UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[*] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period
from_____________________________to__________________________
Commission file number 1-7910
TOSCO CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 95-1865716
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
72 Cummings Point Road,
Stamford, Connecticut 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203)
977-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Stock, $.75 par value New York Stock Exchange
Pacific Stock Exchange
$4.375 Series F Cumulative Convertible New York Stock Exchange
Preferred Stock, $1.00 par value
9% Series A First Mortgage
Bonds due March 15, 1997 New York Stock Exchange
9 5/8% Series B First Mortgage
Bonds due March 15, 2002 New York Stock Exchange
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 No
The aggregate market value of the voting stock held by
non-affiliates of the registrant on February 28, 1994 based on
the closing price at which such stock was sold on the New York
Stock Exchange on such date was $1,080,780,919.
Registrant's Common Stock outstanding at February 28, 1994
was
32,262,117 shares.
Portions of registrant's definitive Proxy Statement relating
to its 1994 Annual Meeting of Shareholders are incorporated by
reference into Part III, as set forth herein.
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 or any amendment to this
Form 10-K. [ ]
TOSCO CORPORATION
INDEX TO ANNUAL REPORT ON FORM 10-K
Items 1 and 2. Business and Properties 1
Introduction 1
Petroleum Refining, Supply,
Distribution, and Marketing 1
Other Activities 5
Office Properties 6
Employees 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters
to a Vote of Security Holders 7
Item 5. Market for Registrant's
Common Equity and Related
Stockholder Matters 9
Item 6. Selected Financial Data 9
Item 7. Management's Discussion
and Analysis of Financial
Condition and Results of Operations 11
Item 8. Financial Statements and
Supplementary Data 15
Item 9. Changes in and Disagreements
with Accountants on
Accounting and Financial Disclosure 16
Item 10. Directors and Executive Officers
of the Registrant 16
Item 11. Executive Compensation 16
Item 12. Security Ownership of
Certain Beneficial Owners
and Management 16
Item 13. Certain Relationships and
Related Transactions 16
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K 17
Index to Consolidatedidated Financial Statements
and Financial Statement Schedules.. F-1
PART I
Items 1 and 2. Business and Properties
INTRODUCTION
Tosco Corporation ("Tosco"), through divisions and
subsidiaries, is a large independent refiner, wholesaler, and
retail marketer of petroleum products, principally on the East
and West Coasts of the United States. Tosco has extensive
distribution facilities and also engages in related commercial
activities throughout the United States and internationally.
During 1993, Tosco considerably expanded and focused its
efforts on its core businesses with the acquisition of the
Bayway Refinery from Exxon Corporation and the acquisition of
British Petroleum's petroleum refining and retail marketing
assets in the Pacific Northwest. Tosco broadened its
involvement in petroleum marketing with the purchase of an
extensive retail gasoline marketing system with the exclusive
right to market under the BP
(British Petroleum) brand in Washington and Oregon. Tosco also
exited the phosphate fertilizer business with the sale by its
subsidiary, Seminole Fertilizer Corporation, of the bulk of its
operating assets in 1993.
Tosco also has interests in oil shale properties in Colorado
and Utah.
Tosco was incorporated under the laws of the State of
Nevada
in 1955. Its principal executive offices are located at 72
Cummings Point Road, Stamford, Connecticut 06902 and its
telephone number is (203) 977-1000.
PETROLEUM REFINING, SUPPLY, DISTRIBUTION, AND MARKETING
Refining
Tosco, through three major facilities, currently processes
approximately 500,000 barrels per day of crude oil and other
feedstocks into various petroleum products, consisting chiefly
of
light transportation fuels (gasoline, diesel and jet fuel) and
heating oil.
Tosco Refining Company ("Tosco Refining"), a division
of Tosco, owns and operates the Avon Refinery, located in the
San
Francisco Bay Area. The Avon Refinery, the largest
independently
owned refinery on the West Coast of the United States, is
technologically
complex, with coking, catalytic cracking, hydrocracking and
hydrodesulfurizing units to accommodate comparatively lower
gravity, higher sulfur crude oils. It is capable of processing
a
broad range of crude oils and other feedstocks into a high
percentage of light refined petroleum products, consisting
chiefly of transportation fuels.
Bayway Refining Company ("BRC"), a subsidiary of Tosco,
owns and operates the Bayway Refinery ("Bayway") located in
Linden, New Jersey, which it acquired from Exxon Corporation in
April, 1993.
Bayway is the largest refinery (as measured by distillation
capacity) on the U.S. East Coast and can process approximately
250,000 barrels per day of crude oil and other feedstocks. Its
facilities include hydrodesulfurization units and the largest
fluid
catalytic cracking unit in the world. In addition to producing
transportation fuels, Bayway is a principal supplier of heating
oil
to the U. S. East Coast. It is strategically located on the New
York Harbor in a large market area, with ready access to marine,
rail, and truck transportation and product distribution
pipelines,
giving it considerable flexibility to change its raw material
input and product output to respond to changing market
conditions.
Tosco Northwest Company ("Tosco NW"), a division of Tosco,
owns and operates the Ferndale Refinery ("Ferndale"), located on
Puget Sound, 100 miles north of Seattle. It has crude oil
distillation
capacity of approximately 85,000 barrels per day and is equipped
with thermal catalytic cracking and hydrodearomatization units,
as well as modern marine facilities. The refinery, together
with
an extensive retail gasoline marketing and distribution system
(the "Pacific Northwest Assets") was acquired from BP
Exploration
& Oil Inc. on December 28, 1993.
The table below sets forth quantities of crude oil, and
additional refinery feeds and blending stocks processed and
refined products manufactured at the Avon Refinery during 1993,
1992 and 1991 and Bayway during the period April 8 to December
31, 1993. A barrel is 42 gallons.
<TABLE>
<CAPTION>
Average Barrels Per Calendar Day<F1>
Avon Bayway
Refinery Refinery<F2> Consolidated
1993 1992 1991 1993 1993
<S> <C> <C> <C> <C> <C>
Crude oil refined 158,160 145,250 132,840 196,150 354,310
Additional refinery feed
and blending
Stocks 8,150 7,260 7,140 63,100 71,250
Total Input. 166,310 152,510 139,980 259,250 425,560
Petroleum products produced:
Gasoline 98,640 92,230 80,200 130,140 228,780
Diesel 38,970 33,920 26,860 76,820 115,790
Jet fuel. 420 3,490 7,020 7,020
Residual 11,820 12,450 11,000 29,800 41,620
Petroleum coke
(fuel oil equivalents) 7,370 6,720 5,910 7,370
Propane 4,260 4,360 3,650 10,910 15,170
Other 3,050 1,030 6,040 9,800 12,850
Total petroleum
products produced 164,110 151,130 37,150 264,490 428,600
Purchased products. 48,320 59,100 42,840 70,290 118,610
Total petroleum
products available
for sale 212,430 210,230 179,990 334,780 547,210
Total Petroleum
products sold 206,540 209,960 178,060 324,940 531,480
<FN>
<F1> Operations of the Ferndale Refinery, which was acquired on
December 28, 1993,
were not material to the results for 1993 and are not included.
<F2> Operations of the Bayway Refinery for the period April 8,
1993 (date acquired)
to December 31, 1993.
</TABLE>
Crude Oil Supply
During 1993, Tosco's crude oil and feedstock requirement
was approximately 425,000 barrels per day following the
acquisition of Bayway. A substantial portion was supplied by
third parties from
domestic sources, primarily California and Alaska. An average
of
approximately 142,000 barrels per day were purchased under term
contracts with Atlantic Richfield Co. ("ARCO"), Texaco Trading
and Transportation Inc. ("Texaco Trading"), Chevron USA, Exxon
Corporation
and Santa Fe Energy Products, a portion of which was resold.
Approximately 67,000 barrels per day of foreign, waterborne
crude
was obtained under contracts with Statoil (Norway) and
PetroEcuador. The balance of Tosco's crude oil requirement
during 1993 (approximately 145,000 barrels per day) was
purchased
on the spot market, where Tosco
purchased a total of approximately 188,000 barrels per day
(including 168,000 barrels per day from foreign sources) and
subsequently resold approximately 23% thereof.
In October 1986, Tosco entered into an agreement (the "ARCO
Exchange Agreement") with ARCO, under which ARCO delivers
an average of 50,000 barrels per day of crude oil to the Avon
Refinery in exchange for a variable quantity of gasoline based
upon the prices of certain crude
oils. The ARCO Exchange Agreement has a ten-year initial term,
with two five-year renewal options exercisable by ARCO. Under
the ARCO Exchange Agreement, Tosco has agreed that in the event
it desires to sell the Avon Refinery, Tosco will first offer it
for sale to ARCO.
If ARCO declines, Tosco will be free for a certain period of
time
to sell the Avon Refinery for consideration no less favorable
to
Tosco than was initially offered to ARCO, subject to the effect
of possible continuing Tosco obligations of exchange under the
ARCO Exchange Agreement. In addition, in any such subsequent
sale ARCO has the right
to participate in the bidding and to acquire the Avon Refinery
if
it is the high bidder. In the event conditions change to the
extent that one of the parties has sustained significant losses
for a substantial period of time, or structural changes make
substantial losses likely,
the ARCO Exchange Agreement is subject to renegotiation and
possible termination. Such possible termination could be
material to Tosco, depending on market conditions at the time.
In June 1986, Tosco and Texaco Refining & Marketing, Inc.
("Texaco") entered into a crude oil purchase, sale and exchange
agreement. This contract was extended in May 1988, in February
1990 and again in April 1992, with Texaco Trading on similar
terms. Pursuant to this agreement, Texaco Trading has agreed
to
supply, and Tosco has agreed to purchase, an average of 35,000
to 40,000 barrels per day of San Joaquin Valley heavy crude oil
(subject to certain volume rate
changes). Crude oil from the San Joaquin Valley is principally
moved to the Avon Refinery via pipelines owned by Texaco. To
the extent such pipelines are not available, Tosco's operating
results may be materially adversely affected.
BRC has several term contracts with foreign
suppliers
of crude oil and believes that in the event such contracts are
terminated, it would be able to replace them in the market
without material adverse effect.
In conjunction with the purchase of the Ferndale Refinery, Tosco
and BP Oil Supply Company entered into, effective as of December
28, 1993 for a term of five years, a crude oil supply agreement
under which Tosco has the right to purchase from BP Alaska North
Slope ("ANS") crude oil delivered to the Ferndale Refinery in an
amount approximately equivalent to the requirements of that
refinery on terms Tosco considers to be favorable.
Tosco believes its average crude oil inventory is
presently sufficient for normal refinery operations at Avon,
Bayway and Ferndale.
Tosco's crude oil inventory level is managed in light of market
risk, carrying costs, and delivery method.
The cost to Tosco of crude oil and other feedstocks
depends on many factors, including the terms of purchase, credit
and delivery. In general, heavy crude oils are less expensive
than lighter crude oils.
Thus, if the production of San Joaquin Valley heavy crude oil is
reduced or curtailed, or if its price relative to lighter crude
oils increases, Tosco's operations could be adversely affected.
If foreign sources of crude oil or the marine system for
delivering crude oil,
including required marine insurance for possible marine
environmental liabilities, were curtailed, Tosco's operation
could be adversely affected. In addition, the loss, or an
adverse change in the terms,
of certain of the crude oil supply contracts described above or
the loss of other sources or means of delivery of crude oil
could
have a material adverse effect on Tosco's operating results.
The
volatility of prices and quantities of crude oil that may be
purchased on the spot
market or pursuant to long and short-term contracts could
materially adversely affect Tosco's operating results. Tosco
participates in crude oil hedging and other commercial
activities
to manage and minimize its raw material costs. Under adverse
market conditions, such practices could increase raw material
costs.
Marketing and Distribution
Tosco sells unbranded refined petroleum products to
wholesale purchasers, and, with the acquisition on December 28,
1993 of its
Pacific Northwest system, markets approximately 40,000 barrels
per day of petroleum fuels under the BP brand through a system
of
approximately 500 retail gas stations. The assets acquired
included 129 company controlled stations and approximately 377
dealer owned and
operated stations, together with the exclusive right to use the
BP brand in Washington and Oregon for a period of at least five
years. The results of operations
for the Pacific Northwest assets were not material to Tosco's
consolidated 1993 results. Tosco's 1993 sales of gasoline and
distillates were made to independent
marketers and to major oil company jobbers who also serve
unbranded markets, including the industrial, commercial,
agricultural and governmental classes of trade. Sales are also
made to other refiners
and resellers, both major and independent. Tosco generally
sells
other petroleum products directly to the ultimate industrial
users of such
products. Tosco's ability to sell its products on economical
terms is dependent in part on the competitive position of its
customers in changing and often turbulent markets. During 1993,
1992 and 1991,
gasoline products accounted for approximately 57%, 68% and 67%,
respectively, of Tosco's revenues, while during the same periods
distillates accounted for approximately 31%, 25%, and 24%,
respectively, of Tosco's revenues. Tosco believes that its
average refined product inventory of 15 to 20 days of sales is
generally consistent with industry practice.
For 1993, approximately 10% of Tosco's consolidated
revenues were from product sales made pursuant to long-term
contracts (i.e., in excess of one year).
During 1993, 1992 and 1991, Tosco purchased for
resale an average of approximately 118,610; 59,100; and 42,840
barrels per day, respectively, of petroleum products from third
parties.
Tosco distributes refined petroleum products,
principally in the eastern and western
United States through an extensive distribution network
comprised
of 64 terminal locations in 16 states and by means of pipelines,
rail tank cars, trucks, ocean-going tankers and barges.
Effective October 1, 1993, a subsidiary of Tosco entered into a
long-term lease of a petroleum products (primarily heating oil)
distribution system located on Long Island, New York. In
addition, Tosco operates a petroleum
storage facility (the Riverhead Terminal) with deep water marine
facilities in Eastern Long Island. Tosco also engages in
commercial
activities related to its petroleum refining, distribution, and
marketing businesses throughout the United States and
internationally.
Tosco owns one product tanker of 38,000 D.W.T. (dead weight
tons).
Compliance with Environmental Requirements
Tosco is subject to extensive federal, state and
local laws and regulations governing releases into the
environment and the storage,
transportation, disposal and clean-up of hazardous materials,
including, but not limited to, the Federal Clean Water Act, the
Clean Air Act, the Resource Conservation and Recovery Act, and
analogous state and local laws and regulations. See "Legal
Proceedings".
Environmental compliance has required, and will
continue to require,
capital expenditures. Tosco spent approximately $13 million in
1993 and $12 million in 1992 for such capital expenditures.
Tosco currently
estimates that capital expenditures for environmental compliance
may approximate $13 million and $15 million for 1994 and 1995,
respectively. Such amounts do not include amounts that would be
necessary to produce gasoline to meet changing "clean fuels"
specifications.
During the fourth quarter of 1992, Tosco recorded a
$25 million
accrual for environmental costs based upon a determination that
investigative work and remedial actions, primarily related to
the
Avon Refinery, will be required in the future. In July 1993,
outstanding litigation concerning environmental issues with
respect to the Avon
Refinery was settled with certain former owners of the Avon
Refinery.
Under the settlement reached, the former owners agreed to pay up
to $18 million for one-half of the costs that may be incurred to
comply with certain environmental orders and to provide Tosco a
$6 million credit for past environmental expenses (which Tosco
will use to reduce its
one-half share of future expenses)(See "Legal Proceedings.")
Because anticipated remedial actions are subject to negotiation
with governmental agencies and, therefore, the amount and timing
of actual cash expenditures is uncertain and, in addition,
further investigative
work and negotiations with governmental agencies may result in
different or additional remedial actions which Tosco cannot
presently predict, the previously made accrual was not reduced.
Governmental regulations are complex and subject to
different interpretations. Therefore, future action and
regulatory initiatives
could result in changes to expected operating permits,
additional
remedial actions or increased capital expenditures and operating
costs that Tosco cannot presently assess with certainty. See
Note 16 to the Consolidated Financial Statements.
Competition
Many of Tosco's competitors are integrated companies
engaged, on a national and/or international basis, in many
segments of the petroleum
business, including exploration, production, transportation,
refining and marketing, on scales much larger than Tosco. Such
competitors may
have greater flexibility than Tosco in responding to or
absorbing
market changes occurring in one or more of such segments.
Tosco's petroleum refining business is not seasonal.
Tosco faces strong competition in its market for the
sale of refined petroleum products, including gasoline. Such
competitors, especially
major integrated oil companies, have in the past and may in the
future engage in marketing practices that result in profit
margin deterioration for Tosco for periods of time, causing an
adverse impact on Tosco. The Company does not believe that there
is any one or a
small number of dominant competitors in the petroleum refining
business. The Company does not know its precise competitive
position
therein. The principal method of competition is price. Tosco
believes it is able to compete effectively with respect to price
because of its facilities and their locations.
Tosco must purchase substantially all of its crude
oil and feedstock
supplies from others, while some of its competitors have
proprietary sources of crude oil available for their own
refineries. Tosco believes it has a crude oil cost disadvantage
to the extent major integrated oil companies have access to
proprietary sources of crude
oil. However, Tosco has agreements with ARCO, British
Petroleum, PetroEcuador, Statoil, Texaco Trading and others to
provide Tosco
certain amounts of crude oil. Under present market conditions,
Tosco does not anticipate difficulty in obtaining necessary
crude oil supplies. See "Petroleum Refining, Supply,
Distribution and Marketing - Crude Oil Supply".
Refinery-Related Properties
Tosco owns the 2,300 acre site on which the Avon Refinery is
located and the buildings, tanks, pipelines and related
facilities at that refinery. The Avon Refinery occupies
approximately l,400 acres of the site. Of the approximately 900
remaining acres, approximately
400 acres are not subject to encumbrances described below. The
Bayway Refining Company owns the 1,300 acre site on which the
Bayway Refinery
and its related facilities are located and Tosco also owns the
850 acre site on which the Ferndale Refinery is located.
Tosco also had available at December 31, 1993, through
ownership, lease agreement, exchange or other appropriate
arrangement, the use of storage tanks, loading racks, wharfs,
warehouses and other related
assets at approximately 64 terminal distribution locations in 16
states. Tosco believes its refinery-related properties are
well-maintained and are suitable and adequate for their
purposes.
Tosco owns or controls by lease approximately 129 retail
service stations located in the states of Washington and Oregon,
principally in the Seattle/Portland metropolitan areas. In
addition to marketing
transportation fuels (gasoline and diesel) many of the stations
also have a convenience store, car wash facility, and/or
automotive repair facilities.
Encumbrances
In March 1992, Tosco sold $300 million of First Mortgage
Bonds
(Bonds), comprised of $100 million of 9% Series A Bonds due
March
15, 1997 and $200 million of 9-5/8% Series B Bonds due March 15,
2002. Interest on the Bonds is payable each March 15th and
September 15th.
Each of the issues is non-callable and is collateralized by
Tosco's Avon Refinery and certain related assets. (See Note 10
to the Consolidated Financial Statements.)
In April 1993, Tosco sold $150 million of 8-1/4%
First Mortgage Bonds due May 15, 2003 which are guaranteed by
BRC
and collateralized by the Bayway Refinery and related assets and
a guarantee of Tosco.
Interest on the bonds is payable semi-annually commencing May
15,
1993.
(See Note 10 to the Consolidated Financial Statements.)
Patents
Tosco's patents relating to petroleum operations are not
material.
OTHER ACTIVITIES
Natural Gas
Natural gas from the Sacramento Valley in Northern
California is delivered to the Avon Refinery through a private
pipeline system.
While Tosco retains minor interests in natural gas production
from the Sacramento Valley and certain other non-California gas
fields, almost all of the natural gas delivered through the
pipeline is purchased from others. During 1993, approximately 4
billion cubic feet were delivered to the Avon Refinery through
the pipeline.
Oil Shale
Tosco and its wholly-owned subsidiary, The Oil Shale
Corporation ("Oil Shale"), have interests in oil shale
properties
aggregating approximately 23,100 net mineral acres in Colorado
and 20,525 net mineral acres in Utah. Tracts vary in size from
l60 to l7,570 mineral acres. Tosco is also the owner of water
rights and certain oil shale
processes and technologies. In addition, Oil Shale controls
approximately l,900 acres of oil shale properties through
unpatented mining claims. (Unpatented properties are those in
which the United States Government has not conveyed to others
all
of its right, title and interest.)
Other
During 1993, Tosco and Continental Grain Company, each held a
partnership interest of approximately 49% in
Continental-Tosco Limited Partnership, which was formed to trade
physical cargoes of crude oil and refined products, as well as
derivative products and futures contracts. The venture was
terminated as of December 31, 1993.
On May 4, 1993, Seminole Fertilizer Corporation, a
wholly-owned subsidiary of Tosco, completed the sale of its
principal operating assets to Cargill Fertilizer Inc.
("Cargill')
for approximately $127 million. The cash proceeds, net of
amounts utilized to extinguish
outstanding borrowings under a revolving credit agreement and
for
payment of certain liabilities of approximately $91.2 million
were applied to reduce outstanding intercompany debt to Tosco.
Under the terms of the sale agreement, Seminole executed
promissory notes to Cargill totaling $14.5 million payable in
two
equal installments on January 1, 1994 and 1995 for land
reclamation liabilities that Cargill
also assumed. Seminole's interest (written down to its
estimated
net realizable value in 1992) in Fort Meade Chemical Products
partnership ("FMCP") was not included in the transaction. An
agreement for the
sale of the interest in FMCP has been entered into and, while
subject to the satisfaction of certain conditions, is expected
to
be completed
during the first quarter of 1994. Such sale is not expected to
have a material effect on Tosco's financial condition.
OFFICE PROPERTIES
At December 31, 1993 Tosco occupied a total of
approximately
130,000 square feet of office space in Concord, California;
Linden, New Jersey; Seattle, Washington and Stamford,
Connecticut. The office space leased
by Tosco is generally suitable and adequate for its purposes.
EMPLOYEES
At December 3l, 1993 Tosco (including its subsidiaries) had
approximately 2,729 employees at various locations.
Approximately 44%
of Tosco's employees are represented by labor organizations.
The
compensation paid to the Company's sales force is based on the
same general components as the Company's compensation to its
other salaried
employees, which is salary plus a bonus under cash incentive
plans based on results of operations. The salespeople do not
receive commissions. The Company does not maintain key person
life insurance
coverage on its executive officers. Tosco believes that its
labor relations with its employees are good.
Item 3. Legal Proceedings
Tosco's Spokane, Washington terminal is located within a
site being
investigated by the United States Environmental Protection
Agency
(the "EPA") and the Washington Department of Ecology (the
"WDOE")
for suspected hydrocarbon and lead contamination. Tosco has
been
notified by the WDOE that it, and the major oil company from
which it purchased
the facility, are included in the list of 6 parties potentially
liable for cleanup of the site under state law. The area
identified by the
WDOE was included on the Superfund National Priorities List (the
"Superfund List"). The source, extent and nature of the
contamination
have not been determined but is the subject of investigations.
Tosco and other potentially liable parties are working with the
WDOE with regard to the investigation of the site. The extent
of
Tosco's liability, if
any, is unknown; however the estimated costs of investigation
have been included in Tosco's environmental cost accrual.
In 1990 the EPA and the California Regional Water Quality
Control Board ("RWQCB") issued Orders ("Orders") identifying
suspected releases
of hazardous constituents at a number of hazardous waste and
solid waste management units on the Avon Refinery property,
including several older
inactive units which were used by Phillips Petroleum Company
("Phillips"), a former owner, but not by Tosco, and directed
Tosco to investigate the identified releases and determine the
need for corrective action. In July 1992, the RWQCB issued
Water
Discharge Requirements which, among other things, ordered Tosco
to submit a plan of corrective action (Corrective Action Plan)
to
deal with the suspected
releases of hazardous waste at the Avon Refinery. The
Corrective
Action Plan was submitted on January 4, 1993. The RWQCB also
issued an Order
in June 1990 which required Tosco to expand programs monitoring
groundwater quality throughout the Avon Refinery and to
investigate the
presence of subsurface liquid hydrocarbons. In the third
quarter
of 1992, Tosco received a "Tentative Order" (later finalized)
from the RWQCB that among other things, set a date by which
significant amounts
of subsurface liquid hydrocarbons were to be removed. Tosco
notified Phillips of the Orders and other items and demanded
indemnification
under the January 9, 1976 Restated Purchase and Sale Agreement
("Agreement") between Tosco and Phillips pursuant to which Tosco
acquired the Avon Refinery. Phillips rejected the request for
indemnification and on August 31, 1990 filed a complaint for
declaratory
relief (Phillips Petroleum Company v. Tosco Corporation, United
States District Court, Central District of California, Case No.
904725) seeking an order that it is not responsible to indemnify
Tosco as discussed
above. Tosco filed an answer denying Phillips' position and
filed counterclaims for, among other things, contractual
indemnification under
the Agreement and for claims under the Comprehensive
Environmental
Response Compensation and Liability Act (CERCLA). Phillips also
demanded indemnification from the previous owners of the Avon
Refinery.
Tosco filed claims against said previous owners, including
claims
under CERCLA. Phillips filed a motion for summary judgment
which
requested the Court to find, among other things, that as a
matter
of law Phillips
has no contractual indemnity liability. In June 1992, the Court
denied Phillips' motion for summary judgment on the issue of
Phillips' contractual indemnity to Tosco. The lawsuit was
settled in July 1993.
The settlement provides that Phillips and Texaco, the former
owners of the refinery, will for the next four years or until
the
funds provided under the agreement are expended (whichever is
later), pay up to an aggregate of $18 million for one-half of
the
costs that may be incurred
for compliance with certain environmental orders, and in
addition, provide Tosco a $6 million credit for past expenses.
After the initial
term of the agreement, the parties would be free to reinstate
the
suit.
Tosco has not relinquished any of its rights to make claims for
reimbursement for costs incurred after the date of settlement
and
would not be required to reimburse amounts received under the
agreement.
The California Regional Water Quality Control Board
("RWQCB")
issued an order adopting individual limits for Tosco on the
amount of
selenium that can be discharged as part of Tosco's treated
wastewater under its National Pollution Discharge Eliminating
System permit (NPDES). On September 16, 1992, the State Water
Resources Control
Board dismissed without prejudice, the petition of Tosco and
other San Francisco Bay Area Refiners and a trade association
(Petitioners) which sought review of the Regional Board's
decision. On October 16, 1992, Petitioners filed a petition for
writ of mandate seeking the court to
order the Regional Board and the State Board to set aside and
vacate their orders establishing selenium limits for refiners
and
to enjoin them from taking any further action to implement an
EPA
requirement under which the Regional Board and State Board
acted.
(Western States Petroleum Association, et al. v. California
Regional Water Quality Control Board San Francisco Bay Region,
et
al., California Superior
Court, Solano County, Case No. 121078). In January 1994, a
settlement was reached in which the parties agreed to dismiss
the
matter.
On September 4, 1992, Tosco received a Report of Violation
(ROV) from the California Department of Toxic Substances Control
(DTSC), alleging violations of hazardous waste regulations
identified during
an inspection of a parcel of land owned by Tosco that was used
for petroleum coke storage in connection with operations of
Tosco's former
Bakersfield Refinery, which was sold in 1986. The ROV, without
specifying dates, orders Tosco to comply with various hazardous
waste handling practices in connection with the site. Tosco has
entered into discussions with DTSC concerning required actions.
On November 18, 1992, the RWQCB issued an order against
Tosco,
Phillips and Wickland Oil Company ("Wickland") as dischargers of
waste, including petroleum hydrocarbons, into the soil and
groundwater at an oil terminal owned by Wickland. The named
parties are required to investigate the site and submit reports
for the recovery of hydrocarbons and the remediation of
contaminated soil and groundwater.
The operator of a landfill to which it is alleged Tosco sent
hazardous waste has sued numerous alleged waste generators,
including Tosco, and municipalities under CERCLA (ACME Landfill
Corporation v. Althin CD Medical, Inc. et al., United States
District Court, Northern District of California, Case No.
C91444268 SBA) to recover the costs
for closure/post closure of the site. The source, extent and
nature of any contamination is the subject of ongoing discovery.
Tosco has sought indemnification from Phillips.
In November 1992, Mulberry Phosphates, Inc.
Debtor/Debtor-in-Possession and the Committee of Unsecured
Creditors of Mulberry Phosphates, Inc. filed a complaint against
Norsk Hydro USA, Seminole Fertilizer Corporation, et al.
alleging
interference with a court ordered bankruptcy sale of Mulberry's
ammonia terminal and tortious interference with contract. The
plaintiffs are seeking compensatory and punitive damages.
Seminole denied the allegations.
In March 1994 Seminole's involvement in the matter was settled
for $160,000. (In re Mulberry Phosphates, Inc. et al. vs. Norsk
Hydro Inc., USA, Seminole Fertilizer Corporation, et al., U.S.
Bankruptcy Court,
Middle District of Florida Adv. Proc. No. 92-855).
The costs of remedial actions are highly uncertain due to,
among other items, the complexity and evolving nature of
governmental laws and regulations and
their interpretations as well as the varying costs and
effectiveness of alternative cleanup technologies. However,
Tosco presently believes
that any cost in excess of the amounts already provided for in
the financial statements should not have a materially adverse
effect upon Tosco's operations or financial condition. Tosco
further believes, as
discussed with respect to the Phillips case above, that a
substantial portion of future environmental costs, as well as
environmental expenditures previously made, will be recovered
from other responsible parties under contractual agreements and
existing laws and regulations.
There are various other suits and claims pending against
Tosco
and its subsidiaries, which in the opinion of Tosco are not
material or meritorious or are substantially covered by
insurance. While it is
impossible to estimate with certainty the ultimate legal and
financial liability with respect to these suits and claims,
Tosco
believes the aggregate amount of such liabilities will not
result
in monetary damages which in the aggregate would be material to
the business or operations of Tosco.
Item 4. Submission of Matters to a Vote of Security Holders
None
<TABLE>
<CAPTION>
Executive Officers of the Registrant
Served as an
Name Age Officer Since Principal Occupation and Positions Held
<S> <C> <C> <C>
Thomas D. O'Malley 52 1989 Chairman of the Board and Chief Executive Officer of Tosco since January 1990;
President of Tosco since May 1993
and from October 1989 to May 1, 1990; Chairman and Chief Executive
Officer of Argus Investments, Inc. since July 1988 and Argus Energy
Corporation since December 1987; Chairman and Chief Executive Officer
of Comfed Banc Corp, Inc. from December 1988 to December 1989; Vice
Chairman of Salomon Inc. from 1983 to December 1986.
Jefferson F. Allen 48 1990 Executive Vice President, Chief Financial
Officer and Treasurer of Tosco Corporation since June 1990; various
positions including Chairman and CEO, with Comfed Bancorp, Inc. and
related entities from November 1988 to June 1990; Executive Vice
President, Argus Investments during 1988; Senior Vice President,
Exploration Management Corporation from 1985 to April 1988.
James M. Cleary 48 1987 Senior Vice President, Tosco Corporation
since July 1990; President of Tosco Refining Company (a division of
Tosco) since May 1990; Senior Vice President of Tosco Refining Company
from June 1989 to May 1990; Vice President-Refining of Tosco from
January 1987 to June 1989. Various other positions with Tosco since
1980.
Wilkes McClave III 46 1989 Vice President and General Counsel of
Tosco and Senior Vice President of Tosco Refining Company (a division
of Tosco) since May 1990; Secretary of Tosco since August 1989; Vice
President and Secretary of Bayway Refining Company since January 1993 and
Tosco Northwest since October 1993;
Assistant General Counsel of Tosco from January 1986 to May 1990.
Dwight L. Wiggins 53 1993 Vice President of Tosco Corporation and
President of Bayway Refining Company since January 1993; New Jersey
Area Manager for Exxon Company U.S.A. 1990 to 1993; Benicia Refinery
Manager for Exxon Company 1983 to 1990.
Robert J. Lavinia 46 1993 President of Tosco Northwest Company (a
division of Tosco) since October 1993; Vice President of Tosco
Corporation since 1993 and Executive Vice President of Bayway Refining
Company during 1993; President, Tosco Energy Corporation during 1992;
various positions with Phibro Energy for a period in excess of five
years; most recently as a Senior Vice President.
Peter A. Sutton 48 1992 Vice President, Tosco Corporation since
January 1992; Senior Vice President, Tosco Refining Company since May
1990, various other positions with Tosco for a period in excess of five
years.
</TABLE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Tosco's Common Stock is traded on the New York Stock Exchange
("NYSE") and the Pacific Stock Exchange. Set forth below are
the
high and low sales prices as reported on the NYSE Composite
Tape.
