutory
rates)............................................. $65,873 $79,892 $56,377
State income taxes, net of Federal benefit........... 2,616 3,074 5,721
Tax-free benefits and dividends on Company owned life
insurance.......................................... (2,920) (3,711) (2,358)
Section 29 credit.................................... (1,462) (1,854) (2,280)
Miscellaneous items.................................. (2,301) (2,345) (807)
------- ------- -------
$61,806 $75,056 $56,653
======= ======= =======
</TABLE>
The tax effects of the primary temporary differences giving rise to the
deferred Federal income tax assets and liabilities as determined under SFAS 109
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred income tax assets:
Basis in inventories...................................... $ 7,407 $ 6,056
Provision for losses...................................... 4,783 3,942
Alternative minimum tax credit carryforwards.............. 35,119 54,481
Miscellaneous items....................................... 11,313 15,161
-------- --------
Total deferred income tax assets.................. 58,622 79,640
-------- --------
Deferred income tax liabilities:
Employee benefits......................................... 2,052 996
Property, plant and equipment, principally due to
differences in depreciation, depletion, amortization,
lease impairment and abandonments...................... 223,778 208,562
Investments in affiliates, principally due to differences
in joint
venture depreciation................................... 33,498 34,539
Miscellaneous items....................................... 757 1,748
-------- --------
Total deferred income tax liabilities............. 260,085 245,845
-------- --------
Net deferred Federal income tax liability......... $201,463 $166,205
======== ========
</TABLE>
25
<PAGE> 28
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1997, alternative minimum tax credit carryforwards of
approximately $35,119,000 are available to reduce future Federal regular income
taxes payable over an indefinite period.
(6) IMPAIRMENT OF LONG-LIVED ASSETS
During the fourth quarter of 1995, the Company adopted SFAS 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
of " which resulted in a before-tax addition of $58,723,000 to depreciation,
depletion and amortization expense. After tax, the additional charge was
$38,173,000 or $1.22 per share.
Under SFAS 121, the Company evaluates impairment of exploration and
production assets on a field-by-field basis rather than using a one country cost
center for its proved properties. On this basis, certain fields are impaired
because they are not expected to recover their entire carrying value from future
cash flows. In addition to the change in grouping of proved properties, the
value of certain marketing assets in the Company's Downstream business were also
determined to be impaired under SFAS 121. As a result, the Company recognized a
non-cash pre-tax charge of $52,523,000 related to its Upstream exploration and
production assets and $6,200,000 related to its Downstream marketing assets. The
fair values of the impaired assets were determined by using the present value of
expected future cash flows for the oil and gas properties and sales prices for
similar assets for certain marketing assets. If estimated future cash flows are
not achieved with respect to certain fields, further writedowns may be required.
(7) 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, 1995... 41,000 $35.25 $1,445,250
======
Exercised.......................................... (8,600) $35.25 (303,150)
------ ====== ----------
Outstanding and exercisable at December 31, 1996... 32,400 $35.25 1,142,100
======
Terminated and reverted to plan.................... (800) $35.25 (28,200)
======
Exercised.......................................... (5,800) $35.25 (204,450)
------ ====== ----------
Outstanding and exercisable at December 31, 1997... 25,800 $35.25 $ 909,450
====== ====== ==========
</TABLE>
The option price for options granted is the market value at date of grant.
Each option granted 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. All options
will expire April 28, 1998, unless earlier exercised.
(8) INVESTMENTS AND ADVANCES TO AFFILIATES
The Company and GE Plastics, a wholly-owned subsidiary of General Electric
Company ("GE"), are joint venturers in Cos-Mar Company ("Cos-Mar"), 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
26
<PAGE> 29
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
expenses include charges from the joint venture of $17,749,000 in 1997,
$18,326,000 in 1996 and $19,346,000 in 1995. Investments in and advances to the
joint venture were $2,626,000 and $48,263,000 at December 31, 1997 and 1996,
respectively. During 1996, Cos-Mar retired $40,000,000 of Company guaranteed
joint venture borrowings from a bank with funds provided from additional
investment by the Company in the joint venture. During 1997, Cos-Mar added
$50,000,000 of Company guaranteed joint venture borrowings from a bank. Proceeds
from this borrowing were distributed to the Company. GE has guaranteed joint
venture's borrowings from a bank, aggregating $74,200,000 at December 31, 1997.
In December 1996, the Company acquired a 34.4% interest in Southwest
Convenience Stores ("SCS"). SCS has contributed all of its operating business,
including all of its assets and certain defined liabilities and obligations and
its area license agreement with the Southland Corporation.
(9) EMPLOYEE AND POSTRETIREMENT 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.
27
<PAGE> 30
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 sheet follows:
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------------------
1997 1996
------------------------ ------------------------
DEFINED DEFINED
BENEFITS RESTORATION BENEFITS RESTORATION
PLANS PLAN PLANS PLAN
--------- ----------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation.................. $(153,611) $(5,415) $(125,651) $(4,357)
========= ======= ========= =======
Accumulated benefit obligation, including
vested benefits......................... $(168,456) $(5,548) $(138,993) $(4,426)
========= ======= ========= =======
Projected benefit obligation................. $(201,455) $(7,557) $(164,351) $(5,874)
Plan assets at fair value, primarily listed
stocks and U.S. Government securities...... 272,510 -- 240,902 --
--------- ------- --------- -------
Plan assets in excess of (less than)
projected benefit obligation............... 71,055 (7,557) 76,551 (5,874)
Unrecognized net (gain) loss from past
experience different from that assumed and
effect of changes in assumptions........... 259 2,943 (11,110) 1,639
Unrecognized prior service cost being
recognized over 15 years................... 1,525 544 1,722 582
Unrecognized net (asset) liability at date of
adoption being recognized over 15.3
years...................................... (3,060) 485 (4,399) 607
Adjustment required to recognize minimum
liability.................................. -- (1,964) -- (1,380)
--------- ------- --------- -------
Prepaid (accrued) pension cost included in
the consolidated balance sheet............. $ 69,779 $(5,549) $ 62,764 $(4,426)
========= ======= ========= =======
</TABLE>
A summary of the components of pension income follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost-benefits earned during the year....... $ 6,366 $ 6,200 $ 4,920
Interest cost on projected benefit obligation...... 12,906 11,856 11,218
Actual return on plan assets....................... (40,031) (30,716) (43,665)
Net asset gain deferred for later recognition...... 15,528 8,156 23,167
Amortization of unrecognized prior service cost.... 234 234 234
Amortization of unrecognized actuarial losses...... 84 5 --
Amortization of unrecognized net asset............. (1,217) (1,217) (1,217)
-------- -------- --------
Total pension income..................... $ (6,130) $ (5,482) $ (5,343)
======== ======== ========
</TABLE>
28
<PAGE> 31
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A summary of the actuarial assumptions used in calculating the plans'
present value of projected benefit obligation follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Weighted average discount rate...................... 7.25% 7.75% 7.50%
Rate of increase in future compensation levels...... 4.00% 4.00% 4.00%
Expected long term rate of return on assets......... 11.00% 11.00% 11.00%
</TABLE>
The effect on the projected benefit obligation of the actuarial assumption
changes was an increase of approximately $24,972,000 in 1997 and a decrease of
approximately $6,081,000 in 1996.
In addition to providing pension benefits, certain health care and life
insurance benefits are provided to active and certain retired employees who meet
eligibility requirements defined in plan documents. The health care benefits in
excess of certain limits and the life insurance benefits are insured. The costs
of providing these benefits for active employees are expensed when the insurance
premiums are paid and claims incurred. The cost of providing these benefits for
active employees was $8,145,000 in 1997, $8,619,000 in 1996 and $8,594,000 in
1995.
A summary of the postretirement plan's funded status and the amounts
recognized in the consolidated balance sheet follows:
<TABLE>
<CAPTION>
DECEMBER 31
------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $37,998 $37,956
Fully eligible active plan participants................... 3,256 3,025
Other active plan participants............................ 23,376 19,136
------- -------
64,630 60,117
Unrecognized net gain (loss)................................ (1,972) 1,223
Unrecognized prior service cost............................. 175 197
------- -------
Accrued postretirement benefit cost......................... $62,833 $61,537
======= =======
</TABLE>
A summary of the components of net periodic postretirement benefit cost
follows:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost......................................... $1,271 $1,309 $1,024
Interest cost........................................ 4,504 4,649 5,111
Amortization of unrecognized prior service cost...... (22) (22) (22)
------ ------ ------
Net periodic postretirement benefit cost............. $5,753 $5,936 $6,113
====== ====== ======
</TABLE>
For measurement purposes, a 6.55% and 6.43% 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
1998; the rate was assumed to decrease gradually to 6.00% for pre-65 and 5.00%
for post-65 years of age by the year 2002 and remain at that level thereafter. A
7.00% and 6.79% annual rate for pre-65 and post-65 years of age, respectively,
was assumed for 1997. 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
29
<PAGE> 32
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1997 by $4,889,000 and the aggregate of the service and interest
cost components of net periodic postretirement benefit cost for the year ended
December 31, 1997 by $326,000.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25%, 7.75% and 7.50% at December 31,
1997, 1996 and 1995, respectively. The effect on the accumulated benefit
obligation of these changes was an increase of $8,144,000 in 1997 and a decrease
of $1,674,000 in 1996.
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 in the highest matched plan subject to salary caps.
The expense for the Company's contribution was $6,296,342 in 1997, $5,965,000 in
1996 and $5,911,000 in 1995.
(10) SALE OF NOTES RECEIVABLE
Notes receivable sold with recourse were $10,502,000 and $15,562,000 at
December 31, 1997 and 1996, respectively. The Company remains obligated to
reimburse the purchasers for any uncollectible amounts pursuant to the recourse
provisions of the agreements.
(11) 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, 1997, minimum lease payments on capital and operating
leases were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES(I) LEASES(II)
--------- ----------
(IN THOUSANDS)
<S> <C> <C>
1998........................................................ $2,381 $ 38,145
1999........................................................ 1,170 32,316
2000........................................................ 379 25,272
2001........................................................ 57 18,274
2002........................................................ -- 11,638
Later years to 2016......................................... -- 23,298
------ --------
Total minimum lease payments...................... 3,987 $148,943
========
Imputed interest (8.82%).................................... (400)
------
Present value of minimum lease payments(iii)................ $3,587
======
</TABLE>
- ---------------
(i) Substantially all leases provide that the Company shall pay taxes,
maintenance, insurance and certain other operating expenses applicable to
the leased properties.
(ii) Minimum payments have not been reduced by minimum sublease rentals of
approximately $1,293,000 which are due in the future under noncancellable
subleases.
(iii)Presented in the consolidated balance sheet as current installments and
noncurrent lease obligations of $2,132,000 and $1,456,000 at December 31,
1997, respectively, and $2,104,000 and $2,307,000 at December 31, 1996,
respectively.
30
<PAGE> 33
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Total rental expense was $41,691,000 (net of $121,000 subleases) in 1997,
$36,114,000 (net of $451,000 subleases) in 1996 and $32,562,000 (net of $676,000
subleases) in 1995. Contingent rentals were not significant.
(12) RELATED PARTY TRANSACTIONS
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 $3,030,000 in 1997, $8,728,000 in 1996 and
$3,652,000 in 1995 to the joint ventures.
Accounts receivable include $5,344,000 and $6,418,000 at December 31, 1997
and 1996, respectively, from affiliates.
Accounts payable include $6,923,000 and $34,127,000 at December 31, 1997
and 1996, respectively, to affiliates.
Interest expense relating to borrowings from PDI was $3,000 in 1997,
$5,125,000 in 1996 and $12,938,000 in 1995. Crude oil and natural gas
aggregating $11,508,000 in 1997, $13,245,000 in 1996 and $8,953,000 in 1995 were
purchased from PDI in the ordinary course of business.
Refined products and chemicals aggregating $19,625,000 in 1997, $57,913,000
in 1996 and $53,542,000 in 1995 were purchased from PetroFina and its affiliates
other than PDI in the ordinary course of business.
(13) CONTINGENCIES
The Company was contingently liable at December 31, 1997, 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 may
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 loss contingencies pursuant to federal, state and
local environmental laws and regulations. These regulations, which are currently
changing, regulate the discharge of materials into the environment and may
require the Company to incur future obligations to investigate the effects of
the release or disposal of certain petroleum, chemical and mineral substances at
various sites; to remediate or restore these sites; to compensate others for
damage to property and natural resources and for remediation and restoration
costs. These possible obligations relate to sites owned by the Company or others
and associated with past or present operations, including sites at which the
Company has been identified as a potentially responsible party ("PRP") under the
federal Superfund law and comparable state laws. The Company is currently
participating in environmental investigations, assessments and cleanups under
these regulations at federal Superfund and state-managed sites, as well as other
cleanup sites, including operating and closed refineries, chemical facilities,
service stations, pipelines and terminals. The Company may in the future be
involved in additional environmental investigations, assessments and cleanups.
The magnitude of future costs will depend on factors such as the unknown nature
and contamination at many sites, the unknown timing, extent and method of the
remedial actions which may be required and the determination of the Company's
liability in proportion to other responsible parties.
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 Company has accrued for environmental remediation
obligations of $19,336,000 and $20,339,000 at December 31, 1997 and 1996,
respectively. Substantially all amounts accrued are expected to be paid out over
the next five to ten
31
<PAGE> 34
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
years. The level of future expenditures for environmental remediation
obligations is impossible to determine with any degree of reliability. The
Company spent approximately $11,321,000 and $13,484,000 during 1997 and 1996,
respectively, in capital expenditures for environmental protection and for
compliance with federal, state and local environmental laws and regulations. In
addition, the Company expensed $34,504,000 and $43,621,000 in 1997 and 1996,
respectively, for ongoing environmental administration and maintenance
activities at operating facilities. Total environmental cash expenditures at the
Company's operating locations are expected to increase over an extended period
of time as the Company complies with present and future regulatory requirements.
Estimated capital expenditures for 1998 related to environmental matters are
$14,570,000 (unaudited).
(14) SEGMENT DATA
The Company is engaged in crude oil and natural gas exploration and
production and natural gas marketing ("Upstream"); petroleum products refining,
supply and transportation and marketing ("Downstream"); and chemicals
manufacturing and marketing ("Chemicals"). Segment data as of and for the three
years ended December 31, 1997 follows (in thousands):
<TABLE>
<CAPTION>
CORPORATE
UPSTREAM DOWNSTREAM CHEMICALS AND OTHER CONSOLIDATED
-------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
1997:
Sales:
Unaffiliated customers............. $896,812 $2,499,376 $1,058,765 $ 180 $4,455,133
======== ========== ========
Affiliates......................... $ -- $ -- $ 7,344 $ -- $ 7,344
======== ========== ========== ========
Inter-segment...................... $ 52,737 $ 101,918 $ 16,914 $ -- $ --
======== ========== ========== ======== ----------
4,462,477
==========
Operating profit (loss)............... $ 42,858 $ 71,626 $ 127,538 $(22,601) $ 219,421
Interest and other income............. 9,120 68 (5,832) 2,714 6,070
Interest expense, net................. -- -- -- (37,284) (37,284)
-------- ---------- ---------- -------- ----------
Earnings (loss) before income
taxes............................ $ 51,978 $ 71,694 $ 121,706 $(57,171) $ 188,207
======== ========== ========== ======== ==========
Accounts and notes receivable, net.... $152,975 $ 261,229 $ 158,910 $ 8,610 $ 581,724
======== ========== ========== ======== ==========
Identifiable assets................... $735,759 $1,346,540 $ 786,080 $146,295 $3,014,674
======== ========== ========== ======== ==========
Depreciation, depletion, amortization
and lease impairment............... $ 95,869 $ 68,251 $ 29,619 $ 8,115 $ 201,854
======== ========== ========== ======== ==========
Capital expenditures.................. $125,403 $ 47,965 $ 158,997 $ 8,351 $ 340,716
======== ========== ========== ======== ==========
</TABLE>
32
<PAGE> 35
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
CORPORATE
UPSTREAM DOWNSTREAM CHEMICALS AND OTHER CONSOLIDATED
-------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
1996:
Sales:
Unaffiliated customers............. $569,014 $2,468,715 $1,032,045 $ 138 $4,069,912
======== ========== ========== ======== ==========
Affiliates......................... $ -- $ -- $ 11,332 $ -- 11,332
======== ========== ========== ========
Inter-segment...................... $ 61,872 $ 109,824 $ 14,763 $ -- --
======== ========== ========== ======== ----------
$4,081,244
==========
Operating profit (loss)............... $ 65,788 $ (12,997) $ 235,378 $(18,917) $ 269,252
Interest and other income............. 3,507 (3,836) (4,156) 1,743 (2,742)
Interest expense, net................. -- -- -- (38,248) (38,248)
-------- ---------- ---------- -------- ----------
Earnings (loss) before income
taxes............................ $ 69,295 $ (16,833) $ 231,222 $(55,422) $ 228,262
======== ========== ========== ======== ==========
Accounts and notes receivable, net.... $122,166 $ 262,367 $ 159,745 $ 8,275 $ 552,553
======== ========== ========== ======== ==========
Identifiable assets................... $680,203 $1,359,690 $ 693,033 $122,896 $2,855,822
======== ========== ========== ======== ==========
Depreciation, depletion, amortization
and lease impairment............... $ 71,711 $ 67,398 $ 27,336 $ 4,584 $ 171,029
======== ========== ========== ======== ==========
Capital expenditures.................. $125,254 $ 72,231 $ 54,318 $ 11,527 $ 263,330
======== ========== ========== ======== ==========
1995:
Sales:
Unaffiliated customers............. $352,932 $2,189,860 $1,059,731 $ 130 $3,602,653
======== ========== ========
Affiliates......................... $ -- $ -- $ 3,984 $ -- 3,984
======== ========== ========== ========
Inter-segment...................... $ 44,095 $ 129,780 $ 7,423 $ -- --
======== ========== ========== ======== ----------
$3,606,637
==========
Operating profit (loss)(1)............ $(60,653) $ (2,777) $ 295,905 $(17,452) $ 215,023
Interest and other income............. (6,258) (1,940) (5,292) 2,379 (11,111)
Interest expense, net................. -- -- -- (42,834) (42,834)
-------- ---------- ---------- -------- ----------
Earnings (loss) before income
taxes............................ $(66,911) $ (4,717) $ 290,613 $(57,907) $ 161,078
======== ========== ========== ======== ==========
Accounts and notes receivable, net.... $ 70,282 $ 194,051 $ 70,427 $ 1,486 $ 336,246
======== ========== ========== ======== ==========
Identifiable assets................... $576,966 $1,263,618 $ 531,737 $115,397 $2,487,718
======== ========== ========== ======== ==========
Depreciation, depletion, and lease
impairment(1)...................... $115,890 $ 75,554 $ 18,975 $ 3,545 $ 213,964
======== ========== ========== ======== ==========
Capital expenditures.................. $ 55,606 $ 42,234 $ 113,911 $ 6,685 $ 218,436
======== ========== ========== ======== ==========
</TABLE>
- ---------------
(1) During the fourth quarter of 1995, the Company adopted SFAS 121, "Accounting
for the Impairment of Long Lived Assets and for Long-Lived Assets to be
Disposed Of". As a result, the Company recognized a before tax addition of
$58,723,000 to depreciation, depletion and amortization expense, of which
$52,523,000 was related to its Upstream business and $6,200,000 was related
to its Downstream business. After tax, the additional charge was $38,173,000
or $1.22 per share.
Consolidated totals are after elimination of inter-segment amounts.
Operating profit (loss) is sales and other operating revenue less operating
expenses (costs and expenses excluding interest) and is substantially all
33
<PAGE> 36
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 1997, 1996 or
1995, and no account receivable from any customer exceeded 5% of consolidated
stockholders' equity at December 31, 1997, 1996 or 1995.
(15) FINA OIL AND CHEMICAL COMPANY AND CONSOLIDATED SUBSIDIARIES SUMMARY
FINANCIAL DATA
Fina Oil and Chemical Company ("FOCC"), a wholly-owned subsidiary of the
Company, is the main operating subsidiary of the Company whose principal lines
of business include crude oil and natural gas exploration and production;
petroleum products refining, supply and transportation and marketing; and
chemicals manufacturing and marketing. FOCC issued senior debt securities during
1996 which are unconditionally guaranteed on an unsecured basis by the Company.
Following is summary consolidated financial data for FOCC (in thousands):
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
At December 31:
Current Assets............................................ $ 846,240 $ 818,116
Noncurrent Assets......................................... 2,296,640 1,914,715
Current Liabilities....................................... (704,163) (659,894)
Noncurrent Liabilities(1)................................. (2,318,492) (1,956,490)
----------- -----------
Net Assets............................................. $ 120,225 $ 116,447
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Year ended December 31:
Sales and other operating revenues.............. $3,785,025 $3,690,533 $3,363,505
========== ========== ==========
Gross profit(2)................................. $ 334,207 $ 341,138 $ 303,166
========== ========== ==========
Net earnings(3)................................. $ 114,777 $ 137,371 $ 99,074
========== ========== ==========
</TABLE>
- ---------------
(1) Primarily consists of payables to related parties.
(2) 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.
(3) In 1995, FOCC adopted SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" which resulted in a
before-tax addition of $58,723,000 to depreciation, depletion and
amortization expense. After tax, the additional charge was $38,173,000.
34
<PAGE> 37
FINA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(16) 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>
1997:
Sales and other operating
revenues........................ $1,114,068 $1,034,558 $1,111,641 $1,202,210
========== ========== ========== ==========
Gross profit(1).................... $ 86,196 $ 102,286 $ 106,039 $ 55,395
========== ========== ========== ==========
Net earnings....................... $ 39,150 $ 40,023 $ 43,593 $ 3,635
========== ========== ========== ==========
Basic and diluted earnings per
common share.................... $ 1.25 $ 1.28 $ 1.40 $ 0.12
========== ========== ========== ==========
1996:
Sales and other operating
revenues........................ $ 965,115 $1,047,290 $ 993,264 $1,075,575
========== ========== ========== ==========
Gross profit(1).................... $ 94,799 $ 95,162 $ 92,857 $ 84,738
========== ========== ========== ==========
Net earnings....................... $ 38,022 $ 38,079 $ 38,866 $ 38,239
========== ========== ========== ==========
Basic and diluted earnings per
common share.................... $ 1.22 $ 1.22 $ 1.25 $ 1.22
========== ========== ========== ==========
</TABLE>
- ---------------
(1) 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.
35
<PAGE> 38
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (UNAUDITED)
The following tables set forth supplementary disclosures for oil and gas
producing activities in accordance with SFAS 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
------------------------------------
1977 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Proved oil and gas properties....................... $1,060,872 $ 975,173 $ 905,554
Unproved oil and gas properties..................... 252,820 263,395 232,085
---------- ---------- ----------
1,313,692 1,238,568 1,137,639
Less accumulated depreciation, depletion,
amortization and lease impairment................. 743,106 691,303 640,223
---------- ---------- ----------
Net capitalized costs............................... $ 570,586 $ 547,265 $ 497,416
========== ========== ==========
</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, 1997 follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Acquisition of unproved properties.................. $ 10,156 $ 8,258 $ 5,304
======== ======== ========
Acquisition of proved properties.................... $ (11) $ 4,128 $ 1,091
======== ======== ========
Exploration costs................................... $109,411 $ 87,738 $ 46,463
======== ======== ========
Development costs................................... $ 50,398 $ 54,840 $ 29,992
======== ======== ========
</TABLE>
The above costs were incurred in the United States.
36
<PAGE> 39
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (UNAUDITED) -- (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, 1997.
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Sales............................................. $225,375 $184,423 $119,772
Transfers......................................... 19,992 23,272 17,710
-------- -------- --------
Total..................................... 245,366 207,695 137,482
Production costs.................................... (53,169) (54,078) (51,922)
Exploration costs................................... (46,536) (30,150) (26,662)
Depreciation, depletion, amortization, lease
impairment and abandonments....................... (96,368) (71,683) (116,592)
-------- -------- --------
49,293 51,784 (57,694)
Income tax benefit (expense)........................ (15,791) (16,270) 22,473
-------- -------- --------
Results of operations from producing activities,
excluding interest costs.......................... $ 33,503 $ 35,514 $(35,221)
======== ======== ========
</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>
1997 1996 1995
---------------- ---------------- ----------------
OIL GAS OIL GAS OIL GAS
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Proved developed and undeveloped
reserves:
Beginning of year..................... 39,087 370,757 34,572 314,222 31,699 348,204
Revisions of previous estimates....... (1,803) (9,475) 2,923 (15,467) 1,236 283
Purchases of minerals in place........ 503 204 1,129 4,769 48 55
Sales of minerals in place............ (3,841) (3,630) (650) (3,074) (2,052) (11,729)
Extensions and discoveries............ 3,296 88,473 4,921 127,026 7,390 29,528
Production............................ (3,806) (69,698) (3,808) (56,719) (3,749) (52,119)
------ ------- ------ ------- ------ -------
End of year........................... 33,436 376,631 39,087 370,757 34,572 314,222
====== ======= ====== ======= ====== =======
Proved developed reserves:
Beginning of year..................... 21,012 239,790 18,814 228,548 19,986 237,270
====== ======= ====== ======= ====== =======
End of year........................... 17,472 247,503 21,012 239,790 18,814 228,548
====== ======= ====== ======= ====== =======
</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.
37
<PAGE> 40
FINA, INC. AND SUBSIDIARIES
SUPPLEMENTAL OIL AND GAS DATA -- (UNAUDITED) -- (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 10% annual discount
rate.
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------
1997 1996 1995
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Future cash inflows............................. $1,321,549 $2,124,172 $1,202,555
Future production and development costs......... (495,084) (592,189) (476,786)
Future income tax expenses...................... (154,559) (403,264) (117,188)
---------- ---------- ----------
Future net cash flows........................... 671,906 1,128,719 608,581
10% annual discount for estimated timing of cash
flows......................................... (239,807) (438,354) (244,862)
---------- ---------- ----------
Standardized measure of discounted future net
cash flows.................................... $ 432,099 $ 690,365 $ 363,719
========== ========== ==========
Beginning of year............................... $ 690,365 $ 363,719 $ 317,694
Changes resulting from:
Sales and transfers of oil and gas produced,
net of production costs.................... (192,197) (153,617) (85,560)
Extensions and discoveries.................... 132,191 232,124 56,806
Purchases of minerals in place................ 3,538 18,444 353
Sales of minerals in place.................... (26,902) (11,906) (22,829)
Previously estimated development costs
incurred during the year................... 52,907 32,270 43,600
Revisions of previous quantities.............. (23,746) 8,017 17,186
Accretion of discount......................... 93,698 43,377 34,626
Net change in income taxes.................... 147,242 (176,597) (41,459)
Net changes in prices and costs............... (444,996) 334,534 43,302
---------- ---------- ----------
End of year..................................... $ 432,099 $ 690,365 $ 363,719
========== ========== ==========
</TABLE>
38
<PAGE> 41
SCHEDULE II
FINA, INC. AND SUBSIDIARIES
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
THREE YEARS ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Year ended December 31, 1995 --
Allowance for doubtful receivables.................. $7,201 $2,790 $3,280(1) $6,711
====== ====== ====== ======
Year ended December 31, 1996 --
Allowance for doubtful receivables.................. $6,711 $1,330 $1,968(1) $6,073
====== ====== ====== ======
Year ended December 31, 1997 --
Allowance for doubtful receivables.................. $6,073 $4,465 $5,709(1) $4,829
====== ====== ====== ======
</TABLE>
- ---------------
(1) Bad debts written off, less recoveries.
39
<PAGE> 42
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 1997 AGE OFFICER SINCE
------------------------------------ --- -------------
<S> <C> <C>
Paul D. Meek, 67 6-06-68
Chairman of the Board
Ron W. Haddock, 57 6-19-86
President and Chief Executive Officer
Cullen M. Godfrey, 52 4-15-87
Senior Vice President, Secretary and General
Counsel
Michael J. Couch, 46 4-30-84
Senior Vice President
H. Patrick Jack, 45 8-23-89
Senior Vice President
Neil A. Smoak, 51 4-24-86
Senior Vice President
(Resigned March 1, 1998)
Yves Bercy, 52 7-01-93
Vice President and Chief Financial Officer
(Resigned August 31, 1997)
Richard L. Charter II, 48 4-24-97
Vice President
Michel Daumerie, 45 4-20-95
Vice President
Richard C. Lindley, 56 4-20-95
Vice President
Jeff D. Morris, 46 4-20-95
Vice President
Geoffroy Petit, 39 9-1-97
Vice President and Chief Financial Officer
S. R. West, 58 5-02-83
Vice President
Hilda Kouvelis, 35 2-20-97
Treasurer
Kevin A. Rupp, 42 4-20-95
Controller
Linda Middleton, 47 8-20-84
Assistant Secretary
</TABLE>
There is incorporated by reference pages 4 through 7 of the Company's Proxy
Statement for the Annual Meeting of Security Holders to be held April 15, 1998.
ITEM 11 EXECUTIVE COMPENSATION
There is incorporated by reference pages 2 through 3 and 9 through 17 of
the Company's Proxy Statement for the Annual Meeting of Security Holders to be
held April 15, 1998.
40
<PAGE> 43
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is incorporated by reference the first page and pages 2 through 7 of
the Proxy Statement for the Annual Meeting of Security Holders to be held April
15, 1998.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference the first page and pages 4 through 5, 13
and 17 of the Company's Proxy Statement for the Annual Meeting of Security
Holders to be held April 15, 1998.
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 13 of this Form 10-K for a list of all
consolidated financial statements and schedules filed as part of this
Form 10-K.
No reports on Form 8-K were filed during the last quarter of the
period covered by this report. However, a Form 8-K was filed on February
17, 1998 reporting a news release by the Company approving PetroFina
S.A.'s offer of a negotiated merger whereby the Company would become an
indirect, wholly-owned affiliate.
3. Exhibits:
<TABLE>
<S> <C>
(2b) -- Agreement and Plan of Merger
(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 Agreements of February 27, 1997 with NationsBank
of Texas, N.A. as amended February 26, 1998
(10c) -- American Petrofina, Incorporated Employee Non-Qualified
Stock Option Plan (1979)
(10d) -- Form 11-K Amdel Inc. Employee Investment Plan
(10e) -- Form 11-K FINA Capital Accumulation Plan
(10f) -- Agreements between FINA, Inc. (formerly American
Petrofina, Incorporated) and Ron W. Haddock
(10g) -- Employee Stock Ownership Plan of American Petrofina,
Incorporated
(10h) -- FINA Capital Accumulation Plan as amended
(10i) -- Fina Restoration Plan
(11) -- Computation of Ratio of Earnings to Fixed Charges
(19) -- FINA, Inc.'s Proxy Statement for Annual Meeting of
Security Holders to be held April 15, 1998
(21) -- Subsidiaries of the Registrant
(23) -- Independent Auditors' Consent
(27) -- Financial Data Schedule
</TABLE>
41
<PAGE> 44
SIGNATURE
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
Senior Vice President, Secretary
and General Counsel
Date: March 12, 1998
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 12, 1998
-------------------------------------------------
Paul D. Meek
Chairman of the Board
By: /s/ RON W. HADDOCK March 12, 1998
-------------------------------------------------
Ron W. Haddock
President and CEO, Director
By: /s/ ALBERT V. CASEY March 12, 1998
-------------------------------------------------
Albert V. Casey
Director
By: /s/ FRANCOIS CORNELIS March 12, 1998
-------------------------------------------------
Francois Cornelis
Director
By: March , 1998
-------------------------------------------------
Axel de Broqueville
Director
By: March , 1998
-------------------------------------------------
Michel-Marc Delcommune
Director
By: /s/ ERNESTO MARCOS March 12, 1998
-------------------------------------------------
Ernesto Marcos
Director
By: March , 1998
-------------------------------------------------
Jose G. Rebelo
Director
By: /s/ PATRICIA M. WALLINGTON March 12, 1998
-------------------------------------------------
Patricia M. Wallington
Director
By: /s/ GEOFFROY PETIT March 12, 1998
-------------------------------------------------
Geoffroy Petit
Vice President and Chief Financial Officer
By: /s/ KEVIN RUPP March 12, 1998
-------------------------------------------------
Kevin Rupp
Controller and Principal Accounting Officer
</TABLE>
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(2b) -- Agreement and Plan of Merger
(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 Agreements of February 27, 1997 with NationsBank
of Texas, N.A. as amended February 26, 1998
(10c) -- American Petrofina, Incorporated Employee Non-Qualified
Stock Option Plan (1979)
(10d) -- Form 11-K Amdel Inc. Employee Investment Plan
(10e) -- Form 11-K FINA Capital Accumulation Plan
(10f) -- Agreements between FINA, Inc. (formerly American
Petrofina, Incorporated) and Ron W. Haddock
(10g) -- Employee Stock Ownership Plan of American Petrofina,
Incorporated
(10h) -- FINA Capital Accumulation Plan as amended
(10i) -- Fina Restoration Plan
(11) -- Computation of Ratio of Earnings to Fixed Charges
(19) -- FINA, Inc.'s Proxy Statement for Annual Meeting of
Security Holders to be held April 15, 1998
(21) -- Subsidiaries of the Registrant
(23) -- Independent Auditors' Consent
(27) -- Financial Data Schedule
</TABLE>
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AMONG
PETROFINA S.A.,
PETROFINA DELAWARE, INCORPORATED,
NEW FINA, INC.
AND
FINA, INC.
Dated as of February 17, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C>
ARTICLE I
THE MERGER; CLOSING......................................................................................2
1.1 The Merger.............................................................................2
1.2 Effective Time.........................................................................2
1.3 Time and Place of Closing..............................................................2
1.4 Effect of the Merger...................................................................2
ARTICLE II
THE SURVIVING CORPORATION................................................................................2
2.1 Certificate of Incorporation. ........................................................2
2.2 By-laws. ..............................................................................3
2.3 Directors and Officers.................................................................3
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE.......................................................................3
3.1 Conversion of Securities...............................................................3
3.2 Mergeco Common Shares..................................................................4
3.3 Stock Options. .......................................................................4
3.4 Dissenting Shares. ...................................................................4
3.5 Exchange of Certificates...............................................................5
3.6 No Liability...........................................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................7
4.1 Organization...........................................................................7
4.2 Capitalization.........................................................................7
4.3 Authorization of this Agreement; Recommendation of Merger..............................8
4.4 Governmental Filings; No Conflicts.....................................................8
4.5 Disclosure and Financial Statements; No Undisclosed Liabilities........................9
4.6 Vote Required.........................................................................10
4.7 Opinion of Financial Advisor..........................................................10
4.8 Finders and Investment Bankers........................................................10
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING MERGECO........................................................10
5.1 Organization..........................................................................10
5.2 Capitalization........................................................................10
5.3 Authorization of this Agreement.......................................................11
5.4 Governmental Filings; No Violations...................................................11
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING PDI............................................................12
6.1 Organization..........................................................................12
6.2 Capitalization........................................................................12
6.3 Authorization of this Agreement.......................................................12
6.4 Governmental Filings; No Violations...................................................12
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PARENT................................................................13
7.1 Organization..........................................................................13
7.2 Capitalization........................................................................13
7.3 Subsidiaries..........................................................................14
7.4 Authorization of this Agreement.......................................................14
7.5 Governmental Filings; No Violations...................................................14
7.6 Disclosure and Financial Statements; No Undisclosed Liabilities.......................15
7.7 Financial Ability to Perform..........................................................16
7.8 Finders and Investment Bankers........................................................16
7.9 No Foreign Withholding................................................................16
ARTICLE VIII
COVENANTS...............................................................................................16
8.1 Conduct of the Business of the Company. ..............................................16
8.2 Activities of Mergeco.................................................................17
8.3 Stockholders' Meeting.................................................................17
8.4 SEC Filings; Registration Statement...................................................17
8.5 Filings, Other Action.................................................................18
8.6 Public Announcements..................................................................18
8.7 NYSE Listing..........................................................................19
8.8 Warrant Agreement.....................................................................19
8.9 Further Action........................................................................19
8.10 Directors' and Officers' Indemnification and Insurance................................19
8.11 Transfer Taxes........................................................................20
8.12 DOL Application.......................................................................21
ARTICLE IX
CLOSING CONDITIONS......................................................................................21
9.1 Conditions to the Obligations of Each Party...........................................21
9.2 Conditions to the Obligations of Parent, PDI and Mergeco..............................21
9.3 Conditions to the Obligations of the Company..........................................22
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE X
TERMINATION AND ABANDONMENT.............................................................................23
10.1 Termination...........................................................................23
10.2 Procedure and Effect of Termination...................................................23
ARTICLE XI
MISCELLANEOUS...........................................................................................24
11.1 Amendment and Modification............................................................24
11.2 Waiver of Compliance; Consents........................................................24
11.3 Non-Survival of Representations, Warranties and Agreements............................24
11.4 Notices...............................................................................25
11.5 Assignment; Parties in Interest.......................................................26
11.6 Expenses..............................................................................26
11.7 Specific Performance..................................................................26
11.8 Governing Law.........................................................................26
11.9 Counterparts..........................................................................26
11.10 Interpretation........................................................................26
11.11 Entire Agreement......................................................................27
INDEX OF DEFINED TERMS...........................................................................................29
</TABLE>
- iii -
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 17, 1998, among (i)
PetroFina S.A., a societe anonyme/naamloze vennootschap organized under the laws
of Belgium ("Parent"); (ii) New Fina, Inc., a Delaware corporation and an
indirect, wholly-owned subsidiary of Parent ("Mergeco"); (iii) Petrofina
Delaware, Incorporated, a Delaware corporation and an indirect, wholly-owned
subsidiary of Parent ("PDI"); and (iv) Fina, Inc., a Delaware corporation (the
"Company").
WHEREAS, Parent owns all of the capital stock of American Petrofina
Holding Company, a Delaware corporation ("APHC"), which owns all of the capital
stock of PDI (each of PDI and APHC are referred to hereinafter as a "Parent
Subsidiary," and together as the "Parent Subsidiaries"); and PDI owns an
aggregate of approximately 85% of the shares of Class A common stock, par value
$0.50 per share, and 100% of the shares of Class B common stock, par value $0.50
per share (collectively, the "Common Shares") of the Company;
WHEREAS, Parent has proposed to the Board of Directors of the Company
that Parent acquire through APHC and PDI the Common Shares not owned by PDI or
any other affiliate of Parent (the "Public Shares" and the holders thereof being
referred to as the "Public Shareholders");
WHEREAS, Parent desires to contribute the interest that it acquires in
the Public Shares to APHC and to cause APHC, in turn, to contribute such
interest to PDI;
WHEREAS, the Board of Directors of each of Parent and Mergeco believes
it is in the best interest of each of Parent and Mergeco and their respective
shareholders, and the Board of Directors of the Company believes it is in the
best interest of the Company and its shareholders, to consummate the merger of
Mergeco with and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, a Special Committee of the Board of Directors of the Company
(the "Special Committee"), has (i) determined that the Merger is fair to and in
the best interests of the Public Shareholders and (ii) recommended the approval
of this Agreement to the Board of Directors of the Company and the adoption of
this Agreement to the Public Shareholders; and
WHEREAS, the Boards of Directors of Parent, PDI, Mergeco and the
Company have approved this Agreement and approved the Merger upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, and intending to be
legally bound hereby, the parties agree as follows:
<PAGE> 6
ARTICLE I
THE MERGER; CLOSING
1.1 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "Delaware Corporation Law" or "DGCL"), at the
Effective Time (as hereinafter defined), Mergeco shall be merged with and into
the Company. As a result of the Merger, the separate corporate existence of
Mergeco shall cease and the Company shall continue as the surviving corporation
of the Merger (the "Surviving Corporation").
1.2 Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
IX, but in no event later than the Closing, the parties hereto shall cause the
Merger to be consummated by filing this Agreement or a certificate of merger or
certificate of ownership and merger (in either case, the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form as
is required by, and executed in accordance with the relevant provisions of, the
Delaware Corporation Law and do any and all other lawful things necessary to
cause the Merger to become effective (the date and time of such filing being the
"Effective Time").
1.3 Time and Place of Closing. The closing of the Merger (the
"Closing") shall take place at the offices of Wilmer, Cutler & Pickering, 2445 M
Street, N.W., Washington, D.C. 20037, or such other place as the parties shall
agree, as soon as practicable following satisfaction or waiver of the conditions
set forth in Article IX. The date on which the Closing actually occurs is herein
referred to as the "Closing Date."
1.4 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of the Delaware
Corporation Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of the Company and Mergeco shall vest in the Surviving Corporation,
and all debts, liabilities, obligations, restrictions, disabilities and duties
of the Company and Mergeco shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
ARTICLE II
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Company shall be amended to read in its
entirety as the Certificate of Incorporation of Mergeco previously delivered to
the Company until thereafter amended as provided by the Delaware Corporation
Law; provided, however, that, at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read as follows: "The name of the corporation is Fina, Inc."
2
<PAGE> 7
2.2 By-laws. At the Effective Time, the By-laws of Mergeco
previously delivered to the Company shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by the Delaware Corporation
Law, the Certificate of Incorporation of the Surviving Corporation and such
By-laws.
2.3 Directors and Officers. The directors of Mergeco immediately
prior to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE
3.1 Conversion of Securities.
(a) Each Common Share issued and outstanding immediately
prior to the Effective Time (other than any Common Shares to be canceled
pursuant to Section 3.1(b) and any Dissenting Shares (as hereinafter defined)),
by virtue of the Merger and without any action on the part of the holder
thereof, shall be converted as of the Effective Time into the right to receive
(i) $60.00 in cash (the "Cash Consideration") and (ii) one warrant (a "Parent
Warrant") to purchase nine-tenths (0.9) of one American Depositary Share (a
"Parent ADS") (subject to adjustment from and after the date hereof as provided
in the Warrant Agreement), evidenced by an American Depositary Receipt (an
"ADR"), each Parent ADS representing one-tenth (0.1) of one ordinary voting
share, without nominal value, of Parent (each a "Parent Share"), with such
Parent Warrant to be substantially in the form annexed to the form of Warrant
Agreement (the "Warrant Agreement") attached hereto as Exhibit A and to have an
exercise price of $42.25 per Parent ADS (subject to adjustment as provided in
the Warrant Agreement) (the "Warrant Consideration"). The Cash Consideration
shall be payable without interest thereon, and the Cash Consideration and the
Warrant Consideration (collectively, the "Merger Consideration") shall be
payable to the holder of such Common Shares upon surrender of the certificate
representing such Common Shares.
(b) Each Common Share held in the treasury of the Company
and each Common Share issued and outstanding immediately prior to the Effective
Time which is then owned beneficially or of record by PDI, Parent or any direct
or indirect wholly-owned subsidiary of Parent shall, by virtue of the Merger and
without any action on the part of the holder thereof, be canceled and retired
and cease to exist, without any conversion thereof and no payment or
distribution shall be made with respect thereto.
(c) Subject to Section 3.4, at the Effective Time the
holders of certificates (the "Certificates") representing Common Shares shall
cease to have any rights as shareholders of the
3
<PAGE> 8
Company, except the right to receive the Merger Consideration specified in
Section 3.1(a) upon the surrender of the Certificates in accordance with Section
3.5 subject, however, to the Surviving Corporation's obligation to pay any
dividends with a record date prior to the Effective Time which have been
declared by the Company prior to the Effective Time and which remain unpaid at
the Effective Time.
3.2 Mergeco Common Shares. Each share of common stock, par value
$0.01 per share, of Mergeco issued and outstanding immediately prior to the
Effective Time (the "Mergeco Common Shares") shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
exchangeable for one fully paid and nonassessable common share, par value $0.01
per share ("Surviving Corporation Common Shares"), of the Surviving Corporation.
3.3 Stock Options. Immediately prior to the Effective Time, the
Company shall adopt resolutions and take all other actions as may be necessary
so that each outstanding Company Option (as defined in Section 4.2) whether or
not then exercisable, shall be canceled by the Company immediately prior to the
Effective Time, and each holder for each canceled Company Option (each, a
"Canceled Option") shall be entitled to receive, as soon as practicable after
the Effective Time, for each Canceled Option (i) an amount in cash equal to the
product of (a) the total number of Common Shares previously subject to the
Canceled Option and (b) the excess, if any, of the amount of Cash Consideration
over the exercise price per Common Share previously subject to such Canceled
Option, and (ii) a number of Parent Warrants equal to the total number of Common
Shares previously subject to such Canceled Option.
3.4 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, if the holder of any Common Share shall have complied with the
provisions of Section 262 of the Delaware Corporation Law as to appraisal rights
with regard to that Common Share (a "Dissenting Share"), no such Dissenting
Share shall be deemed converted into and to represent the right to receive
Merger Consideration hereunder; and the holders of Dissenting Shares, if any,
shall be entitled to payment, solely from the Surviving Corporation, of the
appraised value of such Dissenting Shares to the extent permitted by and in
accordance with the provisions of Section 262 of the Delaware Corporation Law;
provided, however, that (i) if any holder of Dissenting Shares shall, under the
circumstances permitted by the Delaware Corporation Law, subsequently deliver a
written withdrawal of his or her demand for appraisal of such Dissenting Shares,
or (ii) if any holder fails to establish his or her entitlement to rights to
payment as provided in such Section 262, or (iii) if neither any holder of
Dissenting Shares nor the Surviving Corporation has filed a petition demanding a
determination of the value of all Dissenting Shares within the time provided in
such Section 262, such holder or holders (as the case may be) shall forfeit such
right to payment for such Dissenting Shares pursuant to such Section 262, and
the Common Shares of such holder or holders shall be deemed to be converted as
of the Effective Time into the right to receive the Merger Consideration in
accordance with the terms hereof. The Company shall give Parent (i) prompt
notice of any written demands for appraisal of any Common Shares, attempted
withdrawals of such demands, and any other instruments served
4
<PAGE> 9
pursuant to applicable law received by the Company relating to stockholders'
rights of appraisal and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under the Delaware Corporation
Law. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
Common Shares, offer to settle any such demands or approve any withdrawal of any
such demands.
3.5 Exchange of Certificates.
(a) As soon as practicable after the execution and delivery
of this Agreement and, in any event, not less than five Trading Days prior to
the mailing to holders of Common Shares of the Registration Statement (as
defined in Section 8.4), Parent shall designate a bank or trust company (or such
other person or persons as shall be reasonably acceptable to Parent and the
Company) to act as exchange agent (the "Exchange Agent") in effecting the
exchange of Certificates that, prior to the Effective Time, represented Common
Shares (other than Certificates representing Common Shares to be canceled
pursuant to Section 3.1(b) or Dissenting Shares) for Merger Consideration
pursuant to Section 3.1(a) hereof. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each person who was, at the
Effective Time, a holder of record of Common Shares entitled to receive the
Merger Consideration pursuant to Section 3.1(a) a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of such Certificates
to the Exchange Agent) and instructions for use in effecting the surrender of
the Certificates pursuant to such letter of transmittal. Upon the surrender of
each such Certificate, together with such letter of transmittal duly completed
and validly executed in accordance with the instructions thereto, the Exchange
Agent shall pay the holder of such Certificate the Merger Consideration
multiplied by the number of Common Shares formerly represented by such
Certificate in exchange therefor, and such Certificate shall forthwith be
canceled. Until so surrendered and exchanged, each such Certificate (other than
Certificates representing Dissenting Shares or Common Shares to be canceled in
accordance with Section 3.1(b)) shall represent solely the right to receive
Merger Consideration. In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Parent, the posting by such person of a bond in customary form and amount as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration, without any interest or
dividends or other payments thereon, otherwise deliverable upon due surrender of
any such Certificate pursuant to this Agreement.
(b) As of or promptly after the Effective Time, Parent shall
deposit the Warrant Consideration and deposit or cause to be deposited the Cash
Consideration, in trust with the Exchange Agent, for the benefit of the holders
of Common Shares, for exchange in accordance with this Article III.
5
<PAGE> 10
(c) The cash portion of the aggregate Merger Consideration
shall be invested by the Exchange Agent, as directed by and for the benefit of
the Surviving Corporation, provided that such investments shall be limited to
direct obligations of the United States of America, obligations for which the
full faith and credit of the United States of America is pledged to provide for
the payment of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. ("S&P"), and certificates of
deposit issued by a commercial bank whose long-term debt obligations are rated
at least A2 by Moody's or at least A by S&P, in each case having a maturity not
in excess of one year.
(d) Promptly following the date which is six months after
the Effective Time, the Exchange Agent shall deliver to the Surviving
Corporation all cash, Common Shares, Parent Warrants, Certificates and other
documents in its possession relating to the transactions described in this
Agreement, and the Exchange Agent's duties shall terminate. Thereafter, each
holder of a Certificate may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws and, in the case of Dissenting Shares, subject to applicable law) receive
in exchange therefor the applicable Merger Consideration, without any interest
or dividends or other payments thereon.
(e) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of Common Shares. If,
after the Effective Time, Certificates formerly representing Common Shares are
presented to the Surviving Corporation or the Exchange Agent, they shall be
canceled and (subject to applicable abandoned property, escheat and similar laws
and, in the case of Dissenting Shares, subject to applicable law) exchanged for
Merger Consideration, as provided in this Article III.
(f) Subject to and without derogation of the obligations of
Parent under Section 8 of the Warrant Agreement, the Surviving Corporation and
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
Common Shares and/or Company Options such amounts that the Surviving Corporation
or the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the United States Internal Revenue Code of 1986, as
amended (the "Code"), the rules and regulations promulgated thereunder or any
provision of state, or local or foreign tax law. To the extent there is
withholding imposed on the Merger Consideration, the full amount required to be
withheld shall be satisfied from the Cash Consideration. To the extent that
amounts are so withheld by the Surviving Corporation or the Exchange Agent, such
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Common Shares and/or Company Options in respect of which
such deduction and withholding was made by the Surviving Corporation or the
Exchange Agent.
3.6 No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of Common Shares for any Merger Consideration in
respect of such shares (or dividends
6
<PAGE> 11
or distributions with respect thereto) delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Mergeco as follows:
4.1 Organization. Each of the Company and its subsidiaries (each,
a "Company Subsidiary") is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate its properties and to
conduct its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
would not, individually or in the aggregate, have, or reasonably be expected to
have, a material adverse effect on the business, financial condition,
properties, or results of operations of the Company and its subsidiaries taken
as a whole (a "Company Material Adverse Effect").
4.2 Capitalization. The authorized capital stock of the Company
consists of (i) 40,000,000 Common Shares divided into two classes of 38,000,000
Class A shares and 2,000,000 Class B shares, of which, on December 31, 1997,
there were 29,221,972 Class A shares issued and outstanding and 2,000,000 Class
B shares issued and outstanding and (ii) 4,000,000 shares of preferred stock,
par value $1.00 per share, of which, on December 31, 1997, there were no
preferred shares issued and outstanding. Except as set forth above, there are no
shares of capital stock of the Company authorized or, as of the date hereof,
issued or outstanding. All issued and outstanding Common Shares are duly
authorized, validly issued, fully paid and nonassessable. Each of the Company's
subsidiaries is listed in the Company's Annual Report on Form 10-K for the
fiscal year ending December 31, 1996 (the "1996 Form 10-K"), and except, as and
to the extent set forth in the 1996 Form 10-K, the Company owns directly or
indirectly all of the issued and outstanding capital stock of each of the
Company Subsidiaries, free and clear of all liens, pledges, security interests,
claims or other encumbrances. Except for options to purchase 32,400 Common
Shares issued pursuant to the Company's Employee Non-Qualified Stock Option Plan
(the "Plan"), there are not now, and, at the Effective Time there will not be,
any existing stock option or similar plans, or options, warrants, calls,
subscriptions, preemptive rights or other agreements or commitments whatsoever
obligating the Company or any Company Subsidiary to issue, transfer, deliver or
sell or cause to be issued, transferred, delivered or sold any additional shares
of capital stock of the Company or any Company Subsidiary, or obligating the
Company or any Company Subsidiary to grant, extend or enter into any such
agreement or commitment. (The options outstanding under the Plan are hereinafter
referred to as a "Company Option" and collectively, the "Company Options.")
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4.3 Authorization of this Agreement; Recommendation of Merger.
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized and approved by the Company's Board of Directors and, except
for the adoption of this Agreement by the stockholders of the Company, no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company, and subject only to
adoption hereof by its stockholders (and assuming the due authorization,
execution and delivery hereof by Parent and Mergeco), this Agreement constitutes
a valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
(b) The Board of Directors of the Company (at a meeting duly
noticed, called and held on February 17, 1998 at which a quorum was present) has
determined that the Merger is fair to and in the best interests of the
stockholders of the Company and has resolved to recommend approval of the Merger
and adoption of this Agreement by the stockholders of the Company.
(c) At a meeting duly noticed, called and held on February
17, 1998, the Special Committee unanimously determined that the Merger is fair
to and in the best interests of the Public Shareholders, and has recommended the
approval of this Agreement to the Board of Directors of the Company and the
adoption of this Agreement to the Public Shareholders.
4.4 Governmental Filings; No Conflicts.
(a) Except for (i) filings required by the applicable
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Securities Act of 1933, as amended (the "Securities Act"), (ii)
the filing and recordation of appropriate merger documents as required by the
DGCL and, if applicable, the laws of other states in which the Company is
qualified to do business, (iii) filings under securities or blue sky laws or
takeover statutes of the various states, (iv) the listing requirements of the
American Stock Exchange and (v) filings in connection with any applicable
transfer or other taxes in any applicable jurisdiction, no filing with, and no
permit, authorization, consent or approval of, any public body or authority is
necessary for the consummation by the Company of the transactions contemplated
by this Agreement, the failure to make or obtain which would, individually or in
the aggregate, have a Company Material Adverse Effect or materially adversely
affect the ability of the Company to perform its obligations hereunder or to
consummate the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof, will (i) conflict with or result in
any violation of any provision of
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the Certificate of Incorporation or By-Laws of the Company, (ii) result in a
violation or breach of, or constitute a default (or give rise to any right of
termination, cancellation or acceleration) under, any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which the
Company or any Company Subsidiary is a party or by which any of them or any or
their properties or assets is bound or (iii) assuming the truth of the
representations and warranties of Parent and Mergeco contained herein and their
compliance with all agreements contained herein and assuming the due making or
obtaining of all filings, permits, authorizations, consents and approvals
referred to in the preceding sentence, violate any statute, rule, regulation,
order, injunction, writ or decree of any public body or authority by which the
Company or any Company Subsidiary or any of their respective assets or
properties is bound, excluding from the foregoing clauses (ii) and (iii)
violations, breaches, rights or defaults which, would not individually or in the
aggregate, have a Company Material Adverse Effect or materially adversely affect
the Company's ability perform its obligations hereunder or to consummate the
transactions contemplated hereby.
4.5 Disclosure and Financial Statements; No Undisclosed
Liabilities.
(a) The Company has filed all forms, reports and documents
with the Securities and Exchange Commission (the "SEC") since January 1, 1995,
required to be filed by it pursuant to the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder (collectively, the "Company
Disclosure Statements"), all of which have complied in all material respects
with all applicable requirements of the Securities Act and the Exchange Act and
the rules and regulations promulgated thereunder. As of the date of this
Agreement, none of such Company Disclosure Statements, at the time filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) As of the date of this Agreement, the consolidated
balance sheets and the related statements of consolidated income, consolidated
cash flows and consolidated retained earnings (including the notes and schedules
thereto) of the Company and its consolidated subsidiaries contained or
incorporated by reference in the Company Disclosure Statements have been
prepared from, and are in accordance with, the books and records of the Company
and its consolidated subsidiaries, comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, and present fairly the consolidated financial
position of the Company and its consolidated subsidiaries as of their respective
dates, and the consolidated results of their operations and their cash flows for
the periods presented therein, in conformity with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis, except as
otherwise noted therein, and subject in the case of quarterly financial
statements to normal year-end audit adjustments, and except that the quarterly
financial statements do not contain all of the footnote disclosures required by
GAAP.
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(c) As of the date of this Agreement, there is no liability
of the Company or any Company Subsidiary of any nature, whether absolute,
accrued, contingent or otherwise, which, individually or in the aggregate, would
have a Company Material Adverse Effect other than as disclosed in the Company
Disclosure Statements.
4.6 Vote Required. The affirmative vote of the holders of a
majority of the outstanding Common Shares is the only vote of the holders of any
class or series of capital stock of the Company necessary to adopt the Merger
Agreement under the DGCL.
4.7 Opinion of Financial Advisor. The Special Committee has
received the opinion of Goldman, Sachs & Co. ("Goldman Sachs") dated February
17, 1998 that, as of the date of such opinion, the Merger Consideration to be
received by the Public Shareholders pursuant to this Agreement is fair to the
Public Shareholders from a financial point of view.
4.8 Finders and Investment Bankers. No broker, investment banker
or other person is entitled to any broker's or finder's fee or similar
compensation in connection with this Agreement or the Merger based upon
arrangements made by the Company, except for Goldman Sachs whose fees shall be
paid by the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING MERGECO
Each of Parent and Mergeco represents and warrants to the Company as
follows:
5.1 Organization. Mergeco is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Mergeco
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement. As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and, except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement or in furtherance of the transactions contemplated hereby, Mergeco has
not and will not have incurred, directly or indirectly, through any subsidiary
or affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
5.2 Capitalization. The authorized capital stock of Mergeco on
February 17, 1998 consisted of 1000 Mergeco Common Shares, of which there were
10 shares issued and outstanding, fully paid and nonassessable and owned by PDI
free and clear of all liens, claims and encumbrances. All of the Mergeco Common
Shares are entitled to vote on matters submitted to the stockholders of Mergeco.
Except as set forth above, there are no shares of capital stock of Mergeco
authorized, issued or outstanding. There are not now, and, at the Effective Time
there will not be, any existing stock option or similar plans or options,
warrants, calls, subscriptions, preemptive rights or other rights or other
agreements or commitments whatsoever obligating
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Mergeco or any of its subsidiaries to issue, transfer, deliver or sell or cause
to be issued, transferred, delivered or sold any additional shares of capital
stock of Mergeco, or obligating Mergeco to grant, extend or enter into any such
agreement or commitment.
5.3 Authorization of this Agreement. Mergeco has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of
Mergeco and by the shareholders of Mergeco, and no other corporate proceedings
on the part of Mergeco are necessary to authorize this Agreement or consummate
the transactions contemplated hereby (other than, with respect to the Merger,
the filing and recordation of appropriate merger documents as required by
Delaware Corporation Law). This Agreement has been duly and validly executed and
delivered by Mergeco and (assuming the due authorization, execution and delivery
hereof by the Company) constitutes a valid and binding agreement of Mergeco,
enforceable against Mergeco in accordance with its terms.
5.4 Governmental Filings; No Violations.
(a) Except for (i) filings required by the applicable
requirements of the Exchange Act and the Securities Act, (ii) the filing and
recordation of appropriate merger documents as required by the DGCL, (iii)
filings under securities or blue sky laws or takeover statutes of the various
states, and (iv) filings in connection with any applicable transfer or other
taxes in any applicable jurisdiction, no filing with, and no permit,
authorization, consent or approval of, any public body or authority is necessary
for the consummation by Mergeco of the transactions contemplated by this
Agreement, the failure to make or obtain which would, individually or in the
aggregate, materially adversely affect the ability of Mergeco to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, nor compliance by
Mergeco with any of the provisions hereof, will (i) conflict with or result in
any violation of any provision of the Certificate of Incorporation or By-Laws of
Mergeco, (ii) result in a violation or breach of, or constitute a default (or
give rise to any right of termination, cancellation or acceleration) under, any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which Mergeco is a party or by which it or any of its properties
or assets is bound or (iii) assuming the truth of the representations and
warranties of the Company contained herein and its compliance with all
agreements contained herein and assuming the due making or obtaining of all
filings, permits, authorizations, consents and approvals referred to in the
preceding sentence, violate any statute, rule, regulation, order, injunction,
writ or decree of any public body or authority by which Mergeco or any of its
respective assets or properties is bound, excluding from the foregoing clauses
(ii) and (iii) violations, breaches, rights or defaults which would not,
individually or in the aggregate, materially adversely affect Mergeco's ability
perform its obligations hereunder or to consummate the transactions contemplated
hereby.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING PDI
Each of Parent and PDI represents and warrants to the Company as
follows:
6.1 Organization. PDI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate its
properties and to conduct its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not, individually or in the aggregate, have, or reasonably
be executed to have, a material adverse effect on the business, financial
condition, properties or results of operations of Parent and its subsidiaries
taken as a whole (a "Parent Material Adverse Effect").
6.2 Capitalization. The authorized capital stock of PDI on
December 31, 1997 consisted of 250 shares of Class A Common Stock, par value
$1.00 and 750 shares of Class B Common Stock, par value $1.00 (collectively, the
"PDI Shares"), of which there were 1,000 shares issued and outstanding, fully
paid and nonassessable and owned by APHC free and clear of all liens, claims and
encumbrances. All of the PDI Shares are entitled to vote on matters submitted to
the shareholders of PDI. Except as set forth above, there are no shares of
capital stock of PDI authorized, issued or outstanding. There are not now, and,
at the Effective Time there will not be, any existing stock option or similar
plans or options, warrants, calls, subscriptions, preemptive rights or other
rights or other agreements or commitment whatsoever obligating PDI or any of its
subsidiaries to issue, transfer, deliver or sell or cause to be issued,
transferred, delivered or sold any additional shares of capital stock of PDI, or
obligating PDI to grant, extend or enter into any such agreement or commitment.
6.3 Authorization of this Agreement. PDI has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of PDI,
and no other corporate proceedings on the part of PDI are necessary to authorize
this Agreement or consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by PDI and (assuming
the due authorization, execution and delivery hereof by the Company) constitutes
a valid and binding agreement of PDI, enforceable against PDI in accordance with
its terms.
6.4 Governmental Filings; No Violations.
(a) Except for (i) filings required by the applicable
requirements of the Exchange Act and the Securities Act, (ii) the filing and
recordation of appropriate merger documents as required by the DGCL and, if
applicable, the laws of other states in which PDI is
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<PAGE> 17
qualified to do business, (iii) filings under securities or blue sky laws or
takeover statutes of the various states, and (iv) filings in connection with any
applicable transfer or other taxes in any applicable jurisdiction, no filing
with, and no permit, authorization, consent or approval of, any public body or
authority is necessary for the consummation by PDI of the transactions
contemplated by this Agreement, the failure to make or obtain which would,
individually or in the aggregate, materially adversely affect the ability of PDI
to perform its obligations hereunder or to consummate the transactions
contemplated hereby.
(b) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, nor compliance by PDI
with any of the provisions hereof, will (i) conflict with or result in any
violation of any provision of the Certificate of Incorporation or By-Laws of
PDI, (ii) result in a violation or breach of, or constitute a default (or give
rise to any right of termination, cancellation or acceleration) under, any note,
bond, mortgage, indenture, license, agreement or other instrument or obligation
to which PDI is a party or by which it or any or its properties or assets is
bound or (iii) assuming the truth of the representations and warranties of the
Company contained herein and its compliance with all agreements contained herein
and assuming the due making or obtaining of all filings, permits,
authorizations, consents and approvals referred to in the preceding sentence,
violate any statute, rule, regulation, order, injunction, writ or decree of any
public body or authority by which PDI or any of its respective assets or
properties is bound, excluding from the foregoing clauses (ii) and (iii)
violations, breaches, rights or defaults which, would not individually or in the
aggregate, materially adversely affect PDI's ability perform its obligations
hereunder or to consummate the transactions contemplated hereby.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
7.1 Organization. Parent is a societe anonyme/naamloze
vennootschap duly organized, validly existing and in good standing under the
laws of the Kingdom of Belgium and has all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as now being conducted, except where the failure to be so organized, existing
and in good standing or to have such power and authority would not, individually
or in the aggregate, have a Parent Material Adverse Effect.
7.2 Capitalization. The subscribed capital of Parent is
43,605,279,966 Belgian Francs. As of December 31, 1997, there were 23,420,432,
ordinary voting shares, without nominal value, issued and outstanding. All such
issued and outstanding Parent Shares are duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights (other than the preferential
subscription rights described in Parent's Registration Statement on Form 20-F
filed with the SEC on August 25, 1997 (File No. 1-14672)). Since such date, no
additional shares of capital stock of Parent have been issued. Parent has no
outstanding bonds, debentures, notes or
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<PAGE> 18
other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter. Except as contemplated by this
Agreement and except for warrants to purchase 150,000 Parent Shares issued to
Parent employees, there are not at the date of this Agreement any existing
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate Parent or any Parent Subsidiary
to issue, transfer, deliver or sell any shares of capital stock of Parent or any
Parent Subsidiary, or obligating Parent or any Parent Subsidiary to grant,
extend or enter into any such agreement or commitment.
7.3 Subsidiaries. Each of the outstanding shares of capital stock
of each Parent Subsidiary is duly authorized, validly issued, fully paid and
nonassessable. Each of the outstanding shares of capital stock of each Parent
Subsidiary is owned, directly or indirectly, by Parent free and clear of all
liens, pledges, security interests, claims or other encumbrances other than
liens imposed by local law which are not material.
7.4 Authorization of this Agreement. Parent has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of
Parent, and no other corporate proceedings on the part of Parent are necessary
to authorize this Agreement or consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent and,
constitutes a valid and binding agreement of Parent, enforceable against the
Parent in accordance with its terms.
7.5 Governmental Filings; No Violations.
(a) Except for (i) filings required by the applicable
requirements of the Exchange Act and the Securities Act, (ii) the filing and
recordation of appropriate merger documents as required by the DGCL, (iii)
filings under the securities or blue sky laws or takeover statutes of the
various states, (iv) filings required by the Belgian Commission on Banking and
Finance or the Brussels Stock Exchange, and (v) filings in connection with any
applicable transfer or other taxes in any applicable jurisdiction, no filing
with, and no permit, authorization, consent or approval of, any public body or
authority is necessary for the consummation by Parent of the transactions
contemplated by this Agreement, the failure to make or obtain which would,
individually or in the aggregate, have a Parent Material Adverse Effect or
materially adversely affect the ability of Parent to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
(b) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby nor compliance by
Parent with any of the provisions hereof will (i) conflict with or result in any
violation of any provision of the statuts/statuten of Parent (ii) result in a
violation or breach of, or constitute a default (or give rise
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<PAGE> 19
to any right of termination, cancellation or acceleration) under any note, bond,
mortgage, indenture, license, agreement or other obligation to which Parent is a
party, or by which it or any of its respective properties or assets is bound, or
(iii) assuming the truth of the representations and warranties of the Company
hereunder and its compliance with all agreements contained herein and assuming
the due making or obtaining of all filings, permits, authorizations, consents
and approvals referred to in the preceding sentence, violate any statute, rule,
regulation, order, injunction, writ or decree of any public body or authority by
which Parent, or any of its respective properties or assets is bound, excluding
from the foregoing clauses (ii) and (iii) violations, breaches, rights or
defaults which, would not, individually or in the aggregate, have a Parent
Material Adverse Effect or materially adversely affect the Parent's ability to
perform its obligations hereunder or to consummate the transactions contemplated
hereby.
7.6 Disclosure and Financial Statements; No Undisclosed
Liabilities.
(a) Since September 2, 1997, Parent has filed all forms,
reports and documents with the SEC required to be filed by it pursuant to the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder (collectively, the "Parent Disclosure Statements"), all of which have
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder. As of the date of this Agreement, none of such Parent Disclosure
Statements, at the time filed, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Prior to September 2, 1997, Parent was not
required to make filings under the Securities Act or Exchange Act, except for
filings pursuant to Rule 12g3-2(b) promulgated under the Exchange Act.
(b) As of the date of this Agreement, the consolidated
balance sheets and the related statements of consolidated income, consolidated
cash flows and consolidated retained earnings (including the notes and schedules
thereto) of Parent and its consolidated subsidiaries contained in the Parent's
Registration Statement filed on Form 20-F (File No. 1-14672), have been prepared
from, and are in accordance with, the books and records of Parent and its
consolidated subsidiaries, comply in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, and present fairly the consolidated financial position of
Parent and its consolidated subsidiaries as of their respective dates, and the
consolidated results of their operations and their cash flows for the periods
presented therein, in conformity with GAAP applied on a consistent basis, except
as otherwise noted therein.
(c) As of the date of this Agreement, there is no liability
of Parent or any subsidiary of Parent of any nature, whether absolute, accrued,
contingent or otherwise, which, individually or in the aggregate, would have a
Parent Material Adverse Effect, other than as disclosed in the Parent Disclosure
Statements.
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7.7 Financial Ability to Perform. Parent presently has, and at the
Effective Time will have, cash funds available sufficient to consummate the
transactions contemplated by this Agreement and to perform its obligations under
this Agreement.
7.8 Finders and Investment Bankers. No broker, investment banker
or other person is entitled to any broker's or finder's fee or similar
compensation in connection with this Agreement or the Merger based upon
arrangements made by Parent, except for Morgan, Stanley & Co., Incorporated
whose fees shall be paid by Parent.
7.9 No Foreign Withholding. There is no law, rule or regulation of
any taxing authority or other governmental entity outside the United States that
would require Parent, the Surviving Corporation or the Exchange Agent to deduct
from or withhold any portion of the Merger Consideration.
ARTICLE VIII
COVENANTS
8.1 Conduct of the Business of the Company.
(a) Prior to the Effective Time, unless Parent shall
otherwise consent in writing (it being understood that Parent must act in good
faith whenever it withholds such consent), the Company shall, and shall cause
the Company Subsidiaries to, carry on their respective businesses only in the
ordinary course and consistent with past practice and, to the extent consistent
therewith and with the specific terms of this Agreement, use all commercially
reasonable efforts to preserve intact their current business organizations, keep
available the services of their current employees and preserve their
relationships with customers, suppliers and others having business dealings with
them.
(b) During the period from the date of this Agreement to the
Effective Time, the Company shall not declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any combination
thereof) in respect of its capital stock, or agree to do any of the foregoing;
provided, however, that the Company shall declare and pay regular quarterly
dividends of $.80 per Common Share.
(c) Notwithstanding anything herein to the contrary, the
Board of Directors of the Company shall amend the Phantom Share Plan of the
Company (the "Phantom Plan") to (i) convert each Phantom Share (as defined in
the Phantom Plan) credited under the Phantom Plan to a cash amount equal to the
value of the Merger Consideration as of the Closing Date, as determined in good
faith by the Board of Directors of the Company, (ii) provide that future amounts
earned under the Phantom Plan shall be credited in cash instead of Phantom
Shares and (iii) provide that cash amounts credited to the accounts of
participants in the Phantom Plan shall be credited with a reasonable rate of
interest (as determined in good faith by the Board of Directors of the Company)
until distributed in accordance with the terms of the Phantom Plan.
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8.2 Activities of Mergeco. From the date of this Agreement to the
Effective Time, Mergeco will not conduct any business or engage in any
activities of any nature other than activities in connection with this Agreement
or the transactions contemplated hereby.
8.3 Stockholders' Meeting. The Company will take all action
necessary in accordance with applicable law and its Certificate of Incorporation
and By-laws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon the adoption of this Agreement. The Company shall take
all lawful action to solicit such adoption, including, without limitation,
timely mailing the Proxy Statement/Prospectus (as defined in Section 8.4). In
the Proxy Statement/Prospectus the Board of Directors of the Company and the
Special Committee shall recommend adoption of this Agreement, subject to their
respective fiduciary duties as advised by independent counsel. At such meeting,
Parent shall cause all Common Shares then owned by it and its subsidiaries
(including PDI) to be voted in favor of the adoption of this Agreement.
8.4 SEC Filings; Registration Statement.
(a) Parent, PDI, Mergeco and the Company shall timely file
with the SEC a Schedule 13E-3 (the "Schedule 13E-3") with respect to the Merger
and disseminate to Public Shareholders such information as is required by Rule
13e-3 under the Exchange Act.
(b) Parent and the Company shall cooperate and promptly
prepare and Parent shall file with the SEC as soon as practicable a Registration
Statement on Form F-4 (the "Registration Statement") under the Securities Act,
with respect to Parent Warrants issuable in the Merger and Parent Shares
represented by the Parent ADSs issuable upon exercise of the Parent Warrants, a
portion of which Registration Statement shall also serve as the proxy statement
with respect to the meeting of the stockholders of the Company in connection
with the Merger and the prospectus with respect to such Registration Statement
(the "Proxy Statement/Prospectus"). The Company shall file the Proxy
Statement/Prospectus with the SEC as soon as practicable.
(c) The respective parties will cause the Schedule 13E-3,
the Proxy Statement/Prospectus and the Registration Statement to comply as to
form in all material respects with the applicable provisions of the Securities
Act, the Exchange Act and the rules and regulations thereunder. Parent shall use
all reasonable efforts, and the Company will cooperate with Parent, to have the
Registration Statement declared effective by the SEC as promptly as practicable
and to keep the Registration Statement effective as long as is necessary to
consummate the Merger. Parent and the Company shall, as promptly as practicable,
provide copies to each other of any written comments received from the SEC with
respect to the Schedule 13E-3 and Registration Statement and advise each other
of any verbal comments with respect to the Schedule 13E-3 and Registration
Statement received from the SEC. Parent shall use its best efforts to obtain,
prior to the effective date of the Registration Statement, all
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necessary state securities law or "Blue Sky" permits or approvals required to
carry out the transactions contemplated by this Agreement and will pay all
expenses incident thereto. Parent agrees that the Proxy Statement/Prospectus and
each amendment or supplement thereto at the time of mailing thereof and at the
time of the meeting of stockholders of the Company, and the Schedule 13E-3 and
each amendment or supplement thereto, at the time it is filed and the
Registration Statement, at the time it becomes effective, will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statements
of a material fact or omission to state a material fact was made by Parent in
reliance upon and in conformity with written information concerning the Company
furnished to Parent by the Company specifically for inclusion in the Proxy
Statement/Prospectus, Schedule 13E-3 or Registration Statement. The Company
agrees that the written information concerning the Company provided by it
specifically for inclusion in the Proxy Statement/Prospectus and each amendment
or supplement thereto, at the time of mailing thereof and at the time of the
meeting of stockholders of the Company, and the written information concerning
the Company provided by the Company specifically for inclusion in the Schedule
13E-3 and each amendment or supplement thereto, at the time it is filed, and the
written information concerning the Company provided by it specifically for
inclusion in the Registration Statement, at the time it becomes effective, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. No
amendment or supplement to the Registration Statement will be made by Parent or
the Company without the approval of the other party. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective.
8.5 Filings, Other Action. Subject to the terms and conditions
herein provided, the Company and Parent shall: (a) use all reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Effective Time, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from
governmental or regulatory authorities of the United States, the several states
and foreign jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (ii)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations; and (b) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement.
8.6 Public Announcements. Parent and the Company will (i) consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Merger, this Agreement and the transactions
contemplated hereby and (ii) not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
by obligations pursuant to any listing agreement with any securities exchange.
18
<PAGE> 23
8.7 NYSE Listing. Parent agrees that it will use its best efforts
to cause the Parent Warrants and Parent ADSs issuable upon the exercise of the
Parent Warrants to be listed on the New York Stock Exchange ("NYSE"). To the
extent that the Parent Warrants or such Parent ADSs cannot be listed on the
NYSE, Parent shall use its best efforts to cause them to be listed on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ").
8.8 Warrant Agreement. Prior to the Effective Time, Parent shall
execute and deliver the Warrant Agreement and cause the Warrant Agent (as
defined in the Warrant Agreement) to execute and deliver the Warrant Agreement,
with no changes from the form attached as Exhibit A hereto that are adverse in
any material respect to the holders of Common Shares.
8.9 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
8.10 Directors' and Officers' Indemnification and Insurance.
(a) The By-laws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification and exculpation
than are set forth in Article 11 of the Certificate of Incorporation of the
Company, which provisions shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner that would
affect adversely the rights thereunder of individuals who at or prior to the
Effective Time were directors, officers, employees, fiduciaries or agents of the
Company, unless such modification shall be required by law.
(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company and each Subsidiary and each fiduciary and agent of each
such director and officer (collectively, the "Indemnified Parties") against all
costs and expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts paid in connection with any
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee, fiduciary or agent, whether
occurring before or after the Effective Time, until the expiration of the
statute of limitations relating thereto (and shall pay any expenses in advance
of the final disposition of such action or proceeding to each Indemnified Party
to the fullest extent permitted under Delaware Corporation Law, upon receipt
from the Indemnified Party to whom expenses are advanced of any undertaking to
repay such advances required under Delaware Corporation Law). In the event of
any such claim, action, suit, proceeding or
19
<PAGE> 24
investigation, (i) the Company or the Surviving Corporation, as the case may be,
shall pay the reasonable fees and expenses of counsel selected by the
Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation, promptly after statements therefor are
received and (ii) the Company and the Surviving Corporation shall cooperate in
the defense of any such matter; provided, however, that neither the Company nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); and
provided, further, that neither the Company nor the Surviving Corporation shall
be obligated pursuant to this Section 8.10 (b) to pay the fees and expenses of
more than one counsel (plus appropriate local counsel) for all Indemnified
Parties in any single action except (x) that the persons who served as directors
of the Company who were not designees of Parent shall be entitled to retain one
additional counsel (plus appropriate local counsel) to represent them at the
expense of the Company or the Surviving Corporation, and (y) to the extent that
two or more of such Indemnified Parties shall have conflicting interests in the
outcome of such action, in which case such additional counsel (including local
counsel) as may be required to avoid any such conflict or likely conflict may be
retained by the Indemnified Parties at the expense of the Company or the
Surviving Corporation; and provided further that, in the event that any claim
for indemnification is asserted or made within the period prior to the
expiration of the applicable statute of limitations, all rights to
indemnification in respect of such claim shall continue until the disposition of
such claim.
(c) The Surviving Corporation shall use its reasonable
efforts to maintain in effect for six years from the Effective Time, the current
directors' and officers' liability insurance policies maintained by the Company,
or policies of at least the same coverage containing terms and conditions which
are not materially less favorable, with respect to matters occurring prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 8.10(c) more than an
amount per year equal to 200% of current annual premiums paid by the Company for
such insurance. In the event that, but for the proviso to the immediately
preceding sentence, the Surviving Corporation would be required to expend more
than 200% of current annual premiums, the Surviving Corporation shall obtain the
maximum amount of such insurance obtainable by payment of annual premiums equal
to 200% of current annual premiums.
(d) In the event the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the Company
or the Surviving Corporation, as the case may be, or at Parent's option, Parent,
shall assume the obligations set forth in this Section 8.10.
8.11 Transfer Taxes. The Surviving Corporation shall pay any
transfer taxes (including any interest and penalties thereon and additions
thereto) payable in connection with
20
<PAGE> 25
the Merger and shall be responsible for the preparation and filing of any
required tax returns, declarations, reports, schedules, terms and information
returns with respect to such taxes.
8.12 DOL Application. On or before the Closing Date, the Company
shall submit an application (the "Application") to the United States Department
of Labor (the "DOL") for exemption from the application of Section 406(a)(2) and
407(a) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to the receipt, holding, exercise and disposition of the Warrant
Consideration by the Company's Capital Accumulation Plan (the "CAP"). The
parties hereto agree not to withdraw the Application prior to a final decision
thereon by the DOL and to use their best efforts to cause the Application to be
approved by the DOL. During the pendency of the Application, one or more
fiduciaries independent of the Company and its affiliates (which shall include
participants in the CAP with respect to their own account balances) shall make
all decisions regarding the holding, disposition or exercise of the Warrant
Consideration by the CAP based solely on the best interest of participants and
beneficiaries thereunder (which participants and beneficiaries shall be intended
third part beneficiaries of this Section 8.12).
ARTICLE IX
CLOSING CONDITIONS
9.1 Conditions to the Obligations of Each Party. The respective
obligations of each party hereto to effect the Merger shall be subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
conditions:
(a) this Agreement shall have been adopted by the
affirmative vote of the holders of the requisite number of Common Shares in
accordance with the Certificate of Incorporation and By-Laws of the Company and
the DGCL;
(b) no statute, rule, regulation, temporary, preliminary or
permanent order or injunction shall have been promulgated, enacted, entered,
enforced or deemed applicable to the Merger or performance under this Agreement,
by any state, federal or foreign government or governmental authority or court
or governmental agency of competent jurisdiction and remain in effect that
prohibits the consummation of the Merger; and
(c) the Registration Statement shall have become effective
and shall be effective at the Effective Time, and no stop order suspending
effectiveness of the Registration Statement shall have been issued, and no
action, suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing.
9.2 Conditions to the Obligations of Parent, PDI and Mergeco. The
obligations of Parent, PDI and Mergeco pursuant to this Agreement to consummate
the Merger are also subject to the satisfaction or waiver, at or prior to the
Effective Time, of the following additional conditions:
21
<PAGE> 26
(a) the representations and warranties of the Company
contained herein shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) as of the date of this Agreement and as of the
Closing with the same effect as though all such representations and warranties
had been made as of Closing, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct in all
respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of such
date, or (ii) as expressly contemplated by this Agreement, and Parent shall have
received from the Company's President and Chief Financial Officer an officers'
certificate to this effect; and
(b) each and all of the covenants and agreements of the
Company to be performed and complied with pursuant to this Agreement prior to
the Closing shall have been duly performed and complied with in all material
respects, and Parent shall have received from the Company's President and Chief
Financial Officer an officers' certificate to this effect.
9.3 Conditions to the Obligations of the Company. The obligation
of the Company pursuant to this Agreement to consummate the Merger is also
subject to the satisfaction or waiver, at or prior to the Effective Time, of the
following additional conditions:
(a) the representations and warranties of Parent, PDI and
Mergeco contained herein shall be true and correct in all respects (in the case
of any representation or warranty containing any materiality qualification) or
in all material respects (in the case of any representation or warranty without
any materiality qualification) as of the date of this Agreement and as of the
Closing with the same effect as though all such representations and warranties
had been made as of Closing, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct as of
such date, or (ii) as expressly contemplated by this Agreement, and the Company
shall have received from Parent, PDI and Mergeco officers' certificates to this
effect;
(b) each and all of the covenants and agreements of Parent
and Mergeco to be performed and complied with pursuant to this Agreement prior
to the Closing shall have been duly performed and complied with in all material
respects, and the Company shall have received from Parent and Mergeco officers'
certificates to this effect;
(c) the Warrant Agreement shall have been executed and
delivered;
(d) the Parent Warrants issuable to the Company's
stockholders as contemplated by this Agreement, and the Parent ADSs issuable
upon exercise of the Parent Warrants, shall have been approved for listing on
the NYSE or NASDAQ, subject to official notice of issuance; and
22
<PAGE> 27
(e) a Registration Statement on Form F-6 under the
Securities Act with respect to the Parent ADSs covered by the Parent Warrants
shall be effective, and no stop order suspending effectiveness of such
Registration Statement shall have been issued.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Board
of Directors of Parent and the Special Committee on behalf of the Board of
Directors of the Company;
(b) by either Parent or the Special Committee on behalf of
the Company if the Effective Time shall not have occurred on or before September
30, 1998 (the "Termination Date"); provided, however, that the right to
terminate this Agreement under this Section 10.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Effective Time to occur on or
before such date;
(c) by either Parent or the Special Committee on behalf of
the Company, if any court of competent jurisdiction in the United States or
other governmental agency of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger, and such order, decree, ruling or other action
shall have become final and non-appealable;
(d) by the Special Committee, on behalf of the Company, at
any time, if any of the conditions set forth in Section 9.3(a) or (b) shall not
be satisfied at such time and (i) such condition is incapable of being satisfied
prior to the Termination Date or (ii) Parent and the Parent Subsidiaries are not
using their best efforts to cure the breach resulting in such condition not
being satisfied in as timely a manner as practicable; or
(e) by Parent, at any time, if any of the conditions set
forth in Section 9.3(a) or (b) shall not be satisfied at such time and (i) such
condition is incapable of being satisfied prior to the Termination Date or (ii)
the Special Committee or the Company are not using their best efforts to cure
the breach resulting in such condition not being satisfied in as timely a manner
as practicable.
10.2 Procedure and Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company pursuant to
Section 10.1, written notice thereof shall forthwith be given to the other
parties hereto, and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto. Mergeco and PDI
agree
23
<PAGE> 28
that any termination by Parent shall be conclusively binding upon them, whether
given expressly on their behalf or not, and the Company shall have no further
obligation with respect to them. If this Agreement is terminated pursuant to
Section 10.1, this Agreement shall forthwith become void, and there shall be no
liability on the part of any party hereto, except as set forth in Section 11.3.
Nothing herein shall relieve any party from liability for any breach hereof.
ARTICLE XI
MISCELLANEOUS
11.1 Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified or supplemented only by written agreement of
Parent, PDI, Mergeco and the Company at any time prior to the Effective Time
with respect to any of the terms contained herein; provided, that (i) after this
Agreement is adopted by the Company's stockholders pursuant to Section 8.3, no
such amendment or modification shall be made that reduces the amount or changes
the form of the Merger Consideration or otherwise materially and adversely
affects the rights of the Public Shareholders hereunder, without the further
approval of the holders of at least a majority of the outstanding Common Shares
and (ii) the approval of the Special Committee shall be required for any
amendment, modification or supplementing of this Agreement, any extension by the
Company of the time for the performance of any obligations or other acts of
Parent, PDI or Mergeco and any waiver of any of the Company's rights under this
Agreement.
11.2 Waiver of Compliance; Consents. Any failure of Parent, PDI or
Mergeco on the one hand, or the Company, on the other hand, to comply with any
obligation, covenant, agreement or condition herein may be waived by the Company
(subject to the approval of the Special Committee as set forth in Section
11.1(ii)) or Parent, respectively, only by a written instrument signed by the
party granting such waiver, but such waiver shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Any determination by
the Company as to the existence of any such failure on the part of Parent, PDI
or Mergeco shall be made by the Special Committee on behalf of the Company.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in Section 11.1(ii) and
this Section 11.2. Mergeco hereby agrees that any consent or waiver of
compliance given by Parent shall be conclusively binding upon it, whether given
expressly on its behalf or not.
11.3 Non-Survival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 10.1, as the case may be, except that (i) the agreements set forth in
Articles III and XI and Sections 8.9, 8.10 and 8.11 shall survive the Effective
Time indefinitely and (ii) the agreements set forth in Article XI and Section
10.2 shall survive the termination of this Agreement indefinitely.
24
<PAGE> 29
11.4 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (i) delivered personally or by
overnight courier, (ii) mailed by registered or certified mail, return receipt
requested, postage prepaid, or (iii) transmitted by telecopy, and in each case,
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice; provided that notices of a
change of address shall be effective only upon receipt thereto):
<TABLE>
<S> <C>
(a) if to Parent, PDI or Mergeco to
PetroFina S.A.
52 rue de l'Industrie
B-1040 Brussels, Belgium
Telecopy: 32-2-288-3610
Attention: Secretary General
with a required copy to:
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, D.C. 20037
Telecopy: 202-663-6363
Attention: Richard W. Cass
(b) if to the Company, to:
Fina, Inc.
8350 North Central Expressway
Dallas, Texas 75206
Telecopy: 214-750-2570
Attention: Cullen M. Godfrey
with a required copy to:
Special Committee of the Board of Directors of Fina, Inc.
c/o Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy: (212)474-3700
Attention: Allen Finkelson
</TABLE>
25
<PAGE> 30
Any notice so addressed shall be deemed to be given (x) three business days
after being mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid and (y) upon delivery, if transmitted by hand
delivery, overnight courier or telecopy.
11.5 Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of the
other parties. Except for Sections 3.3, 8.10 and 8.12, which are intended to be
for the benefit of the holders of Company Options, Indemnified Parties and the
participants and beneficiaries of the CAP, respectively, this Agreement is not
intended to confer upon any other person except the parties any rights or
remedies under or by reason of this Agreement.
11.6 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided, however, that the allocable share of each of Parent and the
Company for all expenses related to printing, filing and mailing the proxy
statement contained in the Registration Statement and all SEC and other
regulatory filing fees incurred in connection with the Schedule 13E-3 and the
Registration Statement shall be one-half.
11.7 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or equity.
11.8 Governing Law. This Agreement shall be governed by the laws of
the State of Delaware (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters, including but not
limited to matters of validity, construction, effect, performance and remedies.
11.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.10 Interpretation. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"person" shall mean and include an individual, a partnership, a joint venture, a
26
<PAGE> 31
corporation, a limited, liability company, a trust, an unincorporated
organization and a government or any department or agency thereof; (ii) the
terms "affiliate" and "associate" shall have the meanings set forth in Rule
12b-2 of the General Rules and Regulations promulgated under the Exchange Act;
and (iii) the term "subsidiary" of any specified corporation shall mean any
corporation of which the outstanding securities having ordinary voting power to
elect a majority of the board of directors are directly or indirectly owned by
such specified corporation.
11.11 Entire Agreement. This Agreement, including the schedules and
exhibits hereto, embodies the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein and supersedes all
prior agreements and the understandings between the parties with respect to such
subject matter.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
27
<PAGE> 32
IN WITNESS WHEREOF, Parent, PDI, Mergeco, and the Company have caused
this Agreement to be signed, by their respective duly authorized officers or
directly, as of the date first above written.
PETROFINA S.A.
By: /s/ Francois Cornelis
------------------------------------------
Name: Francois Cornelis
Title: Chief Executive Officer and Managing
Director
/s/ Michel-Marc Delcommune
------------------------------------------
Name: Michel-Marc Delcommune
Title: Executive Director, Corporate
Finance - Insurance
PETROFINA DELAWARE, INCORPORATED
By: /s/ Geoffroy Petit
------------------------------------------
Name: Geoffroy Petit
Title: Vice President, Administration and
Finance
NEW FINA, INC.
By: /s/ Francois Cornelis
------------------------------------------
Name: Francois Cornelis
Title: President
FINA, INC.
By: /s/ Ron W. Haddock
------------------------------------------
Name: Ron W. Haddock
Title: President and Chief Executive Officer
28
<PAGE> 33
INDEX OF DEFINED TERMS
(Not Part of This Agreement)
<TABLE>
<CAPTION>
Location of Definition
----------------------
<S> <C>
1996 Form 10-K..............................................................................7
ADR.........................................................................................3
APHC........................................................................................1
Application................................................................................21
Canceled Option.............................................................................4
CAP........................................................................................21
Cash Consideration..........................................................................3
Certificate of Merger.......................................................................2
Certificates................................................................................3
Closing.....................................................................................2
Closing Date................................................................................2
Code........................................................................................6
Common Shares...............................................................................1
Company.....................................................................................1
Company Disclosure Statements...............................................................9
Company Material Adverse Effect.............................................................7
Company Option..............................................................................7
Company Options.............................................................................7
Company Subsidiary..........................................................................7
Delaware Corporation Law....................................................................2
DGCL........................................................................................2
Dissenting Share............................................................................4
DOL........................................................................................21
Effective Time..............................................................................2
ERISA......................................................................................21
Exchange Act................................................................................8
Exchange Agent..............................................................................5
GAAP........................................................................................9
Goldman Sachs..............................................................................10
Mergeco.....................................................................................1
Mergeco Common Shares.......................................................................4
Merger......................................................................................1
Merger Consideration........................................................................3
Moody's.....................................................................................6
NASDAQ.....................................................................................19
NYSE.......................................................................................19
Parent......................................................................................1
</TABLE>
29
<PAGE> 34
<TABLE>
<S> <C>
Parent ADS..................................................................................3
Parent Disclosure Statements...............................................................15
Parent Material Adverse Effect.............................................................12
Parent Share................................................................................3
Parent Subsidiaries.........................................................................1
Parent Subsidiary...........................................................................1
Parent Warrant..............................................................................3
PDI.........................................................................................1
PDI Shares.................................................................................12
Phantom Plan...............................................................................16
Plan........................................................................................7
Proxy Statement/Prospectus.................................................................17
Public Shareholders.........................................................................1
Public Shares...............................................................................1
Registration Statement.....................................................................17
S&P.........................................................................................6
Schedule 13E-3.............................................................................17
SEC.........................................................................................9
Securities Act..............................................................................8
Special Committee...........................................................................1
Surviving Corporation.......................................................................2
Surviving Corporation Common Shares.........................................................4
Termination Date...........................................................................23
Warrant Agreement...........................................................................3
Warrant Consideration.......................................................................3
</TABLE>
30
<PAGE> 1
Exhibit 3a
PAGE 1
State of Delaware
OFFICE OF THE SECRETARY OF STATE
--------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "FINA, INC.", FILED IN THIS OFFICE ON THE SECOND DAY OF MAY, A.D.
1995, AT 8:30 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
/s/ EDWARD J. FREEL
[SEAL] -----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
0499225 8100 7493496
DATE:
950096264 05-03-95
<PAGE> 2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
FINA, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the majority
vote of its members, filed with the minutes of the board, adopted a resolution
proposing and declaring advisable the following amendment to the 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.
SECOND: That at a meeting and by majority vote of stockholders, the their
vote the stockholders have given consent to said amendment in accordance with
the pro visions of Section 242 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Sections 242 of the General Corporation Law of the
State of Delaware, including but not limited to, the giving of notice to
stockholders for the meeting with the amendment set forth in full.
<PAGE> 3
IN WITNESS WHEREOF, said FINA, Inc. has caused this certificate
to be signed by Cullen M. Godfrey, its Senior Vice President,
Secretary and General Counsel and attested by Linda Middleton, its
Assistant Secretary this 28th day of April, 1995.
FINA, Inc.
By: /s/ CULLEN M. GODFREY
---------------------------
Cullen M. Godfrey
Senior Vice President,
Secretary and General
Counsel
Attest:
BY: /s/ LINDA MIDDLETON
-----------------------------
Linda Middleton, Asst. Secretary
<PAGE> 4
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
American Petrofina, Incorporated, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, by the
majority vote of its members, filed with the minutes of the Board adopted a
resolution proposing and declaring advisable the following amendment to the
Certificate of Incorporation:
RESOLVED, That the name of the Company be changed from
American Petrofina, Incorporated, its present name, to FINA, Inc. and
that Article FIRST of the Company's Certificate of Incorporation be
amended to read as follows:
"FIRST: The name of the Corporation shall be FINA, Inc.
(hereinafter called the "Corporation")."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given majority written consent to said amendment in
accordance with the provisions of Section 228 of the General Corporation Law
of the State of Delaware and written notice has been given to stockholders as
required in such Section.
THIRD: That the aforesaid amendment was duly adopted in accordance
with applicable provisions of Sections 242 and 228 of the General Corporation
Law of the State of Delaware.
<PAGE> 5
IN WITNESS WHEREOF, said American Petrofina, Incorporated has caused
this certificate to be signed by Cullen M. Godfrey, its Vice President
Secretary and General Counsel, and attested by Linda Middleton, its
Assistant Secretary, this 17th day of April, 1991.
AMERICAN PETROFINA, INCORPORATED
By: ____/s/_____________________
Cullen M. Godfrey
Vice President, Secretary and
General Counsel
ATTEST:
By:__________/s/_______________________
Linda Middleton, Assistant Secretary
<PAGE> 6
COMPOSITE CERTIFICATE OF INCORPORATION
OF
AMERICAN PETROFINA, INCORPORATED
as of
OCTOBER 15, 1987
WE, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, being Title 8, Chapter 1 of the
Delaware Code of 1953 effective February 12, 1953 as amended and supplemented,
do hereby certify as follows:
FIRST: The name of the corporation shall be American Petrofina,
Incorporated (hereinafter called the "Corporation").
SECOND: The principal office of the Corporation in the State of
Delaware is to be located in the City of Dover, County of Kent. The agent
in charge thereof is the United States Corporation Company, whose address is
No. 129 South State Street, in said city.
THIRD: The nature of the business of the Corporation and the objects
and purposes proposed to be transacted, promoted and carried on are to do
any or all of the things herein mentioned, as fully and to the same extent as
natural persons might or could do and in any part of the world:
(a) To carry out all phases of the business of drilling,
boring and exploring for, producing, manufacturing, treating,
refining, liquefying, or otherwise preparing for market, transporting,
marketing, dealing in, buying and selling, storing, or otherwise
disposing of oil of any and all kinds
<PAGE> 7
and grades, natural or artificial gas of any and all forms,
gasoline, carbon and hydrocarbon products, ammonia, sulphur, asphalt,
bitumen and bituminous substances of all kinds, chemicals,
petrochemicals, fertilizers, and any and all other minerals, mineral
substances, metals, ores of every kinds, drugs, pharmaceuticals, and
the elements, constituents, products, by-products, mixtures,
combinations, compounds derivatives and blends thereof;
(b) To obtain by contract or concession, purchase, or
otherwise acquire, own, use, develop, explore, operate, lease
mortgage, create liens upon, deal and trade in, sell, lease or
otherwise dispose of any and all lands, real property, mining claims,
mineral rights, gas and oil wells, leases, concessions, licenses,
royalty interests, grants, rights of way, land patents, franchises,
deposits, water rights, wells, mines, quarries, claims, easements,
tenements, hereditaments and interests of every description and nature
whatsoever;
(c) To engage in any kinds of manufacturing business and to
manufacture, buy, lease or otherwise acquire, own, operate, install,
service, transport, import, export, sell, lease or otherwise dispose
of and generally to trade and deal in and with any and all kinds of
raw materials, natural resources, manufactured articles and products,
equipment, machinery, parts, supplies, tools, and goods, merchandise
and tangible property of every kind, used or capable of being used for
any purpose whatever;
(d) To build, purchase, lease or otherwise acquire, own,
develop, operate, mortgage, create liens upon, deal in, sell, lease
or otherwise dispose of transportation facilities, including cars,
tank cars, pipe lines, transmission lines, distribution lines and
plants, pumping and compressing stations, terminals, aircraft, tankers
and other vessels or ships of any kind, and any and all related
facilities;
(e) To build, purchase, lease, or otherwise acquire, own,
develop, operate, mortgage, create liens upon, deal in, sell, lease
or otherwise dispose of any and all kinds of plants, factories,
buildings, refineries, warehouses, power plants, waterworks, tanks
and other storage facilities, machinery of all kinds, property, real
or personal, of every kind and description, docks, repair shops,
telegraph and telephone facilities, and any and all facilities,
connections, installations, things or property, real and personal and
of every kind and description,
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<PAGE> 8
connected with, incidental to, necessary, suitable, useful,
convenient or appertaining to any or all of the foregoing purposes
and powers of the Corporation or any of its businesses and
activities;
(f) To acquire and use, develop and operate and sell, assign,
grant licenses or territorial rights in respect to, or otherwise to
turn to account or dispose of any copyrights, trade-marks, trade
names, brands, patent rights, letters patent of the United States or
of any other country or government, inventions, improvements and
processes, whether used in connection with or secured under letters
patent or otherwise;
(g) To borrow money and to make and issue notes, bonds,
debentures, bills of exchange, obligations and evidences of
indebtedness of all kinds, whether secured by mortgage, pledge or
otherwise, without limit as to amount, and to secure the same by
mortgage, pledge or otherwise, and generally to make and perform
agreements and contracts of every kind and description;
(h) To own, subscribe for or cause to be subscribed for and
to purchase or otherwise acquire, hold for investment or otherwise and
to use, sell, assign, transfer, mortgage, pledge, exchange,
distribute or otherwise deal with or dispose of stocks, bonds,
covenants, mortgages, deeds of trust, obligations, evidences of
indebtedness, securities, notes, goodwill, rights, assets and
property of any and every kind of any corporation or corporations;
and to operate, manage and control such properties or any of them,
either in the name of such corporation or corporations or in the
name of the Corporation; to merge or consolidate with any corporation
in such manner as may be permitted by law;
(i) To aid in any manner any corporation whose stocks, bonds
or other obligations are held or in any manner guaranteed by the
Corporation, or in which the Corporation is in any way interested, and
to do any other acts or things for the preservation, protection,
improvement or enhancement of the value of any such stock, bonds, or
other obligations, and while owner of any such stock, bonds or other
obligations to exercise all the rights, powers and privileges of
ownership thereof, and to exercise any and all voting powers thereon,
to guarantee the payment of dividends upon any stock or the
principal or interest or both of any bonds or other obligations,
and the performance of any contracts;
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<PAGE> 9
(j) To purchase or otherwise acquire shares of its own
capital stock, bonds, notes, debentures or other obligations, and to
sell or otherwise dispose of or retire the same, provided that the
Corporation shall not use any of its funds or property for the
purchase of its own shares of capital stock when such use would cause
any impairment of the capital of the Corporation and provided further
that the shares of its own capital stock belonging to the Corporation
shall not be voted directly or indirectly;
(k) To do all and everything necessary, suitable and proper
for the accomplishment of any of the purposes or the attainment of
any of the objects or the furtherance of any of the powers
hereinbefore set forth, either alone or in association with other
corporations, firms, or individuals, and to do every other act or
acts, thing or things, incidental or appurtenant to or growing out of
or connected with the aforesaid business or powers or any part or
parts thereof, provided the same be not inconsistent with the laws
under which the Corporation is organized.
The business or purpose of the Corporation is from time to time to do
any one or more of the acts and things hereinabove set forth, and it shall
have power to conduct and carry on its said business, or any part thereof,
and to have one or more offices, and to exercise any or all of its
corporate powers and rights, in the State of Delaware and in the various
other states, territories, colonies and dependencies of the United States,
in the District of Columbia, and in all or any foreign countries.
The enumeration herein of the objects and purposes of the Corporation
shall be construed as owners as well as objects and purposes and shall not be
deemed to exclude by inference any powers, objects or purposes which the
Corporation is empowered to exercise, whether expressly by force of the laws
of the State of Delaware now or hereafter in effect or implied by the
reasonable construction of the said laws.
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<PAGE> 10
FOURTH: 1. The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is TWENTY-FOUR
MILLION (24,000,000) 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 TWENTY MILLION (20,000,000) shares shall be shares of
common stock of the par value of $1.00 per shares (hereinafter called "Common
Stock") which shall be divided into two classes as follows:
(a) NINETEEN MILLION (19,000,000) shares of Class A Common
Stock, and
(b) ONE MILLION (1,000,000) shares of Class B Common Stock.
The following are the terms and provisions of each class of stock
which the Corporation shall have authority to issue:
SECTION A: Provisions relating to Preferred Stock:
(1) The Board of Directors is expressly authorized at any
time, and from time to time, to provide for the issuance of shares of
Preferred Stock in one or more series, with (subject to the provisions
hereof) such voting owners, full or limited but not to exceed one
vote per share, or without voting powers, and with such designations,
preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions
providing
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<PAGE> 11
for the issue thereof adopted by the Board of Directors, and
as are not stated and expressed in this Certificate of Incorporation,
or any amendment thereto, including (but without limiting the
generality of the foregoing) the following:
(a) The number of shares to constitute, and
designation of, such series.
(b) The dividend rate of such series, the conditions
and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the
dividends payable on any other class or classes or on any
other series of capital stock, and whether such dividends
shall be cumulative or noncumulative.
(c) Whether the shares of such series shall be
subject to redemption by the Corporation, and, if made subject
to such redemption, the times, prices and other terms and
conditions of such redemption (which may vary at different
redemption dates and may differ in the case of shares redeemed
through operation of any purchase, retirement or sinking fund
from the cause of shares otherwise redeemed).
(d) The terms and amount of any sinking fund provided
for the purchase or redemption of the shares of such series.
(e) Whether or not the shares of such series shall
be convertible into or exchangeable for shares
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<PAGE> 12
of any other class or classes or of any other series
of any class or classes of capital stock of the Corporation,
and, if provision be made for conversion or exchange, the
times, prices, rates, adjustments, and other terms and
conditions of such conversion or exchange.
(f) The extent, if any, to which the holders of the
shares of such series shall be entitled to vote as a class or
otherwise with respect to the election of directors or
otherwise; provided, however, that in no event shall any
holder of shares of any series of Preferred Stock be entitled
to more than one vote for each share of such Preferred Stock
held by him; and provided, further, that the voting rights of
the holders of the shares of such series shall in no event
affect the rights of the holders of the shares of Class B
Common Stock, voting as a class, to elect a certain number of
directors, as hereunder set forth.
(g) The restrictions, if any, on the issue or reissue
of shares of such series or of any additional shares of
Preferred Stock.
(h) The limitations and restrictions, if any, upon
the distribution of the assets of the Corporation (including
by means of dividends) and the rights of the holders of shares
of such series upon the dissolution of, or upon any
distribution of the
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assets of the Corporation.
(i) Such other preferences and relative,
participating, optional or other special rights, or
qualifications, limitations or restrictions thereof as shall
not be inconsistent with this Article FOURTH.
(2) Except as otherwise required by law and except for such
voting powers with respect to the election of directors or other
matters as may be stated in the resolutions of the Board of Directors
creating any series of Preferred Stock, the holders of any such series
shall have no voting power whatsoever.
SECTION B: Provisions relating to Common Stock:
(1) Except as otherwise provided in this Article FOURTH and
except as shares are designated as Class A Common stock or Class B
Common Stock as the case may be, each share of Class A Common Stock
and each share of Class B Common Stock shall be identical in all
respects, shall have the same powers, preferences and rights without
preference of any class or share over any other class or share, and
each holder of such shares shall be entitled at any stockholders'
meeting to one vote for each such share standing in his name on the
books of the Corporation.
(2) (a) Except to the extent otherwise provided in the last
sentence of paragraph 2(b) of this Article FOURTH, on any vote for the
election of directors the
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<PAGE> 14
holders of record of the issued and outstanding shares of
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 holders of record of the issued and
outstanding shares of Class A Common Stock (and any series of the
Preferred Stock entitled to vote for the election of directors) shall
be entitled, voting separately (or together with the Preferred Stock
entitled to vote) as a class, to elect the remaining directors to be
elected; provided, however, that this paragraph 2(a) shall not prevent
the holders of shares of Preferred Stock from being entitled, voting
separately as a class, to elect not more than two directors in case
dividends on the Preferred Stock shall be in default in an amount
equal to six full quarterly dividends payable thereon, so long as
after giving effect to the election of such two directors more than
one-half of the directors of the Corporation shall have been
elected by the holders of the shares of Class B Common Stock.
(b) Any director may be removed at any time, either with or
without cause, by the affirmative vote of the holders of record of a
majority of the issued and outstanding shares of the class or classes
of stock of the Corporation which elected such director or a
predecessor of such director. A special meeting of the stockholders
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<PAGE> 15
of any class or classes of stock of the Corporation for the
purpose of removing a director as provided in the first sentence of
this paragraph (b) shall be called by the President or Secretary upon
receipt of written request therefor signed by or on behalf of the
holders of record of a majority of the issued and outstanding shares
of the class or classes of stock of the Corporation which elected
such director or his predecessor or signed by a majority of the
directors who were elected by such class or classes. In the event of
such removal, the vacancy in the Board of Directors caused thereby may
be filled at such meeting by the affirmative vote of the holders of
record of the issued and outstanding shares of the class or classes of
stock of the Corporation the holders of which so removed such
director.
SECTION C. Provisions relating to all classes of Stock:
(1) No holder of any class of stock of the Corporation shall
have any preemptive right to purchase or to subscribe for any
additional issue of stock of the Corporation of any class, or any
warrants, options or rights to purchase any such stock, or any other
securities convertible into or exchangeable for, or carrying options
or warrants to purchase, stock of any class of the Corporation.
(2) In the event that any proposed amendment of this
Certificate of Incorporation would alter in any manner any
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of the provisions of this Article FOURTH, then, in addition
to any other approvals required by law, by the provisions of this
Certificate of Incorporation or by the resolutions of the Board of
Directors creating any series of Preferred Stock, the affirmative vote
of the holders of record of a majority of the issued and outstanding
shares of Class B Common stock, voting separately as a class, shall
be necessary to the adoption of such amendment.
FIFTH: The minimum amount of capital with which the Corporation will
commence business is $1,000.00.
SIXTH: The names and places of residence of each of the incorporators
are as follows:
Name Residence
Peter O. A. Solbert RFD 3, Huntington, New York
David A. Lindsay RFD 3, Huntington, New York
Franklin E. Parker, 3d Washington Corner Road
Mendham, New Jersey
SEVENTH: The existence of the Corporation is to be perpetual.
EIGHTH: The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatsoever.
NINTH: The number of directors of the Corporation shall be fixed from
time to time by, or in the manner provided in, the By-Laws, but in no case
shall the number be less than three. Vacancies (unless the vacancy be caused
by the removal
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of a director and such vacancy be filled as provided in paragraph 3(b)
of Article FOURTH) and newly created directorships resulting from any increase
in the authorized number of directors shall be filled by a majority of the
directors then in office, though less than a quorum, and the directors so
chosen shall hold office until the next annual election and until their
successors shall be elected and qualified. The election of directors of the
Corporation need not be by ballot unless the By-Laws so require.
In furtherance, and not in limitation of the powers conferred by law,
and in addition to the powers which may be conferred by the By-Laws, the Board
of Directors is expressly authorized: (a) To make, alter, amend or repeal the
By-Laws of the Corporation subject to the power of the stockholders of the
Corporation having voting power to alter, amend or repeal By-Laws made by the
Board of Directors.
(b) To remove at any time any officer elected or appointed by
the Board of Directors by such vote of the Board of Directors as may
be provided for in the By-Laws. Any other officer of the Corporation
may be removed at any time by a vote of the Board of Directors, or by
any committee or superior officer upon whom such power of removal may
be conferred by the By-Laws or by the vote of the Board of Directors.
(c) To determine whether any, and if any, what part, of the
annual net profits of the Corporation or of its net
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<PAGE> 18
assets in excess of its capital shall be declared in dividends
and paid to the stockholders, and to direct and determine the use and
disposition of any such annual net profits or net assets in excess of
capital.
(d) To fix from time to time the amount of the profits of the
Corporation to be reserved as working capital or for any other lawful
purpose.
(e) From time to time to determine whether and to what
extent, and at what time and places and under what conditions and
regulations the accounts and books of the Corporation (other than the
stock ledger), or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any
account or book or document of the Corporation, except as conferred
by statute or authorized by the Board of Directors or by a resolution
of the stockholders.
(f) To establish bonus, profit sharing, stock option,
retirement or other types of incentive or compensation plans for the
employees (including officers and directors) of the Corporation and to
fix the amount of the profits to be distributed or shared and to
determine the persons to participate in any such plans and the
amount of their respective participations.
(g) To authorize, and cause to be executed, mortgages and
liens upon the real and personal property of the Corporation.
TENTH: No contract or other transaction between the
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Corporation and any other corporation and no other act of the
Corporation with relation to any other corporation shall, in the absence of
fraud, in any way be invalidated or otherwise affected by the fact that any
one or more of the directors of the Corporation are pecuniarily or otherwise
interested in, or are directors or officers of, such other corporation. Any
director of the Corporation individually, or any firm or association of which
any director may be a member, may be a party to, or may be pecuniarily or
otherwise interested in, any contract or transaction of the Corporation,
provided that the fact that he individually or as a member of such firm or
association is such a party or so interested and the extent of such interest
shall be disclosed or shall have been known to a majority of the whole Board
of Directors present at any meeting of the Board of Directors at which action
upon any such contract or transaction shall be taken; and any director of the
Corporation who is also a director or officer of such other corporation or who
is such a party or so interested may be counted in determining the existence
of a quorum at any meeting of the Board of Directors which shall
authorize any such contract or transaction, with like force and effect
as if he were not such director or officer of such other corporation or not
so interested. Any director of the Corporation may vote upon any contract or
other transaction between the Corporation and any subsidiary or affiliated
corporation without regard to the fact that he is also a director of such
subsidiary or affiliated corporation.
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<PAGE> 20
ELEVENTH: The corporation shall indemnify its directors, officers,
agents, and employees to the fullest extent permitted under Delaware General
Corporation Law, as the same exists or may hereafter be amended.
The rights conferred on any person by the preceding sentence shall not
be exclusive of any other right which such person may have or hereafter
acquire under any statute, provision of this Certificate of Incorporation,
Bylaws, agreement, vote of stockholders or disinterested directors or
otherwise. The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust, other enterprise or
committee against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such
expense, liability or loss under the Delaware General Corporation Law.
No director of the Corporation shall be liable to the Corporation or
it stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the directors' duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which
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the director derived an improper personal benefit.
Neither the amendment nor repeal of this Article ELEVENTH, nor the
adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article ELEVENTH, shall eliminate or reduce the effect
of this Article ELEVENTH in respect of any matter occurring, or any cause of
action, suit or claim that, but for this Article ELEVENTH, would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent
provision.
TWELFTH: Each officer, director, or member of any committee
designated by the Board of Directors shall, in the performance of his duties,
be fully protected in relying in good faith upon the books of accounts or
reports made to the Corporation by any of its officials or by an independent
public accountant or by an appraiser selected with reasonable care by the
Board of Directors or by any such committee or in relying in good faith upon
other records of the Corporation.
THIRTEENTH: Both the stockholders and the directors of the
Corporation may, if the By-Laws so provide, hold their meeting and the
corporation may have an office or offices and may keep its books (except such
as are required by the laws of the State of Delaware to be kept in Delaware)
within or without the State of Delaware, at such place or places as may from
time to time be designated by the Board of Directors.
FOURTEENTH: The Corporation hereby reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation in the manner now or
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hereafter prescribed by the laws of the State of Delaware and all
rights conferred on stockholders therein are granted subject to this
reservation.
17
<PAGE> 1
Exhibit 3 b
AMENDED AND RESTATED AS OF APRIL 17, 1991
BYLAWS
OF
FINA, Inc.
(a Delaware Corporation)
--------
ARTICLE I.
Offices.
Section 1. Principal office in Delaware. The principal
registered office of Fina, Inc. (hereinafter called the
Corporation), in the State of Delaware shall be in the City of
Wilmington, and the registered agent in charge thereof shall
be The Corporation Trust Company.
Section 2. Other Offices. The Corporation may have a
principal or other office or offices at such other place or
places, either within or without the State of Delaware, as the
Board of Directors may from time to time determine or as shall
be necessary or appropriate for the conduct of the business of
the Corporation.
<PAGE> 2
ARTICLE II.
Meeting of Stockholders.
Section 1. Place of Meeting. All meetings of stock
holders shall be held at the head office of the Corporation
or at such place or places as may from time to time be fixed
by the Board of Directors, or as shall be specified in the
respective notices or waivers of notice thereof.
Section 2. Annual Meetings. The annual meeting of
stockholders for the election of directors and the transaction
of other business shall be held on the first Wednesday of
April immediately following the tenth day of such month in
each year. If this date shall fall upon a legal holiday, the
meeting shall be held on the next succeeding business day. At
each annual meeting, the stockholders entitled to vote shall
elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of the
meeting.
Section 3. Special Meetings. A special meeting of the
stockholders, or any class thereof entitled to vote, for any
purpose or purposes, may be called at any time by the Chairman
of the Board or the Vice Chairman of the Board or the
President or by order of the Board of Directors and shall be
called by the Chairman of the Board or the Vice Chairman of
the Board or the President or the Secretary upon the written
request of stockholders holding of record at least a majority
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of the outstanding shares of stock of the Corporation entitled
to vote at such meeting.
Section 4. Notice of Meetings. Except as otherwise
expressly required by law, notice of each meeting of stock holders,
whether annual or special, shall be given at least
ten days before the date on which the meeting is to be held,
to each stockholder of record entitled to vote thereat by
delivering a notice thereof to him personally, or by mailing
such notice in a postage prepaid envelope directed to him at
his address as it appears on the stock ledger of the
Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices intended for
him be directed to another address, in which case such notice
shall be directed to him at the address designated in such
request. Every notice of a special meeting of the
stockholders, besides stating the time and place of the
meeting, shall state briefly the objects or purposes thereof.
Notice of any meeting of stockholders shall not be required to
be given to any stockholder who shall attend such meeting in
person or by proxy; and, if any stockholder shall, in person
or by attorney thereunto authorized, in writing or by
telegraph, cable or wireless, waive notice of any meeting of
the stockholders, whether prior to or after such meeting,
notice thereof need not be given to him. Notice of any
adjourned meeting of the stockholders shall not be required
to be given, except where expressly required by law. No
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business other than that stated in the notice shall be
transacted at any meeting without unanimous consent of all the
stockholders entitled to vote thereat.
Section 5. List of Stockholders. It shall be the duty
of the Secretary or other officer of the Corporation who shall
have charge of the stock ledger to prepare and make, at least
ten days before every election of directors, a complete list
of the stockholders entitled to vote thereat, arranged in
alphabetical order. Such list shall be open for ten days as
specified in the Notice of the meeting, or, if not so
specified at the place where said election is to be held to
the examination of any stockholder and shall be produced and
kept at the time and place of the election during the whole
time thereof and subject to the inspection of any stockholder
who may be present. The original or a duplicate stock ledger
shall be the only evidence as to who are the stockholders
entitled to examine such list or the books of the Corporation
or to vote in person or by proxy at such election.
Section 6. Quorum. At each meeting of the stockholders,
the holders of record of 25% of the issued and outstanding
stock of the Corporation entitled to vote at
such meeting, present in person or by proxy, shall constitute
a quorum for the transaction of business, except where
otherwise provided by law, the Certificate of Incorporation
or these Bylaws. In the event that any business to be
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transacted at such meeting requires the affirmative vote of
any class of stock of the Corporation, 25% of the issued and
outstanding stock of such class, present in person or by
proxy, shall constitute a quorum for the transaction of such
business, except where otherwise provided by law, the
Certificate of Incorporation or these Bylaws. In the absence
of a quorum, any officer entitled to preside at, or act as
Secretary of, such meeting, shall have the power to adjourn
the meeting from time to time until a quorum shall be
constituted. At any such adjourned meeting at which a quorum
shall be present any business may be transacted which might
have been transacted at the meeting as originally called,
but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
Section 7. Voting. At every meeting of stockholders
each holder of record of the issued and outstanding stock of
the Corporation entitled to vote at such meeting shall be
entitled to one vote in person or by proxy for each such
share of stock entitled to vote held by such stockholder,
but no proxy shall be voted after three years from its date,
unless the proxy provides for a longer period and, except
where the transfer books of the Corporation shall have been
closed or a date shall have been fixed as the record date for
the determination of stockholders entitled to vote, no share
of stock shall be voted on at any election for directors which
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shall have been transferred on the books of the Corporation
within twenty days next preceding such election of directors.
Shares of its own capital stock belonging to the Corporation
directly or indirectly shall not be voted upon directly or
indirectly. At all meetings of the stockholders, quorum being
present, all matters shall be decided by a majority vote of
the shares of stock entitled to vote held by stockholders
present in person or by proxy, except as otherwise required
by the laws of the State of Delaware and except as otherwise
specified in the Certificate of Incorporation of the
Corporation. Unless demanded by a stockholder of the
Corporation present in person or by proxy at any meeting of
the stockholders and entitled to vote thereat or so directed
by the Chairman of the meeting or required by the laws of the
State of Delaware, the vote thereat on any question need not
be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or in his name by his
proxy, if there be such proxy, and shall state the number of
shares voted by him. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken in
connection with any corporate action by any provisions of the
laws of the State of Delaware or of the Certificate of
Incorporation or of these Bylaws, the meeting and vote of
stockholders may be dispensed with, if a majority of the stockholders
who would have been entitled to vote upon the action if such
6
<PAGE> 7
meeting were held, shall consent in writing to such corporate
action being taken.
ARTICLE III.
Board of Directors.
Section 1. General Powers. The property, business and
affairs of the Corporation shall be managed by the Board of
Directors.
Section 2. Number and Term of Office. The number of
directors shall be fixed from time to time by resolution of
the Board of Directors, but such number may not be more than
fifteen nor less than five. Directors need not be
stockholders. Each director shall hold office until the
annual meeting of the stockholders next following his election
and until his successor shall have been elected and shall
qualify, or until his death, resignation, or removal.
Section 3. Quorum and Manner of Acting. Unless
otherwise provided by law, the presence of one-third of the
whole Board of Directors, and in any case not less than three
directors, shall be necessary to constitute a quorum for the
transaction of business. In the absence of a quorum, a
majority of the directors present may adjourn the meeting from
time to time until a quorum shall be present. Notice of any
adjourned meeting need not be given. At all meetings of
directors, a quorum being present, all matters shall be
decided by the affirmative vote of a majority of the directors
present, except as otherwise required by the laws of the State
7
<PAGE> 8
of Delaware.
Section 4. Place of Meetings, etc. The Board of
Directors may hold its meetings and keep the books and records
of the Corporation, at such place or places within or without
the State of Delaware, as the Board may from time to time
determine.
Section 5. Annual Meeting. After each annual meeting
of stockholders for the election of directors, the Board of
Directors shall meet for the purpose of organization, the
election of officers and the transaction of other business.
Notice of such meeting shall be given as hereinafter provided
for special meetings of the Board of Directors in Article III,
Section 7.(b) of these Bylaws or in a consent and waiver of
notice thereof signed by all the directors.
Section 6. Regular Meetings. Regular meetings of the
Board of Directors may be held at such time and place, within
or without the State of Delaware, as shall from time to time
be determined by the Board of Directors. After there has been
such determination and notice thereof has been once given to
each member of the Board of Directors, regular meetings may
be held without further notice being given.
Section 7. Special Meetings; Notice. (a) Special
meetings of the Board of Directors shall be held whenever
called by the Chairman of the Board or the Vice Chairman of
the Board or the President or by a majority of the directors.
8
<PAGE> 9
(b) Notice of each such meeting shall be mailed to each
director, addressed to him at his residence or usual place of
business, at least ten days before the date on which the
meeting is to be held, or shall be sent to him at each place
by telegraph, cable, radio or wireless, or be delivered
personally or by telephone, not later than the day before the
day on which such meeting is to be held. Each such notice
shall state the time and place of the meeting but need not
state the purposes thereof except as otherwise required by
these Bylaws, the Certificate of Incorporation or the laws of
the State of Delaware. In lieu of the notice to be given as
set forth above, a waiver thereof in writing, signed by the
director or directors entitled to said notice, whether before
or after the time stated therein, shall be deemed equivalent
thereto for purposes of this Section 7. No notice to or
waiver by any director with respect to any Special Meeting
shall be required if such director shall be present at said
meeting.
Section 8. Resignation. Any director of the Corporation
may resign at any time by giving written notice to the
Chairman of the Board, or the Secretary of the Corporation.
The resignation of any director shall take effect upon receipt
of notice thereof or at such later time as shall be specified
in such notice; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make
it effective.
9
<PAGE> 10
Section 9. Removal. Any elected director may be removed
at any time as provided in the Certificate of Incorporation of
the Corporation.
Section 1O. Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized
number of directors shall be filled as provided in the
Certificate of Incorporation of the Corporation.
Section 11. Compensation of Directors. The directors
shall be entitled to be reimbursed for any expenses paid by
them on account of attendance at any regular or special
meeting of the Board of Directors, and the Board may provide
that the Corporation shall pay each director such compensation
for his services as such as may be fixed by resolution of the
Board. Nothing herein contained shall be construed to
preclude any director from serving the Corporation or any
subsidiary thereof in any other capacity and receiving
compensation therefor.
Section 12. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate
one or more committees, each committee to consist of two or
more directors of the Corporation, which to the extent
provided in the resolution or in the Bylaws, shall have and
may exercise such powers of the Board in the management of
the business and affairs of the Corporation (including the
power to authorize the seal of the Corporation to be affixed
10
<PAGE> 11
to all papers which may require it), as the Board may by
resolution determine and specify in the respective resolutions
appointing them, subject to such restrictions as may be
contained in the Certificate of Incorporation. Such
committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the
Board of Directors. The committees shall keep regular
minutes of their proceedings and report the same to the Board
when required. A majority of all the members of any such
committee may fix its rules of procedure, determine its action
and fix the time and place, whether within or without the
State of Delaware, of its meetings and specify what notice
thereof, if any, shall be given, unless the Board of
Directors shall otherwise by resolution provide. The Board of
Directors shall have power to change the membership of any
such committee at any time, to fill vacancies therein and to
discharge any such committee, either with or without cause, at
any time. Each member of any such committee shall be paid
such fee, if any, as shall be fixed by the Board of Directors
for each meeting of such committee which he shall attend and,
in addition, such transportation and other expenses actually
incurred by him in going to the meeting of such committee and
returning therefrom.
ARTICLE IV.
Officers.
Section 1. Number. The principal officers of the
11
<PAGE> 12
Corporation shall be a Chairman of the Board, a Vice Chairman,
a President, an Executive Vice President, one or more Vice
Presidents, a Chief Financial Officer, a Treasurer, and a
Secretary. The Corporation may also have, at the discretion
of the Board of Directors, such other officers as may be
appointed in accordance with the provisions of these Bylaws.
None of the officers, except the Chairman of the Board, the
Vice Chairman of the Board and the President, need be
directors. One person may hold the offices and perform the
duties of any two or more of said offices.
Section 2. Election and Term of Office. The principal
officers of the Corporation shall be chosen annually by the
Board of Directors at the annual meeting thereof. At such
meeting, or in the event of the resignation or removal of a
designated officer, the Board of Directors shall designate the
Chairman of the Board or the Vice Chairman of the Board or the
President as the Chief Executive Officer and they may
designate any other officer as the Chief Operating Officer.
In the event the Board of Directors shall fail to designate an
officer as Chief Operating Officer, such duties will be
performed by the Chief Executive Officer. Each such officer
shall hold office until his successor shall have been duly
chosen and shall qualify, or until his death or until he shall
resign or shall have been removed in the manner herein
12
<PAGE> 13
provided.
Section 3. Subordinate Officers. In addition to the
principal officers enumerated in Section 1 of this Article IV,
the Corporation may have one or more Assistant Treasurers,
one or more Assistant Secretaries and such other officers,
agents and employees as the Board of Directors may deem
necessary, each of whom shall hold office for such period,
have such authority, and perform such duties as the Board of
the Directors or the President may from time to time
determine. The Board of Directors may delegate to any
principal officer the power to appoint and to remove any such
subordinate officers, agents or employees.
Section 4. Removal. Any officer may be removed, either
with or without cause, at any time, by resolutions adopted by
the Board of Directors at any regular meeting of the Board or
at any special meeting of the Board called for the purpose at
which a quorum is present.
Section 5. Resignations. Any officer may resign at any
time by giving written notice to the Board of Directors or
to the President or to the Secretary. Any such resignation
shall take effect upon receipt of such notice or at any later
time specified therein; and, unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 6. Vacancies. A vacancy in any office may be
filled for the unexpired portion of the term in the manner
13
<PAGE> 14
prescribed in these Bylaws for election or appointment to such
office for such term.
Section 7. Chairman of the Board. The Chairman of the
Board shall have the power to call special meetings of the
stockholders and the Board of Directors of the Corporation for
any purpose or purposes, in accordance with the provisions of
the Certificate of Incorporation and these Bylaws. He shall
preside at all meetings of the stockholders and the Board of
Directors unless he shall be absent or incapacitated or
unless he shall designate the Vice Chairman to preside in his
stead at a particular meeting. The Chairman of the Board
shall possess the same power as the President to execute and
deliver all certificates, contracts and other instruments of
the Corporation. During the absence or disability of the
President, he shall exercise all the powers and discharge all
the duties of the President. He shall perform such other
duties which may be assigned to him by the Board of
Directors.
Section 8. Vice Chairman of the Board. The Vice
Chairman of the Board shall have the power to call Special
Meetings of the Stockholders and of the Board of Directors of
the Corporation for any purpose or purposes, in accordance
with the provisions of the Certificate of Incorporation and
these Bylaws. In the absence of the Chairman of the Board, he
shall preside at all meetings of the stockholders and the
14
<PAGE> 15
Board of Directors, unless he shall be absent or incapacitated
or unless he shall, at his option, designate the President
or, in the absence or incapacity of the President, another
officer of the Corporation to preside in his stead at a
particular meeting. The Vice Chairman shall possess the same
power as the President to execute and deliver all
certificates, contracts and other instruments of the
Corporation. During the absence or disability of the
Chairman of the Board and the President, he shall exercise all
the powers and discharge all the duties of the President. He
shall perform such other duties which may be assigned to him
by the Board of Directors.
Section 9. President. The President shall have general
supervision of the affairs of the Corporation, subject to the
control of the Board of Directors. In the event the offices
of Chairman of the Board and Vice Chairman of the Board are
vacant, or in the absence or incapacity of the Chairman of the
Board and the Vice Chairman of the Board, the President shall
assume all the duties, responsibilities, powers and authority
of the Chairman of the Board and the Vice Chairman of the
Board. He may enter into any contract or execute and deliver
any instrument in the name and on behalf of the Corporation,
except in cases in which the authority to enter into such
contract or execute and deliver such instrument, as the case
may be, shall be otherwise expressly delegated. In general,
he shall perform all duties and exercise all
15
<PAGE> 16
powers incident to the office of President, as herein defined,
and all such other duties as from time to time may be
assigned to him by the Board of Directors. He shall have the
power to call special meetings of the stockholders and of the
Board of Directors of the Corporation for any purpose or
purposes, in accordance with the provisions of the
Certificate of Incorporation and these Bylaws.
Section 10. Executive Vice President. The Executive
Vice President shall serve as chief executive assistant to the
President. The Executive Vice President shall assume such
duties and exercise such powers as the Board of Directors or
the President shall from time to time delegate to him, and
shall at all times actively supervise and carry out the
executive functions and activities devolving upon the office
of Executive Vice President, subject to the guidance,
direction and authority of, the President. In the absence or
incapacity of the Chairman of the Board, the Vice Chairman of
the Board and the President, he shall assume all duties,
responsibilities, powers and authority of the President. The
Executive Vice President may enter into any contract or
execute and deliver any instrument in the name and on behalf
of the Corporation, except in cases where the authority to
enter into such contract or execute and deliver such
instrument, as the case may be, shall be otherwise delegated.
Section 11. Vice Presidents. The Vice Presidents in
16
<PAGE> 17
the order of their seniority, unless otherwise determined by
the Board of Directors, shall, in the absence or disability of
the Chairman of the Board, the Vice Chairman of the Board,
the President, and the Executive Vice President, perform the
duties and exercise the powers of the Chairman of the Board,
the President and the Executive Vice President. Any Vice
President may enter into any contract or execute and deliver
any instrument in the name and on behalf of the Corporation,
except in cases where the authority to enter into such
contract or execute and deliver such instrument, as the case
may be, shall be otherwise delegated. They shall perform such
other duties and have such other powers as the President or
the Board of Directors may from time to time prescribe.
Section 12. Chief Financial Officer. The Chief
Financial Officer shall be responsible for the Company's
overall financial planning, supervising of the treasury
function, relations with banks and financial community, and
procuring financings for operations and acquisitions; and, in
general, shall perform such other duties as from time to time
may be assigned to him by the President or the Board of
Directors.
Section 13. Treasurer. The Treasurer shall report to
the Chief Financial Officer and shall have charge and custody
of, and be responsible for, all funds and securities of the
Corporation and shall deposit all such funds in the name of
the Corporation in such banks or other depositories as shall
17
<PAGE> 18
be selected by the Board of Directors. He shall exhibit at
all reasonable time his books of account and records to any
of the directors of the Corporation upon application during
business hours at the office of the Corporation where such
books and records shall be kept; when requested by the Board
of Directors, shall render a statement of the condition of the
finances of the Corporation at any meeting of the Board or at
the annual meeting of stockholders; shall receive, and give
receipt for, moneys due and payable to the Corporation from
any source whatsoever; and, in general, shall perform all
the duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the
President or the Board of Directors. The Treasurer shall
give such bond, if any, for the faithful discharge of his
duties as the Board of Directors may require.
Section 14. Secretary. The Secretary, if present, shall
act as secretary at all meetings of the Board of Directors and
of the stockholders and keep the minutes thereof in a book or
books to be provided for that purpose; shall see that all notices
required to be given by the Corporation are duly given and served;
shall have charge of the stock records of the Corporation; shall
see that all reports, statements and other documents required by
law are properly kept and filed; and in general, shall perform all
the duties incident to the office of Secretary and such other
18
<PAGE> 19
duties as from time to time may be assigned to him by the
President or the Board of Directors.
Section 15. Salaries. The salaries of the principal
officers shall be fixed from time to time by the Board of
Directors, and the salaries of any other officers may be
fixed by the President.
ARTICLE V.
Shares and Their Transfer.
Section 1. Certificate for Stock. Every stockholder
of the Corporation shall be entitled to a certificate or
certificates, to be in such form as the Board of Directors
shall prescribe, certifying the number and class of shares
of the capital stock of the Corporation owned by him. The
designations, preferences and relative, participating,
optional or other special rights of each class and the
qualifications, limitations or restrictions of such
preferences or rights shall be set forth in full or summarized
on the face or back of the certificate which the Corporation
shall issue to represent such class of stock.
Section 2. Stock Certificate Signature. The certi-
ficates for the respective classes of such stock shall be
numbered in the order in which they shall be issued and shall
be signed by the Chairman of the Board, the Vice Chairman of
the Board, the President, the Executive Vice President or any
Vice President and the Treasurer or an Assistant Treasurer, or
19
<PAGE> 20
the Secretary or an Assistant Secretary of the Corporation and
its seal shall be affixed thereto; provided, however, that,
where such certificate is signed (1) by a transfer agent or an
assistant transfer agent or (2) by a transfer clerk acting
on behalf of the Corporation and a registrar, if the Board of
Directors shall by resolution so authorize, the signature of
such Chairman of the Board, Vice Chairman of the Board,
President, Executive Vice President, Vice President,
Treasurer, Secretary, Assistant Treasurer or Assistant
Secretary and the seal of the Corporation may be facsimile.
In case any officer or officers of the Corporation who shall
have signed, or whose facsimile signature or signatures shall
have been used on, any such certificate or certificates shall
cease to be such officer or officers, whether by reason of
death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation,
such certificate or certificates may nevertheless be adopted
by the Corporation and be issued and delivered as though the
person or persons who signed such certificate or certificates,
or whose facsimile signature or signatures shall have been
affixed thereto, had not ceased to be such officer or
officers.
Section 3. Stock Ledger. A record shall be kept by the
Secretary, transfer agent or by any other officer, employee or
agent designated by the Board of Directors of the name of the
20
<PAGE> 21
person, firm, or corporation holding the stock represented by
such certificates, the number and class of shares represented
by such certificates, respectively, and the respective dates
thereof, and in case of cancellation, the respective dates of
cancellation.
Section 4. Cancellation. Every certificate surrendered
to the Corporation for exchange or transfer shall be canceled,
and no new certificate or certificates shall be issued in
exchange for any existing certificate until such existing
certificate shall have been canceled, except in cases provided
for in Section 7 of this Article V.
Section 5. Transfers of Stock. Transfers of shares of
the capital stock of the Corporation shall be made only on
the books of the Corporation by the registered holder thereof,
or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the Corporation,
or with a transfer clerk or a transfer agent appointed as in
Section 6 of this Article V; provided, and on surrender of
the certificate or certificates for such shares properly
endorsed and the payment of all taxes thereon. The person in
whose name shares of stock stand on the books of the
Corporation shall be deemed the owner thereof for all
purposes as regards the Corporation; provided, however, that
whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact, if known to the
Secretary of the Corporation, shall be so expressed in the
21
<PAGE> 22
entry of transfer.
Section 6. Regulations. The Board of Directors may make
such rules and regulations as it may deem expedient, not
inconsistent with the Certificate of Incorporation or these
Bylaws, concerning the issue, transfer and registration of
certificates for shares of the stock of the Corporation. It
may appoint, or authorize any principal officer or officers to
appoint, one or more transfer clerks or one or more transfer
agents and one or more registrars, and may require all certificates
of stock to bear the signature or signatures of any of them.
Section 7. Lost, Destroyed, or Mutilated Certificates.
As a condition of the issue of a new certificate of stock in
the place of any certificate theretofore issued alleged to
have been lost, stolen, mutilated or destroyed, the Board of
Directors, in its discretion, may require the owner of any
such certificate, or his legal representatives, to give the
Corporation a bond in such sum and in such form as it may
direct, to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss, theft,
mutilation or destruction of any such certificate or the
issuance of such new certificate. Proper and legal evidence
of such loss, theft, mutilation or destruction shall be
procured for the Board of Directors, if required. The Board
of Directors, in its discretion, may refuse to issue such
22
<PAGE> 23
new certificate, save upon the order of some court having
jurisdiction in such matters.
Section 8. Closing of Transfer Books. The Board of
Directors may, by resolution, direct that the stock transfer
books of the Corporation be closed for a period not exceeding
fifty days preceding the date of any meeting of the
stockholders, or the date for the payment of any dividend, or
the date for the allotment of any rights, or the date when
any change or conversion or exchange of capital stock of the
Corporation shall go into effect, or for a period not
exceeding fifty days in connection with obtaining the consent
of stockholders for any purpose. In lieu of such closing of
the stock transfer books, the Board may fix in advance a
date, not exceeding fifty days preceding the date of any
meeting of stockholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital
stock shall go into effect or a date in connection with
obtaining such consent, as a record date for the determination
of the stockholders entitled to notice of, and to vote
at, such meeting, and any adjournment thereof, or to receive
payment of any dividend, or to receive any such allotment of
rights, or to exercise the rights in respect of any such
change, conversion, or exchange of capital stock or to give
such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after
23
<PAGE> 24
any record date so fixed.
ARTICLE VI
Miscellaneous Provisions.
Section 1. Corporate Seal. The Board of Directors shall
provide a corporate seal, which shall be in the form of a circle
and shall bear the name of the Corporation and the words and
figures showing that it was incorporated in the State of Delaware
in the year 1956. The Secretary shall be the custodian of the seal.
The Board of Directors may authorize a duplicate seal to be kept
and used by any other officer.
Section 2. Fiscal Year. The fiscal year of the
Corporation shall end at the close of business on the 31st
day of December in each year.
Section 3. Voting of Stocks owned by the Corporation.
The Chairman of the Board or the Vice Chairman of the Board or
the President may authorize any person in behalf of the
Corporation to attend, vote and grant proxies to be used at
any meeting of stockholders of any corporation in which the
Corporation may hold stock.
Section 4. Dividends. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out
of funds legally available therefor, at any regular or special
meeting declare dividends upon the capital stock of the
24
<PAGE> 25
Corporation as and when they deem expedient. Before declaring
any dividend, there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the
directors from time to time in their discretion deem proper
for working capital or as a reserve fund to meet contingencies
or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the
Corporation.
ARTICLE VII.
Amendments.
The Bylaws of the Corporation may be altered, amended
or repealed either by the affirmative vote or a majority of
the stock issued and outstanding and entitled to vote in
respect thereof and represented in person or by proxy at any
annual or special meeting of the stockholders, provided that
notice of the proposal so to alter or repeal or to make such
Bylaws be included in the notice of such meeting, or by the
affirmative vote of a majority of the directors then in office
given at any regular or special meeting of the Board of
Directors, provided that notice of the proposal so to alter or
repeal or amend such Bylaws be included in the notice of any
special meeting of the Board of Directors. No change of the
time or place of the meeting for the election of directors
shall be made within sixty days next before the day on which
25
<PAGE> 26
such meeting is to be held and, in case of any change of such
time or place, notice thereof shall be given to each
stockholder in person or by letter mailed to his last known
post office address at least twenty days before the meeting
is held. Bylaws, whether made or altered by the stockholders
or by the Board of Directors, shall be subject to alteration
or repeal by the stockholders as in this Article VII above
provided.
ARTICLE VIII.
The Corporation elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware
entitled "Business Combinations with Interested Stockholders."
Anything in these Bylaws to the contrary notwithstanding, this
Article VIII shall not be subject to amendment by the Board
of Directors.
26
<PAGE> 1
EXHIBIT 10A
THRIFT AND EMPLOYEE STOCK OWNERSHIP PLAN
OF
AMERICAN PETROFINA, INCORPORATED
<PAGE> 2
THRIFT AND EMPLOYEE STOCK OWNERSHIP PLAN
OF
AMERICAN PETROFINA, INCORPORATED
TABLE OF CONTENTS
Page
----
PREAMBLE .......................................... 1
ARTICLE I DEFINITIONS AND CONSTRUCTION ............. 2
Section 1.1 Definitions ................. 2
Section 1.2 Participation ............... 11
ARTICLE II PARTICIPATION ............................ 11
Section 2.1 Participation ............... 11
ARTICLE III CONTRIBUTIONS AND ALLOCATIONS ............ 12
Section 3.1 Participant Elected
Contributions ............... 12
Section 3.2 Employer Matching
Contributions ............... 14
Section 3.3 Tax Credit
Contributions ............... 14
Section 3.4 Payment to Trustee .......... 14
Section 3.5 Crediting of Contribu-
tions and Forfeitures ....... 17
ARTICLE IV TRUST AND INVESTMENT PROVISIONS .......... 20
Section 4.1 Trust and Trustee .......... 20
Section 4.2 Investment of ESOP and
PAYSOP Accounts ............. 20
Section 4.3 Investment of Participant
Thrift, Participant
Deferred, Company Thrift
and Company Matching
Accounts .................... 20
Section 4.4 Purchases of Company and
PSA Stock and Government
Bonds ....................... 21
Section 4.5 Voting Rights ............... 23
ARTICLE V VESTING AND DISTRIBUTION EVENTS .......... 24
Section 5.1 Retirement or Disability .... 24
Section 5.2 Death ....................... 24
Section 5.3 Break in Service ............ 24
ARTICLE VI DISTRIBUTIONS AND FORFEITURES ............ 25
Section 6.1 Time and Form of
Distribution ................ 25
(i)
<PAGE> 3
Page
----
Section 6.2 Distribution of Retire-
ment, Disability and
Death Benefits .............. 26
Section 6.3 Withdrawals by Vested
Participants ................ 27
Section 6.4 Withdrawals by Partially
Vested Participants ......... 29
Section 6.5 Withdrawals by Nonvested
Participants ................ 31
Section 6.6 Break in Service
Distribution ................ 32
Section 6.7 Application of
Forfeitures ................. 33
Section 6.8 Distributions to Minors
and Persons Under
Legal Disability ............ 33
ARTICLE VII PLAN ADMINISTRATION ...................... 33
Section 7.1 Appointment to Committee .... 33
Section 7.2 Powers and Duties of the
Committee ................... 34
Section 7.3 Rules, Records and Reports .. 35
Section 7.4 Administration Expenses
and Taxes ................... 35
Section 7.5 Claims Procedure ............ 36
ARTICLE VIII AMENDMENT AND TERMINATION ................ 37
Section 8.1 Amendment ................... 37
Section 8.2 Termination ................. 38
ARTICLE IX MISCELLANEOUS GENERAL PROVISIONS ......... 38
Section 9.1 Spendthrift Provision ....... 38
Section 9.2 Maximum Annual Additional
Limitation .................. 38
Section 9.3 Limitations on
Responsibilities ............ 40
Section 9.4 Committee Indemnification ... 40
Section 9.5 Employment Noncontractual ... 41
Section 9.6 Merger or Consolidation ..... 41
Section 9.7 Employee Stock Ownership
Plan Merger Into Thrift
Plan ........................ 41
Section 9.8 Applicable Law .............. 42
(ii)
<PAGE> 4
THRIFT AND EMPLOYEE STOCK OWNERSHIP PLAN
OF
AMERICAN PETROFINA, INCORPORATED
THIS THRIFT AND EMPLOYEE STOCK OWNERSHIP PLAN, made and
executed at Dallas, Texas by the undersigned Employers.