Price Range of Common Stock
1993 High Low 1992 High Low
1st Quarter $24 5/8 $18 7/8 1st Quarter $30 $25
5/8
2nd Quarter 26 22 3/8 2nd Quarter 30 3/8 22
1/2
3rd Quarter 26 5/8 21 3/8 3rd Quarter 23 3/4 18
3/8
4th Quarter 32 3/4 26 3/8 4th Quarter 21 1/8 16
1/2
The number of Tosco shareholders of record on February 28, 1994
was 11,872.
Dividend Policy
Tosco has paid a regular quarterly cash dividend of $.15 per
share on its Common Stock since the third quarter of 1989.
Pursuant to the terms of Tosco's working capital facility and
its
bond indentures, dividends on Tosco's Common Stock are permitted
to the extent Tosco satisfies certain defined criteria.
Continued payment of such
quarterly dividend is also subject to profitable results of
operations, which are primarily dependent on the continued
favorable performance
of Tosco's operating facilities and favorable operating margins.
There can be no assurance that Tosco will be able to continue
payment of such
quarterly dividend. During 1993, Tosco paid all scheduled
dividends on its outstanding preferred stock. See Note 11 of
the Notes to Consolidated Financial Statements.
Item 6. Selected Financial Data
The following Selected Financial Data are qualified in their
entirety by the more detailed Consolidated Financial Statements
and related Notes at the end of this report. The Selected
Financial Data for each of the five years ended December 31,
1993
are derived from the Consolidated Financial Statements of Tosco
audited by Coopers & Lybrand, independent accountants.
<TABLE>
TOSCO CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (a)
(Millions of dollars except per share and ratio data)
Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Results of Operations
Sales $3,559.2 $1,861.0 $1,608.7 $1,854.6 $ 1,308.7
Gross profit on sales 251.8 132.7 121.2 248.3 91.7
Inventory writedown 17.7
Environmental cost accrual 25.0 4.0 2.0
Operating contribution 234.1 107.7 117.2 246.3 91.7
Selling, general and administrative
expenses 58.2 38.7 30.2 48.1 23.9
Interest expense, net 44.1 18.0 16.5 24.3 26.4
Pre-tax income 131.8 51.0 70.5 173.9 41.4
Provision (credit) for income
taxes (b) 51.2 20.8 2.4 19.6 (7.8)
Income from continuing operations
before other items 80.6 30.2 68.1 154.3 49.2
Discontinued operations, net of
income taxes
income (loss) from operations (15.9) 7.3 (31.1) (8.7)
Estimated loss on disposal (105.0)
Cumulative effect of accounting changes 16.2
Net income (loss) $ 80.6 ($ 74.5) $75.4 $123.2 $ 40.5
Income (loss) per common and
common equivalent share
Primary
From continuing operations $ 2.38 $ .68 $ 2.15 $ 6.81 $ 2.36
From discontinued operations (4.08) .24 (1.44) (.65)
From cumulative effect of
accounting changes .55
Net income (loss) $ 2.38 ($ 2.85) $ 2.39 $ 5.37 $ 1.71
Fully-Diluted:
From continuing operations $ 2.33 $ .68 $ 2.12 $ 4.94 $ 1.51
From discontinued operations (4.08) .23 (1.00) (.27)
From cumulative effect of
accounting changes .55
Net income (loss) $ 2.33 ($ 2.85) $ 2.35 $ 3.94 $ 1.24
Capitalization (at end of period)
Total assets $1,492.9 $ 952.9 $871.0 $678.9 $691.4
Long-term debt $ 603.3 $ 356.8 $211.9 $202.7 $308.8
Preferred stock 111.2 111.2 111.2 153.8
Common shareholders' equity 410.4 270.2 385.6 333.3 115.8
Total capitalization $1,124.9 $ 738.2 $708.7 $536.0 $578.4
Other Information
Ratio of long-term debt to
total capitalization .54 .48 .30 .38 .53
Current ratio 2.2 2.6 1.6 1.6 1.9
Book value per share $ 12.60 $ 9.10 $ 12.78 $ 11.15 $ 7.00
Cash dividends per share $ .60 $ .60 $ .60 $ .60 $ .30
(a) Reflects Seminole Fertilizer Corporation, acquired on July
1, 1989, as a discontinued operation.
(b) Reflects the provision for income taxes for 1993 and 1992
at regular tax rates pursuant to the
provisions of SFAS No. 109 adopted January 1, 1992.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of
Operations.
Introduction
1993 was a year growth for Tosco. Tosco completed a major
expansion of its core petroleum refining and marketing business
through the purchase of the Bayway Refinery
and
related assets (Bayway) from Exxon Corporation in April 1993,
the
long-term lease of Northville Industries' oil products
distribution
facilities in Long Island, New York in the fourth quarter of
1993,
and the purchase of British Petroleum's (BP) Ferndale Refinery
and
retail marketing assets in the Pacific Northwest in December
1993
(PNW Properties). The profitable results of operations from
Bayway, along with record production levels and improved
refining
margins at Avon, enabled Tosco to increase income from
continuing
operations by $50.4 million to $80.6 million for 1993.
Tosco also exited the phosphate fertilizer business with
the
sale of the principal operating assets of Seminole Fertilizer
Corporation (Seminole) in May 1993, and has entered into an
agreement to sell the remainder in the first quarter of 1994.
The
Selected Financial Data, which summarizes Tosco's results of
operations and capitalization over the five year period 1989 -
1993, as well as the discussion which follows, reflects Seminole
as a discontinued operation.
Results of operations - 1993
Year Ended
December
31,
Year Ended December 31, 1993 1992
(Thousands of Dollars) (Thousands
of
Dollars)
Avon Bayway Consolidated
Consolidated
Sales $1,783,387 $1,775,830 $3,559,217 $1,860,969
Cost of sales 1,600,937 1,706,555 3,307,492 1,728,305
Inventory writedown 17,651 17,651
Environmental cost
accrual 25,000
Operating contribution $ 182,450 $ 51,624 234,072 107,664
Selling, general, and
administrative expense 58,174 38,728
Net interest expense 44,146 17,923
Pre-tax income 131,754 51,013
Provision for income taxes 51,175 20,766
Income from continuing
operations 80,579 30,247
Loss from discontinued
operations (120,905)
Cumulative effect of
accounting changes 16,203
Net income (loss) $80,579 ($74,455)
Tosco's continuing operations earned $80.6 million or $2.33
per fully-diluted share, on sales of $3.56 billion for 1993 as
compared to income from continuing operations of $30.2 million,
or
$.68 per fully-diluted share, on sales of $1.86 billion for
1992.
After discontinued operations and the cumulative effect of
accounting changes, a net loss of $74.5 million, or $2.85 per
fully-diluted share, was incurred in 1992.
Tosco's operating contribution (income before selling,
general and administrative expense, net interest expense, income
taxes, and the cumulative effect of accounting changes) of
$234.1
million for 1993
increased by $126.4 million over 1992 due to $74.8 million
increase in operating contribution from Avon and related
commercial
activities and an operating contribution of $51.6 million from
Bayway and related commercial activities. The financial results
of
Bayway are included in Tosco's results of operations beginning
April 8, 1993. The financial results of PNW Properties,
acquired
December 28, 1993, were not significant to 1993 consolidated
results of operations.
The $74.8 million improvement in operating contribution
from
Avon was primarily attributable to record production rates,
improved refining margins and lower environmental cost accruals,
which were partially offset by the higher refinery and product
distribution costs associated with the higher levels of
production. Raw material throughput rates averaged a record
166,310 barrels per day (B/D) for 1993 (versus 152,510 B/D for
1992 which was affected by major turnaround maintenance).
Production of clean transportation fuels (gasoline, diesel, and
jet fuel) also established a new record of 137,610 B/D (versus
126,570 B/D for 1992). Refining margins (the difference between
the price of refined products produced for sale and raw material
costs) improved by $.70 to $8.03 per barrel for 1993 as per
barrel costs of raw materials fell by $1.04 to $14.84 while the
sales value of refined products produced declined by $.34 to
$22.87 per barrel. The improved margins (achieved despite the
sluggish economy, especially in California) were assisted by the
completion and start up of facilities for the production of low-
sulfur, low aromatic diesel fuel meeting California Air
Resources
Board's (CARB) cleaner burning fuel standards effective October
1, 1993.
In 1992, Tosco recorded a $25 million environmental cost
accrual based upon a determination that investigative work and
remedial actions, primarily related to the Avon Refinery, would
be required in the future. In July 1993, outstanding litigation
with the predecessor owners concerning environmental issues was
settled (Settlement Agreement). Under the Settlement Agreement,
the former owners agreed to pay up to $18 million for one-half
of
the costs that may be incurred for compliance with environmental
cleanup orders and to provide Tosco with a $6 million credit for
past expenses. Based on a review of its environmental exposures
and the Settlement Agreement, no adjustment to Tosco's
environmental cost accrual ($29.4 million at December 31, 1992)
was required in 1993. See Note 16 to the Consolidated Financial
Statements.
Bayway achieved an operating contribution of $51.6 million,
net of an inventory writedown of $17.7 million, for the period
April 8, 1993 to December 31, 1993 due to strong refinery
performance in a period of lackluster margins. Raw material
throughput averaged 259,250 B/D while production of clean
transportation fuels and total production averaged 213,980 and
264,490 B/D, respectively. Refining margins, including net
realized gains on hedges designed to lock in a predetermined
level of margins on a varying percentage of Bayway's production,
averaged $3.47 per barrel while refinery and distribution
expenses together averaged approximately $2.55 per barrel.
Bayway's results of operations for 1993 were reduced by a non-
cash inventory writedown of $17.7 million as a result of
declining raw material and refined product prices in November
and
December 1993.
Consolidated selling, general and administrative expense of
$58.2 million for 1993 increased by $19.4 million over 1992
primarily due to the acquisition of Bayway (including
approximately $7.5 million of non-recurring costs incurred in
establishing commercial, accounting and general and
administrative functions at Bayway).
Consolidated net interest expense for 1993 increased by
$26.2 million over 1992. Net interest expense for 1992 includes
$12.8 million of intercompany interest income from Seminole and
the writeoff of approximately $3.6 million of deferred financing
costs related to previously outstanding indebtedness. Without
the effect of these two items, consolidated net interest expense
for 1993 would have increased by $17 million as the costs of
higher levels of debt (resulting from the purchase of Bayway and
its associated working capital requirements) more than offset
the
benefits of lower interest rates.
The provision for income taxes for 1993 includes the 1%
increase in federal income tax rates effective January 1, 1993
as
well as tax credits of approximately $2.5 million which were
finalized in tax returns filed in October 1993.
Results of operations - 1992
Tosco's continuing operations earned $30.2 million, or $.68
per fully-diluted share, on sales of $1.86 billion for 1992 as
compared to income from continuing operations of $68.1 million,
or $2.12 per fully-diluted share, on sales of $1.61 billion for
1991. After discontinued operations and the cumulative effect
of
accounting changes, a net loss of $74.5 million, or $2.85 per
fully-diluted share, was incurred for 1992.
Continuing operations realized an operating contribution of
$107.7 million for 1992, a decrease of $9.5 million from 1991.
The decrease was attributable to the $25 million environmental
cost accrual (an increase of $21 million over the $4 million
accrual of 1991) which more than offset the $11.5 million
improvement in operating margins.
The improvement in operating margins was achieved through
the then record production rates at the Avon Refinery. Raw
material throughput rates averaged 152,510 B/D in 1992 (versus
139,980 B/D in 1991), while production of petroleum products
increased to 151,130 B/D (versus 137,150 B/D in 1991).
Production of clean transportation fuels also achieved then
record levels, increasing from 110,550 B/D to 126,570 B/D for
1992. Despite these record production rates, refining margins
declined by $.33 per barrel to $7.33 for 1992. In view of the
poor margins, which averaged $6.23 for the fourth quarter,
scheduled 1993 maintenance of refinery processing units was
accelerated into 1992. Operating results for 1992 were also
negatively impacted by higher distribution costs associated with
expanded commercial activities and the use of additives and
oxygenates in gasoline.
Selling, general, and administrative expense for 1992
increased by $8.5 million over 1991 primarily because of higher
costs of professional services ($3.6 million) (primarily legal
costs related to litigation against the former owners of the
Avon
Refinery concerning environmental issues), workers compensation
and general liability insurance ($1.0 million), as well as the
full year costs of expanded commercial activities.
Net interest expense for 1992 includes the writeoff of
approximately $3.6 million of deferred financing costs related
to
the refinancing of previously outstanding Bank indebtedness in
March 1992 from the proceeds of the sale of $300 million of
First
Mortgage Bonds. Without the writeoff, net interest expense for
1992 would have been approximately $2.1 million less than 1991,
as the benefits of lower interest rates and higher levels of
invested cash more than offset the costs of higher levels of
outstanding debt.
Tosco recorded a loss of $105 million for the estimated
loss
on disposition of Seminole (including a provision for the
estimated future costs and operating results until the expected
disposition dates). Seminole sold its principal operating
assets
in April 1993 and entered into an agreement to sell the
remainder
in the first quarter of 1994. See Note 5 to the Consolidated
Financial Statements. Effective January 1, 1992, Tosco adopted
Statement of Financial Accounting Standards ("SFAS") No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions," (electing to prospectively amortize its post-
retirement benefits obligation) and SFAS No. 109, "Accounting
for
Income Taxes," and changed its accounting policy for turnaround
costs. The cumulative effect of the changes in accounting for
income taxes and turnaround costs was $13 million or $.44 per
share, and $3.2 million or $.11 per share, respectively.
Results of operations - 1991
Tosco's continuing operations earned $68.1 million, or
$2.12
per fully-diluted share, on sales of $1.61 billion for 1991, as
compared to earnings from continuing operations of $154.3
million, or $4.94 per fully-diluted share, on sales of $1.85
billion for 1990.
Refining margins declined by $1.44 per barrel from 1990
levels due to lower margins and reduced production of clean
transportation fuels. Scheduled maintenance (52 days) on the
fluid coker, a major contributor to profitability, was the
primary reason for the fall in production as compared to 1990.
Operating results for 1991 also include a LIFO credit of
approximately $5.7 million and a $4.0 million charge for
environmental costs. Selling, general and administrative
expenses for 1991 decreased by $17.9 million from 1990. Results
of continuing operations for 1990 included a $10.8 million
relocation provision, a provision for incentive compensation and
other insurance benefits of $8.2 million ($4.0 million higher
than in 1991), and an accrual of $4.0 million for potential
losses on trade receivables.
Net interest expense for 1991 declined by approximately
$7.8
million from 1990 primarily due to the 1991 refinancing of debt
at lower interest rates. Convertible Subordinated Debentures
due
May 1992 of $10.6 million were also redeemed at par in November
1991.
Results of continuing operations for 1991 include federal
tax benefits from utilization of available net operating loss
("NOL") carryforwards. In addition, the provision for income
taxes for 1991 includes the net reversal of approximately $5.9
million of previously accrued federal and state income taxes for
1990.
Pacific Northwest Acquisition
In late December 1993, Tosco purchased the Ferndale,
Washington Refinery (with a current crude capacity of
approximately 85,000 B/D), two product distribution terminals
located in Washington, and retail marketing assets located in
Washington and Oregon for $124 million, not including
inventories. The retail marketing assets acquired included 129
company controlled gasoline stations and a marketing network of
377 independently owned and operated BP branded outlets. The
purchase price may be increased by BP's participation in a
percentage of incremental future profits from the refining and
retail marketing segments (after the achievement of certain
defined profit levels) of up to an additional $150 million over
the next five years. The participation agreement for the retail
marketing segment may be terminated at agreed upon liquidation
values at the option of either party. BP has also agreed to
supply the Ferndale Refinery, at Tosco's option, with crude oil
for a period of five years. Tosco partially financed the
purchase of the PNW Properties through the public offering of
2,990,000 shares of Common Stock with the balance of the
purchase price, including working capital for the operation of
the acquired assets, provided from available cash and cash
borrowings from Tosco's revolving credit agreement. Tosco is
operating the retail network, which markets in excess of 40,000
barrels per day of motor fuels, under the BP brand.
Outlook
With the acquisition of the Bayway and Ferndale Refineries
in April and December 1993, Tosco is one of the largest
independent refiners (as measured by crude oil distillation
capacity) in the United States. The acquisitions are expected
to more than triple Tosco's pre-acquisition production of
refined petroleum products and provide access to additional
major petroleum markets. Tosco has operated, and intends to
continue to operate, the Bayway Refinery at substantially higher
throughput rates than the previous owner, thereby lowering per
barrel refinery operating costs by spreading such operating
costs over the higher volumes of refined products produced. The
Ferndale Refinery is also expected to be operated at full
production rates to similarly minimize per barrel refinery
operating costs. Major maintenance of the processing units at
the Avon, Ferndale and Bayway Refineries may also be
coordinated. The acquired retail marketing assets are also
expected to provide additional earnings and cash flow as Tosco
diversifies downstream. Tosco, therefore, believes that the
acquisitions of Bayway and PNW Properties provide the
opportunity for increased and less volatile earnings.
Earnings continue to be determined principally by two
factors: the operating efficiency of the refineries and
refining margins. At the Avon Refinery, the new methyl tertiary
butyl either (MTBE) facility and a second hydrogen plant
commenced operations in November and December 1993,
respectively. However, certain gasoline production units were
temporarily idled for turnaround maintenance during January 1994
and other major processing units, including the fluid coker, are
scheduled for major turnaround maintenance later in 1994. Major
processing units at the Bayway Refinery, including the fluid
catalytic cracking unit, Bayway's principal gasoline production
unit, are currently scheduled for major turnaround
maintenance in 1994. Ray material processed and clean product
production are therefore not expected to reach 1993 levels at
either the Avon or Bayway Refinery on an annualized basis.
Major maintenance of refinery processing units at the Ferndale
Refinery is not anticipated until 1995.
Tosco is not able to predict the level or trend of refining
margins because of the uncertainties associated with oil
markets. However, Tosco believes its acquisitions as well as a
strengthening national economy will provide opportunities for
Tosco to enhance earnings and cash flows.
Cash flows and liquidity - 1993
Cash flows provided by operating activities were $154
million for 1993. Cash was generated from cash earnings from
operations (net income plus depreciation and amortization and
the non-cash inventory writedown) of $163 million and the
utilization of previously accrued income tax benefits from
discontinued operations of $42 million, partially offset by
increase in working capital of $44 million and other assets
(primarily deferred income tax assets) of $7 million. Net cash
used in investing activities was $477 million, primarily for the
acquisition of the Bayway Refinery, ($318 million, net of the
$17 million paid in 1992) and PNW Properties ($160 million),
both of which include initial levels of inventory, capital
additions ($74 million), and other assets ($21 million,
partially offset by net proceeds received from the sale of the
principal operating assets of Seminole ($91 million) and a $5
million return of Tosco's investment in Continental-Tosco
Limited Partnership, Tosco's joint venture petroleum enterprise
with Continental Grain Company. Tosco expects to recover its
remaining $10 million investment in 1994. Cash generated from
financing activities was $306 million, including $150 million of
proceeds from the issuance of long-term bonds (to finance the
Bayway acquisition), $88 million of net proceeds from the public
sale of Common Stock of Tosco (to finance the acquisition of the
PNW Properties), $147 million of net borrowings under the new
credit facility, less $50 million for the early retirement of
subordinated debt, $28 million of dividends on common and
preferred stock and other payments of $1 million.
Liquidity (as measured by cash, short-term investments and
unused credit facilities) decreased by $11 million during 1993
due to a decrease in cash and short-term investments of $19
million, partially offset by an increase in credit availability
of $8 million. Tosco entered into a new revolving credit
agreement (New Credit Agreement) to support the expanded working
capital requirements of Tosco due to the acquisition of Bayway.
However, Tosco may, depending upon market conditions, offer debt
securities(to raise funds to pay down cash borrowings under its
revolving credit agreement) or expand its revolving credit
availability. At December 31, 1993, liquidity totaled $146
million (an amount which Tosco believes is adequate to meet its
expected liquidity demands for at least the next twelve months).
Capital Expenditures and Capitalization
Tosco spent $74 million on budgeted capital projects at
Avon ($64 million) and Bayway ($10 million). Capital spending
programs continued to address compliance with environmental
regulations and permits, operating flexibility and reliability
and personnel/process safety, as well as to meet new federal and
California regulations, adopted in 1992, for fuels that reduce
emissions. Tosco's $30 million capital expenditure program to
meet the CARB's October 1, 1993 deadline for diesel with lower
sulfur and aromatic content was successfully completed on budget
and ahead of schedule in September 1993. In November 1993,
Tosco entered into a long-term lease of a new MTBE facility
capable of producing up to 2,600 B/D of this oxygenate from a
by-product of the Avon Refinery. In December 1993, operation of
a new $40 million hydrogen plant located at the Avon Refinery
also commenced. Tosco entered into a 15-year agreement to
purchase 25 million cubic feet per day of hydrogen and steam
from that plant.
Future levels of capital spending will vary depending upon
the extent to which the Avon Refinery is reconfigured to meet
the more stringent regulations requiring reformulated gasoline
to be sold in California (presently anticipated to be enforced
by CARB by 1996). Tosco is moving ahead to obtain the necessary
permits for construction of the new facilities (which are
anticipated to range in costs from $175 million to $300 million
during the period prior to the implementation of the CARB
regulations). However, timely completion of the new facilities
will continue to depend on a reasonable approval process for
these permits and market conditions. Tosco has advised CARB
that significant uncertainty exists concerning the
implementations of their gasoline regulations and has requested
that the timing and substance of the regulations be reevaluated
to avoid serious disruption in California in 1996.
At December 31, 1993, total shareholder's equity was $522
million, an increase from December 31, 1992 of $140 million due
to the net proceeds of sale of Common Stock ($88 million) and
net income ($81 million) less dividend and other payments ($29
million). Debt, including current maturities, increased by $247
million to $604 million at the end of 1993 primarily due to the
acquisitions of Bayway and PNW Properties and their associated
working capital requirements.
Impact of Inflation
The impact of inflation has been less significant during
recent years because of the relatively low rates of inflation
experienced in the United States. Raw material costs, energy
costs, and labor costs are important components of Tosco's
costs. Any or all of these components could be increased by
inflation, with a possible adverse effect on profitability,
especially in high inflation periods when raw material and
energy cost increases generally lead finished product prices.
In addition, a rapid escalation of raw material and finished
products prices could result in credit restrictions if working
capital requirements exceed the maximum availability under
Tosco's working capital facilities.
Tosco's results of operations will also be impacted by the
trend of petroleum prices in 1994. Tosco recorded a $17.7
million non-cash inventory writedown as a result of declining
raw material and refined product process in November and
December 1993. In the event that prices at the end of 1994 are
lower than at the end of 1993, additional inventory writedowns
will be required.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data required by Part
II, Item 8, are included in Part IV, as indexed at Item 14(a)(1)
and (a)(2).
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
There is hereby incorporated by reference the information
appearing under the caption "Nominees for Election" in the
registrant's
definitive Proxy Statement relating to its 1994 Annual Meeting
of
Shareholders to be filed with the Securities and Exchange
Commission.
See also the information appearing under the caption "Executive
Officers of the Registrant" appearing in Part I.
Tosco is not aware of any family relationship between any
Director or executive officer. Each officer is generally
elected
to hold office until the next Annual Meeting of the Board of
Directors.
Item 11. Executive Compensation
There is hereby incorporated by reference the information
appearing under the caption "Executive Compensation" in the
registrant's definitive Proxy Statement relating to its 1994
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
There is hereby incorporated by reference the information
appearing under the caption "Stock Ownership of Officers and
Directors" and "Other Matters - Certain Security Holdings" in
the
registrant's definitive Proxy Statement relating to its 1994
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.
Item 13. Certain Relationships and Related Transactions
There is hereby incorporated by reference the information
appearing under the caption "Executive Compensation" in the
registrant's definitive Proxy Statement relating to its 1994
Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission.
PART IV
Item 14. Exhibits, Financial Statement Schedules
(a)(1) and (a)(2). Financial Statements and Financial Statement
Schedules. The consolidated financial statements and financial
statement schedules of Tosco Corporation and subsidiaries,
required by Part II, Item 8, are included in Part IV of this
report. See Index to Consolidated Financial Statements and
Financial Statement Schedules on
page F-1.
(a)(3). Exhibits.
3(a). Restated Articles of Incorporation of Registrant as
currently in effect, including Certificates of Voting Powers,
Designations, Preferences and Relative, Participating, Optional
or Other Special Rights of Preferred Stock. Incorporated by
reference to Exhibit 28.2
to Registrant's Current Report on Form 8-K dated July 29, 1991.
3(b). By-laws of Registrant as currently in effect.
Incorporated by reference to Exhibit 3(b) to Registrant's Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
4(a). Form of Indenture between Registrant and IBJ Schroeder
and
Trust Company, as Trustee, relating to 9% Series A First
Mortgage
Bonds due March 15, 1997 and 9 5/8% Series B First Mortgage
Bonds
due March 15, 2002. Incorporated by reference to Exhibit 4.1 to
Registration
Statement filed by Registrant on Form S-3 dated March 4, 1992.
4(b). Form of Indenture among Registrant, Bayway Refining
Company and the First National Bank of Boston, as Trustee,
relating to 81/4% First Mortgage Bonds due 2003. Incorporated
by
reference to Exhibit 4.1 to Registration Statement filed by
Registrant on Form S-4 dated April 29, 1993.
10(a). Amended and Restated Credit Agreement dated as of April
8, 1993 among Tosco Corporation, Seminole Fertilizer Corporation
and Bayway Refining Company, as Borrowers, and the Banks named
therein, as Banks, and The Chase Manhattan Bank (National
Association) as Co-Agent,
Bank of America National Trust and Savings Association, as
Co-Agent and Co-Arranger, and the First National Bank of Boston,
as Agent and Arranger. Incorporated by reference to Exhibit 28
to Registrant's Current Report on Form 8-K dated April 8, 1993.
10(b). Amendatory Agreement No. 1 dated as of June 7, 1993 to
Credit Agreement among Tosco Corporation, Seminole Fertilizer
Corporation and
Bayway Refining Company, as Borrowers, and the Banks named
therein, as Banks, and The Chase Manhattan Bank (National
Association) as Co-Agent, Bank of America National Trust and
Savings Association, as Co-Agent and
Co-Arranger, and the First National Bank of Boston, as Agent and
Arranger.
10(c). Amendatory Agreement No. 2 dated as of December 10, 1993
to Credit Agreement among Tosco Corporation, Seminole Fertilizer
Corporation and Bayway Refining Company, as Borrowers, and the
Banks named therein, as Banks, and The Chase Manhattan Bank
(National Association) as Co-Agent, Bank of America National
Trust and Savings
Association, as Co-Agent and Co-Arranger, and the First National
Bank of Boston, as Agent and Arranger.
10(d). Exchange Agreement dated October 2, 1986, between
Registrant and Atlantic Richfield Company. Incorporated by
reference to Exhibit 10(aa) to Registration Statement filed by
Registrant on Form S-1 under the Securities Act of 1933 (No.
33-9578).
10(e). Severance Agreement dated November 15, 1989, between
Registrant and James M. Cleary. Incorporated by reference to
Exhibit 10(i) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990. Schedule identifying
similar agreement
between Registrant, or its subsidiaries, and another employee.
Amendments, effective as of January 1 and February 1, 1993, to
said Agreements.
10(f). Severance Agreements dated May 31, 1990 between
Registrant and John J. Lee. Incorporated by reference to
Exhibit
10(j) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990. Amendments, effective as of
January 1, 1993, to said Agreement. Incorporated by reference
to
Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992.
10(g). Severance Agreement dated January 1, 1993 between
Registrant and Thomas D. O'Malley including schedule identifying
similar agreements between Registrant, or its subsidiaries, and
four of its employees.
10(h). Indemnification Agreement dated September 30, 1987,
between Registrant and James M. Cleary, including schedule
identifying similar
agreements between Registrant and its Directors and/or officers,
together with related Trust Agreement. Incorporated by reference
to Exhibit 10(aa) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1987.
10(i). Consulting Agreement dated January 1, 1990 between the
Registrant and Clarence G. Frame. Incorporated by reference to
Exhibit 10(p) to Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989.
10(j). Sale and Purchase Agreement for Bayway Refinery and
Related Facilities dated December 10, 1992 between Exxon
Corporation and Bayway Refining Company. Incorporated by
reference to Exhibit 10(l) to Registrant's Annual Report on Form
10-K for the fiscal year ended December 31, 1992.
10(k). Asset Purchase Agreement dated March 1, 1993
between Seminole Fertilizer Corporation and Cargill Fertilizer,
Inc. Incorporated by reference to Exhibit 10(m) to Registrant's
Annual Report on Form 10-K for the fiscal year ended December
31,
1992.
10(l). Agreement for the Purchase and Sale of Assets between
BP Exploration & Oil Inc. and Tosco Corporation dated November
9,
1993. Incorporated by reference to Exhibit 1 to Registrant's
Current Report on Form 8-K dated November 9, 1993.
10(m). Lease Intended for Security dated June 24,
1992 among Tosco Corporation, as Lessee, Norwest Bank Minnesota,
National Association, as Agent, and certain financial
institutions, as Lessors. Incorporated by reference to Exhibit
10(n) to Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.
10(n). Facility Lease dated October 15, 1992
between 1992 MTBE Facility Trust, Lessor and Tosco Corporation,
Lessee. Incorporated by reference to Exhibit 10(o) to
Registrant's Annual Report on Form 10-K for the fiscal year
ended
December 31, 1992.
10(o). Hydrogen Supply Agreement dated August 19, 1992 between
Air Products and Chemicals, Inc. and Tosco Refining Company.
Incorporated by reference
to Exhibit 10(p) to Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1992.
10(p). Amendment, dated April 30, 1992, to TTTI Buy/Sell
Contract No. 35P73, dated February 22, 1990 between Texaco
Trading and Transportation Inc. and Tosco Refining Company.
Incorporated by reference to Exhibit 10(q) to Registrant's
Annual
Report on Form 10-K for the fiscal year ended December 31, 1992.
10(q). Amendment, dated April 30, 1992, to TTTI Buy/Sell
Contract No. 17P77, dated April 13, 1988 between Texaco Trading
and Transportation Inc. and Tosco Refining Company.
Incorporated
by reference to Exhibit 10(r) to Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992.
10(r). Crude Oil Supply Agreement dated December 28, 1993
between BP Oil Supply Company and Tosco Corporation.
10(s). Trademark License Agreement dated December 28, 1993
between British Petroleum Company p.l.c. and Tosco Corporation.
11. Statement regarding computation of per share earnings.
See
Exhibit 11 to Financial Statements (page F-36), as required by
Item 8 and appearing in Item 14 hereof.
21. A list of all subsidiaries of the Registrant.
23. Consent of Coopers & Lybrand.
(b). Reports on Form 8-K
During the last quarter of the period covered by this
report, the Registrant filed a Current Report on Form 8-K, dated
November 9, 1993, reporting under Item 5, Other Events, an
agreement for the
purchase of certain assets from BP Exploration and Oil, Inc.
("BP"). The Registrant also filed a current Report on form 8-K,
dated December 28, 1993, reporting under Item 2, Acquisition or
Disposition of Assets,
the acquisition of certain of BP's retail marketing and refining
assets, and under Item 7, Financial Statements, Pro Forma
Financial Information and Exhibits, the omission of historical
financial statements of these assets from this Form 10-K.
(c). Financial Statement schedules required by Regulation
S-X are excluded from the Annual Report to Shareholders by Rule
14a-3(b)(1). See Schedules II, V, VI, and VIII to the
Financial
Statements, as required by Item 8, and appearing under Item 14
hereof.
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Financial
Statement Schedules
Filed with the Annual Report of the Company on Form 10-K
Year Ended December 31, 1993
Page
Report of Independent Accountants F-2
Consolidated Balance Sheets as of
December 31, 1993 and 1992 F-3
Consolidated Statements of Operations
for the Years Ended
December 31, 1993, 1992 and 1991 F-4
Consolidated Statements of
Cash Flows for the Years Ended
December 31, 1993, 1992 and 1991 F-5
Consolidated Statement of Common
Shareholders' Equity for the
Years Ended December 31, 1993, 1992 and 1991 F-7
Notes to Consolidated Financial Statements F-8 to F-31
Financial Statement Schedules:
II - Amounts Receivable From Related Parties and
Underwriters, Promoters and
Employees Other Than Related Parties F-32
V - Property, Plant and Equipment F-33
VI - Accumulated Depreciation, Depletion and
Amortization of Property, Plant and Equipment F-34
VIII - Valuation and Qualifying Accounts F-35
Exhibit 11 - Computation of Per Share Data F-36
Financial statement schedules other than those listed above
have been omitted since they are either not required, are not
applicable, or the required information is shown in the
financial statements and related notes.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Tosco Corporation
We have audited the consolidated financial statements and the
financial statement schedules of Tosco Corporation and
Subsidiaries listed in the index on page F-1 of this Form
10-K. These financial statements and financial statement
schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
financial statements and financial statement schedules 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 the 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 consolidated
financial position of Tosco Corporation and Subsidiaries as
of December 31, 1993 and 1992, and the consolidated results
of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles. In
addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic
financial statements taken as a whole, present fairly, in all
material respects, the information required to be included
therein.
As discussed in Note 1 to the consolidated financial statements,
in 1992 the Company changed its method of accounting for
turnarounds, income taxes and postretirement benefits other than
pensions.
COOPERS & LYBRAND
Oakland, California
February 4, 1994
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
December 31,
1993 1992
ASSETS
Current assets
Cash and cash equivalents $ 55,091 $ 71,673
Short-term investments and deposits 30,035 32,216
Trade accounts receivable,
less allowance for uncollectibles
of $5,091,000 (1993) and $5,164,000 (1992) 174,285 90,854
Inventories 363,348 93,160
Net assets of discontinued operations 121,275
Prepaid expenses and other current assets 36,180 20,160
Deferred income taxes 12,123 5,959
Total current assets 671,062 435,297
Property, plant and equipment, net 723,265 390,591
Deferred charges and turnarounds 43,661 50,536
Deferred income taxes 37,108 36,906
Other assets 17,763 39,611
Total assets $1,492,859 $952,941
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 310,243 $167,273
Current installments of long-term debt 787 800
Total current liabilities 311,030 168,073
Long-term debt 603,306 356,761
Other liabilities 12,433 10,141
Environmental cost liability 29,440 29,440
Net liabilities of discontinued operations 11,733
Deferred income taxes 3,273 7,096
Shareholders' equity
$4.375 Series F Cumulative Convertible
Preferred Stock - $1.00 par value
- - Authorized 2,500,000 shares; issued and
outstanding 2,300,000 shares
(liquidation preference of $115,000,000) 111,197 111,197
Common shareholders' equity:
Common Stock $.75 par value, 50,000,000
shares authorized, 34,811,158 (1993)
and 31,821,158 (1992) shares issued 26,112 23,869
Capital in excess of par value 534,727 449,265
Retained earnings (deficit) ( 81,512) (
134,035)
Reductions from capital ( 68,880) (
68,866)
Total common shareholders' equity 410,447 270,233
Total shareholders' equity 521,644 381,430
Total liabilities and shareholders'equity $1,492,859 $952,941
The accompanying notes are an integral part of these
financial statements.
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Thousands of Dollars Except Per Share Data)
Year Ended December 31,
1993 1992 1991
Sales $ 3,559,217 $1,860,969 $1,608,665
Cost of sales 3,307,492 1,728,305 1,487,437
Inventory writedown 17,651
Environmental cost accrual 25,000 4,000
Selling, general and
administrative expenses 58,174 38,728 30,214
Interest expense 48,868 23,941 22,737
Interest income ( 4,722) ( 6,018) ( 6,188)
3,427,463 1,809,956 1,538,200
Income from continuing
operations before provision for
income taxes and
cumulative effect of accounting
changes 131,754 51,013 70,465
Provision for income taxes 51,175 20,766 2,363
Income from continuing
operations before
cumulative effect of
accounting changes 80,579 30,247 68,102
Discontinued operations,
net of income taxes:
Income (loss) from operations,
net of income taxes
of $10,625,000 (1992) and
(647,000) (1991) ( 15,905) 7,262
Estimated loss on disposal,
net of income taxes of $79,531,000 (105,000)
Income (loss) from discontinued
operations ( 120,905)
7,262
Income (loss) before cumulative
effect of accounting changes 80,579 ( 90,658)
75,364
Cumulative effect of changes
in accounting for:
Income taxes
Continuing operations 56,000
Discontinued operations ( 43,000)
Turnarounds, net of taxes 3,203
Net income (loss) 80,579 (74,455)
75,364
Preferred stock dividend
requirements ( 10,063) ( 10,063)
(3,771)
Income (loss) attributable to
common shareholders $ 70,516 ($ 84,518) $
71,593
Income (loss) per common and common
equivalent share:
Primary:
From continuing operations $ 2.38 $ .68 $ 2.15
From discontinued operations ( 4.08) .24
From cumulative effect of
accounting changes .55
Income (loss) per share $ 2.38 ($ 2.85) $ 2.39
Fully diluted:
From continuing operations $ 2.33 $ .68 $ 2.12
From discontinued operations ( 4.08) .23
From cumulative effect of
accounting changes .55
Income (loss) per share $ 2.33 ($ 2.85) $ 2.35
The accompanying notes are an integral part of these
financial statements.
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Thousands of Dollars)
Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) $ 80,579 ($ 74,455) $ 75,364
Adjustments to arrive at
net cash provided by operating
activities:
Depreciation and depletion 35,618 25,740 26,756
Write-off of deferred loan costs 3,645
Amortization of deferred items 29,473 29,323 16,843
Inventory writedown 17,651
Environmental cost accrual 25,000 4,000
(Income) loss from discontinued operations 120,905 (7,262)
Cumulative effect of accounting changes ( 16,203)
Deferred income taxes ( 10,189) 9,044 2,979
Utilization of income tax benefits of
discontinued operations 41,791
(Increase) decrease:
Trade accounts receivable ( 83,431) ( 26,438) 20,931
Inventories ( 95,389) ( 7,123) ( 34,836)
Prepaid expenses and other
current assets ( 16,020) ( 1,677) 383
Increase (decrease):
Accounts payable and accrued
liabilities 151,236 61,578 ( 2,127)
Non-current liabilities and
deferred gains 3,676 3,128 ( 626)
Other, net ( 532) 2,795 ( 5,211)
Net cash provided by operating
activities 154,463 155,262 97,194
Cash flows from investing activities:
Purchase of property, plant and
equipment, net ( 73,897) ( 69,133) ( 41,170)
Purchase of Bayway assets, including
acquired inventories ( 317,630) ( 17,500)
Purchase of PNW Properties, including
acquired inventories ( 159,981)
Increase in deferred turnarounds,
charges and other assets ( 23,655) ( 35,324) ( 45,628)
Net proceeds from sale of
discontinued operations 91,217
Investment in discontinued operations ( 33,306) (126,777)
Net change in short-term investments
and deposits 2,181 ( 20,174) ( 696)
Proceeds from (investment in)
Continental-Tosco Limited Partnership 4,880 ( 16,194)
Net cash used in investing activities ( 476,885) ( 191,631) (214,271)
Cash flows from financing activities:
Proceeds from Bayway Mortgage Bonds 150,000
First Mortgage Bond Offering
Proceeds 300,000
Debt payments (186,608)
Refinancing of debt
Proceeds 200,000
Debt payments (137,311)
Borrowings under revolver, net 147,000
Early retirement of debt ( 50,000) ( 10,600)
Principal payments under debt
agreements ( 795) ( 5,261) ( 27,860)
Issuance of long-term debt 1,500
Issuance of Preferred Stock, net of expenses 111,197
Issuance of Common Stock, net of expenses 88,418
Dividends paid on Preferred and Common Stock ( 28,056) ( 27,825) ( 20,430)
Purchase of equity securities ( 14) ( 13,875) ( 2,091)
Other, net ( 713) 742 923
Net cash provided by financing activities 305,840 68,673 113,828
Net increase (decrease) in cash and cash
equivalents ( 16,582) 32,304 ( 3,249)
Cash and cash equivalents at beginning of year 71,673 39,369 42,618
Cash and cash equivalents at end of year $ 55,091 $ 71,673 $ 39,369
The accompanying notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Supplemental Disclosures of Cash Flow Information
(Thousands of Dollars)
Year Ended December 31,
1993 1992 1991
Cash paid during the year:
Interest $ 44,923 $ 24,878 $
25,229
Income taxes $ 2,576 $ 6,612 $
4,944
The accompanying notes are an integral part of these
financial statements.
<PAGE>
<TABLE>
TOSCO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY
(Dollar Amounts in Thousands)
<CAPTION>
Reductions from Capital
Common Stock Capital in Retained Treasury Stock, Total Common
Issued Excess of Earnings at Cost
Shareholders'
Shares Amount 4% Notes ParValue (Deficit) Shares Amount Other Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance,
January 1, 1991 31,691,509 $ 23,769 $ 2,170 $ 447,103 ($85,408) 1,814,831 ($52,900) ($1,487) $333,247
Net income 75,364 75,364
Accrual of preferred
stock dividends (1,255) (1,255)
Dividends paid 20,430) (20,430)
Purchase of Common Stock 115,880 (2,091) (2,091)
ESOP note activity 687 687
Conversion of
4% Notes 97,444 73 (2,196) 1,834 (289)
Exercise of
stock options 31,240 23 406 429
Other 675) ______ 26 (16) (26) ( 16)
Balance,
December 31 1991 31,819,518 23,865 - 449,327 (31,755) 1,930,711 ( 54,991) ( 800) 385,646
Net loss (74,455) (74,455)
Preferred stock dividends (10,063) (10,063)
Common stock dividends (17,762) (17,762)
Purchase of Common Stock 617,733 (13,875) (13,875)
Payment of
fractional shares
in cash (4,231) (87) (87)
ESOP note payment 800 800
Exercise of stock
options 5,933 4 86 90
Other (62) (61) (61)
Balance,
December 31, 1992 31,821,158 23,869 449,265 (134,035) 2,548,444 (68,866) 270,233
.....
Net income 80,579 80,579
Preferred stock dividends
( 10,063) (10,063)
Common stock dividends (17,993) (17,993)
Issuance of
Common Stock` 2,990,000 2,243 86,175 88,418
Purchase of Common Stock 555 ( 14) ( 14)
Other (713) ( 713)
Balance,
December 31, 1993 34,811,158 $26,112 $ $534,727 ($ 81,512) 2,548,999 ($68,880) $ $410,447
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Tosco Corporation and its wholly owned
subsidiaries (Tosco), including Seminole Fertilizer
Corporation (Seminole), a discontinued operation whose
principal operating assets were sold in 1993 (Note 5).
All significant intercompany accounts and transactions have
been eliminated.
Nature of Business
Tosco is one of the largest independent oil refiners (as
measured by crude distillation capacity) and wholesale
marketers of petroleum products in the United States. With
the acquisition of BP Exploration and Oil, Inc.'s (BP) assets
in Washington and Oregon, Tosco has partially integrated
downstream into retail gasoline marketing. Tosco also engages
in related commercial activities throughout the United States
and internationally, and has interests in oil shale properties
in Colorado and Utah.
Reclassifications
Certain previously reported amounts have been reclassified
to conform to classifications adopted in 1993.
Cash, Cash Equivalents, Short-term Investments and
Deposits
Tosco invests cash in excess of operating requirements in
cash equivalent short-term time deposits, money market
instruments, government securities and commercial paper.
Investments with original maturities of more than three months
are classified as short-term investments and carried at the
lower of cost or market.
The Loil Group Ltd. (Loil), a wholly-owned subsidiary of
Tosco, has issued director and officer liability insurance
policies to Tosco with limits of liability coverage of
$13,200,000 and $12,000,000 at December 31, 1993 and 1992,
respectively (an amount approximately equal to the amount of
cash, short-term investments and marketable securities
available to Loil). The portfolio is restricted to payment of
defense costs and claims made against the directors and
officers of Tosco.
Inventories
Inventories of raw materials and products are valued at
the lower of cost, determined on the last-in, first-out (LIFO)
basis, or market. The net realizable value of LIFO
inventories is measured by aggregating similar pools on a
consolidated basis.
Deferred Charges and Turnarounds
Financing charges related to the obtaining or refinancing
of debt are deferred and amortized over the expected life of
the related debt using the effective interest method.
Turnaround costs (which consist of complete shutdown and
inspection of major processing units at intervals of more than
one year for repairs and replacements) are deferred and
amortized over the period to the next scheduled unit
turnaround which generally ranges from 24 to 36 months. To
provide for a better matching of turnaround costs with
revenues, Tosco changed its accounting for turnaround costs,
effective January 1, 1992 to one that results in the deferral
and subsequent amortization of turnaround costs incurred on
all significant processing units. The cumulative effect of
this accounting change was an increase in earnings of
approximately $3,203,000 (net of income taxes of approximately
$2,138,000) or $.11 per share for 1992.
Property, Plant and Equipment
Property, plant and equipment, including capitalized
interest, are carried at cost less accumulated depreciation.
Depreciation and amortization are provided over the estimated
useful lives of the respective classes of assets utilizing the
straight-line method. Expenditures which materially increase
values, change capacities or extend useful lives are
capitalized. Routine maintenance, repairs, and replacement
costs are charged against income. Upon disposal of
facilities, cost, less proceeds, is charged against
accumulated depreciation unless extraordinary in nature or
amount.
Excise Taxes
Excise taxes collected on the sale of products are remitted
to governmental agencies and are not included in sales, cost
of sales or other expenses.
Environmental Costs
Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or
future revenue generation, are expensed. Liabilities are
recorded when environmental assessments and/or remedial
efforts are probable and the costs can be reasonably
estimated. Generally, the timing of these accruals coincides
with completion of a feasibility study or Tosco's commitment
to a formal plan of action.
Postretirement Benefits
Effective January 1, 1992, Tosco adopted Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions,"
electing to prospectively amortize its accumulated
post-retirement benefits liability.
Income Taxes
Effective January 1, 1992, Tosco adopted SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, Tosco's
deferred income tax liabilities are adjusted for the estimated
future tax effects attributable to "temporary differences"
(differences between book and tax bases of assets and
liabilities) at enacted tax rates. The cumulative effect of
this change in accounting method as of January 1, 1992 was an
increase in net income of $13,000,000 or $.44 per share for
1992.
Earnings Per Share
Primary earnings per share are computed by dividing income
attributable to common shareholders (net income less preferred
stock dividend requirements) by the weighted average number of
common and common equivalent shares outstanding during the
year. Fully diluted earnings per share computations assume
(unless the effect is antidilutive) that all shares of $4.375
Series F Cumulative Convertible Preferred Stock (Series F
Stock) were converted to common stock of Tosco (Common Stock)
at the date of issue and that no preferred dividends were
paid.
The weighted average number of shares used in computing
earnings per share are as follows:
Year Ended December 31,
1993 1992 1991
(In Thousands)
Primary 29,679 29,618 29,965
Fully Diluted 34,641 29,618 32,074
2. Acquisition of Bayway Refinery
On April 8, 1993, Bayway Refining Company, a wholly-owned
subsidiary of Tosco, completed its acquisition of a refinery
and related facilities located in Linden, New Jersey (Bayway)
from Exxon Corporation (Exxon). The purchase price of
approximately $175,000,000, plus related acquisition costs of
approximately $4,056,000 was fully allocated to the acquired
assets, based upon their estimated fair values as of the date
of acquisition. Inventories in storage, with a negotiated
value of $164,630,000, were also purchased from Exxon at the
closing of the acquisition. The funds paid for the
acquisition, including the $17,500,000 deposit made in
December 1992, were received from a combination of sources,
including an equity contribution by Tosco (from the net
proceeds from the sale of bonds), intercompany loans and cash
borrowings under its revolving credit facility (Note 10).
3. Acquisition of Pacific Northwest Properties
On December 28, 1993, Tosco completed the acquisition of BP
Exploration & Oil, Inc.'s (BP), retail marketing and refining
assets located in the states of Washington and Oregon (PNW
Properties). The purchase price of the PNW Properties was
$123,895,000 plus the value of inventory, and a profit
participation of up to $150,000,000 over the five years
following the acquisition. Profit participation payments
relating to the refining operation's performance will be
limited to a cumulative total of $50,000,000, while such
payments relating to the performance of retail marketing will
be limited to a cumulative total of $100,000,000. Tosco or BP
may elect liquidation of the participation agreement for the
retail marketing segment on an annual basis beginning in
December 1994. The retail participation liquidation payment,
which if elected by Tosco is higher than if elected by BP,
decreases over the five year term of the agreement. There
were no amounts due to BP at December 31, 1993 under this
agreement. The assets acquired include the Ferndale Refinery
(located in Ferndale, Washington) with a current capacity of
approximately 85,000 barrels per day, two product distribution
terminals located in Washington, retail marketing assets
located in Washington and Oregon, and the right to market
under the BP brand for at least five years. BP has agreed to
supply the Ferndale Refinery, at Tosco's option, with crude oil
for a period of five years. The purchase price has been
preliminarily allocated to the refinery and terminal assets
($47,895,000) and the retail assets acquired ($76,000,000).
A final allocation of the purchase price, and disclosure of
future minimum lease obligations, will be determined in 1994
when appraisals and other studies are completed.
The funds for the acquisition were received from a
combination of sources, including net proceeds of $88,418,000
received from a public offering of Common Stock, available
cash and funds available under Tosco's revolving credit
agreement.
4. Financial Instruments
Tosco makes extensive use of futures and forward contracts
principally to hedge refining margins on a varying percentage
of Bayway's future production. Futures and forward contracts
are
used to lock in margins between the cost of raw materials
purchased and the selling value of refined products produced,
primarily gasoline and heating oil, generally for periods not
exceeding one year. Gains and losses relating to raw material
futures contracts are deferred until the related refined
products are produced. Unrecognized net gains at December 31,
1993, on futures and forward contracts were approximately
$11,000,000.
Pursuant to the requirements of the commodity exchanges,
margin deposits for a percentage of the value of the futures
contracts have been placed with commodity brokers. The margin
deposits are classified as short-term deposits on the
balance sheet.
Fair Values
Estimated fair values of financial instruments and their
method of determination, are as follows:
December 31, 1993
Carrying Value Fair Value
(Thousands of Dollars)
Cash and cash equivalents $ 55,091 $ 55,091 (a)
Short-term investments
and deposits 30,035 30,035 (a)
Current liabilities 311,030 311,030 (a)
Mortgage and Exchange Bonds 450,000 490,170 (b)
Revolving Credit Facilities 147,000 147,000 (c)
Note collateralized by oil
shale properties
and other long-term debt 6,306 (d)
Interest rate swaps, net (2,690) (e)
(a) Because of the short-term maturity of these instruments,
carrying value approximates fair value.
(b) The fair value of these instruments reflects quoted market
prices at December 31, 1993.
(c) Borrowings under the floating rate revolving credit
facilities approximate fair value.
(d) These instruments are not publicly traded; therefore the
fair value is not practicable to estimate.
(e) As required by a former loan agreement, Tosco entered into
a
five year interest rate swap agreement in 1991 which was
intended
to convert a predetermined percentage of floating rate bank term
debt to fixed rate term debt. At December 31, 1993, the
notional amount (the amount used to measure interest to be paid
or received) of the interest rate swap was $63,500,000.
Concurrent with the retirement of the floating rate bank
term debt, Tosco entered into a second interest rate swap
agreement in 1992 pursuant to which Tosco received fixed
rate interest and paid floating rate interest. In March 1993,
Tosco terminated the second interest rate swap and received
$3,200,000 which is being amortized over the term of the
agreement. The fair value indicated in the table represents the
cost of terminating the first swap, net of the
unamortized gain on the second swap.
Credit Risk
Financial instruments which potentially subject Tosco to
concentrations of credit risk consist principally of temporary
cash investments, trade receivables and commodity futures and
forward contracts. To reduce credit risk, temporary cash
investments are spread among several high quality financial
institutions and Tosco conducts ongoing evaluations of its
broad base of customers and contract parties and requires
letters of credit or other collateral arrangements as
appropriate.
5. Discontinued Operations
On May 4, 1993, Seminole completed its previously announced
sale of its principal operating assets to Cargill Fertilizer
Inc. (Cargill) for approximately $127,000,000. Under the
terms of the sale agreement, Seminole executed promissory
notes to Cargill totalling $14,500,000, payable in two equal
installments on January 1, 1994 and 1995, for land reclamation
liabilities that Cargill also assumed. The cash proceeds, net
of amounts utilized to extinguish outstanding borrowings under
a revolving credit agreement and for payment of certain
liabilities, of approximately $91,217,000 were paid to Tosco
as a reduction of outstanding intercompany debt. A fourth
quarter 1992 loss of $105,000,000 was recorded to reflect the
estimated loss on sale of Seminole's principal operating
assets, the estimated cost of disposing of its interest in the
Fort Meade Chemical Products partnership (FMCP), and a
provision for estimated operating losses during the phase-out
period.
Net assets (liabilities) of the discontinued segment are as
follows:
December 31,
1993 1992
(Thousands of Dollars)
Assets (a) $ 46,059 $ 389,854
Long-term debt (b) ( 32,982) ( 66,339)
Other liabilities ( 24,810) ( 97,240)(c)
Estimated loss on disposal(d) ( 105,000)
Net assets (liabilities)
of discontinued operations ($ 11,733) $121,275
(a) Other assets at December 31, 1993 include a receivable for
income taxes of $37,740,000 (related to tax benefits of
Seminole's losses from operations and sale of assets) which will
be utilized to reduce Tosco's consolidated tax liability
reflected on federal and state income tax returns.
(b) A subsidiary of Seminole
entered into an agreement for the sale of its partnership
interest in FMCP to U.S. Agri-Chemicals Corporation
effective January 1, 1994. Pursuant to the sale
agreement, the subsidiary remains obligated for its 50%
share of the debt of FMCP, which at December 31, 1993
consisted of $20,482,000 capital lease obligations and
$12,500,000 of bonds. The $12,500,000 of bonds were
called by the holder and paid in February 1994. At
December 31, 1992 long-term debt included $33,000,000 of
borrowings under the revolving credit facilities.
(c) $10,000,000 of estimated reclamation costs relating to
Seminole has been reclassified to discontinued operations.
(d) The estimated loss on disposal is presented net of related
income tax benefits of $79,531,000.
6. Inventories
December 31,
1993 1992
(Thousands of Dollars)
Raw materials $ 130,233 $ 37,941
Intermediates 26,723 17,187
Finished products 205,281 66,280
Retail 1,111
363,348 121,408
Less LIFO reserve 28,248
$ 363,348 $ 93,160
Results of operations for the year ended December 1993, include
a charge of $17,651,000 for the writedown
of inventory to estimated net realizable value as of December
31, 1993.
7. Other Assets
December 31,
1993 1992
(Thousands of Dollars)
Bayway Refinery acquisition deposit $ $17,500
Investment in Continental-Tosco
Limited Partnership (CT-LP) (a) 10,180 15,637
Other assets 7,583 6,474
$ 17,763 $ 39,611
(a)During the fourth quarter of 1993 Tosco withdrew its
participation in CT-LP, and received a portion of its
investment. Tosco anticipates recovering its remaining
investment in 1994.
8. Property, Plant and Equipment
December 31, Straight-Line
1993 1992 Annual Rate
Thousands of Dollars)
Land $ 51,287 $ 14,654
Refineries and
related assets 746,948 530,260 4% to 15%
Retail marketing and
related assets 76,000 5% to 20%
Office buildings,
furniture, fixtures
and improvements 30,070 9,993 3% to 33%
Transportation equipment 33,595 13,806 4% to 33%
Mineral properties,
principally oil shale
interests (a) 21,815 21,815
Natural gas properties 3,569 3,569
Construction in progress 45,726 66,918
1,009,010 661,015
Less accumulated
depreciation
and amortization 285,745 270,424
$ 723,265 $ 390,591
(a) At cost, net of impairments.
Expenditures for maintenance and repairs (excluding the
amortization of turnaround costs) were $74,596,000,
$53,480,000, and $54,243,000 for 1993, 1992 and 1991,
respectively.
9. Accounts Payable and Accrued Liabilities
December 31,
1993 1992
(Thousands of Dollars)
Accounts payable - trade $ 220,954 $ 133,100
Accrued taxes other than
taxes on income 36,250 18,908
Accrued compensation and
related benefits 7,365 3,014
Accrued interest 10,791 8,297
Income taxes payable (receivable) 14,106 ( 3,141)
Accrued dividends on preferred stock 1,253 1,253
Acquisition related liabilities 10,938
Other accrued costs 8,586 5,842
$ 310,243 $ 167,273
10.Long-Term Debt
December 31,
1993 1992
(Thousands of Dollars)
Collateralized
First Mortgage Bonds (a) (c) $ 300,000 $ 300,000
Exchange Bonds (b) (c) 150,000
Revolving Credit Facilities (c) 147,000
Note collateralized by oil shale
mining properties (d) 5,647 6,018
Uncollateralized
8% Convertible Subordinated
Debentures (e) 50,000
Other 1,446 1,543
604,093 357,561
Less: Current installments 787 800
$ 603,306 $ 356,761
(a)In March 1992, Tosco sold $300,000,000 of First Mortgage
Bonds (Bonds), comprised of $100,000,000 of 9% Series A
Bonds due March 15, 1997 and $200,000,000 of 9-5/8% Series
B Bonds due March 15, 2002. Interest on the Bonds is
payable each March 15th and September 15th. The Bonds are
non-callable and are collateralized by the Avon Refinery
and certain related assets.
(b)In connection with the acquisition of the Bayway Refinery,
Tosco sold in a private placement $150,000,000 of 8-1/4%
First Mortgage Bonds due May 15, 2003 (Bayway Mortgage
Bonds) which are guaranteed by Bayway. The Bayway
guarantee is collateralized by the Bayway Refinery and
related assets and a guarantee of Tosco. Proceeds from the
sale of the Bayway Mortgage Bonds, net of $2,325,000 of
costs, were contributed as an equity investment to Bayway.
Interest on the Bayway Mortgage Bonds, is payable
semi-annually commencing May 15, 1993. Tosco, pursuant to
a registration statement effective July 7, 1993, exchanged
the Bayway Mortgage Bonds for a new series of its 8-1/4%
First Mortgage Bonds due May 15, 2003 (Exchange Bonds) the
terms of which are substantially identical to the Bayway
Mortgage Bonds. The Exchange Bonds are publicly traded.
All of the Bayway Mortgage Bonds were exchanged for the
Exchange Bonds, and the exchange offer expired on August
20, 1993.
(c) In connection with the acquisition of the Bayway Refinery,
Tosco entered into a new credit agreement (New Credit
Agreement) with a group of bank lenders which provides up
to $350,000,000 of revolving credit availability (New
Revolving Credit Facilities) for working capital purposes
(based upon a borrowing base of eligible investments,
accounts receivable and inventory). Cash borrowings under
the New Revolving Credit Facilities bear interest at the
option of Tosco at either the prime rate plus a margin
ranging from zero to 1/4% or at the Eurodollar rate plus
a margin ranging from 1% to 1-1/2%. The incremental margin
is dependent on the credit rating of the First Mortgage
Bonds. A commitment fee of 3/8% per annum on the unused
portion of the commitment is also due. The New Credit
Agreement is collateralized by investments, accounts
receivable, and inventory of Tosco and Bayway. The New
Credit Agreement expires in April 1997.
The loan agreements for the Bonds, the Exchange Bonds, and
the New Credit Agreement contain covenants which limit
Tosco's ability to incur additional indebtedness, pay
dividends, acquire equity securities of Tosco, make
investments in certain subsidiaries and make discretionary
capital expenditures. In addition, the New Credit
Agreement requires the maintenance of specified ratios and
net worth. At December 31, 1993, Tosco was in compliance
with all debt covenants.
(d)On December 17, 1987, The Oil Shale Corporation, a
subsidiary of Tosco, exercised options to acquire certain
oil shale mining claims (Ertl and Paraho oil shale
properties in Rio Blanco County, Colorado) for a cash
payment of $1,150,000 and execution of a promissory note
of $11,562,000, payable in fifteen equal annual principal
installments beginning on December 17, 1990. The
promissory note, with a stated interest rate of 5%, was
discounted, based upon long-term market rates, to a value
of $6,356,000 at the date of issue.
(e)On October 15, 1980, Tosco International Finance, N. V.,
(TIFNV), a wholly-owned subsidiary of Tosco, sold
$50,000,000 of 8% Convertible Subordinated Debentures due
October 15, 1995 (Debentures) outside the United States.
The Debentures, which were guaranteed by Tosco, were
convertible into Common Stock at $186.875 per share. In
August, 1993, TIFNV completed the redemption of the
Debentures for approximately $53,311,000 (the principal
amount plus accrued interest).
Future Installments of Long-Term Debt
Maturities relating to long-term debt during the next five
years are as follows:
Years Ending Thousands
December 31, of Dollars
1994 $ 787
1995 771
1996 771
1997 247,771 (a)
1998 771
(a) Includes cash borrowings of $147,000,000 at December 31,
1993
under the revolving credit facility. The borrowings
will vary according to Tosco's working capital
requirements.
Utilization of Working Capital Facilities
December 31,
1993 1992
(Thousands of Dollars)
Revolving Credit Facilities
Cash borrowings $ 147,000 $
Letters of credit 142,177 17,443
Total utilization 289,177 17,443
Availability 60,823 52,557
Total credit line $ 350,000 $ 70,000
11.Capital Stock
Series F Preferred Stock
In August 1991, Tosco issued 2,300,000 shares of Series F
Stock for an aggregate value of $115,000,000 (net proceeds of
$111,197,000). The Series F Stock is convertible into 2.0833
shares of Common Stock, equivalent to a conversion price of
$24.00 per share of Common Stock, subject to adjustment in
certain events. The Series F Stock is not subject to any
mandatory redemption or sinking fund provision and is not
redeemable prior to August 15, 1994. The Series F Stock is
subsequently redeemable, in whole or in part, at the option of
Tosco at redemption prices beginning at $53.0625 per share and
declining to $50 per share plus accrued dividends on August
15, 2001. Dividends of $1.09375 per share are payable
quarterly. No cash dividends can be declared or paid on any
stock junior to the Series F Stock in the event of dividend
arrearages. If six quarterly dividends are in arrears, the
holders of the Series F Stock, voting as a separate class,
shall be entitled to elect two additional directors until all
cumulative dividends are paid.
Common Stock
In December 1993, Tosco received net proceeds of
$88,418,000 from a public offering of 2,990,000 shares of
Common Stock.
Common Stock Purchases
In October 1990, Tosco's Board of Directors authorized the
acquisition of up to 2,000,000 common share equivalents in the
open market or otherwise at prices Tosco considers opportune
(Common Stock Acquisition Program). In 1990 and 1991, Tosco
acquired a total of 154,580 shares of Common Stock pursuant to
the Common Stock Acquisition Program. In July 1992, Tosco's
Board of Directors renewed its previous authorization and
Tosco acquired 606,000 shares of Common Stock during the
remainder of 1992.
Tosco also purchased 12,288 shares of Common Stock from the
Tosco Employee Stock Ownership Plan (ESOP) during 1992 and
1993 pursuant to a program which allows employees who have
reached retirement age to transfer their vested investment in
Common Stock to the Tosco Corporation Capital Accumulation
Plan (Note 14).
12.Stock Options and Shares Reserved For Issuance
Tosco had three stock option plans in effect at December
31, 1993: the 1992 Stock Incentive Plan (1992 Plan), the 1989
Stock Incentive Plan (1989 Plan), and the Long Term Incentive
Plan of 1979 (as amended) (LTIP). Grants may no longer be
made under the LTIP; however, grants previously made may be
exercised until their expiration date or termination of
employment.
The 1989 and 1992 Stock Incentive Plans
The 1989 and 1992 Stock Incentive Plans provide for the
issuance to key employees, consultants, and non-employee
directors of a maximum of 1,280,000 and 1,200,000 shares of
Common Stock, respectively, in the form of stock options,
restricted stock awards and/or stock appreciation rights.
Stock options may be granted as "Incentive Stock Options" (as
defined by the Internal Revenue Code of 1986), or as
nonqualified options, including nonqualified stock options
whose purchase price or vesting requirements are based on the
employee's achievement of established performance objectives.
Options may be exercised as determined by the Compensation
Committee of the Board of Directors (Compensation Committee)
but in no event after ten years and one day from the date of
grant. The exercise price of nonqualified stock options is
determined by the Compensation Committee and may be less than
the fair market value of Common Stock on the date of grant.
No awards may be granted under the 1989 and 1992 Plan after
March 7, 1999 and March 13, 2002, respectively.