WITNESSETH THAT:
WHEREAS, the Employers have heretofore adopted for the
benefit of their employees a qualified profit sharing plan
known as the Thrift Plan for Employees of American Petrofina,
Incorporated and Certain Subsidiaries (the "Thrift Plan") and a
qualified tax credit employee stock ownership plan known as the
Employee Stock Ownership Plan of American Petrofina,
Incorporated (the "Employee Stock Ownership Plan"); and
WHEREAS, the Employers now desire to continue said employee
benefits plans without interruption by consolidating the Thrift
Plan and the Employee Stock Ownership Plan into a single plan
providing participating employees with the major benefit
features of both Plans and adding thereto a cash or deferred
arrangement qualifying under the provisions of Section 401(k)
of the Internal Revenue Code:
NOW, THEREFORE, subject to the provisions of Section 9.7 of
this Plan and pursuant to the authority reserved to the
Employers pursuant to Section 16.1 of the Thrift Plan and
Section 12.1 of the Employee Stock Ownership Plan, the Thrift
Plan and the Employee Stock Ownership Plan are hereby amended
<PAGE> 5
and restated in their entirety to merge the Employee Stock
Ownership Plan into the Thrift Plan which, as so amended and
restated in its entirety, shall read as follows:
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
Section 1.1 Definitions. Unless the context clearly
indicates otherwise, when used in this Plan:
(a) "Affiliated Company" means (1) any corporation
or organization, other than an Employer, which is a member
of a controlled group of corporations (within the meaning
of Section 414(b) of the Code) or of an affiliated service
group (within the meaning of Section 414(m) of the Code)
with respect to which an Employer is also a member, (2) any
incorporated or unincorporated trade or business which
along with an Employer is under common control (within the
meaning of the regulations from time to time promulgated by
the Secretary of the Treasury pursuant to Section 414(c) of
the Code), and (3) any other incorporated or unincorporated
trade or business which is designated by the Board of
Directors of the Company as an Affiliated Company for the
purposes of the Plan; provided, however, that for the
purposes of Section 9.2 of the Plan, Section 414(b) and (c)
of the Code shall be applied as modified by Section 415(h)
of the Code.
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<PAGE> 6
(b) "Basic Compensation" means the base salary and
wages (determined without regard to any Basic Compensation
reduction agreement entered into pursuant to Section 3.1)
regularly payable to a Participant as part of his
Compensation after becoming a Participant in the Plan but
shall not include any employee bonus payments,
straight-time, overtime or premium overtime pay, severance
pay, callback pay, night-shift differential, Matching or
Tax Credit Contributions to this Plan or any prior plan,
automobile allowance, living allowance, premium paid on any
life insurance policy or other form of special remuneration.
(c) "Break In Service" means any Service
Computation Period during which an Employee fails to
complete more than 500 Hours of Service.
(d) "Code" means the Internal Revenue Code of
1954, as amended from time to time, or any successor
revenue code which may hereafter be adopted in lieu
thereof, and references herein to any specific provision of
the Code shall be deemed also to refer to the corresponding
provision of the Code as it may hereafter be so amended or
replaced.
(e) "Committee" means the Committee appointed by
the Board of directors of the Company to administer the
Plan on behalf of the Employers.
(f) "Company" means American Petrofina,
Incorporated.
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<PAGE> 7
(g) "Company Matching Account" means the account
established and maintained under the Plan by the Committee
to record a Participant's interest under this Plan
attributable to (1) Matching Contributions made by an
Employer to this Plan for such Participant and (2)
forfeitures applied pursuant to Section 6.7 to reduce the
Matching Contributions which would otherwise have been made
by an Employer for such Participant.
(h) "Company Thrift Account" means the account
established and maintained under the Plan by the Committee
to record a Participant's interest under this Plan
attributable to contributions made by an Employer to the
Thrift Plan for such Participant.
(i) "Company Stock" means the Class A Common Stock
of the Company.
(j) "Compensation" shall mean the amount of
compensation (within the meaning of Section 415(c) (3) of
the Code) payable to a Participant for personal services
rendered to an Employer.
(k) "Deferred Compensation Contribution" means a
contribution made by an Employer to this Plan on behalf of a
Participant pursuant to Section 3.1(b).
(l) "Employee" means any individual employed by an
Employer. Such term shall not include (1) lessees and
sublessees of service stations and their employees, (2)
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<PAGE> 8
commission agents and their employees, (3) distributors and
jobbers and their employees, (4) contractors and
subcontractors and their employees, or (5) any consultant
or other person who under the normal practice of an
Employer is not considered to be a regular employee.
(m) "Employee Stock Ownership Plan" means that
Employee Stock Ownership Plan of American Petrofina,
Incorporated as in effect prior to January 1, 1984.
(n) "Employer" shall include the Company and any
other incorporated or unincorporated trade or business which
may adopt this Plan with the consent of the Board of
Directors of the Company.
(o) "Employment Date" means the date an Employee
first performs an Hour of Service after December 31, 1975;
provided, however, that the Employment Date for any
Employee employed by or on authorized leave of absence from
an Employer or Affiliated Company on January 1, 1976 shall
be the later of (1) such Employee's most recent date of
commencing employment with an Employer or Affiliated
Company prior to January 1, 1976, or (2) such Employee's
most recent date prior to January 1, 1976 of making a
complete withdrawal under the Thrift Plan. If an Employee
incurs a Break in Service after December 31, 1975, his
Employment Date for the purposes of computing his
subsequent Years of Service under the Plan shall be the
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<PAGE> 9
date he first performs an Hour of Service following his
latest Break in Service.
(p) "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, or any
successor legislation which may hereafter be adopted in
lieu thereof, and references herein to any specific
provision of ERISA shall be deemed also to refer to the
corresponding provision of ERISA as it may hereafter be so
amended or replaced.
(q) "ESOP Account" means the account established
and maintained under this Plan by the Committee to record a
Participant's interest under this Plan attributable to
Company and Matching Employee Contributions made to the
Employee Stock Ownership Plan for or by such Participant.
(r) "Government Bonds" means such class or classes
of United States Government Bonds (including notes or
Series E or similar savings bonds) as the Committee shall
determine to be appropriate investments for the purposes of
the Plan.
(s) "Hour of Service" means a hour for which an
Employee is directly or indirectly compensated or entitled
to compensation (including back pay, regardless of
mitigation of damages) by an Employer for the performance
of duties for an Employer or for reasons (such as vacation,
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<PAGE> 10
sickness or disability) other than the performance of
duties for an Employer. An Employee's Hours of Service
shall be credited to the appropriate Service computation
Periods determined in accordance with the provisions of
Section 2530.200(b)-2b and (c) of the Department of Labor
Regulations, which are incorporated herein by this
reference. In determining Hours of Service for the
purposes of this Plan, periods of employment by an
Affiliated Company shall be deemed to be periods of
employment by an Employer. The foregoing provisions of
this definition to the contrary notwithstanding, each
Employee who is not a vocational trainee or crude oil
production pumper shall be credited with 190 Hours of
Service for each month during which such Employee would
otherwise be required to be credited with at least one Hour
of Service under the foregoing provisions of this
definition.
(t) "Matching Contribution" means a contribution
made by an Employer to this Plan for a Participant pursuant
to Section 3.2.
(u) "Net Profits" means an Employer's current
profits or accumulated earned surplus as determined under
generally accepted accounting principles and without regard
to whether such Employer has current or accumulated
earnings and profits for federal income tax purposes.
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<PAGE> 11
(v) "Nonvested Participant" means a Participant
under the age of sixty-five years who has completed less
than three Years of Service.
(w) "Partially Vested Participant" means a
Participant under the age of sixty-five years who has
completed at least three but less than five Years of
Service.
(x) "Participant" means an Employee who has become
a Participant in this Plan in accordance with Section 2.1
and whose Vested Interest under the Plan has not been fully
distributed.
(y) "Participant Deferred Account" means the
account established and maintained under this Plan by the
Committee to record a Participant's interest under this
Plan attributable to Deferred Compensation Contributions
made by an Employer to this Plan on behalf of such
Participant.
(z) "Participant Thrift Account" means the account
established and maintained under this Plan by the Committee
to record a Participant's interest under this Plan
attributable to (1) Thrift Contributions made by such
Participant to this Plan, (2) contributions made by such
Participant to the Employee Stock Ownership Plan which were
not Matching Employee Contributions thereunder, and (3)
contributions made by such Participant to the Thrift Plan.
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<PAGE> 12
(aa) "PAYSOP Account" means the account established
and maintained under this Plan by the Committee to record a
Participant's interest under this Plan attributable to Tax
Credit Contributions allocated to such Participant pursuant
to this Plan.
(bb) "Permanent Disability" means the total and
permanent incapacity of a Participant to perform the usual
duties of his employment with an Employer or Affiliated
Company as determined by the Committee. Such incapacity
shall be deemed to exist when certified by a physician who
is acceptable to the Committee.
(cc) "Plan" means this Thrift and Employee Stock
Ownership Plan to American Petrofina, Incorporated as
effective January 1, 1984, and as in effect from time to
time thereafter.
(dd) "Plan Year" means the calendar year.
(ee) "PSA Stock" means the common stock of
Petrofina, S.A., a corporation organized under the laws of
the Kingdom of Belgium.
(ff) "Retirement" means retirement under the
provisions of a pension or retirement plan of an Employer
or Affiliated Company on or after attaining the age of
fifty-five years.
(gg) "Service Computation Period" means the period
of twelve consecutive months commencing on an Employee's
Employment Date or any anniversary thereof.
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<PAGE> 13
(hh) "Tax Credit Contribution" means a contribution
made by an Employer pursuant to Section 3.3.
(ii) "Thrift Contribution" means a contribution
made by a Participant to this Plan pursuant to Section
3.1(a).
(jj) "Thrift Plan" means the Thrift Plan for
Employees of American Petrofina, Incorporated and Certain
Subsidiaries as in effect prior to January 1, 1984.
(kk) "Trust" means the trust fund established
pursuant to Section 4.1.
(ll) "Trustee" means the individual and/or
corporate trustee or trustees from time to time appointed
and acting as trustee or trustees of the Trust.
(mm) "Vested Interest" means the portion of an
Account under the Plan which is nonforfeitable at the
particular point in time in question.
(nn) "Vested Participant" means a Participant who
has either attained the age of sixty-five years or
completed at least five Years of Service.
(oo) "Year of Service" means a Service Computation
Period during which an Employee completes at least 1,000
Hours of Service; provided, however, that a Service
Computation Period during which an eligible Employee made
no contribution to this Plan or the Thrift Plan shall be
excluded in determining his Years of Service. An Employee
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<PAGE> 14
shall also be credited with Years of Service for periods of
employment with a corporation any portion of the business
of which is acquired by an Employer by merger or otherwise,
to the extent such credit shall be determined by the Board
of Directors of the Company in its discretion to be given
on a uniform basis to all employees of such corporation.
Section 1.2 Construction. The titles to the Articles and
the headings of the Sections in this Plan are placed herein for
convenience of reference only and in case of any conflict the
text of this instrument, rather than such titles or headings,
shall control. Whenever a noun or pronoun is used in this Plan
in plural form and there be only one person or entity within
the scope of the words so used, or in singular form and there
be more than one person or entity within the scope of the word
so used, such word or pronoun shall have a plural or singular
meaning as appropriate under the circumstance. Masculine
pronouns shall include their feminine counterparts and vice
versa.
ARTICLE II.
PARTICIPATION
Section 2.1 Participation. Each Employee who was
participating in the Thrift Plan or the Employee Stock
Ownership Plan on December 31, 1983 shall be come a Participant
in this Plan on January 1, 1984. Each other Employee shall
become a Participant of this Plan on the first day of any month
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<PAGE> 15
coinciding with or next following the earliest anniversary of
his Employment Date as of which he has completed a Year of
Service; provided, however, that unless the Board of Directors
of the Company shall otherwise provide on a basis uniformly
applicable to all Employees similarly situated, no Employee
shall become a Participant in this Plan if and so long as such
Employee is a member of a collective bargaining unit the
recognized representative of which has not agreed to
participation in the Plan by members of such unit. If an
Employee who is already a Participant becomes a member of a
collective bargaining unit the recognized representative of
which has not agreed to participation in the Plan by members of
such unit, such Participant shall remain a Participant in the
Plan except that, any provision of this Plan to the contrary
notwithstanding, no contribution to the Plan shall be made by,
for or on behalf of such Participant so long as he continues to
be a member of such unit.
ARTICLE III.
CONTRIBUTIONS AND ALLOCATIONS
Section 3.1 Participant Elected Contributions. Each
Participant may, if he wishes, elect:
(a) to make a Thrift Contribution to the Plan for
each pay period in an amount equal to 1%, 2%, 3%, 4% or 5%
of his Basic Compensation for that pay period, and
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<PAGE> 16
(b) to have his Employer make a Deferred Compensation
Contribution to the Plan for each pay period in an amount
equal to such whole percentage point of his Basic
Compensation as does not, when added to any Thrift
Contribution made by such Participant for that pay period,
exceed 10% of such Participant's Basic Compensation for
that pay period.
Thrift Contributions shall be made by uniform payroll
deductions which the Participant shall in writing authorize
his Employer to withhold from his Basic Compensation and
pay over to the Trustee. Deferred Compensation Contributions
shall be made by uniform payroll deductions pursuant to a
Basic Compensation reduction agreement between the Participant
and his Employer which authorizes the Employer to pay such
contribution to the Trustee on behalf of the Participant. A
Participant may change the applicable percentage of payroll
deductions as of any January 1, or as of any payday suspend
for a period of at least six months his election to make
Thrift Contributions or to have Deferred Compensation
Contributions made on his behalf, provided (1) that written
notice of such change or suspension is delivered to his
Employer at least thirty days prior to the effective date
thereof, and (2) that such a suspension may be made by a
Participant only once within any period of thirty-six months.
A Participant's elected contributions shall automatically
resume upon the expiration of his designated
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<PAGE> 17
suspension period. No retroactive contributions may be made by
or on behalf of a Participant.
Section 3.2 Employer Matching Contributions. For each
pay period an Employer shall, out of its Net Profits, make a
Matching Contribution to the Plan for each Participant in its
employ in an amount which, when added to any forfeiture amount
being credited to such Participant for that pay period, will
equal the lessor (1) 5% of such Participant's Basic
Compensation for that pay period, or (2) the total amount of
the Thrift and Deferred Compensation Contributions made by or
on behalf of such Participant for that pay period.
Section 3.3 Tax Credit Contributions. For each Plan Year
commencing after December 31, 1982, each Employer shall, out of
its Net Profits, make a Tax Credit Contribution to the Plan in
an amount equal to the following applicable percentage of the
aggregate Compensation for that Plan Year of all Participants
who were in the employ of such Employer on the last day of that
year, or whose employment with such Employer terminated during
that year by reason of death or by reason of retirement under
the normal or early retirement or disability benefit provisions
of a pension or retirement plan of an Employer or Affiliated
Company:
<TABLE>
<CAPTION>
For Plan Year Applicable Percentage
------------- ---------------------
<S> <C>
1983 0.50%
1984 0.50%
1985 0.75%
</TABLE>
-14-
<PAGE> 18
<TABLE>
<CAPTION>
For Plan Year Applicable Percentage
------------- ---------------------
<S> <C>
1986 0.75%
1987 0.75%
1988 or thereafter 0.00%
</TABLE>
The Tax Credit Contribution made to the Plan for a Plan Year
shall be allocated among the Participants who were in the
employ of an Employer on the last day of such year, or whose
employment with such Employer terminated during that year by
reasons of death or by reason of retirement under the normal or
early retirement or disability benefit provisions of a pension
or retirement plan of an Employer or Affiliated Company, in the
proportion that the Compensation received by each such
Participant during that year (disregarding any Compensation in
excess of the first $100,000) bears to the Compensation
received by all such Participants during that year
(disregarding any Compensation in excess of the first $100,000
for any Participant).
Section 3.4 Payment to Trustee. The Thrift and Deferred
Compensation Contributions made to the Plan for a pay period
ending within a particular month shall be paid to the Trustee
in cash no later than thirty days after the end of such month.
The Matching Contribution made to the Plan for a pay period
ending within a particular month may be made in cash or in the
form of Company Stock, or in any combination thereof, and shall
be paid or transferred to the Trustee no later than thirty days
after the end of such month. The Tax Credit Contribution to be
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<PAGE> 19
made to the Plan for a particular Plan Year may be made in cash
or in the form of Company Stock, or any combination thereof,
and shall be paid or transferred to the Trustee no later than
thirty days after the due date (including extensions thereof)
for the filing of the Employers' federal income tax return for
such year. The value of any Company Stock contributed to the
Plan as a Matching Contribution shall be the closing price of
such stock on the open market as of the date of contribution if
such stock was traded on the open market on such date, but if
such stock was not traded on the open market as of the date of
the contribution, then the value of the Company Stock shall be
the closing price of such stock on the open market as of the
date next preceding the date of the contribution that such
stock was traded on the open market. The value of any Company
Stock contributed to the Plan as a Tax Credit Contribution
shall be the average of the closing price of such stock, as
reported on the composite tape for securities listed on the
American Stock Exchange, Inc., for the twenty consecutive
trading days immediately preceding the date on which such stock
is contributed to the Plan. If any Employer is prevented from
making a contribution which it would otherwise have made under
this Plan by reason of having no Net Profits or because such
Net Profits are less than the contribution which it would
otherwise have made, than so much of the contribution which
such Employer was so prevented from making shall be made for
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<PAGE> 20
the benefit of the Participants in the employ of such Employer
by the other Employers to the extent of their Net Profits in
such proportions as such other Employers may determine.
Section 3.5 Crediting of Contributions and Forfeitures.
The Committee shall establish and maintain a Participant Thrift
Account, a Company Thrift Account, a Participant Deferred
Account, a Company Matching Account, an ESOP Account and a
PAYSOP Account for each Participant. All Thrift Contributions
made by a Participant pursuant to Section 3.1(a), all Company
Stock and other amounts attributable to contributions made by
such Participant to the Thrift Plan, and all Company Stock and
other amounts attributable to contributions made by such
Participant to the Employee Stock Ownership Plan which were not
Matching Employee Contributions thereunder, shall be allocated
to such Participant's Participant Thrift Account under this
Plan. All Company Stock and other amounts attributable to
Matching Contributions made by an Employer for a Participant
pursuant to Section 3.2, and all forfeitures applied pursuant
to Section 6.7 to reduce the Matching Contributions which would
otherwise have been made by an Employer for such Participant,
shall be credited to such Participant's Company Matching
Account under this Plan. All Company Stock, Company Class B
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<PAGE> 21
Common Stock and other amounts attributable to contributions
made by an Employer to the Employee Stock Ownership Plan for a
Participant, and all Company Stock, Company Class B Common
Stock and other amounts attributable to contributions made by a
Participant to the Employee Stock Ownership Plan which were
Matching Employee Contributions thereunder, shall be credited
to such Participant's ESOP Account under this Plan. All Tax
Credit Contributions allocated to a Participant pursuant to
Section 3.3 shall be credited to such Participant's PAYSOP
Account under this Plan. All Deferred Compensation
Contributions made by an Employer on behalf of a Participant
pursuant to Section 3.1(b) shall be credited to such
Participant's Participant Deferred Account; provided, however,
that if for any Plan Year commencing after December 31, 1983,
the actual deferral percentage for the highest paid one-third
of all Employees eligible to elect to have their Employer make
a Deferred Compensation Contribution to the Plan for them for
that year fails to satisfy one of the following tests:
(a) the actual deferral percentage for said highest
paid one-third of such Employees is not more than the
actual deferral percentage for all other such Employees
multiplied by 1.5, or
(b) the excess of the actual deferral percentage for
said highest paid one-third of all such Employees over the
actual deferral percentage for all other such Employees is
-18-
<PAGE> 22
not more than three percentage points, and the actual
deferral percentage for said highest paid one-third of
such Employees is not more than the actual deferral
percentage for all other such Employees multiplied by 2.5,
then the 10% maximum percentage of Basic Compensation otherwise
permitted to be credited to the Participant Deferred Accounts
of said highest paid one-third of such Employees shall be
reduced in increments of one-half of one percent until the
actual deferral percentage for said highest paid one-third of
such Employees satisfies one of said tests. For the purposes
of this Section, the term "actual deferral percentage" for a
specified group of Employees for a Plan Year means the average
of the ratios (calculated separately for each Employee in such
group) of (1) the sum of the amounts of the Deferred
Compensation Contribution, the Tax Credit Contribution and the
vested portion of the Matching Contributions (determined as of
the last day of the Plan Year) made to the Plan for or on
behalf of each such Employee for that year, to (2) the amount
of such Employee's Compensation for that year. Any Deferred
Compensation Contribution made by an Employer on behalf of a
Participant pursuant to Section 3.1(b) which cannot be credited
to the Participant Deferred Account of such Participant because
of the limitation contained in this Section shall be credited
to such Participant's Participant Thrift Account.
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<PAGE> 23
ARTICLE IV.
TRUST AND INVESTMENT PROVISIONS
Section 4.1 Trust and Trustee. All of the contributions
and other amounts paid to the Trustee pursuant to this Plan,
together with the income therefrom and the increments thereof,
shall be held in trust by the Trustee under the terms and
provisions of the separate trust agreement between InterFirst
Bank Dallas, N.A., as Trustee, and the Employers, a copy of
which is attached hereto and incorporated herein by this
reference for all purposes, establishing a trust fund for the
exclusive benefit of the Participants and their beneficiaries.
Section 4.2 Investment of ESOP and PAYSOP Accounts. All
Tax Credit Contributions credited to a Participant's PAYSOP
Account which are paid to the Trustee in cash shall be used by
the Trustee within thirty days of receipt of purchase Company
Stock for such Account. All cash dividends, stock dividends,
stock splits and other amounts received by the Trustee with
respect to the Company Stock or other property held for an ESOP
or PAYSOP Account shall be credited to (and, if cash or
property other than Company Stock, used as soon as practicable
to purchase Company Stock for) such Account.
Section 4.3 Investment of Participant Thrift, Participant
Deferred, Company Thrift and Company Matching Accounts. Upon
becoming a Participant in the Plan each Participant shall
direct, on a form prescribed by and filed with the Committee,
that:
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<PAGE> 24
(a) The contributions and other amounts credited to his Participant
Thrift and Participant Deferred Accounts be invested, in percentage
multiples authorized by the Committee, in Company Stock, PSA Stock and/or
Government Bonds; and
(b) the contributions and other amounts credited to his Company
Thrift and Company Matching Accounts be invested, in percentage multiples
authorized by the Committee, in Company Stock and/or PSA Stock.
If a Participant fails to give such investment direction,
all contributions and other amounts credited to his Participant
Thrift and Participant Deferred Accounts shall be invested in
Government Bonds, and all contributions and other amounts
credited to his Company Thrift and Company Matching Accounts
shall be invested in Company Stock. A Participant may change
his investment direction with respect to future contributions
or redirect the investment of one or more of said four Account
balances on any January 1, provided that written notice of such
change is delivered to the Committee at least thirty days prior
to the January 1 as of which such change is to become
effective. All cash dividends, stock dividends, stock splits,
interest and other amounts received by the Trustee with respect
to a particular type of security held for a Participant Thrift,
Participant Deferred, Company Thrift or Company Matching
Account shall be credited to (and, if cash or property other
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<PAGE> 25
than the security from which it was derived, used as soon as
practicable to purchase said security for) such Account.
Section 4.4 Purchases of Company and PSA Stock and
Government Bonds. Company Stock may be purchased by the
Trustee in the open market or from the Company. If Company
Stock is purchased from the Company, the price of such Company
Stock shall be the closing price of Company Stock on the open
market as of the date of the purchase if such stock was traded
on the open market on such date, or if such stock was not
traded on the open market as of the date of the purchase, then
the price of such Company Stock shall be the closing price of
Company on the open market as of the date next preceding the
date of the purchase that such stock was traded on the open
market. PSA Stock shall be purchased by the Trustee in the
open market. Investments in Government Bonds shall be made
subject to such rules and regulations as may from time to time
be established by the Committee. Any cash in the hands of the
Trustee at any time and not invested may be held by the Trustee
for the Accounts of the Participants to whom it is attributable
without obligation to credit interest thereon. The Trustee
shall add to the cost of securities purchased any brokerage
commissions, transfer taxes and other charges or expenses
incident thereto, or deduct from the gross proceeds from the
sale of securities, any such charges incident thereto. The
cost to a Participant's Account of securities purchased shall
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<PAGE> 26
be the average cost of all securities of the particular issue
purchased by the Trustee during the calendar month in which the
securities shall have been purchased for Participants'
Accounts. In case of the redemption of any nontransferrable
Government Bond or on the maturity thereof, the Participant for
whose Account such Government Bond was purchased shall take
such steps as the Trustee may prescribe in order to effect the
redemption or collection thereof by the Trustee.
Section 4.5 Voting Rights. Each Participant shall be
entitled to direct the Trustee as to the manner in which any
rights (including but not limited to voting rights,
subscription rights and conversion privileges) with respect to
the Company Stock and Company Class B Common Stock credited to
such Participant's ESOP and PAYSOP Accounts are to be
exercised. For this purpose, the Committee shall notify each
Participant of each annual or special meeting of the
shareholders of the Company and of any other occasion for the
exercise of voting or other rights by such shareholders, not
later than the date prior to such meeting or other occasion on
which the Company notifies its other shareholders. The
notification shall include a copy of any proxy solicitation
material and other information which the Company distributes to
shareholders regarding the exercise of voting or other rights,
together with a form requesting instructions to the Trustee as
to how the Participant's rights are to be exercised. The
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<PAGE> 27
Trustee shall tabulate the instructions received and shall vote
or otherwise exercise rights with respect to said shares of
stock as instructed. The Trustee shall not vote or otherwise
exercise rights with respect to any of said shares of stock as
to which no instructions from Participants have been duly
received.
ARTICLE V.
VESTING AND DISTRIBUTION EVENTS
Section 5.1 Retirement or Disability. Upon the
Retirement of a Participant or in the event of a Participant's
Permanent Disability while employed by or on authorized leave
of absence from an Employer or Affiliated Company, the amounts
credited to all Accounts maintained for such Participant shall
be fully vested and distributed to him in accordance with the
provisions of Article VI.
Section 5.2 Death. Upon the death of a Participant, the
amounts credited to all Accounts maintained for such
Participant shall be fully vested and distributed to his
beneficiary or beneficiaries in accordance with the provisions
of Article VI.
Section 5.3 Break in Service. If a Participant incurs a
Break in Service prior to his Retirement, Permanent Disability
or death, such Participant shall be entitled to receive the
full amount credited to his Participant Thrift, Participant
Deferred ESOP and PAYSOP Accounts, plus the following portion
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<PAGE> 28
of the amount credited to his Company Thrift and Company
Matching Accounts, depending upon the number of Years of
Service completed by such Participant on the date of such
separation from employment:
Years of Service Percentage Vested
---------------- -----------------
Less Than 3 None
3 60%
4 80%
5 or More 100%
provided, however, that notwithstanding the foregoing schedule,
a Participant's Company Thrift and Company Matching Accounts
shall be fully vested on and after the day such Participant
is entitled to receive under this Section shall be distributed
to such Participant in accordance with the provisions of
Article VI, and the balance of such Participant's Company
Thrift and Company Matching Accounts shall be forfeited.
ARTICLE VI.
DISTRIBUTIONS AND FORFEITURES
Section 6.1 Time and Form of Distribution. The
distribution of amounts withdrawn by or otherwise due to a
Participant or beneficiary under the Plan shall be made as soon
as practicable after such Participant or beneficiary becomes
entitled to distribution, but unless the Participant elects
otherwise with the consent of the Committee, in no event later
than sixty days after the end of the Plan Year during which
-25-
<PAGE> 29
such Participant or beneficiary becomes entitled to such
distribution. The portion of any Account invested in
Government Bonds will be distributed in the form of such bonds
or in cash, or in any combination thereof, as determined by the
Committee in its absolute discretion. The portion of any
Account (other than an ESOP or PAYSOP Account) invested in
Company stock will be distributed in the form of such stock or
in cash, or in any combination thereof, as determined by the
Committee in its absolute discretion. The portion of any
Account invested in PSA Stock will be converted into cash and
distributed in the form of cash or in the form of Company
Stock, or in any combination thereof, as determined by the
Committee in its absolute discretion. All amounts credited to
an ESOP or PAYSOP Account will be distributed in the form of
Company Stock (with cash in lieu of fractional shares). If any
portion of an ESOP Account is invested in shares of Company
Class B Common Stock and a withdrawal or other distribution
event occurs with respect to said shares, prior to any
distribution from such ESOP Account the Participant or
beneficiary to whom such distribution would otherwise be made
shall instruct the Trustee in writing either to "put" said
shares of stock to the Company for cash or to exchange said
shares of stock with the Company for Company Stock on a
share-for-share basis. If the "put" is elected, the per share
value of Company Class B Common Stock shall be deemed to be
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equal to the average closing price per share of Company Stock,
as reported on the composite tape for securities listed on the
American Stock Exchange, Inc., for the twenty consecutive
trading days immediately preceding the date on which such "put"
is exercised. Any Company or PSA Stock which is to be
converted into cash for distribution to a Participant or
beneficiary shall be sold by the Trustee in the open market
during the month following the date as of which such withdrawal
or other distribution event occurs. The amount of cash to be
distributed to the Participant or beneficiary with respect to
such Company or PSA Stock shall be determined on the basis of
the average net proceeds per share (i.e., gross proceeds from
the sale less any brokerage commissions, transfer taxes and
other expenses incident thereto) realized by the Trustee upon
such sales during said month. In lieu of making such sale in
the open market, the Trustee in its discretion may match such
sales with purchases to be made for such month pursuant to the
Plan, with the prices of any such matched sales and purchases
being determined in the same manner as provided in section 4.4
for determining the price of Company Stock purchased from the
Company.
Section 6.2 Distribution of Retirement, Disability and
Death Benefits. Any amount payable to a Participant under the
Plan upon his Retirement or Permanent Disability shall be
distributed to such Participant in a single distribution. Any
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<PAGE> 31
amount payable under the plan upon the death of a Participant
shall be distributed in a single distribution to the
beneficiary or beneficiaries designated by such Participant.
Such designation of beneficiary or beneficiaries shall be made
in writing on a form prescribed by the Committee and, when
filed with the Committee, shall become effective and remain in
effect until changed by the Participant by the filing of a new
beneficiary designation from with the Committee. If a
Participant fails to so designate a beneficiary, or in the
event all of the designated beneficiaries are individuals who
predeceased the Participant, then the Committee shall direct
the Trustee to distribute the amount payable under the Plan in
a single distribution to the estate of such deceased
Participant.
Section 6.3 Withdrawals by Vested Participants. Subject
to such conditions, limitations and procedures as the Committee
may from time to time prescribe for application to all Vested
Participants on a uniform and nondiscriminatory basis, by
filing a written notice of withdrawal with the Committee prior
to the end of any month a Vested Participant may withdraw:
(a)(1) all or any portion of the amount credited to
his Participant Thrift Account as of the end of such month,
and (2) if no amount will remain credited to his
Participant Thrift Account following such withdrawal, all
or any portion of the amount credited to his Company Thrift
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<PAGE> 32
Account as of the end of such month, and if such
Participant has either attained the age of 59-1/2 years or
is not in the employ of or on authorized leave of absence
from an Employer or Affiliated Company, all or any portion
of the amounts credited to his Participant Deferred and
Company Matching Accounts as of the end of such month;
(b) from his ESOP Account, (1) all or any portion of
(i) the Company Stock and/or Company Class B Common Stock
representing Employer contributions which have been
allocated to such Account (or such Participant's Account
under the Employee Stock Ownership Plan) as of the end of
such month for a period of at least 84 months after the
month as of which such allocation was made, (ii) the
Company Stock and/or Company Class B Common Stock
representing Participant contributions which have been
allocated to such Account (or such Participant's Account
under the Employee Stock Ownership Plan) as of the end of
such month for a period of at least 84 months after the
month as of which such allocation was made, and (iii) the
Company Stock which has been purchased with Trust income or
represents dividends paid in Company Stock and which has
been credited to such Account as of the end of such month,
or (2) if such Participant is not in the employ of or on
authorized leave of absence from an Employer or Affiliated
Company at the end of such month, all (but not less than
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all) of the Company Stock and Company Class B Common Stock
credited to such Account;
(c) form his PAYSOP Account, (1) if he has attained
the age of 59-1/2 years, all or any portion of (i) the
Company Stock representing Employer contributions which
have been allocated to such Account as of the end of such
month for a period of at least 84 months after the month as
of which such allocation was made, and (ii) the Company
Stock which has been purchased with Trust income or
represents dividends paid in Company Stock and which has
been credited to such Account as of the end of such month,
or (2) if such Participant is not in the employ of or on
authorized leave of absence from an Employer or Affiliated
Company at the end of such month, all (but not less than
all) of the Company Stock credited to such Account;
(d) from his Participant Deferred and Company
Matching Accounts, if such notice of withdrawal requests a
distribution to alleviate a hardship (within the meaning of
Section 401(k)(2)(B) of the Code and the regulations
promulgated thereunder) of such Vested Participant which is
evidenced to the satisfaction of the Committee, such amount
as the Committee shall determine to be necessary to meet
the immediate financial need created by said hardship and
not reasonably available from other sources.
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Section 6.4 Withdrawals by Partially Vested Participants
Subject to such conditions, limitations and procedures as the
Committee may from time to time prescribe for application to
all Partially Vested Participants on a uniform and
nondiscriminatory basis, a Partially Vested Participant may
withdraw all (but not less than all) of the aggregate value of
his Participant Thrift Account and the vested portion of his
Company Thrift Account as of the end of any month by filing a
written notice of such withdrawal with the Committee prior to
the end of such month. Any provision of this Plan to the
contrary notwithstanding:
(a) if the Partially Vested Participant making a
withdrawal pursuant to this Section is in the employ of or
on authorized leave of absence from an Employer or
Affiliated Company at the end of the month as of which such
withdrawal is made, (1) no Thrift, Deferred Compensation or
Matching Contributions shall be made by, for or on behalf
of such Partially Vested Participant for a period of six
months following the month as of the end of which such
withdrawal was made, and (2) the vested portion of such
Participant's Company Thrift Account at all times after the
making of such withdrawal shall be determined by the
formula P(AB+D)-D, where P is such Participant's vested
percentage at the relevant time, AB is the value of said
Account at the relevant time, and D is the total amount
previously withdrawn from said Account; or
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(b) if the Partially Vested Participant making a withdrawal pursuant
to this Section is not in the employ of or on authorized leave of absence
from an Employer or Affiliated Company at the end of the month as
of which such withdrawal is made, upon such withdrawal the unvested
portion of such Partially Vested Participant's Company Thrift Account
shall be forfeited; provided, however, that if such Partially Vested
Participant repays the full amount of such withdrawal prior to incurring a
Break in Service and within two years of the date he is first credited
with an Hour of Service following such withdrawal, the amount so
forfeited shall be restored to his Company Thrift Account by an additional
Employer contribution.
In addition to the foregoing, a Partially Vested
Participant who is not in the employ of or on authorized leave
of absence from an Employer or Affiliated company may withdraw
all (but not less than all) of the Company Stock and Company
Class B Common Stock credited to his ESOP and PAYSOP Accounts,
and all (but not less than all) of the aggregate value of his
Participant Deferred Account and the vested portion of his
Company Matching Account . Upon the withdrawal by a Partially
Vested Participant of said aggregate value of his Participant
Deferred Account and the vested portion of his Company Matching
Account, the unvested portion of his Company Matching Account
shall be forfeited; provided, however, that if such Partially
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<PAGE> 36
Vested Participant repays the full amount of such withdrawal
prior to incurring a Break in Service and within two years of
the date he is first credited with an Hour of Service following
such withdrawal, the amount so repaid shall be credited to his
Participant Thrift Account and the amount so forfeited shall be
restored to his Company Thrift Account by an additional
Employer contribution.
Section 6.5 Withdrawals by Nonvested Participants.
Subject to such conditions, limitations and procedures as the
Committee may from time to time prescribe for application to
all Nonvested Participants on a uniform and nondiscriminatory
basis, a Nonvested Participant may withdraw all (but not less
than all) of the value of his Participant Thrift Account as of
the end of any month by filing a written notice of such
withdrawal with the Committee prior to the end of such month.
Any provision of this Plan to the contrary notwithstanding, if
a Nonvested Participant makes a withdrawal pursuant to this
Section:
(a) no Thrift, Deferred Compensation or Matching
Contributions shall be made by, for on behalf of such
Nonvested Participant for a period of six months following
the month as of the end of which such withdrawal was made;
and
(b) upon the making of such withdrawal the entire
value of such Nonvested Participant's Company Thrift
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<PAGE> 37
Account shall be forfeited; provided, however, that if such Nonvested
Participant repays the full amount of such withdrawal prior to incurring a
Break in Service and within two years of the date he is first
credited with an Hour of Service following such withdrawal, the amount so
forfeited shall be restored to his Company Thrift Account by an
additional Employer contribution.
In addition to the foregoing, a Nonvested Participant who
is not in the employ of or on authorized leave of absence from
an Employer or Affiliated Company may withdraw all (but not
less than all) of the Company Stock and Company Class B Common
Stock credited to his ESOP and PAYSOP Accounts, and all (but
not less than all) of the value of his Participant Deferred
Account. Upon the withdrawal by a Nonvested Participant of the
value of his Participant Deferred Account, the entire value of
his Company Matching Account shall be forfeited; provided,
however, that if such Nonvested Participant repays the full
amount of such withdrawal prior to incurring a Break in Service
and within two years of the date he is first credited with an
Hour of Service following such withdrawal, the amount so repaid
shall be credited to his Participant Thrift Account and the
amount so forfeited shall be restored to his Company Thrift
Account by an additional Employer contribution.
Section 6.6 Break in Service Distribution. The Vested
Interest of a Participant which has not been previously
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distributed or withdrawn in accordance with the provisions of
this Article shall be distributed in a single distribution to
such Participant upon his incurring a Break in Service. The
then unvested portions of a Participant's Company Thrift and
Company Matching Accounts shall be permanently forfeited when
he incurs a Break in Service.
Section 6.7 Application of Forfeitures. Any forfeitures
resulting under the provisions of this Article shall be
credited to a Forfeiture Account and thereafter applied to
reduce the earliest subsequent Matching Contributions the
Employers would otherwise be required to make to the Plan:
provided, however, that if the Plan is terminated, any
forfeited amounts not then so applied shall be credited ratably
among the Accounts (other than ESOP and PAYSOP Accounts)
remaining in the Plan at the time of such termination.
Section 6.8 Distributions to Minors and Persons Under
Legal Disability. If any distribution under the Plan becomes
payable to a minor or other person under a legal disability,
such distribution shall be made to the duly appointed guardian
or other legal representative of the estate of such minor or
person under legal disability.
ARTICLE VII
PLAN ADMINISTRATION
Section 7.1 Appointment of Committee. This Plan shall be
administered on behalf of all Employers by a Committee composed
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<PAGE> 39
of at least three individuals appointed by the Board of
Directors of the Company. Each member of the Committee so
appointed shall serve in such office until his death,
resignation or removal by the Board of Directors of the
Company. The Board of Directors of the Company may remove any
member of the Committee at any time by giving written notice
thereof to the members of the Committee. Vacancies shall
likewise be filled from time to time by the Board of Directors
of the Company. The members of the Committee shall receive no
remuneration from the Plan for their services as Committee
members.
Section 7.2 Powers and Duties of the Committee. The
Committee shall interpret and implement the provisions of the
Plan, and shall perform all of the duties and may exercise all
of the powers and discretion granted to it under the terms of
the Plan. The Committee shall act by a majority of its members
at the time in office and such action may be taken either by a
vote at a meeting or in writing without a meeting. The
Committee may by such majority action authorize any one or more
of its members to execute any document or documents on behalf
of the Committee, in which event the Committee shall notify the
Trustee in writing of such action and the name or names of its
member or members so authorized to act. Every interpretation,
choice, determination or other exercise by the Committee of any
power or discretion given either expressly or by implication to
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<PAGE> 40
it shall be conclusive and binding on all parties directly or
indirectly affected, without restriction, however, on the right
of the Committee to reconsider and redetermine such actions.
In performing any duty or exercising any power herein
conferred, the Committee shall in no event perform such duty or
exercise such power in any manner which discriminates in favor
of Employees who are officers, shareholders or highly
compensated employees of an Employer.
Section 7.3 Rules, Records and Reports. The Committee
may adopt such rules and regulations for the administration of
the Plan as are consistent with the terms hereof, and shall
keep adequate records of its proceedings and acts and of the
status of the Participants' Accounts. The Committee may employ
such agents, accountants and legal counsel (who may be agents,
accountants or legal counsel for an Employer) as may be
appropriate for the administration of the Plan. The Committee
shall annually provide each Participant with a report
reflecting the status of his Accounts under the Plan and shall
cause such other information, documents or reports to be
prepared, provided and/or filed as may be necessary to comply
with the provisions of the Code, ERISA or other applicable law.
Section 7.4 Administration Expenses and Taxes. Unless
otherwise paid by the Employers in their discretion, the
Committee shall direct the Trustee to pay all reasonable and
necessary expenses (including the fees of agents, accountants
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<PAGE> 41
and legal counsel) incurred by the Committee in connection with
the administration of the Plan. Should any tax of any
character (including transfer taxes) be levied upon the Trust
assets or the income therefrom, such tax shall be paid from and
charged against the assets of the Trust.
Section 7.5 Claims Procedure. If any Participant or
beneficiary (hereinafter called the "claimant") feels that he
is being denied a benefit to which he is entitled under the
Plan, such claimant may file a written claim for said benefit
with any member of the Committee. Within sixty days after the
receipt of such claim the Committee shall determine and notify
the claimant as to whether he is entitled to such benefit.
Such notification shall be in writing and, if denying the claim
for benefit, shall set forth the specific reason or reasons for
the denial, make specific reference to the pertinent provisions
of the Plan, and advise the claimant that he may, within sixty
days of the receipt of such notice, in writing request to
appear before the Committee or its designated representative
for a hearing to review such denial. Any such hearing shall be
scheduled at the mutual convenience of the Committee or its
designated representative and the claimant, and at such hearing
the claimant and/or his duly authorized representative may
examine any relevant documents and present evidence and
arguments to support the granting of the benefit being
claimed. The final decision of the Committee with respect to
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<PAGE> 42
the claim being reviewed shall be made within sixty days
following the hearing thereon and the Committee shall in
writing notify the claimant of its final decision, again
specifying the reasons therefor and the pertinent provisions of
the Plan upon which such decision is based. The final decision
of the Committee shall be conclusive and binding upon all
parties having or claiming to have an interest in the claim
being reviewed.
ARTICLE VIII.
AMENDMENT AND TERMINATION
Section 8.1 Amendment. The Company shall have the right
and power at any time and from time to time to amend this Plan,
in whole or in part, on behalf of all Employers. With the
consent of the company, each Employer shall have the right and
power at any time and from time to time to amend this Plan, in
whole or in part, with respect to the Plan's, application to
the Participants of the particular amending Employer and the
assets held in the Trust for their benefit, or to transfer such
assets or any portion thereof to a new trust for the benefit
of such Participants. However, in no event shall any amendment
or new trust permit any portion of the trust fund to be used
for or diverted to any purpose other than the exclusive benefit
of the Participants and their beneficiaries, nor shall any
amendment or new trust deprive any Participant of his Vested
Interest under the Plan. The Employers shall in writing notify
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the Committee of any amendment or change in the provisions of
the Plan.
Section 8.2 Termination. Each Employer may at any time
terminate this Plan as it applies to the Participants of such
Employer by giving written notice thereof to the Committee and
Trustee. Any provisions of this Plan to the contrary
notwithstanding, upon the termination or partial termination of
the Plan as to any Employer, or in the event any Employer
should completely discontinue making contributions to the Plan
without formally terminating it, all amounts credited to the
Accounts of the affected participants of that particular
Employer shall be fully vested and nonforfeitable.
ARTICLE IX.
MISCELLANEOUS GENERAL PROVISIONS
Section 9.1 Spendthrift Provision. No right or interest
of any Participant or beneficiary under this Plan 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 such Participant or beneficiary.
Section 9.2 Maximum Annual Additional Limitation. Any
provision of this Plan to the contrary notwithstanding, the sum
of (a) the Employer contributions, (b) the lesser of one-half
of the Participant's contributions (excluding rollover
contributions) or the Participant's contributions (excluding
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rollover contributions) in excess of 6% of Compensation and (c)
the forfeitures allocated to the Accounts of any Participant
with respect to a Plan Year shall in no event exceed the lesser
of $30,000 adjusted to take into account any cost-of-living
adjustment authorized pursuant to Section 415(d) of the Code,
or 25% of such Participant's Compensation for that year. For
the purposes of applying the limitation imposed by this
Section, an Employer and its Affiliated Companies shall be
considered a single employer, and all defined contribution
plans (meaning plans providing for individual accounts and
benefits based solely on the amounts contributed to such
accounts and any forfeitures, income, expenses, gains and
losses allocated to such accounts) described in Section 415(k)
of the Code, whether or not terminated, maintained by an
Employer or an Affiliated Company shall be considered a single
plan. If the total amount allocable to a Participant's
Accounts for a Plan Year would, but for this sentence, exceed
the limitation imposed by this Section, such Participant's
Thrift Contributions for such year (with the Deferred
Compensation Contributions made on behalf of such Participant
for that year being reclassified as Thrift Contributions to the
extent necessary) shall be refunded to such Participant to the
extent necessary to permit the maximum permissible allocation
of ESOP and Matching Contributions to such Participant for that
year. Any remaining amount which cannot be allocated to a
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<PAGE> 45
particular Participant for a Plan Year because of the
limitation imposed by this Section shall be credited to a
Suspense Account and thereafter reallocated (prior to the
allocation of forfeitures) to reduce the earliest subsequent
Matching Contributions the Employers would otherwise be
required to make to the Plan.
Section 9.3 Limitations on Responsibilities. The
Employers do not guarantee or indemnify the Trust against any
loss or depreciation of its assets which may occur, nor
guarantee the payment of any amount which may become payable to
a Participant or his beneficiaries pursuant to the provisions
of this Plan. All payments to Participants and their
beneficiaries shall be made by the Trustee at the direction of
the Committee solely from the assets of the Trust and the
Employer shall have no legal obligation, responsibility or
liability for any such payments.
Section 9.4 Committee Indemnification. The Company will
indemnify and hold harmless each member of the Committee
against any claim, cost, expense (including attorney's fees),
judgment or liability (including any sum paid in settlement of
a claim with the approval of the Company) arising out of any
act or omission to act as a member of the Committee under this
Plan, except in the case of willful misconduct.
Section 9.5 Employment Noncontractual. The establishment
of this Plan shall not enlarge or otherwise affect the terms of
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any Employee's employment with an Employer and an Employer may
terminate the employment of any Employee as freely and with the
same effect as if this Plan had not been adopted.
Section 9.6 Merger or Consolidation. In no event shall
this Plan be merged or consolidated into or with any other
plan, nor shall any of its assets or liabilities be transferred
to any other plan, unless each Participant would be entitled to
receive a benefit if the plan in which he then participates
terminated immediately following such merger, consolidation or
transfer, which is equal to or greater than the benefit he
would have been entitled to receive if the Plan had been
terminated immediately prior to such merger, consolidation or
transfer.
Section 9.7 Employee Stock Ownership Plan Merger Into
Thrift Plan. The merger of the Employee Stock Ownership Plan
into the Thrift Plan as contemplated in this Plan is contingent
upon receiving a determination letter from the Internal Revenue
Service that this Plan and its related Trust qualify under the
provisions of Sections 401(a) and (k), 409A and 501(a) of the
Code. Any provision of this Plan to the contrary
notwithstanding, if such determination cannot be obtained
without the making of amendments to the Plan or its related
Trust which the Company is unwilling to make, then this Plan
and its related Trust shall be null and void and the Employee
Stock Ownership Plan, the Thrift Plan and their respective
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trust agreements shall remain in full force and effect in
accordance with their respective terms as in effect on December
31, 1983, with all Thrift and Deferred Compensation
Contributions made hereunder being considered to have been made
by Participants to the Thrift Plan, with all Matching
Contributions made hereunder being considered to have been made
by the Employers to the Thrift Plan, and with all Tax Credit
Contributions made hereunder being considered to have been made
to the Employee Stock Ownership Plan.
Section 9.8 Applicable Law. This Plan shall be governed
and construed in accordance with the laws of the State of Texas
except where superseded by federal law.
IN WITNESS WHEREOF, this Plan has been executed at Dallas,
Texas, on this ______ day of __________________, 1983, to be
effective as of January 1, 1984.
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<PAGE> 1
EXHIBIT 10.(b)
EXECUTION COPY
U.S. $100,000,000
364-DAY CREDIT AGREEMENT
Dated as of February 27, 1997
Among
FINA OIL AND CHEMICAL COMPANY
as Borrower
FINA, INC.
as Guarantor
THE BANKS NAMED HEREIN
as Banks
CIBC INC.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Co-Agents
NATIONSBANC CAPITAL MARKETS, INC.
as Arranger & Syndication Agent
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 . . . . . . . . . . . . 12
Section 1.03. Accounting Terms . . . . . . . . . . . . . . . . . . 12
Section 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. The A Advances . . . . . . . . . . . . . . . . . . . 13
Section 2.02. Making the A Advances . . . . . . . . . . . . . . . 13
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.04. Optional Reduction of the Commitments . . . . . . . 16
Section 2.05. Repayment and Prepayment of A Advances . . . . . . . 17
Section 2.06. Interest on A Advances . . . . . . . . . . . . . . . 17
Section 2.07. Interest Rate Determination . . . . . . . . . . . . 18
Section 2.08. The B Advances . . . . . . . . . . . . . . . . . . . 18
Section 2.09. Payments, Computations; Interest on Overdue
Amounts. . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.10. Consequential Losses . . . . . . . . . . . . . . . . 22
Section 2.11. Increased Costs . . . . . . . . . . . . . . . . . . 22
Section 2.12. Illegality . . . . . . . . . . . . . . . . . . . . . 24
Section 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.14. Payments Pro Rata . . . . . . . . . . . . . . . . . 26
Section 2.15. Increase of Aggregate Commitments . . . . . . . . . 26
ARTICLE III
CONDITIONS
Section 3.01. Conditions Precedent to Effectiveness . . . . . . . 28
Section 3.02. Conditions Precedent to Each A Borrowing . . . . . . 29
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.03. Conditions Precedent to Certain Borrowings . . . . . 30
Section 3.04. Conditions Precedent to Each B Borrowing . . . . . . 30
ARTICLE IV
GUARANTY
Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.02. Guaranty Absolute . . . . . . . . . . . . . . . . . 31
Section 4.03. Waiver. . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.04. Subrogation . . . . . . . . . . . . . . . . . . . . 32
Section 4.05. No Waiver; Remedies . . . . . . . . . . . . . . . . 32
Section 4.06. Continuing Guaranty . . . . . . . . . . . . . . . . 32
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Corporate Existence . . . . . . . . . . . . . . . . 33
Section 5.02. Corporate Power . . . . . . . . . . . . . . . . . . 33
Section 5.03. Authorization and Approvals . . . . . . . . . . . . 33
Section 5.04. Enforceable Obligations . . . . . . . . . . . . . . 34
Section 5.05. Financial Statements . . . . . . . . . . . . . . . . 34
Section 5.06. Litigation . . . . . . . . . . . . . . . . . . . . . 35
Section 5.07. Regulation U; Use of Proceeds . . . . . . . . . . . 35
Section 5.08. Investment Company Act . . . . . . . . . . . . . . . 35
Section 5.09. ERISA . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.11. Holding Company . . . . . . . . . . . . . . . . . . 36
Section 5.12. Environmental Condition . . . . . . . . . . . . . . 36
Section 5.13. Ownership of Borrower . . . . . . . . . . . . . . . 36
Section 5.14. Guarantor's Independent Decision . . . . . . . . . . 36
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01. Compliance with Laws, Etc. . . . . . . . . . . . . . 36
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 6.02. Reporting Requirements . . . . . . . . . . . . . . . 37
Section 6.03. Use of Proceeds . . . . . . . . . . . . . . . . . . 39
Section 6.04. Maintenance of Insurance . . . . . . . . . . . . . . 39
Section 6.05. Preservation of Corporate Existence, Etc. . . . . . 39
Section 6.06. Payment of Taxes, Etc. . . . . . . . . . . . . . . . 39
Section 6.07. Visitation Rights . . . . . . . . . . . . . . . . . . 39
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01. Financial Covenants . . . . . . . . . . . . . . . . 40
Section 7.02. Liens, Etc. . . . . . . . . . . . . . . . . . . . . 40
Section 7.03. Merger and Sale of Assets . . . . . . . . . . . . . 40
Section 7.04. Agreements to Restrict Dividends and Certain
Transfers. . . . . . . . . . . . . . . . . . . . . . 41
Section 7.05. Compliance with ERISA . . . . . . . . . . . . . . . 41
Section 7.06. Transactions with Affiliates . . . . . . . . . . . . 41
Section 7.07. Change of Business . . . . . . . . . . . . . . . . . 42
Section 7.08. Limitation on Loans, Advances and Investments . . . 42
Section 7.09. Fiscal Year; Accounting Practices . . . . . . . . . 42
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . 43
ARTICLE IX
THE AGENT, THE CO-AGENTS, AND THE ARRANGER & SYNDICATION AGENT
Section 9.01. Authorization and Action . . . . . . . . . . . . . . 46
Section 9.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . 46
Section 9.03. NationsBank and Affiliates . . . . . . . . . . . . . 46
Section 9.04. Bank Credit Decision . . . . . . . . . . . . . . . . 47
Section 9.05. Indemnification . . . . . . . . . . . . . . . . . . 47
Section 9.06. Successor Agent . . . . . . . . . . . . . . . . . . 48
Section 9.07. Co-Agents; Arranger & Syndication Agent . . . . . . 48
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc. . . . . . . . . . . . . . . . . . 48
Section 10.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . 49
Section 10.03. No Waiver; Remedies . . . . . . . . . . . . . . . . 49
Section 10.04. Costs, Expenses and Taxes . . . . . . . . . . . . . 50
Section 10.05. Right of Set-off . . . . . . . . . . . . . . . . . 50
Section 10.06. Bank Assignments and Participations . . . . . . . . 51
Section 10.07. Governing Law . . . . . . . . . . . . . . . . . . . 53
Section 10.08. Interest . . . . . . . . . . . . . . . . . . . . . 53
Section 10.09. Execution in Counterparts . . . . . . . . . . . . . 54
Section 10.10. Survival of Agreements, Representations and
Warranties, Etc. . . . . . . . . . . . . . . . . 54
Section 10.11. Borrower's Right to Apply Deposits . . . . . . . . 54
Section 10.12. Confidentiality . . . . . . . . . . . . . . . . . . 55
Section 10.13. Binding Effect . . . . . . . . . . . . . . . . . . 55
Section 10.14. Entire Agreement . . . . . . . . . . . . . . . . . 55
Section 10.15. Severability . . . . . . . . . . . . . . . . . . . 56
</TABLE>
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<PAGE> 6
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
Exhibit F - Form of Accession Agreement
Exhibit G - Form of Consent to Increase in Commitment
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<PAGE> 7
CREDIT AGREEMENT
Dated as of February 27, 1997
This Credit Agreement dated as of February 27, 1997, is by and among the
Borrower, the Guarantor, the Agent, the Co-Agents, the Arranger & Syndication
Agent and the Banks. In consideration of the mutual covenants and agreements
contained herein, the Borrower, the Guarantor, the Agent, the Co-Agents, the
Arranger & Syndication Agent 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.
"Accession Agreement" means an Accession Agreement in the form of
Exhibit F duly executed by the Borrower, the Guarantor, the Agent, and a New
Bank in connection with an increase in the aggregate Commitments permitted
pursuant to Section 2.15.
"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,
<PAGE> 8
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 January 24,
1997 among the Agent, the Borrower and the Guarantor.
"Aggregate Commitment Limit" means $550,000,000.
"Agreement" means this Credit Agreement dated as of February 27, 1997
among the Borrower, the Guarantor, the Agent, the Co-Agents, the Arranger &
Syndication Agent 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 Facility Fee" means, at any time the facility fee described
in Section 2.03 is to be paid, the following percentages per annum determined
as a function of the Guarantor's senior unsecured debt rating according to S&P
or Moody's, whichever is higher, on the last day of the immediately preceding
calendar quarter:
Rating A+/A1 .04%
Rating A/A2 .05%
Rating A-/A3 .06%
Rating BBB+/Baa1
or BBB/Baa2 .08%
Rating BBB-/Baa3 .125%
Rating BB+/Ba1
or below .175%
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<PAGE> 9
"Applicable Margin" means, at any time with respect to any A Advance
which is a Eurodollar Rate Advance, the following percentages determined as a
function of the Guarantor's senior unsecured debt rating according to S&P or
Moody's, whichever is higher, on the last day of the immediately preceding
calendar quarter:
Rating A+/A1 0.16%
Rating A/A2 0.17%
Rating A-/A3 0.185%
Rating BBB+/Baa1
or BBB/Baa2 0.22%
Rating BBB-/Baa3 0.30%
Rating BB+/Ba1
or below 0.45%
"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.
"Banks" means the banks listed on the signature pages hereof and each
other Person that becomes a Bank pursuant to an Assignment or an Accession
Agreement.
"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:
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<PAGE> 10
(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 its capacity as co-agent 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 as the
"Commitment" of such Bank on the signature pages of this Agreement, or if such
Bank has executed an Assignment or a Consent to Increase of Commitment, then
the amount set forth as the "Commitment" of such Bank therein, or if such Bank
is a New Bank, then the amount set forth as the "Commitment" of such Bank in
the Accession Agreement executed by such Bank, in each case as such amount may
be terminated or reduced pursuant to Section 2.04 or Section 8.01.
"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
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<PAGE> 11
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 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.
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<PAGE> 12
"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.
"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)
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<PAGE> 13
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.
"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
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<PAGE> 14
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 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 S&P or of Moody's, 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 S&P
or not less than "P-2" (or the then equivalent) by the rating service of
Moody's, 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 S&P or of Moody's;
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<PAGE> 15
(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.
"Moody's" means Moody's Investors Service, or any successor thereto.
"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.
"New Bank" means any lender which becomes a "Bank" hereunder by
executing an Accession Agreement pursuant to an increase in the aggregate
Commitments permitted by Section 2.15.
"Note" means an A Note or a B Note.
"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).
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<PAGE> 16
"Parallel Agreement" means the U.S. $325,000,000 5-Year Credit Agreement
dated as of February 27, 1997 among the Borrower, the Guarantor, the Agent, the
Arranger & Syndication Agent and the Banks, as amended or modified from time to
time.
"Parallel Agreement Commitments" means, as of any date of determination,
the "Commitments" as defined in the Parallel Agreement.
"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
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<PAGE> 17
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.
"Reference Banks" means NationsBank, CIBC Inc. and Texas Commerce Bank
National Association.
"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.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
"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
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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 February 26, 1998, or the earlier date of
termination in whole of the Commitments pursuant to Section 2.04 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.
"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
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<PAGE> 19
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 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.
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<PAGE> 20
(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, except as provided in Section 2.02(b)(vi),
each Advance comprising such A Borrowing shall be a Base Rate
Advance;
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<PAGE> 21
(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) With respect to any new A Borrowing to be made on the last day of
an Interest Period, the Borrower and each Bank agree that any amounts payable
by the Borrower to such Bank in connection with maturing A Advances on the date
of such Borrowing shall be netted against the amount of the new Borrowing to be
funded by such Bank so as to eliminate where possible the need for actual
payment and readvancement of funds by the parties. In the event of any A
Borrowing
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subject to the conditions precedent in Section 3.03, unless the Agent shall
have received notice from a Bank prior to the date of such A Borrowing that
such Bank will not make available to the Agent such Bank's ratable portion of
such A Borrowing (to the extent in excess of any maturing A Advances payable to
such Bank), 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 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 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 calculated on the amount of such Bank's Commitment (regardless of usage)
from the date hereof until the Termination Date at the Applicable Facility Fee
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
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<PAGE> 23
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 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
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<PAGE> 24
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, 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
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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
(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
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<PAGE> 26
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
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
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<PAGE> 27
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 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
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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
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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 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
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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 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
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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, EACH CO-
AGENT, THE ARRANGER & SYNDICATION AGENT 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, SUCH CO-AGENT, THE ARRANGER & SYNDICATION 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, SUCH CO-AGENT, THE
ARRANGER & SYNDICATION 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
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
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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, or 2.13, 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 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. Increase of Aggregate Commitments. Provided no Default
has occurred and is continuing, the Borrower may by written notice to the Agent
and the Banks request that the aggregate amount of the Commitments hereunder be
increased up to the Aggregate Commitment Limit; provided, however that in the
event the Parallel Agreement is still in effect, (a) the Borrower shall
simultaneously request a pro rata increase in the aggregate amount of the
Parallel Agreement Commitments pursuant to Section 2.15 of the Parallel
Agreement, and (b) after giving effect to such increase of the aggregate
Commitments and such pro rata increase of the aggregate Parallel Agreement
Commitments, the total amount of all Commitments and all Parallel Agreement
Commitments shall not exceed the Aggregate Commitment Limit. Upon the
Borrower's receipt of (a) incremental commitments from such Banks that may
agree to provide an increased Commitment hereunder, and if the Parallel
Agreement is still in effect, an increased Parallel Agreement
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Commitment under the Parallel Agreement (there being no obligation on the part
of any Bank at any time hereunder to increase such Bank's Commitment or such
Bank's Parallel Agreement Commitment but any such increase agreed upon by any
Bank to be pro rata between this Agreement and the Parallel Agreement so that
its ratable percentage of each is the same) and/or (b) commitments from new
lenders willing to become a Bank with a Commitment hereunder, and if the
Parallel Agreement is still in effect, a "Bank" under the Parallel Agreement
with a pro rata Parallel Agreement Commitment, then such increase of the
aggregate Commitments shall become effective simultaneously with any such
increase of the aggregate Parallel Agreement Commitments when the following
conditions precedent and, if applicable, the conditions precedent set forth in
Section 2.15 of the Parallel Agreement have been satisfied and the Agent shall
have notified the parties hereto to such effect:
(i) The Borrower shall have delivered to the Agent, with sufficient
copies for each Bank (A) a certificate of the Chief Financial Officer of the
Borrower addressed to the Banks to the effect that, to the best of such
officer's knowledge, (x) no Default or Event of Default has occurred and is
continuing (or would result from the incurrence of the additional Debt
contemplated by this Section 2.15), and (y) all representations and warranties
herein or in any other Credit Document are true and correct in all material
respects with the same effect as if these representations and warranties had
been made on the date of such certificate (it being understood and agreed that
any representation which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of such
specified date), and (B) unless the documentation delivered in connection with
the effectiveness of this Agreement otherwise authorizes Debt hereunder and
under the Parallel Agreement in an aggregate amount up to the Aggregate
Commitment Limit, a certificate of the Borrower's Secretary certifying that the
Borrower has been duly authorized by resolution of the Borrower's Board of
Directors to incur Debt hereunder and, if the Parallel Agreement is still in
effect, under the Parallel Agreement in an amount equal to or exceeding the
increased aggregate amount of the Commitments and, if the Parallel Agreement is
still in effect, the Parallel Agreement Commitments.
(ii) An Accession Agreement for each New Bank shall have been duly
executed by each party thereto.
(iii) The Agent has received the written consent of each Bank which has
agreed to increase its Commitment hereunder (but no other Bank's consent shall
be required), such consent to be substantially in the form of the Consent to
Increase of Commitment attached as Exhibit G.
(iv) New Notes (including without limitation substitute Notes for
those Banks which have agreed to increase their respective Commitments) shall
have been executed and delivered by the Borrower in substantially the form of
Exhibits A-1 and A-2, as appropriate.
(v) No A Advances are outstanding hereunder as of the date such
increase is to become effective, or any such Advances are contemporaneously
repaid on such date.
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ARTICLE III
CONDITIONS
Section 3.01. Conditions Precedent to Effectiveness. This Agreement
shall become effective when the following conditions precedent have been
satisfied and the Agent shall have notified the parties hereto in writing that
this Agreement has become effective pursuant to this Section:
(a) Documentation. 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, the Arranger & Syndication Agent
and each Bank, and an A Note payable to each Bank duly executed by the
Borrower.
(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.
(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,
L.L.P. 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.
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(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, the Arranger & Syndication Agent and the Banks shall have received
sufficient evidence indicating that the Borrower's and the Guarantor's
obligations under the U.S. $400,000,000 Credit Agreement dated as of March 7,
1995 among the Borrower, the Guarantor, the banks and co-agents 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 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,
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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 condition precedent that on the date of
such Borrowing, no Default occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom (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 such condition precedent is satisfied on the
date of such Borrowing).
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 (other
than in Section 5.05 and 5.06) 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
(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);
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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 the claims to
such amounts are, or are deemed to be, stayed, unenforceable, not allowable,
discharged, or otherwise reduced, restricted or limited in any manner 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;
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(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;
(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
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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, the Arranger & Syndication Agent, 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:
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
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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, 1995, and the related Consolidated and consolidating statements of
income and cash flows of the Guarantor and its Subsidiaries for the fiscal year
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, 1996, 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, 1996, 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, 1996, 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, 1995 and September 30, 1996 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, 1996 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, 1996, there
has been no material adverse change in the condition or operations of the
Borrower or its Subsidiaries.
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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.
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, 1989. 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.
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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
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
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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
certificate of said officer (i) stating that he has no knowledge that a Default
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 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
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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;
(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
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(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, including without limitation
to repay maturing commercial paper of the Borrower.
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 the operations of the Borrower, the
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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, 1997 shall not exceed an amount
equal to (x) $275,000,000, plus (y) 75% of the Guarantor's Consolidated net
income for the period on or after January 1, 1997 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, 1997; 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
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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 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
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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:
(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 for the Borrower, the Guarantor, and all Restricted
Subsidiaries which are 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.
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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 shall have knowledge of such failure, or (iii) any term (other
than a representation and warranty), covenant or agreement contained in any
Credit Document (other than a term, covenant or agreement the noncompliance
with which would be governed by 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;
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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 judgments or orders for the payment of money in excess of
$10,000,000 individually or $25,000,000 in the aggregate 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 judgments or orders or (ii) there shall be any period of
30 consecutive days during which a stay of enforcement of such judgments or
orders, 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 $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
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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; or
(k) any Person or group (or any Affiliate of such Person or group) --
other than Petrofina S.A., a societe anonyme (corporation) organized and
existing under the laws of the Kingdom of Belgium ("Petrofina"), or Petrofina
Delaware, Incorporated, a Delaware corporation ("PDI"), or any wholly-owned
Subsidiary of Petrofina or PDI -- shall beneficially own, directly or
indirectly, capital stock of the Guarantor representing 30% or more of the
voting power of all capital stock of the Guarantor; or
(l) any "Event of Default" (as such term is defined in the Parallel
Agreement) shall occur and be continuing.
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.
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ARTICLE IX
THE AGENT, THE CO-AGENTS, AND THE ARRANGER & SYNDICATION AGENT
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
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
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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 Arranger &
Syndication Agent 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 Arranger & Syndication Agent or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Documents.
SECTION 9.05. INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY THE AGENT,
EACH CO-AGENT, AND THE ARRANGER & SYNDICATION AGENT (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, SUCH CO-AGENT OR THE ARRANGER & SYNDICATION AGENT 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, SUCH CO-AGENT OR THE ARRANGER & SYNDICATION AGENT FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE AGENT'S,
SUCH CO-AGENT'S OR THE ARRANGER & SYNDICATION 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
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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; Arranger & Syndication Agent. The Co-Agents
and the Arranger & Syndication Agent shall have no duties, obligations, or
liabilities in their capacities as such.
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
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conditions specified in Article III, (b) increase the aggregate amount of the
Commitments to greater than the Aggregate Commitment Limit 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 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; and provided, further, that no increase
may be made with respect to any Bank's Commitment without the consent of such
Bank.
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.
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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, EACH CO-AGENT, THE ARRANGER &
SYNDICATION AGENT 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, SUCH CO-AGENT, THE ARRANGER &
SYNDICATION AGENT 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, SUCH CO-
AGENT, THE ARRANGER & SYNDICATION AGENT 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 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
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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 and such Bank shall
simultaneously assign a pro rata portion of such Bank's rights and obligations
in respect of its Parallel Agreement Commitment so that its pro rata percentage
of each of the Commitments and the Parallel Agreement Commitments is the same,
(ii) the amount of the resulting Commitment and Advances of the assigning Bank
(unless it is assigning all its Commitment and all of its Parallel Agreement
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 $3000 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.
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(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 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
-52-
<PAGE> 59
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(c), 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, the Co-Agents, or the
Arranger & Syndication Agent, 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.
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. To the extent that any Bank may be
subject to Texas law limiting the amount of interest
-53-
<PAGE> 60
payable for its account, such Bank shall utilize the indicated (weekly) rate
ceiling from time to time in effect as provided in Article 5069-1.04 of the
Revised Civil Statutes of Texas, as amended.
(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 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. Theindemnities 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
-54-
<PAGE> 61
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 or any Bank's Affiliate) 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.
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
-55-
<PAGE> 62
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 INTENTIONALLY BLANK]
-56-
<PAGE> 63
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
----------------------------------
Yves Bercy
Vice President & Chief
Financial Officer
GUARANTOR:
---------
FINA, INC.
----------------------------------
Yves Bercy
Vice President & Chief
Financial Officer
AGENT:
-----
NATIONSBANK OF TEXAS, N.A.,
as Agent
-----------------------------------
Denise Ashford Smith
Senior Vice President
-57-
<PAGE> 64
ARRANGER & SYNDICATION AGENT
----------------------------
NATIONSBANC CAPITAL MARKETS, INC.
----------------------------------
David E. Hunt
Managing Director
COMMITMENTS: BANKS:
- ----------- -----
$9,411,766 NATIONSBANK OF TEXAS, N.A.
----------------------------------
Denise Ashford Smith
Senior Vice President
$8,117,647 CIBC INC.
----------------------------------
By:
-------------------------------
Title:
----------------------------
$8,117,647 TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
----------------------------------
By:
-------------------------------
Title:
----------------------------
-58-
<PAGE> 65
$5,764,706 BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
----------------------------------
By:
-------------------------------
Title:
----------------------------
$5,764,706 BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
----------------------------------
By:
-------------------------------
Title:
----------------------------
$5,764,706 CREDIT LYONNAIS NEW YORK BRANCH
----------------------------------
By:
-------------------------------
Title:
----------------------------
$5,764,706 THE FUJI BANK, LIMITED
HOUSTON AGENCY
----------------------------------
By:
-------------------------------
Title:
----------------------------
-59-
<PAGE> 66
$5,764,706 MELLON BANK, N.A.