Nonqualified stock options (Stock Options) to acquire an
aggregate of 566,500 shares of Common Stock at prices ranging
from $21.69 to $31.37 per share (the adjusted average of the
high and low market prices of Common Stock on the respective
dates of grant) were granted to key employees and one
non-employee director during 1993. Subject to the severance
agreements with certain key employees (Note 16), each of the
grants is exercisable as to one-third of such shares at any
time following the first anniversary of the date of grant and
an additional one-third after each of the second and third
anniversaries. Stock appreciation rights with respect to
12,000 shares of Common Stock were also granted. The exercise
of Stock Options results in the cancellation of the same
number of stock appreciation rights as to which the Stock
Options are exercised.
<PAGE>
<TABLE>
<CAPTION> Year Ended December 31,
1993 1992 1991
Option Price Option Price Option Price
Shares Per Share Shares Per Share Shares Per Share
<S>tanding, <C> <C> <C> <C> <C> <C>
beginning of year 1,468,099 $11.90 to $28.56 1,003,032 $11.90 to $24.63 623,072 $11.90 to $21.88
Grants - 1992 Plan 542,500 $21.69 to $25.94 193,500 $28.56
Grants - 1989 Plan 24,000 $31.37 324,000 $27.75 to $28.56 449,000 $14.81 to $24.63
Exercised ( 221,633) $18.86 to $23.56 ( 21,933) $11.90 to $28.56 ( 31,240) $11.90 to $18.75
Expired or Cancelled ( 193,667) $28.44 to $28.56 ( 30,500) $18.75 to $23.56 ( 37,800) $18.88 to $21.88
Outstanding, end
of year <F1> 1,619,299 $14.38 to $31.37 1,468,099 $11.90 to $28.56 1,003,032 $11.90 to $24.63
Exercisable 722,799 550,766 289,365
Available for future grant 697,167 1,009,000 357,000
Shares reserved for:
Exercise of stock options 2,316,466 2,477,099 1,360,032
Conversion of 8% Debentures 267,558 267,558
Conversion of Series
F Stock 4,791,590 4,791,590 4,791,590
Total shares reserved 7,108,056 7,536,247 6,419,180
<FN>
<F1> As of December 31, 1993, the expiration dates of options
outstanding
range from May 25, 1994 to January 31, 2003.
</TABLE>
On January 19, 1994, options to purchase 165,000 shares of
Common Stock were granted under the 1989 Plan at a price of
$29.25 per share.
13.Income Taxes
The provision for income taxes is summarized below:
Year Ended December 31,
1993 1992 1991
(Thousands of Dollars)
Current:
Federal $ 51,915 $ 9,293 $ 1,059
State 12,096 3,225 3,542
Foreign 218 336 532
Total current 64,229 12,854 5,133
Deferred:
Federal ( 6,366) 6,546 300
State ( 3,823) 1,366 2,800
Total deferred ( 10,189) 7,912 3,100
Adjustment to prior
year estimated
income taxes (a) ( 2,865) ( 5,870)
Provision for
income taxes $ 51,175 $ 20,766* $ 2,363
* Excluding effect of accounting changes.
(a) See footnote below following table.
A reconciliation of the provision for income taxes to income
taxes computed by applying the statutory federal income tax
rate to earnings before income taxes is as follows:
Year Ended December 31,
1993 1992 1991
(Thousands of Dollars)
Computed income taxes
at 35% for 1993
and 34% for 1992 and 1991 $ 46,114 $ 17,344 $ 23,958
State income taxes 11,858 4,591 6,342
Federal tax benefit of
state income taxes ( 4,150) (1,560) (127)
Foreign and other taxes 218 391 532
Tax benefit of NOL carryforwards (22,472)
Adjustment to prior
year estimated
income taxes (a) ( 2,865) ( 5,870)
$ 51,175 $ 20,766* $ 2,363
* Excluding effect of accounting changes.
(a) The provision for income taxes for 1993 includes tax
credits of approximately $2,500,000 which were finalized
in tax returns filed in October 1993. The adjustment to
the provision for income taxes for 1991 is primarily
attributable to the net reversal of previously accrued
federal and state income taxes for 1990. Income tax
accruals for 1990 were based upon estimates of book/tax
temporary differences, filing status and apportionment data
which were further reviewed and refined in tax returns
filed in September and October 1991.
Temporary differences and carryforwards which give rise to
deferred tax assets and liabilities are as follows:
Year Ended December 31, 1993
1993 1992
(Thousands of Dollars)
Deductible temporary differences:
Environmental cost liability ( $29,440) ($29,440)
Inventories ( 22,318) ( 4,618)
Postretirement benefit
obligations other than pensions ( 3,439) ( 3,111)
Accrued liabilities
deductible for tax when paid ( 12,200) ( 12,349)
Deferred state income taxes (a) ( 3,273) ( 7,096)
Other ( 14,180) ( 4,094)
Tax carryforwards:
Net operating losses (b) ( 176,718) (200,061)
Capital losses ( 18,056)
( 261,568) (278,825)
Taxable temporary differences:
Property, plant and equipment 178,320 186,683
Deferred turnarounds
expensed for tax 7,251 12,000
Other 3,872 5,709
189,443 204,392
Total temporary differences
and carryforwards, net ( 72,125) ( 74,433)
Valuation allowance (d) 18,056
Total temporary differences
and carryforwards
after valuation allowance ($ 72,125) ($56,377)
Federal income taxes
at 35.12% in 1993 and
34.12% in 1992 ($ 25,330) ($19,236)
Tax credit carryforwards (b) ( 14,659) ( 14,659)
Alternative minimum tax
(AMT) credit carryforwards (c) ( 9,242) ( 8,970)
Deferred federal income tax asset ($ 49,231) ($42,865)
Current deferred ($ 12,123) ($ 5,959)
Long-term deferred ( 37,108) ( 36,906)
($ 49,231) ($ 42,865)
(a)Deferred state income tax liabilities of $3,273,000 and
$7,096,000 in 1993 and 1992, respectively, were provided for
temporary differences primarily related to the excess of state
tax over book depreciation. There are no significant NOL or
tax credit carryforwards available for state tax
computations.
(b)The NOLs were generated during the four-year period 1983
through 1986 during which Tosco disposed of three refineries and
its investments in oil and gas ventures and restructured its
operations around the Avon Refinery. Approximately
$9,000,000 of NOL's expires in 2000 while the remainder
of $168,000,000 expires in 2001. Investment tax credit
carryforwards expire in 1997 ($4,334,000), 1998
($8,330,000), 1999 ($464,000), 2000 ($732,000), 2001
($337,000), 2002 ($462,000).
(c) Alternative minimum tax credit carryforwards may be
carried forward indefinitely.
(d) The change in the valuation allowance is due to the
expiration of the capital loss carryforwards (for which the
valuation allowance was originally provided) during 1993.
Tosco believes that it is more likely than not that the
federal deferred tax asset will be realized prior to the
expiration of the carryforward period based upon the expected
continuation of Tosco's profitable results of continuing
operations since 1986 and resultant taxable income.
14 Employee Benefit and Incentive Compensation Plans
Pension Plans
Tosco has non-contributory, defined benefit pension plans
covering substantially all of its employees located at the
Avon and Bayway Refineries and its union employees at the
Ferndale Refinery (collectively, the Plans). The benefits
under the Plans generally are based on the employee's years of
service and average earnings for the three highest consecutive
calendar years of compensation during the ten years
immediately preceding retirement. Contributions to the Plans
are at least sufficient to meet the minimum funding
requirements of applicable laws and regulations but no more
than the amount deductible for federal income tax purposes.
The assets of the Plans are managed by major financial
institutions and invested in high quality equity securities,
guaranteed investment contracts, corporate and government debt
securities and commingled real estate equity funds. The
funded status of the Plans and amounts recognized in Tosco's
balance sheet are as follows:
December 31,
1993 1992
(Thousands of Dollars)
Actuarial present value
of benefit obligations:
Vested benefits ($35,109) ($26,317)
Nonvested benefits ( 1,056) ( 695)
Accumulated benefit
obligations (ABO) ( 36,165) ( 27,012)
Plan assets at fair value 41,920 34,975
Plan assets in excess of ABO $ 5,755 $ 7,963
Projected benefit obligations
(PBO) for services
rendered to date ($65,036) ($35,593)
Plan assets at fair value 41,920 34,975
PBO in excess of plan assets ( 23,116) ( 618)
Prior service cost not yet
recognized in net periodic
pension cost 15,240 58
Unrecognized net loss 7,054 264
Unrecognized net obligation
at January 1, 1987
being amortized over 15 years 2,302 2,545
Prepaid pension cost $ 1,480 $ 2,249
Net pension cost included
the following components:
Service costs $ 3,668 $ 2,036
Interest cost 3,581 2,536
Actual return on plan assets ( 3,521) ( 2,180)
Net amortization and deferral 1,843 56
Net pension cost $ 5,571 $ 2,448
Major assumptions at year end (a)
Assumed discount rate (b) 7% 7-1/2%
Assumed rate of future compensation increase 5% 5%
Expected rate of return on plan assets 7-1/2% 7-1/2%
____________________
(a) Net pension cost is determined using the assumptions as of
the beginning of each respective year. The funded status of
the Plans is determined using the assumptions as of the
end of each respective year. Net pension cost for 1991
was $1,961,000.
(b) The discount rate assumption reflects annuity purchase
rates
at which pension obligations could be settled.
Effective January 1, 1993, certain employees who had been
participants in the Tosco Corporation Pension Plan (terminated
August 1985) were allowed a one-time election to either
continue to receive a 5% of compensation non-matching
contribution in lieu of pension or to rejoin the Plan. Thirty
nine employees elected to be covered by the Plan and account
for approximately $3,700,000 of the present value of projected
benefit obligation as of December 31, 1993.
In connection with Tosco's acquisition of the Bayway and
Ferndale refineries, Tosco granted coverage under its Plan to
certain acquired employees. The terms of the coverage
provided for recognition of past service subject to the offset
of any pension benefits accrued through April 7, 1993 and
December 27, 1993, respectively, and payable at age 65. As a
result the PBO as of December 31, 1993 was increased by
approximately $17,400,000.
In 1990, Tosco adopted a Senior Executive Retirement Plan
to provide retirement benefits to selected senior executives
of Tosco and their beneficiaries. A provision of $1,267,000,
$1,237,000 and $797,000 was recorded in 1993, 1992 and 1991,
respectively.
Employee and Retiree Benefit Plans
Tosco provides certain health care and life insurance
benefits for the majority of its Avon employees when they
reach retirement age. Beginning January 1, 1988, new
employees of Tosco not employed at the Avon Refinery are not
eligible for postretirement health care and life insurance
benefits. Benefits for eligible retired, as well as active,
employees are provided through insurance companies whose
premiums are based on the benefits paid during the year.
Tosco elected to prospectively recognize its accumulated
postretirement benefits obligation (APBO) other than pensions
of $32,661,000 as of January 1, 1992, the effective date of
Tosco's adoption of SFAS No. 106. In view of the escalating
costs of medical care, Tosco adopted several changes to its
employee benefit plans which, among other things, reduced
Tosco's APBO to $25,094,000 as of January 1, 1993. The total
cost of retiree benefits, including the amortization of the
transition obligation, was $2,541,000 for 1993, an increase of
$328,000 over the amount which would have been expensed under
the pay as you go approach.
The funded status of the postretirement plans and the amounts
recognized in Tosco's balance sheet are as follows:
December 31,
1993 1992
(Thousands of Dollars)
Accumulated postretirement
benefit obligation (APBO):
Retirees $18,787 $ 23,310
Fully eligible active plan participants 3,241 3,694
Other active plan participants 3,769 4,460
25,797 31,464
Plan assets at fair value
(Insurance assets) 5,580 5,436
APBO in excess of plan assets 20,217 26,028
Unrecognized net gain from past
experience different
from that assumed and from other changes 31 8,111
Unrecognized transition obligation (16,809) ( 31,028)
Accrued postretirement benefit liability $ 3,439 $ 3,111
Net periodic postretirement benefit cost for 1993 and 1992
includes the following components:
Amortization of transition
obligation over 20 years $ 934 $ 1,633
Interest cost on APBO 1,813 3,094
Service cost 189 589
Actual return on life insurance assets ( 411) ( 404)
Net amortization and deferral 16 7
Net postretirement benefit cost 2,541 4,919
Liability at beginning of year 3,111
Employer payments, net of employee
contributions ( 2,213) ( 1,808)
Accrued postretirement benefit liability $ 3,439 $ 3,111
The discount rate used in determining the APBO at December
31, 1993 was 7.0%. For measurement purposes, a 11% annual
rate of increase in the per capita cost of postretirement
medical benefits was assumed for 1993; the rate was assumed to
decrease (to 10% for 1994) gradually to 6% for 2002 and remain
at that level thereafter. Increasing the assumed health care
cost trend rates by one percentage point in each year would
have increased the APBO as of December 31, 1993 by $1,977,000
and net periodic postretirement benefit cost for 1993 by
$137,000. The assumed rate of return on life insurance assets
(composed of reserves held by the insurer) for 1993 was 7.5%.
Savings Plan
A savings plan has been established for all eligible
employees of Tosco (Tosco Corporation Capital Accumulation
Plan (CAP)) to encourage long-term savings and to provide
additional funds for retirement. Participants may make,
within certain limitations, voluntary contributions under
Section 401(k) of the Code based upon a percentage of their
compensation. Tosco makes matching contributions based upon
years of contributory participation (as defined under the CAP)
for employees who elect to make certain specified and minimum
contributions. In addition, eligible employees receive an
additional contribution equal to 5% of their compensation (up
to $235,840 in 1993 and $150,000 in 1994) which is intended to
replace
Tosco's contribution under a terminated pension plan.
Participants are fully vested in both their voluntary and
Tosco contributions at all times.
Contributions by Tosco to the savings plan for the years
ended December 31 were $5,524,000 (1993), $2,379,000 (1992),
and $1,957,000 (1991).
Management Incentive Plans
A Cash Incentive Plan (CIP) was established for members of
middle and senior management in 1987. The CIP sets forth
suggested awards which are computed as a percentage of a
participant's base salary, which percentage is dependent upon
Tosco's pretax income (as defined). Effective January 1,
1990, Tosco also adopted a bonus plan for senior executives
who are not participants in the CIP based on per share pretax
income (as defined).
Results of operations for the years ended December 31,
1993, 1992 and 1991 include provisions for incentive
compensation of $9,531,000, $5,616,000 and $4,100,000
respectively, of which $7,458,000, $4,393,000 and $3,398,000,
respectively, were included in selling, general and
administrative expenses. In addition, a special bonus of 2%
of annual base salary (totaling $1,623,000), made at the
discretion of the Board of Directors, was awarded to all
employees not covered by management incentive plans in light
of the strong operational and financial performance of Tosco
in 1993.
Employee Stock Ownership Plan
In 1992, Tosco's Board of Directors authorized the merger
of the ESOP into the CAP. Effective January 1, 1993,
contributions of 2% of eligible pay were made to the CAP for
those participants previously eligible for the ESOP. ESOP
expense for the years ended December 31 was $516,000 (1992)
and $883,000 (1991).
15. Lease Commitments
Tosco distributes transportation fuels throughout its
marketing areas through a combination of owned and leased
terminals. Two major West Coast terminal leases scheduled to
expire in 1991 were renegotiated for ten year terms.
Long-term leases for the Riverhead Terminal and Northville's
oil distribution system were acquired in 1992 and 1993,
respectively. The other terminal leases are generally for
short term periods of time and continue in effect until
cancelled by either party. The terminal leases are subject to
escalation, either based upon increases in annual average wage
rates or as allowed by the Public Utilities Commission (PUC).
A portion of the terminals' storage and handling facilities
are periodically subleased to others. Tosco also leases a
sulfuric acid manufacturing plant located at the Avon Refinery
(which lease expires in 1998 with an option to renew for an
additional period), transportation and computer equipment, and
office space primarily in Concord, California and Stamford,
Connecticut. Some of the terminal leases and substantially
all of Tosco's other leases require additional payments for
insurance, taxes and maintenance expenses related to the
leased assets.
In June 1992, Tosco entered into a 5-1/2 year operating
lease agreement for the Riverhead Terminal (a 5.1 million
barrel petroleum storage facility with deep water marine
facilities located on Eastern Long Island, New York). Under
the agreement, Tosco is responsible for all insurance, taxes
and maintenance costs and has the option to purchase the
terminal at the end of the lease for its fair market value.
Minimum annual rentals, a portion of which vary with a
reference interest rate (Eurodollar Rate), approximate
$2,400,000 (excluding a $11,550,000 payment due at the end of
the lease). A portion of the terminal storage capacity is
subleased under long-term contracts to third parties.
During the fourth quarter of 1993 Tosco entered into a nine
year operating lease agreement for Northville Industries
Corporation's oil distribution system on Long Island, New
York. The Northville system has storage capacity for more
than 775,000 barrels of gasoline, low sulfur diesel fuel and
home heating oil which are intended to be supplied from the
Bayway Refinery. Under the agreement, Tosco is responsible
for certain insurance, taxes, maintenance and operating costs.
Minimum annual rentals approximate $4,200,000 for the first
five years and $4,700,000 thereafter.
In December 1993, Tosco entered into a 16-1/2 year
operating lease of a methyl tertiary butyl ether (MTBE)
facility located at the Avon Refinery. The MTBE facility,
which cost approximately $43,300,000 to construct, including
transaction costs, has the capacity to produce 2,600 barrels
per day of MTBE, an oxygenate which can be used as an integral
component of "reformulated" gasoline. Minimum annual payments
for 1994 and 1995 total $2,162,000 and $2,518,000,
respectively, and commence in December 1994. Annual payments
of $4,680,000 and $5,720,000 commence in June 1996 and June
2002, respectively. Tosco has an option to purchase the
facility at the end of the lease for $15,900,000, its
approximate market value.
Future minimum obligations under non-cancellable operating
leases and warehousing agreements at December 31, 1993 were as
follows:
Years Ending Thousands
December 31, of Dollars
1994 $ 16,080
1995 16,017
1996 18,777
1997 20,525
1998 15,746
1999 and subsequent 98,764
Total minimum payments (a) $ 185,909
(a) Excludes lease commitments of PNW Properties (Note 3).
Rental expense was as follows:
Year Ended December 31,
1993 1992 1991
(Thousands of Dollars)
Minimum rental and
warehousing charges $25,428 $15,644 $13,447
Contingent rental and
warehousing charges
(based primarily on throughput) 4,203 3,494 3,532
29,631 19,138 16,979
Rental income on
properties sub-leased
to others (a) ( 3,025) ( 1,493) ( 2,141)
Net rental expense $26,606 $17,645 $14,838
(a) Excludes rental income from the Riverhead Terminal which
is recorded as sales.
16.Commitments and Contingencies
Tosco is subject to extensive federal, state and local
regulation of environmental and permitting matters relating to
its petroleum refining and marketing operations. These
regulations are complex and subject to differing
interpretations, and Tosco is currently involved in a number
of proceedings and discussions regarding the removal and
mitigation of the environmental effects of subsurface liquid
hydrocarbons and alleged levels of hazardous waste at the Avon
Refinery and other locations, including Tosco's Spokane,
Washington terminal which is located in a site which is
included on the Superfund National Priorities List. Tosco
recorded environmental cost accruals of $25,000,000 and
$4,000,000 for 1992 and 1991, respectively, based upon a
determination that investigative work and remedial actions
(primarily on-site remediation of waste management units and
perimeter control of groundwater contamination at the Avon
Refinery) would be required.
In July 1993, outstanding litigation concerning
environmental issues was settled with the predecessor owners
of the Avon Refinery (Settlement Agreement). Under the
Settlement Agreement, the former owners agreed to pay up to
$18 million for one-half of the costs that may be incurred for
compliance with certain environmental orders and to provide
Tosco a $6 million credit for past expenses (which Tosco will
use to reduce its one-half share of future costs). After the
initial term of the Settlement Agreement (the later of four
years or until the $36 million shared cost maximum is
expended), the parties may elect to continue the Settlement
Agreement or to reinstate litigation. Tosco and the former
owners have established a committee to review and approve
expenditures for environmental investigative and remedial
actions at the Avon Refinery. The remedial actions are
subject to negotiation with governmental agencies and
therefore the timing and amount of actual cash expenditures is
uncertain. In addition, further investigative work and
negotiations with the governmental agencies may result in
additional remedial actions which Tosco cannot presently
predict. Tosco has not relinquished its right to make claims
for reimbursement of future costs and is not required to
reimburse amounts received under the Settlement Agreement.
Tosco is pursuing reimbursement under insurance policies in
effect during the applicable periods of coverage.
Environmental exposures are difficult to assess and
estimate for numerous reasons including the complexity and
differing interpretations of governmental regulations, the
lack of reliable data, the number of potentially responsible
parties and their financial capabilities, the multiplicity of
possible solutions, the years of remedial and monitoring
activity required, and the identification of new sites. Tosco
continues to evaluate its liability for environmental costs,
net of liabilities transferred pursuant to the Settlement
Agreement, on a quarterly basis. Based upon that evaluation,
Tosco did not revise its $29,440,000 accrual for environmental
costs in 1993. While Tosco believes that it has adequately
provided for environmental exposures, should these matters be
resolved unfavorably to Tosco, they could have a material
adverse effect on its long-term consolidated financial
position and results of operations.
Pursuant to its purchase agreement with Bayway, Exxon will
remain responsible for environmental obligations related to or
arising out of its ownership or operation of the Bayway
Refinery, as will be set forth in a list to be prepared under
administrative consent orders between Exxon and the State of
New Jersey. Bayway has the right, for a period of one year
following completion of such list (which is expected to take
approximately four years to compile), to add additional items
to such list. The responsibility for previously unidentified
clean-up projects thereafter discovered will be shared by
Exxon and Tosco based on their length of ownership of the
Bayway Refinery. Tosco has also received indemnifications
from BP, with respect to environmental obligations arising out
of or relating to the period prior to the acquisition date of
the PNW Properties. Surveys to identify existing
environmental exposures are continuing.
There are various other legal proceedings and claims
pending against Tosco which are common to its operations.
While it is not feasible to predict or determine the ultimate
outcome of these matters, it is the opinion of management that
these suits will not result in monetary damages which in the
aggregate would be material to the business or operations of
Tosco.
In October 1986, Tosco and Atlantic Richfield Co. (ARCO)
entered into an agreement pursuant to which ARCO has agreed
for ten years (with two five-year renewal options exercisable
by ARCO) to deliver to Tosco an average of 50,000 barrels per
day of Alaskan North Slope crude oil in exchange for a
quantity of gasoline that is a variable percentage of the
amount of crude oil delivered, based upon the prices of
certain crude oils (ARCO Exchange Agreement). Under the ARCO
Exchange Agreement, Tosco has agreed that in the event it
desires to sell the Avon Refinery, Tosco will first offer the
Avon Refinery for sale to ARCO. If ARCO declines, Tosco will
be free for a certain period of time to sell the Avon Refinery
for consideration no less favorable to Tosco than was
initially offered to ARCO, subject to the effect of possible
continuing Tosco obligations of exchange under the ARCO
Exchange Agreement. In addition, in any such subsequent sale
ARCO has the right to participate in the bidding and to
acquire the Avon Refinery as long as it agrees to pay a
specified sum more than any other bidder. The ARCO Exchange
Agreement is subject to renegotiation in the event conditions
change to the extent that one of the parties has sustained
significant losses for a substantial period of time, or
structural changes make substantial losses likely. In the
event such renegotiation is unsuccessful, the ARCO Exchange
Agreement is subject to arbitration and possible termination.
Sales to ARCO, primarily under the ARCO Exchange Agreement,
were approximately $279,000,000, $326,000,000 and $358,000,000
for 1993, 1992 and 1991, respectively. In conjunction with
the acquisition of the Bayway Refinery, Bayway entered into a
commercial supply agreement with Exxon under which Exxon
initially purchased a substantial portion of the refinery's
gasoline production. This arrangement converted progressively
to a product exchange agreement during 1993. The initial term
of the product exchange agreement is five years. Sales to
Exxon were approximately $359,650,000 in 1993.
During 1992, Tosco amended agreements with certain of its
executive officers which provide for lump sum severance
payments and accelerated vesting of options upon termination
of employment under certain circumstances or a change of
control, as defined. Under the amended agreements, lump sum
severance payments now exclude incentive compensation from the
computation base. Tosco's obligation to its seven executive
officers was $5,280,000 at December 31, 1993.
Tosco carries insurance policies on insurable risks which
it believes to be appropriate at commercially reasonable
rates. While Tosco believes that it is adequately insured,
future losses could exceed insurance policy limits or, under
adverse interpretations, be excluded from coverage. Future
liability or costs, if any, incurred by Tosco under such
circumstances would have to be paid out of general corporate
funds, if available.
Tosco, in keeping with industry practice, schedules
periodic maintenance of major processing units for significant
non-routine repairs and replacements as the units reach the
end of their normal operating cycles (turnarounds).
Unscheduled turnarounds also occur because of operating
difficulties or external factors. Throughput and earnings are
lowered, and deferred turnaround expenditures increased,
during such periods.
Tosco's NOL, investment tax and AMT credit carryforwards
(Note 13) are subject to various complex tax rules and
regulations which may be subject to varying interpretations.
These carryforwards may be adversely affected by changes in
the rules and regulations or significant changes in the
ownership of Tosco or its trade or business. Therefore, the
future benefit of these carryforwards, although more likely
than not realizable under current rules and regulations, is
not assured.
In August 1992, Tosco entered into a 15 year agreement
(Hydrogen Supply Agreement) to purchase up to 25 million cubic
feet per day of hydrogen and steam from a facility (Hydrogen
Plant) to be built, owned, and operated by a third party.
Tosco entered into an agreement to provide utilities,
wastewater disposal and other services to the Hydrogen Plant.
The Hydrogen Plant, located at the Avon Refinery on property
leased from Tosco, began commercial operation in December
1993. The Hydrogen Supply Agreement may be modified to
provide for higher levels of hydrogen at prices to be
negotiated and can be terminated under certain circumstances
upon payment of a stipulated fee (which decreases over time).
The third party has undertaken specific performance guarantees
under operating and maintenance contracts.
17. Condensed Consolidating Financial Information
The following tables set forth the condensed consolidating
financial statements as of December 31, 1993 and for the
period then ended of Tosco, Bayway and Tosco's other
subsidiaries. They are provided to meet the reporting and
informational requirements of Bayway as a guarantor of
the Exchange Bonds.
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet
(Thousands of Dollars)
December 31, 1993
Tosco Bayway Minor Subs
(Issuer) (Guarantor) (Non-guarantors) Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 29,066 $ 25,845 $ 180 $ 55,091
Short-term investments and deposits 5,437 6,614 17,984 30,035
Other current assets 250,502 335,316 118 585,936
Total current assets 285,005 367,775 18,282 671,062
Other assets 623,006 172,517 30,640 ($ 4,366) 821,797
Investment in Bayway and other
subsidiaries 205,624 (205,624)
Intercompany receivables 161,845 1,083 4,67 3 ( 167,601)
Total assets $1,275,480 $ 541,375 $ 53,595 ($377,591) $1,492,859
Liabilities and shareholders' equity
Current liabilities $ 161,904 $ 147,898 $ 1,228 $ 311,030
Long-term debt 524,931 72,000 6,375 603,306
Other liabilities 61,245 ($ 4,366) 56,879
Intercompany liabilities 5,756 150,000 11,845 ( 167,601)
Shareholders' equity 521,644 171,477 34,147 ( 205,624) 521,644
Total liabilities and
shareholders' equity $1,275,480 $ 541,375 $ 53,595 ($ 377,591) $1,492,859
Condensed Consolidating Statement of Income
(Thousands of Dollars)
For the Year Ended December 31, 1993
Sales $ 1,783,387 $ 1,775,830 $ $ $ 3,559,217
Cost of sales 1,600,937 1,724,206 3,325,143
Operating contribution 182,450 51,624 234,074
Selling, general, and
administrative expenses <F1> 43,015 15,226 ( 67) 58,174
Interest expense, net 32,612 12,011 ( 477) 44,146
Income before provision
for income taxes 106,823 24,387 544 131,754
Provision for income taxes 40,950 10,007 218 51,175
Net income $ 65,873 $ 14,380 $ 326 $ $ 80,579
<FN>
<F1> The condensed consolidating statement of income which
includes the operations of Bayway since April 8, 1993, does not reflect
an allocation of a portion of
aggregate corporate selling, general and administrative expenses
of $25,557,000 to Bayway and the Minor Subsidiaries.
Tosco may allocate such costs in the future.
</TABLE>
17. Condensed Consolidating Financial Information (continued)
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Cash Flows
Thousands of Dollars)
For the Year Ended December 31, 1993
Tosco Bayway Minor Subs
(Issuer) (Guarantor) (Non-guarantors) Eliminations Consolidated
<S>
Cash flows from operating activities: <C> <C> <C> <C> <C>
Net income $ 65,873 $14,380 $ 326 $ 80,579
Depreciation, depletion and amortization 57,023 7,668 400 65,091
Deferred income taxes and utilization
of tax benefits 31,602 31,602
Inventory writedown 17,651 17,651
Changes in working capital ( 11,376) (31,935) ( 293) ( 43,604)
Other 20,644 (17,500) 3,144
Net cash provided by (used in)
operating activities 163,766 (9,736) 433 154,463
Cash flows from investing activities:
Purchase of property, plant and equipment, net,
and acquired inventories (225,361) (326,147) ( 551,508)
Increase in deferred turnarounds, charges
and other assets ( 22,748) ( 907) ( 23,655)
Investment in Bayway Refinery (147,675) 147,675
Intercompany transfers (199,068) 149,574 49,494
Net proceeds from sale of assets of
discontinued operations 91,217 91,217
Proceeds from (investment in) Continental
Tosco Limited Partnership 4,880 4,880
Net change in short-term investments
and deposits 12,927 ( 6,614) ( 4,132) 2,181
Net cash provided by (used in)
investing activities ( 490,708) ( 36,419) 50,242 (476,885)
Cash flows from financing activities:
Bayway Exchange Bonds 150,000 150,000
Borrowings under revolver, net 75,000 72,000 147,000
Early retirement of debt (50,000) ( 50,000)
Principal payments under debt agreements ( 24) 771) ( 795)
Issuance of Common Stock, net of expenses 88,418 88,418
Dividends on Preferred and Common Stock ( 28,056) ( 28,056)
Other ( 727) ( 727)
Net cash provided by (used in)
financing activities 284,611 72,000 ( 50,771) 305,840
Net increase (decrease) in cash and cash
equivalents ( 42,331) 25,845 (96) ( 16,582)
Cash and cash equivalents at
beginning of period 71,397 276 71,673
Cash and cash equivalents at end of period $29,066 $25,845 $ 180 $ $ 55,091
</TABLE>
18. Quarterly Financial Data (Unaudited)
Thousands of Dollars Except Per Share Data
First Second Third Fourth
Quarter Quarter Quarter Quarter
1993
Sales $ 416,136 $956,254 $1,043,673 $1,143,154
Gross profit
on sales 41,588 64,321 75,502 70,314
Inventory writedown 17,651
Operating
contribution $ 41,588 $ 64,321 $ 75,502 $ 52,663
Income from
continuing
operations before
income taxes $ 24,789 $ 37,220 $ 47,348 $22,397
Provision for
income taxes 9,987 15,079 19,423 6,686
Net income $ 14,802 $ 22,141 $ 27,925 $ 15,711
Earnings per share:
Primary $ .42 $ .67 $ .86 $ .43
Fully diluted $ .42 $ .65 $ .81 $ .43
18.Quarterly Financial Data (Unaudited) (continued)
<TABLE>
<CAPTION>
Thousands of
Dollars Except Per Share Data
First
Second Third Fourth
Quarter
Quarter Quarter (Quarter
<S> <C>
<C> <C> <C>
1992
Sales $ 332,014
$477,132 $ 516,396 $ 535,427
Gross profit on sales 10,467
72,031 30,391 19,775
Environmental cost accrual
25,000
Operating contribution (loss) $ 10,467 $
72,031 $ 30,391 $ 5,225)
Income (loss) from continuing operations
before income taxes and cumulative
effect of accounting changes ($ 1,998) $
57,738 $ 16,699 ($ 21,426)
Provision (credit) for income taxes ( 718)
23,207 6,778 ( 8,501)
Income (loss) from continuing operations
before cumulative effect of accounting
changes ( 1,280)
34,531 9,921 ( 12,925)
Loss from discontinued operations ( 1,620) (
3,037) ( 5,319) ( 5,929)
Loss on sale of Seminole
( 105,000)
Loss from discontinued operations ( 1,620) (
3,037) ( 5,319) ( 110,929)
Cumulative effect of accounting changes 16,203
Net income (loss) $ 13,303 $
31,494 $ 4,602 ($123,854)
Earnings (loss) per share:
From continuing operations ($ .13) $
1.06 $ .25 ($ .53)
From discontinued operations ( .05)
( .10) ( .18) ( 3.78)
From cumulative effect of accounting
changes .54
Earnings (loss) per share - primary $ .36 $
.96 $ .07 ($ 4.31)
Earnings (loss) per share
- fully diluted $ .36 $
.90 $ .07 ($ 4.31)
</TABLE>
SCHEDULE II
TOSCO CORPORATION AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED
PARTIES
Years Ended December 31, 1993, 1992 and 1991
(Thousands of Dollars)
Column A Column B Column C Column D Column E
Balance at Balance
Beginning Amounts at End of
Name of Debtor of Period Additions Collected Period
1993
Aurilia, J. (a) $ 325 $ 6 319
Lavinia, R. (b) $ 200 200
$ 525 $ 206 $ 319
1992
1991
McClave, W. (c) $ 300 $ 300 $
Sutton, P. (d) $ 170 170
Total $ 300 $ 170 $ 470 $
(a) Note bearing interest at 7% per annum ( payable in monthly
installments of $2,000 with the balance due no later than
September 1998) and collateralized by residential property.