----------------------------------
By:
-------------------------------
Title:
----------------------------
$5,764,706 SOCIETE GENERALE, SOUTHWEST
AGENCY
----------------------------------
By:
-------------------------------
Title:
----------------------------
$5,764,706 THE SUMITOMO BANK, LIMITED
----------------------------------
By:
-------------------------------
Title:
----------------------------
$5,764,706 UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
----------------------------------
By:
-------------------------------
Title:
----------------------------
----------------------------------
By:
-------------------------------
Title:
----------------------------
-60-
<PAGE> 67
$4,705,882 BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
----------------------------------
By:
-------------------------------
Title:
----------------------------
----------------------------------
By:
-------------------------------
Title:
----------------------------
$4,705,882 CITICORP USA, INC.
----------------------------------
By:
-------------------------------
Title:
----------------------------
$4,705,882 CREDIT COMMERCIAL DE FRANCE
----------------------------------
By:
-------------------------------
Title:
----------------------------
----------------------------------
By:
-------------------------------
Title:
----------------------------
-61-
<PAGE> 68
$4,705,882 THE DAI-ICHI KANGYO BANK, LTD.
NEW YORK BRANCH
----------------------------------
By:
-------------------------------
Title:
----------------------------
$4,705,882 DEN DANSKE BANK AKTIESELSKAB
CAYMAN ISLANDS BRANCH
----------------------------------
By:
-------------------------------
Title:
----------------------------
----------------------------------
By:
-------------------------------
Title:
----------------------------
$4,705,882 GENERALE BANK--NEW YORK BRANCH
----------------------------------
By:
-------------------------------
Title:
----------------------------
============
$100,000,000 TOTAL COMMITMENTS
-62-
<PAGE> 69
EXHIBIT A-1
A PROMISSORY NOTE
U.S. $___________________ Dated as of February 27, 1997
FOR VALUE RECEIVED, the undersigned, Fina Oil and Chemical Company, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
__________________________ (the "Bank"), for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below) or any
other office designated by the Bank the principal amount of each A Advance (as
defined below) made by the Bank to the Borrower pursuant to the Credit
Agreement (as defined below) on the date such A Advance is due and payable as
set forth in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each A Advance from the date of such A Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A., as Agent, at 901 Main Street,
Dallas, Texas 75202, in same day funds. Each A Advance made by the Bank to the
Borrower and the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Bank and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Promissory
Note.
This Promissory Note is one of the A Notes referred to in, and is
subject to and entitled to the benefits of, the U.S.$100,000,000 364-Day Credit
Agreement dated as of February 27, 1997 (as it may be amended from time to time
in accordance with its terms, the "Credit Agreement") among the Borrower, Fina,
Inc., as Guarantor, the Bank, certain other banks parties thereto, CIBC Inc.
and Texas Commerce Bank National Association, as Co-Agents, NationsBanc Capital
Markets, Inc., as Arranger & Syndication Agent, and NationsBank of Texas, N.A.,
as Agent for the Bank and such other banks. The Credit Agreement, among other
things, (i) provides for the making of advances (the "A Advances") by the Bank
to the Borrower from time to time pursuant to Section 2.01 of the Credit
Agreement in an aggregate outstanding amount not to exceed at any time the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such A Advance being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified. Capitalized terms used herein which are not defined herein and are
defined in the Credit Agreement are used herein as therein defined.
<PAGE> 70
The Borrower hereby waives presentment, demand, protest, notice of
intent to accelerate, notice of acceleration and any other notice of any kind,
except as provided in the Credit Agreement. No failure to exercise, and no
delay in exercising, any rights hereunder on the part of the holder hereof
shall operate as a waiver of such rights.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Texas (except that Tex. Rev. Civ. Stat. Ann.
Art. 5069, Ch. 15, which regulates certain revolving credit loan accounts,
shall not apply to this Note).
FINA OIL AND CHEMICAL COMPANY
------------------------------
By:
---------------------------
Title:
------------------------
-2-
<PAGE> 71
EXHIBIT A-2
B PROMISSORY NOTE
U.S. $_______________ Dated: __________, 19__
FOR VALUE RECEIVED, the undersigned, Fina Oil and Chemical Company, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
__________________________ (the "Bank") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below), on
___________, 199_, the principal amount of ____________________ Dollars
($__________).
The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: _____% per annum (calculated on the basis of a year of
____ days for the actual number of days elapsed).
Interest Payment Date or Dates: ______________________
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A., as Agent, at 901 Main Street,
Dallas, Texas 75202, in same day funds.
This Promissory Note is one of the B Notes referred to in, and is
entitled to the benefits of, the U.S. $100,000,000 364-Day Credit Agreement
dated as of February 27, 1997 (as it may be amended from time to time in
accordance with its terms, the "Credit Agreement") among the Borrower, Fina,
Inc., as Guarantor, the Bank, certain other banks parties thereto, CIBC Inc.
and Texas Commerce Bank National Association, as Co-Agents, NationsBanc Capital
Markets, Inc., as Arranger & Syndication Agent, and NationsBank of Texas, N.A.,
as Agent for the Bank and such other banks. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events. Capitalized terms used herein which are
not defined herein and are defined in the Credit Agreement are used herein as
therein defined.
The Borrower hereby waives presentment, demand, protest, notice of
intent to accelerate, notice of acceleration and any other notice of any kind,
except as provided in the Credit Agreement.
<PAGE> 72
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Texas.
FINA OIL AND CHEMICAL COMPANY
------------------------------
By:
---------------------------
Title:
------------------------
-2-
<PAGE> 73
EXHIBIT B-1
NOTICE OF A BORROWING
[Date]
NationsBank of Texas, N.A., as Agent
for the Banks parties
to the Credit Agreement
referred to below
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Ms. Denise Ashford Smith
Ladies and Gentlemen:
The undersigned, Fina Oil and Chemical Company (the "Borrower"), refers
to the U.S. $100,000,000 364-Day Credit Agreement dated as of February 27,
1997 (as it may be amended from time to time in accordance with its terms, the
"Credit Agreement"; the terms defined therein and not defined herein being used
herein as therein defined), among the undersigned, Fina, Inc., certain Banks
parties thereto, CIBC Inc. and Texas Commerce Bank National Association, as Co-
Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent, and
NationsBank of Texas, N.A., as Agent for such Banks, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests an A Borrowing under the Credit Agreement, and in
that connection sets forth below the information relating to such A Borrowing
(the "Proposed A Borrowing") as required by Section 2.02(a) of the Credit
Agreement:
(i) The Business Day of the Proposed A Borrowing is ________________,
19___.
(ii) The Type of A Advances comprising the Proposed A Borrowing is
[Base Rate Advances][Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed A Borrowing is
$____________.
<PAGE> 74
(iv) The Interest Period for each A Advance made as part of the
Proposed A Borrowing is _______ [days] [months].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed A Borrowing:
(a) the representations and warranties contained in Article V
of the Credit Agreement (excluding those contained in Section 5.05 and
Section 5.06 of the Credit Agreement) are correct on and as of the date
of the Proposed A Borrowing, before and after giving effect to the
Proposed A Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date;
(b) no event has occurred and is continuing, or would result
from the Proposed A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default *[or which would
constitute a Default]; and
(c) after giving effect to the Proposed A Borrowing and all
other Borrowings which have been requested on or prior to the date of
the Proposed A Borrowing 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.
Very truly yours,
FINA OIL AND CHEMICAL COMPANY
------------------------------
By:
---------------------------
Title:
------------------------
- --------------------
*To be included in Notices of A Borrowing in respect of A Borrowings
referred to in Section 3.03 of the Credit Agreement.
-2-
<PAGE> 75
EXHIBIT B-2
NOTICE OF B BORROWING
[Date]
NationsBank of Texas, N.A., as Agent
for the Banks parties
to the Credit Agreement
referred to below
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Ms. Denise Ashford Smith
Ladies and Gentlemen:
The undersigned, Fina Oil and Chemical Company (the "Borrower"), refers
to the U.S. $100,000,000 364-Day Credit Agreement dated as of February 27, 1997
(as it may be amended from time to time in accordance with its terms, the
"Credit Agreement"; the terms defined therein and not defined herein being used
herein as therein defined), among the undersigned, Fina, Inc., certain Banks
parties thereto, CIBC Inc. and Texas Commerce Bank National Association, as Co-
Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent, and
NationsBank of Texas, N.A., as Agent for such Banks, and hereby gives you
notice, irrevocably, pursuant to Section 2.16 of the Credit Agreement that the
undersigned hereby requests a B Borrowing under the Credit Agreement, and in
that connection sets forth the terms on which such B Borrowing (the "Proposed B
Borrowing") is requested to be made:
(A) Date of B Borrowing ________________________
(B) Amount of B Borrowing ________________________
(C) Maturity Date ________________________
(D) Interest Rate Basis ________________________
(E) Interest Payment Date(s) ________________________
(F) ____________________ ________________________
(G) ____________________ ________________________
<PAGE> 76
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed B Borrowing:
(a) the representations and warranties contained in Article V
of the Credit Agreement (excluding those contained in Section 5.05 and
Section 5.06 of the Credit Agreement) are correct on and as of the date
of the Proposed B Borrowing, before and after giving effect to the
Proposed B Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date;
(b) no event has occurred and is continuing, or would result
from the Proposed B Borrowing or from the application of the proceeds
therefrom, which constitutes a Default; and
(c) following the making of the Proposed B Borrowing and all
other Borrowings to be made on the same day under the Credit Agreement,
the aggregate principal amount of all Advances then outstanding shall
not exceed the aggregate amount of the Commitments (computed without
regard to any B Reduction).
The undersigned hereby confirms that the Proposed B Borrowing is to be
made available to it in accordance with Section 2.08(a)(v) of the Credit
Agreement.
Very truly yours,
FINA OIL AND CHEMICAL COMPANY
------------------------------
By:
---------------------------
Title:
------------------------
-2-
<PAGE> 77
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Dated ________________, 19__
Reference is made to the U.S.$100,000,000 364-Day Credit Agreement dated
as of February 27, 1997 (as the same may be amended or modified from time to
time, the "Credit Agreement") among Fina Oil and Chemical Company, a Delaware
corporation (the "Borrower"), Fina, Inc., a Delaware corporation (the
"Guarantor"), the Banks, CIBC Inc. and Texas Commerce Bank National
Association, as Co-Agents, NationsBanc Capital Markets, Inc., as Arranger &
Syndication Agent, and NationsBank of Texas, N.A., as Agent. Capitalized terms
not otherwise defined in this Assignment and Acceptance ("Assignment") shall
have the meanings assigned to them in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, ________________ wishes
to assign and delegate [(a)] ____%(1) of its rights and obligations under the
Credit Agreement in connection with its Commitment and its outstanding A
Advances and A Note [and (b) ____% of its rights under the Credit Agreement in
connection with its outstanding B Advance(s) and B Note(s)]. Therefore,
_________________ ("Assignor"), _______________ ("Assignee"), and the Agent
agree as follows:
i. The Assignor hereby sells and assigns and delegates to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, as of the Effective Date (as defined below), without
recourse to the Assignor and without representation or warranty
except for the representations and warranties specifically set
forth in clauses (i), (ii), and (iii) of Section 2 hereof, [(a)]
a ___% interest in and to all of the Assignor's rights and
obligations under the Credit Agreement in connection with its
Commitment (without regard to any B Reduction), its outstanding A
Advances and its A Note, [and (b) ____% of its rights under the
Credit Agreement in connection with its outstanding B Advance(s)
and B Note(s)].
ii. The Assignor (i) represents and warrants that, prior to
executing this Assignment and Acceptance, its Commitment (without
regard to any B Reduction) is $_____________, and the aggregate
outstanding principal amount of A Advances owed to it by the
Borrower is $_____________;
- -------------------------
(1) Specify percentage in no more than 5 decimal points.
<PAGE> 78
(ii) represents and warrants that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (iii) makes
no representation or warranty and assumes no responsibility with
respect to any statements, warranties, or representations made in
or in connection with the Credit Agreement or any other Credit
Document or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of the Credit Agreement or any
other Credit Document or any other instrument or document
furnished pursuant thereto; (iv) makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the Guarantor or the
performance or observance by the Borrower or the Guarantor of any
of their respective obligations under the Credit Agreement or any
other Credit Document or any other instrument or document
furnished pursuant thereto; and (v) attaches the Note(s) referred
to in paragraph 1 above and requests that the Agent [(i)]
exchange such A Note for [a] new A Note dated ____________, 19__
in the principal amount of $______________ payable to the order
of the Assignee[, and a new A Note dated _____________, 19___ in
the principal amount of $__________ payable to the order of
Assignor][, and (ii) exchange such B Note(s) for new B Note(s)
dated __________, 19__ in the principal amount(s) of $__________,
$__________, and $__________ payable to the order of the Assignee
and new B Note(s) dated __________, 19__ in the principal
amount(s) of $__________, $__________, and $__________].
iii. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial
statements referred to in Section 5.05 thereof and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor, 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
Agreement; (iii) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under
the Credit Agreement as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental
thereto; (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank;
(v) specifies as its Domestic Lending Office (and address for
notices) and Eurodollar Lending Office the offices set forth
beneath its name on the
-2-
<PAGE> 79
signature pages hereof; (vi) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to
the Assignee's status for purposes of determining exemption from
United States withholding taxes with respect to all payments to
be made to the Assignee under the Credit Agreement and its
Note(s) or such other documents as are necessary to indicate that
all such payments are subject to such rates at a rate reduced by
an applicable tax treaty(2), and (vii) represents that it is an
Eligible Assignee.
iv. The effective date for this Assignment and Acceptance
shall be ________________ (the "Effective Date")(3) and
following the execution of this Assignment, the Agent will record
it.
v. Upon such recording, and as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement for all
purposes, and, to the extent provided in this Assignment, have
the rights and obligations of a Bank thereunder and (ii) the
Assignor shall, to the extent provided in this Assignment,
relinquish its rights (other than rights against the Borrower
pursuant to Section 10.04 of the Credit Agreement, which shall
survive this assignment) and be released from its obligations
under the Credit Agreement.
vi. Upon such recording, from and after the Effective Date,
the Agent shall make all payments under the Credit Agreement and
the Note(s) in respect of the interest assigned hereby
(including, without limitation, all payments of principal,
interest, and fees) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the
Credit Agreement and the Note(s) for periods prior to the
Effective Date directly between themselves.
vii. This Assignment shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
- --------------------
(2) If the Assignee is organized under the laws of a jurisdiction outside the
United States.
(3) See Section 10.06(a). Such date shall be at least three Business Days
after the execution of this Assignment.
-3-
<PAGE> 80
The parties hereto have caused this Assignment to be duly executed as of
the date first above written.
[ASSIGNOR]
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Address:
-----------------------
-----------------------
-----------------------
Attention:
---------------------
Telecopy:
---------------------
Telephone:
---------------------
[ASSIGNEE]
Domestic Lending Office:
-----------------------
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Address:
-----------------------
-----------------------
-----------------------
Attention:
---------------------
Telecopy:
---------------------
Telephone:
---------------------
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<PAGE> 81
Eurodollar Lending Office:
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Address:
-----------------------
-----------------------
-----------------------
Attention:
---------------------
Telecopy:
---------------------
Telephone:
---------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent for Itself and the Banks
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Address: 901 Main Street
Dallas, Texas 75202
Attention: Ms. Denise Ashford Smith
Telecopy: (214) 508-1285
Telephone: (214) 508-1261
-5-
<PAGE> 82
EXHIBIT D
[FORM OF OPINION OF GENERAL COUNSEL FOR
THE BORROWER AND THE GUARANTOR]
February 27, 1997
To each of the lenders parties to
the Credit Agreement herein
described and to NationsBank
of Texas, N.A., as Agent
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the U.S.
$100,000,000 364-Day Credit Agreement dated as of February 27, 1997 (the
"Credit Agreement"), among Fina Oil and Chemical Company, as borrower (the
"Borrower"), Fina, Inc., as guarantor (the "Guarantor"), the banks parties
thereto (the "Banks"), CIBC Inc. and Texas Commerce Bank National Association,
as Co-Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication
Agent, and NationsBank of Texas, N.A., as Agent for the Banks. Terms defined
in the Credit Agreement are used herein as therein defined.
[Opinion format of rendering counsel to be supplied by such counsel.]
Opinions:
i. 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.
ii. Each of (i) the execution, delivery and performance
by each of the Borrower and the Guarantor of the Credit
Agreement, (ii) the execution, delivery and performance by
the Borrower of the A Notes and the other Notes to be
executed by the Borrower, and (iii) the consummation of
the transactions contemplated by the Credit Agreement, are
within the corporate powers of the Borrower and the
Guarantor, respectively, have been duly authorized by all
necessary corporate action, do not contravene (x) the
Certificate of Incorporation or the By-laws of the
Borrower or the Guarantor,
<PAGE> 83
respectively, or (y) any law, rule or regulation
applicable to the Borrower or the Guarantor (including,
without limitation, Regulation X of the Board of Governors
of the Federal Reserve System) or (z) any contractual or
legal restriction and will not result in or require the
creation or imposition of any Lien prohibited by the
Credit Agreement. With respect to the Notes to be
executed after the date hereof by the Borrower, this
opinion is limited to laws, rules and regulations as in
force and applied on the date hereof, the Certificate of
Incorporation and the Bylaws of the Borrower, and
restrictions in effect on the date hereof. The Credit
Agreement has been duly executed and delivered by the
Borrower and the Guarantor, and the A Notes have been duly
executed and delivered by the Borrower.
iii. No authorization, 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 Agreement, and (in the case of the Borrower)
the respective Notes or the consummation of the
transactions contemplated by the Credit Agreement.
iv. The A Notes executed by the Borrower constitute,
and each Note hereafter executed by the Borrower will
constitute, a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance
with its terms. The Credit Agreement executed by the
Borrower and the Guarantor constitutes legal, valid and
binding obligations of the Borrower and the Guarantor,
respectively, enforceable against the Borrower and the
Guarantor in accordance with its terms.
v. There are no pending or overtly threatened actions
or proceedings against the Borrower, the Guarantor or any
of their respective Subsidiaries before any court,
governmental agency or arbitrator which purport to affect
the legality, validity, binding effect or enforceability
of the Credit Agreement or any of the Notes or which could
reasonably be expected to have a materially adverse effect
upon the financial condition or operations of the Borrower
and its Subsidiaries taken as a whole, or the Guarantor
and its Subsidiaries taken as a whole.
vi. 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. Neither the Borrower nor
the Guarantor is a "holding company", or a "subsidiary
company" of a
-2-
<PAGE> 84
"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.
Very truly yours,
-3-
<PAGE> 85
EXHIBIT E
FORM OF OPINION OF SPECIAL COUNSEL TO AGENT
February 27, 1997
To each of the lenders parties
to the Credit Agreement
herein described and to
NationsBank of Texas, N.A.,
as Agent
Ladies and Gentlemen:
We have acted as special counsel to NationsBank of Texas, N.A., acting for
itself and as Agent, in connection with the preparation, execution and delivery
of the U.S.$100,000,000 364-Day Credit Agreement dated as of February 27, 1997
(the "Credit Agreement"), among Fina Oil and Chemical Company, as borrower (the
"Borrower"), Fina, Inc., as guarantor (the "Guarantor"), CIBC Inc. and Texas
Commerce Bank National Association, as Co-Agents, NationsBanc Capital Markets,
Inc., as Arranger & Syndication Agent, NationsBank of Texas, N.A., as agent
(the "Agent"), and each of you named as Banks thereunder. Terms defined in the
Credit Agreement are used herein as therein defined.
In that connection, we have examined the following documents:
(i) counterparts of the Credit Agreement, executed by the
Agent, the Borrower, and the Guarantor, respectively;
(ii) the A Notes dated as of February 27, 1997 of the Borrower
payable to the order of each Bank party to the Credit Agreement as of
the date hereof (the "A Notes"); and
(iii) the opinion dated February 27, 1997 of Cullen M. Godfrey,
General Counsel for each of the Borrower and the Guarantor ("Opinion").
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the
genuineness of all signatures and the conformity to the originals of all such
documents submitted to us as copies. We have also assumed that each of the
Borrower, the Guarantor, the Banks and the Agent has duly executed and
delivered, with all necessary power and authority (corporate and otherwise),
the Credit Agreement, that the Borrower has duly executed and delivered, with
all necessary power and authority (corporate and otherwise),
<PAGE> 86
February 27, 1997
Page 2
the A Notes. We have also assumed that no Bank has requested that the Opinion
required by Section 3.01(d) of the Credit Agreement contain any other matters
not contained in the form of opinion set forth as Exhibit D to the Credit
Agreement.
Based upon the foregoing examination of documents and assumptions and upon such
other investigation as we have deemed necessary, we are of the opinion that the
A Notes and the Opinion, are substantially responsive to the requirements of
the Credit Agreement.
This opinion is solely for the benefit of the Banks, the Agent, their
respective successors, assigns, participants and other transferees and may be
relied upon only by such Persons.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 87
EXHIBIT F
FORM OF ACCESSION AGREEMENT
[NAME OF BANK] , hereby agrees with Fina Oil and Chemical
Company, as Borrower, Fina, Inc., as Guarantor, and NationsBank of Texas, N.A.,
as Agent under the U.S.$100,000,000 364-Day Credit Agreement dated as of
February 27, 1997 (as it may be amended from time to time in accordance with
its terms, the "Credit Agreement") among the Borrower, the Guarantor, the Banks
parties thereto, CIBC Inc. and Texas Commerce Bank National Association, as
Co-Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent,
and NationsBank of Texas, N.A., as Agent for the Banks (as such agreement is
amended from time to time in accordance with its terms, the "Credit Agreement";
capitalized terms used herein and not otherwise defined having the meanings set
forth therein), as follows:
The undersigned hereby agrees and confirms that, as of the date hereof,
it (a) intends to be a Bank party to the Credit Agreement with a Commitment of
$____________ in connection with the proposed increase of the aggregate
Commitments pursunt to Section 2.15 of the Credit Agreement to $__________, and
undertakes to perform all the obligations expressed therein as a Bank; (b) has
received a copy of the Credit Agreement, together with copies of the financial
statements referred to in Section 5.05 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Accession Agreement and become a Bank under the
Credit Agreement; (c) will, independently and without reliance upon the Agent
or any 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 Agreement; (d) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (e) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank;
(f) specifies as its Domestic Lending Office (and address for notices) and
Eurodollar Lending Office the offices set forth beneath its name on the
signature pages hereof; (g) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to its status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to it under the Credit Agreement and its Note(s) or
such other documents as are necessary to indicate that all such payments are
subject to
<PAGE> 88
such rates at a rate reduced by an applicable tax treaty*****, and
(h) represents that it is an Eligible Assignee.
The effective date for this Accession Agreement shall be the date the
related increase in the aggregate Commitments becomes effective in accordance
with the terms of Section 2.15 of the Credit Agreement (the "Effective Date")
and following the execution of this Accession Agreement, the Agent will record
it. Upon such recording, and as of the Effective Date, (i) the undersigned
shall be a Bank party to the Credit Agreement for all purposes, and, to the
extent of its Commitment, shall have the rights and obligations of a Bank
thereunder.
This Accession Agreement shall be construed as a contract governed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF this Accession Agreement was executed and delivered
as of the ___ day of _________, ____.
[NAME OF NEW BANK]
---------------------------
By:
------------------------
Title:
---------------------
Domestic Lending Office:
-----------------------
Address:
-------------------------
Attention:
-----------------------
Telecopy:
------------------------
Telephone:
-----------------------
- --------------------
(1) If the New Bank is organized under the laws of a jurisdiction outside the
United States.
-2-
<PAGE> 89
Eurodollar Lending Office:
-------------------------
Address:
-----------------------
Attention:
-----------------------
Telecopy:
------------------------
Telephone:
-----------------------
Acknowledged and Agreed By:
FINA OIL AND CHEMICAL COMPANY
- -------------------------------
By:
----------------------------
Title:
-------------------------
FINA, INC.
- -------------------------------
By:
----------------------------
Title:
-------------------------
NATIONSBANK OF TEXAS, N.A.
- -------------------------------
By:
----------------------------
Title:
-------------------------
<PAGE> 90
EXHIBIT G
FORM OF CONSENT TO INCREASE OF COMMITMENT
[NAME OF BANK] , hereby agrees with Fina Oil and Chemical
Company, as Borrower, Fina, Inc., as Guarantor, and NationsBank of Texas, N.A.,
as Agent under the U.S.$100,000,000 364-Day Credit Agreement dated as of
February 27, 1997 (as it may be amended from time to time in accordance with
its terms, the "Credit Agreement") among the Borrower, the Guarantor, the
undersigned and the other Banks parties thereto, CIBC Inc. and Texas Commerce
Bank National Association, as Co-Agents, NationsBanc Capital Markets, Inc., as
Arranger & Syndication Agent, and NationsBank of Texas, N.A., as Agent for the
Banks (as such agreement is amended from time to time in accordance with its
terms, the "Credit Agreement"; capitalized terms used herein and not otherwise
defined having the meanings set forth therein), as follows:
The undersigned hereby agrees and confirms that, as of the date hereof,
it intends to increase its Commitment under the Credit Agreement to
$____________ in connection with the proposed increase of the aggregate
Commitments pursunt to Section 2.15 of the Credit Agreement to $__________.
The effective date for this Consent and for the increase of the
undersigned's Commitment as set forth in the preceding paragraph shall be the
date the related increase in the aggregate Commitments becomes effective in
accordance with the terms of Section 2.15 of the Credit Agreement (the
"Effective Date").
This Consent shall be construed as a contract governed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF this Consent was executed and delivered as of the ___
day of _________, ____.
[NAME OF BANK]
-------------------------------
By:
----------------------------
Title:
-------------------------
<PAGE> 91
Acknowledged and Agreed By:
FINA OIL AND CHEMICAL COMPANY
- -------------------------------
By:
----------------------------
Title:
-------------------------
FINA, INC.
- -------------------------------
By:
----------------------------
Title:
-------------------------
NATIONSBANK OF TEXAS, N.A.
- -------------------------------
By:
----------------------------
Title:
-------------------------
<PAGE> 92
EXECUTION COPY
U.S. $325,000,000
5-YEAR CREDIT AGREEMENT
Dated as of February 27, 1997
Among
FINA OIL AND CHEMICAL COMPANY
as Borrower
FINA, INC.
as Guarantor
THE BANKS NAMED HEREIN
as Banks
CIBC INC.
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Co-Agents
NATIONSBANC CAPITAL MARKETS, INC.
as Arranger & Syndication Agent
and
NATIONSBANK OF TEXAS, N.A.
as Agent
<PAGE> 93
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . 1
Section 1.02. Computation of Time Periods . . . . . . . . . . . . 12
Section 1.03. Accounting Terms . . . . . . . . . . . . . . . . . . 12
Section 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. The A Advances . . . . . . . . . . . . . . . . . . . 13
Section 2.02. Making the A Advances . . . . . . . . . . . . . . . 13
Section 2.03. Fees . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.04. Optional Reduction of the Commitments . . . . . . . 16
Section 2.05. Repayment and Prepayment of A Advances . . . . . . . 17
Section 2.06. Interest on A Advances . . . . . . . . . . . . . . . 17
Section 2.07. Interest Rate Determination . . . . . . . . . . . . 18
Section 2.08. The B Advances . . . . . . . . . . . . . . . . . . . 18
Section 2.09. Payments, Computations; Interest on Overdue
Amounts . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.10. Consequential Losses . . . . . . . . . . . . . . . . 22
Section 2.11. Increased Costs . . . . . . . . . . . . . . . . . . 22
Section 2.12. Illegality . . . . . . . . . . . . . . . . . . . . . 24
Section 2.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.14. Payments Pro Rata . . . . . . . . . . . . . . . . . 26
Section 2.15. Increase of Aggregate Commitments . . . . . . . . . 26
ARTICLE III
CONDITIONS
Section 3.01. Conditions Precedent to Effectiveness . . . . . . . 28
Section 3.02. Conditions Precedent to Each A Borrowing . . . . . . 29
</TABLE>
-i-
<PAGE> 94
<TABLE>
<S> <C> <C>
Section 3.03. Conditions Precedent to Certain Borrowings . . . . . 30
Section 3.04. Conditions Precedent to Each B Borrowing . . . . . . 30
ARTICLE IV
GUARANTY
Section 4.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.02. Guaranty Absolute . . . . . . . . . . . . . . . . . 31
Section 4.03. Waiver. . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.04. Subrogation . . . . . . . . . . . . . . . . . . . . 32
Section 4.05. No Waiver; Remedies . . . . . . . . . . . . . . . . 32
Section 4.06. Continuing Guaranty . . . . . . . . . . . . . . . . 32
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. Corporate Existence . . . . . . . . . . . . . . . . 33
Section 5.02. Corporate Power . . . . . . . . . . . . . . . . . . 33
Section 5.03. Authorization and Approvals . . . . . . . . . . . . 33
Section 5.04. Enforceable Obligations . . . . . . . . . . . . . . 34
Section 5.05. Financial Statements . . . . . . . . . . . . . . . . 34
Section 5.06. Litigation . . . . . . . . . . . . . . . . . . . . . 35
Section 5.07. Regulation U; Use of Proceeds . . . . . . . . . . . 35
Section 5.08. Investment Company Act . . . . . . . . . . . . . . . 35
Section 5.09. ERISA . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.11. Holding Company . . . . . . . . . . . . . . . . . . 36
Section 5.12. Environmental Condition . . . . . . . . . . . . . . 36
Section 5.13. Ownership of Borrower . . . . . . . . . . . . . . . 36
Section 5.14. Guarantor's Independent Decision . . . . . . . . . . 36
ARTICLE VI
AFFIRMATIVE COVENANTS
Section 6.01. Compliance with Laws, Etc. . . . . . . . . . . . . . 36
Section 6.02. Reporting Requirements . . . . . . . . . . . . . . . 37
</TABLE>
-ii-
<PAGE> 95
<TABLE>
<S> <C>
Section 6.03. Use of Proceeds . . . . . . . . . . . . . . . . . . 39
Section 6.04. Maintenance of Insurance . . . . . . . . . . . . . . 39
Section 6.05. Preservation of Corporate Existence, Etc. . . . . . 39
Section 6.06. Payment of Taxes, Etc. . . . . . . . . . . . . . . . 39
Section 6.07. Visitation Rights . . . . . . . . . . . . . . . . . 39
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01. Financial Covenants . . . . . . . . . . . . . . . . 40
Section 7.02. Liens, Etc. . . . . . . . . . . . . . . . . . . . . 40
Section 7.03. Merger and Sale of Assets . . . . . . . . . . . . . 40
Section 7.04. Agreements to Restrict Dividends and Certain
Transfers . . . . . . . . . . . . . . . . . . . . . 41
Section 7.05. Compliance with ERISA . . . . . . . . . . . . . . . 41
Section 7.06. Transactions with Affiliates . . . . . . . . . . . . 41
Section 7.07. Change of Business . . . . . . . . . . . . . . . . . 42
Section 7.08. Limitation on Loans, Advances and Investments . . . 42
Section 7.09. Fiscal Year; Accounting Practices . . . . . . . . . 42
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . 43
ARTICLE IX
THE AGENT, THE CO-AGENTS, AND THE ARRANGER & SYNDICATION AGENT
Section 9.01. Authorization and Action . . . . . . . . . . . . . . 46
Section 9.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . 46
Section 9.03. NationsBank and Affiliates . . . . . . . . . . . . . 46
Section 9.04. Bank Credit Decision . . . . . . . . . . . . . . . . 47
Section 9.05. Indemnification . . . . . . . . . . . . . . . . . . 47
Section 9.06. Successor Agent . . . . . . . . . . . . . . . . . . 48
Section 9.07. Co-Agents; Arranger & Syndication Agent . . . . . . 48
</TABLE>
-iii-
<PAGE> 96
ARTICLE X
MISCELLANEOUS
<TABLE>
<S> <C> <C>
Section 10.01. Amendments, Etc. . . . . . . . . . . . . . . . . . 48
Section 10.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . 49
Section 10.03. No Waiver; Remedies . . . . . . . . . . . . . . . . 49
Section 10.04. Costs, Expenses and Taxes . . . . . . . . . . . . . 50
Section 10.05. Right of Set-off . . . . . . . . . . . . . . . . . 50
Section 10.06. Bank Assignments and Participations . . . . . . . . 51
Section 10.07. Governing Law . . . . . . . . . . . . . . . . . . . 53
Section 10.08. Interest . . . . . . . . . . . . . . . . . . . . . 53
Section 10.09. Execution in Counterparts . . . . . . . . . . . . . 54
Section 10.10. Survival of Agreements, Representations and
Warranties, Etc. . . . . . . . . . . . . . . . . 54
Section 10.11. Borrower's Right to Apply Deposits . . . . . . . . 54
Section 10.12. Confidentiality . . . . . . . . . . . . . . . . . . 55
Section 10.13. Binding Effect . . . . . . . . . . . . . . . . . . 55
Section 10.14. Entire Agreement . . . . . . . . . . . . . . . . . 55
Section 10.15. Severability . . . . . . . . . . . . . . . . . . . 56
</TABLE>
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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
Exhibit F - Form of Accession Agreement
Exhibit G - Form of Consent to Increase in Commitment
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CREDIT AGREEMENT
Dated as of February 27, 1997
This Credit Agreement dated as of February 27, 1997, is by and among the
Borrower, the Guarantor, the Agent, the Co-Agents, the Arranger & Syndication
Agent and the Banks. In consideration of the mutual covenants and agreements
contained herein, the Borrower, the Guarantor, the Agent, the Co-Agents, the
Arranger & Syndication Agent 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.
"Accession Agreement" means an Accession Agreement in the form of
Exhibit F duly executed by the Borrower, the Guarantor, the Agent, and a New
Bank in connection with an increase in the aggregate Commitments permitted
pursuant to Section 2.15.
"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,
<PAGE> 99
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 January 24,
1997 among the Agent, the Borrower and the Guarantor.
"Aggregate Commitment Limit" means $550,000,000.
"Agreement" means this Credit Agreement dated as of February 27, 1997
among the Borrower, the Guarantor, the Agent, the Co-Agents, the Arranger &
Syndication Agent 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 Facility Fee" means, at any time the facility fee described
in Section 2.03 is to be paid, the following percentages per annum determined
as a function of the Guarantor's senior unsecured debt rating according to S&P
or Moody's, whichever is higher, on the last day of the immediately preceding
calendar quarter:
Rating A+/A1 .06%
Rating A/A2 .07%
Rating A-/A3 .08%
Rating BBB+/Baa1
or BBB/Baa2 .10%
Rating BBB-/Baa3 .15%
Rating BB+/Ba1
or below .20%
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"Applicable Margin" means, at any time with respect to any A Advance
which is a Eurodollar Rate Advance, the following percentages determined as a
function of the Guarantor's senior unsecured debt rating according to S&P or
Moody's, whichever is higher, on the last day of the immediately preceding
calendar quarter:
Rating A+/A1 0.14%
Rating A/A2 0.15%
Rating A-/A3 0.165%
Rating BBB+/Baa1
or BBB/Baa2 0.20%
Rating BBB-/Baa3 0.275%
Rating BB+/Ba1
or below 0.425%
"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.
"Banks" means the banks listed on the signature pages hereof and each
other Person that becomes a Bank pursuant to an Assignment or an Accession
Agreement.
"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:
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(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 its capacity as co-agent 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 as the
"Commitment" of such Bank on the signature pages of this Agreement, or if such
Bank has executed an Assignment or a Consent to Increase of Commitment, then
the amount set forth as the "Commitment" of such Bank therein, or if such Bank
is a New Bank, then the amount set forth as the "Commitment" of such Bank in
the Accession Agreement executed by such Bank, in each case as such amount may
be terminated or reduced pursuant to Section 2.04 or Section 8.01.
"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
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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 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.
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"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.
"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)
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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.
"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
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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 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 S&P or of Moody's, 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 S&P
or not less than "P-2" (or the then equivalent) by the rating service of
Moody's, 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 S&P or of Moody's;
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(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.
"Moody's" means Moody's Investors Service, or any successor thereto.
"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.
"New Bank" means any lender which becomes a "Bank" hereunder by
executing an Accession Agreement pursuant to an increase in the aggregate
Commitments permitted by Section 2.15.
"Note" means an A Note or a B Note.
"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).
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"Parallel Agreement" means the U.S. $100,000,000 364-Day Credit
Agreement dated as of February 27, 1997 among the Borrower, the Guarantor, the
Agent, the Arranger & Syndication Agent and the Banks, as amended or modified
from time to time.
"Parallel Agreement Commitments" means, as of any date of determination,
the "Commitments" as defined in the Parallel Agreement.
"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
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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.
"Reference Banks" means NationsBank, CIBC Inc. and Texas Commerce Bank
National Association.
"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.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
"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
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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 February 27, 2002, or the earlier date of
termination in whole of the Commitments pursuant to Section 2.04 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.
"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
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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 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.
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(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, except as provided in Section 2.02(b)(vi),
each Advance comprising such A Borrowing shall be a Base Rate
Advance;
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(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) With respect to any new A Borrowing to be made on the last day of
an Interest Period, the Borrower and each Bank agree that any amounts payable
by the Borrower to such Bank in connection with maturing A Advances on the date
of such Borrowing shall be netted against the amount of the new Borrowing to be
funded by such Bank so as to eliminate where possible the need for actual
payment and readvancement of funds by the parties. In the event of any A
Borrowing
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subject to the conditions precedent in Section 3.03, 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 (to the extent in excess of any maturing A Advances payable to such
Bank), 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 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 calculated on the amount of such Bank's Commitment (regardless of
usage) from the date hereof until the Termination Date at the Applicable
Facility Fee 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
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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 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
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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, 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
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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
(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
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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
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
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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 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
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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
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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 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
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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 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
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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, EACH CO-
AGENT, THE ARRANGER & SYNDICATION AGENT 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, SUCH CO-AGENT, THE ARRANGER & SYNDICATION 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, SUCH CO-AGENT, THE
ARRANGER & SYNDICATION 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
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
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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, or 2.13, 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 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. Increase of Aggregate Commitments. Provided no Default
has occurred and is continuing, the Borrower may by written notice to the Agent
and the Banks request that the aggregate amount of the Commitments hereunder be
increased up to the Aggregate Commitment Limit; provided, however that in the
event the Parallel Agreement is still in effect, (a) the Borrower shall
simultaneously request a pro rata increase in the aggregate amount of the
Parallel Agreement Commitments pursuant to Section 2.15 of the Parallel
Agreement, and (b) after giving effect to such increase of the aggregate
Commitments and such pro rata increase of the aggregate Parallel Agreement
Commitments, the total amount of all Commitments and all Parallel Agreement
Commitments shall not exceed the Aggregate Commitment Limit. Upon the
Borrower's receipt of (a) incremental commitments from such Banks that may
agree to provide an increased Commitment hereunder, and if the Parallel
Agreement is still in effect, an increased Parallel Agreement
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Commitment under the Parallel Agreement (there being no obligation on the part
of any Bank at any time hereunder to increase such Bank's Commitment or such
Bank's Parallel Agreement Commitment but any such increase agreed upon by any
Bank to be pro rata between this Agreement and the Parallel Agreement so that
its ratable percentage of each is the same) and/or (b) commitments from new
lenders willing to become a Bank with a Commitment hereunder, and if the
Parallel Agreement is still in effect, a "Bank" under the Parallel Agreement
with a pro rata Parallel Agreement Commitment, then such increase of the
aggregate Commitments shall become effective simultaneously with any such
increase of the aggregate Parallel Agreement Commitments when the following
conditions precedent and, if applicable, the conditions precedent set forth in
Section 2.15 of the Parallel Agreement have been satisfied and the Agent shall
have notified the parties hereto to such effect:
(i) The Borrower shall have delivered to the Agent, with sufficient
copies for each Bank (A) a certificate of the Chief Financial Officer of the
Borrower addressed to the Banks to the effect that, to the best of such
officer's knowledge, (x) no Default or Event of Default has occurred and is
continuing (or would result from the incurrence of the additional Debt
contemplated by this Section 2.15), and (y) all representations and warranties
herein or in any other Credit Document are true and correct in all material
respects with the same effect as if these representations and warranties had
been made on the date of such certificate (it being understood and agreed that
any representation which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as of such
specified date), and (B) unless the documentation delivered in connection with
the effectiveness of this Agreement otherwise authorizes Debt hereunder and
under the Parallel Agreement in an aggregate amount up to the Aggregate
Commitment Limit, a certificate of the Borrower's Secretary certifying that the
Borrower has been duly authorized by resolution of the Borrower's Board of
Directors to incur Debt hereunder and, if the Parallel Agreement is still in
effect, under the Parallel Agreement in an amount equal to or exceeding the
increased aggregate amount of the Commitments and, if the Parallel Agreement is
still in effect, the Parallel Agreement Commitments.
(ii) An Accession Agreement for each New Bank shall have been duly
executed by each party thereto.
(iii) The Agent has received the written consent of each Bank which has
agreed to increase its Commitment hereunder (but no other Bank's consent shall
be required), such consent to be substantially in the form of the Consent to
Increase of Commitment attached as Exhibit G.
(iv) New Notes (including without limitation substitute Notes for
those Banks which have agreed to increase their respective Commitments) shall
have been executed and delivered by the Borrower in substantially the form of
Exhibits A-1 and A-2, as appropriate.
(v) No A Advances are outstanding hereunder as of the date such
increase is to become effective, or any such Advances are contemporaneously
repaid on such date.
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ARTICLE III
CONDITIONS
Section 3.01. Conditions Precedent to Effectiveness. This Agreement
shall become effective when the following conditions precedent have been
satisfied and the Agent shall have notified the parties hereto in writing that
this Agreement has become effective pursuant to this Section:
(a) Documentation. 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, the Arranger & Syndication Agent
and each Bank, and an A Note payable to each Bank duly executed by the
Borrower.
(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.
(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,
L.L.P. 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.
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(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, the Arranger & Syndication Agent and the Banks shall have received
sufficient evidence indicating that the Borrower's and the Guarantor's
obligations under the U.S. $400,000,000 Credit Agreement dated as of March 7,
1995 among the Borrower, the Guarantor, the banks and co-agents 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 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,
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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 condition precedent that on the date of
such Borrowing, no Default occurred and is continuing, or would result from
such Borrowing or from the application of the proceeds therefrom (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 such condition precedent is satisfied on the
date of such Borrowing).
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 (other
than in Section 5.05 and 5.06) 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
(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);
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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 the claims to
such amounts are, or are deemed to be, stayed, unenforceable, not allowable,
discharged, or otherwise reduced, restricted or limited in any manner 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 of 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;
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(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;
(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
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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, the Arranger & Syndication Agent, 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:
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
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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, 1995, and the related Consolidated and consolidating statements of
income and cash flows of the Guarantor and its Subsidiaries for the fiscal year
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, 1996, 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, 1996, 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, 1996, 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, 1995 and September 30, 1996 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, 1996 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, 1996, there
has been no material adverse change in the condition or operations of the
Borrower or its Subsidiaries.
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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.
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, 1989. 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.
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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
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
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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
certificate of said officer (i) stating that he has no knowledge that a Default
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 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
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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;
(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
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(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, including without limitation
to repay maturing commercial paper of the Borrower.
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 the operations of the Borrower, the
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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, 1997 shall not exceed an amount
equal to (x) $275,000,000, plus (y) 75% of the Guarantor's Consolidated net
income for the period on or after January 1, 1997 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, 1997; 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
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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 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
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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:
(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 for the Borrower, the Guarantor, and all Restricted
Subsidiaries which are 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.
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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 shall have knowledge of such failure, or (iii) any term (other
than a representation and warranty), covenant or agreement contained in any
Credit Document (other than a term, covenant or agreement the noncompliance
with which would be governed by 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;
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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 judgments or orders for the payment of money in excess of
$10,000,000 individually or $25,000,000 in the aggregate 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 judgments or orders or (ii) there shall be any period of
30 consecutive days during which a stay of enforcement of such judgments or
orders, 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 $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
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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; or
(k) any Person or group (or any Affiliate of such Person or group) --
other than Petrofina S.A., a societe anonyme (corporation) organized and
existing under the laws of the Kingdom of Belgium ("Petrofina"), or Petrofina
Delaware, Incorporated, a Delaware corporation ("PDI"), or any wholly-owned
Subsidiary of Petrofina or PDI -- shall beneficially own, directly or
indirectly, capital stock of the Guarantor representing 30% or more of the
voting power of all capital stock of the Guarantor; or
(l) any "Event of Default" (as such term is defined in the Parallel
Agreement) shall occur and be continuing.
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.
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ARTICLE IX
THE AGENT, THE CO-AGENTS, AND THE ARRANGER & SYNDICATION AGENT
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
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
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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 Arranger &
Syndication Agent 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 Arranger & Syndication Agent or any other
Bank and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit Documents.
SECTION 9.05. INDEMNIFICATION. THE BANKS AGREE TO INDEMNIFY THE AGENT,
EACH CO-AGENT, AND THE ARRANGER & SYNDICATION AGENT (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, SUCH CO-AGENT OR THE ARRANGER & SYNDICATION AGENT 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, ANY CO-AGENT OR THE ARRANGER & SYNDICATION AGENT FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM THE AGENT'S,
SUCH CO-AGENT'S OR THE ARRANGER & SYNDICATION 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
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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; Arranger & Syndication Agent. The Co-Agents
and the Arranger & Syndication Agent shall have no duties, obligations, or
liabilities in their capacities as such.
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
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conditions specified in Article III, (b) increase the aggregate amount of the
Commitments to greater than the Aggregate Commitment Limit 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 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; and provided, further, that no increase
may be made with respect to any Bank's Commitment without the consent of such
Bank.
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.
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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, EACH CO-AGENT, THE ARRANGER &
SYNDICATION AGENT 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, SUCH CO-AGENT, THE ARRANGER &
SYNDICATION AGENT 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, SUCH CO-
AGENT, THE ARRANGER & SYNDICATION AGENT 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 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
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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 and such Bank
shall simultaneously assign a pro rata portion of such Bank's rights and
obligations in respect of its Parallel Agreement Commitment so that its pro
rata percentage of each of the Commitments and the Parallel Agreement
Commitments is the same, (ii) the amount of the resulting Commitment and
Advances of the assigning Bank (unless it is assigning all its Commitment and
all of its Parallel Agreement 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 $3000 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.
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(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 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
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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(c), 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, the Co-Agents, or the
Arranger & Syndication Agent, 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.
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. To the extent that any Bank may be
subject to Texas law limiting the amount of interest
-53-
<PAGE> 151
payable for its account, such Bank shall utilize the indicated (weekly) rate
ceiling from time to time in effect as provided in Article 5069-1.04 of the
Revised Civil Statutes of Texas, as amended.
(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 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.
-54-
<PAGE> 152
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 or any Bank's Affiliate) 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.
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
-55-
<PAGE> 153
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 INTENTIONALLY BLANK]
-56-
<PAGE> 154
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
-------------------------------
Yves Bercy
Vice President & Chief
Financial Officer
GUARANTOR:
---------
FINA, INC.
-------------------------------
Yves Bercy
Vice President & Chief
Financial Officer
AGENT:
-----
NATIONSBANK OF TEXAS, N.A.,
as Agent
-------------------------------
Denise Ashford Smith
Senior Vice President
-57-
<PAGE> 155
ARRANGER & SYNDICATION AGENT
----------------------------
NATIONSBANC CAPITAL MARKETS, INC.
---------------------------------
David E. Hunt
Managing Director
Commitments BANKS:
- ----------- -----
$30,588,234 NATIONSBANK OF TEXAS, N.A.
---------------------------------
Denise Ashford Smith
Senior Vice President
$26,382,353 CIBC INC.
---------------------------------
By:
-------------------------------
Title:
----------------------------
$26,382,353 TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
---------------------------------
By:
-------------------------------
Title:
----------------------------
-58-
<PAGE> 156
$18,735,294 BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
------------------------------
By:
----------------------------
Title:
-------------------------
$18,735,294 BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
------------------------------
By:
----------------------------
Title:
-------------------------
$18,735,294 CREDIT LYONNAIS NEW YORK BRANCH
------------------------------
By:
----------------------------
Title:
-------------------------
$18,735,294 THE FUJI BANK, LIMITED
HOUSTON AGENCY
------------------------------
By:
----------------------------
Title:
-------------------------
-59-
<PAGE> 157
$18,735,294 MELLON BANK, N.A.
------------------------------
By:
----------------------------
Title:
-------------------------
$18,735,294 SOCIETE GENERALE, SOUTHWEST
AGENCY
------------------------------
By:
----------------------------
Title:
-------------------------
$18,735,294 THE SUMITOMO BANK, LIMITED
------------------------------
By:
----------------------------
Title:
-------------------------
$18,735,294 UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
------------------------------
By:
----------------------------
Title:
-------------------------
------------------------------
By:
----------------------------
Title:
-------------------------
-60-
<PAGE> 158
$15,294,118 BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH
------------------------------
By:
----------------------------
Title:
-------------------------
------------------------------
By:
----------------------------
Title:
-------------------------
$15,294,118 CITICORP USA, INC.
------------------------------
By:
----------------------------
Title:
-------------------------
$15,294,118 CREDIT COMMERCIAL DE FRANCE
------------------------------
By:
----------------------------
Title:
-------------------------
------------------------------
By:
----------------------------
Title:
-------------------------
-61-
<PAGE> 159
$15,294,118 THE DAI-ICHI KANGYO BANK, LTD.
NEW YORK BRANCH
------------------------------
By:
----------------------------
Title:
-------------------------
$15,294,118 DEN DANSKE BANK AKTIESELSKAB
CAYMAN ISLANDS BRANCH
------------------------------
By:
----------------------------
Title:
-------------------------
------------------------------
By:
----------------------------
Title:
-------------------------
$15,294,118 GENERALE BANK--NEW YORK BRANCH
------------------------------
By:
----------------------------
Title:
-------------------------
=================
$325,000,000 TOTAL COMMITMENTS
-62-
<PAGE> 160
EXHIBIT A-1
A PROMISSORY NOTE
U.S. $___________________ Dated as of February 27, 1997
FOR VALUE RECEIVED, the undersigned, Fina Oil and Chemical Company, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
__________________________ (the "Bank"), for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below) or any
other office designated by the Bank the principal amount of each A Advance (as
defined below) made by the Bank to the Borrower pursuant to the Credit
Agreement (as defined below) on the date such A Advance is due and payable as
set forth in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each A Advance from the date of such A Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A., as Agent, at 901 Main Street,
Dallas, Texas 75202, in same day funds. Each A Advance made by the Bank to the
Borrower and the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Bank and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Promissory
Note.
This Promissory Note is one of the A Notes referred to in, and is
subject to and entitled to the benefits of, the U.S. $325,000,000 5-Year Credit
Agreement dated as of February 27, 1997 (as it may be amended from time to time
in accordance with its terms, the "Credit Agreement") among the Borrower, Fina,
Inc., as Guarantor, the Bank, certain other banks parties thereto, CIBC Inc.
and Texas Commerce Bank National Association, as Co-Agents, NationsBanc Capital
Markets, Inc., as Arranger & Syndication Agent, and NationsBank of Texas, N.A.,
as Agent for the Bank and such other banks. The Credit Agreement, among other
things, (i) provides for the making of advances (the "A Advances") by the Bank
to the Borrower from time to time pursuant to Section 2.01 of the Credit
Agreement in an aggregate outstanding amount not to exceed at any time the U.S.
dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such A Advance being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified. Capitalized terms used herein which are not defined herein and are
defined in the Credit Agreement are used herein as therein defined.
<PAGE> 161
The Borrower hereby waives presentment, demand, protest, notice of
intent to accelerate, notice of acceleration and any other notice of any kind,
except as provided in the Credit Agreement. No failure to exercise, and no
delay in exercising, any rights hereunder on the part of the holder hereof
shall operate as a waiver of such rights.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Texas (except that Tex. Rev. Civ. Stat. Ann.
Art. 5069, Ch. 15, which regulates certain revolving credit loan accounts,
shall not apply to this Note).
FINA OIL AND CHEMICAL COMPANY
------------------------------
By:
---------------------------
Title:
------------------------
-2-
<PAGE> 162
EXHIBIT A-2
B PROMISSORY NOTE
U.S. $_______________ Dated: __________, 19__
FOR VALUE RECEIVED, the undersigned, Fina Oil and Chemical Company, a
Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
__________________________ (the "Bank") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below), on
___________, 199_, the principal amount of ____________________ Dollars
($__________).
The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: _____% per annum (calculated on the basis of a year of
____ days for the actual number of days elapsed).
Interest Payment Date or Dates: ______________________
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A., as Agent, at 901 Main Street,
Dallas, Texas 75202, in same day funds.
This Promissory Note is one of the B Notes referred to in, and is
entitled to the benefits of, the U.S. $325,000,000 5-Year Credit Agreement
dated as of February 27, 1997 (as it may be amended from time to time in
accordance with its terms, the "Credit Agreement") among the Borrower, Fina,
Inc., as Guarantor, the Bank, certain other banks parties thereto, CIBC Inc.
and Texas Commerce Bank National Association, as Co-Agents, NationsBanc Capital
Markets, Inc., as Arranger & Syndication Agent, and NationsBank of Texas, N.A.,
as Agent for the Bank and such other banks. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events. Capitalized terms used herein which are
not defined herein and are defined in the Credit Agreement are used herein as
therein defined.
The Borrower hereby waives presentment, demand, protest, notice of
intent to accelerate, notice of acceleration and any other notice of any kind,
except as provided in the Credit Agreement. No failure to exercise, and no
delay in exercising, any rights hereunder on the part of the holder hereof
shall operate as a waiver of such rights.
<PAGE> 163
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of Texas.
FINA OIL AND CHEMICAL COMPANY
---------------------------------
By:
------------------------------
Title:
---------------------------
-2-
<PAGE> 164
EXHIBIT B-1
NOTICE OF A BORROWING
[Date]
NationsBank of Texas, N.A., as Agent
for the Banks parties
to the Credit Agreement
referred to below
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Ms. Denise Ashford Smith
Ladies and Gentlemen:
The undersigned, Fina Oil and Chemical Company (the "Borrower"), refers
to the U.S. $325,000,000 5-Year Credit Agreement dated as of February 27, 1997
(as it may be amended from time to time in accordance with its terms, the
"Credit Agreement"; the terms defined therein and not defined herein being used
herein as therein defined), among the undersigned, Fina, Inc., certain Banks
parties thereto, CIBC Inc. and Texas Commerce Bank National Association, as Co-
Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent, and
NationsBank of Texas, N.A., as Agent for such Banks, and hereby gives you
notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the
undersigned hereby requests an A Borrowing under the Credit Agreement, and in
that connection sets forth below the information relating to such A Borrowing
(the "Proposed A Borrowing") as required by Section 2.02(a) of the Credit
Agreement:
(i) The Business Day of the Proposed A Borrowing is ________________,
19___.
(ii) The Type of A Advances comprising the Proposed A Borrowing is
[Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed A Borrowing is
$____________.
<PAGE> 165
NationsBank of Texas, N.A., as Agent
____________, ___
Page 2
(iv) The Interest Period for each A Advance made as part of the
Proposed A Borrowing is _______ [days] [months].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed A Borrowing:
(a) the representations and warranties contained in Article V
of the Credit Agreement (excluding those contained in Section 5.05 and
Section 5.06 of the Credit Agreement) are correct on and as of the date
of the Proposed A Borrowing, before and after giving effect to the
Proposed A Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date;
(b) no event has occurred and is continuing, or would result
from the Proposed A Borrowing or from the application of the proceeds
therefrom, which constitutes an Event of Default *[or which would
constitute a Default]; and
(c) after giving effect to the Proposed A Borrowing and all
other Borrowings which have been requested on or prior to the date of
the Proposed A Borrowing 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.
Very truly yours,
FINA OIL AND CHEMICAL COMPANY
-----------------------------
By:
--------------------------
Title:
-----------------------
- ----------------------------------
*To be included in Notices of A Borrowing in respect of A Borrowings
referred to in Section 3.03 of the Credit Agreement.
<PAGE> 166
EXHIBIT B-2
NOTICE OF B BORROWING
[Date]
NationsBank of Texas, N.A., as Agent
for the Banks parties
to the Credit Agreement
referred to below
901 Main Street, 64th Floor
Dallas, Texas 75202
Attention: Ms. Denise Ashford Smith
Ladies and Gentlemen:
The undersigned, Fina Oil and Chemical Company (the "Borrower"), refers
to the U.S. $325,000,000 5-Year Credit Agreement dated as of February 27, 1997
(as it may be amended from time to time in accordance with its terms, the
"Credit Agreement"; the terms defined therein and not defined herein being used
herein as therein defined), among the undersigned, Fina, Inc., certain Banks
parties thereto, CIBC Inc. and Texas Commerce Bank National Association, as Co-
Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent, and
NationsBank of Texas, N.A., as Agent for such Banks, and hereby gives you
notice, irrevocably, pursuant to Section 2.16 of the Credit Agreement that the
undersigned hereby requests a B Borrowing under the Credit Agreement, and in
that connection sets forth the terms on which such B Borrowing (the "Proposed B
Borrowing") is requested to be made:
(A) Date of B Borrowing
------------------------
(B) Amount of B Borrowing
------------------------
(C) Maturity Date
------------------------
(D) Interest Rate Basis
------------------------
(E) Interest Payment Date(s)
------------------------
(F)
-------------------------- ------------------------
(G)
-------------------------- ------------------------
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed B Borrowing:
<PAGE> 167
NationsBank of Texas, N.A., As Agent
_____________, 19__
Page 2
(a) the representations and warranties contained in Article V
of the Credit Agreement (excluding those contained in Section 5.05 and
Section 5.06 of the Credit Agreement) are correct on and as of the date
of the Proposed B Borrowing, before and after giving effect to the
Proposed B Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date;
(b) no event has occurred and is continuing, or would result
from the Proposed B Borrowing or from the application of the proceeds
therefrom, which constitutes a Default; and
(c) following the making of the Proposed B Borrowing and all
other Borrowings to be made on the same day under the Credit Agreement,
the aggregate principal amount of all Advances then outstanding shall
not exceed the aggregate amount of the Commitments (computed without
regard to any B Reduction).
The undersigned hereby confirms that the Proposed B Borrowing is to be
made available to it in accordance with Section 2.08(a)(v) of the Credit
Agreement.
Very truly yours,
FINA OIL AND CHEMICAL COMPANY
-------------------------------------
By:
----------------------------------
Title:
-------------------------------
<PAGE> 168
EXHIBIT C
ASSIGNMENT AND ACCEPTANCE
Dated ________________, 19__
Reference is made to the U.S. $325,000,000 5-Year Credit Agreement dated
as of February 27, 1997 (as the same may be amended or modified from time to
time, the "Credit Agreement") among Fina Oil and Chemical Company, a Delaware
corporation (the "Borrower"), Fina, Inc., a Delaware corporation (the
"Guarantor"), the Banks, CIBC Inc. and Texas Commerce Bank National
Association, as Co-Agents, NationsBanc Capital Markets, Inc., as Arranger &
Syndication Agent, and NationsBank of Texas, N.A., as Agent. Capitalized terms
not otherwise defined in this Assignment and Acceptance ("Assignment") shall
have the meanings assigned to them in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, ________________ wishes
to assign and delegate [(a)] ____%(1) of its rights and obligations under the
Credit Agreement in connection with its Commitment and its outstanding A
Advances and A Note [and (b) ____% of its rights under the Credit Agreement in
connection with its outstanding B Advance(s) and B Note(s)]. Therefore,
_________________ ("Assignor"), _______________ ("Assignee"), and the Agent
agree as follows:
1. The Assignor hereby sells and assigns and delegates to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, as
of the Effective Date (as defined below), without recourse to the Assignor and
without representation or warranty except for the representations and
warranties specifically set forth in clauses (i), (ii), and (iii) of Section 2
hereof, [(a)] a ___% interest in and to all of the Assignor's rights and
obligations under the Credit Agreement in connection with its Commitment
(without regard to any B Reduction), its outstanding A Advances and its A Note,
[and (b) ____% of its rights under the Credit Agreement in connection with its
outstanding B Advance(s) and B Note(s)].
2. The Assignor (i) represents and warrants that, prior to executing
this Assignment and Acceptance, its Commitment (without regard to any B
Reduction) is $_____________, and the aggregate outstanding principal amount of
A Advances owed to it by the Borrower is $_____________; (ii) represents and
warrants that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or representations
made in or in connection with the Credit Agreement or any other Credit Document
or the execution, legality, validity, enforceability, genuineness, sufficiency,
or value of the Credit Agreement or any other Credit Document or any other
instrument or document furnished pursuant thereto; (iv) makes no representation
or warranty and assumes no responsibility with respect
- ----------------------------------
(1) Specify percentage in no more than 5 decimal points.
<PAGE> 169
to the financial condition of the Borrower or the Guarantor or the performance
or observance by the Borrower or the Guarantor of any of their respective
obligations under the Credit Agreement or any other Credit Document or any
other instrument or document furnished pursuant thereto; and (v) attaches the
Note(s) referred to in paragraph 1 above and requests that the Agent [(i)]
exchange such A Note for [a] new A Note dated ____________, 19__ in the
principal amount of $______________ payable to the order of the Assignee[, and
a new A Note dated _____________, 19___ in the principal amount of $__________
payable to the order of Assignor][, and (ii) exchange such B Note(s) for new B
Note(s) dated __________, 19__ in the principal amount(s) of $__________,
$__________, and $__________ payable to the order of the Assignee and new B
Note(s) dated __________, 19__ in the principal amount(s) of $__________,
$__________, and $__________].
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the financial statements referred to
in Section 5.05 thereof and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment; (ii) agrees that it will, independently and without reliance
upon the Agent, the Assignor, 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 Agreement;
(iii) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under the Credit Agreement as are delegated
to the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement are
required to be performed by it as a Bank; (v) specifies as its Domestic Lending
Office (and address for notices) and Eurodollar Lending Office the offices set
forth beneath its name on the signature pages hereof; (vi) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as
to the Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement and its Note(s) or such other documents as
are necessary to indicate that all such payments are subject to such rates at a
rate reduced by an applicable tax treaty(2), and (vii) represents that it is an
Eligible Assignee.
- ----------------------------------
(2) If the Assignee is organized under the laws of a jurisdiction
outside the United States.
<PAGE> 170
4. The effective date for this Assignment and Acceptance shall be
________________ (the "Effective Date")(3) and following the execution of this
Assignment, the Agent will record it.
5. Upon such recording, and as of the Effective Date, (i) the
Assignee shall be a party to the Credit Agreement for all purposes, and, to the
extent provided in this Assignment, have the rights and obligations of a Bank
thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment, relinquish its rights (other than rights against the Borrower
pursuant to Section 10.04 of the Credit Agreement, which shall survive this
assignment) and be released from its obligations under the Credit Agreement.
6. Upon such recording, from and after the Effective Date, the Agent
shall make all payments under the Credit Agreement and the Note(s) in respect
of the interest assigned hereby (including, without limitation, all payments of
principal, interest, and fees) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Note(s) for periods prior to the Effective Date directly between
themselves.
7. This Assignment shall be governed by, and construed and enforced
in accordance with, the laws of the State of Texas.
- ----------------------------------
(3) See Section 10.06(a). Such date shall be at least three
Business Days after the execution of this Assignment.
-3-
<PAGE> 171
The parties hereto have caused this Assignment to be duly executed as of
the date first above written.
[ASSIGNOR]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address:
------------------------------
------------------------------
------------------------------
Attention:
------------------------------
Telecopy:
------------------------------
Telephone:
------------------------------
[ASSIGNEE]
Domestic Lending Office:
-----------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address:
------------------------------
------------------------------
------------------------------
Attention:
------------------------------
Telecopy:
------------------------------
Telephone:
------------------------------
-4-
<PAGE> 172
Eurodollar Lending Office:
-------------------------
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address:
------------------------------
------------------------------
------------------------------
Attention:
------------------------------
Telecopy:
------------------------------
Telephone:
------------------------------
NATIONSBANK OF TEXAS, N.A.,
as Agent for Itself and the Banks
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address: 901 Main Street
Dallas, Texas 75202
Attention: Ms. Denise Ashford Smith
Telecopy: (214) 508-1285
Telephone: (214) 508-1261
-5-
<PAGE> 173
EXHIBIT D
[FORM OF OPINION OF GENERAL COUNSEL FOR
THE BORROWER AND THE GUARANTOR]
February 27, 1997
To each of the lenders parties to
the Credit Agreement herein
described and to NationsBank
of Texas, N.A., as Agent
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01 of the U.S.
$325,000,000 5-Year Credit Agreement dated as of February 27, 1995 (the "Credit
Agreement"), among Fina Oil and Chemical Company, as borrower (the "Borrower"),
Fina, Inc., as guarantor (the "Guarantor"), the banks parties thereto (the
"Banks"), CIBC Inc. and Texas Commerce Bank National Association, as Co-Agents,
NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent, and
NationsBank of Texas, N.A., as Agent for the Banks. Terms defined in the
Credit Agreement are used herein as therein defined.
[Opinion format of rendering counsel to be supplied by such counsel.]
Opinions:
1. 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.
2. Each of (i) the execution, delivery and performance by each of
the Borrower and the Guarantor of the Credit Agreement, (ii) the execution,
delivery and performance by the Borrower of the A Notes and the other Notes to
be executed by the Borrower, and (iii) the consummation of the transactions
contemplated by the Credit Agreement, are within the corporate powers of the
Borrower and the Guarantor, respectively, have been duly authorized by all
necessary corporate action, do not contravene (x) the Certificate of
Incorporation or the By-laws of the Borrower or the Guarantor, respectively, or
(y) any law, rule or regulation applicable to the Borrower or the Guarantor
(including, without limitation, Regulation X of the Board of Governors of the
Federal Reserve System) or (z) any contractual or legal restriction and will
not result in or require the creation or imposition of any Lien prohibited by
the Credit Agreement. With respect to the Notes to be executed after the date
hereof by the Borrower, this
<PAGE> 174
February 27, 1997
Page 2
opinion is limited to laws, rules and regulations as in force and applied on
the date hereof, the Certificate of Incorporation and the Bylaws of the
Borrower, and restrictions in effect on the date hereof. The Credit Agreement
has been duly executed and delivered by the Borrower and the Guarantor, and the
A Notes have been duly executed and delivered by the Borrower.
3. No authorization, 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 Agreement, and (in the case of the Borrower) the respective Notes or
the consummation of the transactions contemplated by the Credit Agreement.
4. The A Notes executed by the Borrower constitute, and each Note
hereafter executed by the Borrower will constitute, a legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms. The Credit Agreement executed by the Borrower and the Guarantor
constitutes legal, valid and binding obligations of the Borrower and the
Guarantor, respectively, enforceable against the Borrower and the Guarantor in
accordance with its terms.
5. There are no pending or overtly threatened actions or proceedings
against the Borrower, the Guarantor or any of their respective Subsidiaries
before any court, governmental agency or arbitrator which purport to affect the
legality, validity, binding effect or enforceability of the Credit Agreement or
any of the Notes or which could reasonably be expected to have a materially
adverse effect upon the financial condition or operations of the Borrower and
its Subsidiaries taken as a whole, or the Guarantor and its Subsidiaries taken
as a whole.
6. 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. 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.
Very truly yours,
<PAGE> 175
EXHIBIT E
FORM OF OPINION OF SPECIAL COUNSEL TO AGENT
February 27, 1997
To each of the lenders parties
to the Credit Agreement
herein described and to
NationsBank of Texas, N.A.,
as Agent
Ladies and Gentlemen:
We have acted as special counsel to NationsBank of Texas, N.A., acting for
itself and as Agent, in connection with the preparation, execution and delivery
of the U.S. $325,000,000 5-Year Credit Agreement dated as of February 27, 1997
(the "Credit Agreement"), among Fina Oil and Chemical Company, as borrower (the
"Borrower"), Fina, Inc., as guarantor (the "Guarantor"), CIBC Inc. and Texas
Commerce Bank National Association, as Co-Agents, NationsBanc Capital Markets,
Inc., as Arranger & Syndication Agent, NationsBank of Texas, N.A., as agent
(the "Agent"), and each of you named as Banks thereunder. Terms defined in the
Credit Agreement are used herein as therein defined.
In that connection, we have examined the following documents:
(1) counterparts of the Credit Agreement, executed by the
Agent, the Borrower, and the Guarantor, respectively;
(2) the A Notes dated as of February 27, 1997 of the Borrower
payable to the order of each Bank party to the Credit Agreement as of
the date hereof (the "A Notes"); and
(3) the opinion dated February 27, 1997 of Cullen M. Godfrey,
General Counsel for each of the Borrower and the Guarantor ("Opinion").
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the
genuineness of all signatures and the conformity to the originals of all such
documents submitted to us as copies. We have also assumed that each of the
Borrower, the Guarantor, the Banks and the Agent has duly executed and
delivered, with all necessary power and authority (corporate and otherwise),
the Credit
<PAGE> 176
February 27, 1997
Page 2
Agreement, that the Borrower has duly executed and delivered, with all
necessary power and authority (corporate and otherwise), the A Notes. We have
also assumed that no Bank has requested that the Opinion required by Section
3.01(d) of the Credit Agreement contain any other matters not contained in the
form of opinion set forth as Exhibit D to the Credit Agreement.
Based upon the foregoing examination of documents and assumptions and upon such
other investigation as we have deemed necessary, we are of the opinion that the
A Notes and the Opinion, are substantially responsive to the requirements of
the Credit Agreement.
This opinion is solely for the benefit of the Banks, the Agent, their
respective successors, assigns, participants and other transferees and may be
relied upon only by such Persons.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 177
EXHIBIT F
FORM OF ACCESSION AGREEMENT
[NAME OF BANK] , hereby agrees with Fina Oil and Chemical
Company, as Borrower, Fina, Inc., as Guarantor, and NationsBank of Texas, N.A.,
as Agent under the U.S. $325,000,000 5-Year Credit Agreement dated as of
February 27, 1997 (as it may be amended from time to time in accordance with
its terms, the "Credit Agreement") among the Borrower, the Guarantor, the Banks
parties thereto, CIBC Inc. and Texas Commerce Bank National Association, as
Co-Agents, NationsBanc Capital Markets, Inc., as Arranger & Syndication Agent,
and NationsBank of Texas, N.A., as Agent for the Banks (as such agreement is
amended from time to time in accordance with its terms, the "Credit Agreement";
capitalized terms used herein and not otherwise defined having the meanings set
forth therein), as follows:
The undersigned hereby agrees and confirms that, as of the date hereof,
it (a) intends to be a Bank party to the Credit Agreement with a Commitment of
$____________ in connection with the proposed increase of the aggregate
Commitments pursunt to Section 2.15 of the Credit Agreement to $__________, and
undertakes to perform all the obligations expressed therein as a Bank; (b) has
received a copy of the Credit Agreement, together with copies of the financial
statements referred to in Section 5.05 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Accession Agreement and become a Bank under the
Credit Agreement; (c) will, independently and without reliance upon the Agent
or any 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 Agreement; (d) appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (e) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of the Credit Agreement are required to be performed by it as a Bank;
(f) specifies as its Domestic Lending Office (and address for notices) and
Eurodollar Lending Office the offices set forth beneath its name on the
signature pages hereof; (g) attaches the forms prescribed by the Internal
Revenue Service of the United States certifying as to its status for purposes
of determining exemption from United States withholding taxes with respect to
all payments to be made to it under the Credit Agreement and its Note(s) or
such other documents as are necessary to indicate that all such payments are
subject to such rates at a rate reduced by an applicable tax treaty(1), and (h)
represents that it is an Eligible Assignee.