(b) Short-term note bearing interest at 3.85% per annum.
(c) Note bearing interest at 10% per annumdue June 1991 and
collateralized by
residential property.
(d) Non-interest bearing two-month bridge loan collateralized
by residential property.
SCHEDULE V
<TABLE>
<CAPTION>
TOSCO CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
Years Ended December 31, 1993, 1992 and 1991
(Thousands of Dollars)
Column A Column B Column C Column D Column E Column F
Balance at Balance
Beginning Additions Other at End of
Classification of Period at Cost<F1> Retirements Changes<F2> Period
<S> <C> <C> <C> <C> <C>
1993
Land $ 14,654 $ 36,633 $ 51,287
Refineries and related assets 530,260 ($20,297) $ 236,985 746,948
Retail marketing and related
assets 76,000 76,000
Office buildings, furniture,
fixtures and improvements 9,993 20,077 30,070
Transportation equipment 13,806 19,789 33,595
Mineral properties, principally
oil shale interests 21,815 21,815
Natural gas properties 3,569 3,569
Construction in progress 66,918 73,897 ( 95,089) 45,726
$ 661,015 $ 73,897 ($ 20,297) $294,395 $1,009,010
1992
Land $ 12,768 $ 1,886 $ 14,654
Refinery and related assets 494,956 ($ 323) $ 35,627 530,260
Office buildings, furniture,
fixtures and improvements 9,032 ( 100) 1,061 9,993
Transportation equipment 8,663 5,143 13,806
Mineral properties, principally
oil shale interests 21,815 21,815
Natural gas properties 3,391 178 3,569
Construction in progress 41,680 67,069 ( 41,831) 66,918
$592,305 $ 69,133 ($ 423) $ - $ 661,015
1991
Land $ 12,768 12,768
Refinery and related assets 472,907 ($ 96) $ 22,145 494,956
Office buildings, furniture,
fixtures and improvements 7,719 ( 98) 1,411 9,032
Transportation equipment 8,449 214 8,663
Mineral properties, principally
oil shale interests 21,815 21,815
Natural gas properties 3,319 $ 72 3,391
Construction in progress 24,351 41,099 ( 23,770) 41,680
$551,328 $ 41,171 ($ 194) $ - $592,305
<FN>
<F1> Primarily projects at the Avon and Bayway Refineries
required to comply with applicable safety and environmental
regulations.
<F2> Primarily the acquisition of Bayway and PNW Properties and
transfers from construction in progress.
The purchase price for PNW Properties has been preliminarily
allocated to the refinery and terminal
assets ($47,895,000) and retail assets acquired ($76,000,000).
A final allocation of the purchase
price will be determined in 1994 when appraisals and other
studies are completed.
</TABLE>
SCHEDULE VI
TOSCO CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
Years Ended December 31, 1993, 1992 and 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
Additions
Balance at charged to Balance
Beginning Costs and Other at End of
Description of Period Expenses Retirements Changes Period
<S> <C> <C> <C> <C> <C>
1993
Refineries and related assets $ 250,552 $31,127 ($ 20,297) $261,382
Office buildings, furniture,
fixtures and improvements 7,353 1,981 9,334
Transportation equipment 9,364 2,434 11,798
Natural gas properties 3,155 76 3,231
$ 270,424 $ 35,618 ($ 20,297) $ 285,745
1992
Refinery and related assets $ 227,095 $ 23,733 ($ 276) $ 250,552
Office buildings, furniture,
fixtures and improvements 6,593 786 ( 26) 7,353
Transportation equipment 8,257 1,107 9,364
Natural gas properties 3,041 114 3,155
$ 244,986 $ 25,740 ($ 302) $ 270,424
1991
Refinery and related assets $ 201,474 $ 25,737 ($ 116) $ 227,095
Office buildings, furniture,
fixtures and improvements 6,049 621 ( 77) 6,593
Transportation equipment 8,037 220 8,257
Natural gas properties 2,863 178 3,041
$ 218,423 $26,756 ($ 193) $ 244,986
</TABLE>
SCHEDULE VIII
TOSCO CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1993, 1992 and 1991
(Thousands of Dollars)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Charged
Balance at (Credited) to Charged Balance
Beginning Costs and to Other at End of
Description of Period Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C>
1993
Allowance for
Uncollectible Trade
Accounts Receivable $5,164 $ $ 73 $ 5,091
1992
Allowance for
Uncollectible
Trade Accounts
Receivable $5,148 $ 26 $ 10 $ 5,164
1991
Allowance for
Uncollectible Trade
Accounts Receivable $5,268 $ $ 120 $ 5,148
</TABLE>
TOSCO CORPORATION AND SUBSIDIARIES
COMPUTATION OF PER SHARE DATA
Thousands of Dollars Except Per Share Data
<TABLE>
Exhibit 11
<CAPTION>
Year Ended December 31,
1993 1992 1991
<S> <C> <C> <C>
Net income (loss) $ 80,579 ($ 74,455) $ 75,364
Preferred stock dividends ( 10,063) ( 10,063) ( 3,771)
Net income (loss)
attributable to common
shareholders for primary
earnings per share computations 70,516 ( 84,518) 71,593
Addback of dividends on
preferred stock
for assumed conversion 10,063 10,063 3,771
Net income (loss)
attributable to common
shareholders for fully
diluted earnings per
share computations $ 80,579 ($ 74,455) $ 75,364
Weighted average number of
shares outstanding
during the period 29,522 29,618 29,857
Stock option equivalents 157 78
Weighted average common stock
equivalents related to
the 4% Notes 30
Shares and equivalents used
for computation of primary
earnings per share 29,679 29,618 29,965
Additional stock option equivalents 170 112
Weighted average potentially
dilutive securities for the
assumed conversion of
preferred stock 4,792 1,997
Shares and equivalents used
for computation of
fully diluted earnings per share 34,641 29,618 32,074
Earnings (loss) per share:
Primary $ 2.38 ($ 2.85) $2.39
Fully diluted $ 2.33 ($ 2.85)<F1> $2.35
<FN>
<F1> Fully diluted earnings per share computations for 1992 did
not assume the conversion of
stock options or Series F Stock because the effect would have
resulted in a lower loss per share.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of San Francisco, and the
State of California on March 17, 1994.
TOSCO CORPORATION
(Registrant)
BY /s/ Thomas D. O'Malley
(Thomas D. O'Malley)
Chairman of the Board of Directors,
President and Chief Executive Officer
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.
Signature Title
/s/Thomas D. O'Malley Chairman of the Board of March 17, 1994
(Thomas D. O'Malley) Directors, President and
Chief Executive Officer
/s/Jefferson F. Allen Principal Financial Officer,March 17, 1994
(Jefferson F. Allen) Executive Vice President
and Director
/s/Robert I. Santo Principal Accounting Officer March 17, 1994
(Robert I. Santo)
/s/Joseph B. Carr Director March 17, 1994
(Joseph B. Carr)
/s/Houston I. Flounroy Director March 17, 1994
(Houston I. Flounroy)
/s/Clarence g. Frame Director March 17, 1994
(Clarence G. Frame)
/s/Edmund A. Hajim Director March 17, 1994
(Edmund A. Hajim)
/s/Joseph P. Ingrassia Director March 17, 1994
(Joseph P. Ingrassia)
/s/Charles J. Luellen Director March 17, 1994
(Charles J. Luellen)
EXHIBIT 10(b)
AMENDMENT NO. 1
AND ASSIGNMENT AND ACCEPTANCE
DATED AS OF JUNE 7, 1993 TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 8, 1993
AMENDMENT NO. 1 AND ASSIGNMENT AND ACCEPTANCE (the
"Amendment and Assignment") dated as of June 7, 1993 by and
among TOSCO CORPORATION, a Nevada corporation ("Tosco"),
SEMINOLE FERTILIZER CORPORATION, a Delaware corporation
("Seminole") and BAYWAY REFINING COMPANY, a Delaware corporation
("Bayway") as co-borrowers (collectively, the "Borrowers"), the
banking institutions listed on Schedule 1.01(a) attached hereto
(the "Banks"), THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
("Chase"), as co-agent, BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION ("BofA"), as co-agent and co-arranger, and
THE FIRST NATIONAL BANK OF BOSTON ("FNBB") as agent (in that
capacity, the "Agent") and as arranger for the Banks.
Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement referred to below
shall have the same meaning herein as in the Credit Agreement.
WHEREAS, the Borrowers, those Banks listed on Schedule
1.01(a) to the Credit Agreement as in effect immediately prior
to the date hereof, the Co-Agents, the Agent and the FMCP L/C
Bank are parties to that certain Credit Agreement dated as of
April 8, 1993 (as amended, restated, modified or supplemented
and in effect from time to time, the "Credit Agreement"); and
WHEREAS, each of FNBB, BofA and Chase desires to assign to
each of Internationale Nederlanden Bank, N.V. ("ING Bank"), Bank
Hapoalim B.M. ("Hapoalim"), United Jersey Bank ("United Jersey")
and The Yasuda Trust and Banking Co., Ltd. ("Yasuda") a portion
of its interests in and to all of its rights and obligations
under the Credit Agreement, including, without limitation, its
Commitment, and all Loans, Letter of Credit Reimbursement
Obligations and Acceptance Obligations owing to it.
NOW, THEREFORE, in consideration of the foregoing premises
the parties hereto hereby agree as follows:
1. Amendment to Credit Agreement. The Credit Agreement is
hereby amended by deleting Schedule 1.01(a) and Schedule 1.01(b)
thereto, and replacing them, respectively with Schedule 1.01(a)
and Schedule 1.01(b) attached hereto.
2. Assignment and Acceptance.
(a) Assignments. Each of FNBB, BofA and Chase
(collectively, the "Assignor Banks" and individually, an
"Assignor Bank") hereby sells and assigns to each of ING Bank,
Hapoalim, United Jersey and Yasuda (collectively the "Assignee
Banks" and individually an "Assignee Bank") a certain percentage
interest in and to all of such Assignor Bank's rights and
obligations under the Credit Agreement as of the Amendment and
Assignment Effective Date (as defined in Section 5 hereof),
including, without limitation, such percentage interest in the
Assignor Bank's Commitment as in effect on the Amendment and
Assignment Effective Date, and the outstanding Loans, Letter of
Credit Reimbursement Obligations and Acceptance Obligations
owing to the Assignor Bank on the Amendment and Assignment
Effective Date, and such percentage interest in the Revolving
Credit Note held by the Assignor Bank (such interest being
hereinafter referred to as the "Assigned Portion") such that,
after giving effect to the assignments contemplated hereby and
as of the Amendment and Assignment Effective Date, the
respective Commitments and Commitment percentages of the
Assignor Banks and the Assignee Banks shall be as set forth on
Schedule 1.01(b) to the Credit Agreement, as amended hereby and
each Bank shall have that percentage interest in all outstanding
Loans, Letter of Credit Reimbursement Obligations and Acceptance
Obligations. Notwithstanding any term or provision of Section
10.03 of the Credit Agreement to the contrary, the execution and
delivery hereof by the Assignor Banks, the Assignee Banks, the
Agent, the FMCP L/C Bank and the Borrowers shall constitute an
Assignment and Acceptance delivered in accordance with the
Credit Agreement and shall be effective in respect of the
assignments contemplated hereby. The parties hereto further
agree that, without the further consent of the Borrowers or the
Agent and without any further action by ING Bank, at any time
after the Amendment and Assignment Effective Date, ING Bank may
assign all (but not less, than all) of its rights and
obligations under the Credit Agreement, including, without
limitation, its Commitment, and its interest in the Loans,
Letter of Credit Reimbursement Obligations, FMCP L/C
Reimbursement Obligations and Acceptance Obligations owing to it
on the date of such assignment to any entity acquiring all or
substantially all of the assets of ING Bank; provided that such
assignee is acceptable to the beneficiary of the FMCP L/C; and
provided further that ING Bank shall give the Agent written
notice of said assignment within (7) days of the effective date
of said assignment, together with written notice of the address
of its assignee's domestic lending office and eurodollar lending
office. In the event of an assignment pursuant to the
immediately preceding sentence, such assignee bank shall be a
"Bank" under the Credit Agreement.
(b) Representations and Warranties of Assignor Banks.
Each Assignor Bank (i) represents and warrants that as of the
date hereof, its Commitment and Commitment percentage (without
giving effect to assignments thereof which have not yet become
effective, including, but not limited to, the assignment
contemplated hereby) is the amount set forth opposite such
Assignor Bank's name under the respective captions "Commitment"
and "Commitment Percentage" on Schedule 1.01(b) to the Credit
Agreement as in effect prior to the Amendment and Assignment
Effective Date; (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 Ancillary Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any Ancillary Agreement 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 any
Borrower or any of its Subsidiaries or the performance or
observance by any Borrower or any of its Subsidiaries of any of
its or their obligations under the Credit Agreement or any
Ancillary Agreement or any other instrument or document
furnished pursuant thereto; and (v) requests that the Agent and
the Borrowers exchange the Revolving Credit Notes referred to in
Section 2(a) above for new Revolving Credit Notes, each dated
the Closing Date, payable to the order of each Assignor Bank and
each Assignee Bank in the principal amount of the Commitment set
forth opposite such Assignor Bank's name and Assignee Bank's
name on Schedule 1.01(b) to the Credit Agreement as amended
hereby.
(c) Representations and Warranties of Assignee Banks.
Each Assignee Bank represents and warrants (i) that it has
received a copy of the Credit Agreement and each Ancillary
Agreement, together with copies of the financial statements
referred to in Section 4.11 of the Credit Agreement and the most
recent financial statements delivered to the Banks pursuant to
Sections 5.04(d)(i) and 5.04(e) of the Credit Agreement and such
other documents and information as it deems appropriate to make
its own credit analysis and decision to enter into this
Amendment and Assignment, (ii) that it will, independently and
without reliance upon any Assignor Bank or any other Bank or the
Agent 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 or any Ancillary Agreement, (iii) that it is an
Eligible Assignee and (iv) that the making of Loans by such
Assignee Bank will not be unlawful as set forth in Section 2.16
of the Credit Agreement.
(d) Appointment of Agent. Each Assignee Bank (i)
appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers under the Credit
Agreement and the Ancillary Agreements as are delegated to the
Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, and (ii) agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement and the Ancillary
Agreements are required to be performed by it as a Bank.
(e) Respective Rights and Obligations of Assignor
Banks and Assignee Banks. As of the Amendment and Assignment
Effective Date, (i) each Assignee Bank shall, in addition to any
rights and obligations under the Credit Agreement held by it
immediately prior to the Amendment and Assignment Effective
Date, have the respective rights and obligations of a Bank under
the Credit Agreement and the Ancillary Agreements that have been
assigned to it pursuant to this Section 2 and under Sections
2.15 and 2.20 of the Credit Agreement with respect to the
applicable Assigned Portion and (ii) each Assignor Bank shall,
to the extent provided in this Section 2, relinquish its rights
and be released from its obligations under the Credit Agreement
and the Ancillary Agreements with respect to the applicable
Assigned Portion.
(f) Agent's Duties in Respect of Assignment and
Acceptance. From and after the Amendment and Assignment
Effective Date, the Agent shall record the information contained
in this Section 2 in the Register and shall make all payments
under the Credit Agreement and the Revolving Credit Notes in
respect of the interests assigned hereby (including, without
limitation, all payments of principal, interest and fees with
respect thereto) to the Assignee Banks. The Assignor Banks and
Assignee Banks shall make all appropriate adjustments under the
Credit Agreement and the Revolving Credit Notes for periods
prior to the Amendment and Assignment Effective Date directly
between themselves as directed by the Agent.
3. Scope of Amendment and Assignment. Except as
specifically amended by this Amendment and Assignment, the
Credit Agreement shall remain in full force and effect.
4. Representations and Warranties of Borrowers. The
Borrowers hereby jointly and severally represent and warrant to
the Banks, the Agent and the FMCP L/C Bank as follows:
(a) Representations and Warranties in Credit
Agreement. The representations and warranties of the Borrowers
contained in the Credit Agreement (i) were true and correct in
all material respects when made, and (ii) except to the extent
such representations and warranties by their terms are made
solely as of a prior date, continue to be true and correct in
all material respects on the date hereof.
(b) Authority, etc. The execution and delivery by
the Borrowers of this Amendment and Assignment and the
performance by the Borrowers of all of their agreements and
obligations under this Amendment and Assignment are within the
corporate authority of each of the Borrowers, have been duly
authorized by all necessary corporate action on the part of each
of the Borrowers, and do not and will not (i) contravene any
provision of any Borrower's charter, other incorporation papers,
by-laws or any stock provision, or any amendment thereof, (ii)
conflict with, or result in a breach of any material term,
condition or provision of, or constitute a default under or
result in the creation of any mortgage, lien, pledge, charge,
security interest or other encumbrance upon any of the property
of any Borrower under agreement, deed of trust, indenture,
mortgage or other instrument to which such Borrower is a party
or by which any of such Borrower's properties are bound, (iii)
violate or contravene any provision of any law, regulation,
order, ruling or interpretation thereunder or any decree, order
or judgment of any court or governmental or regulatory
authority, bureau, agency or official, (iv) require any waiver,
consent or approval by any creditor of any Borrower which has
not been obtained and (v) require any approval, consent, order,
authorization or license by, or giving notice to, or taking any
other action with respect to, any governmental or regulatory
authority or agency under any provision of any law, except those
actions which have been taken or will be taken prior to the date
of execution of this Amendment and Assignment.
(c) Enforceability of Obligations. This Amendment
and Assignment and the Credit Agreement, as amended hereby, and
the Notes delivered in connection herewith constitute the legal,
valid and binding obligations of the Borrowers enforceable
against the Borrowers in accordance with their respective terms,
provided that (i) enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applications affecting the rights and remedies
of creditors, and (ii) the availability of the remedies of
specific performance and injunctive relief may be subject to the
discretion of the court before which any proceedings for such
remedies may be brought.
5. Conditions to Effectiveness. The effective date of
this Amendment and Assignment (the "Amendment and Assignment
Effective Date") shall be that date on which the Agent receives
the following, in form and substance satisfactory to the Banks
and the FMCP L/C Bank:
(a) this Amendment and Assignment, executed and
delivered by the Borrowers;
(b) copies, certified by the Secretary of each of the
Borrowers to be true and complete on the date of execution of
this Amendment and Assignment, of the records of all actions
taken by such Borrower as may be required according to the terms
of such Borrower's charter, other incorporation documents and
by-laws to authorize (i) the execution and delivery of this
Amendment and Assignment by such Borrower and (ii) the
performance by such Borrower of all of its agreements and
obligations under this Amendment and Assignment, delivered by
the Borrowers. If, no such actions are required, the Borrower
shall deliver a letter to such effect; and
(c) Revolving Credit Notes executed and delivered by
the Borrowers and payable to the order of each of the Assignor
Banks and the Assignee Banks in the respective aggregate
principal amounts set forth under the caption "Commitment"
opposite such Bank's name on Schedule 1.01(b) hereto, as amended
hereby.
6. Transfer of Seminole Letters of Credit. Tosco and
Seminole hereby instruct the Agent to transfer from Seminole's
account to Tosco's account irrevocable Standby Letter of Credit
No. I-047-CFSI-50025939 dated October 22, 1992 and issued by the
Agent for the benefit of The Chase Manhattan Bank, Karachi,
Pakistan in the aggregate face amount of $459,243 and
irrevocable Standby Letter of Credit No. I-047-CFSI-50078193
dated April 30, 1993 and issued by the Agent for the benefit of
Cargill Fertilizer, Inc. in the aggregate face amount of
$7,250,000 (collectively, the "Seminole L/Cs"). Seminole hereby
assigns and Tosco hereby unconditionally and irrevocably assumes
all of Seminole's rights and obligations with respect to the
Seminole L/Cs, whether arising under the Credit Agreement or
under the Applications executed in connection with the Seminole
L/Cs. The assignment and assumption set forth in this Section 6
shall be effective as of May 4, 1993.
7. Execution in Counterparts. This Amendment and
Assignment may be executed in any number of counterparts, but
all such counterparts shall together constitute but one
instrument. In making proof of this Amendment and Assignment it
shall not be necessary to produce or account for more than one
counterpart signed by each party hereto by and against which
enforcement hereof is sought.
8. Governing Law. This Amendment and Assignment
shall be construed according to and governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Assignment to be duly executed as an agreement
under seal as of the date set forth at the beginning of this
Amendment and Assignment.
TOSCO CORPORATION
By:______________________________
Title:
SEMINOLE FERTILIZER CORPORATION
By:______________________________
Title:
BAYWAY REFINING COMPANY
By:______________________________
Title:
THE FIRST NATIONAL BANK OF
BOSTON, individually and
as Agent
By:______________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Co-Agent
By:______________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually
By:______________________________
Title:
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Co-Agent
By:______________________________
Title:
ARAB BANKING CORPORATION
By:______________________________
Title:
NATIONAL CITY BANK
By:______________________________
Title:
THE FUJI BANK, LIMITED
By:______________________________
Title:
INTERNATIONALE NEDERLANDEN
BANK N.V.
By:______________________________
Title:
BANK HAPOALIM B.M.
By:______________________________
Title:
UNITED JERSEY BANK
By:______________________________
Title:
THE YASUDA TRUST AND
BANKING CO., LTD.
By:______________________________
Title:
<PAGE>
EXHIBIT 10(c)
AMENDMENT NO. 2
DATED AS OF DECEMBER 10, 1993 TO
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 8, 1993
AMENDMENT No. 2 (the "Amendment") dated as of December 10,
1993 by and among TOSCO CORPORATION, a Nevada corporation
("Tosco"), SEMINOLE FERTILIZER CORPORATION, a Delaware
corporation ("Seminole") and BAYWAY REFINING COMPANY, a Delaware
corporation ("Bayway") as co-borrowers (collectively, the
"Borrowers"), the financial institutions listed on Schedule
1.01(a) to the Credit Agreement referred to below (the "Banks"),
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION) ("Chase"), as
co-agent, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
("BofA"), as co-agent and co-arranger, and THE FIRST NATIONAL
BANK OF BOSTON ("FNBB") as agent (in that capacity, the "Agent")
and as arranger for the Banks.
Capitalized terms which are used herein without definition
and which are defined in the Credit Agreement referred to below
shall have the same meaning herein as in the Credit Agreement.
WHEREAS, the Borrowers, the Banks, the Co-Agents, the Agent
and the FMCP L/C Bank are parties to that certain Credit
Agreement dated as of April 8,1993 (as amended, restated,
modified or supplemented and in effect from time to tune, the
"Credit Agreement"); and
WHEREAS, Tosco completed the Seminole Sale on May 4,1993 in
accordance with the terms and conditions of Section 7.05 of the
Credit Agreement; and
WHEREAS, Tosco has informed the Banks that it intends to
acquire certain refining, distributing and wholesale and retail
marketing assets belonging to BP Oil Company in the Pacific
Northwest region of the United States of America (the "BP
Acquisition"); and
WHEREAS, in connection with the Seminole Sale and the BP
Acquisition, the parties wish to amend the Credit Agreement in
order to clarify that the Banks have no further obligation to
advance any Loans to Seminole or to issue any additional Credit
Instruments for the account of Seminole (other than certain
Letters of Credit which shall remain outstanding) and to make
certain other modifications to the Credit Agreement;
NOW, THEREFORE, in consideration of the foregoing premises
the parties hereto hereby agree as follows:
1. Amendment to Credit Agreement.
SECTION 1.1. Seminole. The Credit Agreement is hereby
amended to provide that (i) Seminole shall no longer be a
Borrower thereunder and (ii) none of the Banks shall be under
any
obligation to make Loans to, or to issue additional Credit
Instruments for the account of, Seminole; provided that
notwithstanding the foregoing, the FMCP L/C shall remain
outstanding and Seminole and Tosco shall continue to be liable
for the FMCP L/C Reimbursement Obligations. The Credit Agreement
is hereby amended mutatis mutandis as appropriate to reflect the
fact that Seminole is no longer a Borrower thereunder.
SECTION 1.2. Certain Definitions. Section 1.01 of the
Credit Agreement is hereby amended by deleting in their entirety
the definitions of "Eligible Fertilizer Fixed Assets", "Eligible
Fertilizer Raw Material Inventory", "Eligible Fertilizer Raw
Material Inventory Under Contract", "Eligible Finished
Fertilizer Inventory", "Eligible Finished Fertilizer Inventory
Under Contract", "Fertilizer Raw Material Inventory", "Finished
Fertilizer Inventory", "Seminole Advance", "Seminole Borrowing
Base", "Seminole Overadvance Amount", and "Seminole Revolving
Credit Debt". From and after the effective date of this
Amendment pursuant to Section 5 hereof, all references contained
in the Credit Agreement to the foregoing defined terms shall be
deemed to have been deleted.
SECTION 1.3. Application. Section 1.01 of the Credit
Agreement is hereby further amended by deleting the definition
of
"Application" in its entirety and replacing it with the
following:
"Application" means(a) an application by any Borrower
to the Agent for a Documentary Letter of Credit or Standby
Letter of Credit in the forms annexed hereto as Exhibit A-2
or A-3, respectively (or in the event another Bank issues a
Letter of Credit, such issuing Bank's forms), or (b) an
application by Seminole to the FMCP L/C Bank for an FMCP
L/C in such form as is satisfactory to the FMCP L/C Bank.
SECTION 1.4. Borrowing Base. Section 1.01 of the Credit
Agreement is hereby further amended by deleting the definition
of "Borrowing Base" in its entirety and replacing it with the
following:
"Borrowing Base" means, as to Tosco or Bayway, at any
given time, the sum of the following amounts owned by or
reflected on the books of such Borrower at such time:
(a) 100% of its Eligible Cash and Eligible Cash
Equivalents,
(b) 95% of its Eligible Investments,
(c) 90% of its Major Oil Company Receivables,
(d) 85% of the excess, if any, of its Eligible
Receivables over its Major Oil Company
Receivables,
(e) the lesser of (i) 85% of its Eligible Margin
Deposits, or (ii) $50,000,000,
(f) 80% of its Eligible Petroleum Inventory,
(g) 80% of its Eligible Petroleum Inventory Under
Contract, and
(h) 100% of its Paid but Unexpired Standby Letters of
Credit.
SECTION 1.5. Eligible Exchange Balances. Section 1.01 of
the Credit Agreement is hereby further amended by amending the
definition of "Eligible Exchange Balances" by deleting the
symbol "(i)" and the phrase ", and (ii) with respect to Eligible
Exchange Balances included in the Seminole Borrowing Base, at
the lower of (A) cost determined on a FIFO basis and (B) the
Fair Market Value of such product" from the third sentence
thereof.
SECTION 1.6. Eligible Receivables. Section 1.01 of the
Credit Agreement is hereby further amended by inserting at the
end of the definition of "Eligible Receivables" the following
additional sentence:
For the purposes of this definition, at any time when
the combined Borrowing Base of the Borrowers does not
exceed the Credit Limit by at least $50,000,000,
Eligible Receivables owing to the Borrowers by any
Account Debtor shall be determined on a consolidated
basis for the Borrowers net of any and all offsets,
counterclaims or contras arising in connection with
any such Account owing by such Account Debtor such
that the Eligible Receivables owing to one Borrower by
an Account Debtor shall be reduced by the amount by
which any such offsets, counterclaims or contras
relating to Accounts owing to the other Borrower by
such Account Debtor exceed that portion of such
Accounts which would otherwise be Eligible
Receivables.
SECTION 1.7. Ferndale Refinery. Section 1.01 is hereby
further
amended by inserting the following new definition in the
appropriate alphabetical order:
"Ferndale Refinery" means the land and improvements
known as the Ferndale Refinery, located in Ferndale,
Washington, together with the terminals, tanks, pipelines
and related facilities used or intended for use in
connection therewith.
SECTION 1.8. FMCP L/C Limit. Section 1.01 of the Credit
Agreement is hereby further amended by deleting the definition
of "FMCP L/C Limit" in its entirety and replacing it with the
following:
"FMCP L/C Limit" means an initial amount equal to
$44,112,705 as reduced by $2,533,383.33 on the
fifteenth day of each April and October, commencing
April 15, 1993.
SECTION 1.9. FMCP L/C Maturity Date. Section 1.01 of the
Credit
Agreement is hereby further amended by deleting the definition
of "FMCP L/C Maturity Date", in its entirety and replacing it
with the following:
"FMCP L/C Maturity Date" means December 31, 1997.
SECTION 1.10. Free Cash. Section 1.01 of the Credit
Agreement is
hereby amended by deleting the definition of "Free Cash" in its
entirety and replacing it with the following definition:
"Free Cash" means, as to the Company, the cumulative
amount, if any, determined as of the last Business Day of
the Fiscal Quarter most recently ended (commencing with
March 31, 1993 as the first such date of determination),
for the period commencing with the Fiscal Quarter ending
March 31, 1993 through and including the date of
determination, equal to (a) the sum of (i) $150,000,000
plus (ii) 100% of Cash Flow, calculated cumulatively for
such period plus (iii) the net cash proceeds received by
the Borrowers on or after September 30, 1993 with respect
to the issuance by Tosco of its Stock or instruments
evidencing Indebtedness for borrowed money (other than in
connection with Indebtedness arising pursuant to this
Agreement or the refinancing of Indebtedness existing as of
December 10, 1993) during such period to the extent such
proceeds have not been used to reduce the aggregate amount
of Non-Discretionary Capital Expenditures made by the
Borrowers from and including the Fiscal Quarter ending
September 30, 1993 pursuant to clause (b) of the definition
of Non-Discretionary Capital Expenditures; provided that
net cash proceeds received by the Borrowers from the
issuance of instruments evidencing Indebtedness for
borrowed money may only be included in Free Cash if the
maturity of the Indebtedness evidenced thereby (including
any and all interim amortization payments) occurs after
April 8, 1997, minus (b) the sum of, without duplication,
(i) all dividends paid or declared by Tosco pursuant to
Sections 7.03 and 7.04 during such period plus (ii) Debt
Service, calculated cumulatively for such period, plus
(iii) the aggregate amount of prepayments of Indebtedness
of the Company in advance of the scheduled maturity date
thereof during such period, plus (iv) the amount of any
Free Cash utilized by the Borrowers or any Restricted
Subsidiary at any time during such period.
SECTION 1.11. Adjusted Permitted Debt Amount. Section
1.01
is
hereby further amended by inserting the following new definition
in the appropriate alphabetical order:
"Adjusted Permitted Debt Amount" means an aggregate
Dollar amount determined by multiplying (a) the aggregate
net cash proceeds received by Tosco on or after September
30, 1993 from the issuance by Tosco of its Stock (excluding
debt instruments convertible into stock and all redeemable
stock) by (b)that percentage set forth below opposite the
Leverage Ratio as in effect at the end of the fiscal
quarter immediately preceding the quarter in which
Indebtedness in excess of $50,000,000 is to be incurred as
permitted by SECTION 7.01(a)(viii).
Leverage Ratio Percentage of Increase
less than 1.2:1 100%
less than or equal to 1.5:1 and 85%
greater than or equal to 1.2:1
greater than 1.5:1 50%
SECTION 1.12. Funded Debt. Section 1.01 is hereby further
amended
by inserting the following new definition in the appropriate
alphabetical order:
"Funded Debt" of any Person means, at any time, the
amount of all Indebtedness for borrowed money (other than
short-term trade credit) or for the deferred purchase price
of Capital Assets plus Capitalized Lease Obligations,
calculated in accordance with GAAP.
SECTION 1.13. Leverage Ratio. Section 1.01 is hereby
further
amended by inserting the following new definition in the
appropriate alphabetical order:
"Leverage Ratio" means the ratio of Funded Debt of the
Company to Tangible Net Worth of the Company,
determined on a LIFO basis.
SECTION 1.14. Non-Discretionary Capital Expenditures.
Section
1.01 of the Credit Agreement is hereby further amended by
deleting the definition of "Non-Discretionary Capital
Expenditures" in its entirety and replacing it with the
following:
"Non-Discretionary Capital Expenditures" means for any
fiscal year of the Company, (a) all Capital Expenditures of
the Company during such fiscal period for (i) deferred
turnaround costs with respect to the Avon Refinery, the
Bayway Refinery, the Ferndale Refinery and any other
refinery owned by Tosco or Bayway at the relevant time of
reference thereto, so classified on a basis consistent with
current practice and (ii) all other Capital Expenditures
necessarily incurred by the Company in order to maintain
its property, plants and equipment (including, without
limitation, the Avon Refinery, the Bayway Refinery, the
Ferndale Refinery and such other refinery owned by Tosco or
Bayway at the relevant time of reference thereto) in
compliance with applicable Environmental Laws and other
laws and regulations, minus (b) an amount equal to the sum
of (i) the net cash proceeds received by the Company with
respect to the issuance of Stock or instruments evidencing
Indebtedness for borrowed money (other than in connection
with Indebtedness arising pursuant to this Agreement or
refinancings of Indebtedness existing as of the Closing
Date) during such fiscal period; plus (ii) the lesser of
(x) the net cash proceeds received by the Company with
respect to the issuance of Stock or instruments evidencing
Indebtedness for borrowed money (other than in connection
with Indebtedness arising pursuant to this Agreement or
refinancings of Indebtedness existing as of December 10,
1993) during prior fiscal periods and (y) an amount equal
to Free Cash as at the end of such fiscal period; provided
that in no event shall the amount subtracted in accordance
with this clause (b) reduce Non-Discretionary Capital
Expenditures to an amount less than zero ($0).
SECTION 1.15. Restricted Investment. Section 1.01 of the
Credit
Agreement is hereby further amended by amending the definition
of "Restricted Investment" by deleting clause (ix) thereof and
inserting the following:
(ix) investments in respect of intercompany loans
made by Tosco to Bayway in connection with Bayway
Advances hereunder.
SECTION 1.16. Tosco Revolving Credit Debt. Section 1.01
of
the
Credit Agreement is hereby further amended by deleting the
definition of "Tosco Revolving Credit Debt" and replacing it
with the following:
"Tosco Revolving Credit Debt" means at any time, (a)
the aggregate principal amount of all Borrowings at such
time made pursuant to Article II and issued for the account
of or requested by Tosco, including, without limitation,
(i) all such Borrowings in cash thereunder, (ii) the
aggregate principal amount of all such Letter of Credit
Reimbursement Obligations outstanding thereunder and (iii)
the aggregate principal amount of all such Acceptance
Obligations outstanding thereunder, but not including (b)
the aggregate principal amount of Bayway Advances
outstanding at such time.
SECTION 1.17. Capitalization. Section 4.05(c) of the
Credit
Agreement is hereby deleted in its entirety and replaced with
the following:
(c) The authorized capitalization of Tosco, as of the
date hereof, consists of 50,000,000 shares of common stock
and 12,000,000 shares of preferred stock and as of December
10, 1993 34,811,158 shares of common stock are issued and
outstanding (including 2,548,999 treasury shares),
6,391,189 shares of common stock are reserved for issuance
and 2,300,000 shares of preferred stock are issued and
outstanding.
SECTION 1.18. Reports. Section 5.04(c) of the Credit
Agreement
is hereby deleted in its entirety and replaced with the
following:
(c) As soon as available, and in any event within
thirty (30) days after the end of each calendar month
commencing with the calendar month preceding the month
during which the Closing Date occurs, detailed consolidated
and consolidating monthly statements of income or loss of
the Company and consolidated and consolidating balance
sheets of the Company (including a statement of the amount
of the Company's LIFO reserve) and consolidated and
consolidating statements of cash flow of the Company as at
the end of such month and a management-prepared statement
showing the contribution to Net Income (Loss) for the
fiscal period covered by such monthly statement made by the
Avon Refinery and the Ferndale Refinery, all of which shall
be certified as true, complete and correct (to the best of
such officer's knowledge) by the Chief Financial Officer of
Tosco.
SECTION 1.19. Reports. Section 5.04(d)(i) of the Credit
Agreement is hereby deleted in its entirety and replaced with
the following:
(i) the consolidated and consolidating balance sheets
of the Company (including a statement of the amount of the
Company's LIFO reserve) as at the end of such quarter and
the consolidated and consolidating statements of income,
retained earnings and cash flows of the Company for such
quarter and, after the end of each of the first three
Fiscal Quarters of each Fiscal Year of the Company, for the
portion of the current Fiscal Year then ended (all in
reasonable detail and including a management statement
showing the contribution to Net Income (Loss) made by the
Avon Refinery and the Ferndale Refinery for such fiscal
periods), accompanied by a certificate from the Chief
Financial Officer of Tosco stating that such statements
have been properly prepared in accordance with the books
and records of the Company and fairly present the financial
condition and operations of the Company subject only to
normal year-end audit adjustments;
SECTION 1.20. Reports. Section 5.04 of the Credit
Agreement is
hereby further amended by inserting the following new subsection
(q) after existing subsection (p):
(q) Promptly and in any event within fifteen (15)
days after knowledge thereof, the Borrowers shall give the
Agent and BofA as Co-Agent notice if there is a material
likelihood that the aggregate amount by which any offsets,
contras or counterclaims, calculated on a consolidated
basis, with respect to Eligible Receivables will exceed by
more than $50,000,000 the gross amount of the Accounts
comprising the Eligible Receivables to which such offsets,
contras or counterclaims relate.
SECTION 1.21. Right to Inspect Premises and Records.
Section 5.05
of the Credit Agreement is hereby amended by inserting the
following new sentence at the end thereof:
In addition and without limiting the generality of the
foregoing, each Borrower agrees that the Agent and
BofA as Co-Agent may conduct, at the Borrowers' cost
and expense, such additional special audits of the
consolidated netting practices used by the Company in
connection with the calculation and reporting of
Eligible Receivables as the Agent and BofA as Co-Agent
may deem necessary and desirable.
SECTION 1.22. Material Change in Business. Section 5.11
of
the
Credit Agreement is hereby deleted in its entirety and replaced
with the following:
5.11. Material Change in Business. Tosco's primary
business shall continue to be petroleum refining,
distribution, wholesale and retail marketing and related
businesses (other than oil and gas exploration, natural gas
marketing and petroleum trading which does not directly
support the primary refining, distribution and marketing
business). Tosco shall notify the Agent promptly (and in
any event by no later than the next Business Day) upon (i)
any termination of the ARCO Exchange Agreement or any
failure of the ARCO Exchange Agreement to be in full force
and effect and (ii) any termination of the Exxon Supply
Agreement or any failure of the Exxon Supply Agreement to
be in full force and effect. Bayway's primary business
shall be petroleum refining, distribution, wholesale and
retail marketing and related businesses (other than oil and
gas exploration, natural gas marketing and petroleum
trading which does not directly support the primary
refining, distribution and marketing business).
SECTION 1.23. Appraisals of Seminole Property. Section
5.17
of
the Credit Agreement is hereby deleted in its entirety.
SECTION 1.24. Ratio of Funded Debt to Tangible Net Worth.
Section 6.01(c) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(c) The Leverage Ratio, during any period set forth
in the table below, shall not at any time exceed the ratio
set forth opposite such period in the table below:
Period Ratio
Closing Date through 12/30/93 1.9:1.0
12/31/93 through 12/30/94 1.5:1.0
12/31/94 through 12/30/95 1.4:1.0
12/31/95 and thereafter 1.2:1.0.
SECTION 1.25. Limitations on Indebtedness. Section
7.01(a)(iv)
of the Credit Agreement is hereby amended by deleting the phrase
"in respect of Seminole Advances" from the second and third
lines thereof.
SECTION 1.26. Limitations on Indebtedness. Section
7.01(a)(viii)
of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
(viii) Indebtedness in an aggregate principal amount
not to exceed $50,000,000 plus the Adjusted Permitted Debt
Amount; provided that any such Indebtedness in excess of
$50,000,000 shall have a maturity date no earlier than 120
days after the Maturity Date hereof; and
SECTION 1.27. Limitations on Liens, Etc. Section 7.02 of
the
Credit Agreement is hereby amended by (a) deleting the word "or"
from the end of subsection (l) thereof, (b) deleting the period
at the end of subsection (m) thereof and replacing it with the
phrase"; or" and (c) inserting the following new subsection (n)
after the existing subsection (m):
(n) on fixed assets acquired after September 30, 1993
to secure Indebtedness which at the time does not exceed
the lesser of the purchase price or the net book value of
such assets.
SECTION 1.28. Limitations on Restricted Payments, Etc.
Section
7.03 of the Credit Agreement is hereby deleted in its entirety
and replaced with the following:
7.03. Limitation on Restricted Payments, Restricted
Prepayments, Restricted Investments and Discretionary
Capital Expenditures. Except as permitted in Sections
7.01(a)(v) and 7.04, the Borrowers shall not, and shall not
permit any Restricted Subsidiary to, directly or
indirectly, make any Restricted Investment, Restricted
Payment, Restricted Prepayment or Discretionary Capital
Expenditure, or enter into any agreement to make any
Restricted Investment, Restricted Payment, Restricted
Prepayment or Discretionary Capital Expenditure; provided,
however, that so long as no Default or Event of Default
shall have occurred and be continuing or would result from
such Restricted Investment, Restricted Payment, Restricted
Prepayment, or Discretionary Capital Expenditure, (A) Tosco
may pay or provide funds for Seminole to pay obligations
owing to Cargill Fertilizer, Inc. in the amount of
$14,500,000 and the FMCP L/C Reimbursement Obligations or
the underlying debt secured by such letters of credit and
(B) the Borrowers and/or any Restricted Subsidiary may make
Restricted Investments, Restricted Payments, Restricted
Prepayments and/or Discretionary Capital Expenditures
solely to the extent that (a) with respect to any
Restricted Investment, such Restricted Investment is listed
on Schedule 7.03, (b) such Restricted Investment,
Restricted Payment, Restricted Prepayment, or Discretionary
Capital Expenditure would otherwise be permitted under this
Agreement but for the applicability of this Section 7.03,
(c) with respect to any Discretionary Capital Expenditure,
such Discretionary Capital Expenditure is listed on
Schedule 7.03, or (d) such Restricted Investment,
Restricted Payment, Restricted Prepayment or Discretionary
Capital Expenditure is made out of Free Cash, as set forth
on the most recently certified quarterly computation of
Free Cash delivered to the Banks pursuant to Section
5.04(d)(ii) hereof, as reduced for all other Restricted
Investments, Restricted Payments, Restricted Prepayments,
and Discretionary Capital Expenditures made or to be made
since the delivery of such quarterly computation provided,
however, that if the Leverage Ratio is greater than 1.2 to
1.0 (as set forth in the most recent Compliance Certificate
delivered to the Banks pursuant to Section 5.04(d)(iii)
hereof after giving effect to all such Restricted
Investments, Restricted Payments, Restricted Prepayments
and Discretionary Capital Expenditures made or to be made
since the delivery of such computation), (i) no Restricted
Prepayment of Subordinated Debt incurred after the Closing
Date shall be made and (ii) no Restricted Payment shall be
made except as otherwise permitted by Section 7.04.
Notwithstanding any provision contained herein to the
contrary, (i) Tosco shall not, directly or indirectly, make
any Restricted Investment in, or enter into any agreement
to make any Restricted Investment in Continental-Tosco
Limited Partnership in excess of $50,000,000 in aggregate
amount, and (ii) Tosco shall not make any Restricted
Investment in an amount in excess of $5,000,000 in the
stock or obligations of any Person or any Discretionary
Capital Expenditure in excess of $5,000,000 other than
Restricted Investments in the stock or obligations of a
Person whose primary business is petroleum refining,
distribution, wholesale and retail marketing and related
businesses (other than oil and gas exploration, natural gas
marketing and petroleum trading which does not directly
support the primary refining, distribution and marketing
business) and Discretionary Capital Expenditures for assets
to be used in connection with petroleum refining,
distribution, wholesale and retail marketing and related
businesses (other than oil and gas exploration, natural gas
marketing and petroleum trading which does not directly
support the primary refining, distribution and marketing
business), provided that the aggregate amount (calculated
as provided below) of all Restricted Investments in Persons
whose primary business is petroleum refining, distribution,
wholesale and retail marketing and related businesses and
Discretionary Capital Expenditures for assets used for
petroleum refining, distribution, marketing and related
businesses shall not exceed $225,000,000. For the purposes
of clause (ii) of the preceding sentence, the amount of
Restricted Investments and Discretionary Capital
Expenditures shall be equal to the purchase price (in the
case of the acquisition of any business, exclusive of the
cost of any acquired working capital to the extent not
reflected in the purchase price) plus the amount of any
liabilities assumed in connection therewith
SECTION 1.29. Limitations on Sale. Section 7.05(a)(iv) of
the
Credit Agreement is hereby deleted in it entirety and replaced
with the following:
(iv) Tosco may sell or otherwise dispose of the FMCP
Interest and upon the request of Tosco in conjunction with
such sale, the Agent shall release its Lien thereon without
further requirement of consent from the Banks.
SECTION 1.30. Schedules 1.01(a) and (b). The Credit
Agreement is
hereby amended by deleting Schedule 1.01(a) and (b) thereto and
replacing them with Schedule 1.01(a) and (b) hereto.
SECTION 1.31. Schedule 4.10. The Credit Agreement is
hereby
amended by deleting Schedule 4.10 thereto and replacing it with
Schedule 4.10 hereto.
SECTION 1.32. Schedule 4.16. The Credit Agreement is
hereby
amended by deleting Schedule 4.16 thereto and replacing it with
Schedule 4.16 hereto.
SECTION 1.33. Schedule 4.21. The Credit Agreement is
hereby
amended by deleting Schedule 4.21 thereto and replacing it with
Schedule 4.16 hereto.
SECTION 1.34. Exhibit L. The Credit Agreement is hereby
amended
by deleting Exhibit L thereto and replacing it with Exhibit L
attached hereto.
2. Scope of Amendment. Except as specifically amended by
this Amendment, the Credit Agreement shall remain in full force
and effect.
3. Representations and Warranties. The Borrowers hereby
jointly and severally represent and warrant to the Banks, the
Agent and the FMCP L/C Bank as follows:
(a) Representations and Warranties in Credit Agreement.
The representations and warranties of the Borrowers and Seminole
contained in the Credit Agreement (i) were true and correct in
all material respects when made, and (ii) except to the extent
such representations and warranties by their terms are made
solely as of a prior date, continue to be true and correct in
all material respects on the date hereof.
(b) Authority, etc. The execution and delivery by the
Borrowers and Seminole of this Amendment and the performance by
the Borrowers and Seminole of all of their agreements and
obligations under this Amendment are within the corporate
authority of each of the Borrowers and Seminole, have been duly
authorized by all necessary corporate action on the part of each
of the Borrowers and Seminole, and do not and will not (i)
contravene any provision of any Borrower's or Seminole's
charter, other incorporation papers, by-laws or any stock
provision, or any amendment thereof, (ii) conflict with, or
result in a breach of any material term, condition or provision
of, or constitute a default under or result in the creation of
any mortgage, lien, pledge, charge, security interest or other
encumbrance upon any of the property of any Borrower or Seminole
under agreement, deed of trust, indenture, mortgage or other
instrument to which such Borrower or Seminole is a party or by
which any of such Borrower's or Seminole's properties are bound,
(iii) violate or contravene any provision of any law,
regulation, order, ruling or interpretation thereunder or any
decree, order or judgment of any court or governmental or
regulatory authority, bureau, agency or official, (iv) require
any waiver, consent or approval by any creditor of any Borrower
or Seminole which has not been obtained and (v) require any
approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to, any
governmental or regulatory authority or agency under any
provision of any law, except those actions which have been taken
or will be taken prior to the date of execution of this
Amendment.
(c) Enforceability of Obligations. This Amendment and the
Credit Agreement, as amended hereby, constitute the legal, valid
and binding obligations of the Borrowers and Seminole
enforceable against the Borrowers and Seminole in accordance
with their respective terms, provided that (i) enforcement may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applications affecting the
rights and remedies of creditors, and (ii) the availability of
the remedies of specific performance and injunctive relief may
be subject to the discretion of the court before which any
proceedings for such remedies may be brought.
4. Conditions to Effectiveness. The effectiveness of this
Amendment No. 2 shall be conditioned upon receipt by the Agent
of the following, in form and substance satisfactory to the
Banks:
(a) this Amendment No. 2, executed by the Borrowers, the
Banks, the Agent, the Co-Agents and the FMCP L/C Bank;
(b) copies, certified by the Secretary of each of the
Borrowers and Seminole to be true and complete on the date of
execution of this Amendment, of the records of all actions taken
by such Borrower and Seminole as may be required according to
the terms of such Borrower's or Seminole's charter, other
incorporation documents and by-laws to authorize (i) the
execution and delivery of this Amendment by such Borrower and
Seminole and (ii) the performance by such Borrower and Seminole
of all of its agreements and obligations under this Amendment;
and
(c) a fee in the amount of $5,000 for each Bank, payable
to the Agent for the account of each of the Banks.
5. Effective Date. Upon satisfaction of the conditions
set forth in Section 4 hereof, the provisions of this Amendment
No. 2
shall be deemed effective as of December 10, 1993.
6. Execution in Counterparts. This Amendment may be
executed in any number of counterparts, but all such
counterparts shall together constitute but one instrument. In
making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart signed by each
party hereto by and against which enforcement hereof is sought.
7. Governing Law. This Amendment shall be construed
according to and governed by the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as an agreement under seal as of
the date set forth at the beginning of this Amendment.
TOSCO CORPORATION
By:
Title
SEMINOLE FERTILIZER CORPORATION
By:
Title
BAYWAY REFINING COMPANY
By:
Title
THE FIRST NATIONAL BANK OF
BOSTON, individually and as
Agent
By:
Title
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Co-Agent
By:
Title
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
individually
By:
Title
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
individually and as Co-Agent
By:
Title
ARAB BANKING CORPORATION
By:
Title
NATIONAL CITY BANK
By:
Title
THE FUJI BANK, LIMITED
By:
Title
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION
By:
Title
BANK HAPOALIM, B.M.
By:
Title
By:
Title
UNITED JERSEY BANK
By:
Title
THE YASUDA TRUST AND BANKING
CO., LTD.
By: Kiyoshi Terao
Title: Joint General Manager
INTERNATIONALE NEDERLANDEN
BANK, N.V., as FMCP L/C Bank
By:
Title
<PAGE>
Exhibit 10(e)
SCHEDULE
Peter A. Sutton Vice President, Tosco Corporation
<PAGE>
AMENDMENT, effective as of the first day of January, 1993
to that certain Amended and Restated Agreement dated as of the
15th day of November, 1989, by and between Tosco Corporation, a
Nevada corporation ("Tosco"), and Peter A. Sutton, (the
"Executive").
For and in good consideration of the mutual covenants and
agreements herein contained, and other good and valuable
consideration the adequacy and receipt of which are hereby
acknowledged, Tosco and Executive agree that the Agreement be
and hereby is amended as follows:
Section 3(a) is hereby deleted and replaced with the
following:
"Following the termination of the Executive's
employment as provided in Section 1(a) hereof, Tosco
shall pay to the Executive a lump sum severance
payment (the "Lump Sum Severance Payment"), no later
than five days after such termination, in an amount
equal to twenty four (24) months of his base annual
salary at the rate in effect immediately prior to such
termination (exclusive of any bonuses or incentive
pay)."
Tosco Corporation Executive
By:_____________________ ________________________
<PAGE>
AMENDMENT, effective as of the first day of February, 1993
to that certain Amended and Restated Agreement dated as of the
15th day of November, 1989, by and between Tosco Corporation, a
Nevada corporation ("Tosco"), and James M. Cleary, (the
"Executive").
For and in good consideration of the mutual covenants and
agreements herein contained, and other good and valuable
consideration the adequacy and receipt of which are hereby
acknowledged, Tosco and Executive agree that the Agreement be
and hereby is amended as follows:
Section 3(a) is hereby deleted and replaced with the
following:
"Following the termination of the Executive's
employment as provided in Section 1(a) hereof, Tosco
shall pay to the Executive a lump sum severance
payment (the "Lump Sum Severance Payment"), no later
than five days after such termination, in an amount
equal to twenty four (24) months of his base annual
salary at the rate in effect immediately prior to such
termination (exclusive of any bonuses or incentive
pay)."
Tosco Corporation Executive
By:_____________________ ________________________
<PAGE>
EXHIBIT 10(g)
THIS AGREEMENT made as of this 1st day of January 1, 1993, by
and between Tosco Corporation, a Nevada corporation ("Tosco"),
and Thomas D. O'Malley (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is a key employee of Tosco; and
WHEREAS, Tosco deems it important and appropriate to assure
to itself the continued availability of certain services and
assistance of Executive; and
WHEREAS, Executive is willing to perform certain services
for, and to make certain information available to, Tosco as
Tosco may request, provided Executive is appropriately
compensated, in the event his employment by Tosco terminates.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements herein contained, Tosco and the
Executive agree as follows:
1. If during the term of this Agreement:
(a) Executive's employment with Tosco is terminated,
the Executive shall be entitled to the benefits provided in
Section 3 (a) hereof, unless such termination is (i) due to
Executive's death or disability (as hereinafter defined), (ii)
by Tosco for Cause (as hereinafter defined) or (iii) by the
Executive other than for Good Reason (as hereinafter defined);
(b) a Change of Control takes place, the provisions
of paragraph 3(b) shall control in lieu of the provisions of
Section 1(a) above.
2. When used in this Agreement:
(a) "Cause" shall mean the material and intentional
failure by the Executive to substantially perform his duties as
an employee of Tosco (other than by reason of Disability or for
Good Reason) after a written demand for substantial performance
is delivered to the Executive by the Board of Directors, which
demand specifically identifies such failure; actual (as
distinguished from statutory) fraud; intentional
misappropriation of property of Tosco to the Executive's own
use; embezzlement from Tosco; or substantial damage to property
of Tosco which property is material to Tosco's operations and
which damage results from an action by the Executive which
intentionally causes such damage. The burden of proving Cause
shall be on Tosco. It is specifically agreed that Cause shall
not include any act of commission or omission by the Executive
in the exercise of the Executive's business judgment as an
employee of Tosco or as a member of the Board of Directors of
Tosco.
(b) "Disability" shall mean Executive's incapacity
due to physical or mental illness resulting in his absence from
full-time performance of his functions for a period in excess of
six (6) consecutive months.
(c) "Good Reason" shall mean, without Executive's
express written consent, any of the following:
(i) the assignment of Executive of duties
inconsistent with and of a lesser nature than his
present position or a significant reduction in the
nature of Executive's responsibility;
(ii) a reduction in the fixed elements, or
change in the method of calculation of the variable
elements that would reduce the amount receivable, of
the Executive's annual compensation;
(iii) the relocation of Executive's office to a
location more than 50 miles from the area where such
offices are presently located; or
(iv) Tosco shall have given notice pursuant to
Section 6 hereof that it does not wish to extend the
term of this Agreement.
In the event Executive has attained the age of 55 years and
terminates his employment with Tosco, such voluntary termination
of employment by Employee shall be deemed, for purposes of this
Agreement, to be termination for "Good Reason", provided
Executive agrees in writing to provide to Tosco at no further
expense to Tosco, as Tosco may reasonably request from
time-to-time, information with respect to Executive's duties at
Tosco.
3. (a) Following the termination of the Executive's
employment as provided in Section 1(a) hereof, Tosco shall pay
to the Executive a lump sum severance payment (the "Lump Sum
Severance Payment"), no later than five (5) days after such
termination, in an amount equal to thirty (30) months multiplied
by his monthly base salary then in effect, exclusive of any
bonuses.
(b) Within ten (10) business days after the date of a
Change of Control of Tosco, Tosco or its successors as a result
of the Change of Control (collectively referred to herein as
Tosco), shall have the right, in its discretion, to elect to
have the Executive's employment continue, for an additional full
period of six (6) months, on terms and conditions no less
favorable to the Executive as were in existence on the date of
the Change of Control.
(i) If Tosco does not elect to continue such
employment of the Executive, Tosco shall pay to the
Executive the full Lump Sum Severance Payment in
accordance with Section 3(a).
(ii) If Tosco elects to continue the employment
of the Executive with Tosco on such terms and notifies
the Executive of its election, and if the Executive
refuses such offer and terminates his employment, the
Executive shall not be entitled to any Lump Sum
Severance Payment.
(iii) If Tosco elects to continue the employment
of the Executive with Tosco on such terms and notifies
the Executive of its election, and if the Executive
agrees to and does continue such employment during
such full period, the Executive and Tosco shall then
seek to reach mutual agreement as to continued
employment of the Executive by Tosco after such full
period. If such agreement is reached, the terms and
conditions thereof shall supersede this agreement and
this agreement shall be deemed terminated; if Tosco
and the Executive do not reach mutually acceptable
further employment terms within ten (10) days after
the termination of the such full employment period,
Tosco shall pay to the Executive, within five (5) days
thereafter, an amount equal to seventy-five percent
(75%) of the Lump Sum Severance Payment.
(c) In the event that the employment of the Executive
by Tosco is terminated by reason of the provisions of paragraph
1(a) hereof, or if there has been a Change of Control, all
options or shares of stock which have been granted or issued to
the Executive by Tosco which are not vested or are subject to
restrictions at the time of termination shall vest immediately
upon such termination in the event of a termination pursuant to
paragraph 1(a) hereof, or upon the date of Change of Control in
the event of a Change in Control, and such restrictions shall
lapse. The amounts to be received by the Executive pursuant to
clauses (a) or (b) of this Section 3 and options and shares
which become vested pursuant to the provisions of this Section
3(c) are collectively referred to herein as the "Total Severance
Payments."
(d) If the Executive shall resort to any action or
proceeding to recover any amount from Tosco which Tosco has
failed to pay as provided in this Section 3 and the Executive
shall be awarded any amounts in any such action or proceeding,
Tosco shall promptly pay and reimburse to the Executive all or
the costs and expenses (including attorneys' fees) incurred by
the Executive in and with respect to such action or proceeding.
(e) For the purposes of this Agreement, "Change of
Control" shall be deemed to have occurred if:
(i) any "person" or "group" (as defined in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), is or
becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly,
of more than fifty percent (50%) of Common Stock of
Tosco. Common Stock of Tosco shall be computed on a
fully diluted basis and shall include the outstanding
common stock par value of $.75 per share of Tosco and
all shares of common stock of Tosco underlying
outstanding convertible securities and warrants of
Tosco; or
(ii) the stockholders of Tosco approve (A) a
merger or consolidation of Tosco with any other
corporation except a merger or consolidation (an
"Acquisition Transaction") which would result in the
voting securities of Tosco outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) fifty
percent (50%) or more of the combined voting power of
the voting securities of Tosco or such surviving
entity outstanding immediately after such merger or
consolidation, or (B) a plan of complete liquidation
of Tosco or (C) the sale or disposition by Tosco,
directly or indirectly, of the Avon Refinery.
(iii) there is a change in the composition of
the Board of Directors of Tosco by other than the
individuals who constitute the Board of Directors on
the date hereof (the "Incumbent Board") and
individuals elected or nominated by a vote of the
Board constituting at least one person more than
one-half of the Incumbent Board (which individuals
shall then be considered the Incumbent Board) so that
the Incumbent Board shall not constitute a majority of
the Board of Directors of Tosco after such
transaction.
(iv) notwithstanding anything to the contrary
contained in this Section 3(e), the acquisition of any
Common Stock or any other security of Tosco or the
designation of the Board of Directors of Tosco by
Argus Energy Corporation or any of its associated or
affiliated groups shall not constitute a Change of
Control.
4. Notwithstanding anything to the contrary contained in
Section 3 hereof, in the event that any payment or benefit
received or to be received by the Executive in connection with
the termination of his employment whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement
with Tosco (collectively with his Total Severance Payments
herein called "Total Payments"), would not be deductible, in
whole or part, as a result of Section 280G of the Internal
Revenue Code of 1986, as hereafter amended (the "Code"), by
Tosco, the Total Severance Payments shall be reduced until no
portion of the Total Payments is not deductible, or the Total
Severance Payments are reduced to zero, with any payments deemed
made pursuant to Section 3(c) hereof to be reduced prior to
payments to be made pursuant to Section 3(a) or 3(b) hereof.
This provision may be waived by the Board of Directors of Tosco
in the exercise of its discretion. The determination as to
whether any portion of the Total Payments would not be
deductible by Tosco as a result of Section 280G of the Code
shall be determined by the Committee on Resources and Personnel
of the Board of Directors (or any committee thereof performing
similar functions) after consultation with Tosco's independent
auditors and counsel, and any such determination made in good
faith shall be binding upon the employee and Tosco.
5. The Executive shall not be required to mitigate the
amount of any payment provided for in Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in Section 3 be reduced by any compensation
earned by the Executive as the result of the employment by
another employer, by retirement benefits, by offset against any
amount claimed to be owed by Executive to Tosco or otherwise.
6. This Agreement shall commence on the date hereof and
shall continue in effect for one (1) year from the date hereof;
provided, however, that commencing on the anniversary of this
Agreement and each anniversary thereafter, this Agreement shall
automatically be extended for one additional year, unless not
later than six months prior to any anniversary, Tosco shall have
give notice to the Executive that it does not wish to extend
this Agreement.
7. The terms of this Agreement shall supersede and replace
any employment or severance agreement which the Executive may
have with Tosco or any subsidiary and upon execution of this
Agreement any such other employment agreement shall be
terminated and of no further force or effect. Nothing in this
Agreement shall be construed to be a commitment or guarantee of
future employment with Tosco.
8. (i) Tosco will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Tosco
to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that Tosco would be required
to perform it if no such succession had taken place. Failure of
Tosco to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from
Tosco in the same amount and on the same terms to which the
Executive would be entitled hereunder if the Executive
terminates his employment for Good Reason.
(ii) This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amount would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee
or, if there is no such designee, to his estate.
9. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when
personally delivered or when mailed by United States certified
or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth below, or to
such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt:
To the Corporation: Tosco Corporation
72 Cummings Point Road
Stamford, CT 06902
To the Executive: Thomas D. O'Malley
Horse Island
Head Point
Greenwich, CT 06830
10. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. The
validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of
California without regard to its conflicts of law principles.
All references to sections of the code shall be deemed also to
refer to any successor provisions to such sections. Any
payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local
law. The obligations of Tosco under Section 3 shall survive the
expiration of the term of this Agreement.
11. Subject to the last sentence of this Section 11, after
the date hereof the Executive shall not become a member of the
board of directors of or perform a similar function with any
other entity without the prior approval of the Tosco Committee
on Resources and Personnel, which approval shall not be
unreasonably withheld. In the event that such approval is
given, the Executive confirms that the performance of his duties
and obligations as an employee of Tosco shall not be interfered
with by his obligations to such other board of directors or
entity. In no case shall the Executive assume any position with
any entity which shall violate the Conflicts of Interest policy
of Tosco (a copy of which has been received) or cause the
Executive to divulge any confidential information relating to
Tosco or any affiliated entity. Approval of the Committee on
Resources and Personnel shall not be required for the Executive
to become a member of the board of directors of, or perform a
similar function with, family or charitable entities.
12. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in
full force and effect.
13. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original
but all of which together will constitute one and the same
instrument.
14. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein
and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officers, employee or
representative of any party hereof; and any prior agreement of
the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled.
15. Any controversy or claim arising out of or relating to
this Agreement, the interpretation thereof, or the breach
therefor, shall be submitted to arbitration and such arbitration
shall comply with and be governed by the provisions of the
California Arbitration Act, Sections 1280 through 1294.2 of the
California Code of Civil Procedure.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the day and year first above
written.