The effective date for this Accession Agreement shall be the date the
related increase in the aggregate Commitments becomes effective in accordance
with the terms of Section 2.15 of the Credit Agreement (the "Effective Date")
and following the execution of this Accession Agreement,
- --------------------
(1) If the New Bank is organized under the laws of a jurisdiction
outside the United States.
<PAGE> 178
the Agent will record it. Upon such recording, and as of the Effective Date,
(i) the undersigned shall be a Bank party to the Credit Agreement for all
purposes, and, to the extent of its Commitment, shall have the rights and
obligations of a Bank thereunder.
This Accession Agreement shall be construed as a contract governed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF this Accession Agreement was executed and delivered
as of the ___ day of _________, ____.
[NAME OF NEW BANK]
------------------------------------
By:
---------------------------------
Title:
------------------------------
Domestic Lending Office:
-----------------------
Address:
----------------------
----------------------
Attention:
----------------------
Telecopy:
----------------------
Telephone:
----------------------
Eurodollar Lending Office:
-------------------------
Address:
----------------------
----------------------
Attention:
----------------------
Telecopy:
----------------------
Telephone:
----------------------
<PAGE> 179
Acknowledged and Agreed By:
FINA OIL AND CHEMICAL COMPANY
- -----------------------------------
By:
--------------------------------
Title:
-----------------------------
FINA, INC.
- -----------------------------------
By:
--------------------------------
Title:
-----------------------------
NATIONSBANK OF TEXAS, N.A.
- -----------------------------------
By:
--------------------------------
Title:
-----------------------------
-3-
<PAGE> 180
EXHIBIT G
FORM OF CONSENT TO INCREASE OF COMMITMENT
[NAME OF BANK] , hereby agrees with Fina Oil and Chemical
Company, as Borrower, Fina, Inc., as Guarantor, and NationsBank of Texas, N.A.,
as Agent under the U.S. $325,000,000 5-Year Credit Agreement dated as of
February 27, 1997 (as it may be amended from time to time in accordance with
its terms, the "Credit Agreement") among the Borrower, the Guarantor, the
undersigned and the other Banks parties thereto, CIBC Inc. and Texas Commerce
Bank National Association, as Co-Agents, NationsBanc Capital Markets, Inc., as
Arranger & Syndication Agent, and NationsBank of Texas, N.A., as Agent for the
Banks (as such agreement is amended from time to time in accordance with its
terms, the "Credit Agreement"; capitalized terms used herein and not otherwise
defined having the meanings set forth therein), as follows:
The undersigned hereby agrees and confirms that, as of the date hereof,
it intends to increase its Commitment under the Credit Agreement to
$____________ in connection with the proposed increase of the aggregate
Commitments pursunt to Section 2.15 of the Credit Agreement to $__________.
The effective date for this Consent and for the increase of the
undersigned's Commitment as set forth in the preceding paragraph shall be the
date the related increase in the aggregate Commitments becomes effective in
accordance with the terms of Section 2.15 of the Credit Agreement (the
"Effective Date").
This Consent shall be construed as a contract governed in accordance
with the laws of the State of Texas.
IN WITNESS WHEREOF this Consent was executed and delivered as of the ___
day of _________, ____.
[NAME OF BANK]
-----------------------------------
By:
-------------------------------
Title:
-----------------------------
<PAGE> 181
Acknowledged and Agreed By:
FINA OIL AND CHEMICAL COMPANY
- --------------------------------
By:
-----------------------------
Title:
--------------------------
FINA, INC.
- --------------------------------
By:
-----------------------------
Title:
--------------------------
NATIONSBANK OF TEXAS, N.A.
- --------------------------------
By:
-----------------------------
Title:
--------------------------
-2-
<PAGE> 182
EXHIBIT (10b)
Execution Copy
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
This First Amended and Restated Credit Agreement dated as of February
26, 1998 (this "Amendment") is by and between Fina Oil and Chemical Company, a
Delaware corporation (the "Borrower"), Fina, Inc., a Delaware corporation (the
"Guarantor"), the Banks party hereto, CIBC Inc. and Chase Bank of Texas,
National Association (formerly known as Texas Commerce Bank National
Association), as Co-Agents, NationsBanc Montgomery Securities LLC (formerly
known as NationsBanc Capital Markets, Inc.), as Arranger & Syndication Agent,
and NationsBank of Texas, N.A., as Agent.
INTRODUCTION
A. Pursuant to the U.S.$100,000,000 Credit Agreement dated as of
February 27, 1997, by and among the Borrower, the Guarantor, the lenders party
thereto (the "Original Banks"), the Arranger & Syndication Agent, and the Agent
(the "Credit Agreement"), the Original Banks agreed to provide advances to the
Borrower pursuant to a revolving credit facility in an aggregate principal
amount outstanding at any time of up to U.S.$100,000,000. As of the date of
this Amendment there are no Advances (as defined in the Credit Agreement)
outstanding.
B. The Borrower has requested that (i) the revolving credit
facility under the Credit Agreement be extended for an additional 364-day
period, (ii) as contemplated pursuant to Section 2.15 of the Credit Agreement
as in effect prior to the date of this Amendment, the aggregate amount of the
Commitments under the Credit Agreement be increased to U.S. $130,000,000 and
the aggregate amount of the Parallel Agreement Commitments (as defined in the
Credit Agreement) under the Parallel Agreement (as defined in the Credit
Agreement) be increased to U.S. $420,000,000, and (iii) certain other
amendments be made to the terms of the Credit Agreement.
C. The Sumitomo Bank, Limited ("Sumitomo"), an Original Bank, has
elected not to renew its Commitment under the Credit Agreement and Credit
Communal de Belgique --New York Branch has agreed (i) to provide a Commitment
under the Credit Agreement equal to the former Commitment of Sumitomo and (ii)
to assume the Parallel Agreement Commitment of Sumitomo under the Parallel
Agreement as in effect on the date hereof pursuant to an assignment and
assumption agreement delivered as of the date hereof under the Parallel
Agreement.
D. Each of Deutsche Bank AG New York Branch and/or Cayman Islands
Branch, Istituto Bancario San Paolo di Torini SpA, and SunTrust Bank, Atlanta
have agreed to become a new Bank under the Credit Agreement and a new bank
under the Parallel Agreement, and certain of the Original Banks have agreed to
increase their respective Commitments under the Credit Agreement and their
respective Parallel Agreement
<PAGE> 183
Commitments under the Parallel Agreement, as contemplated by Section 2.15 of
the Credit Agreement.
E. For the sake of administrative convenience the parties hereto
have elected to effect the increase in the aggregate Commitments under the
Credit Agreement through this Amendment instead of using the procedures set
forth in Section 2.15 of the Credit Agreement and to confirm through this
Amendment that Sumitomo will no longer be a Bank under the Credit Agreement
after the date of this Amendment except to the extent certain of its
obligations under the Credit Agreement survive in accordance with the terms
thereof.
F. Upon the effectiveness of this Amendment, the Credit Agreement
is hereby restated in its entirety to read as set forth in the Credit Agreement
with the amendments contained herein.
THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties set forth herein, and for other good and
valuable consideration, the parties hereto agree as follows:
Section 1. Definitions; References. Unless otherwise defined in this
Amendment, each capitalized term used in this Amendment has the meaning given
to such term in the Credit Agreement.
Section 2. Amendment of the Credit Agreement.
(a) Section 1.01. Section 1.01 of the Credit Agreement is amended
by restating the definitions for the terms "Agent's Fee Letter," "Banks,"
"Commitments," "Co-Agent," "Reference Banks," and "Termination Date" in their
entirety, and a new definition for the term "First Amendment Agreement" is
added in appropriate alphabetical order, as follows:
"Agent's Fee Letter" means the letter agreement dated as of
January 14, 1998 among the Arranger & Syndication Agent, the Agent,
and the Borrower, as it may be amended from time to time in accordance
with its terms.
"Banks" means the lenders listed on the signature pages of the
First Amendment Agreement under the heading "Banks" and each other
Person that becomes a Bank pursuant to an Assignment.
"Co-Agent" means either CIBC Inc. or Chase Bank of Texas,
National Association in its capacity as co- agent pursuant to Article
IX hereof, and "Co-Agents" means suchs banks collectively.
"Commitment" of any Bank means at any time the amount set
forth as the "Commitment" of such Bank on the signature pages of the
First Amendment
-2-
<PAGE> 184
Agreement, or if such Bank has executed an Assignment or a Consent to
Increase of Commitment, then the amount set forth as the "Commitment"
of such Bank therein, or if such Bank is a New Bank, then the amount
set forth as the "Commitment of such Bank in the Accession Agreement
executed by such Bank, in each case as such amount may be terminated
or reduced pursuant to Section 2.04 or Section 8.01.
"First Amendment Agreement" means the First Amended and
Restated Credit Agreement dated as of February 26, 1998 among the
Borrower, the Guarantor, the Banks, the Arranger & Syndication Agent,
and the Agent.
"Reference Banks" means NationsBank, CIBC Inc. and Chase Bank
of Texas, National Association.
"Termination Date" means February 25, 1999, or the earlier
date of termination in whole of the Commitments pursuant to Section
2.04 or 8.01.
(b) Section 10.08. Section 10.08 of the Credit Agreement is
amended by restating the last sentence of paragraph (a) thereof in its entirety
as follows:
To the extent that any Bank may be subject to Texas law limiting the
amount of interest payable for its account, such Bank hereby elects
to determine the applicable rate ceiling under Texas law by the
indicated (weekly) rate ceiling from time to time in effect, subject
to each such Bank's right subsequently to change such method in
accordance with applicable law.
(c) Schedule I. Schedule I attached to the Credit Agreement is
hereby replaced in its entirety with Schedule I attached to this Amendment.
(d) Exhibits. Exhibit A-1 is replaced in its entirety with
Exhibit A-1 attached to this Amendment, and each of the other Exhibits to the
Credit Agreement is hereby amended by (i) changing each reference therein to
"NationsBanc Capital Markets, Inc." to "NationsBanc Montgomery Securities LLC",
and (ii) changing each reference therein to "Texas Commerce Bank National
Association" to "Chase Bank of Texas, National Association".
Section 3. Representations and Warranties. Each of the Borrower and
the Guarantor represents and warrants to the Banks and the Agent that:
(a) all representations and warranties set forth in the Credit
Agreement, as amended by this Amendment, and in any other Credit Document are
true and correct as of the date of this Amendment;
-3-
<PAGE> 185
(b) the execution, delivery and performance of the Credit
Agreement, as amended by this Amendment, are within the power and authority of
the Borrower and have been duly authorized by appropriate proceedings. The
Credit Agreement as so amended constitutes a valid legally binding agreement of
the Borrower and the Guarantor enforceable in accordance with its terms; and
(c) as of the date of this Amendment, no Default has occurred and
is continuing.
Section 4. Effectiveness. This Amendment shall become effective as
of the date hereof when the Agent shall have received the following:
(a) a counterpart of this Amendment duly executed by Borrower, the
Guarantor, each Bank, and the Arranger & Syndication Agent each of the parties
hereto and new Notes as described on Annex A to this Amendment;
(b) a certificate of the Secretary or an Assistant Secretary of
the Borrower certifying the name and true signature of the officer of the
Borrower authorized to sign this Amendment, in form and substance satisfactory
to the Agent;
(c) a certificate of the Secretary or an Assistant Secretary of
the Guarantor certifying the name and true signature of the officer of the
Guarantor authorized to sign this Amendment, in form and substance satisfactory
to the Agent;
(d) an opinion of counsel to the Borrower and the Guarantor in
form and substance satisfactory to the Agent regarding the enforceability of
this Amendment and the Notes to be executed in connection herewith;
(e) for the ratable benefit of each of the Original Banks (based
on their respective Commitments in effect prior to the effectiveness of this
Amendment), all accrued but unpaid fees or interest or other amounts owing
under the Credit Agreement prior to giving effect to this Amendment;
(f) documentation effecting the assignment of Sumitomo's Parallel
Agreement Commitment and the pro rata increase of the Parallel Agreement in
accordance with the provisions of Section 2.15 of the Parallel Agreement, duly
executed by each of the required parties thereto; and
(g) for the account of the Agent, the fees referred to in the
Agent's Fee Letter which are payable on the date this Amendment becomes
effective, and the fees of legal counsel for the Agent (as notified to the
Borrower) incurred in connection with this Amendment and the related increase
in the Parallel Agreement.
-4-
<PAGE> 186
Section 5. Choice of Law. This Amendment shall be governed by and
construed and enforced in accordance with the laws of the State of Texas. The
parties hereto agree that Chapter 346 of the Texas Finance Code, which replaced
former Tex. Rev. Civ. Stat. Ann. Art. 5069, Chapter 15 and which regulates
certain revolving credit loan accounts, shall not apply to the transactions
contemplated by the Credit Agreement, as amended by this Amendment, and any
Note executed in connection therewith.
Section 6. Counterparts. This Amendment may be signed in any number
of counterparts, each of which shall constitute one and the same instrument.
Section 7. INTEGRATION. THE CREDIT AGREEMENT, AS AMENDED BY THIS
AMENDMENT, TOGETHER WITH THE OTHER CREDIT DOCUMENTS CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES RELATING TO THE FINANCING TRANSACTION
CONTEMPLATED THEREBY AND SUPERSEDES ALL PRIOR UNDERSTANDINGS AND AGREEMENTS,
WHETHER WRITTEN OR ORAL, BETWEEN THE PARTIES HERETO CONCERNING THE TRANSACTIONS
PROVIDED FOR HEREIN AND THEREIN.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-5-
<PAGE> 187
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
-----------------------------
Geoffroy Petit
Vice President & Chief
Financial Officer
GUARANTOR:
FINA, INC.
-----------------------------
Geoffroy Petit
Vice President & Chief
Financial Officer
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
-----------------------------
Denise Ashford Smith
Senior Vice President
-6-
<PAGE> 188
ARRANGER & SYNDICATION AGENT
NATIONSBANC MONTGOMERY
SECURITIES LLC
-----------------------------
David E. Hunt
Managing Director
COMMITMENTS: BANKS:
$10,470,591 NATIONSBANK OF TEXAS, N.A.
-----------------------------
Denise Ashford Smith
Senior Vice President
$8,941,176 CHASE BANK OF TEXAS,
NATIONAL ASSOCIATION
-----------------------------
By:
-------------------------
Title:
----------------------
$8,941,176 GENERALE BANK--NEW YORK
BRANCH
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
-7-
<PAGE> 189
$8,941,176 MELLON BANK, N.A.
-----------------------------
By:
-------------------------
Title:
----------------------
$8,117,647 CIBC INC.
-----------------------------
By:
-------------------------
Title:
----------------------
$6,941,176 BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
-----------------------------
By:
-------------------------
Title:
----------------------
$6,941,176 CITICORP USA, INC.
-----------------------------
By:
-------------------------
Title:
----------------------
$5,764,706 BANK BRUSSELS LAMBERT,
NEW YORK BRANCH
-----------------------------
By:
-------------------------
Title:
----------------------
-8-
<PAGE> 190
$5,764,706 CREDIT COMMUNAL DE BELGIQUE--
NEW YORK BRANCH
-----------------------------
By:
-------------------------
Title:
----------------------
$5,764,706 CREDIT LYONNAIS
NEW YORK BRANCH
-----------------------------
By:
-------------------------
Title:
----------------------
$5,764,706 DEUTCHE BANK AG
NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
$5,764,706 THE FUJI BANK, LIMITED--
HOUSTON AGENCY
-----------------------------
By:
-------------------------
Title:
----------------------
-9-
<PAGE> 191
$5,764,706 ISTITUTO BANCARIO SAN PAOLO
DI TORINO SpA
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
$5,764,706 SOCIETE GENERALE, SOUTHWEST
AGENCY
-----------------------------
By:
-------------------------
Title:
----------------------
$5,764,706 SUNTRUST BANK, ATLANTA
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
-10-
<PAGE> 192
$5,764,706 UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
$4,705,882 BAYERISCHE LANDESBANK
GIROZENTRALE,
CAYMAN ISLANDS BRANCH
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
$4,705,882 CREDIT COMMERCIAL DE FRANCE
-----------------------------
By:
-------------------------
Title:
----------------------
-----------------------------
By:
-------------------------
Title:
----------------------
-11-
<PAGE> 193
$4,705,882 THE DAI-ICHI KANGYO BANK,LTD.
NEW YORK BRANCH
------------------------------
By:
--------------------------
Title:
-----------------------
$4,705,882 DEN DANSKE BANK AKTIESELSKAB
CAYMAN ISLANDS BRANCH
------------------------------
By:
--------------------------
Title:
-----------------------
------------------------------
By:
--------------------------
Title:
-----------------------
- ------------ -----------------
$130,000,000 TOTAL COMMITMENTS
ACKNOWLEDGED AND AGREED BY:
THE SUMITOMO BANK, LIMITED
- -----------------------------
By:
-------------------------
Title:
----------------------
-12-
<PAGE> 194
ANNEX A
NOTES TO BE ISSUED IN CONNECTION WITH
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Notes for Banks with Increased Commitments:
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
NationsBank of Texas, N.A. in the amount of $10,470,591.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Chase Bank of Texas, National Association in the amount of $8,941,176.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Generale Bank--New York Branch in the amount of $8,941,176.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Mellon Bank, N.A. in the amount of $8,941,175.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Banque Nationale de Paris, Houston Agency in the amount of $6,941,176.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Citicorp USA, Inc. in the amount of $6,941,175.
Notes for New Banks:
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Deutsche Bank AG New York Branch and/or Cayman Islands Branch in the amount of
$5,764,706.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Istituto Bancario San Paolo di Torini SpA in the amount of $5,764,706.
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
SunTrust Bank, Atlanta in the amount of $5,764,706.
Note for Replacement Bank:
A Promissory Note dated February 26, 1998 executed by the Borrower in favor of
Credit Communal de Belgique--New York Branch in the amount of $5,764,706.1
<PAGE> 1
EXHIBIT 10C
THROUGH AMENDMENT NO. 3
AMERICAN PETROFINA, INCORPORATED
EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN (1979)
Section 1. Purpose. It has been the policy of
American Petrofina, Incorporated ("Company") since 1957 to
promote the interests of the Company and its shareholders by
providing a method whereby officers and other key employees
of the Company and its subsidiaries may be encouraged to
invest in the Company's Class A Common Stock and thereby
increase their proprietary interest in its business,
encourage them to remain in the employ of the Company and
increase their personal interest in its continued success
and progress. The purpose of this Plan is to continue such
policy.
Section 2. Administration. (a) A Committee of the
Board of Directors of the Company ("Committee"), which shall
be selected by the Board and none of whose members shall be
eligible to receive options, shall have full power and
authority, subject to such orders or resolutions not
inconsistent with the provisions of the Plan as may from time
to time be issued or adopted by the Board, to interpret the
provisions and supervise the administration of the Plan.
All determinations by the Committee shall be made by the
affirmative vote of a majority of its members, but any
determination reduced to writing and signed by all of the
<PAGE> 2
members shall be fully as effective as if it had been made
by a majority vote at a meeting duly called and held.
(b) Each option shall be evidenced by an option
agreement which shall contain such terms and conditions as may be
approved by the Committee and shall be signed by an officer
of the Company and the employee.
(c) Subject to any applicable provisions of the
Company's By-laws, all decisions made by the Committee pursuant
to the provisions of the Plan and related orders or resolutions
of the Board shall be final, conclusive and binding on
all persons, including the Company, shareholders, employees
and optionees.
Section 3. Shares Subject to the Plan. (a) The
shares of Class A Common Stock to be delivered upon exercise
of options granted under the Plan shall be made available,
at the discretion of the Board of Directors, either from the
authorized but unissued shares of the Company or from shares
reacquired by the Company, including shares purchased in the
open market.
(b) Subject to adjustments made pursuant to the
provisions of paragraph (c) of this Section 3, the aggregate
number of shares to be delivered upon exercise of all options
which may be granted under this Plan shall not exceed
250,000 shares. If an option granted under this Plan shall
expire or terminate for any reason during the term of the
<PAGE> 3
Plan, the shares subject to but not delivered under such
option shall be available for other options under the Plan.
(c) In the event of a merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in
corporate structure affecting the Company's Class A Common
Stock, such adjustment shall be made in the aggregate number
of shares subject to the Plan and the number and option
price of shares subject to options granted under the Plan as
may be determined to be appropriate by the Board of
Directors upon recommendation by the Committee.
Section 4. Eligibility and Participation. The
employees eligible to receive options shall consist of
salaried officers and other key employees of the Company and its
subsidiaries (whether or not directors of the Company).
Subject to the limitations of the Plan, the Committee shall
select the employees to be granted options, determine the
number and option price of the shares subject to each
option, and determine the times when each option shall be
granted and within which it may be exercised. More than one
option may be granted to the same employee.
Section 5. Option Period. The maximum period
during which each option may be exercised shall be fixed by
the Committee at the time such option is granted, but such
period in no event shall exceed ten years from the date the
option is granted.
<PAGE> 4
Section 6. Option Price and Payment. The price at
which shares may be purchased upon exercise of a particular
option shall be not less than 100 percent of the fair market
value of such shares on the day such option is granted, as
determined by the Committee. For this purpose such fair
market value shall be the average of the highest and lowest
prices at which the Company's Class A Common Stock is traded
on the American Stock Exchange or, if not so traded, the
average of the closing bid and asked prices thereof on such
Exchange as reported for the day the option is granted.
Section 7. Exercise of Options. (a) Each option
granted under this Plan may be exercised only after two
years of continued employment by the Company or its
subsidiaries immediately following the date the option is
granted and, except in case of death, retirement and
termination of employment as hereinafter provided, only during
the continuance of the optionee's employment with the Company
or one of its subsidiaries. The times when optioned
shares may be purchased and the number of shares which may
be purchased at such times shall be fixed by the Committee
and set forth in the option agreement. Subject to the
foregoing limitations and the terms and conditions of the
option agreement, each option shall be exercisable at any
time or from time to time, but no option may at any time be
<PAGE> 5
exercised in part with respect to fewer than twenty shares.
(b) The Company shall have no obligation to deliver
shares pursuant to the exercise of any option, in whole or
in part, until qualified for delivery under such laws and
regulations as may be deemed by the Company to be applicable
thereto and until payment in full of the option price
therefor is received by the Company in cash or cash
equivalent (or certificates representing shares of common
stock of the company having a market value equal to the
Option Price). No optionee, or the legal representative,
legatee, or distributee of any optionee, shall be or be
deemed to be a holder of any shares subject to such option
unless and until the certificate or certificates therefor
have been issued.
Section 8. Federal Withholding Tax. The Company
shall collect a Federal Withholding Tax from the optionee
when any option, other than an incentive stock option
granted in accordance with Section 13 of the Plan, is
exercised, in an amount equal to twenty percent (20%) of the
difference between the option price and the fair market
value of shares on the date of exercise of such option.
Section 9. Transferability of Options and Shares.
A Non-Qualified Stock Option granted under the Plan may not
be transferred except by will or by the laws of descent and
distribution and, during the lifetime of the employee to
<PAGE> 6
whom granted, may be exercised only by such employee. The
shares issued to an optionee pursuant to the exercise of an
Incentive Stock Option granted under the Plan may not be
assigned, transferred or alienated for a period of two (2)
years from the date of the issuance of such shares to such
optionee except by will or by the laws of descent and
distribution, and the Committee shall affix to the stock
certificate or certificates representing such shares an
appropriate legend evidencing such restriction.
Section 10. Death, Retirement, and Termination of
Employment. Any option, the period of which has not
theretofore expired, shall terminate at the time of the death of
the employee to whom granted or of the termination for any
reason of such employee's employment with the Company and
its subsidiaries, and no shares may thereafter be delivered
pursuant to such option, except that, subject to the
condition that no option may be exercised in whole or in part
after the expiration of the option period specified in the
option agreement:
(a) After termination of employment due to disability
or retirement under a retirement plan of the Company, unless
the Committee elects to cancel such option because of actions
of the employee deemed inimical to the best interests
of the Company, an optionee may, within one year after the
date of such termination, purchase from time to time some or
at any time all of the shares with respect to which such
<PAGE> 7
optionee was entitled to exercise such option immediately
prior to such termination, and
(b) After the death of any optionee while in active
service or of any such disabled or retired optionee within
the one-year period referred to in (a) above, the person or
persons to whom such optionee's rights under the option are
transferred by will or the laws of descent and distribution
may, within one year after the date of such optionee's
death, purchase from time to time some or at any time all of
the shares with respect to which such optionee was entitled
to exercise such option immediately prior to the death of the
optionee.
Section 11. Amendments and Discontinuance. The
Board of Directors may amend, suspend, or discontinue the
Plan, but may not, without the prior approval of the
shareholders or pursuant to Section 3(c) above, make any
amendment which operates (a) to abolish the Committee, change the
qualification of its members, or withdraw the administration
of the Plan from its supervision, (b) to make any material
change in the class of eligible employees as defined in the
Plan, (c) to increase the total number of shares for which
options may be granted under the Plan, (d) to extend the
terms of the Plan or the maximum option period, (e) to decrease
the minimum option price, or (f) to permit adjustment
<PAGE> 8
or reductions of the price at which shares may be purchased
under any option granted under the Plan.
Section 12. Effective Date. The Plan shall become
effective as of August 7, 1979, but all options granted
prior to the Company's 1980 Annual Meeting of Shareholders
shall be granted subject to approval of the Plan at that
meeting.
Section 13. Incentive Stock Options. Any option
granted under the Plan may be designated by the Committee as
an incentive stock option intended to qualify under Section
422A of the Internal Revenue Code. Any provision of the
Plan to the contrary notwithstanding, (i) no incentive stock
option shall be granted to any employee who, at the time
such incentive stock option is granted, owns stock
possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or any
affiliate unless the purchase price under such incentive stock
option is at least 110 percent of the fair market value of
the Company's Class A Common Stock at the date of grant and
such incentive stock option is not exercisable after the
expiration of five years from the date of its grant, (ii) no
incentive stock option granted to any employee shall be
exercisable while there is outstanding (within the meaning
of Section 422A of the Internal Revenue Code) any incentive
stock option which was previously granted under the Plan or
<PAGE> 9
any other such plan to such employee to purchase shares of
Class A Common Stock (or any other stock of the Company) or
the stock of an affiliate (or any predecessor corporation of
the Company or an affiliate) and (iii) the sum of the fair
market value (determined as of the time an incentive stock
option is granted) of the Class A Common Stock for which an
employee may be granted incentive stock options under the
Plan and the fair market value (determined as of the time
such incentive stock options are granted) of the stock for
which such employee may be granted incentive stock options
under all other such plans of the Company or an affiliate
shall not, in any calendar year, exceed $100,000 plus any
"unused limit carryover" as provided in Section 422A of the
Internal Revenue Code. Unless otherwise determined by the
Committee in the case of stock of the Company or an affiliate
which is not listed or admitted to trading on the
American Stock Exchange, the term "fair market value" shall
have the meaning set forth in Section 6 hereof. As used
herein, the term "affiliate" means any parent or subsidiary
corporation of the Company within the meaning of Section
425(e) and (f) of the Internal Revenue Code.
<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 AND EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] TRANSACTION 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
DECEMBER 31, 1996 AND 1995
(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, 1996
and 1995 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, 1996 and 1995, 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 Fund Information in the statements
of net assets available for plan benefits and the statements of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets for plan benefits of each fund. The supplemental schedules
and Fund Information 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.
As discussed in Note 3 to the financial statements, the Board of Directors
of Fina Oil and Chemical Company (the Plan Sponsor) has terminated the Plan
effective December 31, 1996. In accordance with generally accepted accounting
principles, the Plan has changed its basis of accounting used to determine the
amounts at which investments are stated from the ongoing Plan basis used in
presenting the 1995 financial statements to the liquidation basis used in
presenting the 1996 financial statements.
KPMG PEAT MARWICK LLP
Dallas, Texas
March 14, 1997
<PAGE> 4
AMDEL INC. EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR
PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
FUND INFORMATION
--------------------------------------------------------
FINA, INC. U.S. TBC INC. POOLED
COMMON TREASURY EMPLOYEE DAILY COMPANY
TOTAL STOCK OBLIGATIONS LIQUIDITY FUND FORFEITURES
---------- ---------- ----------- --------------- -----------
<S> <C> <C> <C> <C> <C>
DECEMBER 31, 1996:
Investments, liquidation value:
FINA, Inc., Class A Common Stock
(11,853 shares; cost of
$504,862)........................ $ 571,907 571,907 -- -- --
Money market investments............ 1,638,068 -- -- 1,638,068 --
Cash.................................. 68,794 64,157 92 -- 4,545
Interest receivable................... 7,841 239 82 7,499 21
Contributions receivable from
employees........................... 54,423 13,504 3,223 37,696 --
Contributions receivable from
employing companies................. 41,575 9,387 2,504 29,684 --
Securities Sold Pending Settlement.... 450,715 203,199 247,516 -- --
---------- ------- ------- --------- ------
Plan assets................. 2,833,323 862,393 253,417 1,712,947 4,566
Forfeitures available for future
use................................. (4,566) -- -- -- (4,566)
---------- ------- ------- --------- ------
Net assets available for
plan benefits............. $2,828,757 862,393 253,417 1,712,947 --
========== ======= ======= ========= ======
DECEMBER 31, 1995:
Investments, at fair value:
FINA, Inc., Class A common stock
(13,131 shares; cost of
$511,902)........................ $ 663,116 663,116 -- -- --
The Boston Company Intermediate
Government Securities Fund
(19,986 shares; cost of
$254,015)........................ 257,421 -- 257,421 -- --
Money market investments............ 1,914,139 4,200 -- 1,905,627 4,312
Cash.................................. 6,500 (38) (17) 6,555 --
Interest receivable................... 9,298 50 13 9,217 18
Contributions receivable from
employees........................... 56,539 11,397 2,987 42,155 --
Contributions receivable from
employing companies................. 42,905 7,986 2,411 32,508 --
---------- ------- ------- --------- ------
Plan assets................. 2,949,918 686,711 262,815 1,996,062 4,330
Forfeitures available for future
use................................. (4,330) -- -- -- (4,330)
---------- ------- ------- --------- ------
Net assets available for
plan benefits............. $2,945,588 686,711 262,815 1,996,062 --
========== ======= ======= ========= ======
</TABLE>
See accompanying notes to financial statements
2
<PAGE> 5
AMDEL INC. EMPLOYEE INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS, WITH FUND INFORMATION
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
FUND INFORMATION
------------------------------------------------------------
TBC INC. POOLED
FINA, INC. U.S. TREASURY EMPLOYEE DAILY COMPANY
TOTAL COMMON STOCK OBLIGATIONS LIQUIDITY FUND FORFEITURES
---------- ------------ ------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Allotments and contributions:
Basic allotments by employees........ $ 516,548 $108,545 $ 31,003 $ 377,000 $ --
Additional allotments by employees... 159,776 47,575 6,947 105,254 --
Contributions by employing
companies.......................... 516,546 110,053 29,958 376,535 --
---------- -------- ---------- ---------- ----------
1,192,870 266,173 67,908 858,789 --
---------- -------- ---------- ---------- ----------
Investment income (expense):
Dividends............................ 50,913 39,420 11,493 -- --
Interest............................. 83,754 1,488 250 82,016 --
Other expense........................ (20,628) (6,580) (1,800) (12,248) --
Net depreciation in liquidation
values of investments.............. (45,328) (40,199) (5,129) -- --
---------- -------- ---------- ---------- ----------
68,711 (5,871) 4,814 69,768 --
---------- -------- ---------- ---------- ----------
Withdrawals-
In cash and in kind.................. 1,378,412 210,663 85,942 1,081,807 --
---------- -------- ---------- ---------- ----------
1,378,412 210,663 85,942 1,081,807 --
---------- -------- ---------- ---------- ----------
Transfers among funds.................. -- 126,043 3,822 (129,865) --
---------- -------- ---------- ---------- ----------
Net increase (decrease) in net
assets available for plan
benefits......................... (116,831) 175,682 (9,399) (283,115) --
Net assets available for plan benefits:
Beginning of year.................... 2,945,588 686,711 262,815 1,996,062 --
---------- -------- ---------- ---------- ----------
End of year.......................... $2,828,757 $862,393 $ 253,417 $1,712,947 $ --
========== ======== ========== ========== ==========
YEAR ENDED DECEMBER 31, 1995:
Allotments and contributions:
Basic allotments by employees........ $ 552,124 $ 90,263 $ 31,782 $ 430,079 $ --
Additional allotments by employees... 170,785 39,206 7,439 124,140 --
Contributions by employing
companies.......................... 552,124 93,902 32,058 426,164 --
---------- -------- ---------- ---------- ----------
1,275,033 223,371 71,279 980,383 --
---------- -------- ---------- ---------- ----------
Investment income (expense):
Dividends............................ 36,935 24,007 12,928 -- --
Interest............................. 94,393 823 23 93,547 --
Other expense........................ (11,022) (2,243) (1,086) (7,693) --
Net appreciation in fair values of
investments........................ 175,558 160,113 15,445 -- --
---------- -------- ---------- ---------- ----------
295,864 182,700 27,310 85,854 --
---------- -------- ---------- ---------- ----------
Withdrawals:
In cash and in kind.................. 1,013,892 80,768 48,391 884,733 --
Forfeitures.......................... 1,482 1,482 -- -- --
---------- -------- ---------- ---------- ----------
1,015,374 82,250 48,391 884,733 --
---------- -------- ---------- ---------- ----------
Transfers among funds.................. -- 25,912 -- (25,912) --
---------- -------- ---------- ---------- ----------
Net increase in net assets
available for plan benefits...... 555,523 349,733 50,198 155,592 --
Net assets available for plan benefits:
Beginning of year.................... 2,390,065 336,978 212,617 1,840,470 --
---------- -------- ---------- ---------- ----------
End of year.......................... $2,945,588 $686,711 $ 262,815 $1,996,062 $ --
========== ======== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 6
AMDEL INC. EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(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 the Pension 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. The Boston Safe Deposit and Trust Company serves as the independent
trustee.
(b) BASIS OF PRESENTATION
The accompanying financial statements of the Plan have been prepared on an
accrual basis. In 1995, investments were recorded at fair value based on closing
market quotations or listed redeemable value. In 1996, in accordance with
generally accepted accounting principles, the Plan changed its basis of
accounting used to determine the amount at which net assets are stated from the
ongoing basis to the liquidation basis with no material change in value as a
result of the termination of the Plan as discussed in Note 3.
(c) COSTS RELATING TO INVESTMENT SECURITIES
Costs 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 external costs and expenses incurred in administering the Plan,
including the fees and expense of the Trustee, the fee of its counsel and other
administrative expenses, are the responsibility of the Plan.
(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 money market fund, government securities fund, or the Class A Common
Stock of FINA, Inc. In the absence of direction, all amounts will be held in
cash
4
<PAGE> 7
AMDEL INC. EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
without interest. Participants become completely vested in contributions of the
employing companies upon five years of service with the Company.
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, 1996 and 1995 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.
A summary of participants by investment options follows:
1996 1995
---- ----
FINA, Inc. Class A common stock............................. 78 75
Government securities fund.................................. 27 26
Money market fund........................................... 213 229
(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 available for plan benefits and withdrawals reported in the
Plan's Form 5500 are different from the corresponding amount reported in the
accompanying financial statements by $2,396,605 and ($1,610,316), respectively,
as of and for the year ended December 31, 1996 and $786,289 and ($33,735),
respectively, as of and for the year ended December 31, 1995. These differences
relate to the classification of withdrawals currently payable to participants.
(i) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and deductions during the
reporting period. Actual results could differ from those estimates.
(2) FEDERAL INCOME TAXES
The Plan has obtained from the Internal Revenue Service a determination
letter dated August 18, 1995 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.
5
<PAGE> 8
AMDEL INC. EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(3) PLAN TERMINATION
In September 1996, FOCC terminated the Plan effective December 31, 1996.
Each participant in the Plan as of the termination date became fully vested, and
will be allowed to withdraw a portion or all of their account balance or to
rollover a portion or all of their account balance to the FINA Capital
Accumulation Plan. All net assets of the Plan were distributed in February 1997.
(4) SUBSEQUENT EVENTS
On February 25, 1997, FINA, Inc. with subsidiaries (the "Company") received
a letter from PetroFina S.A. proposing a merger transaction in which the Company
would become a wholly-owned affiliate of PetroFina S.A. The transaction would be
a negotiated merger in which each holder of a Class A share not owned by
PetroFina S.A. and its affiliates would receive the equivalent of $60 U.S. per
share in cash, PetroFina S.A. shares or a combination of cash and PetroFina S.A.
shares. The Plan held 11,853 shares of FINA, Inc. Class A Common Stock at
December 31, 1996. PetroFina S.A. advised that it intends to seek listing on The
New York Stock Exchange of American Depositary Receipts representing shares of
PetroFina S.A. concurrently with the transaction. Consummation of the merger
would be subject, among other things, to approval of the Board of Directors of
the Company and the negotiation and execution of a definitive merger agreement
containing customary terms and conditions.
Following receipt of the merger proposal, the Board of Directors of the
Company acting by written consent appointed a special committee of independent
directors (the "Special Committee") to review and evaluate the merger proposal
of PetroFina S.A. The Special Committee retained independent legal counsel and
independent investment advisors to assist the members of the Special Committee
in carrying out their duties and responsibilities.
6
<PAGE> 9
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 March 14, 1997,
relating to the statements of net assets available for plan benefits of the
Amdel Inc. Employee Investment Plan as of December 31, 1996 and 1995, 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, 1996 annual report on Form 11-K of the Amdel Inc. Employee
Investment Plan.
Our report refers to a change to the liquidation basis of valuing
investments.
KPMG Peat Marwick LLP
Dallas, Texas
April 14, 1997
<PAGE> 10
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
----------------------------------------
Cullen M. Godfrey
Vice President, Secretary and
General Counsel of the Registrant
Dated: April 14, 1997
<PAGE> 11
SCHEDULE 1
AMDEL INC. EMPLOYEE INVESTMENT PLAN
ITEM 27(a) -- SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF CURRENT
IDENTITY OF MARKETABLE INVESTMENT DESCRIPTION OF INVESTMENT SHARES/UNITS COST VALUE
--------------------------------- ------------------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
FINA, Inc. Class A Common Stock*... Common Stock 11,853 $ 504,862 $ 571,907
TBC Inc. Pooled Employee Daily
Liquidity Fund*.................. Money Market Fund 1,638,068 $1,638,068 $1,638,068
---------- ----------
$2,142,930 $2,209,975
========== ==========
</TABLE>
- ---------------
* Party in interest
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, 1996
<TABLE>
<CAPTION>
CURRENT VALUE
NUMBER OF ASSET ON
OF PURCHASE SELLING LEASE EXPENSES COST OF TRANSACTION NET
DESCRIPTION OF ASSET TRANSACTIONS PRICE PRICE RENTAL INCURRED ASSET DATE (LOSS)
-------------------- ------------ ---------- ---------- ------ -------- ---------- ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Purchases:
FINA, Inc. Class A
Common Stock*........ 13 $ 252,418 -- -- -- $ 252,418 $ 252,418 --
TBC Inc. Pooled
Employee Daily
Liquidity Fund*...... 90 $1,784,842 -- -- -- $1,784,842 $1,784,842 --
Dreyfus Short
Intermediate
Government Fund...... 2 $ 249,083 -- -- -- $ 249,083 $ 249,083 --
Premier LTD Term
Government Fund...... 20 $ 72,723 -- -- -- $ 72,723 $ 72,723 --
Sales:
FINA, Inc. Class A
common stock*........ 2 -- $ 208,245 -- -- $ 182,581 $ 208,245 $25,664
TBC Inc. Pooled
Employee Daily
Liquidity Fund*...... 79 -- $1,992,354 -- -- $1,992,354 $1,992,354 --
Dreyfus Short
Intermediate
Government Fund...... 1 -- $ 247,516 -- -- $ 249,083 $ 247,516 $(1,567)
Premier LTD Term
Government Fund...... 9 -- $ 326,582 -- -- $ 326,738 $ 326,582 $ (156)
</TABLE>
- ---------------
* Party in interest
See accompanying independent auditors' report.
<PAGE> 1
EXHIBIT 10(e)
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
(MARK ONE:)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
[ ] TRANSACTION REPORT PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
</TABLE>
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:
FINA CAPITAL ACCUMULATION PLAN
(FORMERLY NAMED THRIFT PLAN OF AMERICAN PETROFINA, INCORPORATED)
(SAME ADDRESS AS SHOWN BELOW)
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
FINA CAPITAL ACCUMULATION PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1996 AND 1995
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Pension Committee
FINA Capital Accumulation Plan:
We have audited the accompanying statements of net assets available for
plan benefits of the FINA Capital Accumulation Plan as of December 31, 1996 and
1995, 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 FINA
Capital Accumulation Plan as of December 31, 1996 and 1995, 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 Fund Information in the statements
of net assets available for plan benefits and the statements of changes in net
assets available for plan benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets for plan benefits of each fund. The supplemental schedules
and Fund Information 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.
KPMG PEAT MARWICK LLP
Dallas, Texas
March 14, 1997
<PAGE> 4
FINA CAPITAL ACCUMULATION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996 AND 1995
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FINA, PETROFINA U.S.
INC. S.A. DEBT MONEY GLOBAL
COMMON COMMON INDEX MARKET BALANCED EQUITY
TOTAL STOCK STOCK FUND FUND FUND FUND
-------- ---------- ----------- ---------- ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1996:
Investments, at fair value:
FINA, Inc., Class A Common Stock
(1,588,436 shares: cost of
$51,833)............................ $ 76,642 $76,642 $ -- $ -- $ -- $ -- $ --
PetroFina S.A., Common Stock (48,921
shares; cost of $13,255)............ 15,573 -- 15,573 -- -- -- --
Wells Fargo Nikko U.S. Debt Index Fund
(448,402 shares; cost of $5,084).... 6,289 -- -- 6,289 -- -- --
Money market investments.............. 5,989 1,346 62 -- 4,569 -- --
American Balanced Fund, Inc. (631,456
shares; cost of $8,328)............. 9,188 -- -- -- -- 9,188 --
American New Perspective Global Equity
Mutual Fund (508,432 shares; cost of
$7,882)............................. 9,238 -- -- -- -- -- 9,238
Wells Fargo Nikko Equity Index Fund
(453,870 shares: cost of $6,898).... 10,079 -- -- -- -- -- --
Employee loans receivable............. 4,006 -- -- -- -- -- --
Contributions receivable from
employees............................. 575 152 29 58 31 97 102
Contributions receivable from employing
companies............................. 451 347 104 -- -- -- --
Accounts receivable..................... 192 28 8 24 50 22 25
Accrued interest receivable............. 27 5 1 -- 21 -- --
-------- ------- ------- ------ ------ ------ ------
Plan assets....................... 138,248 78,520 15,777 6,371 4,671 9,307 9,365
Forfeitures available for future use...... (18) -- -- -- -- -- --
Due to broker............................. (335) (271) (64) -- -- -- --
-------- ------- ------- ------ ------ ------ ------
Net assets available for plan
benefits........................ $137,895 $78,249 $15,713 $6,371 $4,671 $9,307 $9,365
======== ======= ======= ====== ====== ====== ======
<CAPTION>
EQUITY
INDEX COMPANY EMPLOYEE
FUND FORFEITURES LOANS
---------- ----------- --------
<S> <C> <C> <C>
DECEMBER 31, 1996:
Investments, at fair value:
FINA, Inc., Class A Common Stock
(1,588,436 shares: cost of
$51,833)............................ $ -- $ -- $ --
PetroFina S.A., Common Stock (48,921
shares; cost of $13,255)............ -- -- --
Wells Fargo Nikko U.S. Debt Index Fund
(448,402 shares; cost of $5,084).... -- -- --
Money market investments.............. -- 12 --
American Balanced Fund, Inc. (631,456
shares; cost of $8,328)............. -- -- --
American New Perspective Global Equity
Mutual Fund (508,432 shares; cost of
$7,882)............................. -- -- --
Wells Fargo Nikko Equity Index Fund
(453,870 shares: cost of $6,898).... 10,079 -- --
Employee loans receivable............. -- -- 4,006
Contributions receivable from
employees............................. 105 -- --
Contributions receivable from employing
companies............................. -- -- --
Accounts receivable..................... 29 6 --
Accrued interest receivable............. -- -- --
------- ---- ------
Plan assets....................... 10,213 18 4,006
Forfeitures available for future use...... -- (18) --
Due to broker............................. -- -- --
------- ---- ------
Net assets available for plan
benefits........................ $10,213 $ -- $4,006
======= ==== ======
</TABLE>
See accompanying notes to financial statements
1
<PAGE> 5
FINA CAPITAL ACCUMULATION PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------
FINA, INC. PETROFINA MONEY
COMMON S.A. COMMON U.S. DEBT MARKET BALANCED GLOBAL
TOTAL STOCK STOCK INDEX FUND FUND FUND EQUITY FUND
-------- ---------- ----------- ---------- ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1995:
Investments, at fair value:
FINA, Inc., Class A Common Stock (1,530,920
shares: cost of $48,417).................. $ 77,311 $77,311 $ -- $ -- $ -- $ -- $ --
PetroFina S.A., Common Stock (48,157 shares;
cost of $12,947).......................... 14,841 -- 14,841 -- -- -- --
Wells Fargo Nikko U.S. Debt Index Fund
(495,767 shares; cost of $5,548).......... 6,704 -- -- 6,704 -- -- --
Money market investments.................... 5,538 656 159 -- 4,713 -- --
American Balanced Fund, Inc. (478,674
shares; cost of $6,116)................... 6,773 -- -- -- -- 6,773 --
American New Perspective Global Equity
Mutual Fund (438,243 shares; cost of
$6,606)................................... 7,178 -- -- -- -- -- 7,178
Wells Fargo Nikko Equity Index Fund (344,150
shares: cost of $4,727)................... 6,216 -- -- -- -- -- --
Employee loans receivable................... 2,936 -- -- -- -- -- --
Cash.......................................... (6) (5) (1) -- -- -- --
Contributions receivable from employees....... 581 154 35 66 38 96 103
Contributions receivable from employing
companies................................... 446 328 118 -- -- -- --
Accounts receivable........................... 144 32 5 15 9 31 25
Accrued dividend receivable................... 27 4 -- -- 23 -- --
Accrued interest receivable................... 1 -- 1 -- -- -- --
-------- ------- ------- ------ ------ ------ ------
Plan assets........................... 128,690 78,480 15,158 6,785 4,783 6,900 7,306
Forfeitures available for future use.......... (14) -- -- -- -- -- --
-------- ------- ------- ------ ------ ------ ------
Net assets available for plan
benefits............................ $128,676 $78,480 $15,158 $6,785 $4,783 $6,900 $7,306
======== ======= ======= ====== ====== ====== ======
<CAPTION>
FUND INFORMATION
-----------------------------------
EQUITY COMPANY EMPLOYEE
INDEX FUND FORFEITURES LOANS
---------- ----------- --------
<S> <C> <C> <C>
DECEMBER 31, 1995:
Investments, at fair value:
FINA, Inc., Class A Common Stock (1,530,920
shares: cost of $48,417).................. $ -- $ -- $ --
PetroFina S.A., Common Stock (48,157 shares;
cost of $12,947).......................... -- -- --
Wells Fargo Nikko U.S. Debt Index Fund
(495,767 shares; cost of $5,548).......... -- -- --
Money market investments.................... -- 10 --
American Balanced Fund, Inc. (478,674
shares; cost of $6,116)................... -- -- --
American New Perspective Global Equity
Mutual Fund (438,243 shares; cost of
$6,606)................................... -- -- --
Wells Fargo Nikko Equity Index Fund (344,150
shares: cost of $4,727)................... 6,216 -- --
Employee loans receivable................... -- -- 2,936
Cash.......................................... -- -- --
Contributions receivable from employees....... 89 -- --
Contributions receivable from employing
companies................................... -- -- --
Accounts receivable........................... 23 4 --
Accrued dividend receivable................... -- -- --
Accrued interest receivable................... -- -- --
------ ---- ------
Plan assets........................... 6,328 14 2,936
Forfeitures available for future use.......... -- (14) --
------ ---- ------
Net assets available for plan
benefits............................ $6,328 $ -- $2,936
====== ==== ======
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 6
FINA CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION
YEARS ENDED DECEMBER 31, 1996 AND 1995
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
FUND INFORMATION
---------------------------------------------------------------------------
FINA, INC. PETROFINA S.A. MONEY
COMMON COMMON U.S. DEBT MARKET BALANCED GLOBAL
TOTAL STOCK STOCK INDEX FUND FUND FUND EQUITY FUND
-------- ---------- --------------- ---------- ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Contributions:
Employees.............................. $ 7,335 $ 1,928 $ 407 $ 771 $ 408 $1,220 $1,278
Employing companies.................... 5,638 4,242 1,396 -- -- -- --
-------- ------- ------- ------- ------ ------ ------
12,973 6,170 1,803 771 408 1,220 1,278
-------- ------- ------- ------- ------ ------ ------
Investment income:
Dividends.............................. 5,819 4,212 522 -- 164 763 158
Interest............................... 433 36 10 2 61 3 3
Net appreciation(depreciation) in fair
value of investments................. 171 (3,670) 443 224 -- 259 1,180
-------- ------- ------- ------- ------ ------ ------
6,423 578 975 226 225 1,025 1,341
-------- ------- ------- ------- ------ ------ ------
Transfers between funds.................. -- (576) (824) (1,036) (442) 518 82
-------- ------- ------- ------- ------ ------ ------
Withdrawals and expenses:
In cash and in kind.................... 9,916 6,241 1,359 351 315 343 628
Forfeitures............................ 33 27 6 -- -- -- --
Other (additions) deductions........... 228 135 34 24 (12) 13 14
-------- ------- ------- ------- ------ ------ ------
10,177 6,403 1,399 375 303 356 642
-------- ------- ------- ------- ------ ------ ------
Net increase(decrease) in net assets... 9,219 (231) 555 (414) (112) 2,407 2,059
Net assets available for plan benefits:
Beginning of year...................... 128,676 78,480 15,158 6,785 4,783 6,900 7,306
-------- ------- ------- ------- ------ ------ ------
End of year............................ $137,895 $78,249 $15,713 $ 6,371 $4,671 $9,307 $9,365
======== ======= ======= ======= ====== ====== ======
<CAPTION>
FUND INFORMATION
------------------------------------
EQUITY COMPANY EMPLOYEE
INDEX FUND FORFEITURES LOANS
----------- ----------- --------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Contributions:
Employees.............................. $ 1,323 $ -- $ --
Employing companies.................... -- -- --
------- ---- ------
1,323 -- --
------- ---- ------
Investment income:
Dividends.............................. -- -- --
Interest............................... 5 -- 313
Net appreciation(depreciation) in fair
value of investments................. 1,735 -- --
------- ---- ------
1,740 -- 313
------- ---- ------
Transfers between funds.................. 1,415 -- 863
------- ---- ------
Withdrawals and expenses:
In cash and in kind.................... 573 -- 106
Forfeitures............................ -- -- --
Other (additions) deductions........... 20 -- --
------- ---- ------
593 -- 106
------- ---- ------
Net increase(decrease) in net assets... 3,885 -- 1,070
Net assets available for plan benefits:
Beginning of year...................... 6,328 -- 2,936
------- ---- ------
End of year............................ $10,213 $ -- $4,006
======= ==== ======
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 7
FINA CAPITAL ACCUMULATION PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND
INFORMATION -- (CONTINUED)
<TABLE>
<CAPTION>
FUND INFORMATION
-----------------------------------------------------------------------
PETROFINA
FINA, INC. S.A. MONEY
COMMON COMMON U.S. DEBT MARKET BALANCED GLOBAL
TOTAL STOCK STOCK INDEX FUND FUND FUND EQUITY FUND
-------- ---------- ----------- ---------- ------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Contributions:
Employees................................... $ 7,286 $ 1,878 $ 475 $ 899 $ 508 $1,193 $1,310
Employing companies......................... 5,554 3,964 1,590 -- -- -- --
-------- ------- ------- ------- ------ ------ ------
12,840 5,842 2,065 899 508 1,193 1,310
Investment income:
Dividends................................... 4,583 3,437 499 -- 279 244 124
Interest.................................... 277 37 9 1 1 -- 2
Net appreciation in fair value of
investments............................... 29,169 23,966 556 1,100 -- 1,145 990
-------- ------- ------- ------- ------ ------ ------
34,029 27,440 1,064 1,101 280 1,389 1,116
-------- ------- ------- ------- ------ ------ ------
Transfers between funds....................... -- 534 (646) (1,094) (323) (91) 487
-------- ------- ------- ------- ------ ------ ------
Withdrawals and expenses:
In cash and in kind......................... 8,074 5,139 919 526 250 458 442
Forfeitures................................. 36 28 8 -- -- -- --
Other (additions) deductions................ 156 91 20 17 7 8 9
-------- ------- ------- ------- ------ ------ ------
8,266 5,258 947 543 257 466 451
-------- ------- ------- ------- ------ ------ ------
Net increase in net assets.................. 38,603 28,558 1,536 363 208 2,025 2,462
Net assets available for plan benefits:
Beginning of year........................... 90,073 49,922 13,622 6,422 4,575 4,875 4,844
-------- ------- ------- ------- ------ ------ ------
End of year................................. $128,676 $78,480 $15,158 $ 6,785 $4,783 $6,900 $7,306
======== ======= ======= ======= ====== ====== ======
<CAPTION>
FUND INFORMATION
-----------------------------------
EQUITY COMPANY EMPLOYEE
INDEX FUND FORFEITURES LOANS
---------- ----------- --------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995:
Contributions:
Employees................................... $1,023 $-- $ --
Employing companies......................... -- -- --
------ --- ------
1,023 -- --
Investment income:
Dividends................................... -- -- --
Interest.................................... 1 -- 226
Net appreciation in fair value of
investments............................... 1,412 -- --
------ --- ------
1,413 -- 226
------ --- ------
Transfers between funds....................... 968 -- 166
------ --- ------
Withdrawals and expenses:
In cash and in kind......................... 263 -- 77
Forfeitures................................. -- -- --
Other (additions) deductions................ 8 (3)
------ --- ------
271 -- 74
------ --- ------
Net increase in net assets.................. 3,133 -- 318
Net assets available for plan benefits:
Beginning of year........................... 3,195 -- 2,618
------ --- ------
End of year................................. $6,328 $-- $2,936
====== === ======
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 8
FINA CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(1) GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) GENERAL
The FINA Capital Accumulation Plan (the Plan) operates for the benefit of
certain employees of FINA, Inc. (Company) and its subsidiaries and American
Petrofina Holding Company, hereafter referred to as "employing companies."
Employees who have completed one year of service are eligible to participate in
the Plan; provided, however, that no employee may become a participant if the
employee is a member of a collective bargaining unit, the recognized
representative of which has not agreed to participation in the Plan by members
of such unit.
The Plan is a defined contribution plan and is subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended (ERISA). The
following description of the Plan is provided for general purposes only.
Participants should refer to the Plan document for more complete information.
The Plan is administered by the Pension Committee appointed by and acting
on behalf of the Board of Directors of the Company. Pursuant to the Plan's trust
agreement, an independent trustee (Trustee) maintains custody of the Plan's
assets. The Boston Safe Deposit and Trust Company serves as the independent
trustee.
(b) BASIS OF PRESENTATION
The accompanying financial statements 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) COSTS RELATING TO INVESTMENT SECURITIES
Costs 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 external 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 the responsibility of the Plan.
(e) CONTRIBUTIONS
Participants may elect to contribute up to 6% (effective 1/1/96) of their
basic compensation on an after-tax basis (Thrift Contribution), up to 10% on a
pre-tax basis (Deferred Compensation Contribution), or a combination of pre-tax
and after-tax contributions not exceeding 10% of their basic compensation. If a
participant elects to make a Deferred Compensation Contribution, the participant
must enter into a basic compensation reduction agreement authorizing the
employing company to make such contribution on the participant's behalf.
For each participant, an employing company will contribute an amount equal
to the lesser of the aggregate Thrift and Deferred Compensation Contributions
for the pay period or 6% (effective 1/1/96) pre-tax of the participant's basic
compensation for the pay period (Matching Contribution). Matching Contributions
are reduced by participants' forfeitures.
Thrift and Deferred Compensation Contributions are paid to the Trustee in
cash and Matching Contributions are paid to the Trustee in cash or the Company's
Class A Common Stock.
5
<PAGE> 9
FINA CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(f) INVESTMENT PROGRAM AND VESTING
Participants may direct the investment of their Thrift and Deferred
Compensation Contributions into a money market fund, U.S. debt index fund,
balanced fund, equity index fund, global equity fund, the Company's Class A
Common Stock or Petrofina S.A. Common Stock; and the investment of the Matching
Contributions into the Company's Class A Common Stock or Petrofina S.A. Common
Stock. Participants become completely vested in contributions of the employing
companies upon five years of service with the employing companies.
A description of rights and provisions and an explanation of the treatment
of withdrawals, forfeitures and other matters are contained in the Plan
document.
Participation in each investment option at December 31, 1996 and 1995 is
presented below. The sum of participation by investment option is greater than
the total number of Plan participants making contributions because participation
is allowed in more than one investment option.
A summary of participants by investment options follows:
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
Company Class A Common Stock................................ 2,246 2,003
Petrofina S.A. Common Stock................................. 1,098 1,065
U.S. debt index fund........................................ 748 818
Equity index fund........................................... 1,107 809
Balanced fund............................................... 1,002 827
Global equity fund.......................................... 999 863
Money market fund........................................... 613 638
</TABLE>
(g) LOAN OPTION
A participant may borrow from his or her Participant Deferred Account an
amount which, when added to the greater of the total outstanding balance of all
other loans to such Participant from the Plan or the highest outstanding balance
of all such loans for the one-year period ending the day before the date of the
loan, does not exceed up to one-half of the first $100,000 of such participant's
vested interest under the Plan, or the amount allowed under Section 72(p) of the
Internal Revenue Code. Any such loan made to a participant shall be evidenced by
a promissory note payable to the Trustee, shall bear a reasonable rate of
interest, shall be secured by the borrowing participant's vested interest under
the Plan and shall be repayable within five years; provided, however, that if
such loan is to be used to acquire or construct any dwelling unit which within a
reasonable time is to be used as a principal residence of the participant, the
Committee may direct the Trustee to make such loan repayable over such period
greater than five years. No withdrawal pursuant to any of the withdrawal
provisions of the Plan may be made by a participant to whom a loan is
outstanding from the Plan unless the Committee is satisfied that such loan will
remain nontaxable and fully secured by the withdrawing participant's vested
interest under the Plan following such withdrawal. At December 31, 1996,
employee loans had maturities ranging from 1996 to 2010 and interest rates
ranging from 6% to 11.5%.
(h) FORM 5500 RECONCILIATION
The net assets available for plan benefits and withdrawals reported in the
Plan's 1996 and 1995 Form 5500's are different from the corresponding amounts
reported in the accompanying financial statements by $1,191,981 and $333,616,
respectively, as of and for the year ended December 31, 1996 and $1,525,597 and
($613,380), respectively, as of and for the year ended December 31, 1995. These
differences relate to the classification of withdrawals currently payable to
participants.
6
<PAGE> 10
FINA CAPITAL ACCUMULATION PLAN
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(i) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of additions and deductions during the
reporting period. Actual results could differ from those estimates.
(2) FEDERAL INCOME TAXES
The Plan has obtained from the Internal Revenue Service a determination
letter dated March 19, 1996 indicating that the Plan qualifies under the
provision of Sections 401(a) and 401(k) 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, such contributions are tax
deferred.
(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.
(4) SUBSEQUENT EVENTS
On February 25, 1997, FINA, Inc. with subsidiaries (the "Company") received
a letter from PetroFina S.A. proposing a merger transaction in which the Company
would become a wholly-owned affiliate of PetroFina S.A. The transaction would be
a negotiated merger in which each holder of a Class A share not owned by
PetroFina S.A. and its affiliates would receive the equivalent of $60 U.S. per
share in cash, PetroFina S.A. shares or a combination of cash and PetroFina S.A.
shares. The Plan held 1,615,057 shares of FINA, Inc. Class A Common Stock at
March 6, 1997. PetroFina S.A. advised that it intends to seek listing on The New
York Stock Exchange of American Depositary Receipts representing shares of
PetroFina S.A. concurrently with the transaction. Consummation of the merger
would be subject, among other things, to approval of the Board of Directors of
the Company and the negotiation and execution of a definitive merger agreement
containing customary terms and conditions.
Following receipt of the merger proposal, the Board of Directors of the
Company acting by written consent appointed a special committee of independent
directors (the "Special Committee") to review and evaluate the merger proposal
of PetroFina S.A. The Special Committee retained independent legal counsel and
independent investment advisors to assist the members of the Special Committee
in carrying out their duties and responsibilities.
7
<PAGE> 11
CONSENT OF INDEPENDENT AUDITORS
The Plan Committee
FINA Capital Accumulation Plan:
We consent to incorporation by reference in the Registration Statement
(No. 2-89230) on Form S-8 of FINA, Inc. of our report dated March 14, 1997,
relating to the statements of net assets available for plan benefits of the
FINA Capital Accumulation Plan as of December 31, 1996 and 1995, 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, 1996 annual report on Form 11-K of the FINA
Capital Accumulation Plan.
KPMG Peat Marwick LLP
Dallas, Texas
April 14, 1997
<PAGE> 12
SIGNATURE
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 report to be signed on its behalf by the undersigned
thereunto duly authorized.
FINA CAPITAL ACCUMULATION PLAN
/s/ CULLEN M. GODFREY
------------------------------------
Cullen M. Godfrey
Senior Vice President, Secretary and
General Counsel of the Registrant
Date: April 14, 1997
<PAGE> 13
SCHEDULE 1
FINA CAPITAL ACCUMULATION PLAN
ITEM 27(a) -- SCHEDULE OF ASSETS HELD FOR INVESTMENT
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CURRENT
NUMBER OF COST VALUE
IDENTITY OF MARKETABLE INVESTMENT DESCRIPTION OF INVESTMENT SHARES/UNITS (IN THOUSANDS) (IN THOUSANDS)
--------------------------------- ------------------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
FINA, Inc. Class A Common Stock*.......... Common Stock 1,588,436 $ 51,833 $ 76,642
PetroFina S.A. Common Stock*.............. Common Stock 48,921 13,255 15,573
Wells Fargo Nikko U.S. Debt Index Fund.... Commingled Trust Fund 448,402 5,084 6,289
American Balanced Fund, Inc............... Mutual Fund 631,456 8,328 9,188
American New Perspective Global Equity
Mutual Fund............................. Mutual Fund 508,432 7,882 9,238
Wells Fargo Nikko Equity Index Fund....... Commingled Trust Fund 453,870 6,898 10,079
TBC Inc. Pooled Employee Daily Liquidity
Fund*................................... Money Market fund 5,989,456 5,989 5,989
Employee loans receivable*................ Employee loans with maturities
ranging from 1997 to 2010 and
interest rates ranging from 6%
to 11.5% 4,006 4,006
-------- --------
$103,276 $137,004
======== ========
</TABLE>
- ---------------
* Party-in-interest
See accompanying independent auditors' report.
<PAGE> 14
SCHEDULE 2
FINA CAPITAL ACCUMULATION PLAN
ITEM 27(d) -- SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
CURRENT VALUE
NUMBER OF ASSET ON
OF PURCHASE SELLING LEASE EXPENSE COST OF TRANSACTION NET
DESCRIPTION OF ASSET TRANSACTIONS PRICE PRICE RENTAL INCURRED ASSET DATE GAIN
-------------------- ------------ -------- ------- ------ -------- ------- ------------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PURCHASES:
FINA, Inc. Class A Common Stock*......... 70 $ 4,471 -- -- -- $ 4,471 $ 4,471 --
TBC Inc. Pooled Employee Daily Liquidity
Fund*.................................. 313 26,952 -- -- -- 26,952 26,952 --
Northern Trust S/T Fund.................. 12 298 -- -- -- 298 298 --
Wells Fargo Bank MM Fund................. 52 1,712 -- -- -- 1,712 1,712 --
Wells Fargo Bk Nikko US Debt Index
Fund................................... 8 433 -- -- -- 433 433 --
PetroFina S.A. Common Stock*............. 7 745 -- -- -- 745 745 --
American Balanced Fund................... 20 2,323 -- -- -- 2,323 2,323 --
American New Perspective Global Equity
Fund................................... 13 1,275 -- -- -- 1,275 1,275 --
New Perspective Fund Inc................. 2 112 -- -- -- 112 112 --
Wells Fargo Bk Nikko Equity Index Fund... 15 2,302 -- -- -- 2,302 2,302 --
SALES:
FINA, Inc. Class A Common Stock*......... 1 50 -- -- $ 33 $ 50 $ 17
TBC Inc. Pooled Employee Daily Liquidity
Fund................................... 304 21,788 -- -- 21,788 21,788 --
Northern Trust S/T Fund.................. 18 5,011 -- -- 5,011 5,011 --
Wells Fargo Bank MM Fund................. 32 1,712 -- -- 1,712 1,712 --
Wells Fargo Bk Nikko US Debt Index
Fund................................... 22 1,071 -- -- 896 1,071 175
PetroFina S.A. Common Stock*............. 4 469 -- -- 436 469 33
American Balanced Fund................... 7 167 -- -- 151 167 16
American New Perspective Global Equity
Fund................................... 11 469 -- -- 409 469 60
New Perspective Fund Inc................. 1 38 -- -- 33 38 5
Wells Fargo Bk Nikko Equity Index Fund... 13 174 -- -- 131 174 43
</TABLE>
* Party-in-interest
See accompanying independent auditors' report
<PAGE> 1
EXHIBIT 10.(f)
May 20, 1986
Mr. Ronald W. Haddock
8306 Acupulco Cove Court
Humble, TX 77338
Dear Ron:
In consideration of your decision to join American Petrofina, Incorporated
(API), API agrees to provide you, upon retirement from the active service of
API at age 55 or later, with supplemental retirement benefits as determined in
the following manner:
Your primary retirement benefit will equal 1.6% of your Final Average Earnings
(includes basic salary and paid bonuses) that you receive from API over the 36
consecutive months out of the most recent 120 months immediately prior to
retirement during which such earnings are the highest. Final Average Earnings
shall then be multiplied by the number of completed years and months of service
from June 11, 1963 to the date of your retirement from API, and then reduced by
the lesser of (i) 1-1/2% of your Old Age Social Security benefit for such
completed years and months of service or (ii) 50% of your Old Age Social
Security benefit. If your retirement is prior to age 60, the retirement
benefit amount will be reduced 5/12% for each month that your retirement
precedes age 60. This retirement benefit amount will be payable as a 5 year and
life annuity.
Your retirement benefit, as determined in the preceding paragraph, shall be
reduced by the following three amounts:
The first amount will equal your vested deferred monthly 5 year certain and
life annuity from the Exxon Corporation plan payable from your retirement date.
The second amount will equal your monthly 5 year certain and life annuity from
the Pension Plan for employees of American Petrofina, Incorporated and Certain
Subsidiaries payable from your retirement date.
<PAGE> 2
Mr. Ronald W. Haddock
May 20, 1986
Page Two
The third amount will equal your monthly 5 year certain and life annuity from
the Excess Benefit Plan of American Petrofina, Incorporated and Certain
Subsidiaries payable from your retirement date.
Such supplemental retirement benefits may be converted into any of the optional
forms of benefit then permitted under the Pension Plan for employees of API,
using the actuarial equivalence factor applicable under that plan.
As we discussed, such supplemental retirement benefits will not be funded in
advance but will be considered as general obligations of API.
If you find the foregoing to be satisfactory to you, please so indicate in the
spaces provided below. Return one executed copy to me and retain one copy for
your files.
Sincerely,
/s/
Paul D. Meek
PDM/dld
ACCEPTED AND AGREED this 29 day of May , 1986.
/s/
----------------------------
Ronald W. Haddock
<PAGE> 3
FINA, Inc.
INTEROFFICE CORRESPONDENCE
THIS MEMORANDUM CONSTITUTES THE
AMENDMENT TO THE LETTER OF 5/20/86
Date: December 16, 1993 Subject: Tax Avoidance by Vesting--
Ron W. Haddock's SERP
From: Bill H. Bonnett
To: Paul D. Meek
In order to keep the Company from paying $15,000 in FICA-Medicare taxes and an
equal match by the employee, I recommend a December 1, 1993 vesting of the
Supplemental Executive Retirement Plan (SERP) benefits outlined in the
employment contract you signed for Ron Haddock. This is a result of the Tax
Reform Act (OBRA '93) provision effective January 1, 1994, which requires a
FICA-Medicare tax of 1.45% on past accruals for SERP's at the point of
vesting. This tax can be avoided if the benefit is vested before January 1,
1994.
When Ron was hired he received an individual employment contract which provided
a supplemental benefit to "keep him whole" with the Exxon equivalent benefit.
In the agreement (see attached) the benefit will vest when age 55 is reached
(7/95). There is no hidden cost to accelerate the vesting of the benefits as
long as Ron remains with FINA until at least age 55.
Your approval of this amendment to the employment contract is respectfully
requested. The attached E-mail form Mike Godfrey confirms approval by our
outside directors and Ron has also received approval from Francois Cornelis.
/s/
Bill H. Bonnett
BHB/dld
Attachment
APPROVED:
/s/
Paul D. Meek
<PAGE> 1
Exhibit 10 g
EMPLOYEE STOCK OWNERSHIP PLAN
OF
AMERICAN PETROFINA, INCORPORATED
<PAGE> 2
TABLE OF CONTENTS*
PAGE
SECTION l. Definitions 1
SECTION 2. Participation 10
SECTION 3. Company Contributions, Employee
Contributions and Investment
Credit Recapture 11
SECTION 4. Allocation of Shares to
Participants 18
SECTION 5. Dividends 23
SECTION 6. Voting Rights 24
SECTION 7. Expenses 25
SECTION 8. Vesting 27
SECTION 9. Distributions from the
Trust Fund 27
SECTION 10. The Trust Fund 34
SECTION 11. Committee of Administration 35
SECTION 12. Amendment, Suspension and
Termination; Merger, Consolidation
and Transfer 41
SECTION 13. Miscellaneous 46
* The Table of Contents is not a part of this
instrument.
(i)
<PAGE> 3
SECTION 1. Definitions.
The following words and phrases as used herein shall have the
following meanings unless a different meaning is plainly required by the
context:
1.1 "Board of Directors" shall mean the Board of Directors of the
Company.
1.2 "Break in Service" shall mean any Year during which an Employee
does not complete more than 500 Hours of Service.
1.3 "Committee" shall mean the committee established to administer
the Plan in accordance with Section 11.
1.4 "Company" shall mean American Petrofina, Incorporated, a Delaware
corporation, or any successor to it in ownership of all or substantially all of
its assets.
1.5 "Company Contributions" for any Year shall mean the total
contributions by the Company and any Participating Companies for that Year made
under the Plan in accordance with Section 3.
<PAGE> 4
1.6 "Compensation" shall mean for any Year the total of all amounts
paid to a Participant by the Company or any Participating Company for personal
services as salary, wages, bonuses or overtime pay, but such term shall not
include any other payments, any Company Contributions or benefits paid under
this Plan.
1.7 "Effective Date" shall mean January 1, 1976.
1.8 "Employee" shall mean any employee or officer of an Employer who
is not included in a unit of employees represented by a collective bargaining
agent.
1.9 "Employee Contributions" for any Year shall mean the total
contributions by Participants for that Year made under the Plan in accordance
with Section 3.
1.10 "Employer" shall mean the Company, any subsidiary of the Company
or any subsidiary of any subsidiary of the Company.
1.11 "ERISA" shall mean the provisions of the Employee Retirement
Income Security Act of 1974, as it (or the provisions of the United States Code
in which such provisions appear) may be amended from time to time,
<PAGE> 5
or any successor legislation adopted in lieu thereof, and references herein to
any specific provision of ERISA shall be deemed also to refer to any specific
provision of ERISA as it may hereafter be so amended or replaced.
1.12 "Fiduciary Responsibility" shall mean those operational and
administrative duties required to be performed by fiduciaries pursuant to the
provisions of Part 4 of Title I of ERISA.
1.13 "Hour of Service" shall mean each hour described in (b) through
(g) below, determined as provided in (a) below. No Hour of Service shall be
counted more than once under this Section 1.13.
(a) An Employee's Hours of Service shall
be determined and credited in accordance with the
Rules and Regulations for Minimum Standards for
Employee Pension Benefit Plans, 29 C.F.R. Part 2530,
promulgated by the United States Department of Labor,
as amended from time to time, or any successor
regulations promulgated in lieu thereof. Pursuant
to 29 C.F.R. Section 2530.200b-3(e) (1) (iv) , in lieu of
recording each Hour of Service, as defined in
subsections (b)-(g) below, an Employee shall be
<PAGE> 6
credited with 190 Hours of Service for each month for
which he would otherwise be required to be credited
with at least one such Hour of Service, as defined
below.
(b) Each hour for which an Employee is
paid, or entitled to payment, for the performance of
duties for the Employer during the applicable period.
(c) Each hour for which an Employee is
paid, or entitled to payment, by the Employer on
account of a period of time during which no duties
are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence.
Notwithstanding the preceding sentence:
(i) No more than 501 Hours of
Service shall be credited to an Employee on
account of any single continuous period during
which the Employee performs no duties;
<PAGE> 7
(ii) An hour for which an Employee
is directly or indirectly paid, or entitled to
payment, on account of a period during which no
duties are performed shall not be credited to
the Employee if such payment is made or due
under a plan maintained solely for the purpose
of complying with applicable workmen's
compensation, or unemployment compensation or
disability insurance laws; and
(iii) An hour shall not be credited
for a payment which solely reimburses an Employee
for medical or medically-related expenses
incurred by the Employee.
(d) During a period of Authorized Absence,
each hour for which an Employee would normally have
been directly or indirectly paid, or entitled to
payment, by the Employer for the performance of duties
had the Employee performed duties during such period
in accordance with his most recent normal work
schedule prior to the Absence. Such hours shall be
credited to the Employee for the period in which the
duties would have been performed. For purposes of
this subsection (d) , "Authorized Absence" shall mean
<PAGE> 8
absence authorized by the Employer without loss of
employment status, including leave of absence for
military or governmental service, for which no
compensation is paid by the Employer.
(e) Each hour for which back pay,
irrespective of mitigation of damages, is either
awarded or agreed to by the Employer.
(f) Each hour for which an Employee is
required to be given credit for an Hour of Service
under any Federal law other than ERISA. The nature
and extent of any such hours shall be determined
under any such law.
(g) In the sole discretion of the Board
of Directors, hours in respect of service with any
corporation which shall be merged into or shall be
consolidated with an Employer or all or substantially
all of the assets of which shall have been acquired
by an Employer.
1.14 "Internal Revenue Code" shall mean the
Internal Revenue Code of 1954, as it may be amended from
time to time, or any successor revenue code which may
hereafter be adopted in lieu thereof, and references
<PAGE> 9
herein to any specific provision of the Internal Revenue
Code shall be deemed also to refer to the corresponding
provision of the Internal Revenue Code as it may
hereafter be so amended or replaced.
1.15 "Matching Employee Contributions" shall
mean for any Year the aggregate of the Employee
Contributions for such Year which qualify to be matched by
Company Contributions under Tax Reduction Act Section
301(e).
1.16 "Participant" shall mean any Employee of
the Company or a Participating Company who has become a
Participant in the Plan in accordance with Section 2.
1.17 "Participating Company" shall mean any
corporation (other than the Company) which for any Year
qualifies to file a consolidated Federal income tax
return with the Company, provided that such corporation
shall be designated by the Board of Directors as a
Participating Company for the purposes of the Plan and
that the board of directors of such corporation shall
adopt the Plan and Trust Agreement. Any Participating
Company shall cease to be a Participating Company under
the Plan upon the joint action of the Board of Directors
<PAGE> 10
and the board of directors of such Participating Company.
1.18 "Plan" shall mean this Employee Stock
Ownership Plan of American Petrofina, Incorporated, as
amended from time to time.
1.19 "Shares" shall mean collectively the
Company's Class A and Class B common stock, such common
stock being referred to herein as "Class A Shares" and
"Class B Shares", respectively.
1.20 "Tax Reduction Act" shall mean the Tax
Reduction Act of 1975, as it (or the provisions of the
United States Code in which it appears) may be amended
from time to time, or any successor legislation adopted
in lieu thereof, and references herein to any specific
provision of the Tax Reduction Act shall be deemed also
to refer to any specific provision of the Tax Reduction
Act as it may be hereafter so amended or replaced.
1.21 "Trust Agreement" shall mean the agreement
and declaration of trust entered into in accordance with
Section 10.
<PAGE> 11
1.22 "Trust Fund" shall mean the fund held by
the Trustee under the Trust Agreement in accordance with
Section 10.
1.23 "Trustee" shall mean the trustee or
trustees under the Trust Agreement entered into in
accordance with Section 10.
1.24 "Year" shall mean a calendar year. The
Plan Year shall be the calendar year.
1.25 Year of Service" shall mean the 12-
consecutive-month period, commencing on the date an
Employee first performs an Hour of Service, in which the
Employee completes at least 1,000 Hours of Service. In
the case of an Employee who has terminated employment
prior to becoming a Participant, "Year of Service" also
shall mean the 12-consecutive-month period, commencing
on the date on which such Employee first performs an Hour
of Service upon returning to employment following his
most recent termination of employment, in which the
Employee completes at least 1,000 Hours of Service. If
an Employee fails to complete at least 1,000 Hours of
Service in any 12-consecutive-month period described in
either of the two preceding sentences, "Year of Service"
<PAGE> 12
shall mean any Year in which the Employee completes at
least 1,000 Hours of Service.
1.26 Except as the context otherwise requires,
the masculine pronoun shall include the feminine.
SECTION 2. Participation.
2.1 Eligibility for Participation. Each
Employee of the Company or a Participating Company shall
become a Participant on January 1, 1976 if he had
completed at least one Year of Service on that date. Any
other Employee of the Company or a Participating Company
shall become a Participant on the first day of any month
coincident with or next following his completing one Year
of Service.
2.2 Loss of Participation. A Participant shall
cease participation as of the date he terminates
employment with the Company or a Participating Company
or as of the first day of any Year in which he incurs a
Break in Service.
2.3 Return to Participation. A former
Participant who has terminated employment but has not
incurred a Break in Service shall again become a
<PAGE> 13
Participant as of the date he is re-employed by the
Company or a Participating Company. A former Participant
who has incurred a Break in Service (whether or not he
has terminated employment) shall again become a
Participant as of the first day of any Year following
such Break in Service in which he completes at least
1,000 Hours of Service.
SECTION 3. Company Contributions, Employee
Contributions and Investment Credit
Recapture.
3.1 Company Contributions. (a) For each Year,
commencing with 1976, the Company and each Participating
Company shall contribute, in such proportions as such
companies shall together agree, to the Trust Fund cash
or Shares of an aggregate value equal to the additional
investment credit determined under Internal Revenue Code
Section 46(a) (2) (B) , if any, with respect to the
aggregate qualified investment of the Company and all
Participating Companies, as determined under Internal
Revenue Code Sections 46(c) and 46(d) (the "Company
Contribution"). To the extent that a Company
Contribution is in cash, such cash shall be used by the
Trustee to purchase Class A or Class B Shares as soon as
reasonably practicable following receipt thereof by the
<PAGE> 14
Trustee. Except as provided in Section 3.5, no other
contributions to the Trust Fund shall be required or
permitted.
(b) Class A Shares and Class B Shares directly
attributable to Company Contributions, as defined in
Section 3.1(a) above, shall be acquired by the Trust Fund
in a ratio substantially equal to the proportion that the
value of all outstanding Class A Shares, as determined
in Section 3.3 below, bears to the value of all
outstanding Class B Shares, in both cases excluding all
such Shares held by the Trust Fund. For this purpose,
Class B Shares shall be valued at the same value as the
same number of Class A Shares.
3.2 Time of Company Contributions. Company
Contributions in cash and in Shares and Shares purchased
by the Trustee using Company Contributions in cash shall
be transferred to the Trust Fund prior to or as soon as
reasonably practicable following the due date (including
extensions) for filing the Company's Federal income tax
return for the Year for which the Company Contributions
are made; provided, that if any additional investment
credit of the Company or any Participating Company,
determined under Internal Revenue Code Section
<PAGE> 15
46(a)(2)(B), exceeds the limitations on allowable tax
credits of Internal Revenue Code Section 46(a)(3), then
(i) that portion of the Shares allocable
to investment credit carrybacks of such excess credit
shall be transferred to the Trust Fund within the time
prescribed in Section 3.2 above for the Company
Contribution for the unused credit year, as defined
in Internal Revenue Code Section 46(b), and
(ii) that portion of Shares allocable to
investment credit carryovers of such excess credit
shall be transferred to the Trust Fund within the
time prescribed in Section 3.2 above for the Year to
which such portion is carried over.
3.3 Valuation of Share Contributions. For
purposes of Section 3.1 above, Company Contributions in
Shares shall be valued (i) by taking the average of
closing sale prices of the Class A Shares, as reported
by the composite tape for securities listed on the
American Stock Exchange, Inc., for the 20 consecutive
trading days immediately preceding the date on which the
Company's Federal income tax return is filed for the Year
with respect to which such Company Contributions are
<PAGE> 16
made, or (ii) in the case of Class B Shares, not listed
on a national exchange, at the value, as determined in
(i) above, of the same number of Class A Shares.
3.4 Initial Plan Qualification.
Notwithstanding anything contained herein to the
contrary, if an application for a determination that the
Plan satisfies the requirements of Sections 301(d) and
301(e) of the Tax Reduction Act and Internal Revenue Code
Section 401(a) is filed with the Internal Revenue Service
not later than 90 days following the date on which the
Company's tax credit under Internal Revenue Code Section
38 for 1976 with respect to the Plan is allowed, and if
such determination is not issued, then all Company
Contributions made to the Trust Fund may be returned to
the Company and the Participating Companies within 12
months after the date on which the Internal Revenue
Service issues notice to the Company that the Plan does
not satisfy the foregoing requirements or otherwise
advises the Company that it refuses to issue a favorable
determination.
<PAGE> 17
3.5 Employee Contributions. (a) For each
Year, commencing with 1977, each Participant may elect
to make voluntary Employee Contributions in cash to the
Trust Fund in an amount not less than 2% nor more than
10% of the Participant's Compensation for the Year;
provided, that such Participant must designate in writing
that his Employee Contributions for that Year shall be
available as Matching Employee Contributions. Such
Employee Contributions shall be made by payroll
deductions or such other means as the Committee may
prescribe. Employee Contributions shall be accumulated
and held by the Company, without interest, and shall be
transferred to the Trust Fund at the end of each quarter
of the Year.
(b) Employee Contributions shall be used by the
Trustee to purchase Shares as soon as reasonably
practicable following the date on which such Employee
Contributions are received by the Trustee. Class A
Shares and Class B Shares so purchased shall be acquired
by the Trustee in a ratio, at the date of any acquisition
of such Shares, substantially equal to the proportion
that the fair market value of all outstanding Class A
Shares bears to the fair market value of all outstanding
<PAGE> 18
Class B Shares, in both cases excluding all such Shares
held by the Trust Fund. For this purpose, Class B Shares
shall be valued at the same fair market value as the same
number of Class A Shares.
3.6 Additional Investment Credit Recapture.
(a) Except as otherwise provided in Section 3.6(b) (iii)
below, if the amount of any additional investment credit
determined under Internal Revenue Code Section
46(a)(2)(B) is recaptured or redetermined in accordance
with the provisions of said Internal Revenue Code, then
the Company Contributions attributable thereto which have
been transferred to the Trust Fund shall remain in the
Trust Fund and shall continue to be allocated to
Participants in the Plan.
(b) If any such credit is so recaptured, then:
(i) the Company or any Participating
Company may reduce the amount of its Company
Contribution for the Year in which recapture occurs
or any succeeding Years by the portion of the amount
so recaptured which is attributable to its respective
Company Contributions to the Trust Fund, or
<PAGE> 19
(ii) the Company or any Participating
Company may deduct said portion for Federal income tax
purposes, subject to the limitations of Internal Revenue
Code Section 404, or
(iii) the Company or any Participating
Company may withdraw from the Trust Fund an amount
attributable to Company Contributions which is not
in excess of such portion which is recaptured, on
condition that (A) while subject to withdrawal
because of recapture, such amounts are segregated
from other Trust Fund assets, and (B) separate
accounts are maintained for Participants on whose
behalf said amounts have been allocated. For this
purpose, Shares to be withdrawn from the Trust Fund
shall be valued at their fair market value at the
date of withdrawal. Shares, dividends and other
assets in the Trust Fund attributable to Employee
Contributions may not be withdrawn under this Section
3.6(b)(iii).
(c) If the amount of the credit claimed by the
Company or a Participating Company for any Year under
Internal Revenue Code Section 38 is reduced because of
a final redetermination of Federal income tax and Company
<PAGE> 20
Contributions were made for such Year, then either:
(i) the Company or any Participating
Company may reduce the amount of its Company
Contribution for the Year in which such
redetermination becomes final or any succeeding Year
by the portion of the amount of such reduction in the
credit or increase in tax which is attributable to
such Company Contributions, or
(ii) the Company or any Participating
Company may deduct such portion for Federal income tax
purposes, subject to the limitations of Internal
Revenue Code Section 404.
SECTION 4. Allocation of Shares to Participants.
4.1 Proportionate Allocation. (a) All Shares
directly attributable to Company Contributions which may
be made without regard to any Matching Employee
Contributions for any Year, as determined under Internal
Revenue Code Section 46(a)(2)(B)(i), shall be allocated
(to the nearest 1/100 of a Share) as of the end of such
Year to the account of each Participant who completed at
least 1,000 Hours of Service while a Participant during
such Year in an amount which bears substantially the same
<PAGE> 21
proportion to the amount of all such Shares allocated for
such Year to all Participants as the amount of such
Participant's Compensation while a Participant for the
Year (not in excess of $100,000) bears to the
Compensation paid to all such Participants, while
Participants, during that Year (disregarding each
Participant's Compensation in excess of $100,000).
(b) All Shares directly attributable to Company
Contributions which may be made only to match Matching
Employee Contributions for the Year, as determined under
Internal Revenue Code Section 46(a)(2)(B)(ii), shall be
allocated as of the end of such Year to the account of
each Participant in an amount equal to such Participant's
share of the Matching Employee Contributions to the Trust
Fund for such Year.
(c) All Shares purchased with Employee
Contributions shall be allocated, as soon as reasonably
practicable after they are purchased by the Trustee, to
the accounts of the Participants who made such Employee
Contributions.
<PAGE> 22
(d) All Class A Shares and Class B Shares
allocated to Participants' accounts under this Section
4.1 shall be so allocated in the ratio, at the date of
acquisition of such Shares by the Trustee, as set forth
in Section 3.5(b) above.
4.2 Limitations on Allocations. (a) The total
"annual addition", as defined below, allocated to any
Participant's account during any Year shall not exceed
the lesser of:
(i) the sum of (A) $26,825, adjusted for
each Year to take into account any cost-of-living
increase provided for that Year under Section 415(d)
of the Internal Revenue Code, plus (B) the lesser of
$26,825, as so adjusted, or the amount of the Company
Contributions for the Year, or
(ii) 25% of the Participant's Compensation
for the preceding Year.
For purposes of this Section 4.2, the "annual addition"
for any Year shall mean the sum of (1) the value of
Shares directly attributable to Company Contributions and
(2) the lesser of (A) the amount of the Participant's
Employee Contributions for the Year in excess of 6% of
<PAGE> 23
his Compensation for such Year or (B) one-half of his
Employee Contributions for such Year.
(b) For purposes of the computation of the
limitation in Section 4.2(a) above, the amount referred
to in Section 4.2(a)(i)(B) above shall be deemed to be
zero if more than one-third of the Shares directly
attributable to Company Contributions for that Year are
allocated to the group of Participants consisting of
officers of the Company, shareholders owning more than
10% of the Company's Shares (determined under Internal
Revenue Code Section 415(c)(6)(a)(iv)) and Participants
whose Compensation for the Year exceeds an amount equal
to twice $26,825, adjusted as described above.
(c) Notwithstanding the foregoing, in any case
in which an individual is a Participant in the Plan and
a participant in a defined benefit plan maintained by the
Company or a Participating Company, the sum of such
individual's "defined benefit plan fraction" and his
"defined contribution plan fraction" for any Year, as
defined in Internal Revenue Code Section 415(e), may not
exceed 1.4. The otherwise permissible "annual additions"
to any such Participant under the Plan may be reduced to
the extent necessary, as determined by the Committee, to
<PAGE> 24
prevent disqualification of the Plan, or of any other tax-
qualified plan of deferred compensation maintained by the
Company or a Participating Company in which such
Participant is a member, under the 1.4 limitation imposed
by Internal Revenue Code Section 415(e). The Committee
shall advise affected Participants of any additional
limitation on "annual additions" required by the
preceding sentences.
4.3 Reallocation of Shares. To the extent that
any Shares directly attributable to Company Contributions
cannot be allocated for any Year to a Participant's
account because of the limitations contained in Section
4.2 above, such Shares shall be proportionately
reallocated for that Year under Section 4.1 to the
accounts of other Participants. If the amount of such
Shares for any Year exceeds the amount which can be
allocated under Section 4.2 and this Section 4.3 for that
Year, such Shares shall be held in an unallocated account
in the Trust Fund and shall be allocated proportionately
under Section 4.1 for the next following Year.
<PAGE> 25
SECTION 5. Dividends.
5.1 Reinvestment of Dividends. Except as may
otherwise be directed by the Committee or otherwise be
provided in the Plan, all dividends paid on Shares held
in the Trust Fund shall be used by the Trustee to
purchase Class A Shares. Such additional Class A Shares
purchased with dividends on Shares allocated to a
Participant's account shall be allocated to such
Participant in the same proportion as the number of
Shares (including fractional Shares) which were credited
to such Participant's account immediately prior to the
record date of the dividend bears to the total number of
Shares (including fractional Shares) then credited to all
such accounts. Except as provided in Section 9.1(a)
below, additional Class A Shares purchased with dividends
and allocated to a Participant's account shall be
distributed from such account at the same time and manner
as are the Shares with respect to which said dividends
were allocated. Such additional Class A Shares purchased
with dividends on Shares not allocated to a Participant's
account shall be held with such unallocated Shares and
allocated or otherwise distributed or withdrawn from the
Trust Fund at the same time and manner as are said
<PAGE> 26
Shares.
SECTION 6. Voting Rights.
6.1 Voting by Participants. Each Participant shall be entitled to
direct the Trustee as to the manner in which any rights--including but not
limited to voting rights, subscription rights and conversion privileges--with
respect to any Shares allocated to such Participant's account are to be
exercised. For this purpose, the Committee shall notify each Participant of
each annual or special meeting of the shareholders of the Company and of any
other occasion for the exercise of voting or other rights by such shareholders
not later than the date, prior to such meeting or other occasion, on which the
Company so notifies its other shareholders. The notification shall include a
copy of any proxy solicitation material and any other information which the
Company distributes to shareholders regarding the exercise of voting or other
rights, together with a form requesting instructions to the Trustee as to how
the Participant's rights are to be exercised. The Committee shall tabulate and
certify to the Trustee the instructions received, and the Trustee shall vote or
otherwise exercise rights with respect to Shares as
<PAGE> 27
instructed. The Trustee shall not vote or otherwise
exercise rights with respect to any Shares as to which
no instructions from Participants have been duly received
and certified.
SECTION 7. Expenses.
7.1 In General. Except as otherwise provided
below, all expenses of establishing and administering the
Plan and Trust Fund shall be paid by the Company.
7.2 Expenses of Establishment. As
reimbursement for the expenses of establishing the Plan,
the Company may withhold from the amount of the total
Company Contribution for 1976 so much of the amounts paid
or incurred in connection with the establishment of the
Plan as does not exceed the sum of (i) 10% of the first
$100,000 of such Company Contribution for 1976 and (ii)
5% of any amount in excess of such first $100,000;
provided, that such withholding shall not reduce the
additional investment credit to which the Company would
otherwise be entitled under Internal Revenue Code Section
46(a)(2)(B).
<PAGE> 28
7.3 Expenses of Administration. As
reimbursement for the expenses of administering the Plan,
the Company may withhold from the amount of the total
Company Contribution for any Year so much of the amounts
paid or incurred during said Year, as expenses of
administering the Plan as does not exceed the smaller of
(i) the sum of 10% of the first $100,000 and 5% of any
amount in excess of $100,000 of the income from dividends
paid to the Plan with respect to Shares during said Year
or (ii) $100,000; provided, that such withholding shall
not reduce the additional investment credit to which the
Company would otherwise be entitled under Internal
Revenue Code Section 46(a)(2)(B).
7.4 Payment by Trust Fund. In lieu of
withholding amounts from the Company Contributions, as
specified in Sections 7.2 and 7.3 above, the Committee
may direct that said specified amounts shall instead be
paid in whole or in part directly from the Trust Fund,
other than from Shares purchased with Employee
Contributions.
<PAGE> 29
SECTION 8. Vesting.
8.1 Full Vesting. Each Participant shall at
all times have a nonforfeitable right to all Shares or
other assets allocated or credited to his account, except
to the extent that Shares or other assets may be
withdrawn from the Trust Fund as provided in Sections
3.6(b)(iii) or 7.4.
SECTION 9. Distributions from the Trust Fund.
9.1 Withdrawals in Respect of Company
Contributions and Dividends on Shares. (a) Once each
Year, each Participant may irrevocably elect in writing
to withdraw from the Trust Fund all or any whole number
of:
(i) those Shares transferred to the Trust
Fund as Company Contributions or purchased with
Company Contributions in cash, which, as of December
31 of such Year, have been allocated to and have
remained in the Participant's account for a period
of at least 84 months after the month in which such
Shares were allocated to his account, and
<PAGE> 30
(ii) those Shares which were purchased with cash
dividends or constitute dividends in Shares on Shares
(whether derived from Company Contributions or Employee
Contributions) and which have been allocated to his
account as of December 31 of such Year;
provided, that such election shall be made prior to
December 1 in the election Year. Shares referred to in
(i) above shall be eligible for the election to withdraw
only in the Year in which they first satisfy said 84-
month requirement, and Shares referred to in (ii) above
shall be eligible for the election to withdraw only in
the Year in which they first were allocated to the
Participant's account.
(b) Shares which a Participant has elected to
withdraw pursuant to Section 9.1(a) above shall be
distributed to him in a single distribution as soon as
reasonably practicable in the Year following the Year in
which the election is made.
9.2 Withdrawals in Respect of Employee
Contributions. Each Participant may at any time elect
in writing to withdraw from his account in the Trust Fund
<PAGE> 31
as of the last day of the next June or December following
the month in which such election is made all or any whole
number of those Shares which were purchased with his
Employee Contributions; provided, that Shares purchased
with Matching Employee Contributions may be withdrawn
only after such Shares have been allocated to and have
remained in the Participant's account for a period of at
least 84 months after the month in which such Shares were
originally so allocated. Such Shares shall be
distributed as soon as reasonably practicable following
such June or December, as the case may be.
9.3 Distribution Upon Termination of
Employment. Shares allocated to a Participant's account
which such Participant has not elected to withdraw under
Sections 9.1 or 9.2 above shall be distributed to him
commencing as soon as reasonably practicable after he
terminates employment for any reason, other than death,
either (i) in a single distribution or (ii) in not more
than 10 equal annual installments, at the Participant's
election. Such election shall be made in writing at any
time prior to the Participant's date of termination of
employment, and any such election may be revoked and
another election made at any time prior to such date.
<PAGE> 32
If no election is in effect at the date of termination
of employment, distribution shall be in a single
distribution.
9.4 Distribution Upon Death. Upon the death
of any Participant to whose account any Shares remain
credited at the date of death, such remaining Shares
shall be distributed to his beneficiary or beneficiaries
designated pursuant to Section 13.2 commencing as soon
as reasonably practicable after the date of death, either
(i) in a single distribution or (ii) in not more than 10
equal annual installments, at the Participant's election.
Such election shall be made in writing at any time prior
to death, and any such election may be revoked and
another election made at any time prior to death. If no
election is in effect at the date of death, such Shares
shall be distributed as soon as practicable thereafter
to the Participant's designated beneficiary or
beneficiaries in a single distribution. If no
beneficiary is designated at the date of death, such
Shares shall be distributed as soon as practicable
thereafter to the Participant's estate in a single
distribution.
<PAGE> 33
9.5 Fractional Shares. In lieu of any
fractional Shares distributable under this Section 9, the
Trustee shall distribute cash equal to the fair market
value of such fractional Shares, determined as of the
date of distribution.
9.6 Time of Final Distribution. Except as a
Participant may otherwise elect in writing pursuant to
the terms of the Plan, no distribution shall commence
later than 60 days after the close of the Year in which
the Participant terminates employment for any reason;
provided, that in the case of a Participant who
terminates employment prior to allocation to his account
of any Shares to which he is entitled under the
provisions of Section 4, such Shares shall be distributed
to him as soon as practicable after allocation is
completed.
9.7 Disability and Hardship Distributions. (a)
In case of disability, a Participant may apply in writing
to the Committee at any time for the immediate
distribution of all or any whole number of Shares not
otherwise distributable from the Trust Fund.
<PAGE> 34
(b) In case of hardship, a Participant or any
beneficiary designated by a deceased Participant may so
apply for the immediate distribution of all or any whole
number of such Shares, not otherwise distributable from
the Trust Fund, except that no Shares contributed to the
Trust Fund as Company Contributions or purchased with
Company Contributions in cash shall be distributable to
any Participant or designated beneficiary on account of
hardship unless such Shares have been allocated to and
have remained in the Participant's account for at least
the 84-month period specified in Section 9.1(a)(i) above.
(c) Subject to the sole discretion of the
Committee and to the limitations in (b) above, there may
be distributed to such Participant or designated
beneficiary referred to in (a) or (b) above such number
of Shares in the Participant's account as the Committee
may determine is necessary to alleviate the burdens of
such disability or of such hardship. In making such a
determination the Committee shall use its best efforts
to follow uniform and nondiscriminatory practices, and its
determination shall be final and binding. For the
purposes of this Section 9.7, (i) disability shall mean
incapacity (whether temporary or permanent) from gainful
<PAGE> 35
employment and (ii) hardship shall mean a need for
financial assistance in meeting obligations incurred or
to be incurred by a Participant or designated beneficiary
for his health or welfare or for the health or welfare
of members of his immediate family.
9.8 Special Conditions on Class B Shares.
Prior to any distribution of Class B Shares from the
Trust Fund, the Participant or the designated beneficiary
or beneficiaries of a deceased Participant, as the case
may be, shall instruct the Trustee in writing either to
"put" such Class B Shares to the Company for cash or to
exchange such Shares with the Company for Class A Shares
on a Share-for-Share basis. If the "put" is elected, the
value of the Class B Shares shall be deemed to be equal
to the fair market value of the same number of Class A
Shares, determined by taking the average of closing sale
prices of the Class A Shares, as reported-by the
composite tape for securities listed on the American
Stock Exchange, Inc., for the 20 consecutive trading days
immediately preceding the date on which such "put" is
exercised. Following such "put" or exchange, as the case
may be, the Trustee shall distribute the assets in the
Participant's account in accordance with the terms of the
<PAGE> 36
Plan.
9.9 Special Condition on Class A Shares. Class
A Shares held in the Trust Fund may be sold by the
Trustee, in order to obtain cash or otherwise, only to
the Company.
SECTION 10. The Trust Fund.
10.1 The Trust Agreement. The Company shall
enter into a Trust Agreement which shall contain such
provisions as shall render it impossible for any part of
the corpus of the trust or income therefrom to be at any
time used for, or diverted to, purposes other than for
the exclusive benefit of Participants, except as provided
in Sections 3.6(b)(iii) or 7.4. Any or all rights or
benefits accruing to any person under the Plan with
respect to any Company Contributions and Employee
Contributions deposited under the Trust Agreement shall
be subject to all the terms and provisions of the Trust
Agreement.
10.2 Management of Trust Fund. The Trustee
shall have exclusive authority to manage and control the
assets of the Trust Fund, except as otherwise provided
herein.
<PAGE> 37
10.3 Investment of Trust Fund. The Trustee is
hereby directed to invest the assets of the Trust Fund
exclusively in Shares. While it is intended that the
Trust Fund be invested exclusively in Shares, the Trustee
is empowered to invest such cash as it may from time to
time receive in any form of liquid investment earning
interest, whether or not authorized by law for the
investment of trust funds and including investment
through the medium of any common, collective, or
commingled trust fund maintained by the Trustee which is
qualified under Sections 401(a) and 501(a) of the
Internal Revenue Code and the investments of which
consist of interest-bearing liquid investments, pending
application thereof to the purchase of Shares.
SECTION 11. Committee of Administration.
11.1 In General.
(a) The general administration of the Plan
shall be placed in a Committee, the members of which
shall be appointed from time to time by, and shall
serve at the pleasure of, the Board of Directors.
The Committee shall consist of not less than five
persons all of whom shall be directors or officers
<PAGE> 38
or both or other employees of the Company or a
Participating Company.
(b) The Committee shall be the Plan's
"named fiduciary", as such term is defined in ERISA
Section 3(21).
(c) The Committee shall be the Plan's
"administrator", as such term is defined in ERISA
Section 3(16).
(d) Every member of the Committee and each
person to whom Fiduciary Responsibilities are
delegated under Section 11.4 shall be bonded if and
as required by ERISA Section 412.
11.2 Quorum; Vote Required. A majority of the
members of the Committee at the time in office shall
constitute a quorum for the transaction of business. All
resolutions or other actions taken by the Committee at
any meeting shall be by vote of a majority of those
present at any such meeting or may be by consent in
writing of a majority of the Committee without a meeting.
<PAGE> 39
11.3 Rules and Regulations. Subject to the
limitations set forth in the Plan, the Committee may from
time to time establish uniform and nondiscriminatory
rules and regulations for the transaction of its business
and for the administration of the Plan.
11.4 Procedure and Performance of Fiduciary
Duties.
(a) The members of the Committee shall
elect one of their number as Chairman and shall elect
a Secretary who may, but need not, be a member of the
Committee; may appoint from their number such
committees with such powers as they shall determine;
may authorize one or more of their number or any
agent to execute or deliver any instrument in their
behalf, and may employ such counsel and agents as
they may require in carrying out the provisions of
the Plan.
(b) The Fiduciary Responsibilities of the
Committee may be allocated among its members or
delegated to persons who are not members of the
Committee; provided, however, that in order to be
effective such allocation or delegation of duties
<PAGE> 40
must (i) be made by a resolution of the Committee
unanimously adopted by the members thereof present
at a meeting of the Committee at which a quorum is
present, (ii) be specifically accepted in writing by
the person or persons to whom such duties are
allocated or delegated and (iii) be approved by the
Board of Directors. Upon an allocation or delegation
of Fiduciary Responsibilities, the person or persons
to whom such Fiduciary Responsibilities are allocated
or delegated shall be solely responsible for the
performance of such Fiduciary Responsibilities, and
the other members of the Committee shall not in any
respect be responsible for the performance of such
Fiduciary Responsibilities, except as provided in the
following sentences. The Committee shall, at least
annually, review the performance of any person or
persons to whom any Fiduciary Responsibility has been
allocated or delegated. A review may be instigated
at the request of any member of the Committee. In
the event such review is satisfactory to the
Committee, the Committee may by resolution,
unanimously approved by the voting members,
specifically approve the performance of such person
during the past term and extend for an additional
<PAGE> 41
twelve-month period the allocation or delegation of
Fiduciary Responsibilities to such person or persons.
The Committee shall report to the Board of Directors
any such resolution and the extension will be
effective unless the Board of Directors disapproves
it. In the event the Committee does not adopt an
extension resolution, the allocation or delegation
shall become immediately null and void and such
Fiduciary Responsibilities shall revert immediately
to the committee. The Committee shall perform its
allocation and delegation functions in the same
manner as it performs all of its other Fiduciary
Responsibilities pursuant to paragraph (c) below.
(c) The Committee shall perform all of the
Fiduciary Responsibilities with respect to the Plan
except those Fiduciary Responsibilities which are
allocated or delegated pursuant to paragraph (b) above
and those Fiduciary Responsibilities which are to be
performed by the Trustee pursuant to the Trust
Agreement.
<PAGE> 42
11.5 Power to Interpret. The Committee shall
have the exclusive right to interpret the Plan and to
determine any question arising under or in connection
with the administration of the Plan. Its decision or
action in respect thereof shall be conclusive and binding
upon all persons having an interest in the Trust Fund or
under the Plan.
11.6 Accounts. The Trustee shall cause to be
maintained accounts showing transactions under the Plan
and the interests of Participants and any beneficiary or
beneficiaries. A separate account shall be maintained
by the Trustee for each Participant and any beneficiary
to which there shall be credited the Shares and other
assets allocated to him, and to which there shall be
charged the amount of any payments made with respect to
his interest. At least annually the Trustee shall
furnish to each Participant and any beneficiary having
an interest in the Trust Fund a summary statement of the
transactions of the Trust Fund since the date of the last
previous statement so furnished and of his interest in
the Trust Fund. Any such Participant or beneficiary who
does not notify the Trustee as to any objection which he
may have with respect to any such statement within 90
<PAGE> 43
days after the date of distribution thereof shall be
conclusively presumed to have approved the transactions
reflected therein.
11.7 Indemnification. The Company will
indemnify and save harmless each member of the Committee
and any other person to whom Fiduciary Responsibilities
are allocated or delegated under Section 11.4(b) against
any claim, cost, expense (including attorney's fees) or
liability (including any sum paid in settlement of a
claim with the approval of the Company) arising out of
any act or omission to act as a member of the Committee,
or as a delegate, except in the case of willful
misconduct.
SECTION 12. Amendment, Suspension and Termination;
Merger, Consolidation and Transfer.
12.1 Amendment.
(a) The provisions of the Plan may be
amended at any time and from time to time by the
Board of Directors (for the Company and for the other
Participating Companies), but no such amendment shall
have the effect of reinvesting in the Company or any
Participating Company any part of the Trust Fund or
<PAGE> 44
of diverting any part of the Trust Fund to any
purpose other than for the exclusive benefit of the
Participants or, subject to Section 12.1(b), of
reducing any interest of any Participant in the Trust
Fund which has accrued prior to any such amendment
or increasing the eligibility of officers with
respect to allocation of Company Contributions under
the Plan. Without limiting the generality of the
foregoing, any such amendment relating to the manner
of determining the amount of the Company
Contributions may be made applicable to the
computation of such contribution for the entire Year
in which the amendment is adopted by the Board of
Directors, irrespective of the date on which such
amendment is adopted.
(b) Notwithstanding anything to the
contrary herein contained, the Board of Directors may
make any and all changes or modifications
(retroactively, if necessary) which in the opinion
of the Board of Directors are necessary or advisable
in order to comply with the provisions of the
Internal Revenue Code, ERISA, the Tax Reduction Act
or any other applicable law or regulation pertaining
<PAGE> 45
to employee stock ownership plans.
12.2 Suspension and Termination. The Company
reserves the right, by action of the Board of Directors
prior to the timely filing of the Company's Federal
income tax return for any Year, to suspend the operation
of the Plan by omitting all Company Contributions for
such Year. In the event the operation of the Plan is so
suspended for any Year or Years all the provisions of the
Plan and Trust Agreement, other than those relating to
Company Contributions for such Year or Years, shall
continue in effect. The Company further reserves the
right, by action of its Board of Directors, to terminate
the Plan either completely or partially, or to
discontinue completely Company Contributions thereto, at
any time, but no such action may be made effective as of
a prior Year. In the event of any such termination,
partial termination or complete discontinuance of Company
Contributions, the Board of Directors may either continue
the Trust Agreement in effect with respect to
contributions theretofore made or terminate the Trust
Agreement as well as the Plan. If the Trust Agreement
is terminated, the assets of the Trust Fund shall be
distributed among the Participants (with the interest of
<PAGE> 46
any Participant who has died being distributed to his
designated beneficiary or beneficiaries) in proportion
to the respective interests in the Trust Fund of such
Participants; provided, that any Participant or
designated beneficiary having an interest in the Trust
Fund may request the Trustee in writing to convert said
interest entirely into cash prior to distribution thereof
and the Trustee shall comply with such requests, on a
uniform and non-discriminatory basis among such
Participants and designated beneficiaries, to the extent
practicable, as determined by the Trustee. In the event
of any such termination or partial termination of the
Plan, or complete discontinuance of Company Contributions
thereto, all Participants' interests in the Trust Fund
shall be 100% nonforfeitable, except to the extent that
Shares or other assets may be withdrawn from the Trust
Fund as provided in Sections 3.6(b)(iii) or 7.4.
12.3 Merger, Consolidation or Transfer. In the
event of any merger or consolidation with, or transfer
in whole or in part of the assets and liabilities of the
Trust Fund to, any other trust plan (the "New Plan") of
deferred compensation maintained or to be established for
the benefit of all or some of the Participants of this
<PAGE> 47
Plan, the assets and liabilities of the Trust Fund
applicable to such Participants shall be transferred to
the New Plan only if:
(i) Each such Participant would receive
a benefit immediately after the merger, consolidation
or transfer (if the New Plan had then terminated)
which is equal to or greater than the benefit such
Participant would have been entitled to receive
immediately before the merger, consolidation or
transfer (if this Plan had then terminated);
(ii) Resolutions of the Board of Directors
(for the Company and for the Participating
Companies), or of the board of directors of any new or
successor employer of the affected Participants, shall
authorize such transfer of assets; and, in the case of
the new or successor employer of the affected
Participants, its resolutions shall include an
assumption of liabilities with respect to such
Participants' inclusion in the New Plan; and
(iii) The New Plan and Trust, if any, are
qualified under Sections 401 and 501 of the Internal
Revenue Code.
<PAGE> 48
SECTION 13. Miscellaneous.
13.1 Benefits Payable from Trust Fund. All
persons with any interest in the Trust Fund shall look
solely to the Trust Fund for any payments with respect
to such interest.
13.2 Designation of Beneficiary. Each
Participant may designate a beneficiary or beneficiaries
and may change such designation from time to time by
filing a written designation of beneficiaries with the
Secretary of the Committee on a form to be prescribed by
it, provided that no such designation shall be effective
unless so filed prior to the death of such Participant.
13.3 Elections. Elections hereunder shall be
made by a Participant in writing by the completion and
delivery to the Secretary of the Committee of forms
prescribed by the Committee for such purposes, within the
time limits set forth hereunder with respect to each such
election or, if no time limit is set forth, as may be
established by the Committee.
<PAGE> 49
13.4 No Right to Continued Employment. Neither
the establishment of the Plan nor the payment of any
benefits thereunder nor any action of the Company, any
Participating Company, the Board of Directors or the
board of directors of any Participating Company, the
Committee or the Trustee shall be held or construed to
confer upon any person any legal right to be continued
in the employ of the Company or any Participating
Company, and the Company and each Participating Company
expressly reserves the right to discharge any employee
whenever the interest of any such company in its sole
judgment may so require without liability to the Company,
any Participating Company, the Board of Directors or the
board of directors of any Participating Company, the
Committee or the Trustee except as to any rights which
may be conferred upon such employee under the Plan with
respect to his interest in the Trust Fund.
13.5 Inalienability of Benefits and Interests.
No benefit payable under the Plan or interest in the
Trust Fund shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such attempted
action shall be void and no such benefit or interest
<PAGE> 50
shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements or torts of any
Participant or beneficiary. If any Participant or
beneficiary shall become bankrupt or shall attempt to
anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge any benefit payable under the Plan or
interest in the Trust Fund, then, to the extent permitted
by law, the Committee in its discretion may hold or apply
such benefit or interest or any part thereof to or for
the benefit of such Participant, or his beneficiary, his
spouse, children, blood relatives, or other dependents,
or any of them, in such manner and in such proportions
as the Committee may consider proper. Notwithstanding
the foregoing, any Participant may direct that benefits
payable pursuant to Section 9 from the Trust Fund shall
be paid to the trustee of a trust created by him for his
own benefit or for the benefit of his immediate family.
13.6 Payments Due Infants or Incompetents. If
any person to whom a benefit is payable hereunder is an
infant, or if the Committee determines that any person to
whom a benefit is payable is incapable by reason of
physical or mental disability of taking care of his own
affairs, the Committee shall have power to cause the
<PAGE> 51
payments becoming due to such person to be made to
another for his benefit without responsibility of the
Committee or the Trustee to see to the application of
such payments. Payments made pursuant to such power
shall operate as a complete discharge of the obligation
of the Company, any Participating Company, the Trust
Fund, the Trustee and the Committee to make such
payments.
13.7 Payments for Exclusive Benefits of
Participants. Payments of benefits in respect of the
interest of a Participant under the Plan to any person
other than such Participant in accordance with the
provisions of the Plan shall be deemed to be for the
exclusive benefit of such Participant.
13.8 Procedure for Denial of Claims. Subject
to such regulations as may be prescribed by the Secretary
of Labor, the Committee shall provide written notice to
any Participant or surviving beneficiary whose claim for
benefits under the Plan has been denied, setting forth
the specific reasons for such denial. The Committee
shall afford a reasonable opportunity to any such person
whose claim for benefits has been denied for a full and
fair review by the Committee of the decision denying the
<PAGE> 52
claim.
13.9 Profit Sharing or Bonus Payments Outside
of the Plan. The adoption of the Plan shall not be
construed as limiting the authority of the Board of
Directors to pay bonuses to, and to establish from time
to time, and to amend or discontinue, profit sharing,
stock bonus or other supplemental compensation plans for,
persons employed by the Company or by any branch thereof
or by any affiliate of the Company who are not eligible to
participate in the Plan and to pay bonuses or other
supplemental compensation to Participants in addition to
any amounts allocated to them hereunder if deemed
advisable by the Board of Directors.
13.10 Agent for Service of Process. The
Secretary of the Company shall be the Plan's designated
agent for service of legal process.
13.11 Texas Law to Govern. This Plan shall be
construed and enforced in accordance with the laws of the
State of Texas and applicable Federal law.
<PAGE> 53
AMENDMENT NO. 1 TO THE EMPLOYEE STOCK
OWNERSHIP PLAN OF AMERICAN PETROFINA, INCORPORATED
Pursuant to the provisions of Section 12.1 thereof,
the Employee Stock Ownership Plan of American Petrofina,
Incorporated (the Plan) is hereby amended in the following
respects only:
FIRST:Section 3.4 of the Plan is hereby amended by
restatement in its entirety to read as follows:
"3.4 Initial Plan Qualification.
Notwithstanding anything contained herein to the contrary,
if an application for an initial determination that
the Plan satisfies the requirements of Sections
301(d) and 3O1(e) of the Tax Reduction Act and
Internal Revenue Code Section 401(a) is filed with
the Internal Revenue Service not later than 90
days following the date on which the Company's
tax credit under Internal Revenue Code Section 38
for 1976 with respect to the Plan is allowed, and
if such an initial determination is not issued, then
all Company Contributions made to the Trust Fund
may be returned to the Company and the
Participating Companies within 12 months after
the date on which the Internal Revenue Service
issues notice to the Company that the Plan does
not satisfy the foregoing requirements or otherwise
advises the Company that it refuses to issue a
favorable determination."
SECOND: Section 4. 2(a)(i) of the Plan is hereby
amended by restatement in its entirety to read as follows:
"(i) the sum of (A) $26,825, adjusted by the
Secretary or his delegate for each Year to take
into account any cost-of-living increase provided
for that Year under Section 415(d) of the Internal
Revenue Code, plus (B) the lesser of $26,825, as
so adjusted, or the amount of the Company
Contributions for the Year, or"
EXHIBIT A
<PAGE> 54
THIRD: Section 4.3 of the Plan is hereby amended by
adding at the end thereof the following sentence:
"No gains or losses shall be allocated to
Participants' accounts with respect to shares
held in the unallocated account."
FOURTH: Section 10 of the Plan is hereby amended by
adding the following as a new paragraph 10.4:
"10.4 Borrowing by Trustee. The Trustee
may borrow funds on behalf of the Trust provided,
however;
(1) Such loan must be at a reasonable rate of
interest;
(2) Any collateral pledged to the creditor by
the Trust Fund shall consist only of the assets
purchased with the borrowed funds (although in
addition to such collateral, the Company may
guarantee repayment of the loan);
(3) Under the terms of the loan, the creditor
shall have no recourse against the Trust Fund
except with respect to such collateral, contributions
(other than contributions of Shares) from the
Company which are made under a plan to make
such contributions sufficient to meet the obligations
of the Trust Fund under the loan, and earnings
attributable to the investment of such securities;
(4) The loan shall be repaid only from those
amounts contributed by the Company to the Trust
Fund and from amounts earned on trust investments;
(5) The employer must contribute to the Trust
Fund amounts sufficient to enable the Trust Fund
to pay each installment of principal and interest on
the loan on or before the date such installment is
due, even if no tax benefit results from such
contributions;
EXHIBIT A
<PAGE> 55
(6) Upon the payment of any portion of the
balance due on the loan, the assets originally
pledged as collateral for such portion shall be
released from encumbrance and allocated to the
accounts of the employees participating in the Plan
during the year such portion is paid off in the manner
provided in Section 4 above."
FIFTH: Section 12.2 of the Plan is hereby amended by
substituting the following sentence for the last sentence
thereof:
"In the event of termination or partial
termination of the Plan, or complete discontinuance of
Company Contributions thereto, all participants'
interests in the Trust Fund shall be 100% nonforfeitable,
except to the extent that Shares or
other assets may be withdrawn from the Trust
Fund as provided in Section 3.6(b)(iii) or 7.4."
EXHIBIT A
<PAGE> 56
AMENDMENT NO. 2 TO THE
EMPLOYEE STOCK OWNERSHIP PLAN
OF AMERICAN PETROFINA, INCORPORATED
Pursuant to the provisions of Section 12.1 thereof,
the Employee Stock Ownership Plan of American Petrofina,
Incorporated is hereby amended in the following respects
only:
FIRST: Section 1.15 is hereby amended by restatement
in its entirety to read as follows:
"1.15 `Matching Employee Contributions' shall
mean for any Year the aggregate of the Employee Contributions
for such Year which qualify to be matched
by Company Contributions under Internal Revenue Code
Section 48(n)."
SECOND: Sections 3.1, 3.2, 3.3, 3.4, 3.5 and 3.6 are
hereby amended by restatement in their entirety to read as
follows:
"3.1 Company Contributions. For each Year
commencing after December 31, 1978, the Company and
each Participating Company shall contribute, in such
proportions as such companies shall together agree, to
the Trust Fund cash or Class A Shares of an aggregate
value equal to the additional investment credit, if
any, claimed under Internal Revenue Code Section
46(a)(2)(A)(iii) with respect to the aggregate qualified
investment of the Company and all Participating
Companies, as determined under Internal Revenue Code
Sections 46(c) and 46(d) (the "Company Contribution").
To the extent that a Company Contribution is in cash,
such cash shall be used by the Trustee within 30 days
of receipt to purchase Class A Shares. Except as
provided in Section 3.5, no other contributions to the
Trust Fund shall be required or permitted."
"3.2 Time of Company Contributions. Company
Contributions in cash and in Class A Shares shall be
transferred to the Trust Fund no later than 30 days
<PAGE> 57
after the due date (including extensions) for filing
the Company's Federal income tax return for the Year
for which the Company Contributions are made;
provided, that if any additional investment credit of
the Company or any Participating Company determined
under Internal Revenue Code Section 46(a)(2) exceeds
the limitations on allowable tax credit under Internal
Revenue Code Section 46(a)(3), then
(i) that portion of the Company Contribution
allocable to investment credit carrybacks of such
excess credit shall be transferred to the Trust
Fund within the time prescribed in Section 3.2
above for the Company Contribution for the unused
credit year, as defined in Internal Revenue Code
Section 46(b), and
(ii) that portion of Company Contribution
allocable to investment credit carryovers of such
excess credit shall be transferred to the Trust
Fund within the time prescribed in Section 3.2
above for the Year to which such portion is
carried over."
"3.3 Valuation of Share Contributions. For
purposes of Section 3.1 above, Company Contributions in
Class A Shares shall be valued by taking the average
of closing sale prices of the Class A Shares, as
reported by the composite tape for securities listed
on the American Stock' Exchange, Inc., for the 20
consecutive trading days immediately preceding the
date on which the Company's Federal income tax return
is filed for the Year with respect to which such
Company Contributions are made."
"3.4 Initial Plan Qualification. Any provision
of this Plan to the contrary notwithstanding, if an
application for a determination that the Plan
satisfies the requirements of Internal Revenue Code
Section 409A is filed with the Internal Revenue
Service not later than 90 days following the date on
which the Company's 1979 tax credit under Section 38
of the Internal Revenue Code is claimed, and if such
determination is not issued, then, no later than one
year after the date on which the Internal Revenue
Service issues notice to the Company that the Plan
does not satisfy said requirements, all Company
Contributions made to the Trust Fund
<PAGE> 58
with respect to Years Commencing after December 31,
1978, to the extent not previously distributed to
Participants or beneficiaries, shall be returned to
the Company and the Participating Companies by the
Trustee at the direction of the Committee.
"3.5 Employee Contributions. For each Year
commencing after December 1, 1978, each Participant may
elect to make voluntary Employee Contributions in cash
to the Trust Fund in an amount not less than 2% nor
more than 10% of the Participant's Compensation for
the Year; provided, that such Participant must
designate in writing that his Employee Contributions
for that Year shall be available as Matching Employee
Contributions. Such Employee Contributions shall be
made by payroll deductions or such other means as the
Committee may prescribe. Employee Contributions shall
be accumulated and held by the Company, without
interest, and shall be transferred to the Trust Fund
at the end of each quarter of the Year. Employee
Contributions shall be used by the Trustee as soon as
reasonably practicable, but in no event later than 60
days after the due date (including extensions) for the
filing of the Company's Federal income tax return for
the Year for which said Employee Contributions were
made, to purchase Class A Shares."
"3. 6 Credit Recapture or Redetermination. If
any amount of the credit claimed by the Company or a
Participating Company for a prior Year under Internal
Revenue Code Section 38 is recaptured under Internal
Revenue Code Section 47, or if such credit is reduced
because of a redetermination of Federal income tax for
such prior Year which becomes final during the current
Year, and Company Contributions were made to the Trust
Fund for such prior Year, then the Company or
Participating Company (i) may reduce the amount of its
Company Contribution otherwise due the Plan for the
current Year, or for any succeeding Year, by an amount
equal to the portion of the amount so recaptured, or
the portion of the amount of such reduction in the
credit or increase in tax, which is attributable to
its Company Contribution to the Trust Fund, or (ii) to
the extent not taken in account under phase (i) above,
may deduct an amount equal to such portion subject to
the limitations of Internal Revenue Code Section 404."
<PAGE> 59
THIRD: Section 4.1 is hereby amended by restatement
in its entirety to read as follows:
"4.1 Proportionate Allocation. (a) All Class A
Shares directly attributable to Company Contributions
which may be made without regard to any Matching Employee
Contributions for the Year, as determined under
Internal Revenue Code Sections 46(a)(2) and
48(n)(1)(A), shall be allocated (to the nearest 1/100
of a Share) as of the end of each such Year to the
account of each Participant who completed at least
1,000 Hours of Service while a Participant during such
Year in an amount which bears substantially the same
proportion to the amount of all such Shares allocated
for such Year to all such Participants as the amount
of such Participant's Compensation for that Year (not
in excess of $100,000) bears to the Compensation paid
to all such Participants during that Year
(disregarding each Participant's Compensation in
excess of $100,000)."
"(b) All Class A Shares directly attributable to
Company Contributions which may be made only to match
Matching Employee Contributions for the Year, as
determined under Internal Revenue Code Sections
46(a)(2) and 48(n)(1)(B), shall be allocated as of the
end of such Year to the account of each Participant
eligible to share in the allocation under Section
4.1(a) above, in an amount equal to such Participant's
share of the Matching Employee Contributions to the
Trust Fund for such Year."
"(c) All Class A Shares purchased with Employee
Contributions shall be allocated, as soon as
reasonably Practicable after they are purchased by the
Trustee, to the accounts of the Participants who made
such Employee Contributions."
FOURTH: Effective with respect to allocations made
for Years commencing after December 31, 1979, Paragraph
(a) of Section 4.1 is hereby further amended by
restatement in its entirety to read as follows:
57
<PAGE> 60
"(a) All Class A Shares directly attributable to
Company Contributions which may be made without regard to
any Matching Employee Contributions for the Year, as
determined under Internal Revenue Code Sections 46(a)(2) and
48(n)(1)(A), shall be allocated (to the nearest 1/100 of a
Share) as of the end of each such Year to the account of
each Participant who either was in the employ of the
Company or a Participating Company on the last day of such
Year, or whose employment with the Company or a Participating
Company terminated during such Year by reason of
death or by reason of retirement under the normal or early
retirement or disability benefit provisions of the Pension
Plan for Non-Represented Employees of American Petrofina,
Incorporated and Certain Subsidiaries, in an amount which
bears substantially the same proportion to the amount of
all such Shares allocated for such Year to all such
Participants as the amount of such Participant's Compensation
for that Year (not in excess of $100,000) bears to the
Compensation paid to all such Participants during that
Year (disregarding each Participant's Compensation in
excess of $100,000)."
FIFTH: The reference in Section 7.3 to "Internal
Revenue Code Section 46(a)(2)(B)" is hereby amended to
make reference to "Internal Revenue Code Section
46(a)(2)(A)."
SIXTH: The reference in Section 8.1 to "Sections
3.6(b)(iii) or 7.4" is hereby amended to make reference to
"Section 7.4."
SEVENTH: Paragraph (a) of Section 9.1 is hereby
amended by restatement in its entirety to read as follows:
"(a) At any time prior to December 1 in each
Year, a Participant may irrevocably elect in writing to
withdraw from the Trust Fund all or any whole number of
the Shares which, as of December 31 of such Year, have
been allocated to and have remained in such Participant's
account for a period of at least 84 months after the month
in which such Shares were allocated to his account;
provided, however, that the Shares referred to in this
Section 9.1(a) shall be eligible for the election to
withdraw only in the Year in which such Shares first
satisfy said 84-month requirement."
<PAGE> 61
EIGHTH: Section 9.7 is hereby amended by
restatement in its entirety to read as follows:
"9.7 Disability and Hardship Distributions. In
case of disability, a Participant may apply in writing
to the Committee at any time for the immediate
distribution of all or any whole number of Shares not
otherwise distributable from the Trust Fund. In case
of hardship, any beneficiary designated by a deceased
Participant may so apply for the immediate
distribution of all or any whole number of Shares not
otherwise distributable from the Trust Fund.
Distributions pursuant to this Section 9.7 shall be
made only to the extent that the Committee, in its
absolute discretion, determines such to be necessary
to alleviate the burdens of such disability or
hardship. In making such determinations the Committee
shall use its best efforts to follow uniform and
nondiscriminatory practices, and its determinations
shall be final and binding. For the purposes of this
Section 9.7, (i) disability shall mean incapacity
(whether temporary or permanent) from gainful employment
and (ii) hardship shall mean a need for financial
assistance in meeting obligations incurred or to be
incurred by a designated beneficiary of a deceased
Participant for his health or welfare or for the
health or welfare of members of his immediate family."
NINTH: The reference in the last sentence of Section
12.2 to "Sections 3.6(b)(iii) or 7.4" is hereby amended to
make reference to "Section 7.4".
IN WITNESS WHEREOF, this Amendment has been executed
by the Company on behalf of itself and all Participating
Companies on this 12th day of September, 1980, the FOURTH
and SEVENTH provisions hereof to be effective as of
January 1, 1980, and the remaining provisions hereof to be
effective as of January 1, 1979.
AMERICAN PETROFINA, INCORPORATED
By Joe A. Moss, Vice President
<PAGE> 1
EXHIBIT 10h
FINA CAPITAL
ACCUMULATION PLAN
(AMENDED AND RESTATED
EFFECTIVE AS OF JANUARY 1, 1989)
<PAGE> 2
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
CONTENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SECTION PAGE
<S> <C>
ARTICLE I. THE PLAN
1.1 Establishment and Amendment of the Plan 1
1.2 Applicability of the Plan 1
1.3 Purpose of the Plan 1
ARTICLE II. DEFINITIONS
2.1 Definitions 2
2.2 Gender and Number 7
ARTICLE III. PARTICIPATION AND SERVICE
3.1 Eligibility for Participation 8
3.2 Commencement of Active Participation 8
3.3 Participation Status; Membership; Reemployment 8
3.4 Service 9
3.5 Special Provisions for Participants Who Enter the Armed
Forces 12
3.6 Leased Employees 12
ARTICLE IV. PLAN CONTRIBUTIONS
4.1 Types of Contributions 13
4.2 Before-Tax Contributions 13
4.3 After-Tax Contributions 13
4.4 Matching Contributions 14
4.5 Rollover Contributions 14
4.6 Limitations on Contributions 15
4.7 Elections Relating to Contributions 16
4.8 Suspension of Contributions 17
4.9 Payment of Contributions 17
4.10 Forfeitures 17
</TABLE>
i
<PAGE> 3
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
CONTENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SECTION PAGE
<S> <C>
ARTICLE V. ACCOUNTS; ALLOCATION AND ADJUSTMENTS TO ACCOUNTS
5.1 Accounts of Members 18
5.2 Adjustment of Accounts; Valuation of Trust Fund 18
5.3 Account Balances 19
5.4 Account Statements 19
ARTICLE VI. VESTING IN ACCOUNTS
6.1 Fully Vested Accounts 20
6.2 Matching Contributions Accounts 20
ARTICLE VII. DISTRIBUTIONS; LOANS; WITHDRAWALS
7.1 Distribution Upon Termination of Employment 21
7.2 Commencement of Distributions 21
7.3 Method of Distribution 21
7.4 Required Distributions 22
7.5 Forfeitures 22
7.6 Loans 23
7.7 In-Service Withdrawals 26
7.8 Withholding Taxes 27
7.9 Optional Direct Rollovers of Eligible Rollover Distributions 27
ARTICLE VIII. LIMITATIONS
8.1 Limitations on Before-Tax Contributions 30
8.2 Limitations on After-Tax Contributions and Matching
Contributions 32
8.3 Combination of Limitations; Multiple Use 34
8.4 Limitations on Annual Account Additions 35
ARTICLE IX. INVESTMENT OF ACCOUNTS
9.1 Investments 37
9.2 Investment Funds 37
9.3 Investment Elections for Contributions 38
</TABLE>
ii
<PAGE> 4
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
CONTENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SECTION PAGE
<S> <C>
9.4 Investment Transfers 39
9.5 Rules of Committee 40
9.6 Purchase of Company Stock and PSA Stock 40
ARTICLE X. APPOINTMENT OF FIDUCIARIES AND PLAN ADMINISTRATION
10.1 Allocation of Responsibility Among Fiduciaries for Plan and
Trust Administration 42
10.2 Committee 42
10.3 Responsibility and Authority of the Committee 42
10.4 Responsibility and Authority of Committee Pertaining to the
Trust Fund 43
10.5 Delegation of Responsibilities 44
10.6 Compensation and Expenses 44
10.7 Records 44
10.8 Manner of Action 45
10.9 Information and Data for Benefits 45
10.10 Filing a Claim for Benefits 45
10.11 Appeals from Denial of Claims 45
10.12 Indemnity for Liability 46
10.13 Conflicts 46
10.14 Reliance on Information 46
10.15 Beneficiary Designation 47
10.16 Incompetency 48
10.17 No Enlargement of Employee Rights 48
10.18 Applicable Law 48
10.19 Internal Revenue Service Approval 48
10.20 Severability 48
10.21 Effective Dates for Certain Provisions 49
ARTICLE XI. TRUST FUND AND TRUSTEE
11.1 Establishment of Trust Fund 50
11.2 Trustee 50
11.3 Rights in the Trust Fund 50
</TABLE>
iii
<PAGE> 5
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
CONTENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SECTION PAGE
<S> <C>
11.4 Nonreversion; Exclusive Benefit 51
11.5 Nonalienation 51
11.6 Merger, Consolidation or Transfer 51
ARTICLE XII. AMENDMENT AND TERMINATION
12.1 Amendment and Termination 52
12.2 Limitations on Amendments 52
12.3 Effect of Bankruptcy and Other Contingencies Affecting an
Employer 53
12.4 Distributions on Plan Termination 53
ARTICLE XIII. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY
AN EMPLOYER
13.1 Participation in the Plan 55
13.2 Withdrawal from the Plan 55
ARTICLE XIV. TOP-HEAVY PROVISIONS
14.1 Application of Top-Heavy Provisions 57
14.2 Definitions 57
14.3 Minimum Contribution 59
14.4 Limit on Annual Additions: Combined Plan Limit 59
14.5 Collective Bargaining Agreements 60
</TABLE>
iv
<PAGE> 6
ARTICLE 1. THE PLAN
1.1 ESTABLISHMENT AND AMENDMENT OF THE PLAN
FINA, Inc. ("Company") presently maintains a profit-sharing and thrift plan for
the benefit of its Eligible Employees and the Eligible Employees of the other
participating Employers under such plan, which plan was originally established
effective as of March 1, 1959. Said plan is hereby amended and restated in its
entirety as set forth herein effective as of January 1, 1989, and shall continue
to be known as the "FINA Capital Accumulation Plan" ("Plan").
1.2 APPLICABILITY OF THE PLAN
The provisions of the Plan as amended and restated as of the Effective Date, and
as amended thereafter, shall be applicable only with respect to those persons
who become or continue as Members (or their Beneficiaries) under the Plan on or
after the Effective Date.
1.3 PURPOSE OF THE PLAN
The purpose of the Plan is to provide Participants with a means of accumulating
capital on a regular and long term basis for their retirement income needs.
1
<PAGE> 7
ARTICLE II. DEFINITIONS
2.1 DEFINITIONS
Whenever used in the Plan, the following words and phrases shall have the
respective meanings stated below unless a different meaning is plainly required
by the context, and when the defined meaning is intended, such term is
capitalized.
(a) "ACCOUNT" means the separate account maintained for each Member which
represents the Member's total proportionate interest in the Trust Fund as
of any relevant date and which consists of the following subaccounts, and
other subaccounts as may be applicable to the Member:
(1) "Before-Tax Contributions Account;"
(2) "After-Tax Contributions Account;"
(3) "Matching Contributions Account;" and
(4) "Rollover Contributions Account."
(b) "AFFILIATE" means--
(1) Any corporation other than the Company, i.e., either a subsidiary
corporation or an affiliated or associated corporation of the Company,
which together with the Company is a member of a "controlled group" of
corporations (as defined in Code section 414(b));
(2) Any organization which together with the Company is under "common
control," (as defined in Code section 414(c));
(3) Any organization which together with the Company is an "affiliated
service group" (as defined in Code section 414(m));
(4) Any organization required to be aggregated with the Company pursuant
to Code section 414(o); or
(5) Any other corporation or entity designated as an affiliate by
resolution of the Board of Directors of the Company.
(c) "BENEFICIARY" means the person or persons designated by a Member pursuant
to Section 10.13.
(d) "BOARD OF DIRECTORS" means the Board of Directors of the Company.
(e) "CODE" means the Internal Revenue Code of 1986 and the regulations issued
thereunder, as amended from time to time.
(f) "COMMITTEE" means the individuals who have been designated as the "plan
administrator" as provided in Section 10.2
(g) "COMPANY" means FINA, Inc., or any successor thereto.
(h) "COMPANY STOCK" means the Class A Common Stock of the Company.
(i) "COMPENSATION" means a Participant's pay, determined as follows:
(1) For all purposes under the Plan, except as otherwise specified,
Compensation means the Participant's regular base salary or
2
<PAGE> 8
wages received from an Employer while an Employee, including amounts
excluded from compensation by reason of an Employee's election to
reduce compensation in lieu of benefits under a cash or deferred
arrangement under Code section 401(k) or under a cafeteria plan under
Code section 125, but excluding employee bonus payments, straight-time
overtime or premium overtime pay, severance pay, callback pay, accrued
vacation, night-shift differential or Matching Contributions to this
Plan or any prior plan, automobile or other allowances (e.g., all
expatriate differentials), premiums paid on any life insurance policy
or other forms of special remuneration.
(2) For purposes of satisfying the limitations described in Section 8.4
and for purposes of Article XIV, Compensation means a Participant's
wages received from an Employer or other Affiliate as defined in Code
section 3401(a) for purposes of income tax withholding at the source
but determined without regard to any rules that limit the remuneration
included in wages based on the nature or location of the employment or
the services performed.
(3) For purposes of determining whether an individual is a Highly-
Compensated Employee, and for purposes of applying the limitations of
Sections 8.1, 8.2 and 8.3, Compensation means an Employee's
Compensation, as described in Section 2.1(i)(2), increased by amounts
excluded from wages by reason of an Employee's election to reduce
wages in lieu of benefits under a cafeteria plan under Code section
125 or a cash or deferred arrangement under Code section 401(k);
provided, however, that in lieu of the definition of Compensation set
forth in this paragraph (3), the Committee may elect any alternative
definition of Compensation permitted under Treasury regulations for
purposes of applying the limitations described in Sections 8.1, 8.2
and 8.3.
The Compensation of each Employee that may be taken into account under the
Plan shall not exceed the "applicable dollar amount" of an Employee's
Compensation. For purposes of this Section 2.1(i), the term "applicable
dollar amount" means the maximum annual compensation limit which is
$150,000 effective January 1, 1994 (and was $200,000 effective January 1,
1989), as provided for in Code section 401(a)(17) and as such amount may be
adjusted or changed from year to year in accordance with the adjustment
provisions of Code section 401(a)(17), or as a result of changes to the
dollar amount set forth in Code section 401(a)(17). Additionally, for
purposes of applying the limitation in the two preceding sentences, the
rules of Code section 414(q)(6) shall
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<PAGE> 9
apply to the determination of an Employee's annual Compensation. In the
case of an Employee who is a 5% owner as defined in Code section
416(i)(1)(b)(iii) or one of the ten Highly Compensated Employees paid the
greatest Compensation during a Plan Year, then for such Plan Year the
"applicable dollar amount" shall be applied to the aggregate compensation
of the Employee, his spouse, and any of his lineal descendants who have not
attained age 19 before the end of the Plan Year. If as a result of the
application of such rules, the "applicable dollar limit" is exceeded, then
the limitation shall be prorated among the affected individuals in
proportion to such individual's Compensation as determined under this
Section 2.1(i) prior to the application of this limitation.
(j) "CONTRIBUTIONS" under the Plan include--
(1) "BEFORE-TAX CONTRIBUTIONS" made by the Employer on behalf of a
Participant, as described in Section 4.2.
(2) "AFTER-TAX CONTRIBUTIONS" made by a Participant as described in
Section 4.3.
(3) "MATCHING CONTRIBUTIONS" made by the Employer on behalf of a
Participant, as described in Section 4.4.
(4) "ROLLOVER CONTRIBUTIONS" made by a Participant or Inactive
Participant, as described in Section 4.5.
(k) "DISABILITY" means a physical or mental condition which, in the judgment of
the Committee, totally and presumably permanently prevents a Participant or
Inactive Participant from engaging in any substantial gainful employment.
Whenever such Participant qualifies for disability benefits under any group
long-term disability plan offered or provided by the Company, he shall be
deemed disabled for purposes of the Plan. In other instances, a
determination of Disability shall be based upon competent medical evidence
satisfactory to the Committee.
(l) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
(m) "EFFECTIVE DATE" means January 1, 1989, the effective date of this
amendment and restatement of the Plan.
(n) "ELIGIBLE EMPLOYEE" means an Employee of an Employer other than--
(1) Employees covered by a collective bargaining agreement between
Employee representatives and the Employer, if retirement benefits were
the subject of good faith bargaining, unless the agreement includes
coverage under the Plan, and
(2) With respect to Plan Years after 1991, any Employee who is not a U.S.
citizen and is on temporary assignment from a foreign
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<PAGE> 10
Affiliate.
(o) "EMPLOYEE" means an individual who is employed by the Company or an
Affiliate, excluding any person who is an independent contractor.
"Independent contractor" shall include:
(1) lessees and sublessees of service stations and their employees,
(2) commission agents and their employees,
(3) distributors and jobbers and their employees,
(4) contractors and subcontractors and their employees, and
(5) any consultant or other person who under the normal practice of an
Employer is not considered to be a regular employee.
The determination of a person's employment status shall be made by the
Employer in accordance with its standard employment practices, which shall
be applied in a non-discriminatory manner.
(p) "EMPLOYER" means the Company and any Affiliate that has become a
participating Employer under the Plan pursuant to Section 13.1.
(q) "ENTRY DATE" means the first day of any month.
(r) "HIGHLY-COMPENSATED EMPLOYEE" means any Employee who is a highly
compensated employee as defined in Code section 414(q) and the Treasury
regulations thereunder. Generally, with respect to any Plan Year, an
Employee is considered a Highly Compensated Employee if at any time during
the preceding Plan Year the Employee--
(1) received Compensation (as defined in Code section 414(q)(7)) from the
Employers and Affiliates in excess of $75,000,
(2) received Compensation (as defined in Code section 414(q)(7)) from the
Employers and Affiliates in excess of $50,000 and was in the top paid
20 percent of Employees,
(3) was an officer who received Compensation (as defined in Code section
414(q)(7)) in excess of 50 percent of the amount in effect under Code
section 415(b)(1)(A) for such Plan Year, or
(4) was a 5 percent owner (as determined under Code section 416(i)(1)).
Generally, an Employee is also considered a Highly-Compensated Employee
with respect to any Plan Year, if at any time during such Plan Year, the
Employee met the descriptions contained in (1), (2) or (3) above and was
among the top-paid 100 Employees or any Employee who was a 5 percent owner.
In applying the provisions of (1) and (2) above, the dollar amounts
described therein shall be automatically adjusted to reflect any increases
in such amounts provided for under applicable law and regulations. A family
member of a Highly Compensated Employee who is one of the ten most highly
compensated employees of the Employer shall be aggregated with the
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<PAGE> 11
Highly Compensated Employee to the extent required by the Code and
regulations thereunder. The term "family member" means the Employee's
spouse and lineal ascendants and descendants and the spouses of such
lineal ascendants and descendants. In determining the Highly-Compensated
Employees of the Employer, the provisions of this Section 2.1(r) shall be
applied in accordance with the provisions of Code section 414(q), including
in the discretion of the Committee (and pursuant to the appropriate
election) the simplified method for determining Highly-Compensated
Employees described in Code section 414(q)(12) and the provisions of all
applicable Treasury regulations issued under Code section 414(q).