TOSCO CORPORATION
By:_______________________ Date:___________________
Date:___________________
Thomas D. O'Malley
Executive
SCHEDULE A
(to exhibit 10(g))
Jefferson F. Allen Executive Vice President,
Tosco Corporation
Wilkes McClave III Vice President,
Tosco Corporation
Dwight L. Wiggins Vice President,
Tosco Corporation
(copy of severance agreement
attached)
Robert J. Lavinia Vice President,
Tosco Corporation
(copy of severance agreement
attached)
<PAGE>
Agreement made as of this 1st day of January, 1993, by and
between Bayway Refining Company, a Delaware corporation ("BRC"),
and Mr. Dwight L. Wiggins (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is now or is expected to become a
key
employee of BRC; and
WHEREAS, BRC deems it important and appropriate to assure
to
itself the availability of the service of Executive and to
induce
the Executive to render services to BRC or as BRC may direct;
and
WHEREAS, the Executive deems it in his best interests to be
appropriately compensated if his employment shall be terminated
under certain circumstances and to set forth certain other
matters:
NOW, THEREFORE, in consideration of the mutual covenants
and
agreements herein contained, BRC and the Executive agree as
follows:
1. If during the term of this Agreement:
(a) Executive's employment with BRC is terminated,
the
Executive shall be entitled to the benefits provided in section
3(a) hereof, unless such termination is (i) due to Executive's
death or Disability (as hereinafter defined), (ii) by BRC for
Cause (as hereinafter defined) or (iii) by the Executive other
than for Good Reason (as hereinafter defined).
2. When used in this Agreement:
(a) "Cause" shall mean the material and intentional
failure by the Executive to substantially perform his duties as
an
employee of BRC (other than by reason of Disability or for Good
Reason) after a written demand for substantial performance is
delivered to the Executive by the Board of Directors, which
demand
specifically identifies such failure; fraud; intentional
misappropriation of property of BRC to the Executive's own use;
embezzlement from BRC; or substantial damage to property of BRC
which property is material to BRC's operations and which damage
results from an action by the Executive which intentionally
causes
such damage. The burden of proving Cause shall be on BRC. It
is
specifically agreed that cause shall not include any act of
commission or omission by the Executive in the exercise of the
Executive's business judgment in good faith on behalf of BRC as
an
employee of BRC.
(b) "Disability" shall mean Executive's incapacity
due
to physical or mental illness resulting in his absence from
full-time performance of his functions for a period of four (4)
consecutive months.
(c) "Good Reason" shall mean, without Executive's
express written consent, any of the following:
(i) reduction by BRC in the executive's annual
base salary as in effect at any time; or
(ii) BRC shall have given notice pursuant to
Section 5 hereof that it does not wish to extend the
term of this Agreement.
3. (a) Following the termination of the Executive's
employment under section 1(a) hereof, BRC shall pay to the
Executive a lump sum severance payment (the "Lump Sum Severance
Payment"), no later than five (5) days after such termination,
in
an amount equal to thirty-six (36) months multiplied by his base
monthly salary at the rate in effect immediately prior to such
termination, exclusive of any bonuses or incentive pay,
provided,
however, that in the event Executive terminates his employment
with Exxon U.S.A., commences full-time employment with BRC, and
BRC (or an affiliate) does not acquire the Bayway Refinery, such
amount shall be thirty-six (36) months multiplied by his base
monthly salary at the rate in effect immediately prior to such
termination.
(b) In the event that the employment of the Executive
by BRC is terminated by reason of the provisions of section 1(a)
hereof, all options or shares of stock which have been granted
or
issued to the Executive as a result of his employment by BRC
which
are not vested or are subject to restrictions at the time of
termination shall vest immediately upon such termination and
such
restrictions shall lapse.
(c) If the Executive shall resort to any action or
proceeding to recover any amount of BRC which BRC has failed to
pay as provided in this Section 3 and the Executive shall be
awarded any amounts in any such action or proceeding, BRC shall
promptly pay and reimburse to the Executive all of the costs and
expenses (including attorneys' fees) incurred by the Executive
in
and with respect to such action or proceeding.
4. The Executive shall not be required to mitigate the
amount of the payment provided for in Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in Section 3 be reduced by any compensation
earned by the Executive as the result of the employment by
another
employer, by retirement benefits, by offset against any amount
claimed to be owed by Executive to BRC or otherwise.
5. BRC'S obligations under this Agreement shall commence
the
date Executive first becomes an employee of BRC, and this
Agreement, except as to matters set forth in Sections 6, and 7
below, shall continue in effect for a term of three (3) years
from
the date hereof; provided, however, that commencing on the third
anniversary of this Agreement and each second anniversary
thereafter, this Agreement shall automatically be extended for
two
additional years unless not later than six months prior to any
anniversary, Tosco shall have given notice to the Executive that
it does not wish to extend this Agreement.
6. In the course of his employment Executive will become
knowledgeable about BRC's (and its affiliates) business
strategies
and development plans; customers; pricing strategies; technical,
production, financial and commercial capabilities; and other
confidential affairs of BRC not readily available to the public.
In light thereof, Executive agrees:
(a) to keep secret and retain in the strictest
confidence all confidential matters of BRC and its affiliates
and
not to disclose them to any one outside of BRC, either during
or,
as provided below, after his employment by BRC, except in the
course of performing the duties of his employment by BRC or with
BRC's express written consent; and
(b) to deliver promptly to BRC on termination of this
Agreement, or at any other time that BRC may request, all
memoranda, notes, records, reports, manuals, drawings,
blueprints,
and other documents (and all copies thereof), whether in
written,
electronic, or other form, relating to BRC's or its affiliates'
business and all property associated therewith, which he may
then
possess or have under his control.
The provisions of this Section shall survive the
termination of Executive's employment with BRC (or any
affiliate)
for a period of two (2) years and the obligations hereunder
shall
be in addition to, and not in place of, any other
confidentiality
agreements or obligations Executive may have with or to BRC or
its
affiliates.
7. (a) During Executive's employment with BRC, Executive
(i) shall not accept employment from any person or entity other
than BRC or its affiliates without the prior written consent of
BRC, (ii) shall not invest in or provide services to any person
or
entity (other than BRC or its affiliates) that engages in the
same
or similar businesses of BRC and/or its affiliates (the
"Restricted Businesses"), and shall not engage in the Restricted
Businesses except on behalf of BRC or its affiliates, without
the
prior written consent of BRC; provided, however, that nothing
herein shall prohibit the Executive from purchasing up to five
percent of the outstanding voting shares of any corporation
involved in the Restricted Businesses that are publicly traded
on
any national securities exchange or reported on the NASD, Inc.,
and (iii) shall not participate in any investment or activity
that
would be in conflict with or substantially impair the
Executive's
ability to discharge the duties of his employment with BRC.
(b) Following the termination of Executive's
employment
with BRC, for a period of time equal to the period used in
determining any severance payment made hereunder (if any there
may
be), Executive shall not call on or otherwise solicit the
business
of past or present customers of BRC or of those entities whose
business BRC was soliciting or preparing to solicit during the
term of Executive's employment with BRC.
The obligations of this section 7 are in addition to
those contained in Section 6 above.
8. The terms of this Agreement shall supersede and replace
any employment or severance agreement which the Executive may
have
with BRC and upon execution of this Agreement any such other
employment agreement shall be terminated and of no further force
or effect. Nothing in this Agreement shall be construed to be a
commitment or guarantee of future employment with BRC.
9. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amount would still be payable to him hereunder if he had
continued
to live, all such amounts, unless otherwise provided herein,
shall
be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, it there is
no
such designee, to his estate.
10. For the purpose of this Agreement, notices and all
other
communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when personally
delivered or when mailed by United States certified or
registered
mail, return receipt requested, postage prepaid, addressed to
the
respective addresses set forth below, or to such other address
as
either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address
shall
be effective only upon receipt:
To the Corporation: Bayway Refining Company
72 Cummings Point Road
Stamford, CT 06902
To the Executive: Mr. Dwight L. Wiggins
30 Hillcrest Way
Basking Ridge, NJ 07920
11. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such
officer
as may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of
this
Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New Jersey without
regard to its conflicts of law principles. Any payments
provided
for hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of
BRC under Section 3 shall survive the expiration of the term of
this Agreement.
12. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability
of
any other provision of this Agreement, which shall remain in
full
force and effect.
13. This Agreement may be executed in several
counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
14. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein
and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officers, employee or
representative of any party hereof; and any prior agreement of
the
parties hereto in respect of the subject matter contained herein
is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties hereto have caused
this
Agreement to be executed as of the day and year first above
written.
Bayway Refining company
By:
Dwight L. Wiggins
Executive
<PAGE>
AGREEMENT made as of the 1st day of March, 1992, by and
between Tosco Corporation, a Nevada corporation ("Tosco"), and
Mr. Robert J. Lavinia (the "Executive").
W I T N E S S E T H :
WHEREAS, the Executive is or is anticipated to become a key
employee of Tosco; and
WHEREAS, Tosco deems it important and appropriate to assure
to itself the availability of the services of Executive and to
induce the Executive to render services to Tosco or as Tosco may
direct; and
WHEREAS, the Executive deems it in his best interests to be
appropriately compensated if his employment shall be terminated
under certain circumstances and to set forth certain other
matters;
NOW, THEREFORE, in consideration of the mutual covenants
and
agreements herein contained, Tosco and the Executive agree as
follows:
1. If during the term of this Agreement:
(a) Executive's employment with Tosco is terminated,
the Executive shall be entitled to the benefits provided in
Section 3(a) hereof, unless such termination is (i) due to
Executive's death or Disability (as hereinafter defined), (ii)
by
Tosco for Cause (as hereinafter defined) or (iii) by the
Executive
other than for Good Reason (as hereinafter defined);
(b) a Change of Control takes place, the provisions
of
Section 3(b) shall control in lieu of the provisions of Section
1(a) above.
2. When used in this Agreement:
(a) "Cause" shall mean the material and intentional
failure by the Executive to substantially perform his duties as
an
employee of Tosco (other than by reason of Disability or for
Good
Reason) after a written demand for substantial performance is
delivered to the Executive by the Board of Directors, which
demand
specifically identifies such failure; fraud; intentional
misappropriation of property of Tosco to the Executive's own
use;
embezzlement from Tosco; or substantial damage to property of
Tosco which property is material to Tosco's operations and which
damage results from an action by the Executive which
intentionally
causes such damage. The burden of proving Cause shall be on
Tosco. It is specifically agreed that Cause shall not include
any
act of commission or omission by the Executive in the exercise
of
the Executive's business judgment in good faith on behalf of
Tosco
as an employee of Tosco.
(b) "Disability" shall mean Executive's incapacity
due
to physical or mental illness resulting in his absence from
full-time performance of his functions for a period of four (4)
consecutive months.
(c) "Good Reason" shall mean, without Executive's
express written consent, any of the following:
(i) reduction by Tosco in the Executive's annual
base salary as in effect at any time; or
(ii) Tosco shall have given notice pursuant to
Section 5 hereof that it does not wish to extend the
term of this Agreement.
3. (a) Following the termination of the Executive's
employment under Section 1(a) hereof, Tosco shall pay to the
Executive a lump sum severance payment (the "Lump Sum Severance
Payment"), no later than five (5) days after such termination,
in
an amount equal to the number of months and any fraction thereof
(but not less than six months) remaining in the then current
term
(either initial or renewal) of this Agreement multiplied by his
base monthly salary at the rate in effect immediately prior to
such termination (anticipated to be $25,000/month for 1992),
exclusive of any bonuses or incentive pay.
(b) Within ten (10) business days after the date of a
Change of Control of Tosco, Tosco or its successors as a result
of
the Change of Control (collectively referred to herein as
Tosco),
shall have the right, in its discretion, to elect to have the
Executive's employment continue, for a period of six (6) months,
on terms and conditions no less favorable to the Executive as
were
in existence on the date of the Change of Control.
(i) If Tosco does not elect to continue such
employment of the Executive following a Change of
Control, Tosco shall pay to the Executive an amount
equal to twenty-four (24) months of his base monthly
salary at the rate in effect immediately prior to such
termination (exclusive of any bonuses or incentive
pay).
(ii) If Tosco elects to continue the employment
of
the Executive with Tosco on such terms and notifies
the
Executive of its election, and if the Executive
refuses
such offer and terminates his employment, the
Executive
shall not be entitled to any severance payment.
(iii) If Tosco elects to continue the employment
of the Executive with Tosco on such terms and notifies
the Executive of its election, and if the Executive
agrees to and does continue such employment during the
full six (6) month period, the Executive and Tosco
shall
then seek to reach mutual agreement as to continued
employment of the Executive by Tosco after such six
(6)
month period. If such agreement is reached, the terms
and conditions thereof shall supersede this agreement
and this agreement shall be deemed terminated; if
Tosco
and the Executive do not reach mutually acceptable
further employment terms within ten (10) days after
the
termination of such six (6) month employment period,
Tosco shall pay to the Executive, within five (5) days
thereafter, an amount equal to eighteen (18) months of
his base monthly salary at the rate in effect
immediately prior to such termination (exclusive of
any
bonuses or incentive pay).
(c) In the event that the employment of the Executive
by Tosco is terminated by reason of the provisions of Section
1(a)
hereof, or if there has been a Change of Control, all options or
shares of stock which have been granted or issued to the
Executive
by Tosco which are not vested or are subject to restrictions at
the time of termination shall vest immediately upon such
termination in the event of a termination pursuant to Section
1(a)
hereof, or upon the date of Change of Control, and such
restrictions shall lapse.
(d) If the Executive shall resort to any action or
proceeding to recover any amount from Tosco which Tosco has
failed
to pay as provided in this Section 3 and the Executive shall be
awarded any amounts in any such action or proceeding, Tosco
shall
promptly pay and reimburse to the Executive all of the costs and
expenses (including attorneys' fees) incurred by the Executive
in
and with respect to such action or proceeding.
(e) For the purposes of this Agreement, "Change of
Control" shall be deemed to have occurred if:
(i) any "person" or "group" (as defined in
Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act")), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than fifty percent
(50%) of Common Stock of Tosco. Common Stock of
Tosco shall be computed on a fully diluted basis
and shall include the outstanding common stock par
value of $.75 per share of Tosco and all shares of
common stock of Tosco underlying outstanding
convertible securities and warrants of Tosco; or
(ii) the stockholders of Tosco approve (A) a
merger or consolidation of Tosco with any other
corporation except a merger or consolidation (an
"Acquisition Transaction") which would result in
the voting securities of Tosco outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) fifty percent (50%) or more of the
combined voting power of the voting securities of
Tosco or such Surviving entity outstanding
immediately after such merger or consolidation, or
(B) a plan of complete liquidation of Tosco.
(iii) there is a change in the composition
of the Board of Directors of Tosco by other than
the individuals who constitute the Board of
Directors on the date hereof (the "Incumbent
Board") and individuals elected or nominated by a
vote of the Board constituting at least one person
more than one-half of the Incumbent Board (which
individuals shall then be considered the Incumbent
Board) so that the Incumbent Board shall not
constitute a majority of the Board of Directors of
Tosco after such transaction.
(iv) notwithstanding anything to the
contrary contained in this Section 3(e), the
acquisition of any Common Stock or any other
security of Tosco or the designation of the Board
of Directors of Tosco by Argus Energy Corporation
or any of its associated or affiliated groups
shall not constitute a Change of Control.
4. The Executive shall not be required to mitigate the
amount of any payment provided for in Section 3 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in Section 3 be reduced by any compensation
earned by the Executive as the result of the employment by
another
employer, by retirement benefits, by offset against any amount
claimed to be owed by Executive to Tosco or otherwise.
5. Tosco's obligations under this Agreement shall commence
on the date Executive first becomes an employee of Tosco, and
this
Agreement, except as to matters set forth in Sections 6, 7, and
8
below, shall continue in effect for an initial term of two (2)
years from the date hereof; provided, however, that on the
second
anniversary of this Agreement and at the end of any six month
renewal term, this Agreement shall automatically be extended for
a period of six months, unless not later than three months prior
to the scheduled end of the initial term or any six month
renewal
term Tosco shall have given notice to the Executive that it does
not wish to extend this Agreement.
6. In the course of his employment Executive will become
knowledgeable about Tosco's (and its affiliates') business
strategies and development plans; customers; pricing strategies;
technical, production, financial and commercial capabilities;
and
other confidential affairs of Tosco not readily available to the
public. In light thereof, Executive agrees:
(a) to keep secret and retain in the strictest
confidence all confidential matters of Tosco and its affiliates
and not to disclose them to any one outside of Tosco, either
during or, as provided below, after his employment by Tosco,
except in the course of performing the duties of his employment
by
Tosco or with Tosco's express written consent; and
(b) to deliver promptly to Tosco on termination of
this
Agreement, or at any other time that Tosco may request, all
memoranda, notes, records, reports, manuals, drawings,
blueprints
and other documents (and all copies thereof), whether in
written,
electronic, or other form, relating to Tosco's or its
affiliates'
business and all property associated therewith, which he may
then
possess or have under his control.
The provisions of this Section shall survive the
termination of Executive'S employment with Tosco for a period of
two (2) years and the obligations hereunder shall be in addition
to, and not in place of, any other confidentiality agreements or
obligations Executive may have with or to Tosco or its
affiliates.
7. (a) During Executive's employment with Tosco,
Executive
(i) shall not accept employment from any person or entity other
than Tosco or its affiliates without the prior written consent
of
Tosco, (ii) shall not invest in or provide services to any
person
or entity (other than Tosco or its affiliates) that engages in
the
same or similar businesses of Tosco and/or its affiliates (the
"Restricted Businesses"), and shall not engage in the Restricted
Businesses except on behalf of Tosco or its affiliates, without
the prior written consent of Tosco; provided, however, that
nothing herein shall prohibit the Executive from purchasing up
to
five percent of the outstanding voting shares of any corporation
involved in the Restricted Businesses that are publicly traded
on
any national securities exchange or reported on the NASD, Inc.,
and (iii) shall not participate in any investment or activity
that
would be in conflict with or substantially impair the
Executive's
ability to discharge the duties of his employment with Tosco.
(b) Following the termination of Executive's
employment
with Tosco, for a period of time equal to the period used in
determining any severance payment made hereunder (if any there
may
be), Executive shall not call on or otherwise solicit the
business
of past or present customers of Tosco or of those entities whose
business Tosco was soliciting or preparing to solicit during the
term of Executive'S employment with Tosco.
The obligations of this Section 7 are in addition to
those contained in Section 6 above.
8. Tosco agrees that Executive will be included as a
participant in a Cash Incentive Plan (or Plans) (CIP) for
calendar
year 1992, which will provide for a maximum possible aggregate
bonus of up to 150% of Executive's base annual salary, adjusted
to
the date you first became an employee of Tosco ("Employment
Date"). The total CIP bonus will be the sum of two elements,
with
each element providing for up to a maximum of 75% of base annual
salary, adjusted to employment Date. The first element will
from
the Tosco Refining Company base CIP and the second element will
be
from the CIP for Tosco Energy Corporation. If Tosco terminates
Executive's employment during the calendar year of a CIP, other
than for Cause, Executive shall be entitled to a pro-rata award
based on the part of the year he was in Tosco's employ. (To
calculate a partial year's award, earnings to the date of
termination would be annualized, the applicable annual award
under
a CIP determined, and that result would be multiplied by a
factor
representing the proportion of the year Executive was in Tosco's
employ.) If Executive terminates his employment with Tosco
other
than for Good Reason, he will not be entitled to a CIP award for
the year he terminates.
9. The terms of this Agreement shall supersede and replace
any employment or severance agreement which the Executive may
have
with Tosco and upon execution of this Agreement any such other
employment agreement shall be terminated and of no further force
or effect. Nothing in this Agreement shall be construed to be a
commitment or guarantee of future employment with Tosco.
10. This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any
amount would still be payable to him hereunder if he had
continued
to live, all such amounts, unless otherwise provided herein,
shall
be paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee or other designee or, if there is
no
such designee, to his estate.
11. For the purpose of this Agreement, notices and all
other
communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when personally
delivered or when mailed by United States certified or
registered
mail, return receipt requested, postage prepaid, addressed to
the
respective addresses set forth below, or to such other address
as
either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address
shall
be effective only upon receipt:
To the Corporation: Tosco Corporation
72 Cummings Point Road
Stamford, CT 06902
To the Executive: Mr. Robert J. Lavinia
33 Doubling Road
Greenwich, CT 06830
12. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such
officer
as may be specifically designated by the Board. No waiver by
either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of
this
Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of New York without
regard to its conflicts of law principles. All references to
sections of the code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided
for
hereunder shall be paid net of any applicable withholding
required
under federal, state or local law. The obligations of Tosco
under
Section 3 shall survive the expiration of the term of this
Agreement.
13. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability
of
any other provision of this Agreement, which shall remain in
full
force and effect.
14. This Agreement may be executed in several
counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein
and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officers, employee or
representative of any party hereof; and any prior agreement of
the
parties hereto in respect of the subject matter contained herein
is hereby terminated and canceled.
16. Any controversy or claim arising out of or relating to
this Agreement, the interpretation thereof, or the breach
thereof,
shall be submitted to arbitration in the City of New York and
such
arbitration shall comply with and be governed by the provisions
of
New York State statutes governing arbitration.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
TOSCO CORPORATION
By:
Robert J. Lavinia
Executive
<PAGE>
EXHIBIT 10(R)
CRUDE OIL SALES CONTRACT
(CONFIDENTIAL)
BP Contract Number: 20870
This document is "Part 1" of a two-part Agreement (this
"Agreement"), effective as of December 15, 1993 and hereby
confirms the Agreement set forth in the Letter Agreement dated
September 2, 1993 between Tosco Corporation ("Buyer") and BP Oil
Supply Company ("BP"), BP Oil Supply Common Terms and Conditions
for the Sale and Exchange of Alaskan North Slope Crude Oil,
Effective November 1, 1991 are hereby incorporated by reference
as "Part 2" of this Agreement and shall prevail unless
superseded
by the terms contained in Part 1 hereof.
TERM: This Agreement shall be in effect for a term of five
years commencing on the closing date of the Agreement
for Purchase and Sale of Assets between BP Exploration
& Oil Inc. and Tosco Corporation dated November 9,
1993.
SELLER: BP Oil Supply Company (BP)
BUYER: Tosco Corporation (Buyer)
CRUDE TYPE: Alaskan North Slope Crude Oil (ANS)
QUANTITY: Up to barrels per month of ANS net of BS&W
subject to a maximum of barrels per calendar
year.
Buyer shall provide BP with its Purchase Volume +0/-
5MBD for the delivery month (M) no later than the last
business day of the second month (M-2) prior to the
delivery month. Buyer shall also at that time commit
to a range of Purchase Volume for the following two
months as follows: for the month after delivery month
(M+1) a volume +/-10 MBD and for the following month
(M+2) a volume +/-15 MBD. Buyer shall provide BP with
its final purchase volume by the 15th of the month (M-
1) prior to the delivery month (M). (For example, by
December 31, 1993 Purchase volume +0/-5 MBD for
February 1994, committed +/-10 MBD for March 1994,
committed +/-15 MBD for April 1994; by January 15,
1994, fixed volume for February 1994). This rolling
three month process is meant to ensure stable supply
operations between Buyer and BP.
DELIVERY: All ANS sold under this Agreement shall be delivered
in
vessels provided by BP to Buyer's Ferndale, Washington
dock only, except in the case of unanticipated
operational difficulty of either party, including, but
not limited to, maintenance of refinery process units
or tanks, and ship delays. BP shall to the extent
necessary to mitigate the unanticipated operational
difficulty use reasonable efforts to accommodate such
alternate delivery points as Tosco may request with an
appropriate differential (not to exceed actual cost
differences to BP). Title and risk of loss of ANS
shall pass from BP to Buyer as the ANS passes the
vessel's last permanent flange at the delivery port.
If Buyer's Ferndale facility is not covered by Marine
Preservation Association (MPA) membership and if in
the
future the MPA imposes fees on its members (BP being a
member) for deliveries to non-member facilities, Buyer
shall reimburse BP for one-half of such fees up to a
maximum reimbursement of five cents per barrel.
PRICE: The monthly average spot market price of ANS for the
month prior to the intended delivery month. The final
volume fixed for any month will be sold at the price
applying to the intended delivery month regardless of
time of actual delivery. The spot market price for
any
month is .
If on the first or any subsequent anniversary of this
Agreement either party believes that the formula set
forth herein ceases on an ongoing basis to reflect the
midpoint of the spot market price, it may propose a
prospective revision to the formula to take effect six
months thereafter. Thereupon the parties will
negotiate in good faith to reach a revised formula
which accurately reflects such price. Until a revised
formula is agreed, the then effective formula shall
continue to be used.
If the parties cannot agree within 60 days either
party
may demand binding arbitration according to procedures
to be agreed by the parties or, in the absence of such
agreement, before a mutually-agreed single arbitrator
who shall be a person familiar with the ANS market and
whose authority shall be limited to selecting among
the
then current formula and any revised formulas proposed
by the parties. The arbitrator shall be charged with
selecting the formula which most closely approximates
the spot market price midpoint and shall detail the
reasons for his or her choice in a written opinion.
If in any given month either party believes the
formula
price misrepresents the spot market price because of
inclusion in the indices, of non-representative
transactions involving either of the parties, the
parties shall adjust the formula to eliminate the
effect of any such non-representative transactions.
If
the parties cannot agree on an adjustment then either
party may call for binding arbitration according to
the
procedures described in the paragraph above.
P&C: Buyer agrees that the terms of its purchase of ANS
hereunder is private and confidential and will not be
disclosed to any third party without Seller's consent
except as required by law or regulation.
INCENTIVE ALLOWANCE:
PAYMENT TERMS: Payments made by Buyer for ANS and by BP for
incentive allowance shall be made on or before the
fifth day after the date of delivery of ANS.
Associated payment details are subject to Article 8,
Section 8.2 contained in Part 2 of this Agreement.
SCHEDULING & NOMINATIONS: Buyer shall provide BP by the 15th of
the month (M-1) prior to the delivery month (M) its
nominated delivery windows for the month with
operational flexibility to request +/-5 MBD over/under
delivery from Purchase Volume. Upon mutual agreement,
Seller may have the operational flexibility to
over/under deliver Buyer's nominated volume by up to
15%. In the event by mutual agreement Seller should
under-deliver Buyer's nomination in any given month,
the under-delivered volume will be delivered in the
following month in addition to the following month's
nomination and that volume will be priced as if it had
been delivered during the prior month. To the extent
Seller over-delivers in any given month, the over-
delivered barrels shall be subtracted from the next
month's nomination and will be priced as if it had
been
delivered in the following month. This operational
flexibility will not increase the total Purchase
Volume
by Buyer in any given month. BP will deliver to Buyer
in parcel sizes between 200,000 and 600,000 barrels,
with typical deliveries of about 400,000 barrels.
Volumes committed for any given month shall be
delivered on a ratable basis in cargo quantities. If
the parties cannot agree, then BP shall deliver and
Tosco shall receive vessels during the arrival windows
on the following days of the month; from the 1st
through the 6th; from the 7th through the 14th; from
the 15th through the 21st; and from the 22nd through
the 28th.
ALLOCATION: Article 14 in Part 2 of this Agreement is amended by
adding a new sentence as follows:
"In the event BP puts an allocation program into
effect, it shall allocate quantities to Buyer on a
basis which is no less favorable than that applied to
BP's other customers located on the U.S. West Coast."
LAYTIME: Modify Article 6, Section 6.6, in Part 2 of this
Agreement by inserting the following in lieu of the
first sentence of the fifth paragraph: "36 running
hours shall be allowed as laytime for discharging a
full cargo (including crude oil washing and/or cargo
stripping, if performed) and a pro rata amount of
hours, plus six additional hours, shall be allowed for
discharging partial cargoes subject to a minimum of 12
hours. For example, if a partial cargo of 400 MB is
delivered on a 120 MDWT vessel with capacity of 800
MB,
a partial cargo laytime of 36 x (400/800) = 18 plus 6,
equal to a total of 24 hours will be allowed."
QUANTITY AND
QUALITY DETERMINATION:
Article 4.2C in Part 2 of this Agreement is amended as
follows: Delete "as available on the vessel" in the
first sentence. Add in the second sentence, before
the
word "inspectors", the word "independent".
FINANCIAL SECURITY: Tosco Corporation shall comply with the
payment terms as set forth in Section 8.2 of Part 2 of
this Agreement and will provide additional financial
security as set forth in Section 8.4 of Part 2 of this
Agreement only if there is a material adverse change
in
the financial condition of Tosco relative to the date
of this Agreement.
NOTICES: All written notices shall be sent by U.S. mail, telex
or telefax to the addresses listed below. Except as
otherwise provided in this Agreement, the effective
date of a notice shall be the date of receipt by the
addressee. A party shall promptly notify the other
party of any address change.
BP Oil Supply Company TOSCO Corporation
200 Public Square 2300 Clayton Road
5th Floor Suite 1100
Cleveland, OH 44114 Concord, CA 94520-2100
Telex: 62917760 (preferred mode of
communication)
Telefax: (216) 586-5243
BP OIL SUPPLY COMPANY TOSCO CORPORATION
By:________________________ By:___________________
Title:_____________________ Title:________________
Date:______________________ Date:_________________
<PAGE>
EXHIBIT 10(s)
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT ("Agreement"). with
an effective date of December 28, 1993, is between The British
Petroleum Company p.l.c., an English Corporation, with an
address of Britannic House, 1 Finsbury Circus, London EC2M7BA,
England; BP Exploration & Oil Inc., an Ohio Corporation with
offices at 200 Public Square, Cleveland, Ohio 44114-2375
(collectively "BP") as licensor and Tosco Corporation, a Nevada
corporation with an address of 72 Cummings Point Road, Stamford,
Connecticut 06902 ("Tosco") as licensee;
WHEREAS, BP has for many years been a refiner and
marketer of motor fuel, motor oil and related petroleum products
to the public in the United States; and
WHEREAS, because of the quality of the motor fuel,
motor oil and related petroleum products produced and thereafter
sold by BP and the excellent service rendered at BP retail
gasoline service stations the public has come to associate a
very high degree of consistency and quality with the motor fuel,
motor oil and related goods and services of BP; and
WHEREAS, BP has made significant expenditures
advertising and promoting its motor fuel, motor oil and related
petroleum products and services using certain trademark, service
marks, trade dress, color schemes, designs and other verbal and
non-verbal symbols which have come to represent BP throughout
the United States; and
WHEREAS, BP Exploration & Oil Inc. and Tosco have
entered into an Agreement for the Purchase and Sale of assets
pursuant to which Tosco has purchased the Ferndale refinery,
several terminals and numerous retail gasoline stations in
Washington and Oregon from BP; and
WHEREAS, Tosco wishes to use trademark, service mark,
trade dress, color schemes, designs and other verbal and
non-verbal symbols owned by BP in conjunction with the sale of
motor fuel, motor oil and related services in Washington and
Oregon;
WHEREAS, BP is willing to license such use subject to
the terms and conditions set forth herein which are designed to
protect the valuable goodwill of BP's trademarks, service mark,
trade dress, color schemes, designs and the verbal and
non-verbal symbols associated with BP's image as a refiner and
marketer of motor fuel, motor oil and related petroleum products
and services;
NOW THEREFORE in consideration of the premises and the
agreements hereinafter set forth, the parties agree as follows:
Article 1
DEFINITIONS
The terms set forth below shall be defined as follows
when used in this Agreement:
1.1 Licensor - The British Petroleum Company p.l.c.
for the trademark and service mark BP and BP Exploration & Oil
Inc., a wholly-owned subsidiary of the British Petroleum Company
p.l.c. for the trade dress, color schemes and other verbal and
non-verbal symbols associated with the trademark and service
mark BP. BP Exploration & Oil Inc. shall be directly
responsible for enforcing the rights and fulfilling the
obligations set forth herein.
1.2 Licensee - Tosco Corporation.
1.3 Licensed Mark - the service mark and trademark
"BP".
1.4 Licensed Marketing Indicia - the trade dress,
color schemes, designs, and verbal and non-verbal symbols
associated with BP's retail image. Such symbols include, but
are not limited to, the proprietary typeface associated with
signage at BP service stations; canopy facia including both the
rounded "bullnose" sections and the flat sections contiguous to
the "bullnose" sections; the round monocolumns found on multiple
product dispensers; the round shrouds that surround the major
identification (MID) signs; the round corners on the ancillary
buildings and the colors green and yellow.
* Photographs of a service station displaying one
version of the Licensed Marketing Indicia accompany
this Agreement as Exhibit A.
1.5 Licensed Goods and Services - motor fuel and
motor oil produced in accordance with BP specifications; car
wash services; motor vehicle repair services; and retail
convenience store services.
1.6 Licensed Territory - the States of Oregon and
Washington, U.S.A.