(s) "INVESTMENT FUND OR FUND" means each investment fund established from time
to time by the Committee for the investment of funds credited to Members'
Accounts, as provided in Section 9.2.
(t) "LEAVE OF ABSENCE" means any absence authorized by the Employer under the
Employer's standard personnel practices, provided that all persons under
similar circumstances must be treated alike in the granting of such Leaves
of Absence, and provided further that the Employee returns or retires
within the period specified in the authorized Leave of Absence.
(u) "MEMBER" means an Active Participant, Inactive Participant, or Former
Participant who has a balance credited to his Account under the Plan. Where
the context indicates, the term "Member" shall also mean the Beneficiary of
a Member.
(v) "PARTICIPANT" means an "Active Participant" or an "Inactive Participant,"
as such terms are defined in Section 3.3. The term "Former Participant"
shall have the meaning provided for in Section 3.3.
(w) "PLAN" means the "FINA Capital Accumulation Plan" as amended and restated
effective as of the Effective Date, and as amended from time to time
thereafter.
(x) "PSA STOCK" means the common stock of Petrofina, S.A., a corporation
organized under the laws of the Kingdom of Belgium.
(y) "PLAN YEAR" means a period of 12 consecutive months beginning January 1 of
each year and ending on December 31.
(z) "TRUST AGREEMENT" means any agreement in the nature of a trust, or in the
nature of a custodial or other funding agreement (including any group or
annuity contract and/or funding investment contract issued pursuant
thereto) between the Company and Trustee and/or insurer, that is
established to form a part of the Plan to receive, hold, invest, and
dispose of the Trust Fund.
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(aa) "TRUST FUND" or "TRUST" means the funds or assets which are held and
administered by the Trustee pursuant to the Trust Agreement and the Plan.
(bb) "TRUSTEE" means the Trustee or Trustees named in the Trust Agreement and/or
insurer named in any other funding agreement, and any additional or
successor Trustee or Trustees from time to time acting as Trustee or
Trustees of the trust assets under the Plan, or the insurer acting in the
capacity of a custodian of such trust assets.
(cc) "VALUATION DATE" means those dates on which the assets of the Plan are
valued, at least annually, as specified from time to time by the Committee.
(dd) "YEAR OF SERVICE" means the service of an Employee as described in Section
3.4.
2.2 GENDER AND NUMBER
Wherever applicable, the masculine pronoun as used herein shall be deemed to
include the feminine pronoun, and the singular shall be deemed to include the
plural.
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ARTICLE III. PARTICIPATION AND SERVICE
3.1 ELIGIBILITY FOR PARTICIPATION
An Employee shall become a Participant under the Plan on or after the Effective
Date as follows:
(a) Each Employee who is a "participant" as defined under the Plan immediately
prior to the Effective Date shall become a Member under the Plan on the
date he is first employed as an Employee on or after the Effective Date, if
he has a balance credited to his Account on such date. Such a Member shall
be eligible to become an Active Participant in accordance with Section 3.2,
and his status as Active Participant or Inactive Participant shall be
determined as provided in Section 3.3.
(b) Each Employee other than an Employee described in Section 3.1(a) shall
become a Participant under the Plan on the date he first becomes an Active
Participant as provided in Section 3.2.
3.2 COMMENCEMENT OF ACTIVE PARTICIPATION
From and after the Effective Date, an Employee described in 3.1(a) or (b) shall
commence participation as an "Active Participant" under the Plan on the Entry
Date coincident with or next following the later to occur of--
(a) the Effective Date;
(b) the date on which he is employed as an Eligible Employee;
(c) the date on which he is credited with at least one Year of Service; or
(d) the date on which he has an election in effect to commence Before-Tax or
After-Tax Contributions beginning as of such Entry Date;
provided he is employed as an Eligible Employee on such Entry Date.
An Eligible Employee shall be eligible to make a Rollover Contribution (as
provided in Section 4.5) before becoming an Active Participant.
3.3 PARTICIPATION STATUS; MEMBERSHIP; REEMPLOYMENT
A Participant shall either be an "Active Participant" or an "Inactive
Participant" under the Plan. An Eligible Employee who has become an Active
Participant under the Plan, as provided for in Section 3.2, shall continue his
status as an Active Participant so long as he remains employed as an Eligible
Employee and he is making Before-Tax or After-Tax Contributions. An Employee who
has become a Participant under the Plan, as provided for in Section 3.2, shall
be an Inactive Participant during any period when he is employed as an Employee,
he has a balance credited to his Account and he is not making Before-Tax or
After-Tax Contributions under the Plan. Such an Inactive Participant shall
resume the status of an
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<PAGE> 14
"Active Participant" at the time he resumes making such Contributions while
employed as an Eligible Employee. An Eligible Employee who has made a Rollover
Contribution (as provided in Section 4.5), but who has not become an Active
Participant, shall be an Inactive Participant and shall continue such status as
an Inactive Participant so long as he remains employed as an Employee and he has
a balance credited to his Account, or until he becomes an Active Participant.
Such an Inactive Participant shall not be entitled to make a loan (as provided
in Section 7.6) or a withdrawal (as provided in Section 7.7) until he is
credited with one Year of Service as provided in Section 3.4(a).
An Active Participant or Inactive Participant who ceases employment as an
Employee shall become a "Former Participant." A Former Participant shall become
an Inactive Participant upon his reemployment as an Employee (if he still has a
balance credited to his Account), and shall become an Active Participant upon
his reemployment as an Eligible Employee and his resumption of Before-Tax or
After-Tax Contributions. A "participant" as defined under the Plan as in effect
immediately prior to the Effective Date who does not become an Employee on or
after the Effective Date, but who has a balance credited to his Account as of
the Effective Date, shall also be a "Former Participant" under the Plan. As
provided in Section 2.1(u) an individual shall be classified as a "Member" under
the Plan so long as he is an Active Participant, Inactive Participant or Former
Participant, and he has a balance credited to his Account under the Plan.
3.4 SERVICE
An Employee shall be credited with Years of Service in accordance with the
following provisions:
(a) An Employee shall receive credit for a Year of Service, for purposes of
determining eligibility to participate pursuant to Section 3.2(c), for the
12 month period beginning on the Employee's Employment Commencement Date
and ending on the first anniversary thereof, if the Employee completes
1,000 or more Hours of Service during such period. If an Employee fails to
complete 1,000 or more Hours of Service during such period, the Employee
shall receive credit, for purposes of eligibility to participate, for any
Plan Year beginning after the Employee's Employment Commencement Date,
during which the Employee completes 1,000 or more Hours of Service.
(b) An Employee shall receive credit for a Year of Service, for purposes of
vesting pursuant to Section 6.2(a), for any Plan Year during which he has
at least 1,000 Hours of Service.
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<PAGE> 15
(c) If an Employee who incurs a One-Year Break in Service is subsequently
reemployed by an Employer or non-participating Affiliate, the Years of
Service the Employee had prior to such One-Year Break in Service shall be
reinstated upon the Employee's reemployment; provided however, that if an
Employee is reemployed after incurring five consecutive One-Year Breaks in
Service, his service after reemployment shall be disregarded only for
purposes of determining the vested portion of his pre-break Matching
Contributions Account.
(d) An Employee shall receive credit, for vesting and eligibility purposes, for
any years of service credited for a period of employment by a corporation
which is acquired, in whole or in part, by an Employer by merge or
otherwise, but only if, and to the extent that, the Board of Directors (or
the board of directors of any Employer that is a 100% owned subsidiary of
the Company), specifically determines, at its discretion, to award credit
for such service on a uniform and nondiscriminatory basis.
(e) In determining an Employee's Years of Service pursuant to this Section 3.4,
the following terms shall apply:
(1) "EMPLOYMENT COMMENCEMENT DATE" means the first day on which an
Employee first performs an Hour of Service for an Employer or
Affiliate or, if applicable, the first day following a One-Year Break
in Service on which an Employee performs an Hour of Service for an
Employer or Affiliate.
(2) "BREAK IN SERVICE" means the cessation of crediting Hours of Service
when the Employee--
(A) resigns;
(B) is discharged;
(C) fails to report for work within the period required under the law
pertaining to veterans' reemployment rights after the Employee is
released from military duty with the armed forces of the United
States, in which case the Employee's Break in Service shall be
deemed to have occurred on the first day of the Employee's
authorized leave of absence for such military duty;
(D) is on an authorized leave of absence and fails to return to
employment, in which case the Employee's Break in Service shall
be deemed to have occurred on the first day of the Employee's
authorized leave of absence; or
(E) retires or dies.
(3) "ONE-YEAR BREAK IN SERVICE" means each Plan Year in which an Employee
who has a Break in Service is credited with less than
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<PAGE> 16
501 Hours of Service.
(4) "HOURS OF SERVICE" means the hours of service credited to an Employee
as follows:
(A) One hour for each hour for which he is paid, or entitled to
payment, by an Employer or an Affiliate for the performance of
duties during the applicable computation period for which his
Hours of Service are being determined under the Plan.
(B) One hour for each hour, in addition to the hours in Section
3.4(e)(4)(A), for which he is directly or indirectly paid, or
entitled to payment, by an Employer or an Affiliate, on account
of a period of time during which no duties are performed due to
vacation, holiday, illness, disability, layoff, jury duty,
military duty or Leave of Absence. Not more than 501 hours shall
be credited under this Section 3.4(e)(4)(B) on account of any
single continuous period during which he performs no duties. An
hour is not required to be credited under this Section
3.4(e)(4)(B) if the payment for such hour is made or due under a
plan maintained solely for the purpose of complying with
applicable worker's compensation, unemployment compensation or
disability insurance laws, or if such payment is solely to
reimburse an Employee for medical or medically related expenses
incurred by the Employee.
(C) One hour for each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Employer or an Affiliate, with no duplication of credit for
hours.
(D) Hours of Service shall be credited in accordance with the rules
of Department of Labor regulation Section 2530.200b-2(b) and (c),
which are incorporated herein by reference.
(E) For purposes of determining whether an Employee has had a
One-Year Break in Service, an Employee who is absent from work
for reasons of an "authorized maternity or paternity leave" shall
be credited with the number of Hours of Service (not in excess of
501) equal to--
(i) the number of Hours of Service which otherwise would
normally have been credited to such Employee but for such
absence, or
(ii) in any case in which the number of Hours of Service
described in Section 3.4(e)(4)(E)(i) cannot be determined,
eight Hours of Service per day of such
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<PAGE> 17
absence.
An absence for an "authorized maternity or paternity leave" means
an absence by reason of the pregnancy of the Employee, by reason
of the birth of a child of the Employee, by reason of the
placement of a child with the Employee in connection with the
adoption of such child by the Employee, or for purposes of caring
for such child for a period immediately following such birth or
placement. The Hours of Service described in this Section
3.4(e)(4)(E)(i) shall be credited only in the Plan Year in which
the absence from work begins if the Employee would be prevented
from incurring a Break in Service in such Plan Year solely
because of this provision or, in any other case, in the
immediately following Plan Year.
3.5 SPECIAL PROVISIONS FOR PARTICIPANTS WHO ENTER THE ARMED FORCES
If a Participant is absent from employment for voluntary or involuntary military
service with the armed forces of the United States and returns to employment
within the period required under the law pertaining to veterans' reemployment
rights, the Participant shall receive service for the period of the
Participant's absence from employment as required by applicable law.
3.6 LEASED EMPLOYEES
A person who is not an Employee and who performs services for an Employer or an
Affiliate pursuant to an agreement between the Employer or Affiliate and a
leasing organization shall be considered a "leased employee" if such person
performed the services on a substantially full time basis for a period of at
least a year and the services are of a type historically performed by Employees
in the business field of the Employer or Affiliate. A person who is considered a
"leased employee" of an Employer or an Affiliate shall not be considered an
Employee for purposes of the Plan. If such a person becomes a Participant as a
result of subsequent employment with an Employer or nonparticipating Affiliate,
he shall receive service for his employment as a leased employee.
Notwithstanding the foregoing provisions of this Section 3.6, a leased employee
shall be included as an Employee for purposes of applying the requirements
described in Code section 414(n)(3) and for purposes of determining the number
and identity of Highly Compensated Employees.
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ARTICLE IV. PLAN CONTRIBUTIONS
4.1 TYPES OF CONTRIBUTIONS
From and after the Effective Date, the following types of Contributions are
provided for under the Plan:
(a) Before-Tax Contributions by Active Participants, as described in Section
4.2;
(b) After-Tax Contributions by Active Participants, as described in Section
4.3;
(c) Matching Contributions by the Employer, as described in Section 4.4; and
(d) Rollover Contributions by Eligible Employees, as described in Section 4.5.
4.2 BEFORE-TAX CONTRIBUTIONS
An Active Participant may elect to reduce this Compensation by any whole
percentage of not less than 1 percent and not more than 10 percent for any pay
period for which his election is in effect, and to have the amounts by which his
Compensation is so reduced contributed on his behalf by his Employer as
Before-Tax Contributions under the Plan. All elections with respect to
Before-Tax Contributions shall be made in accordance with the provisions of
Section 4.6. The Before-Tax Contributions made on behalf of an Active
Participant shall be credited and allocated to his Before-Tax Contributions
Account.
4.3 AFTER-TAX CONTRIBUTIONS
An Active Participant may elect to make After-Tax Contributions in any whole
percentage of not less than 1 percent and not more than 5 percent for any pay
period for which his election is in effect, and to have such amounts deducted
from his Compensation and contributed on his behalf by his Employer as After-Tax
Contributions under the Plan. All elections with respect to After-Tax
Contributions shall be made in accordance with the provisions of Section 4.6.
The After-Tax Contributions made on behalf of an Active Participant shall be
credited and allocated to his After-Tax Contributions Account. The sum of the
percentage of Before-Tax Contributions elected under Section 4.2 and the
percentage of After-Tax Contributions elected under this Section 4.3 for any
period shall not exceed 10 percent.
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4.4 MATCHING CONTRIBUTIONS
(a) MATCHING CONTRIBUTIONS PRIOR TO JULY 1, 1991. Prior to July 1, 1991, each
Employer shall contribute an amount equal to 100 percent of the amount of
Before-Tax Contributions and/or After-Tax Contributions contributed by or
on behalf of each Active Participant employed by such Employer; provided,
however, that no such Matching Contribution shall be made for any pay
period which is in excess of 5 percent of the Active Participant's
Compensation.
(b) MATCHING CONTRIBUTIONS AFTER JUNE 30, 1991. After June 30, 1991, each
Employer shall contribute an amount equal to 100 percent of the amount of
Before-Tax Contributions contributed by or on behalf of each Active
Participant employed by such Employer; provided, however, that no such
Matching Contribution shall be made for any pay period which is in excess
of 6 percent of the Active Participant's Compensation. Each Employer shall
also contribute an amount equal to 100 percent of the amount of After-Tax
Contributions contributed by or on behalf of each Active Participant
employed by such Employer; provided, however, that no such Matching
Contribution shall be made for any pay period which is in excess of 5
percent of the Active Participant's Compensation. The 5 percent limitation
in the preceding sentence shall be increased to 6 percent in the event an
Active Participant elects to make After-Tax Contributions as a result of a
suspension of his Before-Tax Contributions pursuant to the provisions of
Section 4.6(a). Matching Contributions for any pay period with respect to
both After-Tax Contributions and Before-Tax Contributions pursuant to this
Section 4.4(b) shall not exceed an aggregate limit of 6 percent of an
Active Participant's Compensation.
(c) IN GENERAL. The Matching Contributions to be made on behalf of an Active
Participant for a Plan Year shall be determined by reference to each pay
period within such Plan Year during which the Active Participant has an
election in effect with respect to Before-Tax Contributions and/or
After-Tax Contributions. Matching Contributions may be made in cash or in
Company Stock, or in any combination of cash and Company Stock. The
Matching Contributions made on behalf of an Active Participant shall be
credited and allocated to his Matching Contributions Account.
4.5 ROLLOVER CONTRIBUTIONS
Effective September 1, 1992 an Eligible Employee may, in accordance with
procedures prescribed by the Committee, contribute the following amounts to the
Plan provided such amounts are delivered to the Trustee in cash or
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<PAGE> 20
cash equivalents:
(a) All or any portion of a distribution (or proceeds from the sale of
distributed property) which qualifies as an "eligible rollover
distribution" as defined in Code section 402(c)(4), provided such amount is
paid over to the Trustee on or before the 60th day after receipt by the
Eligible Employee of the distribution, or such amount is a direct rollover
to the Trustee made in accordance with Code section 401(a)(31) and the
Treasury regulations thereunder.
(b) A distribution from an individual retirement account, the entire amount of
which distribution is from a source described in Section 4.5(a).
All Rollover Contributions with respect to an Eligible Employee shall be
credited and allocated to such Eligible Employee's Rollover Contributions
Account.
4.6 LIMITATIONS ON CONTRIBUTIONS
In addition to the contribution limitations and requirements of Sections 4.2,
4.3 and 4.4, Contributions under the Plan shall be subject to the following
limitations and requirements:
(a) LIMITATION ON BEFORE-TAX CONTRIBUTIONS. The maximum amount of Before-Tax
Contributions contributed by an Employer on behalf of any Participant
during a Plan Year shall be $7,627 (as adjusted by the Secretary of the
Treasury to reflect increases in the cost of living). In any event where
the Before-Tax Contributions limited by this Section 4.6(a) would exceed
the maximum limitation provided herein, the election to make Before-Tax
Contributions shall be suspended for the balance of that Plan Year and the
Participant shall be entitled to elect to make After-Tax Contributions in
lieu of the suspended Before-Tax Contributions as provided in Section
4.6(b).
(b) REDIRECTED CONTRIBUTIONS. In the event any Before-Tax Contributions are
suspended pursuant to Section 4.6(a), the Participant shall be entitled to
elect to make After-Tax Contributions in lieu of the suspended Before-Tax
Contributions. Any After-Tax Contributions made pursuant to this Section
4.6(b) shall not be subject to the percentage of pay limitation on
After-Tax Contributions provided in Section 4.3 but shall be subject to the
percentage of pay limitation on Before-Tax Contributions in Section 4.2.
Any After-Tax Contributions made under this Section 4.6(b) in lieu of
suspended Before-Tax Contributions shall be allocated to the Participant's
After-Tax Contributions Account.
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(c) MAXIMUM DEDUCTIBLE CONTRIBUTIONS. In no event shall an Employer make
Before-Tax Contributions and Matching Contributions on behalf of
Participants for any Plan Year in an amount greater than the maximum
amount which is deductible by such Employer under the applicable provisions
of the Code.
(d) OTHER CONTRIBUTION LIMITATIONS. Contributions under this Article IV shall
be further subject to the limitations and restrictions of Article VIII.
4.7 ELECTIONS RELATING TO CONTRIBUTIONS
Elections to make Before-Tax or After-Tax Contributions under the provisions of
this Article IV shall be subject to and governed by the following provisions of
this Section 4.7, in addition to the other conditions and requirements relating
to such Contributions as are contained in this Article IV:
(a) ELECTIONS IN GENERAL. All elections relating to Contributions by
Participants shall be made on such form or forms and in such manner as may
be prescribed by the Committee from time to time. Such election form shall
be filed with the Committee, and shall designate the contribution rate or
rates for the Contributions elected, provide for the appropriate payroll
deduction and/or payroll reduction of the elected Contributions, specify
the Investment Fund or Funds to which the Contributions are to be allocated
pursuant to Section 9.3, and provide for such other information as the
Committee may require from time to time. Elected Before-Tax Contributions
and elected After-Tax Contributions shall be made by payroll reduction and
deduction, respectively. Such Contributions shall be made with respect to
each pay period the applicable election is in effect and shall be
determined by multiplying the Active Participant's Compensation for such
pay period by the elected contribution rate for the Before-Tax or After-Tax
Contributions elected, with the product thereof rounded to the nearest
whole cent. An Active Participant's election with respect to his Before-Tax
or After-Tax Contributions shall remain in effect so long as he continues
as an Active Participant, or until he makes a change with respect to such
Contributions as provided in Section 4.7(c).
(b) COMMENCEMENT OF ELECTIONS. An Eligible Employee must file an election to
make Before-Tax or After-Tax Contributions under the Plan in order to
become an Active Participant. Such election to make Contributions shall
become effective as of the Entry Date immediately following the date such
election is filed or as soon thereafter as administratively practicable.
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(c) CHANGES IN CONTRIBUTION ELECTIONS. An Active Participant may elect to make
a change with respect to his election of Before-Tax or After-Tax
Contributions under the Plan on a semi-annual basis, including a change
with respect to the type of such Contributions or the contribution rate or
rates for such Contributions. An election with respect to Contributions
under this Section 4.7(c) shall be filed with the Committee and shall be
made on such form and in such manner as may be prescribed by the Committee
from time to time. Such election change form shall be filed in advance of
the semi-annual period to which it relates, as required by the Committee,
and a timely filed election change shall then become effective as of the
first day of such semi-annual period.
4.8 SUSPENSION OF CONTRIBUTIONS
An Active Participant may at any time elect to suspend all of his Before-Tax or
After-Tax Contributions under the Plan. An election to suspend Contributions
under this Section 4.8 shall be filed with the Committee and shall be made on
such form and in such manner as may be prescribed by the Committee from time to
time. An Active Participant's suspension election shall become effective as of
the first of the month immediately following the date on which his suspension
election is filed with the Committee, and such suspension election shall
thereafter continue in effect for six months. Before-Tax and After-Tax
Contributions will automatically resume after six months at the same rate or
rates as before the suspension, unless otherwise specified by the Participant.
4.9 PAYMENT OF CONTRIBUTIONS
The Employers shall deposit Contributions with the Trustee on at least a monthly
basis.
4.10 FORFEITURES
Any forfeitures arising under the terms of the Plan each Plan Year shall be used
to reduce the Employers' Matching Contributions for such Plan Year or any
following Plan Year. An Employer shall receive credit for the forfeitures (if
any) of the Members who were last employed by such Employer.
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ARTICLE V. ACCOUNTS; ALLOCATION AND ADJUSTMENTS TO ACCOUNTS
5.1 ACCOUNTS OF MEMBERS
The Committee shall maintain, or cause to be maintained, an Account for each
Member for the purpose of accounting for the beneficial interest of each such
Member in the assets constituting the Trust Fund, which interest is attributable
to the Contributions credited to such Member under the Plan and as such interest
is adjusted from time to time to reflect Contributions, the earnings, gains and
losses on and changes in the value of the funds credited to the Account, charges
to reflect administrative expenses and any distributions or payments made to or
with respect to such Member from his Account. Each such Account shall consist of
the following subaccounts as may be applicable to the Member in order to account
for the specified Contributions to be credited to each such subaccount:
(a) BEFORE-TAX CONTRIBUTIONS ACCOUNT-- to account for Before-Tax Contributions
credited to the Account.
(b) AFTER-TAX CONTRIBUTIONS ACCOUNT-- to account for After-Tax Contributions
credited to the Account.
(c) MATCHING CONTRIBUTIONS ACCOUNT-- to account for Matching Contributions
credited to the Account.
(d) ROLLOVER CONTRIBUTIONS ACCOUNT-- to account for Rollover Contributions
credited to the Account.
Each such subaccount, and any other subaccount maintained as part of a Member's
Account, shall reflect the applicable Contributions credited to the subaccount,
the earnings, gains and losses on and changes in the value of the funds credited
to the subaccount, charges to the subaccount to reflect administrative expenses
and any distributions or payment made to or with respect to the Member from the
subaccount. A Member's Account shall reflect the Member's investment interest of
the funds credited to such Account in the Investment Funds from time to time. In
the case of a loan pursuant to Section 7.6, the Member's Account shall reflect
the Member's investment interest of the funds credited to such Account in the
Member's loan. The Committee shall also maintain, cause to be maintained, such
other accounts, subaccounts, records or books as are deemed necessary to
properly provide for the maintenance of Accounts under the Plan, and to carry
the intent and purposes of the Plan.
5.2 ADJUSTMENT OF ACCOUNTS; VALUATION OF TRUST FUND
The Accounts of Members shall be adjusted to reflect all Contributions credited
to the Accounts, all payments, distributions and expenses charged to the
Accounts and all earnings, gains or losses on the funds credited to
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the Accounts, with each such adjustment being made as soon as administratively
feasible following the event giving rise to the adjustment, but in any event at
least as frequently as of each Valuation Date. In making such adjustments, the
Member's Account shall reflect the allocations of the investment or reinvestment
of the funds credited to such Accounts among the Investment Funds (or loans
pursuant to Section 7.6), and the allocable shares of the Member's investment or
reinvestment therein. The assets of the Trust Fund shall be valued by the
Trustee as of each Valuation Date to reflect the value of the Trust assets on
such Date, and the change in such value from the immediately preceding Valuation
Date. Each valuation by the Trustee shall reflect the earnings, gains or losses
of the Trust Fund net of reasonable expenses, and the adjustment to a Member's
Account resulting from such valuation shall reflect such Account's pro rata
participation in the changes and values reflected thereby. The method of
valuation of the Trust Fund shall be determined by the Trustee pursuant to the
terms of the Trust Agreement and shall be followed with reasonable consistency
from Valuation Date to Valuation Date. Any such valuation shall be made on the
basis of the fair market value of the assets of the Trust Fund. All
determinations made by the Trustee as to fair market values, and all methods of
adjustment to allocations among Accounts, shall be made in accordance with
generally accepted accounting principles and pursuant to the terms of the Trust
Agreement.
5.3 ACCOUNT BALANCES
As of any relevant date, any Member's balance credited to his Account shall be
the value of the balance standing to the credit of his Account as of the
Valuation Date immediately preceding such relevant date, adjusted as necessary
to reflect any credits or charges made to such Account after such Valuation
Date, including, without limitation, those adjustments to reflect Contributions
to and payments from such Account.
5.4 ACCOUNT STATEMENTS
At least once each Plan Year, the Committee shall deliver to each Member in the
Plan a statement of the Member's Account under the Plan. The Committee may cause
such account statements to be distributed following each Valuation Date, or on
such other dates as the Committee may provide from time to time.
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ARTICLE VI. VESTING IN ACCOUNTS
6.1 FULLY VESTED ACCOUNTS
A Member shall at all times be fully vested and have a nonforfeitable interest
in the balances credited to the Member's Before-Tax Contributions Account,
After-Tax Contributions Account and Rollover Contributions Account.
6.2 MATCHING CONTRIBUTIONS ACCOUNTS
(a) Vesting in General. A Member shall have a vested and nonforfeitable
interest in that vested percentage portion of the balance credited to his
Matching Contributions Account at any time determined by reference to his
completed Years of Service in accordance with the following schedule:
<TABLE>
<CAPTION>
=============================================
YEARS OF SERVICE VESTED PERCENTAGE
- ---------------------------------------------
<S> <C>
Less than 3 years 0%
3 years 60%
4 years 80%
5 or more years 100%
- ---------------------------------------------
</TABLE>
(b) Accelerated Vesting. Notwithstanding the provisions of Section 6.2(a), a
Member shall be fully vested and have a nonforfeitable interest in the
balance credited to his Matching Contributions Account if-
(1) he attains age 55 while an Employee;
(2) he dies or suffers a Disability while an Employee;
(3) he is credited with five Years of Service computed under Section 3.4,
but disregarding the last clause of Section 3.4(b) thereby allowing
such Member to be credited with a Year of Service for each Plan Year
in which he has 1,000 or more Hours of Service irrespective of any
election to make or not to make Before-Tax or After-Tax Contributions
to the Plan; or
(4) while he is an Employee, contributions to the Plan are completely
discontinued or the Plan is terminated, or the Plan is partially
terminated and such Member is affected by such partial termination.
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ARTICLE VII. DISTRIBUTIONS; LOANS; WITHDRAWALS
7.1 DISTRIBUTION UPON TERMINATION OF EMPLOYMENT
Upon termination of a Member's employment as an Employee for any reason, there
shall be distributed to the Member, or to his Beneficiary in the case of his
death, the vested portion of his Account determined as of the Valuation Date
coincident with or immediately preceding the date on which the distribution is
made (plus any nonforfeitable amounts credited to his Account subsequent to
such Valuation Date, if applicable).
7.2 COMMENCEMENT OF DISTRIBUTIONS
(a) Subject to the provisions of this Section 7.2 and Section 7.4,
distributions pursuant to Section 7.1 shall be made to the Member as soon
as practicable following the Member's termination of employment as an
Employee; provided, however, if the vested portion of a Member's Account
exceeds $3,500 (or such higher amount as may be permitted under applicable
law or regulation), then such distribution shall not be made (unless
elected by the Member under Section 7.2(b)) at any time before the earlier
of the Member's attaining age 70-1/2 or the Member's death.
(b) Any Member who does not receive an immediate distribution following his
termination of employment as an Employee as provided in Section 7.2(a)
shall be entitled to elect to receive a distribution of the vested portion
of this Account at any time prior to the time specified in Section 7.4.
Such distribution shall be made as soon as practicable following the
Member's notification to the Committee in accordance with procedures
established by the Committee to effect such distributions.
(c) If a Member dies after his termination of employment but prior to receiving
the full distribution of his Account to which he is entitled under this
Article VII, any unpaid balance thereof at the time of his death shall be
distributed to the Member's Beneficiary in a lump sum, to be distributed as
soon as practicable and permissible under the Code after his death.
7.3 METHOD OF DISTRIBUTION
All distributions shall be in a single lump sum payment. Such distribution
shall be made in cash; provided, however, that to the extent the Member's
Account is invested in Company Stock (or, prior to 1993, in government
bonds), the Member shall be entitled to elect a distribution in kind, subject
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<PAGE> 27
to minimum share limits as determined by the Committee from time to time.
7.4 REQUIRED DISTRIBUTIONS
Notwithstanding any of the preceding provisions of this Article VII-
(a) In no event may the distribution of a Member's benefits commence later than
April 1 of the calendar year following the year in which the Member
reaches age 70-1/2; provided, however, that in the case of a Member who
obtained age 70-1/2 prior to January 1, 1988, such distribution shall be
required to be commenced prior to April 1 of the calendar year following
the calendar year in which the Member retires.
(b) A Member who remains in employment after reaching age 70-1/2 shall receive
a distribution of his Account pursuant to subsection (a) and shall
thereafter receive a distribution of his Account for each subsequent year
that he remains employed.
(c) If a Member dies prior to the commencement of the payments of benefits, the
Member's benefits will be distributed as soon as practical following the
Member's death.
(d) All distributions under the Plan will be made in accordance with Code
section 401(a)(9) and the regulations thereunder.
7.5 FORFEITURES
(a) If a Member's employment as an Employee terminates and the value of the
vested portion of the balance credited to his Account is not greater than
$3,500 (or such higher amount as may be permitted by applicable law or
regulation), the Member shall receive a distribution of the value of the
vested portion of his Account and the value of the nonvested portion shall
be treated as a forfeiture and applied in accordance with Section 4.10.
(b) If a Member's employment as an Employee terminates and the value of the
vested portion of the balance credited to his Account is greater than
$3,500 (or such higher amount as may be permitted by applicable law or
regulation), the Member may elect to receive a distribution of the value of
the vested portion of his Account and the value of the nonvested portion of
such Accounts shall be treated as a forfeiture and applied in accordance
with Section 4.10.
(c) If a Member receives a distribution pursuant to Section 7.5(a) or (b) which
is less than the full value of the Member's Account and he is reemployed by
an Employer or Affiliate prior to incurring five consecutive One-Year
Breaks in Service, any portion of such Account
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<PAGE> 28
forfeited pursuant to Section 7.5(a) or (b) shall be restored if the Member
repays to the Plan the full amount of his distribution. Such repayment must
be made prior to the fifth anniversary of the first date on which the
Member is subsequently reemployed as an Employee. The source for restoring
forfeitures shall be first, current forfeitures, and if insufficient, an
additional contribution by the Member's Employer. Repaid distributions and
restored forfeitures shall be allocated to the Member's After-Tax
Contributions Account and shall be invested in an Investment Fund or Funds
as designated by the Member.
(d) If a Member incurs five consecutive One-Year Breaks in Service or if
Section 7.5(c) is applicable to the Member but he fails to make the
repayment described therein, the prior forfeiture shall not be reinstated,
or if no amount was forfeited at such time, the nonvested portion of his
Account shall no longer be eligible for reinstatement at the time he incurs
five consecutive One-Year Breaks in Service.
7.6 LOANS
An "eligible Member" may make a loan from the "Loan Assets" credited to his
Account in accordance with the provisions of this Section 7.6 and any loan
procedures established from time to time by the Committee. Any such loan shall
be subject to the following provisions of this Section 7.6:
(a) LOANS IN GENERAL. Loans under this Section 7.6 shall only be available to
an "eligible Member" as described in Section 7.6(b). Each request for a
loan shall be filed with the Committee on such form and in such manner as
may be prescribed by the Committee from time to time, and shall be
accompanied by such other documents as the Committee may require for
processing the loan request. Subject to the further provisions of this
Section 7.6, the Committee may from time to time adopt such rules relating
to the terms, conditions and the making of loans as it deems appropriate,
including, without limitation, rules limiting the number and frequency of
the loans that may be made by an eligible Member, providing for a minimum
loan amount, providing for a fee for a loan, and governing the loan
repayment procedures.
(b) ELIGIBLE MEMBERS. The term "eligible Member" shall mean a Member who is an
Employee on the date the loan is made or any other Member who is a "party
in interest" as defined in ERISA Section 3(14) on the date on which the
loan is made. A loan to an eligible Member who is not an Employee may be
offered on different terms and conditions than other loans where the
differences are based solely on factors that are legally considered by
commercial entities in the business of making similar loans. Pursuant to
the Committee's written
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<PAGE> 29
administrative rules, regulations and procedures (as provided for in
Section 7.6(a)), the Committee shall determine the terms and conditions for
such loans which may include, but shall not be limited to, charging an
application fee, charging a higher interest rate, requiring a credit report
and providing a payment method and schedule for loan repayments.
(c) LOAN ASSETS. All or any portion of the balance credited to the eligible
Member's Before-Tax Contributions Account or Rollover Contributions Account
(except to the extent invested in Company Stock or PSA Stock) shall be
"Loan Assets" available for loans pursuant to this Section 7.6. The value
of the eligible Member's Loan Assets shall be determined as of the
Valuation Date coincident with or immediately preceding the date on which
his loan request form is filed with the Committee. The Committee shall
adopt rules and procedures for the allocation of loan payments among the
Investment Funds in which the eligible Member's Loan Assets are invested.
(d) AMOUNT OF LOAN. The maximum amount of an eligible Member's loan or loans
under this Section 7.6 shall not exceed the lesser of:
(1) $50,000, reduced by the excess (if any) of--
(A) the highest outstanding balance of the loan of such Member under
the Plan during the one-year period ending on the date before the
date on which a loan is made, over
(B) the outstanding balance of the loan of such Member under the Plan
on the date on which such loan is made, or
(2) One-half of the current value of such Member's vested interest in his
Before-Tax Contributions Account, Matching Contributions Account and
Rollover Contributions Account.
All determinations of the maximum loan amount under this Section 7.6(d)
shall be made as of the date any loan payment is to be made, and such
maximum amount shall reflect any outstanding loans the eligible Member may
have under any other qualified plan maintained by the Employers or any
Affiliate. The minimum amount of any loan shall be $1,000.
(e) TERM OF LOAN. The term for the repayment of any loan under this Section 7.6
shall not extend beyond a five-year period from the date of the loan
payment; provided, however, that, if such loan is to be used to acquire a
dwelling unit which within a reasonable period of time is to be used as the
principal residence of the eligible Member, then the term for such loan may
extend beyond such five-year period and for a period as approved by the
Committee.
(f) INTEREST RATE. All loans under this Section 7.6 shall bear a reasonable
rate of interest which provides the Plan with a return commensurate
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with the prevailing interest rate charged on similar commercial loans by
persons in the business of lending money. Such interest rate shall be
determined by the Committee in accordance with its rules and procedures,
and after giving due consideration to those factors as may be prescribed
under Section 408(b)(6) of ERISA or other applicable law with respect to
establishing interest rates for loans under employee benefit plans.
(g) EVIDENCE OF LOAN. No loan shall be made to any eligible Member prior to the
execution and submission by him of--
(1) a written application therefor;
(2) a promissory note payable to the Trustee in an amount and on a form
prescribed by the Committee; and
(3) a written authorization for loan repayment by means of payroll
deductions, except where a different repayment method is provided for
an eligible Member who is not an Employee.
(h) LOAN REPAYMENTS. All loan repayments of principal and interest shall be
made in substantially equal amounts (with such payments no less frequently
than on a quarterly basis) so as to permit the loan to be amortized over
the term of the loan. Except as otherwise provided by the Committee, loan
repayments shall be by payroll deductions. Repayments of principal and
interest received on each loan shall be credited to the eligible Member's
applicable Account from which Loan Assets were paid and shall be allocated
for reinvestment on the basis of the Member's investment election in effect
at the time of such repayment. An eligible Member shall be entitled to make
a prepayment in cash, without penalty, for the total outstanding principal
amount of and interest accrued on a loan.
(i) LAYOFF OR LEAVE OF ABSENCE. An eligible Member with an outstanding loan who
is on Leave of Absence for any reason shall be entitled to continue loan
repayments in installment payments equivalent in value to the payments then
being deducted by payroll deduction.
(j) TERMINATION OF EMPLOYMENT. All outstanding loans shall be due and payable
as of the date of an eligible Member's termination of employment as an
Employee for any reason. An eligible Member who, prior to his repayment of
the total principal amount and accrued interest of a loan, terminates
employment as an Employee for any reason, shall have his loan promissory
note cancelled and treated as distributed to him, unless such eligible
Member elects to repay the outstanding balance of the loan in full. In the
event that an eligible Member who is not an Employee terminates his status
as "party in interest" (as described in Section 7.6(b)) before the
repayment of a loan under this Section 7.6, the unpaid balance on the loan,
together with
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the accrued interest, shall immediately become due and payable.
(k) LOAN DEFAULT. In the event an eligible Member defaults on a loan, the
entire outstanding balance of and accrued interest on the loan shall be due
and payable. The amount of such loan default shall be charged against such
eligible Member's Account in accordance with rules and procedures
prescribed by the Committee from time to time. Such charges against the
eligible Member's Account shall be treated as a distribution with respect
to such Member; provided, however, that such a charge against an eligible
Member's Account shall not occur with respect to funds in his Before-Tax
Contributions Account at a time so as to cause a violation of the
provisions of Code section 401(k)(2)(B)(i).
(1) SECURITY FOR LOAN. The outstanding principal balance of and accrued
interest on any loan by an eligible Member shall be secured by 50 percent
of the balances credited to his Before-Tax Contributions Account and
Rollover Contributions Account (which shall include such outstanding loan
balance). Where it deems necessary, the Committee may also require the
eligible Member to provide additional security for the repayment of any
loan. No loan shall be made or remain outstanding unless the loan amount
(or the outstanding balance thereof) is adequately secured.
(m) RESTRICTION ON LOANS. Notwithstanding the foregoing provisions of this
Section 7.6, the Committee may limit loans, deny loans, declare moratoriums
on the granting of loans to eligible Members, and make the necessary rules
and regulations to implement this Section 7.6.
7.7 IN-SERVICE WITHDRAWALS
A Member may make a withdrawal from his Account in accordance with the following
provisions:
(a) AGE 59-1/2. A Member may make a withdrawal of all or any portion of the
vested amounts credited to his Account at any time after he attains age
59-1/2.
(b) BEFORE AGE 59-1/2. Prior to attaining age 59-1/2, a Member may make a
withdrawal of all or any portion of (i) the amount credited to his
After-Tax Contributions Account, or (ii) the vested amount credited to his
Matching Contributions Account prior to 1984. A Member may make only two
such withdrawals pursuant to this Section 7.7(b) during a Plan Year and no
more than five such withdrawals during a five year period.
(c) WITHDRAWALS IN GENERAL. All withdrawal requests pursuant to this Section
7.7 shall be filed with the Committee, and shall be made on such withdrawal
request form and in such manner as the Committee
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may prescribe from time to time. In addition, withdrawals and withdrawal
payments pursuant to this Section 7.7 shall be subject to and made
in accordance with such rules and procedures as the Committee may prescribe
from time to time, including rules governing the withdrawal and allocation
of withdrawal payments among the Investment Funds in which the Member's
Account is invested. The value of the Member's funds available for
withdrawal shall be determined as of the Valuation Date coincident with or
immediately preceding the date on which his withdrawal request form is
filed with the Committee. The minimum amount of any withdrawal shall be
$500.
7.8 WITHHOLDING TAXES
The Employer may withhold from a Member's Compensation and the Trustee may
withhold from any payment under this Plan any taxes required to be withheld
with respect to contributions or benefits under this Plan.
7.9 OPTIONAL DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
(a) IN GENERAL. Effective January 1, 1993, a "Distributee" may elect to have
any portion of an "Eligible Rollover Distribution" paid directly to an
"Eligible Retirement Plan" specified by the "Distributee" in a "Direct
Rollover" to the extent permitted by Code section 401(a)(31). Terms in
quotation marks are defined in Section 7.9(b) below.
(b) DEFINITIONS.
(1) "DIRECT ROLLOVER" means a payment by the Plan to the Eligible
Retirement Plan specified by the Distributee.
(2) "DISTRIBUTEE" means each of the following persons who may elect a
Direct Rollover of an Eligible Rollover Distribution of the
Participant's retirement benefit:
(A) The Participant;
(B) The Participant's surviving spouse; and
(C) An alternate payee under a qualified domestic relations order, as
defined in Code section 414(p), if that person is the spouse or
former spouse of the Participant.
(3) "ELIGIBLE RETIREMENT PLAN" means an individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code
section 403(a), or a qualified trust described in Code section 401(a),
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible
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<PAGE> 33
Rollover Distribution to a Distributee's surviving spouse, an
"Eligible Retirement Plan" is an individual retirement account or
individual retirement annuity, as such terms are defined in the
preceding sentence.
(4) "ELIGIBLE ROLLOVER DISTRIBUTION" means any distribution of all or any
portion of the retirement benefit payable to the Distributee, except
that an "Eligible Rollover Distribution" does not include:
(A) Any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Distributee or the joint
lives (or joint life expectancy) of the Distributee or the
Distributee's designated beneficiary, or for a specified period
of ten years or more;
(B) Any distribution to the extent such distribution is required
under Code section 401(a)(9);
(C) The portion of any distribution that is not includible in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities); and
(D) Any other amounts which are not considered "Eligible Rollover
Distributions" under Code section 401(a)(31).
(c) No amount shall be directly rolled over pursuant to this Section 7.9 unless
and until it would otherwise be distributed to the Distributee and all
consents and written elections required to make the distribution have been
obtained.
(d) The Committee shall provide notice to each Distributee who will receive an
Eligible Rollover Distribution of the Distributee's right to elect a Direct
Rollover in accordance with Code section 401(a)(31). The Committee shall
provide such notice at the time and in the manner required by regulations.
(e) The Distributee shall notify the Committee in writing by such deadline as
the Committee shall prescribe whether or not he wishes to have any part of
the Eligible Rollover Distribution directly rolled over. If the Distributee
fails to elect a Direct Rollover by the deadline established by the
Committee, then the entire amount of the Eligible Rollover Distribution
shall be distributed directly to the Distributee.
(f) A Distributee may elect that the lowest of the following amounts shall be
directly rolled over:
(1) The entire amount of the Eligible Rollover Distribution;
(2) Such portion of the Eligible Rollover Distribution as the Distributee
specifies (in accordance with rules established by the Committee),
provided that the amount directly rolled over is not
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<PAGE> 34
less than $500 or such higher amount as the Committee may prescribe in
accordance with Treasury regulations; or
(3) No portion of the Eligible Rollover Distribution if his Eligible
Rollover Distribution is less than $200.
(g) The Distributee may only request a Direct Rollover to one Eligible
Retirement Plan.
(h) No amount will be directly rolled over pursuant to this Section 7.9 unless
the Distributee provides the Committee, by such deadline as the Committee
shall prescribe, such information as it shall require:
(1) To determine that the amount directly rolled over will be received by
an Eligible Retirement Plan that will accept the Direct Rollover; and
(2) To make the Direct Rollover and make such reports and keep such
records as are required under applicable law.
The Committee may rely on all such information provided by the Distributee
and shall not be required to verify any such information.
(i) The Committee shall select the manner in which to make the Direct Rollover.
(j) Any amount directly rolled over in accordance with this Section 7.9 shall
be a distribution from this Plan and shall discharge any liability to the
Distributee under this Plan to the same extent as a payment directly to the
Distributee.
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ARTICLE VIII. LIMITATIONS
8.1 LIMITATIONS ON BEFORE-TAX CONTRIBUTIONS
(a) IN GENERAL. In no event shall any Employer make Before-Tax Contributions
for any Plan Year that would result in the actual deferral percentage of
the group of Highly-Compensated Employees who are Eligible Employees and
are participating or are eligible to participate as Participants exceeding
the actual deferral percentage of the group of all other of such Eligible
Employees by more than the greater of--
(1) one and one-quarter times, or
(2) the lesser of (A) two times or (B) two percentage points.
The deferral percentage of each group of such Eligible Employees for any
Plan Year shall be the average of the ratios (calculated separately for
each Eligible Employee in each such group) of (i) the Before-Tax
Contributions made on behalf of such Eligible Employee for such Plan Year
to (ii) such Eligible Employee's Compensation for such Plan Year.
(b) SPECIAL RULES. For purposes of this Section 8.1, the actual deferral
percentage for any Eligible Employee who is a Highly-Compensated Employee
for the Plan Year and who is eligible to have Before-Tax Contributions
allocated to his accounts under two or more plans or arrangements
maintained by the Employer or an Affiliate (excluding plans that cannot be
permissively aggregated) shall be determined as if all such Before-Tax
Contributions were made under a single arrangement.
For purposes of this Section 8.1, any Before-Tax Contributions made under
two or more plans maintained by the Employer or an Affiliate which are
aggregated for purposes of Code sections 401(a)(4) or 410(b) (other than
Code section 410(b)(2)(A)(ii)) are to be treated as made under a single
plan. And if two more plans are permissively aggregated for purposes of
applying the average deferral percentage test then the aggregated plans
must satisfy Code sections 401(a)(4) and 410(b) as though they were a
single plan.
If an Eligible Employee is a member of the family of a five percent owner
or one of the ten most Highly-Compensated Employees, such Eligible
Employee shall not be treated as a separate Employee and his Compensation
and his Before-Tax Contributions shall be treated as attributable to a
single five percent owner or Highly-Compensated Employee. For such a
family group (which is treated as a single Highly-Compensated Employee),
the actual deferral percentage for each individual shall be determined by
combining the Compensation and Before-Tax Contributions of all such family
members. If the
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Before-Tax Contributions of an aggregated Highly-Compensated Employee have
to be reduced to conform to the limitations in Section 8.1(a), the
Before-Tax Contributions of each family member shall be reduced in
proportion to the amount of Before-Tax Contributions made by each family
member.
Any Eligible Employee covered by a collective bargaining agreement that
provides for his participation in the Plan shall not be included when the
limits of this Section 8.1 are applied to Eligible Employees who are not
covered by a collective bargaining agreement, and the limits of this
Section 8.1 shall be separately applied to each group of Eligible
Employees covered by a separate collective bargaining agreement.
The determination and treatment of the Before-Tax Contributions and actual
deferral percentage of any Eligible Employee shall satisfy such other
requirements as prescribed by the Secretary of Treasury.
(c) CORRECTION METHODS.
(1) DISTRIBUTION. To the extent necessary to conform to the limitations in
Section 8.1(a), the Committee shall reduce the Before-Tax
Contributions made on behalf of the Highly Compensated Employees. Such
reduction shall be effected by reducing Before-Tax Contributions made
on behalf of Highly Compensated Employees (in the order of their
actual deferral percentages) beginning with the Highly-Compensated
Employees who elected the highest percentage of such Contributions, in
accordance with the "leveling" method described in Treas.
Reg.1.401(k)-1(f)(2). A reduction pursuant to this Section 8.1(c)(2)
which results in a refund of Before-Tax Contributions already
contributed under the Plan shall include with such refunded amounts
any earnings allocable to such refunded amount through the end of the
Plan Year. Any such refunded earnings shall be computed in accordance
with a method established by the Committee that is used consistently
for all Participants and for all refunded amounts for the Plan Year,
and is used by the Plan for allocating income to Participants'
Accounts. The Matching Contributions, if any, that relate to such
distributed Before-Tax Contributions shall be treated as a forfeiture
under Section 4.10 except to the extent that such amounts are
distributable pursuant to Section 8.2(c). The amount of Before-Tax
Contributions refunded to a Participant pursuant to this Section
8.1(c)(1) shall be reduced by the amount of any Before-Tax
Contributions previously distributed to the Participant to comply with
the limitations of Section 8.4.
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(2) ADDITIONAL ACTIONS. The Committee may take such additional action as
it shall consider appropriate to ensure compliance with the
requirements of Section 8.1. Such action may include the
implementation of limits on Before-Tax Contributions contributed by or
on behalf of Highly-Compensated Employees at periodical intervals
through a Plan Year that the Committee deems necessary or appropriate
to assure compliance at year end. Such rules may provide each Active
Participant affected by such limitation an opportunity to make a
change with respect to his Before-Tax Contributions election at the
time a reduction is applied, and at such later time when such
reductions are no longer necessary to comply with the limitations of
Section 8.1.
8.2 LIMITATIONS ON AFTER-TAX CONTRIBUTIONS AND MATCHING CONTRIBUTIONS
(a) IN GENERAL. In no event shall After-Tax Contributions and Matching
Contributions for any Plan Year be made which would result in the
contribution percentage of the group of Highly-Compensated Employees who
are Eligible Employees and are participating or are eligible to participate
as Participants exceeding the contribution percentage of the group of all
other of such Eligible Employees by more than the greater of--
(1) one and one-quarter times, or
(2) the lesser of (A) two times or (B) two percentage points.
The contribution percentage of each group of such Eligible Employees for
any Plan Year shall be the average of the ratios (calculated separately for
each Eligible Employee in each such group) if (i) the After-Tax
Contributions and the Matching Contributions made on behalf of each such
Eligible Employee for such Plan Year to (ii) such Eligible Employee's
Compensation for such Plan Year.
(b) SPECIAL RULES. For purposes of this Section 8.2, the contribution
percentage for any Eligible Employee who is a Highly-Compensated Employee
for the Plan Year and who is eligible to have Matching Contributions and/or
After-Tax Contributions allocated to his accounts under two or more
arrangements maintained by the Employer or an Affiliate (excluding plans
that cannot be permissively aggregated) shall be determined as if all such
contributions were made under a single arrangement.
For purposes of this Section 8.2, any After-Tax or Matching Contributions
made under two or more plans maintained by the Employer or an Affiliate
which are aggregated for purposes of Code sections 401(a)(4) or 410(b)
(other than Code section 410(b)(2)(A)(ii)) are to be treated as made under
a single plan. And if two or more
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plans are permissively aggregated for purposes of applying the
contribution percentage test then the aggregated plans must satisfy
Code sections 401(a)(4) and 410(b) as though they were a single plan.
If an Eligible Employee is a member of the family of a five percent
owner or one of the ten most Highly-Compensated Employees, such
Eligible Employee shall not be treated as a separate Employee and his
Compensation under After-Tax and Matching Contributions shall be
treated as attributable to a single five percent owner or Highly-
Compensated Employee. For such a family group (which is treated as a
single Highly-Compensated Employee), the actual deferral percentage
for each individual shall be determined by combining the Compensation
and After-Tax and Matching Contributions of an aggregated
Highly-Compensated Employee have to be reduced to conform to the
limitations of Section 8.2(a), the After-Tax and Matching
Contributions of each family member shall be reduced in proportion
into the amount of After-Tax and Matching Contributions made by each
family member.
Any Eligible Employee covered by a collective bargaining agreement
that provides for his participation in the Plan shall not be included
when the limits of this Section 8.2 are applied to Eligible Employees
who are not covered by a collective bargaining agreement. Matching
Contributions and After-Tax Contributions made on behalf of Highly-
Compensated Employees who are covered by a collective bargaining
agreement shall not be subject to the limits of this Section 8.2. The
determination and treatment of the After-Tax Contributions, Matching
Contributions and contribution percentage of any Eligible Employee
shall satisfy such other requirements as prescribed by the Secretary
of the Treasury.
(c) CORRECTION METHODS.
(1) DISTRIBUTION. To the extent necessary to conform to the
limitations in Section 8.2(a), the Committee shall reduce the
After-Tax Contributions and the Matching Contributions made on
behalf of the Highly-Compensated Employees. Such reductions
shall be affected by reducing After-Tax Contributions and
Matching Contributions made by or on behalf of Highly-Compensated
Employees (in order of their actual contribution percentages)
beginning with the Highly-Compensated Employee who elected the
highest percentage of such contributions, in accordance with the
"leveling" method described in Treas. Reg.1.401(m)-l(e)(2)(i).
Any such reduction with respect to After-Tax Contributions
already contributed under the Plan on behalf of any Participant
shall refunded to the Participant. Any such
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reductions with respect to the Matching Contributions already made
under the Plan on behalf of any Participant shall be paid to the
Participant (to the extent he is vested) or treated as a forfeiture
(to the extent forfeitable). Such refunds or payment shall be made as
soon as administratively feasible, but will be made at the latest
before the close of the following Plan Year. The reductions provided
for under this Section 8.2(c) shall also be made in accordance with
such rules as the Committee may provide from time to time, including
rules similar to the rules described in Section 8.1(c) relating to
changes with respect to Before-Tax Contributions elections. A
reduction pursuant to this Section 8.2(c) which results in a refund or
payment of After-Tax Contributions or Matching Contributions already
contributed under the Plan shall include with such refunded amounts
any earnings allocable to such refunded amounts through the end of the
Plan Year. Any such refunded earnings shall be computed in accordance
with a method established by the Committee that is used consistently
for the Plan Year, and is used by the Plan for allocating income to
Participants' Accounts.
(2) ADDITIONAL ACTIONS. The Committee may take such additional action as
it shall consider appropriate to ensure compliance with the
requirements of this Section 8.2.
8.3 COMBINATION OF LIMITATIONS; MULTIPLE USE
(a) The Committee may comply with the limitations of Sections 8.1 and 8.2 by
combining contributions under the Plan with contributions under any other
defined contribution plan maintained by an Employer or an Affiliate. Such
combination shall be done in compliance with applicable final Treasury
regulations. To the extent permitted by Treas. Reg.1.401(m)-l(b)(5), the
Committee may also elect to take Before-Tax Contributions into account in
applying the contribution percentage test under Section 8.2(a).
(b) The deferral and contribution percentage test limitations of Sections
8.1(a) and 8.2(a) shall be applied in accordance with the provisions of
Code sections 401(k) and 401(m), and in accordance with the provisions of
Treas. Reg.1.401(m)-2 governing alternative limitations. If the multiple
use of alternative limitations occurs, and correction becomes necessary,
such correction shall be made in accordance with the provisions of Treas.
Reg.1.401(m)-2(c) by reducing the actual contribution percentage of all
Highly-Compensated Employees.
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8.4 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS
(a) ANNUAL ACCOUNT ADDITION. "Annual Account Addition" means for any
Participant for any Plan Year, which shall also be the limitation year, the
sum of-
(1) Employer or employee contributions made for him under any defined
contribution plan, including excess contributions (as defined in Code
section 401(k)(8)(B)), excess aggregate contributions (as defined in
Code section 401(m)(6)(B)) and excess deferrals (as described in Code
section 402(g)), irrespective of whether such amounts are distributed
or forfeited;
(2) Forfeitures allocated to him under any defined contribution plan; and
(3) Amounts described in Code sections 415(l)(1) and 419A(d)(2) allocated
to him.
"Any defined contribution plan" means all defined contribution plans of the
Employers and Affiliates considered as one plan. For purposes of this
Section 8.4, "Affiliate" shall have the meaning provided in Section 2.1(b),
except that the phrase "more than 50%" shall be substituted for the phrase
"at least 80%" each place it appears in Code section 1563(a)(1). Repaid
distributions and restored forfeitures pursuant to Section 7.5 or a
Rollover Contribution pursuant to Section 4.5 shall not be included as part
of a Participant's Annual Account Addition (nor shall any similar amounts
under any other defined contribution plan).
(b) LIMITATION. A Participant's Annual Account Addition for any Plan Year shall
not exceed the lesser of-
(1) $30,000, or if greater, one-fourth of the defined benefit dollar
limitation set forth in Code section 415(b)(1)(A) as in effect for the
limitation year; or
(2) 25 percent of the Participant's Compensation.
The limitation in Section 8.4(b)(2) shall not apply to (i) any contribution
for medical benefits (within the meaning of Code section 419A(f)(2)) after
separation from service which are treated as an Annual Account Addition, or
(ii) any amount otherwise treated as an Annual Account Addition under Code
section 415(l)(1).
(c) ADDITIONAL LIMITATION. If in any Plan Year a Participant is covered both
under any defined contribution plan and under any defined benefit plan, the
sum of the defined benefit plan fraction (as defined in Code section
415(e)(2)) and the defined contribution plan fraction (as defined in Code
section 415(e)(3)) for such Plan Year shall not exceed one. In calculating
the defined contribution fraction, the Committee may make the election
described in Code section 415(e)(6). It is
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intended to reduce the benefits payable under any defined benefit plan to
the extent necessary to prevent the sum of such fractions for any Plan Year
from exceeding one before reducing contributions to any defined
contribution plan. "Any defined benefit plan" means all defined benefit
plans of the Employers and Affiliates considered as one plan.
(d) REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Plan Year a Participant's
Annual Account Addition exceeds the limitation determined under Section
8.4(b), such excess shall not be allocated to his accounts in any defined
contribution plan but shall be handled in the following manner and order
until such excess is eliminated:
(1) His after-tax contributions or any part thereof shall be refunded to
him;
(2) His portion of the before-tax contributions or any part thereof made
on his behalf shall be refunded to him;
(3) His portion of the allocation of employer matching contributions or
any part thereof shall be placed in a suspense account, and
(4) His portion of the allocation of any employer contributions (other
than employer contributions described in Section 8.4(d)(2) and (d)(3))
or any portion thereof shall be placed in a suspense account.
Such reductions shall be applied first to any other defined contribution
plan, and thereafter to the Plan. The amount held in any suspense account
that is attributable to Matching Employer Contributions of an Employer
shall be used to reduce such Contributions by that Employer for the next
following Plan Year. Such suspense account shall not share in the gains and
losses of the Trust Fund.
(e) CODE SECTION 415. The limitations and provisions of this Section 8.4 shall
be applied in accordance with the provisions of Code section 415 and the
regulations issued thereunder, which are hereby incorporated by reference
into the Plan. In addition, the limitations and reductions provided for in
this Section 8.4 shall be applied in accordance with such rules as the
Committee may prescribe from time to time to carry out the provisions of
this Section 8.4 and Code section 415.
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ARTICLE IX. INVESTMENT OF ACCOUNTS
9.1 INVESTMENTS
(a) INVESTMENTS IN GENERAL. All Contributions shall be paid over to the Trustee
and shall be invested promptly by the Trustee as provided in this Article
IX and in accordance with the terms of the Trust Agreement. Dividends,
interest, earnings, proceeds from the sale or tender of assets or
securities (except where a loan, withdrawal, or distribution is being made)
and other income from the assets credited to an Investment Fund shall be
promptly reinvested in such Fund.
(b) BEFORE-TAX AND AFTER-TAX CONTRIBUTIONS. Before-Tax and After-Tax
Contributions and all other funds credited to a Member's Before-Tax
Contributions Account, After-Tax Contributions Account and Rollover
Contributions Account under the Plan shall be invested in the Investment
Funds in accordance with the Member's investment elections in effect from
time to time and the provisions of this Article IX.
(c) INVESTMENT OF MATCHING CONTRIBUTIONS ACCOUNT. Matching Contributions and
all other funds credited to a Member's Matching Contributions Account under
the Plan shall be invested in Company Stock and/or PSA Stock in accordance
with the applicable investment election of the Member then in effect, as
authorized and directed by the Committee.
(d) LOANS. Notwithstanding the foregoing provisions of this Section 9.1, in any
case where a Member has made a loan of any portion of his Account pursuant
to the Section 7.6, the Member shall be deemed to have directed the
investment of the outstanding balance of such loan from time to time, and
such balance shall be invested in such loan in accordance with the terms of
the loan and the provisions of Section 7.6.
9.2 INVESTMENT FUNDS
The Plan shall provide for Investment Funds for the investment of the funds
credited to Members' Accounts from time to time. As of January 1, 1993, the
following Investment Funds are provided for under the Plan:
(a) Company Stock Fund;
(b) PSA Stock Fund;
(c) Money Market Fund;
(d) Bond Index Fund;
(e) Balanced Fund;
(f) Stock Index Fund; and
(g) Global Fund.
In addition to or in lieu of the Investment Funds listed above, the Committee
may also from time to time designate other Investment Funds to be available
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for the investment of the funds credited to the Members' Accounts (other than
the Matching Contributions Account which shall remain invested solely in
Company Stock and/or PSA Stock). The Committee shall instruct and advise the
Trustee and the Members as to the addition or deletion of an Investment Fund,
including the effective date of any such addition or deletion and any special
provisions as may be applicable to the investment elections or transfers with
respect to the Investment Funds. The Committee shall designate the investment
company, insurance company or other financial institution or institutions
(including the Trustee) responsible for the management and administration of
the investment of the funds of each Investment Fund. The Committee shall also
establish such investment guidelines or directions as it may deem appropriate
relating to the investment management and administration of Investment Fund.
The investment of funds in the Investment Fund shall also be subject to the
investment provisions of the Trust Agreement.
9.3 INVESTMENT ELECTIONS FOR CONTRIBUTIONS
Each Participant shall file with the Committee an investment election with
respect to the Contributions made by or on behalf of such Participant under the
Plan. Such investment election shall be made on such form or forms and in such
manner as the Committee shall prescribe from time to time. The Participant's
investment elections shall be filed at the following times and subject to the
following provisions:
(a) COMMENCEMENT OF ACTIVE PARTICIPATION. Whenever a Participant commences or
recommences active participation under the Plan as provided in Section 3.2
or 3.3, such Participant shall file his investment election form no later
than the date on which he is to commence or recommence his status as an
Active Participant. Such investment election shall be applicable to all
subsequent Contributions (other than Rollover Contributions) made on behalf
of such Participant under the Plan and the investment election shall remain
in effect so long as the Participant continues as an Active Participant, or
until such Participant makes a change with respect to the investment of his
future Contributions, as provided in Section 9.3(c).
(b) ROLLOVER CONTRIBUTIONS. Whenever a Participant (including an Inactive
Participant) makes a Rollover Contribution (as provided in Section 4.5),
such Participant shall file his investment election form no later than the
date on which his Rollover Contribution is made to the Plan. Such
investment election shall be applicable with respect to the Rollover
Contribution made by or on behalf of the Participant.
(c) CHANGE IN INVESTMENT ELECTION. A Participant may file an investment change
election form as prescribed by the Committee to be effective
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with respect to all future Contributions (other than Rollover
Contributions) made by or on behalf of such Participant under the Plan
from and after the date on which such investment change becomes effective.
Any such investment changes shall become effective at periodic intervals
during the Plan Year (e.g., quarterly) as determined by the Committee and
communicated to Participants. Participant investment elections shall remain
in effect so long as the Participant continues as an Active Participant, or
until the Participant makes a change with respect to the investment of his
future Contributions, as provided in this Section 9.3(c).
(d) ELECTRONIC OR TELEPHONIC CHANGES. From time to time, the Committee may
authorize alternative methods for effecting changes in investment
elections, including electronic or telephonic communications, with respect
to some or all Contributions made by or on behalf of an Active Participant
with respect to pay periods subsequent to such electronic or telephonic
communication. Any such authorized change in investment election shall be
in lieu of the written form prescribed in Section 9.3(c) and shall be
considered "filed" for purposes of this Article IX.
On each investment election form filed by a Participant pursuant to this Section
9.3, the Participant shall designate the percentage increments for the
investment of his Contributions among the available Investment Funds. Such
designation shall be in percentage increments of 5 percent, unless the
Committee, in its discretion, provides for investments in percentage increments
other than 5 percent. The Contributions made by or on behalf of each Participant
shall be invested under the Plan in accordance with the investment election he
then has in effect with respect to such Contributions. Each such investment
election shall also be applicable with respect to any earnings or other income
attributable to the Contributions subject to such investment election.
9.4 INVESTMENT TRANSFERS
A Member may file an investment transfer election with respect to the balance
credited to his Accounts. Such investment transfer election shall be made on
such form or forms and in such manner as the Committee may prescribe from time
to time, and such investment transfer election shall become effective as of the
date established by the Committee, which shall establish periodic intervals
throughout the Plan Year (e.g., quarterly) and communicate such dates to
Members. On such investment transfer election form, the Member shall
designate the percentage increments for the investment of the balance credited
to his Accounts as of the effective date of his election. Such designation
shall be in percentage increments of 10
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percent, unless the Committee, in its discretion provides for investments in
percentage increments other than 10 percent. From time to time, the Committee
may authorize alternative methods for effecting investment transfers, including
electronic or telephonic communications, in lieu of filing a prescribed written
form as provided in this Section 9.4. Any such authorized transfer method shall
be considered "filed" for purposes of this Article IX. All investment election
transfers shall be effected by liquidating the interest to be transferred from
one Fund to another Fund, and by reallocating such interest to the other Fund.
Any loss in value or adverse consequences resulting from such transfers shall
reduce the value of the amount to be transferred, as directed by the Member.
The Committee may restrict, delay or prohibit transfers in any Plan Year to the
extent the effecting of such transfers may tend to create adverse investment
results for one or more of the Funds.
9.5 RULES OF COMMITTEE
The Committee shall prescribe such rules and procedures from time to time as
deemed appropriate for investment elections and investment transfers under the
Plan. The Committee may also from time to time provide for limitations or
restrictions applicable to specific Contributions, Accounts and Investment
Funds. In the event a Participant fails to file or is unable to file an
investment election form prior to any date established in accordance with
Section 9.3, the Committee may prescribe procedures permitting the filing of
such investment election form on a later date to become effective as prescribed
by the Committee. The Committee may also prescribe procedures for the
investment of the Contributions made by or on behalf of a Participant who fails
to file an effective investment election pursuant to Section 9.3(a) or (b). The
Committee's rules and procedures relating to investment elections and
investment transfers shall be administered in a nondiscriminatory manner.
9.6 PURCHASE OF COMPANY STOCK AND PSA STOCK
Company Stock may be purchased by the Trustee in the open market or from the
Company in accordance with the terms of the Trust Agreement. If Company Stock
is purchased from the Company on a day such stock was traded on the open
market, the price of such Company Stock shall be the closing price of a Company
Stock on the open market on such day. If such stock was not traded on the open
market on the day of the purchase from the Company, then the price of such
Company Stock shall be the closing price of Company Stock on the open market
on the nearest date next preceding the date of the purchase. PSA Stock shall be
purchased by the
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Trustee in such market or markets as may exist from time to time. All shares
and securities shall be held by the Trustee in its name or that of its nominee
and a Member shall not be deemed to have an interest in any particular
certificate of stock or security.
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ARTICLE X. APPOINTMENT OF FIDUCIARIES AND PLAN ADMINISTRATION
10.1 ALLOCATION OF RESPONSIBILITY AMONG FIDUCIARIES FOR PLAN AND TRUST
ADMINISTRATION
The fiduciaries under the Plan and Trust shall have only those specific powers,
duties, responsibilities, and obligations as are specifically given them under
this Plan or the Trust Agreement. In general, the Company shall have the
responsibility for making the contributions necessary to provide benefits under
the Plan. The Company, acting through its Board of Directors, shall have the
authority to appoint and remove the Committee members, and the Trustee, and the
Company reserves the right to amend or terminate, in whole or in part, this
Plan or the Trust Agreement at any time. The Committee shall have the
responsibility for the administration of this Plan, as described in this
Article X and the Trust Agreement. The Trustee shall have the responsibility
for the administration of the Trust and the management of the assets held in
the Trust Fund, all as specifically provided in the Trust Agreement, except as
specifically provided therein for any portion of the Trust Fund to be the
responsibility of an investment manager. It is intended under this Plan and the
Trust Agreement that each fiduciary shall be responsible for the proper
exercise of its own powers, duties, responsibilities, and obligations under
this Plan and the Trust Agreement and shall not be responsible for any act or
failure to act of another fiduciary, except as may be provided otherwise in
ERISA.
10.2 COMMITTEE
The Plan shall be administered by a Committee appointed by the Board of
Directors. The members shall hold office at the pleasure of the Board of
Directors. Any member may resign by delivering his written resignation to the
Board of Directors. Vacancies in the Committee membership arising by
resignation, death, removal, or otherwise, shall be filled by the Board of
Directors. The Committee shall be a fiduciary under the Plan and under the
Trust Agreement, and a named fiduciary in accordance with ERISA.
10.3 RESPONSIBILITY AND AUTHORITY OF THE COMMITTEE
Unless otherwise specifically provided hereunder, the Committee shall have full
and complete authority, responsibility, and control over the management,
administration, and operation of the Plan, including, but not limited to, the
authority to-
(a) formulate, adopt, issue, and apply procedures and rules, necessary or
appropriate for the efficient administration of the Plan,
(b) construe and apply the provisions of the Plan,
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(c) make appropriate determinations relating to eligibility of Employees to
become and remain Participants under the Plan, and the amount of
Compensation upon which Contributions are to be made,
(d) authorize and direct payment of benefits,
(e) adopt and prescribe the use of necessary forms,
(f) prepare and file reports, notices, and any other documents relating to the
Plan which may be required by the Secretary of Labor or the Secretary of
the Treasury,
(g) prepare and distribute to Participants all communication materials required
by ERISA, and
(h) appoint such benefits consultants, legal counsel, auditors, and other
specialists, as the Committee considers appropriate to assist in the
administration of the Plan.
The Committee shall have the exclusive right and discretionary authority to make
any finding of fact necessary or appropriate for any purpose under the Plan
including, but not limited to, the final determination of the eligibility for
and the amount of any benefit payable under the Plan. The Committee shall have
the exclusive right and discretionary authority to interpret the terms and
provisions of the Plan and to determine any and all questions arising under the
Plan or in connection with the administration thereof, including, without
limitation, the right to remedy or resolve possible ambiguities,
inconsistencies, or omissions, by general rule or particular decision. All
findings of fact, determinations, interpretations, and decisions of the
Committee shall be conclusive and binding upon all persons having or claiming to
have any interest or right under the Plan and shall be given the maximum
possible deference allowed by law. If challenged in court, any decision of the
Committee shall not be subject to de novo review and shall not be overturned
unless proven to be arbitrary and capricious under the evidence considered at
the time of such decision.
10.4 RESPONSIBILITY AND AUTHORITY OF COMMITTEE PERTAINING TO THE TRUST FUND
The Committee shall have the following authority, responsibility, and control
over the management and operation of the Trust Fund:
(a) to appoint one or more investment managers to manage and direct the
investment of all or any portion of the Trust Fund in accordance with the
provisions of the Trust Agreement,
(b) to issue policy guidelines to the Trustee and other investment managers,
(c) to authorize and direct adequate liquidity to meet benefit and expense
payment requirements,
(d) to allot new funds to the Trustee and other investment managers,
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(e) to monitor cash transactions of the Trustee and other investment managers,
(f) to review valuations and earnings record of investment funds of the Trust
Fund,
(g) to prepare reports on investment funds of the Trust Fund for review by the
Board of Directors, and
(h) to recommend changes in the Trustee or investment policy.