1.7 Effective Date - December 15, 1993.
Article 2
LICENSE GRANT
2.1 Subject to the terms and conditions of this
Agreement, BP grants to Tosco the exclusive right to use the
Licensed Mark and the Licensed Marketing Indicia only in the
Licensed Territory and only in connection with the production,
advertising, promotion and sale of the Licensed Goods and
Services. As consideration for use of the Licensed Mark and the
Licensed Marketing Indicia Tosco shall pay BP a royalty fee
which shall be paid up for the first five (5) years after the
Effective Date of this Agreement. This royalty fee shall be
deemed a part of the purchase price paid to BP pursuant to the
Agreement for Purchase and Sale of Assets between BP and Tosco.
Thereafter, the license granted shall bear a royalty fee as
provided in Section 3.04 of this Agreement.
2.2 Tosco may grant sublicenses to third party
petroleum jobbers and dealers to use the Licensed Mark and the
Licensed Marketing Indicia in the Licensed Territory in
connection with the Licensed Goods and Services and may
authorize the jobbers to grant further rights to their reseller
customers for such use, so long as all such third parties first
agree in writing that their rights are subordinate to and
derived from this Agreement and that they shall be bound by the
terms of this Agreement related to use and display of the
Licensed Mark and Licensed Marketing Indicia and sale of the
Licensed Goods and Services.
2.3 Tosco shall not use the Licensed Mark or the
Licensed Marketing Indicia or any mark similar to the Licensed
Mark as part of its corporate name or its trade name or at or on
any manufacturing or terminal facility.
2.4 Until this Agreement is terminated BP shall not
use the Licensed Mark or the Licensed Marketing Indicia in the
Licensed Territory in connection with the Licensed Goods and
Services.
2.5 Nothing in this Agreement shall be deemed to
constitute an assignment by BP of the Licensed Mark or the
Licensed Marketing Indicia or any of its rights therein or to
give Tosco or any sublicensee of Tosco any right, title or
interest in and to the Licensed Mark or the Licensed Marketing
Indicia except as provided in this Agreement.
2.6 Tosco acknowledges that neither this Agreement
nor the relationship contemplated by this Agreement is a
"Franchise" or "Business Opportunity" within the meaning of:
(i) 16 Code of Federal Regulations 436;
(ii) Revised Code of Washington Title 19, Chapters
19.100, 19.110 and 19.120;
(iii) Oregon Revised Statutes Title 50, Sections
650.005 through 650.250;
(iv) 15 United States Code Chapter 55.
Tosco shall not, under sections 2.02 above, or otherwise, grant
any rights in the name of or on behalf of BP or otherwise
obligate BP or cause BP to be liable under the statutes set
forth herein or their amended, successor or replacement
statutes.
Article 3
TERM AND TERMINATION
3.1 This Agreement shall have a term of five (5)
years commencing with its Effective Date. It shall continue
thereafter unless it is terminated as provided for in this
Article or elsewhere in this Agreement.
On the fourth anniversary of the Effective Date of
this Agreement and thereafter either BP or Tosco may terminate
the license grant provision of this Agreement upon giving one
(1) year's prior notice in accordance with the notice provisions
of this Agreement.
3.2 In addition to the termination provisions set
forth elsewhere in this Agreement if, at any time, BP believes
that Tosco is in breach of any of its obligations under this
Agreement, it may send Tosco notice thereof. Tosco shall have
sixty (60) days from the date it receives such notice to cure
such breach. If such breach is not cured within such period of
time then BP may terminate the license grant provisions of this
Agreement upon giving one hundred and twenty (120) days prior
notice to Tosco.
3.3 At least forty-five (45) days prior to filing a
petition for any arrangement or reorganization under any
bankruptcy or insolvency law, Tosco shall inform BP of its
intention to file such a petition or of any other party's
intention to file such a petition. Failure to conform to this
notice requirement shall be an incurable prepetition breach of
this Agreement. BP may immediately terminate the license grant
provisions of this Agreement if Tosco or another party declares
its intention to file a petition for any arrangement or
reorganization of Tosco under any bankruptcy or insolvency law.
3.4 Provided that Tosco has fully performed all its
obligations under this Agreement, BP and Tosco shall, prior to
the third anniversary of this Agreement, enter into negotiations
to extend Tosco's use of the Licensed Mark and the Licensed
Marketing Indicia in the Licensed Territory. Any such extension
agreement shall include use of the Licensed Mark and the
Licensed Marketing Indicia on terms and conditions reflecting
fair market value as agreed to by BP and Tosco.
3.5 Upon the termination of the license grant
provisions of this Agreement Tosco shall cease to use in any
manner whatsoever the Licensed Mark and the Licensed Marketing
Indicia. In particular, Tosco shall stop using all signs,
advertising materials, forms and promotional materials that
display the Licensed Mark or the Licensed Marketing Indicia.
Tosco shall further cause any third parties who are using the
Licensed Mark and the Licensed Marketing Indicia under Tosco's
sublicense to cease all such use. Within 60 days of the
termination or expiration of the license grant provisions of
this Agreement, Tosco shall provide a written report to BP
setting forth each location where it had authorized any use of
the Licensed Mark and the Licensed Marketing Indicia and the
date that all such use ceased.
3.6 Within sixty (60) days of the termination of the
license grant provisions of this Agreement Tosco shall, at its
expense, deliver to one (1) of two (2) designated storage sites
all signs, station design elements or other materials in the
Licensed Territory bearing the Licensed Mark or constituting the
Licensed Marketing Indicia. One (1) designated storage site
shall be located within the city limits of Seattle, Washington;
the other designated storage site shall be located within the
city limits of Portland, Oregon. The material delivered shall
be in as good condition as when installed by Tosco or received
by Tosco from BP normal wear and tear excepted.
Thereafter BP shall have sixty (60) days to remove all
such signs, station design elements or other materials bearing
the Licensed Mark or constituting the Licensed Marketing Indicia
from each of the designated sites. If BP fails to remove all
such materials within the sixty (60) day period, then BP shall
pay reasonable storage fees until such time as all such
materials are removed.
As an alternative or a supplement to the above
procedure BP may instruct Tosco to destroy certain signs,
station design elements or other materials bearing the Licensed
Mark or constituting the Licensed Marketing Indicia. Tosco
shall bear all costs associated with any such destruction of
materials so long as such costs are lower than the cost of
transportation and storing materials that would otherwise be
destroyed.
Unless the provisions of Section 4.4 are applicable,
Tosco shall also take all necessary steps to alter the existing
color scheme of each motor fuel service station in the Licensed
Territory such that the service station and related equipment,
including vehicles, do not suggest to the public in any way the
retail image of BP. Such necessary steps shall include, but are
not limited to, repainting to a color other than green the
following: canopies, MID signs, pump dispenser panels, pump
island spreaders and the background color for the permanent
signage, at each motor fuel gasoline service station in the
Licensed Territory.
3.7 As soon as practicable but in any event within
one (1) year after the expiration or termination of the license
grant provision of this Agreement, Tosco shall delete from any
telephone directory entry or yellow pages any display or listing
of the Licensed Mark or the Licensed Marketing Indicia. Tosco
shall also direct its sublicensees to remove any such telephone
directory or yellow pages listing that displays the Licensed
Mark or the Licensed Marketing Indicia.
Article 4
OWNERSHIP OF THE MARK AND MARKETING INDICIA
4.1 Tosco acknowledges BP's exclusive right, title
and interest in and to the Licensed Mark, the Licensed Marketing
Indicia and the goodwill associated therewith. Tosco shall not
represent in any manner that it has ownership in the Licensed
Mark or the Licensed Marketing Indicia. Tosco acknowledges
that, other than as expressly provided herein, its use thereof
shall not create any right, title or interest in Tosco but that
all such use by Tosco shall inure to the benefit of BP.
4.2 Tosco shall not do or permit to be done any act
that might jeopardize or invalidate the Licensed Mark and the
Licensed Marketing Indicia or the goodwill or title of BP in and
to the Licensed Mark and the Licensed Marketing Indicia. Tosco
shall not dispute, contest, jeopardize or impair directly or
indirectly the validity of BP's ownership of the Licensed Mark
or the Licensed Marketing Indicia.
4.3 During this Agreement and after the license grant
provisions of this Agreement have been terminated Tosco shall
not adopt any name or symbol that incorporates the color green
or is otherwise similar to the Licensed Mark in the Licensed
Territory. After the license grant provisions of this Agreement
have been terminated, Tosco shall not use the color green on
canopies, MID signs, pump dispenser panels, pump island
spreaders or as the background color for permanent signage, at
any gasoline service station in the Licensed Territory.
4.4 Notwithstanding the provisions of Section 4.3
Tosco may, after the license grant provisions of this Agreement
have been terminated, use the color green if Tosco must do so as
part of a rebranding program whereby Tosco assumes the brand and
marketing indicia of an established national marketer of
gasoline that has already been using the color green to identify
its brand or marketing indicia. Nothing in this section shall
be construed to limit BP's ability to enforce BP's rights in the
Licensed Mark or the Licensed Marketing Indicia against any such
established national marketer or its licensee. Nothing in this
section shall be construed as granting Tosco the right to use
the color green inside the Licensed Territory in any manner as
part of a brand or marketing indicia that Tosco develops or that
is developed under Tosco's influence or direction.
4.5 BP acknowledges that after the Effective Date of
this Agreement the MID signs that BP owns shall become the
property of Tosco. So long as Tosco complies with the terms and
conditions of this Agreement Tosco may erect any further such
MID signs in the Licensed Territory as Tosco wishes. If this
Agreement is terminated, Tosco shall take all necessary actions
to ensure that all MID signs in the Licensed Territory bearing
the Licensed Mark or containing elements of the Licensed
Marketing Indicia are altered so that they do not convey to the
consuming public the retail image of BP. Such actions shall
include, but are not limited to, removing the round pole shrouds
and removing all green and yellow BP signage, message and price
panels from each such sign.
Article 5
DISPLAY OF THE LICENSED MARK AND THE LICENSED MARKETING
INDICIA
5.1 Tosco shall only use the Licensed Mark and the
Licensed Marketing Indicia in connection with the Licensed Goods
and Services and only in the Licensed Territory. Tosco shall
display the proper form of trademark and service mark notice
associated with the Licensed Mark in accordance with
instructions received from BP.
5.2 BP shall provide Tosco with relevant portions of
its Visual Standards Manuals as updated from time to time that
relate to the use and display of the Licensed Mark and the
Licensed Marketing Indicia. Tosco shall strictly comply with
the standards set forth in the Visual Standards Manuals. BP
shall notify Tosco in writing if the standards embodied in the
Visual Standards Manuals are changed. Tosco shall acknowledge
any such changes in writing and shall, at its own expense,
incorporate such changes at a rate and in a manner inside the
Licensed Territory similar to the rate such changes are being
made by BP outside the Licensed Territory.
5.3 To assist Tosco and any third parties authorized
by Tosco to comply with this Agreement in their use of the
Licensed Mark and the Licensed Marketing Indicia, BP shall
designate a representative to advise on proper techniques for
displaying the Licensed Mark and the Licensed Marketing Indicia.
BP shall make such a representative available to consult with
Tosco for the duration of this Agreement.
5.4 BP shall provide Tosco with the names of
authorized vendors for the sale or repair of the Licensed
Marketing Indicia. Tosco may select other vendors provided that
such vendors' construction or repairs conform to BP's
specifications and standards of display.
5.5 BP shall, upon reasonable advance notice, have
the right to inspect any motor fuel service station in the
Licensed Territory displaying the Licensed Mark and the Licensed
Marketing Indicia to ensure that appropriate visual standards
are being met. Tosco's agreements with its sublicensees shall
provide that BP shall have such inspection right with respect to
the sublicensees' stations.
5.6 If BP determines that its standards for the
visual display of the Licensed Mark and the Licensed Marketing
Indicia at an individual location are not being met, BP shall so
advise Tosco. Tosco or any third party sublicensed by Tosco to
use the Licensed Mark and the Licensed Marketing Indicia shall
promptly take the necessary corrective actions to conform to the
visual standards set forth by BP. If Tosco does not correct the
defect in visual standards within 5 days or such longer time as
may be reasonable in the circumstances, the continuance of the
defect shall constitute an "occurrence". BP shall notify Tosco
of each such occurrence.
If during the term of this Agreement Tosco or any
third party authorized by Tosco to use the Licensed Mark or the
Licensed Marketing Indicia is responsible for _____ occurrences
at a particular location BP may terminate the license grant
provisions of this Agreement for that location upon giving one
hundred and twenty (120) days prior notice to Tosco. If during
the term of this Agreement a total of ______ locations
accumulate _____ occurrences referred to herein then BP may
terminate the license grant provisions of this Agreement upon
giving one hundred and twenty (120) days prior notice to Tosco.
Article 6
QUALITY OF GOODS ASSOCIATED WITH THE LICENSED MARK AND THE
LICENSED MARKETING INDICIA
6.1 All motor fuel or motor oil sold by Tosco or its
sublicensees in the Licensed Territory under the Licensed Mark
shall conform to BP's specifications for such products. To that
end Tosco shall only use the Licensed Mark and the Licensed
Marketing Indicia in connection with motor fuel or motor oil
that meets or exceed the formulation specifications set forth in
Exhibit B to this Agreement. BP may by written notice change
its formulation specifications or its proprietary gasoline
additives from time to time. Tosco shall acknowledge in writing
its receipt of any such changes and immediately thereafter
incorporate them in the products it produces for sale under the
Licensed Mark and the Licensed Marketing Indicia in the Licensed
Territory. BP shall not impose unreasonable product
formulations on Tosco. In this context reasonableness shall be
defined as follows: a) the minimum product specifications as
defined by the Olympic Pipeline and the Santa Fe Pipeline
Partnership or b) product specifications for products then being
sold by two major brand competitors or three competitors in the
Licensed Territory. Other than this reasonableness definition,
BP shall not impose on Tosco higher specifications than those
used by BP outside the Licensed Territory.
6.2 Tosco acknowledges that the information contained
in the product formulation specifications is a confidential
trade secret of BP. Tosco shall exercise at least the same
degree of diligence to protect BP's product formulation
specifications as Tosco takes for its own most confidential
proprietary information. Such necessary steps shall include,
but are not limited to, restricting the access of employees or
other parties to BP's formulation specifications and having
employees and others who must have access to BP's formulation
specifications sign confidentiality agreements. If Tosco fails
to comply with its secrecy obligations under this Agreement BP
may immediately terminate the license grant provisions of this
Agreement. The confidentiality provisions of this Agreement
shall survive its termination or expiration for a period of ten
(10) years.
6.3 To ensure that BP's established standards of
gasoline quality are maintained throughout the duration of this
Agreement, Tosco shall utilize BP's proprietary additives in all
motor fuel sold in the Licensed Territory under the Licensed
Mark and the Licensed Marketing Indicia. Such additives are a
necessary component of the formulation specifications set forth
in Exhibit B.
6.4 To further ensure that BP's established standards
of motor fuel quality are maintained throughout the duration of
this Agreement Tosco shall, at its expense, hire an independent
laboratory to demonstrate that the motor fuels sold under the
Licensed Mark and the Licensed Marketing Indicia meet or exceed
the product formulation specifications set forth in Exhibit B.
The testing required shall be done at least as often as BP
conducts such similar testing. Such testing shall conform to
the procedures set forth in Exhibit C and shall also include the
following: random sampling each year of at least ten retail
gasoline stations in both the greater Seattle and Portland
markets, with at least five such stations sampled each six month
period; sampling of the refinery and terminals every month.
Tosco shall instruct the independent laboratory to send BP a
copy of the results at the time such test results are provided
to Tosco.
The testing required in this Section shall be in
addition to any testing required by local, state or federal laws
or regulations such as regulations directed to oxygenated
gasoline, low RVP gasoline, low sulfur diesel fuel or
reformulated gasoline.
6.5 If the independent laboratory determines that the
motor fuel produced by Tosco has failed to meet the formulation
specifications set forth by BP, Tosco shall immediately explain
to BP's designated representative the cause for such failure.
If Tosco's motor fuel has failed to meet the
specifications because of willful misconduct BP may immediately
terminate the license grant provisions of this Agreement. If
Tosco's motor fuel has failed to meet BP's specifications
because of inadvertence Tosco shall seek a waiver from BP. If
BP determines that a waiver from its product formulation
specifications will not result in a materially defective
gasoline BP may grant the waiver without further penalty to
Tosco.
If BP determines that a waiver is not possible then BP
and Tosco shall consult to determine how best to dispose of the
defective motor fuel or what corrective actions are necessary by
Tosco to eliminate or minimize the possibility that such motor
fuel could be purchased by consumers.
6.6 Tosco and its sublicensees shall also comply with
local, state or federal laws and regulations applicable to motor
fuel quality. If Tosco or its sublicensees fails to comply with
local, state or federal laws and regulations applicable to motor
fuel quality Tosco shall advise BP on the reason for any such
failure. BP and Tosco shall consult to determine what
corrective actions are necessary by Tosco to eliminate or
minimize the effect of such non-compliance and what measures
Tosco can take to avoid any future non-compliance. If the
failure is due to willful misconduct of Tosco BP may immediately
terminate the license grant provisions of this Agreement for a
particular site or sites depending on the scope of the willful
failure. ln the event of willful misconduct by a sublicensee, BP
may require Tosco to immediately terminate the sublicensee or a
particular site or sites of the sublicensee depending on the
scope of the willful failure.
If the failure to meet such standards is due to
inadvertence then Tosco shall take the necessary corrective
actions required by local, state or federal laws or regulations.
If Tosco or its sublicensees fails to meet applicable local,
state or federal regulations on motor fuel quality on _________
BP may terminate the license grant provisions of this Agreement
upon giving Tosco one hundred and twenty (120) days prior
notice.
For purposes of this Section 6.6, a failure to comply
because of events flowing from a common source shall constitute
a single event. (For example, if a batch of off-grade motor
fuel is distributed to several stations and used to fuel a
number of vehicles, it will count as one incident of non-
compliance.) If Tosco terminates a non complying
jobber-supplied site or sites, non-compliance attributable to
such sites shall be deleted from the non-compliance count. If
new fuel regulations are imposed that result in a significant
increase in citations to all gasoline marketers in the Licensed
Territory BP and Tosco shall consult to determine whether such
violations by Tosco constitute non-compliance of this Agreement
that should subject Tosco to possible termination of the license
grant provisions of this Agreement.
Article 7
QUALITY OF SERVICE ASSOCIATED
WITH THE LICENSED MARK AND THE LICENSED MARKETING INDICIA
7.1 Tosco shall operate its business in the Licensed
Territory in accordance with the standards and requirements
necessary to maintain the quality level of service now
associated by consumers with the Licensed Mark and the Licensed
Marketing Indicia in the Licensed Territory as defined by
section 7.2-7.5 of this Agreement.
7.2 To ensure that the existing standards of service
and responsiveness in the Licensed Territory are maintained,
Tosco shall develop customer responsiveness programs that meet
the following criteria: (1) customer inquiries or complaints
shall be addressed within a maximum of fourteen (14) days of
receipt by Tosco or its sublicensees; (2) Tosco shall institute
a Tosco Shopper Program (TSP) similar to BP's "Mystery Shopper
Program." Tosco shall design its TSP in such a manner that its
results measure the same criteria as and can be meaningfully
compared with the results generated by BP's Mystery Shopper
Program. To achieve such meaningful comparisons Tosco shall
sample its customers and its sublicensees' customers at the same
intervals as such customers are sampled under BP's Mystery
Shopper Program. Tosco shall provide BP copies of the results
of all TSP surveys.
7.3 The baselines for the TSP for the first year of
this Agreement (1994) shall be as follows:
Self-Service Mini-Service Station
Housekeeping
Average
Consistency
Each subsequent year beginning in 1995 the baselines
for Tosco's TSP Program shall be either the baselines from the
prior year or from any earlier year whichever represents the
higher baselines for compliance by Tosco.
If the results of the TSPs in any three month period
are lower than the applicable baselines, Tosco shall take the
necessary steps to ensure that the resulting customer
satisfaction levels are restored within two (2) testing periods.
If, _______________ any one of the elements of Tosco's TSP
Program still does not meet the applicable baselines then BP may
terminate the license grant provisions of this Agreement.
7.4 So that the existing standards of service and
responsiveness are not diminished any service station in the
Licensed Territory bearing the Licensed Mark and the Licensed
Marketing Indicia shall honor BP's and other credit cards in
accordance with the terms of BP's credit card program so long as
BP sponsors such a program. Tosco and its sublicensees shall
also stock sufficient quantities of BP branded motor oil to meet
customer demand in the Licensed Territory.
7.5 Tosco shall ensure that all service stations not
branded BP on the Effective Date of this Agreement that it later
authorizes to use the Licensed Mark and the Licensed Marketing
Indicia shall comply with the retail marketing matrix attached
to this Agreement as Exhibit D; further, Tosco shall ensure that
all such service stations sell at least twenty-five thousand
(25,000) gallons of motor fuel per month; have a paved driveway,
a canopy for the gasoline pumps and Electronic Point of Sale
(EPOS) equipment for processing credit card sales.
7.6 To further ensure that the goodwill associated
with the Licensed Mark and the Licensed Marketing Indicia is
preserved in the Licensed Territory and to preserve the image
and value of the BP brand, Tosco shall either participate in, or
adopt, at its expense, motor fuel and product guarantee programs
comparable to those adopted by BP from time to time outside the
Licensed Territory in connection with the Licensed Goods and
Services.
Article 8
ADVERTISING
8.1 Tosco shall submit to BP for prior approval
samples of any proposed advertising materials, signage, graphic
designs, product brochures, technical data sheets or premium
items bearing the Licensed Mark or the Licensed Marketing
Indicia planned for public viewing or listening and materials
not bearing the Licensed Mark used to promote products and
services at motor fuel service stations within the Licensed
Territory. BP shall notify Tosco in writing if it objects to
any such materials and, unless the objections are resolved,
Tosco shall not use or display such materials. BP shall not
unreasonably withhold its approval or unreasonably object to any
such materials submitted by Tosco for prior approval. If BP
does not notify Tosco of its objection or disapproval within
fifteen (15) days after receipt by BP of any such submission of
advertising materials, signage, graphic designs, product
brochures, technical data sheets or premium items, such approval
shall be deemed to have been given by BP.
BP shall notify Tosco in writing if it objects to any
such materials and, unless the objections are resolved, Tosco
shall not use or display such materials. BP shall not
unreasonably raise such objections.
8.2 To help ensure that the goodwill associated with
the Licensed Mark and Licensed Marketing Indicia is preserved in
the Licensed Territory Tosco shall commit funds to advertise the
goods and services associated with the Licensed Mark and the
Licensed Marketing Indicia. Tosco shall spend a minimum of
_____ during each ____ consecutive year period that this
Agreement is in force for advertising that promotes the BP brand
in association with the Licensed Goods and Services. Of this
total Tosco shall spend at least _____________ per year for the
duration of this Agreement for advertising on television, on
radio, in magazines, in newspapers and on billboards.
Article 9
INFRINGEMENT
9.1 Tosco shall immediately notify BP in writing of
any apparent infringement of, or challenge to, Tosco's use of
the Licensed Mark or the Licensed Marketing Indicia, or of any
claim by any person of any rights in a service mark, trademark
or overall image similar to the Licensed Mark or the Licensed
Marketing Indicia. Tosco shall not directly or indirectly
communicate with any person other than BP or BP's legal counsel
in connection with any such alleged infringement, challenge or
claim.
9.2 BP shall have sole discretion to take the actions
it deems appropriate and the exclusive right to control any
litigation, U.S. Patent and Trademark Office proceeding or other
administrative proceeding arising from Tosco's use of the
Licensed Mark or the Licensed Marketing Indicia. Tosco shall
execute any and all documents and do all such acts and things
necessary in the opinion of BP to protect and maintain the
interest of BP in any such proceeding. If BP, in its sole
discretion, decides not to take further action in any
litigation, U.S. Patent and Trademark Office proceeding or other
administrative proceeding arising from Tosco's use of the
Licensed Mark or the Licensed Marketing Indicia, Tosco may take
such further action ____________ BP shall not unreasonably
withhold such approval. Tosco shall bear all the costs
associated with any such further action.
9.3 Except as set forth above in Section 9.2, BP
shall reimburse Tosco for all reasonable expenses incurred in
connection with any litigation, U.S. Patent and Trademark Office
proceeding or other administrative proceeding arising from
Tosco's use of the Licensed Mark or the Licensed Marketing
Indicia unless such litigation, U.S. Patent and Trademark Office
proceeding or other administrative proceeding arises from a
dispute between BP and Tosco.
9.4 BP represents and Tosco acknowledges that BP is
granting Tosco rights only to the extent, that BP has such
rights. If the Licensed Mark or the Licensed Marketing Indicia
are found to be invalid, defective or otherwise not the property
of BP, Tosco shall have no claim in law or equity seeking
compensation or redress for any such invalidity or defect, and
hereby expressly waves the right to pursue any such action or
proceeding.
Article 10
ASSIGNMENT/TRANSFER
10.1 This Agreement is personal to Tosco. Tosco
shall not attempt to assign or transfer this Agreement or any of
its rights or obligations hereunder except to one of its
affiliated companies. If Tosco does assign this Agreement to
one of its affiliated companies Tosco shall still assume primary
responsibility for its obligations under this Agreement. An
acquisition of more than _______ of the stock of Tosco by a
third party shall be considered a transfer of this Agreement.
BP may then terminate the license grant provisions of this
Agreement upon giving Tosco one hundred and twenty (120) days
prior notice.
BP may terminate the license grant provisions of this
Agreement if Tosco sells or otherwise disposes of all or
substantially all of the retail properties in the Licensed
Territory that Tosco has purchased from BP; provided however,
that the sale or transfer of properties for financing purposes
under which Tosco retains control of the properties shall not
constitute grounds for termination. Termination under this
Section shall be effective if BP gives Tosco one hundred and
twenty (120) days prior notice.
Article 11
INDEMNIFICATION AND INSURANCE
11.1 Except to the extent directly caused by a defect
in the product specifications contained in Exhibit B, BP assumes
no liability to Tosco or to third parties with respect to goods
sold or services rendered under the Licensed Mark or the
Licensed Marketing Indicia by Tosco or by third parties
sublicensed by Tosco.
11.2 Tosco shall indemnify and hold harmless BP, its
officers, directors, subsidiaries and affiliates against any and
all claims, liabilities, damages, costs and expenses including
attorneys' fees incurred by BP arising out of or attributable in
any way to use by Tosco or third parties sublicensed by Tosco of
the Licensed Mark or the Licensed Marketing Indicia or the
breach by Tosco of any provision of this Agreement. Tosco shall
have no obligation to indemnify and hold harmless BP, its
officers, its directors, subsidiaries and affiliates if the
Licensed Mark or the Licensed Marketing Indicia are found to be
invalid, or otherwise not the property of BP.
11.3 Tosco shall purchase and maintain in full force
and effect during the term of this Agreement comprehensive
general or commercial general liability insurance covering
personal injury and property damage claims arising out of
Tosco's operations, which shall include contractual liability,
products liability and completed operations coverage. The
insurance shall be in an amount of at least ten million
($10,000,000) dollars combined single limit per occurrence. The
policy or policies of insurance shall be endorsed to name BP as
an additional insured with respect to any liability BP may incur
as a result of Tosco's or its sublicensees' use of the Licensed
Mark or the Licensed Marketing Indicia and to provide that such
coverage shall be primary to any other liability insurance
obtained and carried by BP.
11.4 At the Effective Date of this Agreement Tosco
shall furnish BP certificates issued by Tosco's insurer
indicating that all required insurance is in full force and
effect. Such certificates shall also include an undertaking by
the insurer to give BP written notice 10 days prior to
cancellation of or a material change in the coverage.
11.5 Tosco's failure or neglect to provide or keep in
force any or all of the insurance required under this Agreement
shall be considered a material breach of this Agreement that
shall give BP good cause for immediate termination.
Article 12
COMPLIANCE WITH LAWS AND REGULATIONS
12.1 Tosco shall acquaint itself and strictly comply
with all local, state and federal laws, ordinances and
regulations relating to the production, sale, handling and
distribution of motor fuel and other products including those
relating to environmental protection and compliance, and health,
safety and sanitation. Any motor fuel or other products
produced or sold in the Licensed Territory and services rendered
in the Licensed Territory by Tosco under the Licensed Mark and
the Licensed Marketing Indicia shall be in accordance with all
applicable local, state, and national laws and regulations.
Article 13
NOTICES
13.1 Any notice required or permitted to be given
under this Agreement shall be in writing and shall be given by
first class mail postage prepaid, by mail courier or by
facsimile transmission with a confirmation copy by first class
mail postage pre-paid. Any such notice shall be addressed as
follows:
(a) In the case of BP:
BP Exploration & Oil Inc.
200 Public Square, 39-5300-B
Cleveland, Ohio 44114-2375
Attn: Corporate Secretary
with a copy to:
The British Petroleum Company p.l.c.
Britannic House
1 Finsbury Circus
London EC2M7BA, England
Attn: Group Legal: Trade Marks
(b) In the case of Tosco:
Tosco Corporation
72 Cummings Point Road
Stamford, Connecticut 06902
Attn: Vice President & General Counsel
13.2 Tosco shall accept any notice directed to
sublicensees, jobbers or branded dealers under this Agreement.
Article 14
GENERAL PROVISIONS
14.1 This Agreement shall be governed by the
substantive and procedural laws of the State of New York without
regard to rules on choice of law. BP and Tosco hereby submit to
the jurisdiction and venue of all courts located within the
State of New York, County of New York to hear disputes arising
under this Agreement.
14.2 Nothing in this Agreement is intended to
constitute or shall be construed so as to constitute BP and
Tosco as partners or joint venturers; or the employees, agents
or representatives of BP as employees, agents or representatives
of Tosco; or the employees, agents or representatives of Tosco
as the employees, agents or representatives of BP.
14.3 Each section, part, term or provision of this
Agreement shall be considered severable. If, for any reason, a
section is determined to be invalid or unenforceable, that
section shall be deemed not part of this Agreement and it shall
not impair the operation or effect of the remaining terms or
provisions of this Agreement.
14.4 The failure of BP or Tosco to require
performance of any provision in this Agreement shall not be
deemed a waiver. Any such failure shall not deprive BP or Tosco
of their right to require such performance in a particular
instance or at any other time. Any waiver of this Agreement
must be in writing signed by the waiving party.
14.5 This Agreement embodies the complete
understanding of the parties with respect to its subject matter.
It supersedes any prior understanding between the parties,
whether written or oral, with respect to its subject matter and
may not be modified or amended except in a written document
signed by a duly authorized representative of BP and Tosco.
14.6 The section or paragraph headings contained in
this Agreement are for convenient reference only, and shall not
in any way affect the meaning or interpretation of this
Agreement. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original,
but all of which shall constitute but one.
IN WITNESS WHEREOF, the parties have caused this
Trademark License Agreement to be duly executed by their
authorized officers or representatives as of the day and year
first written above.
THE BRITISH PETROLEUM COMPANY p.l.c. BP EXPLORATION & OIL INC.
By:________________________________ By:______________________
Title: Attorney-in-Fact Title: Vice President
Date: Date:
TOSCO CORPORATION
By:_______________________________________
Title: Vice President and General Counsel
Date:
<PAGE>
Exhibit 21
SUBSIDIARIES OF TOSCO CORPORATION
AZL Resources, Inc.
Arizona-Florida Land & Cattle Company
AZCO Capital Corp. N.V.
AZCO Properties, Inc.
AZL Engineering, Inc.
Breckenridge Nordic Village Corporation
Bayway Refining Company
Tosco Pipeline Company
Diablo Service Corporation
Seminole Fertilizer Corporation
Bartow Cogen Corporation
Ridgewood Chemical Corporation
Seminole Cogen Corporation
International Energy Insurance Limited
The Loil Group Limited
The Oil Shale Corporation
Tosco (C-TI), Inc.
Tosco (C-TLP), Inc.
Tosco Corporation (Delaware)
Tosco International Finance N.V.
Tosco Refining Company, Inc.
Tosco Trading, Transportation and Supply, Inc.
Tosco (U.K.) Ltd.
Toscopetro Corporation
Western Hemisphere Corporation
Avon Marine Corp.
Riverhead Marine Corp.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Tosco Corporation on Form S-8 (File No. 33-39303
and File No. 33-51243) of our report dated February 4, 1994, on
our audits of the consolidated financial statements and the
financial statement schedules of Tosco Corporation as of
December 31, 1993 and 1992, and for the years ended December 31,
1993, 1992 and 1991, which report is included in this Annual
Report on Form 10-K.
COOPERS & LYBRAND
Oakland, California
March 16, 1994