10.5 DELEGATION OF RESPONSIBILITIES
The Committee may delegate such of its powers and duties as it deems desirable
to one or more individuals appointed by the Committee, in which case every
reference herein to the Committee shall be deemed to mean or include such
individual(s) as to matters within their jurisdiction. Such individual(s) may be
such officers or other Employees of the Employers and such other persons as the
Committee may appoint.
10.6 COMPENSATION AND EXPENSES
(a) A member of the Committee shall serve without compensation for services as
such if he is receiving full-time pay from the Employer as an Employee. Any
such member who is not such an Employee may receive compensation for
services, but paid by the Employer and not from the Trust Fund. Any such
member may receive reimbursement by the Employer of expenses properly and
actually incurred.
(b) All expenses incurred in the administration of the Plan shall be paid by
the Trustee from the Trust, unless the Company and/or other Employers elect
to pay any such expense. Such expenses shall include expenses and fees
incident to the functioning of the Committee, and fees of the Trustee,
accountants, counsel, consultants and other specialists providing services
for the Plan. Such expenses shall also include brokerage fees, commissions,
stock transfer taxes and other charges and expenses incurred in connection
with the purchase and sale of investments for the Trust.
10.7 RECORDS
All resolutions, proceedings, acts and determinations of the Committee shall be
recorded by the Committee or under its supervision, and all such records,
together with such documents and instruments as may be necessary for the
administration of the Plan, shall be preserved in the custody of the Committee.
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10.8 MANNER OF ACTION
A majority of the members of the Committee shall constitute a quorum for the
transaction of business. Actions taken by the Committee at any meeting at which
a quorum is present shall be by the vote of a majority of those present at any
such meeting. Action of the Committee may be taken without a meeting upon the
concurrence in writing of a majority of the members.
10.9 INFORMATION AND DATA FOR BENEFITS
All persons claiming benefits from the Plan must furnish to the Committee, such
documents, evidence, or information as the Committee considers necessary or
desirable for the purpose of administering the Plan; and each such person must
furnish such information promptly and sign such documents as the Committee may
reasonably require before any benefits become payable from the Plan.
10.10 FILING A CLAIM FOR BENEFITS
If a Member or Beneficiary 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 shall be made in writing and shall be signed by the
claimant. If the claimant does not furnish sufficient information to determine
the validity of the claim, the Committee shall indicate to the claimant any
additional information which is required.
10.11 APPEALS FROM DENIAL OF CLAIMS
If any claim for benefits under the Plan is wholly or partially denied, the
claimant shall be given notice in writing of such denial within 60 days setting
forth the following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which denial is based;
(c) a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary;
(d) an explanation that a full and fair review by the Committee of the decision
denying the claim may be requested by the claimant or his authorized
representative by filing with the Committee, within 60 days after such
notice has been received, a written request for such review; and
(e) if such request is so filed, the claimant or his authorized representative
may review pertinent documents and submit issues and comments in
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writing within the same 60-day period specified in subsection (d) above.
The decision of the Committee shall be made promptly, and not later than 60 days
after the Committee's receipt of the request for review, unless special
circumstances require an extension of time for processing, in which case the
claimant shall be so notified and a decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
The claimant shall be given a copy of the decision promptly. The decision shall
be in writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific references to
the pertinent Plan provisions on which the decision is based. The final decision
of the Committee shall be conclusive and binding on all having or claiming to
have an interest in the claim being reviewed and shall not be reversed by any
court unless the court shall find that the Committee's decision was arbitrary
and capricious.
10.12 INDEMNITY FOR LIABILITY
The Employer shall indemnify the members of the Committee, and each other
fiduciary who is an Employee of the Employer, against any and all claims,
losses, damages, expenses, including counsel fees, incurred by said fiduciaries
and any liability, including any amounts paid in settlement with approval of the
Employer and the fiduciary, arising from the fiduciary's action or failure to
act in connection with said fiduciary's responsibility under this Plan except
when the same is judicially determined to be attributable to the gross
negligence or willful misconduct of such fiduciary.
10.13 CONFLICTS
No member of the Committee shall participate in any determination by the
Committee of his rights or benefits under the Plan.
10.14 RELIANCE ON INFORMATION
The Committee may rely absolutely upon all information furnished by the
Employers or any Member, provided such information is received and accepted by
the Committee or its members in good faith as true and accurate. The Committee
may similarly rely on information furnished by anyone employed in good faith by
it, by the Employer, or by the Trustee, for the purpose for furnishing such
information.
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10.15 BENEFICIARY DESIGNATION
(a) Each unmarried Member may designate a Beneficiary or Beneficiaries under
the Plan. He may, from time to time during his lifetime, on a form approved
by and filed with the Committee, change his Beneficiary or Beneficiaries.
(b) The Beneficiary of each Member who is married shall automatically be the
surviving spouse of such Member, unless such spouse had consented in
writing to the designation of another Beneficiary or Beneficiaries. Each
married Member may, from time to time, change his designation of a
Beneficiary or Beneficiaries; provided, however, that the Member may not
change such designation without the written consent of his spouse. Any such
written consent must satisfy the requirements of Section 10.15(e).
(c) The Beneficiary or Beneficiaries of a Member shall receive the benefits
payable under the Plan in the event of the Member's death. All Beneficiary
designations, and the written consents provided for in Section 10.15(b),
shall be on such form or forms as may be prescribed by the Committee. No
Beneficiary designation shall be effective for any purpose until it has
been filed with the Committee during the lifetime of the Member. On each
Beneficiary designation, the Member shall name a primary Beneficiary or
Beneficiaries and may name a contingent Beneficiary or Beneficiaries.
(d) In the event that a Member fails to designate a Beneficiary or
Beneficiaries, or if for any reason such designation shall be legally
ineffective, or if all designated Beneficiaries predecease him or die
simultaneously with him, distribution shall be made to his estate.
(e) The written consent described in Section 10.15(b) shall not be effective
unless (i) the spouse has consented in writing to the designation of
another Beneficiary or Beneficiaries, (ii) such designation designates
another Beneficiary or Beneficiaries (or a form of benefits) which may not
be changed without written spousal consent (or the consent of the spouse
expressly permits designations by the Member without any requirement of
further consent by the spouse), and (iii) the spouse's consent acknowledges
the effect of such designation and is witnessed by a Plan representative or
a notary public. Such consent shall not be required if the Member
establishes to the satisfaction of the Committee that such consent may not
be obtained because there is no spouse, because the spouse cannot be
located or because of such other circumstances as the Secretary of the
Treasury may prescribe by regulation.
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10.16 INCOMPETENCY
Every person receiving or claiming benefits under the Plan shall be conclusively
presumed to be mentally competent until the date on which the Committee receives
a written notice, in a form and manner acceptable to it, that such person is
incompetent, for whom a guardian or other person legally vested with the care of
his estate has been appointed; provided, however, that if the Committee shall
find that any person to whom a benefit is payable under the Plan is unable to
care for his affairs because of any disability or infirmity, any payment due
(unless a prior claim therefor shall have been made by a duly appointed legal
representative of his estate) may be paid to the spouse, a child, a parent, or a
brother or sister. Any such payment so made shall be a complete discharge of any
liability therefor under the Plan. In the event a guardian of the estate of any
person receiving or claiming benefits under the Plan shall be appointed by a
court of competent jurisdiction, benefit payments may be made to such guardian
provided that proper proof of appointment and continuing qualification is
furnished in a form and manner acceptable to the Committee. Any such payment so
made shall be a complete discharge of any liability therefor under the Plan.
10.17 NO ENLARGEMENT OF EMPLOYEE RIGHTS
Nothing contained in this Plan shall give any Employee the right to be retained
in the service of an Employer or to interfere with the right of an Employer to
discipline, discharge or retire any Employee at any time.
10.18 APPLICABLE LAW
The Plan and all rights hereunder shall be governed by and construed according
to the laws of the State of Texas to the extent such laws have not been
preempted by applicable Federal laws.
10.19 INTERNAL REVENUE SERVICE APPROVAL
It is the intention of the Company to obtain a ruling or rulings by the District
Director of the Internal Revenue Service that the Plan, as in effect from time
to time, with respect to all Employers, meets the requirements of Code Section
401(a).
10.20 SEVERABILITY
If a provision of the Plan shall be held illegal or invalid, the illegality or
invalidity shall not affect the remaining parts of the Plan and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included in the Plan.
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10.21 EFFECTIVE DATES FOR CERTAIN PROVISIONS
(a) As a result of changes made by the Tax Reform Act of 1986, certain changes
to the Code relating to qualified plans and trusts have become effective as
to the Plan for its Plan Year beginning January 1, 1987. Since such
effective date precedes the effective date of this amended and restated
Plan, it is the intent that certain provisions in the Plan retroactively
applied as of January 1, 1987 to the prior Plan document. Accordingly, any
and all amendments reflected in the Plan as amended and restated effective
as of January 1, 1989 which relate to such changes as are required by the
Tax Reform Act of 1986 and other applicable changes to the Code, and which
would be required to be made under the Plan effective as of a date earlier
than January 1, 1989 shall be deemed to be amendments to the Plan which are
effective as required by the Tax Reform Act of 1986. Such amendments shall
include, without limitation, the provisions in Section 8.1 (relating to
Code section 415 limits) and Article XIII (relating to top-heavy
provisions) to be effective as of January 1, 1987. All such amendments
shall be administratively applied under the provisions of the Plan as if
the content thereof had been included in a separate amendment to the prior
Plan document.
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ARTICLE XI. TRUST FUND AND TRUSTEE
11.1 ESTABLISHMENT OF TRUST FUND
The Company has entered into a Trust Agreement with the Trustee in order to
implement and carry out the provisions of the Plan and to finance the benefits
provided for under the Plan. The Company may amend or modify the Trust Agreement
in accordance with the terms of the Trust Agreement from time to time to
accomplish the purposes of the Plan. Pursuant to the Trust Agreement, a Trust
Fund was created and is to be maintained to carry out the purposes of the Plan,
and the funds held as part of the Trust Fund are to be invested in accordance
with the terms of the Trust Agreement and, where applicable, the Plan. The
declaration of trust created under the Trust Agreement forms a part of the Plan.
The Employers shall make such Contributions to the Trust Fund as are required by
the provisions of the Plan, subject to the right of the Company to amend, modify
or terminate the Plan at any time, and all benefits under the Plan shall be paid
from the Trust Fund. All rights which may accrue to any Member, Beneficiary or
other person under the Plan shall be subject to all the terms and provisions of
the Plan and Trust Agreement.
11.2 TRUSTEE
The Trustee of the Trust Fund shall be the Trustee provided for under the Plan
and the Trust Agreement as in effect from time to time, or any trust instrument
substituted for such Trust Agreement. The Trustee's obligations, duties and
responsibilities shall be governed by the terms of the Trust Agreement, or such
other trust instrument as may be in effect, and, where applicable, by the terms
of the Plan.
11.3 RIGHTS IN THE TRUST FUND
Members or any other person eligible for or claiming benefits under the Plan
shall be entitled to look only to the Trust Fund for the payment of such
benefits and shall have no claim against any Employer, the Committee or any
other person. No person shall have any right or interest in the Trust Fund
except as expressly provided in the Plan. Except to the extent, if any, that
Section 410 of ERISA may otherwise require, in no event shall the Employers, or
any of their officers, directors, Employees, or the members of the Committee be
liable in their individual capacities to any person whomsoever, under the
provisions of the Plan or Trust Agreement.
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11.4 NONREVERSION; EXCLUSIVE BENEFIT
The Trust Fund shall be used and applied only in accordance with the provisions
of the Plan and Trust Agreement, to provide the benefits provided under the
Plan. No Employers shall have any right, title or interest in the assets of the
Trust Fund, and no part of the corpus or income of the Trust Fund shall be used
for, or diverted to, purposes other than for the exclusive benefit of Members
and their Beneficiaries and for the payment of the reasonable expenses of
administering the Plan and Trust, except that if Contributions are made to the
Trust Fund by an Employer by a mistake of fact, then such Contributions may be
returned to such Employer within one year after the payment of such
Contributions; and if any part or all of the Contributions are disallowed as a
deduction under Code section 404, then to the extent such Contributions are
disallowed as a deduction they may be returned to such Employer within one year
after the disallowance; provided, however, that any earnings attributable to
Contributions made by mistake of fact or disallowed as a deduction under Code
section 404 shall not be returned to the Employer, but losses attributable
thereto must reduce the amount returned.
11.5 NONALIENATION
Except as provided in Code section 401(a)(13), neither benefits payable at any
time under the Plan nor the corpus or income of the Trust Fund shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, attachment,
garnishment, or encumbrance of any kind. Any attempt to alienate, sell,
transfer, assign, pledge, or otherwise encumber any such benefit, whether
presently or thereafter payable, shall be void. No benefit nor the Trust Fund
shall in any manner be liable for or subject to the debts or liabilities of any
Member or of any other person entitled to any benefit. The Committee shall
establish procedures to determine whether domestic relations orders are
"qualified domestic relations orders" and to administer distributions under such
qualified domestic relations orders.
11.6 MERGER, CONSOLIDATION OR TRANSFER
In the case of any merger or consolidation of the Plan with, or in the case of
any transfer of assets or liabilities of the Plan to or from, any other plan,
each Member shall receive a benefit immediately after the merger, consolidation,
or transfer (if the Plan had then terminated) which is equal to or greater than
the benefit he would have been entitled to receive immediately before the
merger, consolidation, or transfer (if the Plan had then terminated).
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ARTICLE XII. AMENDMENT AND TERMINATION
12.1 AMENDMENT AND TERMINATION
(a) The Company does hereby expressly and specifically reserve the sole and
exclusive right at any time by action of the Board of Directors to amend,
modify, or terminate the Plan. The Company's right of amendment,
modification, or termination shall not be subject to the consent or
concurrence of any other Employer, the Trustee, any Member or any other
interested party, nor shall such right be subject to any action by any
other Employer notwithstanding that such action by the Company may relate
in whole or in part to persons in the employ of such Employer.
(b) While each Employer contemplates carrying out the provisions of the Plan
indefinitely with respect to its Employees, no Employer shall be under any
obligation or liability whatsoever to maintain the Plan for any minimum or
other period of time.
(c) Any action taken to amend, modify or terminate the Plan shall be evidenced
by a written instrument duly executed and/or certified by an officer of the
Company. Any such instrument evidencing an amendment to the Plan shall be
delivered by the Company to the Committee, the Trustee and each other
Employer.
(d) Upon any termination of the Plan in its entirety, or with respect to any
Employer, the Company shall give written notice thereof to the Committee,
the Trustee, and any Employer involved.
(e) Except as provided by law, upon any termination of the Plan, no Employer
with respect to whom the Plan is terminated (including the Company) shall
thereafter be under any obligation, liability, or responsibility whatsoever
to make any contribution or payment to the Trust Fund, the Plan, any Member
or any other person, trust or fund whatsoever, for any purpose whatsoever
under or in connection with the Plan.
(f) In the event the Plan is terminated, the Plan is partially terminated or
Contributions under the Plan are completely discontinued, the rights of all
Members (or in the case of a partial termination, the Members affected
thereby) to the amounts credited to their Accounts shall continue to be
fully vested and nonforfeitable.
12.2 LIMITATIONS ON AMENDMENTS
The provisions of this Article XII relating to amendments shall be subject to
and limited by the following restrictions:
(a) No amendment shall operate either directly or indirectly to give any
Employer any interest whatsoever in any funds or property held by the
Trustee under the terms of the Plan, or to permit the corpus or
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income of the Trust to be used for or diverted to purposes other than the
exclusive benefit of Members or the payment of the reasonable expenses of
administering the Plan.
(b) No such amendment shall operate either directly or indirectly to deprive
any Member of his vested and nonforfeitable interest as of the time of such
amendment.
(c) No amendment shall change the rights, duties or responsibilities of the
Trustee under the Plan without its written consent.
(d) Subject to the foregoing limits, the Committee shall have the authority to
amend the Plan (either retroactively or prospectively) as it deems
necessary or advisable with respect to the operation and administration of
the Plan that is within the scope of the responsibility and authority of
the Committee as established in Article X, including any modification or
amendments necessary to comply with any laws or regulations to qualify as a
tax-exempt Plan and Trust. The Committee shall not have the authority to
amend the principal design characteristics of the Plan, such authority
being exclusively reserved to the Board of Directors.
12.3 EFFECT OF BANKRUPTCY AND OTHER CONTINGENCIES AFFECTING AN EMPLOYER
In the event an Employer terminates its participation in the Plan, or in the
event an Employer is dissolved, liquidated, or shall by appropriate legal
proceedings be adjudged bankrupt, or in the event judicial proceedings of any
kind result in the involuntary dissolution of an Employer, participation in the
Plan shall be terminated with respect to such Employer. The merger,
consolidation, or reorganization of an Employer, or the sale by it of all or
substantially all of its assets, shall not terminate the Plan if there is
delivery to such Employer by the Employer's successor or by the purchaser of all
or substantially all of the Employer's assets, of a written instrument
requesting that the successor or purchaser be substituted for the Employer and
agreeing to perform all the provisions hereof which such Employer is required
to perform. Upon the receipt of said instrument, with the approval of the
Company, the successor or the purchaser shall be substituted for such Employer
under the Plan, and such Employer shall be relieved and released from any
obligations of any kind, character, or description herein or in any Trust
Agreement imposed upon it.
12.4 DISTRIBUTIONS ON PLAN TERMINATION
In the event of the termination of the Plan in its entirety, or with respect to
any Employer, the Company may prescribe, or instruct the Committee to
prescribe, a method for making distributions from the Plan following such
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termination; provided, however, that distribution of Before-Tax Contribution
Accounts shall only occur in accordance with the provisions of Code section
401(k)(10) relating to distributions upon termination of a Plan and applicable
Treasury regulations. Such method of distribution may provide for termination
distributions to be made as soon as practicable following such termination, and
may permit the Members to elect the form and method of their distributions. If
such termination distributions are not provided for, distributions and payments
shall be made to Members in accordance with the provisions of Article VII. In
any such case, the Committee shall instruct the Trustee as to the making of Plan
distributions following any such Plan termination.
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ARTICLE XIII. PARTICIPATION IN AND WITHDRAWAL FROM THE PLAN BY AN EMPLOYER
13.1 PARTICIPATION IN THE PLAN
Any Affiliate which desires to become a participating Employer under the Plan
may elect, with the consent of the Board of Directors, to become a party to the
Plan and Trust Fund by adopting the Plan for the benefit of its Eligible
Employees, effective as of the date specified in such adoption--
(a) By filing with the Company a certified copy of a resolution of its board of
directors (or equivalent governing authority) to that effect and such other
instruments as the Company may require; and
(b) By the Company's filing with the Committee and the Trustee a copy of such
resolution, together with a certified copy of resolutions of the Board of
Directors approving such adoption.
The adoption resolution or decision may contain such specific changes and
variations in Plan or Trust Agreement terms and provisions applicable to such
adopting Employer and its Employees as may be acceptable to the Company and the
Trustee. The adoption resolution or decision shall become, as to such adopting
organization and its employees, a part of this Plan as then amended or
thereafter amended and the related Trust Agreement. It shall not be necessary
for the adopting organization to sign or execute the original Plan and Trust
Agreement documents. The coverage date of the Plan for any such adopting
organization shall be that stated in the resolution or decision of adoption,
and from and after such effective date, such adopting organization shall assume
all the rights, obligations, and liabilities of an Employer hereunder and under
the Trust Agreement. The administrative powers and control of the Company, as
provided in the Plan and Trust Agreement, including the right to amend or
terminate the Plan and the Trust Agreement, the right to appoint and remove the
Committee members and the Trustee, shall not be diminished by reason of the
participation in the Plan of any adopting Employer.
13.2 WITHDRAWAL FROM THE PLAN
Any Employer, other than the Company, by action of its board of directors or
other governing body, may elect to withdraw from the Plan and Trust Agreement by
giving 90 days' advance written notice of its election to the Board of
Directors, unless the Board of Directors waives such advance notice or agrees to
a shorter advance notice period. Such Employer's election to withdraw from the
Plan and Trust Agreement shall be subject to the consent of the Board of
Directors. Distributions following such withdrawal may be implemented through
continuation of the Trust Fund,
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or transfer to another trust fund exempt from tax under Code section 501, or to
a group annuity contract qualified under Code section 401, or distributions may
be made as immediate distributions in accordance with the directions of the
Committee; provided, however, that no such action shall direct any part of the
Trust Fund relating to the Participants of such Employer to any purpose other
than the exclusive benefit of the Participants of such Employer, or the
surviving spouses or Beneficiaries of such Participants, prior to the
satisfaction of all benefit liabilities under the Plan with respect to the
Participants of such Employer.
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ARTICLE XIV. TOP-HEAVY PROVISIONS
14.1 APPLICATION OF TOP-HEAVY PROVISIONS
(a) SINGLE PLAN DETERMINATION. Except as provided in Section 14.1(b)(2), if as
of a Determination Date, the sum of the amount of the Section 416 Accounts
of Key Employees and the Beneficiaries of deceased Key Employees exceeds 60
percent of the amount of the Section 416 Accounts of all Members and
Beneficiaries (excluding former Key Employees), the Plan is top-heavy and
the provisions of this Article XIV shall become applicable.
(b) AGGREGATION GROUP DETERMINATION.
(1) If as of a Determination Date the Plan is part of an Aggregation Group
which is top-heavy, the provisions of this Article XIV shall become
applicable. Top-heaviness for the purpose of this Section 14.1(b)(1)
shall be determined with respect to the Aggregation Group in the same
manner as described in Section 14.1(a).
(2) If the Plan is top-heavy under Section 14.1(a), but the Aggregation
Group is not top-heavy, the Plan shall not be top-heavy and this
Article XIV shall not be applicable.
(c) COMMITTEE. The Committee shall have responsibility to make all calculations
to determine whether the Plan is top-heavy.
14.2 DEFINITIONS
(a) "AGGREGATION GROUP" means the Plan and all other plans maintained by the
Employers and Affiliates which cover a Key Employee and any other plan
which enables a plan covering a Key Employee to meet the requirements of
Code section 401(a)(4) or 410. In addition, at the election of the
Committee, the Aggregation Group may be expanded to include any other
qualified plan maintained by an Employer or Affiliate if such expanded
Aggregation Group meets the requirements of Code sections 401(a)(4) and
410.
(b) "DETERMINATION DATE" means the last day of the Plan Year immediately
preceding the Plan Year for which top-heaviness is to be determined or, in
the case of the first Plan Year of a new plan, the last day of such Plan
Year.
(c) "KEY EMPLOYEE" means a Member who for the Plan Year containing the
Determination Date or any of the four preceding Plan Years is--
(1) An officer of an Employer or Affiliate who has annual Compensation
greater than 50 percent of the amount in effect under Code section
415(b)(1)(A) for such Plan Year; provided, however, that no more than
the lesser of--
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(A) 50 Employees, or
(B) the greater of (i) three Employees or (ii) 10 percent of all
Employees,
shall be treated as officers, and such officers shall be those with
the highest annual Compensation in the five-year period;
(2) One of the ten Employees having annual Compensation from all Employers
and Affiliates for such Plan Year greater than the dollar limit
specified in Code section 415(c)(1)(A) and owning both more than a
one-half of 1 percent interest and the largest interests in an
Employer or Affiliate;
(3) A 5 percent owner of an Employer or Affiliate; or
(4) A 1 percent owner of an Employer or Affiliate having annual
Compensation of more than $150,000.
Ownership shall be determined in accordance with Code section 416(i)(1)(B)
and (C). For purposes of Section 14.2(c)(2), if two Employees have the same
ownership interest in an Employer or Affiliate, the Employee having the
greater annual Compensation from the Employers and Affiliates shall be
treated as having a larger interest.
(d) "SECTION 416 ACCOUNT" means
(1) The amount credited as of a Determination Date to a Member's or
Beneficiary's account, under the Plan and under any other qualified
defined contribution plan which is part of an Aggregation Group
(including amounts to be credited as of the Determination Date but
which have not yet been contributed);
(2) The present value of the accrued benefit credited to a Member or
Beneficiary under a qualified defined benefit plan which is part of an
Aggregation Group; and
(3) The amount of distributions to the Member or Beneficiary during the
five-year period ending on the Determination Date other than a
distribution which is a tax-free rollover contribution (or similar
transfer) that is not initiated by the Member or that is contributed
to a plan which is maintained by an Employer or Affiliate; reduced
by--
(4) The amount of rollover contributions (or similar transfers) and
earnings thereon credited as of a Determination Date under a plan
forming part of an Aggregation Group which is attributable to a
rollover contribution (or similar transfer) accepted after December
31, 1983, initiated by the Member and derived from a plan not
maintained by an Employer or Affiliate.
The account of a Member who was a Key Employee and who subsequently meets
none of the conditions of Section 14.2(c) for the
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Plan Year containing the Determination Date is not a Section 416 Account
and shall be excluded from all computations under this Article XIV.
Furthermore, if a Member has not performed any services for an Employer or
Affiliate during the five year period ending on the Determination Date, any
account of such Member (and any accrued benefit for such Member) shall not
be taken into account in computing top-heaviness under this Article XIV.
14.3 MINIMUM CONTRIBUTION
(a) GENERAL. If the Plan is determined to be top-heavy under the provisions of
Section 14.1 with respect to a Plan Year, the sum of employer contributions
(excluding contributions under a salary reduction agreement only for
non-Key Employees) and forfeitures under all qualified defined contribution
plans allocated to the accounts of each Member in the Aggregation Group who
is not a Key Employee (determined without regard to whether such Member
completed any minimum Period of Service or made Before-Tax Contributions
for such Plan Year) and is an Employee on the last day of the Plan Year
shall not be less than 3 percent of such Member's Compensation. This
Section 14.3 shall not be applicable with respect to a Member who is also
covered under a defined benefit plan maintained by an Employer or an
Affiliate which provides the benefit specified by Code section 416(c)(1).
(b) EXCEPTION. The contribution rate specified in Section 14.3(a) shall not
exceed the percentage at which employer contributions and forfeitures are
allocated under the plans of the Aggregation Group to the account of the
Key Employee for whom such percentage is the highest for the Plan Year. For
the purpose of this Section 14.3(b), the percentage for each Key Employee
shall be determined by dividing the employer contributions and forfeitures
for the Key Employee by the amount of his total Compensation for the year
(as determined under the provisions of Section 2.1(i)).
14.4 LIMIT ON ANNUAL ADDITIONS: COMBINED PLAN LIMIT
(a) GENERAL. If the Plan is determined to be top-heavy under Section 14.1,
Section 8.4 of the Plan shall be applied by substituting 1.0 for 1.25 in
applying the provisions of Code section 415(e)(2) and (e)(3). The
transitional rule of Code section 415(e)(6)(B)(i) shall be applied by
substituting "$41,500" for "$51,875."
(b) EXCEPTION. Section 14.4(a) shall not be applicable if--
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(1) Section 14.3 is applied by substituting "4 percent" for "3 percent,"
and
(2) the Plan would not be top-heavy if "90 percent" is substituted for
"60 percent" in Section 14.1.
(c) TRANSITIONAL RULE. If, but for this Section 14.4(c), Section 14.4(a) would
begin to apply with respect to the Plan, the application of Section 14.4(a)
shall be suspended with respect to a Member so long as there are--
(1) no employer contributions, forfeitures, or voluntary nondeductible
contributions allocated to such Member, and
(2) no accruals under a qualified defined benefit plan for such Member.
14.5 COLLECTIVE BARGAINING AGREEMENTS
The requirements of Section 14.3 shall not apply with respect to any Employee
included in a unit of Employees covered by a collective bargaining agreement
between Employee representatives and an Employer or Affiliate if retirement
benefits were the subject of good faith bargaining between such Employee
representatives and such Employer or Affiliate.
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IN WITNESS WHEREOF, the authorized officers of the Company have signed this
document and have affixed the corporate seal on , 1996, but effective as
of the 1st day of January, 1989.
FINA, Inc.
Attest:
By /s/ CULLEN M. GODFREY
----------------------------
Its
-------------------------
By
----------------------------------
Its (Corporate Seal)
-------------------------------
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FIRST AMENDMENT
to the
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
WHEREAS, FINA, Inc. ("Company") maintains the "FINA Capital Accumulation Plan,"
as amended and restated effective January 1, 1989 ("Plan");
WHEREAS, the Company desires to amend the Plan to allow after-tax contributions
up to 6 percent of compensation, to provide a match on all contributions (both
before-tax and after-tax) up to an aggregate amount of 6 percent of
compensation, and to make such other changes that it deems necessary or
desirable;
WHEREAS, Section 12.1 of the Plan provides that the Company may amend the Plan
from time to time;
NOW, THEREFORE, in accordance with the provisions of Section 12.1, the Plan is
hereby amended in the following respects:
1. Section 4.3 of the Plan is amended by deleting the reference to "5 percent
of pay" and adding in its place "6 percent of pay" so that the first
sentence of such section shall hereinafter read as follows:
"An Active Participant may elect to make After-Tax Contributions in any
whole percentage of not less than I percent and not more than 6 percent for
any pay period for which his election is in effect, and to have such
amounts deducted from his Compensation and contributed on his behalf by his
Employer as After-Tax Contributions under the Plan."
2. Section 4.4 of the Plan is amended to add a new subsection (d) to read in
its entirety as follows:
(d) MATCHING CONTRIBUTIONS AFTER 1995. After December 31, 1995, each
Employer shall contribute an amount equal to 100 percent of the sum of
Before-Tax Contributions and/or After-Tax Contributions contributed by
or on behalf of each Active Participant employed by such Employer;
provided, however, that no such Matching Contribution shall be made
for any pay period which is in excess of 6 percent of the Active
Participant's Compensation. If an Active Participant elects to make
both Before-Tax Contributions and After-
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Tax Contributions for any pay period, Matching Contributions shall be
allocated first to Before-Tax Contributions and, if such Before-Tax
Contributions are less than the 6 percent aggregate limit, next to
After-Tax Contributions.
3. Paragraph (c) of Section 7.5 of the Plan is amended, effective January 1,
1995, by deleting the last sentence thereof and adding the following
sentence in its place:
"Repaid distributions and restored forfeitures shall be invested in an
Investment Fund or Funds as designated by the Member."
4. Paragraph (c) of Section 7.6 of the Plan is amended by deleting the
parenthetical language "(except to the extent invested in Company Stock or
PSA Stock)" from the first sentence thereof and such sentence shall
hereinafter read as follows:
"All or any portion of the balance credited to the eligible Member's
Before-Tax Contributions Account or Rollover Contributions Account shall be
"Loan Assets" available for loans pursuant to this Section 7.6."
5. Except as otherwise provided herein, this First Amendment shall be
effective as of January 1, 1996.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its
duly authorized officers on this first day of May 1996.
FINA, INC.
By: /s/ CULLEN M. GODFREY
---------------------------------
Title: Senior Vice President,
Secretary and General Counsel
------------------------------
2
<PAGE> 69
SECOND AMENDMENT
to the
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
FINA, Inc., a Delaware corporation, pursuant to authorization of the Board
of Directors, adopts the following amendments to the FINA Capital Accumulation
Plan (the "Plan"):
1. Subsection (h) of Section 2.1 of the Plan ("Definitions" is amended in
its entirety to read as follows:
(h) "Company Stock" means common stock of the Company; PSA Stock; and/or
ADSs.
2. Subsection (x) of Section 2.1 of the Plan ("Definitions") is amended in
its entirety to read as follows:
(x) "PSA Stock" means the ordinary voting shares of PetroFina S.A., a
corporation organized under the laws of the Kingdom of Belgium.
3. Section 2.1 of the Plan ("Definitions") is amended by the addition of
the following new subsection:
(ee) "ADSs" means American Depositary Shares that represent the shares of
PSA Stock. Each ADS represents approximately one-tenth of one share of PSA
Stock.
4. The second and third sentences of Section 9.2 of the Plan ("Investment
Funds") are amended in their entirety to read as follows:
As of February 19, 1998, the following Investment funds are provided under
the Plan.
(a) Company Stock Fund;
(b) ADS Fund;
(c) Money Market Fund;
(d) Bond Index Fund;
(e) Balanced Fund;
(f) Stock Index Fund;
(g) Global Fund; and
(h) Growth Fund.
<PAGE> 70
In addition to or in lieu of the Investment Funds listed above, the
Committee may also from time to time designate other Investment Funds to be
available for the investment of funds credited to the Members' Accounts
(other than the Matching Contributions Account which, subject to the
provisions of Section 9.6, shall remain invested solely in Company Stock.
5. Subsection (c) of Section 9.1 of the Plan ("Investments") is amended
in its entirety to read as follows:
(c) INVESTMENT OF MATCHING CONTRIBUTIONS ACCOUNT. Matching Contributions
and all other funds credited to a Member's Matching Contributions
Account under the Plan shall be invested in Company Stock in accordance
with the applicable investment election of the Member then in effect,
as authorized and directed by the Committee.
6. Section 9.6 of the Plan is amended in its entirety to read as follows:
9.6 COMPANY STOCK, PSA STOCK AND ADSs
Company Stock may be purchased by the Trustee in the open market or from the
Company in accordance with the terms of the Trust Agreement. If Company
Stock is purchased from the Company on a day such stock is traded on the
open market, the price of such Company Stock shall be the closing price of
the Company Stock on the open market on such day. If the Company Stock is
not traded on the open market on the day of the purchase from the Company,
then the price of the Company Stock shall be the closing price of the
Company Stock on the open market on the nearest date next preceding the date
of the purchase.
From and after April 1, 1998, or such later date as the Committee determines
in its discretion, the Plan shall no longer invest in PSA Stock and instead
shall invest in ADSs, which shall be purchased by the Trustee on the open
market. In addition, the Committee shall cause the Trustee to sell the PSA
Stock held in the PSA Fund and purchase ADSs with the sale proceeds of the
PSA Stock, or to otherwise exchange the PSA Stock and receive in such
exchange ADSs with the same value as the PSA Stock surrendered therefor, all
in accordance with such rules and procedures as the Committee in its
discretion may establish, including without limitation rules and procedures
governing period of time in which such sale or exchange shall be
accomplished.
In the event that warrants, options or other securities convertible into or
exchangeable for Company Stock are distributed to holders of the Company
Stock, the Committee shall cause the Trustee to sell such securities as
promptly as possible, consistent with the Trustee's duty of prudence, and to
reinvest the proceeds of the sale of such securities in Company Stock, as
applicable.
2
<PAGE> 71
All stocks and securities shall be held by the Trustee in its name or that
of its nominee, and a Member shall not be deemed to have an interest in any
particular stock or security.
7. The foregoing amendments shall be effective as of February 19, 1998.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer this 19th day of February, 1998.
FINA, INC.
By /s/ CULLEN M. GODFREY
----------------------------------
Cullen M. Godfrey, Senior
Vice President, Secretary
and General Counsel
3
<PAGE> 72
THIRD AMENDMENT
to the
FINA CAPITAL ACCUMULATION PLAN
(Amended and Restated Effective as of January 1, 1989)
WHEREAS, FINA, Inc. ("Company") maintains the "FINA Capital Accumulation
Plan," as amended and restated effective January 1, 1989 ("Plan");
WHEREAS, the Company desires to amend the Plan to clarity the provisions of
Section 4.6(b) and conform to administrative practice;
WHEREAS, Section 12.1 of the Plan provides that the Company may amend the
Plan from time to time;
NOW, THEREFORE, in accordance with the provisions of Section 12.1, the Plan
is hereby amended in the following respects:
1. Subsection (b) of Section 4.6 of the Plan is amended by deleting the
second sentence thereof and adding "(in the percentages set forth in Section
4.3)" after "After-Tax Contributions" in the first sentence thereof, and such
subsection shall hereinafter read as follows:
(b) REDIRECTED CONTRIBUTIONS. In the event any Before-Tax
Contributions are suspended pursuant to Section 4.6(a), the Participant
shall be entitled to elect to make After-Tax Contributions (in the
percentages set forth in Section 4.3) in lieu of the suspended
Before-Tax Contributions. Any After-Tax Contributions made under this
Section 4.6(b) in lieu of suspended Before-Tax Contributions shall be
allocated to the Participant's After-Tax Contributions Account.
2. This Third Amendment shall be effective as of January 1, 1996.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer this 19th day of February, 1998.
FINA, Inc.
By /s/ CULLEN M. GODFREY
--------------------------------
Cullen M. Godfrey, Senior Vice
President, Secretary and
General Counsel
<PAGE> 1
EXHIBIT 10 i
================================================================================
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
EXHIBIT 11
FINA, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
FOR THE FIVE YEARS ENDING DECEMBER 31, 1996
(IN THOUSANDS)
FINA, INC. CONSOLIDATED
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net pre-tax earnings.................... $188,207 $228,262 $161,078 $152,357 $ 96,115
Fixed charges........................... 58,945 55,086 61,561 56,010 69,106
Adjustment for capitalized interest..... (7,764) (4,889) (7,873) (2,422) (3,234)
-------- -------- -------- -------- --------
Earnings as adjusted (A).............. $239,388 $278,459 $214,766 $205,945 $161,987
======== ======== ======== ======== ========
Fixed Charges:
Interest Expense:....................... $ 45,048 $ 43,137 $ 50,707 $ 47,023 $ 58,190
Rents under leases representative of an
interest factor (1)................... 13,897 11,949 10,854 8,987 10,916
-------- -------- -------- -------- --------
Fixed Charges as adjusted (B)........... $ 58,945 $ 55,086 $ 61,561 $ 56,010 $ 69,106
======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED
CHARGES:
(A) DIVIDED BY (B).......... 4.1 5.1 3.5 3.7 2.3
======== ======== ======== ======== ========
</TABLE>
FOCC CONSOLIDATED
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net pre-tax earnings.................... $176,434 $204,670 $152,824 $145,819 $100,147
Fixed charges........................... 57,911 54,980 61,420 55,863 68,747
Adjustment for capitalized interest..... (7,673) (4,852) (7,788) (2,371) (3,198)
-------- -------- -------- -------- --------
Earnings as adjusted (A).............. $226,672 $254,798 $206,456 $199,311 $165,696
======== ======== ======== ======== ========
Fixed Charges:
Interest Expense........................ 45,048 $ 43,134 $ 50,706 $ 47,021 $ 58,182
Rents under leases representative of an
interest factor(1).................... 12,863 11,846 10,714 8,842 10,565
-------- -------- -------- -------- --------
Fixed Charges as adjusted (B)......... $ 57,911 $ 54,980 $ 61,420 $ 55,863 $ 68,747
======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED
CHARGES:
(A) DIVIDED BY (B).......... 3.9 4.6 3.4 3.6 2.4
======== ======== ======== ======== ========
</TABLE>
- ---------------
(1) Management of the Company believes approximately one-third of rental and
lease expense is representative of the interest component of rent expense.
<PAGE> 1
FINA, INC.
FINA PLAZA
DALLAS, TEXAS 75206
NOTICE OF ANNUAL MEETING OF SECURITY HOLDERS
TO BE HELD APRIL 15, 1998
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 Hotel, 8250 North Central Expressway,
Dallas, Texas 75206, on the 15th day of April, 1998 at 4 o'clock in the
afternoon to consider and act upon the following matters:
1. To elect nine 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 transact such other business as may properly come before the
meeting.
The Board of Directors fixed the close of business on March 6, 1998 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 9, 1998
<PAGE> 2
FINA, INC.
FINA PLAZA
DALLAS, TEXAS 75206
PROXY STATEMENT
FOR
ANNUAL MEETING OF SECURITY HOLDERS
TO BE HELD APRIL 15, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of FINA, Inc. for use at the Annual Meeting of
Security Holders of the Company to be held on April 15, 1998. Discretionary
authority to vote unmarked Forms of Proxy is being solicited and unmarked
proxies will be voted FOR proposals in the discretion of the Proxy Committee.
Omnibus Proxies which are marked to abstain and non-votes by brokers are counted
for purposes of quorum only. 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 13, 1998.
On February 17, 1998, PetroFina and the Company announced that they entered
into a definitive agreement and plan of merger pursuant to which the Company
will become an indirect, wholly-owned subsidiary of PetroFina. Under the terms
of the agreement, current shareholders of the Company, other than PetroFina and
its subsidiaries will receive in exchange for each FINA, Inc. share they
currently hold $60 and a warrant entitling the holder to purchase nine-tenths
(0.9) of one PetroFina American Depositary Share ("ADS") at an exercise price of
$42.25 per ADS. Thus, each 10 warrants will entitle the holder of those
warrants, upon payment of $380.25, to receive nine ADSs. The warrants will be
exercisable for a period of five years from effective date of the merger.
PetroFina intends to seek listing of the warrants on the New York Stock
Exchange. The agreement was recommended by a Special Committee of the Board of
Directors of the Company and approved by the Company's Board of Directors.
Goldman, Sachs & Co. acted as financial adviser to the Special Committee. The
merger is subject to customary closing conditions. Security Holders of the
Company will be asked to approve the merger at a Special Meeting of Security
Holders later this year, and a separate proxy statement will be mailed to all
Security Holders prior to such Special Meeting. No vote on the merger is being
sought pursuant to this proxy solicitation, and no vote on the merger will take
place at the Annual Meeting of Security Holders.
At the close of business on March 6, 1998, the record date for the meeting,
the Company had outstanding and entitled to vote 29,231,972 shares of Class A
Common Stock and 2,000,000 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, 1998, are entitled to vote at the April 15, 1998
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 four directors.
<PAGE> 3
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 beneficial
owners of more than 5% of the outstanding Class A and Class B Common Stock of
the Company as of March 6, 1998:
<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 24,796,112 84.825%
Fina Plaza
Dallas, TX 75206
Boston Safe Deposit and Trust Company 1,637,930 5.603%
One Boston Place
Boston, Mass. 02108
Class B Common Stock....... Petrofina Delaware, Incorporated 2,000,000 100%
Fina Plaza
Dallas, TX 75206
</TABLE>
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 100% of Petrofina Delaware,
Incorporated. 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).
On March 6, 1998, Boston Safe Deposit and Trust Company, as Trustee for the
FINA Capital Accumulation Plan ("FINA Plan"), owned for the accounts of
participants in the FINA Plan an aggregate of 1,564,133 shares of Class A Common
Stock (representing more than 5% of this Class), and, as Trustee, has the right
to vote these shares and has investment power over these shares. This Trustee is
a subsidiary of Dreyfus Service Corporation which is affiliated with Mellon
Bank.
At the close of business on March 6, 1998, there were registered in the
name of "PetroFina B.D.R. Account" 773,678 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.
2
<PAGE> 4
Included in the table below is information relating to ownership of Class A
Common Stock of directors and officers at February 6, 1998:
<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 400 shares less than 1%
Class A Common Stock Ron W. Haddock 18,664 shares(1)(2) less than 1%
Class A Common Stock Paul D. Meek 410 shares less than 1%
Class A Common Stock H. Patrick Jack 3,398 shares(1) less than 1%
Class A Common Stock Neil A. Smoak 2,859 shares(1)(2) less than 1%
Class A Common Stock Michael J. Couch 3,586 shares(1)(2) less than 1%
Class A Common Stock Cullen M. Godfrey 3,457 shares(1)(2) less than 1%
Class A Common Stock All Directors and
Officers as a group 45,582 shares(2)(3) less than 1%
</TABLE>
- ---------------
(1) Included in this amount are the following shares relating to exercisable
stock options: 4,000 as to Mr. Haddock, 1,200 as to Mr. Jack, 2,000 as to
Mr. Smoak, 1,200 as to Mr. Couch and 1,000 as to Mr. Godfrey.
(2) Included in this amount are the following shares held on January 30, 1998,
by the Trustee of the FINA Capital Accumulation Plan, a 401(k) plan: 4,664
as to Mr. Haddock, 2,198 as to Mr. Jack, 59 as to Mr. Smoak, 2,386 as to
Mr. Couch, and 2,387 as to Mr. Godfrey. The Trustee holds 22,997 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 11,400 shares under currently vested exercisable
stock options.
Included in the table below is information relating to ownership of
PetroFina S.A. Common Stock as of January 30, 1998 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 1,771 shares less than 1%
PetroFina S.A. Common Stock Axel de Broqueville 2,086 shares less than 1%
PetroFina S.A. Common Stock Michel-Marc Delcommune 578 shares less than 1%
PetroFina S.A. Common Stock Ron W. Haddock 2,394 shares(1) less than 1%
PetroFina S.A. Common Stock Jose G. Rebelo 1,239 shares less than 1%
PetroFina S.A. Common Stock Neil A. Smoak 591 shares(1) less than 1%
PetroFina S.A. Common Stock H. Patrick Jack 107 shares(1) less than 1%
PetroFina S.A. Common Stock Michael J. Couch 282 shares(1) less than 1%
PetroFina S.A. Common Stock Cullen M. Godfrey 217 shares(1) less than 1%
PetroFina S.A. Common Stock All Directors and
Officers as a group 10,805 shares less than 1%
</TABLE>
- ---------------
(1) The Trustee of the FINA Capital Accumulation Plan held these shares on
Messrs. Haddock, Smoak, Jack, Couch and Godfrey's behalf as of December 31,
1997. In addition, Mr. Haddock owns 1,877 shares directly and Mr. Godfrey
owns 17 shares directly.
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. Unmarked Forms of Proxy will be voted FOR
proposals in the discretion of the Proxy Committee. 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.
3
<PAGE> 5
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 Ernesto Marcos, Albert V. Casey, Patricia M. Wallington and Ron
W. Haddock 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, 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, Michel-Marc Delcommune, Paul D. Meek and Jose G. Rebelo. 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 1997 LISTED BELOW
-------------------- --- -------------------------------- ------------
<S> <C> <C> <C>
Francois Cornelis............. 48 Chief Executive Officer and Vice- April 17, 1985
Chairman of PetroFina S.A.
Axel de Broqueville........... 54 Executive Director of PetroFina S.A. April 11, 1990
Michel-Marc Delcommune........ 49 Executive Director of PetroFina S.A. August 16, 1995
Ron W. Haddock................ 57 President and Chief Executive December 17, 1987
Officer of the Company
Ernesto Marcos................ 53 Consultant October 19, 1995
Paul D. Meek.................. 67 Chairman of the Board of the Company July 10, 1968
Albert V. Casey............... 78 Distinguished Executive in April 16, 1997
Residence -- Southern Methodist
University
Jose G. Rebelo................ 59 General Manager of PetroFina S.A. February 22, 1996
Patricia M. Wallington........ 59 Corporate Vice President and Chief April 20, 1995
Information Officer of Xerox
Corporation
</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.
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.
4
<PAGE> 6
Mr. 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. Delcommune has held his present position since May 1992. Prior to that
time, he was Senior Vice President and Chief Financial Officer of PetroFina S.A.
He directs the negotiation and consummation of many sophisticated financial
transactions worldwide.
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. 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.
Dr. Marcos is President of E. Marcos & Associates, A.C. since 1995. Prior
to that time, he was Chief Financial Officer of PEMEX from 1989 until 1994. He
advises clients in the energy industry as to many aspects of business in Mexico.
Mr. Casey is the Distinguished Executive in Residence at Southern Methodist
University, Cox School of Business in Dallas, Texas. Prior to that time, he was
President and Chief Executive Officer of Resolution Trust Corporation from
October 1991 to March 1993, and Chairman and Chief Executive Officer of AMR
Corp., the parent company of American Airlines from 1974 to 1985. He is a member
of the Boards of Directors of MAG Aerospace Industries and Arkansas General
Industries.
Mr. Rebelo has held his present position since 1992. Prior to that time, he
was Assistant General Manager of PetroFina S.A. He is currently the principal
executive officer of the exploration and production efforts of PetroFina S.A.
Ms. Wallington has been Corporate Vice President and Chief Information
Officer of Xerox Corporation since 1989. She currently has responsibility to
direct and manage Xerox Corporation's information systems.
MEETING AND DIRECTOR COMPENSATION INFORMATION
The Board of Directors in 1997 held five regular meetings and three consent
meetings. All directors other than Messrs. Cornelis, de Broqueville, Delcommune
and Rebelo 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 Francois 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 1997, Directors, other than Mr. Haddock, because he was
an active employee of the Company, received a retainer fee equalling $20,000 per
year.
The Board of Directors has an Audit Committee, which in 1997 consisted of
Patricia M. Wallington and Ernesto Marcos. The Committee met two times in 1996
to review with the Company's independent public accountants the Company's
accounting procedures and controls and the Company's audit.
The Board of Directors also has a Compensation Committee, which in 1997
consisted of Francois Cornelis and Patricia M. Wallington. The Committee held
two meetings in 1997 to review the Company's salaries, bonuses and benefits for
officers and other key employees.
5
<PAGE> 7
The Board of Directors appointed a Special Committee consisting of Ernesto
Marcos, Patricia M. Wallington and Albert V. Casey to study and negotiate a fair
merger valuation as to the proposed PetroFina S.A. merger described above. In
1997, there were ten meetings of the Special Committee.
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
employment with the Company. He served as a Commissioner of the Public Utility
Commission of Texas from November 1989 to April 1992.
Mr. Cullen M. Godfrey was elected Senior Vice President, Secretary and
General Counsel effective April 1995. Prior to that time, he was Vice President
of the Company since August 1990. He is also a Vice President of Petrofina
Delaware, Incorporated. He has managed the Company's Legal and Security
Department since August 1990, and he managed the Public Affairs Department from
July 1994 to May 1997.
Mr. M. J. Couch was elected as Senior Vice President in April 1995. He
served as Vice President from April 1984. His principal duties in fiscal 1995
were to manage the refining and marketing activities associated with the
Company's Southeastern Business Unit. He formerly served as Vice President since
April 1984 and as General Manager of Supply and Transportation and Manager of
Raw Materials since joining the Company in 1977.
Mr. H. Patrick Jack was elected Senior Vice President in April 1995. From
February 1985 Mr. Jack was General Manager of Chemicals Marketing until his
promotion to Vice President in August 1989. His principal duty is to manage the
chemicals business of the Company.
Mr. Neil A. Smoak was elected Senior Vice President in April 1995. Prior to
that time he was elected Vice President in April 1986 and also was the manager
of the Oklahoma City regional exploration and production office from 1983 until
1986. He resigned in March 1998. His principal duty in 1997 was to manage the
exploration and production activities of the Company.
Mr. Yves Bercy was elected Vice President and Chief Financial Officer
effective July 1993 and was additionally elected as Treasurer in April 1994. He
resigned in August 1997 to accept employment with PetroFina S.A. He was 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. Richard L. Charter II was elected Vice President effective April 1997.
Prior to that time he was manager of environmental affairs and health and safety
for the Company since 1988. His principal duty is to manage the environmental
affairs and safety of the Company.
6
<PAGE> 8
Mr. Michel Daumerie was elected Vice President effective April 1995. Prior
to that time, he was manager of technology for the Company since 1988. His
principal duty is to manage the laboratory research of the Company.
Mr. Richard C. Lindley was elected Vice President effective April 1995.
Prior to that time, he was general manager of the Company's natural gas
business. His principal duty is to manage the natural gas marketing business of
the Company.
Mr. Jeff D. Morris was elected Vice President effective April 1995. Prior
to that time, he was general manager of the Company's Big Spring, Texas,
Refinery. His principal duty is to manage the refining and marketing activities
associated with the Company's Southwestern Business Unit.
Mr. Geoffroy Petit was elected Vice President and Chief Financial Officer
in September 1997. He is also Vice President and a Director of Petrofina
Delaware, Incorporated. Prior to that time he was manager and a Director of
PetroFina International Group, a financial subsidiary of PetroFina S.A. for at
least the preceding five-year period. He is responsible for the financial
affairs of the Company.
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.
Mr. Kevin A. Rupp was elected Controller effective April 1995. Prior to
that time, he was Coordinator of Corporate Planning for the Company from 1992
and a Division Controller from October 1989. His principal duty is to direct the
accounting matters of the Company.
Ms. Hilda Kouvelis was elected Treasurer in February 1997. Prior to that
time, she was General Manager of the Company's treasury operations from 1995 and
Manager of General Accounting from 1993. Her principal duties are to direct the
debt and cash management of the Company.
Ms. Linda Middleton was elected Assistant Secretary in August 1984. Her
principal duty is to assist the Corporate Secretary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
No failure to file Reports with the Securities and Exchange Commission
occurred during the reporting period based on an examination of forms submitted
to the Registrant.
7
<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>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) FINA, INC. CL A INDUSTRY INDEX BROAD MARKET
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 119.83 120.13 118.81
1994 125.34 128.17 104.95
1995 195.28 165.44 135.28
1996 196.89 206.84 142.74
1997 273.93 253.21 171.76
</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., Chevron Corp., Atlantic Richfield Company, Mobil Corp. and
Phillips Petroleum Co. The base year of 1992 is held constant at 100 with all
dividends paid and market increases added each year. If a company paid no
dividends and had no change in market value since 1992, 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.
8
<PAGE> 10
EXECUTIVE COMPENSATION
The following tabulation sets forth the aggregate compensation paid or
accrued during the fiscal year ended December 31, 1997, 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
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK OPTIONS/ LTIP COMPEN-
NAME AND 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 1997 605,015 -- -- -- -- -- 43,065(3)
President and Chief 1996 582,317 285,000 -- -- -- -- 40,218
Executive Officer 1995 500,202 225,000 -- -- -- -- 36,155
Neil A. Smoak 1997 291,202 -- -- -- -- -- 19,777(4)
Senior Vice 1996 285,989 107,000 -- -- -- -- 19,219
President 1995 266,196 75,000 -- -- -- -- 17,610
H. Patrick Jack 1997 287,317 -- -- -- -- -- 18,475(5)
Senior Vice 1996 278,600 139,000 -- -- -- -- 17,110
President 1995 249,781 110,000 -- -- -- -- 15,801
Michael J. Couch 1997 263,669 -- -- -- -- -- 16,616(6)
Senior Vice 1996 246,320 74,000 7,600(7) -- -- -- 15,295
President 1995 217,004 76,000 -- -- -- -- 13,753
Cullen M. Godfrey 1997 231,844 -- -- -- -- -- 15,727(8)
Senior Vice President, 1996 224,660 74,000 -- -- -- -- 15,206
General Counsel 1995 210,576 60,000 -- -- -- -- 15,583
and Secretary
</TABLE>
- ---------------
(1) An incentive compensation program for fiscal 1997, which is a function of
the financial results of the Company and each line of business, is expected
to result in bonuses to executive officers. The payments are incalculable
at the time of publication of this document as the relative results of
other companies which are to be used in the payment calculation have not
been published. Any such payments are subject to adjustment based upon the
recommendation of the Compensation Committee. Payments pertaining to fiscal
1996 were made in May 1997 and are reported in this column.
(2) No options were awarded during the three-year period.
(3) Includes the following for fiscal 1997: $25,950 under the Company's
restoration plan, life insurance over $50,000 of $7,515 and the Company's
$9,600 matching contribution to the 401(k) plan. The value of the pension
restoration portion of the Restoration Plan is set forth herein in the
retirement table.
(4) Includes the following for fiscal 1997: $7,725 under the Company's
Restoration Plan, Reimbursement of $250 tax preparation fee, life insurance
over $50,000 of $2,202 and the Company's $9,600 matching contribution to
the 401(k) plan. The value of the pension restoration portion of the
Restoration Plan is set forth herein in the retirement table.
9
<PAGE> 11
(5) Includes the following for fiscal 1997: $7,560 under the Company's
Restoration Plan, life insurance over $50,000 of $1,315 and the Company's
$9,600 matching contribution to the 401(k) plan. The value of the pension
restoration portion of the Restoration Plan is set forth herein in the
retirement table.
(6) Includes the following for fiscal 1997: $5,850 under the Company's
Restoration Plan, life insurance over $50,000 of $1,166 and the Company's
$9,600 matching contribution to the 401(K) plan. The value of the pension
restoration portion of the Restoration Plan is set forth herein in the
retirement table.
(7) Gain on a nonqualified stock option of FINA, Inc. Class A Common calculated
as the spread between the option price and market price.
(8) Includes the following for fiscal 1997: $4,185 under the Company's
Restoration Plan, reimbursement of $250 tax preparation fee, life insurance
over $50,000 of $1,692 and the Company's $9,600 matching contribution to
the 401(K) plan. The value of the pension restoration portion of the
Restoration Plan is set forth herein in the retirement table.
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 1997. Compensation used to determine benefits
under the Pension Plan for employees is a formula based 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. Payments made under the incentive program will not
be includable in pension calculations.
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 Restoration Plan. Under this arrangement, the supplemental benefit
which would have been owed by the Company in fiscal 1997 was $198,333 subject to
offsets described above which are currently undeterminable.
In 1997 the Company provided certain employees with automobiles and club
memberships for use in the Company's business. Currently, no directors and only
one officer, Mr. Daumerie, are furnished automobiles. One officer, Mr. Petit, is
provided a furnished home. 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, Smoak, Lindley, Morris, West and Rupp in 1997 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.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is appointed by the Board of Directors in April
of each year. During 1997, there were two members of the Committee. Patricia M.
Wallington, an outside director, was Chairman of the Committee and served in
this capacity since February 1996. The additional member was Francois Cornelis,
an
10
<PAGE> 12
executive of PetroFina S.A. and former employee of the Company. 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.
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 1997, the Company's compensation program consisted of: (i) base
salary, (ii) incentive compensation participation as to executive officers,
(iii) matching contributions under the FINA Capital Accumulation Plan, a 401(k)
plan, (the "FINA Plan"), and (iv) accruals 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. However, the Standard Industry
Classification code companies used in the performance graph on page 7 include a
broader range in asset/revenue size than the PIECC companies. There are 31 PIECC
companies including: Anadarko Petroleum, Enron Oil & Gas, Kerr McGee, Maxus
Energy, Meridian Oil, Oryx Energy, Sonat Exploration, Tesoro Petroleum, and
Valero Energy. The Compensation Committee, receives a memorandum from the
President and Chief Executive Officer as to salary recommendations for the Vice
Presidents 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
incentive compensation payments, if any, 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 performance
and level and scope of responsibility. Executive Officers of the Company
received increases in base salary in fiscal 1997 that ranged from 3.0% to 16.8%
compared with a range of 2.5% to 19.2% in 1996. The financial performance of the
Company improved over the previous year. Base salaries for the Company's
Executive Officers, including the named Executive Officers, are generally at or
below the average of the surveyed data.
Deferred Compensation -- In fiscal 1997, FINA had no executive deferred
compensation plan other than (i) the FINA Plan, a 401(k) qualified plan provided
to all eligible employees, as defined in the plan document; (ii) the Pension
Plan, a defined benefit plan more fully described herein; and (iii) a
Restoration Plan which restores Pension Plan and FINA Plan benefits to
executives and employees reaching the maximum participation levels permitted by
law. 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.
11
<PAGE> 13
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 in addition to utilizing
the PIECC survey used for other executives. Mr. Haddock received a 5.3% increase
in 1997 compared to a 12.4% increase in 1996. No bonus has yet occurred for
fiscal 1997 and he is not entitled to any long-term incentive payment for the
period other than contributions and accruals under the FINA Plan and the
Restoration Plan described herein. Mr. Haddock received a cash bonus of $285,000
in 1997 which was a function of the size of the Company's incentive compensation
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. Recognizing the Company's financial
performance in 1997, it is expected that Mr. Haddock will be awarded an
incentive bonus which will be paid at the same time as the distributions to
other executive officers pursuant to the Company's incentive compensation
program discussed below. The Compensation Committee reserves the right to
determine the final payment recommendation for Mr. Haddock.
Options and Incentive Payment Program
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.
The price and number of shares were adjusted to $35.25 per share to reflect a
2-for-1 stock split in May 1995. At the date of this report an approximate $25
per share gain has occurred, as adjusted for the stock split.
An incentive compensation program covering all exempt employees, including
executive officers, will provide bonuses based on a formula which includes the
overall financial performance of the Company during 1997, the relative
performance of the Company in comparison to the performance of ten other
companies, the financial performance of the separate lines of business, the
relative performance to ten other companies in the same line-of-business and an
individual performance assessment. Because relative performance of the Company
and each line of business can not be measured until other comparable companies
have announced earnings, the payment amount is incalculable.
To calculate the incentive payments, an executive officer's individual
performance assessment and the competitive total cash compensation target for
his individual position must be established. The resulting dollar amount for an
incentive target is then determined. That dollar amount is then multiplied by a
factor which is weighted 75% on overall corporate performance and 25% on
line-of-business performance. Overall corporate performance will be based on (i)
return on capital employed compared to ten companies: Amerada Hess Corp.,
Ashland Oil Inc., Coastal Corp., Kerr McGee Corp., Murphy Oil Corp., Occidental
Petroleum Corp., Phillips Petroleum Co., Sun Co Inc., Unocal Corp. and
USX-Marathon and; (ii) corporate financial performance above an annually
established minimum return on capital employed. The line-of-business performance
is based on (i) a target tied to that line-of-business' return on capital
employed and cost of capital, and; (ii) that line-of-business' return on assets
compared to ten companies in similar lines of business. While the Compensation
Committee reserves the right to determine the final incentive payment for each
executive officer, the amount determined under the incentive compensation
program will be a key factor considered by the Compensation Committee when
recommending final payments.
12
<PAGE> 14
Summary
The Compensation Committee believes that the combination of base salary
paid in 1997 and incentive awards to be paid for 1997 based upon individual and
corporate performance provides a program which attracts and retains key
executives. Incentive awards to be paid for 1997 are directly related to the
financial performance of the Company; i.e., net earnings and performance
rankings to other companies. The actual performance of the Company for fiscal
1997 was $126 million. Earnings per common share were $4.05. The performance of
the Company for fiscal 1996 was a net of $153 million and earnings per common
share were $4.91.
This Report has been submitted by the Compensation Committee: Francois
Cornelis and Patricia Wallington.
Other Benefit Related Matters
Inapplicability of the $1 Million Deduction Limit. 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. In 1997, there were no
transactions with management or others which are required to be disclosed.
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. 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. PetroFina S.A. has proposed a merger transaction in which the
Company would become an indirect, wholly-owned affiliate of PetroFina S.A. and
the Company has approved the proposal.
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 1997.
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 or her
65th birthday. Married participants normally elect a joint and survivor annuity
as the method of receipt for benefits. Unmarried participants and those with
spousal consent may elect a benefit payable for their lifetime only or a reduced
benefit may be shared with an eligible beneficiary.
13
<PAGE> 15
The following table shows annual retirement benefits under the Pension Plan
for participants retiring at age 65 in 1998 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, 1997,
as shown:
Retiring at age 65 in 1998. Highest 36 consecutive monthly
compensation during the previous ten years ending December 31, 1997. Social
Security tax base through December 31, 1997.
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>
Final Average
Compensation 15 20 25 30 35
$50,000 $8,976 $11,968 $14,960 $17,951 $21,321
$75,000 $14,939 $19,919 $24,899 $29,878 $35,261
$100,000 $21,127 $28,169 $35,211 $42,253 $49,698
$150,000 $33,502 $44,669 $55,836 $67,003 $78,573
$200,000** $45,877 $61,169 $76,461 $91,753 $107,448
$250,000** $58,252 $77,669 $97,086 $116,503 $136,323*
$300,000** $70,627 $94,169 $117,711 $141,253* $165,198*
$350,000** $83,002 $110,669 $138,336* $166,003* $194,073*
$400,000** $95,377 $127,169* $158,961* $190,753* $222,948*
$450,000** $107,752 $143,669* $179,586* $215,503* $251,823*
$500,000** $120,127* $160,169* $200,211* $240,253* $280,698*
$550,000** $132,502* $176,669* $220,836* $265,003* $309,573*
$600,000** $144,877* $193,169* $241,461* $289,753* $338,448*
$650,000** $157,252* $209,669* $262,086* $314,503* $367,323*
$700,000** $169,627* $226,169* $282,711* $339,253* $396,198*
$750,000** $182,002* $242,669* $303,336* $364,003* $425,073*
$800,000** $198,000* $264,000* $330,000* $396,000* $462,000*
$850,000** $210,375* $280,500* $350,625* $420,750* $490,875*
$900,000** $222,750* $297,000* $371,250* $445,500* $519,750*
$1,000,000** $247,500* $330,000* $412,500* $495,000* $577,500*
</TABLE>
- ---------------
* The maximum benefit limitation established by IRC Section 415(b) is $120,000.
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 all highly compensated employees whose pension benefit exceeds the
IRC 415(b) limits.
** The covered compensation limit established by IRC Section 401(a)(17) is
$160,000. 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 other employee and was
implemented to benefit all employees whose compensation exceeds the
401(a)(17) limits.
The remuneration covered by the Pension Plan is composed of all salaries
and bonuses through 1996.
Messrs. Haddock, Jack, Smoak, Couch and Godfrey are vested under the
Pension Plan with service credits of 11.5, 11.8, 13.0, 20.9, and 15.3 years,
respectively.
14
<PAGE> 16
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 $160,000 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.
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 1997, $344,419 was credited to officers' and employees' accounts
compared to $191,895 in 1996.
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, the Brandywine
Fund or a global fund named New Perspective Fund.
15
<PAGE> 17
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 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 $47.125 per share which was fully exercised in 1992. All
shares subject to the 1979 Plan are shares of the Company's Class A Common
Stock.
The 1979 Plan was amended in April 1984 at the Annual Meeting of Security
Holders to (i) allow stock to be traded for its cash equivalent for option
stock, (ii) allow the Board of Directors to issue Incentive Stock Options, and
(iii) impose a two-year holding period on stock issued pursuant to an Incentive
Stock Option.
No grants were made in 1997 as the 1979 Plan has expired, and no grant
table is presented.
The aggregated option exercises and year-end values of options held by the
CEO and the other four most highly compensated executives follows in tabulation
form:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS
AT FISCAL YEAR-END
SHARES (#) VALUE OF UNEXERCISED
ACQUIRED -------------------- IN-THE-MONEY OPTIONS
ON VALUE AT FISCAL YEAR-END ($)
EXERCISE REALIZED EXERCISABLE/ -------------------------
(#) ($) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME(A) (B) (C) (D) (E)(1)
------- -------- -------- -------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Ron W. Haddock................ -- -- 4,000 4,000/0 $100,000
Neil A. Smoak................. -- -- 2,000 2,000/0 50,000
H. Patrick Jack............... -- -- 1,200 1,200/0 30,000
Michael J. Couch.............. -- -- 1,200 1,200/0 30,000
Cullen M. Godfrey............. -- -- 1,000 1,000/0 25,000
</TABLE>
- ---------------
(1) The options were granted at $70.50 per share (and later adjusted to $35.25
per share for a 2-for-1 stock split).
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
1997 there were three 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.
16
<PAGE> 18
The increase in net value during 1997 of the unvested Rights for all
Participants as a group was $40,810 (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.
SCHEDULE OF PAYMENTS
PHANTOM SHARE PLAN
(BASED ON RETIRED PARTICIPANTS ENTITLED TO RECEIVE CASH AS OF DECEMBER 31, 1997)
<TABLE>
<S> <C>
1997............................................... $ 7,966
1998............................................... 7,966
1999............................................... -0-
2000............................................... -0-
2001............................................... -0-
</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.
TRANSACTIONS WITH SECURITY HOLDERS
The Company has a 50% interest in joint ventures with Petrofina Delaware,
Incorporated in Texas and with PetroFina, S.A. in Hong Kong which market
chemicals in international trade. The Company sold chemicals aggregating
$3,030,000 in 1997, $8,728,000 in 1996 and $3,652,000 in 1995 to the joint
ventures.
Accounts receivable include $5,344,000 and $6,418,000 at December 31, 1997
and 1996, respectively, from affiliates.
Accounts payable include $6,923,000 and $34,127,000 at December 31, 1997
and 1996, respectively, to affiliates.
Interest expense relating to borrowings from Petrofina Delaware,
Incorporated was $3,000 in 1997, $5,125,000 in 1996 and $12,938,000 in 1995.
Crude oil and natural gas aggregating $11,508,000 in 1997, $13,245,000 in 1996
and $8,953,000 in 1995 were purchased from Petrofina Delaware, Incorporated in
the ordinary course of business.
Refined products and chemicals aggregating $19,625,000 in 1997, $57,913,000
in 1996 and $53,542,000 in 1995 were purchased from PetroFina S.A. and its
affiliates other than Petrofina Delaware, Incorporated in the ordinary course of
business.
17
<PAGE> 19
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 1999 Annual Meeting of Security Holders, if such were to
be held, it must be received by the Company on or before November 13, 1998. 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.
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
1997.
FINA, INC.
CULLEN M. GODFREY
Secretary
Dated: March 9, 1998
18
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
(Companies in which FINA, Inc. owns 50% or more at 12-31-97)
<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)
Archon Shipping, Inc. Delaware 100%
Cosden, Inc. Louisiana 100%
Cos-Mar, Incorporated Louisiana 50%
Cos-Mar Company (Joint Venture) 50%
Fina Energy Services Company Delaware 100%
Fina LaTerre, Inc. Delaware 100%
Fina Mexicana, S.A. de C.V. Mexico 99%
Fina Natural Gas Company Delaware 100%
Fina Oil and Chemical Company Delaware 100%
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 Hong Kong (Joint Venture) 50%
Finachem Sales Corporation Barbados 50%
Finachem, U. S. (Partnership) 50%
FinaMark, Inc. Delaware 100%
FinaServe, Inc. Texas 100%
Fin-Tex 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 Coatings, Inc. Delaware 100%
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
FINA, Inc.:
We consent to incorporation by reference in the registration statements
listed below of FINA, Inc. and Fina Oil and Chemical Company of our report dated
January 26, 1998, except as to the third paragraph of note 1(a) which is as of
February 17, 1998, relating to the consolidated balance sheets of FINA, Inc. and
subsidiaries as of December 31, 1997 and 1996 and the related consolidated
statements of earnings, stockholders' equity and cash flows and related schedule
for each of the years in the three-year period ended December 31, 1997, which
report appears in the December 31, 1997 annual report on Form 10-K of FINA, Inc.
Registration Statements on Form S-8 of FINA, Inc.:
- Amdel Inc. Employee Investment Plan, Registration No. 2-49321
- American Petrofina, Incorporated Employee Non-Qualified Stock Option Plan
(1979), Registration No. 2-68232
- Thrift and Employee Stock Ownership Plan for Employees of American
Petrofina, Incorporated, Registration No. 2-89230
Registration Statement on Form S-3 of Fina Oil and Chemical Company
Registration No. 333-06903.
Our report refers to a change in the method of accounting for the
impairment of long-lived assets in 1995.
KPMG Peat Marwick LLP
Dallas, Texas
March 12, 1998
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,271
<SECURITIES> 0
<RECEIVABLES> 581,724
<ALLOWANCES> 0
<INVENTORY> 345,235
<CURRENT-ASSETS> 975,962
<PP&E> 3,483,066
<DEPRECIATION> (1,633,688)
<TOTAL-ASSETS> 3,014,674
<CURRENT-LIABILITIES> 826,947
<BONDS> 594,988
0
0
<COMMON> 15,611
<OTHER-SE> 1,261,501
<TOTAL-LIABILITY-AND-EQUITY> 3,014,674
<SALES> 4,462,477
<TOTAL-REVENUES> 4,468,547
<CGS> 3,476,924
<TOTAL-COSTS> 378,766
<OTHER-EXPENSES> 387,366
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,284
<INCOME-PRETAX> 188,207
<INCOME-TAX> 61,806
<INCOME-CONTINUING> 126,401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,401
<EPS-PRIMARY> 4.05
<EPS-DILUTED> 4.05
</TABLE>
